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Item 8. Financial Statements and Supplementary Data

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ý		Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the fiscal year ended December 31, 2012
for the fiscal year ended December 31, 2013
—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: 014140

GLEACHER & COMPANY, INC.
(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		22-2655804 (I.R.S. Employer Identification No.)
1290 Avenue of the Americas, New York, New York (Address of principal executive offices)		10104 (Zip Code)
677 Broadway, 2nd Floor, Albany, NY (Address of principal executive offices)		12207 (Zip Code)

Registrant's telephone number, including area code: (212) 273-7100

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered

Common stock, par value $.01 per share		The NASDAQ Global Market

Securities registered pursuant to Section 12(g) of the Act:

		None

		(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes o No ý

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer o		Accelerated Filer ý		Non-accelerated Filer o (Do not check if a smaller reporting company)		Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

The aggregate market value of the shares of common stock of the Registrant held by non-affiliates based upon the closing price of Registrant's shares as reported on The NASDAQ Global Market on June 3028, ~~2012~~2013, which was $013.8088 per share, was $~~100~~60,~~584~~301,~~912~~071. This calculation is based on the number of shares of the Registrant's common stock outstanding as of June 30, 2012, excluding shares of the Registrant's common stock held by any officer or director of the Company or by any person known by the Company to own 5% or more of the Registrant's outstanding shares of common stock. Exclusion of shares held by any person should not be construed as a conclusion by the Company, or an admission by any such person, that such person is an "affiliate" of the Company, as defined by applicable securities laws.

As of February 28, ~~2013~~2014, ~~123~~6,~~242~~183,~~192~~654 shares of common stock, par value $0.01 per share, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's definitive proxy statement for the ~~2013~~2014 annual meeting of stockholders to be filed with the Securities and Exchange Commission are incorporated by reference into Part III of this Annual Report on Form 10-K to the extent stated herein.

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TABLE OF CONTENTS

		Page
PART I
Item 1.	Business	1	1
Item 1A.	Risk Factors	10	6
Item 1B.	Unresolved Staff Comments	23	14
Item 2.	Properties	23	14
Item 3.	Legal Proceedings	23	15
Item 4.	Mine Safety Disclosures	23	15
PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	24	16
Item 6.	Selected Financial Data	26	18
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	28	20
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	60	39
Item 8.	Financial Statements and Supplementary Data	67	41
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	~~126~~	96
Item 9A.	Controls and Procedures	~~126~~	96
Item 9B.	Other Information	~~126~~	96
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	~~127~~	97
Item 11.	Executive Compensation	~~127~~	97
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~127~~	97
Item 13.	Certain Relationships and Related Transactions, and Director Independence	~~127~~	97
Item 14.	Principal Accountant Fees and Services	~~127~~	97
PART IV
Item 15.	Exhibits, Financial Statement Schedule	~~128~~	98

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PART I

This Annual Report on Form 10-K contains "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. These statements are not historical facts but instead represent the Company's belief or plans regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company's control. ~~The~~These ~~Company~~statements ~~often~~include, ~~but~~for ~~not always~~example, ~~identifies~~the ~~forward-looking~~expectations ~~statements~~regarding the byCompany's ~~using~~proposed ~~words~~dissolution, orfurther ~~phrases~~discussed ~~such~~below. asThe ~~"anticipate,"~~Company's ~~"estimate,"~~forward-looking ~~"plan,"~~statements ~~"project,"~~are ~~"target,"~~subject ~~"expect,"~~to ~~"continuing,"~~various ~~"ongoing~~risks and uncertainties," ~~"believe"~~including the risks and ~~"intend."~~other ~~The~~factors ~~Company's~~identified herein ~~forward-looking~~and ~~statements~~in ~~are~~other ~~based on~~public ~~facts~~disclosures asmade by the Company ~~understands~~from ~~them~~time atto ~~the~~ time, including in the Company's ~~makes~~periodic ~~any~~and ~~such~~current ~~statement~~reports asand ~~well~~other asfilings ~~estimates~~with ~~and~~the ~~judgments~~Securities ~~based~~and onExchange ~~these facts~~Commission. ~~The~~As a result, the Company's ~~forward-looking~~actual ~~statements~~results may ~~turn~~differ ~~out to~~materially befrom ~~inaccurate~~those ~~for~~expressed aor ~~variety~~implied ofby ~~reasons,~~these ~~many~~forward-looking ofstatements. ~~which~~Readers are ~~outside~~cautioned ~~of its control. Factors~~ that ~~could~~these ~~render the Company's~~ forward-looking statements, including, ~~subsequently~~without ~~inaccurate~~limitation, ~~include~~statements regarding the ~~conditions~~ dissolution and liquidation of the ~~securities markets~~Company, ~~generally~~the availability, ~~and~~amount ~~demand~~or ~~for~~timing ~~the~~of ~~Company's~~liquidating ~~services~~distributions ~~within~~to ~~those markets~~stockholders, the ~~risk~~adequacy of reserves ~~further~~established ~~credit~~to ~~rating~~satisfy ~~downgrades~~the ofCompany's obligations, the ~~U.S.~~belief ~~government~~that bythere ~~major~~is ~~credit~~a ~~rating~~reasonable ~~agencies, the~~possibility ~~impact~~that a portion of ~~international~~the ~~and~~contingency ~~domestic~~reserves ~~sovereign~~will ~~debt~~ultimately ~~uncertainties,~~be ~~the~~distributed ~~possibilities~~to ofthe stockholders ~~localized~~and orthe ~~global~~possibility ~~economic~~that ~~recession~~an ~~and~~alternative, ~~other~~value-creating ~~risks~~transaction ~~and~~may ~~factors~~be ~~identified~~proposed, ~~from~~and ~~time~~other tostatements ~~time~~contained inherein ~~the Company's~~that ~~filings~~are ~~with~~not ~~the~~historical ~~Securities~~facts, ~~and~~are ~~Exchange~~only ~~Commission~~estimates or predictions. You are cautioned not to place undue reliance on ~~these~~any forward-looking statements. The Company does not undertake to update any of its forward-looking statements.

~~You~~As ~~should~~used ~~review~~herein, the terms "~~Risk~~Company," ~~Factors~~"Gleacher," ~~section~~"we," of"us," ~~this~~or ~~Report~~"our" ~~for~~refer ~~a discussion of the important factors that could cause actual results~~ to ~~differ~~Gleacher & ~~materially~~Company, ~~from those~~Inc, ~~described~~and ~~in or implied by the forward-looking statements contained in this Report~~its subsidiaries.

In particular, the Company has recently experienced several adverse events that have significantly affected our business operations and have resulted in a recent and serious decline in our financial results. In order to address these issues, the Company is seeking, and may continue to seek a strategic transaction with a third party that could result, for example, in an acquisition of the Company or sale of all or substantially all of our assets. Whether the Company can effect such a transaction, and if so, the terms of any such transaction, will greatly affect the Company's future and, as a result, the ultimate accuracy of our forward-looking statements.

As used herein, the terms "Company," "Gleacher," "we," "us," or "our" refer to Gleacher & Company, Inc. and its subsidiaries.

Item 1. Business

Overview

Gleacher & Company, Inc. (the "Parent," and together with its subsidiaries, ~~the~~ "~~Company~~Gleacher") isor anthe ~~independent investment bank that provides corporate and institutional clients with strategic and financial advisory services. The~~ "Company also provides capital raising, research-based investment analysis, and securities brokerage services. The Company offers a range of products through its Investment Banking, Mortgage Backed Securities & Rates ("~~MBS & Rates"~~) ~~and~~is ~~Credit Products divisions. The Company was originally~~ incorporated ~~in 1985 in the state of New York and re-incorporated~~ under the laws of the ~~state~~State of Delaware. inThe ~~2010~~Company's ~~and its~~ common stock is traded on The NASDAQ Global Market ("NASDAQ") under the symbol "GLCH."

The Company ~~also~~recently ~~provided~~announced ~~residential~~that, ~~mortgage~~after ~~lending~~an ~~services~~extensive ~~through~~evaluation ~~its~~of ~~subsidiary~~other alternatives, ~~ClearPoint~~its ~~Funding Inc.~~Board ~~("ClearPoint").~~of OnDirectors ~~February 14,~~has ~~2013,~~determined ~~the~~that ~~Company~~it ~~entered into~~is anin ~~agreement~~the tobest ~~sell~~interests ~~substantially all~~ of the ~~assets~~Company's stockholders ofthat ~~ClearPoint to Homeward Residential, Inc. (~~the ~~"Homeward~~Company ~~Transaction"). This transaction closed on February 22~~dissolve, ~~2013,~~liquidate and ~~all remaining~~distribute ~~business~~to ~~activities~~stockholders ofits ~~ClearPoint~~available ~~are being wound down~~assets. ~~Refer to Note 29 within the footnotes to the~~

Planned Dissolution and Liquidation

As previously announced, the Company has been engaged in a lengthy and intensive evaluation of potential strategic alternatives in order to preserve and maximize stockholder value. Those potential alternatives included (i) pursuing a strategic transaction with a third party, such as a merger or sale of the Company; (ii) the reinvestment of the Company's liquid assets in favorable opportunities; and (iii) dissolving the Company, winding down its remaining operations and distributing its net assets to its stockholders, after making appropriate reserves for liabilities and expenses. The Board of Directors and the Company, together with its external advisors, devoted substantial time and effort in seeking, identifying and pursuing opportunities and other alternatives to enhance stockholder value; however, that process had not at that time yielded any opportunities viewed by the Board as reasonably likely to provide greater realizable value to stockholders than the complete dissolution and liquidation of the Company.

The Company's dissolution was unanimously approved by the Board of Directors on March 12, 2014, but is subject to stockholder approval. The Company intends to present this proposal to its stockholders of record as of April 21, 2014 at the Company's 2014 Annual Stockholders Meeting (the "2014 Annual Meeting"), currently scheduled for May 29, 2014. The Company will file prescribed proxy

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~~consolidated~~materials ~~financial~~with ~~statements~~the ~~contained~~Securities and Exchange Commission in ~~Item 8~~advance of ~~this~~that ~~Annual~~meeting. ~~Report~~In onconnection ~~Form 10~~with the dissolution, the Company intends to distribute to its stockholders all available cash other than as may be required to pay expenses and pay or make reasonable provision for known and potential claims and obligations of the Company, as required by applicable law. The Board of Directors' decision contemplates an orderly wind down of the Company's remaining business and operations, including the dissolution and winding-Kup of subsidiaries. If approved by the Company's stockholders, the Company intends to file a certificate of dissolution, pay, satisfy, resolve or make reasonable provisions for ~~additional~~claims ~~information~~and obligations as well as anticipated costs associated with the Company's dissolution and liquidation, and seek to convert its remaining assets into cash or cash equivalents as soon as reasonable, practicable and financially prudent.

InIf ~~recent~~the ~~years,~~Company's westockholders ~~have~~approve ~~incurred~~the ~~losses~~proposal, ~~and~~the ~~experienced~~Company ~~significant~~currently ~~turnover,~~expects ~~including~~to ~~among~~make ~~our~~an ~~senior~~initial ~~management~~liquidating ~~and~~distribution ~~business~~to ~~leaders~~stockholders of ~~our~~approximately ~~operating~~$20 million ~~segments,~~($3.23 per share). The Company expects to make this initial liquidating distribution as ~~well~~soon as practicable following receipt of stockholder approval and filing of a ~~number~~ certificate of ~~departures~~dissolution. The amount of this initial distribution reflects the Company's current liquid assets offset in part by provisions, ~~generally~~or reserves, ~~throughout~~for ~~the~~future ~~ranks~~operating ofcosts ~~our~~and ~~organization.~~expenses ~~Recently~~associated wewith ~~have~~dissolution ~~experienced~~and ~~several~~liquidation and, ~~events~~as ~~that~~required ~~have~~by ~~adversely~~law, ~~affected~~for ~~our~~other ~~business~~known ~~operations~~and potential claims and ~~resulted~~obligations. Delaware law requires that, in connection with a ~~further~~dissolution, the Company's Board of Directors make reasonable provision ~~deterioration~~for inknown ~~our~~and ~~financial~~potential ~~results.~~claims Inand ~~August~~obligations ~~2012~~of wethe ~~announced~~Company ~~that~~and wemaintain ~~were~~those ~~engaged~~reserves until resolution of such matters, and similar legal requirements apply to our subsidiaries. The Board of Directors, in ~~exploring~~consultation with its advisors, has evaluated the liabilities, expenses, and ~~evaluating~~known ~~strategic~~potential ~~alternatives~~claims ~~for~~and obligations of the Company and its subsidiaries, ~~including~~as ~~partnering~~well ~~with~~as ~~one~~other ormatters, ~~more~~in ~~equity~~order ~~investors~~to estimate the amount that will be reserved. Insofar as the reserves required by applicable law exceed, ~~strategic~~in ~~acquisitions~~the ~~and~~view ~~divestitures~~of orthe aBoard ~~business~~of ~~combination~~Directors, ~~involving~~the ultimate amounts the Company. Inwill ~~this~~likely ~~process~~be required weto ~~explored~~pay creditors, the Board of Directors believes there is a ~~wide~~reasonable ~~variety~~possibility that a portion of ~~potential~~the ~~strategic~~reserves ~~transactions~~will ultimately be distributed to stockholders. ByThe ~~February~~Board of Directors ~~2013,~~currently webelieves ~~had~~that ~~not~~these ~~yet~~subsequent ~~been~~distributions ~~presented~~could ~~with~~range abetween ~~suitable~~$40 million ~~strategic~~and ~~alternative~~$70 million ($6.47 Weand ~~intended,~~$11.32 ~~however~~per share), tofor ~~continue~~a total aggregate distribution to ~~examine~~stockholders ranging ~~strategic~~between ~~alternatives~~$60 million ~~should~~and ~~appropriate~~$90 million ~~opportunities~~($9.70 ~~arise~~and $14.55 Weper ~~announced~~share). ~~this update~~The Board will evaluate the Company's reserves on ~~February 15,~~a ~~2013~~periodic basis and will approve liquidating distributions when and as it deems appropriate. AsAdditional ~~would~~liquidating bedistributions ~~expected,~~will ~~our~~be ~~strategic~~made ~~review~~to ~~introduced~~the ~~uncertainty~~extent ~~with~~the ~~our~~required ~~trading~~contingency ~~partners~~reserves ~~and~~are ~~employees~~released and ~~consumed~~upon ~~significant~~the ~~amounts~~Company's ofnon-cash ~~our~~assets ~~senior~~being monetized, ~~management~~which would likely span a multi-year period. Further details regarding anticipated future distributions will be disclosed in the Company's ~~time~~proxy ~~and~~materials ~~attention.~~to ~~This~~be ~~uncertainty~~filed ~~increased~~in ~~after~~connection ~~our~~with ~~February 15~~the ~~update~~Company's 2014 Annual Meeting.

InThe ~~January~~amount ~~2013~~distributable to stockholders, ~~Eric~~both J.initially ~~Gleacher~~and in total, ~~our~~may ~~then-chairman~~vary ~~and~~substantially afrom ~~significant~~the ~~stockholder~~amounts currently estimated based on many factors, ~~resigned~~including asthe aresolution ~~director~~of outstanding known claims and ~~executive~~obligations, ~~officer~~the possible assertion of claims that are currently unknown to the Company, the ability to receive reasonable value when selling or otherwise monetizing its assets, including its investment in FA Technology Ventures L.P. ("FATV"), and costs incurred to wind down the Company's business. Further, if additional amounts are ultimately determined to be necessary to satisfy or make provision for any of these obligations, stockholders may receive substantially less than the current estimates.

InUntil ~~mid-February~~such time, 20if ~~sales~~any, as the stockholders approve the Company's dissolution, and ~~trading~~the ~~professionals~~Board ~~from~~of ~~our~~Directors ~~Credit~~decides, ~~Products~~and ~~group~~instructs ~~left~~management, ~~together~~to proceed with a dissolution, the Company will continue to ~~join~~investigate ~~another~~and ~~securities~~consider ~~firm~~any feasible, ~~reducing~~alternative, value-creating transactions of which it becomes aware. If prior to its dissolution, the ~~headcount~~Company receives an offer for a transaction that, in the view of ~~this~~the ~~group~~Board, would be expected to provide superior value to stockholders than the value of the currently estimated distributions, taking into account factors that could affect ~~approximately~~valuation, ~~70.~~including Astiming aand ~~result~~certainty of payment or closing, ~~revenues~~proposed ~~from~~terms ~~this~~and ~~group~~other ~~have~~factors, ~~declined~~the ~~significantly.~~dissolution could be abandoned

In a letter dated February 23, 2013, four current directors of the Company, Henry S. Bienen, Robert A. Gerard, Bruce Rohde and Robert S. Yingling, informed the Company that they do not intend to stand for re-election at the Company's 2013 Annual Meeting of Stockholders, to be held on May 23, 2013 (the "Annual Meeting"). These directors stated that their decision was based on communications from MatlinPatterson FA Acquisition LLC, a significant holder of the Company's common stock ("MatlinPatterson"), indicating that MatlinPatterson would oppose their re-election. These directors further stated that they had reason to believe that Mr. Gleacher would also vote his shares against them were they to run and that, as a result, it is a virtual certainty that if they were to stand for re-election, they would not be re-elected. The letter also stated that, should the situation change in the interim, they may be willing to reconsider their decision not to stand. The directors' decision not to stand for re-election was not the result of any disagreement with the Company relating to the Company's operations, policies or practices.

Also on February 23, 2013, the Company received a submission by MatlinPatterson of a slate of eight nominees for election to the Company's Board of Directors at the Annual Meeting. In their proposal, MatlinPatterson nominated current directors Marshall Cohen, Mark R. Patterson and Christopher Pechock, as well as nominees Carl McKinzie, Jaime Lifton, Edwin Banks, Keith B. Hall and Nasir A. Hasan.

Uncertainties regarding the implications of our net losses and management and employee turnover have been aggravated by these more recent events, resulting in further questions regarding the stability and strategic direction of the Company and adversely affecting relations with both our clients and our employees. A number of our trading customers have reduced or suspended trading activities with us. Moreover, at least in part because of the perceived instability of our business, new investment banking mandates have dwindled. These events have weakened employee morale, which may lead to additional resignations. As a result, we have experienced a significant decline in revenue in the first quarter of 2013, and we cannot predict when, or if, we will be able to reduce or reverse this decline and associated losses.

In order to address these issues and preserve value for our stockholders, the Company is seeking, and may continue to seek, a strategic transaction with a third party that could result, for example, in an

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~~acquisition~~in offavor ~~the Company or the sale~~ of ~~all~~such or substantially all of our assets. Subsequent to our February 15 update on our review of strategic alternatives, we have been approached by third parties regarding potential strategic alternatives. If we are unable to consummate a ~~strategic~~ transaction, weeven ~~will consider such alternatives,~~ if ~~any,~~dissolution ashas ~~may~~been bepreviously ~~available~~approved toby ~~us at such time. In doing so, we will consider all relevant factors, including our financial condition and operating results, our access to financial resources,~~ the ~~market~~Company's ~~environment and our financial and operational prospects~~stockholders. ~~Depending on the circumstances, courses of action could consist of expeditious reduction of operating and overhead expenses and/or monetization of assets, among other steps.~~

~~As of~~ ~~March 15,~~Going ~~2013,~~Concern ~~the~~and ~~Company~~Basis ~~had~~of ~~approximately 220 employees.~~ Presentation

~~The~~ As noted above, the Company's ~~Gleacher &~~Board ~~Company~~of ~~Securities, Inc.~~Directors ~~("Gleacher~~approved ~~Securities")~~a dissolution and ~~Gleacher~~liquidation ~~Partners, LLC~~of ~~("Gleacher~~the ~~Partners")~~Company, ~~subsidiaries~~subject ~~are~~to ~~registered as~~stockholder ~~broker-dealers~~approval. In connection with this intention, the ~~Securities~~Company ~~and~~intends ~~Exchange~~to ~~Commission~~distribute ~~("SEC")~~to ~~and~~its ~~are~~stockholders ~~members~~all ofavailable ~~the~~cash ~~Financial~~other ~~Industry~~than ~~Regulatory~~as ~~Authority, Inc.~~may ~~("FINRA")~~be ~~and~~required ~~various~~to ~~exchanges.~~pay ~~Gleacher~~or ~~Securities~~make isreasonable provision for known and ~~also~~potential aclaims ~~member~~and obligations of the ~~National~~Company. ~~Futures~~The ~~Association~~Board ~~("NFA").~~of ~~ClearPoint~~Directors' ~~remains~~decision ~~under~~also ~~the~~contemplates ~~regulatory~~a ~~oversight~~further, orderly wind down of the ~~Department~~Company's ~~of Housing~~business and ~~Urban~~operations ~~Development~~and, ~~("HUD")~~if approved by the Company's stockholders, asthe ~~well~~filing asof ~~various~~a ~~regulatory~~certificate ~~bodies~~of indissolution, ~~the~~among ~~states~~other inmatters. ~~which~~All itof ~~conducts~~these ~~business~~factors ~~until~~raise itsubstantial doubt about the Company's ~~business~~ability ~~activities~~to ~~are~~continue ~~wound~~as ~~down~~a going concern.

~~The~~Accounting principles generally accepted in the United States of America ("GAAP") require financial statements to be prepared on a going concern basis. A liquidation basis of accounting is only appropriate to the extent liquidation is imminent. In order to meet this criteria, among other factors, the plan for dissolving the Company, which would be followed by liquidation must be approved by the person or persons with the authority to make such a plan effective, which in this instance, is the Company's ~~headquarters~~stockholders. ~~are~~If ~~located~~the atplan ~~1290~~of ~~Avenue~~dissolution ofis approved by the ~~Americas~~Company's stockholders at the Company's 2014 Annual Stockholders Meeting, ~~New~~currently ~~York~~scheduled for May 29, NY2014, ~~10104~~the Company would then prospectively prepare its financial statements on a liquidation basis of accounting. The ~~telephone~~Company's ~~number~~accompanying atfinancial ~~that~~statements ~~address~~contained iswithin ~~(212)~~Item ~~273~~8 of this Annual Report on Form 10-~~7100~~K, and ~~our~~the ~~internet address~~discussion and financial information contained herein, have been prepared on a going concern basis as liquidation currently is ~~www~~not imminent.~~gleacher.com.~~

~~Business~~Discontinuation ~~Segments~~of Operations and Appointment of Capstone Advisory Group, LLC

AsThe Company has no meaningful revenue-producing operations. In the first quarter of ~~December 31~~2013, ~~2012~~the weCompany operated ~~through~~an ~~the~~investment ~~following~~banking business, ~~four~~predominately fixed-income sales and trading and financial advisory services, through three principal business ~~segments~~ units: Investment Banking, MBS & Rates and Credit Products. The Company also engaged in residential mortgage lending operations through its subsidiary ClearPoint Funding, Inc. ("ClearPoint").

~~This~~ During ~~division~~the ~~provides~~second ~~financial~~quarter ~~advisory~~of ~~and~~2013, ~~capital~~the ~~raising~~Company's ~~services~~Board inof ~~connection~~Directors ~~with~~approved ~~mergers,~~plans ~~acquisitions~~to ~~and~~discontinue ~~other~~operations ~~strategic~~in ~~matters.~~its ~~The~~MBS & ~~division~~Rates is(including ~~being~~RangeMark ~~realigned~~Financial ~~around~~Services ("RangeMark")) ~~existing~~and ~~M&A expertise~~Credit Products divisions (together, ~~expanded~~"Fixed ~~capital~~Income" ~~markets~~or ~~capabilities~~the ~~and~~"Fixed ~~key~~Income ~~industry~~businesses") ~~verticals~~as well as, ~~including~~later ~~real~~in ~~estate~~the quarter, ~~leveraged~~its ~~finance,~~Investment ~~financial~~Banking ~~services,~~division. ~~aerospace~~Exiting these businesses impacted approximately 150 employees. The ClearPoint business was discontinued, and ~~defense~~the business sold to Homeward Residential, Inc. ~~technology~~("Homeward") in February 2013 (the "Homeward Transaction"). In addition, ~~media~~in ~~and~~the ~~telecom~~third quarter of 2011, ~~paper and~~the ~~packaging~~Company exited the Equities business. Exiting the Equities business impacted 62 employees. As of March 17, ~~general~~2014, ~~industrial~~the ~~and~~Company ~~financial~~had ~~sponsor~~13 ~~coverage~~employees.

~~This~~ On ~~division provides sales~~May 31, ~~trading~~2013, ~~research~~the ~~and~~Board ~~advisory~~of ~~services~~Directors onappointed aChristopher ~~wide~~J. ~~range~~Kearns of ~~mortgage~~Capstone ~~and~~Advisory ~~asset-backed securities~~Group, LLC ~~U.S.~~("Capstone") ~~Treasury~~as ~~and~~the ~~government~~Company's ~~agency~~Chief ~~securities,~~Restructuring ~~structured~~Officer ~~products~~and ~~such~~Chief asExecutive ~~CLOs~~Officer. ~~and~~The ~~CDOs,~~Company ~~whole~~also ~~loans,~~entered ~~and~~into ~~other~~an ~~securities.~~agreement ~~Revenues~~with ~~are~~Capstone ~~currently~~and ~~generated~~Mr. Kearns, ~~from~~pursuant ~~spreads~~to onwhich ~~principal~~Capstone ~~transactions~~was ~~executed~~engaged to ~~facilitate~~provide ~~trades~~a ~~for~~number ~~clients~~of services to the Company, including (i) evaluating onand aimplementing, ~~riskless principal~~subject ~~basis.~~to ~~Revenues~~the ~~are~~approval ~~also~~of ~~generated~~the ~~from~~Company's ~~changes~~Board inof ~~fair~~Directors, the chosen course of action to preserve asset value and ~~interest~~maximize ~~income~~recoveries onto ~~securities~~stockholders ~~held~~under the incircumstances; ~~inventory.~~(ii) overseeing Inthe ~~addition,~~operations ~~this~~of ~~division~~the isCompany ~~integrating~~through ~~its~~execution ~~advanced~~of ~~analytics~~the selected course of action; (iii) ascertaining personnel and potential funding required and ~~quantitative~~taking ~~research~~key ~~capabilities~~steps ~~through~~to ~~its~~effectuate ~~platform~~the ~~acquired~~selected ~~from~~course ~~RangeMark~~of ~~Financial~~action; ~~Services, Inc.~~and (~~"RangeMark"~~iv). soliciting ~~RangeMark's~~and ~~integration~~evaluating ~~may~~expressions ~~also~~of ~~provide~~interest ~~for~~in ~~revenues~~certain ~~earned~~assets ~~through~~of the Company and effectuating such sales where ~~advisory~~appropriate ~~services~~and practical under the circumstances.

This division provides analysis, sales and trading on a wide range of debt securities including bank debt and loans, investment grade debt, high-yield debt, treasuries, convertibles, distressed debt, preferred debt, emerging market debt and reorganization equities to corporate and institutional investor clients. The division also provides trade execution services, liability management, corporate debt repurchase programs and new issue distributions. Revenues are generated primarily from spreads on riskless principal transactions, and to a lesser extent, principal trading and commissions on trades executed on behalf of clients. In addition, revenues are also generated on a smaller scale from interest income on securities held in inventory.

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~~This division~~ ~~originated,~~Other processed and underwrote single and multi-family residential mortgage loans within a number of states across the country. The loans were underwritten using standards prescribed by conventional mortgage lenders and loan buyers such as the Federal National Mortgage Association and Federal Home Loan Mortgage Corporation. Revenues were generated primarily from the sale of the residential mortgage loans with servicing released. On February 14, 2013, the Company entered into the Homeward Transaction, an agreement to sell substantially all of ClearPoint's assets to Homeward Residential, Inc. ("Homeward"). This transaction closed on February 22, 2013, and all remaining business activities of ClearPoint are being wound down. Information

The ~~Other~~Company's ~~Activities~~ headquarters are located at 677 Broadway, 2nd Floor, Albany, NY 12207. The telephone number at that address is (212) 273-7100, and our internet address is www.gleacher.com.

The Company also recognizes investment gains/(losses) and earns fees related to the Company's investment in and management of FA Technology Ventures L.P. ("FATV" or the "Partnership") a fund that holds investments in privately held companies. The Company's results also include expenses not directly associated with specific reportable segments, including goodwill impairment charges, costs related to corporate overhead and support, such as various fees associated with financing, legal and consulting expenses and amortization of certain intangible assets from business acquisitions not reported within discontinued operations.

Sources of Revenues

~~Set~~As ~~forth~~stated inabove, the ~~table~~Company ~~below~~currently ishas ~~information~~no ~~regarding~~meaningful ~~the~~revenue-producing ~~amount~~operations. ~~and~~Revenues ~~percentage~~currently ofare ~~net revenues~~ derived from ~~each~~the ~~of our principal~~sources ~~revenue~~indicated ~~sources (excluding net revenues from discontinued operations) for the years ended December 31~~below:

	2012					2011					2010
(Dollars in thousands)	Amount		Percent			Amount		Percent			Amount		Percent
Principal transactions	$	52,771		25.9	%	$	89,108		34.1	%	$	79,433		32.0	%
Commissions		71,418		35.1	%		71,347		27.3	%		76,817		30.9	%
Investment banking		30,553		15.0	%		33,069		12.7	%		43,400		17.5	%
Investment banking revenues from related party		—		0.0	%		—		0.0	%		1,947		0.8	%
Investment gains, net		1,233		0.6	%		2,996		1.1	%		7		0.0	%
Interest income		48,796		24.0	%		66,194		25.3	%		57,292		23.0	%
Gain from bargain purchase—ClearPoint Funding, Inc. acquisition		—		0.0	%		2,330		0.9	%		—		0.0	%
Fees and other		11,651		5.7	%		8,041		3.1	%		1,004		0.4	%
Total revenues	$	216,422		106.3	%	$	273,085		104.6	%	$	259,900		104.6	%
Interest expense		12,827		6.3	%		11,913		4.6	%		11,318		4.6	%
Net revenues	$	203,595		100.0	%	$	261,172		100.0	%	$	248,582		100.0	%

Investment gains, net

~~The~~Investment ~~financial~~gains, ~~results~~net, ~~set~~represent ~~forth~~the changes in the ~~foregoing~~carrying ~~table~~value ~~may not be representative~~ of ~~future results due to recent developments described in Item 1, "Business—Overview" and elsewhere in this Annual Report on Form 10-K. For information regarding~~ the Company's ~~reportable~~legacy ~~segments,~~investments. ~~refer~~Refer to Note 2710 within the footnotes to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K.

Fees and Other

Fees and other revenues generally relate to miscellaneous income and also include revenues related to the clawback of certain stock-based compensation grants subject to non-competition provisions.

Set forth in the table below is information regarding the amount and percentage of net revenues derived from continuing operations for the years ended December 31, 2013, 2012 and 2011. Certain amounts in prior periods have been reclassified to discontinued operations in order to conform to the current year presentation with no impact to previously reported net loss or stockholders' equity. This includes the prior period results of the Investment Banking, MBS & Rates and Credit Products divisions, as well as the results of ClearPoint. Refer to Note 22 within the footnotes to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K.

	2013					2012					2011

(Dollars in thousands)	Amount		Percent			Amount		Percent			Amount		Percent
Investment gains, net	$	1,267		65.5	%	$	1,233		59.2	%	$	2,996		73.8	%
Fees and other		666		34.5	%		849		41.8	%		1,066		26.2	%


Total revenues	$	1,933		100.0	%	$	2,082		100.0	%	$	4,062		100.0	%

Discontinued Operations

Investment Banking and Fixed Income Businesses

The Company's Board of Directors approved plans to discontinue operations in its Investment Banking and Fixed Income businesses on May 30, 2013 and April 5, 2013, respectively. Exiting these businesses impacted approximately 150 employees.

ClearPoint—Homeward Transaction

On February 14, 2013, the Company entered into an agreement to sell substantially all of ClearPoint's assets to Homeward. This transaction closed on February 22, 2013, and all remaining business activities of ClearPoint have been substantially wound down.

Equities Business—Exit on August 22, 2011

On August 22, 2011, the Board of Directors of the Company approved a plan to exit the Equities business, effective immediately. Exiting the Equities business impacted 62 employees.

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Refer to ~~Principal~~"Overview" ~~Transactions~~ above and Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" for additional information.

~~For~~ ~~the~~Regulatory periods presented, principal transactions revenues were generated primarily by the Company's MBS & Rates and ClearPoint divisions, and to a lesser extent, the Credit Products division. The MBS & Rates division generates revenues from spreads on customer trading activities and changes in fair value on financial instruments held in inventory, including agency mortgage-backed securities, debt issued by U.S. Government and federal agency obligations, commercial mortgage-backed debt, residential mortgage-backed debt, other debt obligations, CDOs, corporate debt securities, equity securities, preferred stock and derivatives. The Company's ClearPoint division originated mortgage loans and entered into related hedging instruments in connection with its residential lending activities. Changes in the fair value of such loans and hedging are also reflected in principal transactions. Requirements

The ~~Commissions~~ Company's subsidiaries, Gleacher & Company Securities, Inc. ("Gleacher Securities") and Gleacher Partners, LLC ("Gleacher Partners") are currently registered as broker-dealers with the Securities and Exchange Commission ("SEC") and are members of the Financial Industry Regulatory Authority, Inc. ("FINRA"). These subsidiaries intend to submit Forms BDW to withdraw their registrations as broker-dealers from the SEC, self-regulatory organizations, and the states. Withdrawal from broker-dealer registration becomes effective 60 days after the filing of Form BDW, unless a firm consents to a longer period or the SEC institutes a proceeding, delays or shortens the date of effectiveness, or otherwise imposes terms or conditions upon such withdrawal. Once the withdrawal becomes effective, it is anticipated that each of these subsidiaries will, after making appropriate and necessary reserves for creditors, pay substantially all of its available capital to the Parent.

~~Commission~~Gleacher Securities ~~income~~and isGleacher ~~primarily~~Partners ~~comprised~~are currently subject to the net capital requirements of ~~commission~~Rule 15c3-1 ~~equivalents~~promulgated ~~earned~~under onthe ~~riskless~~Securities ~~principal~~Exchange ~~transactions~~Act ~~generated~~of in1934, ~~both~~as amended (the "Exchange Act"). These net capital rules are designed to measure the general financial condition and liquidity of a broker-dealer, and they impose a required minimum amount of net capital deemed ~~Company~~necessary to meet a broker-dealer's ~~Credit~~continuing ~~Products~~commitments ~~and~~to ~~MBS &~~its ~~Rates divisions~~customers.

At December 31, ~~Investment~~2013, ~~Banking~~ net capital and excess net capital of the Company's broker-dealer subsidiaries were as follows:

Investment banking fees are generated from financial advisory services in regards to mergers and acquisitions, restructurings and recapitalizations and from acting as an underwriter or placement agent in debt, equity and convertible securities offerings.

(In millions)	Net Capital		Excess Net Capital

Gleacher Securities	$	33.9	$	33.6
Gleacher Partners	$	0.9	$	0.6

~~Set~~Assuming ~~forth~~deregistration inof the ~~table~~broker-dealers ~~below~~as iscontemplated ~~information~~above, ~~regarding~~the ~~investment~~net ~~banking~~capital ~~revenues~~rules bywould ~~area~~no ~~for~~longer ~~the~~apply ~~periods~~to ~~indicated:~~these subsidiaries.

	For the years ended December 31,
(In thousands)	2012		2011		2010
Investment banking transactions
Advisory services	$	24,388	$	24,341	$	32,383
Capital markets		6,165		8,728		12,964
Total Investment banking revenues	$	30,553	$	33,069	$	45,347

Available Information

The ~~Investment~~Company ~~gains~~files ~~(losses)~~ with the SEC current, annual and quarterly reports, proxy statements and other information as required by the Exchange Act. You may read and copy any document we file with the SEC at the SEC's Public Reference Room located at 100 F Street, N.E., Washington, DC 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an internet website at www.sec.gov from which interested persons can electronically access the Company's SEC filings.

~~Investment~~The Company ~~gains~~will ~~(losses)~~make ~~primarily~~available ~~represent~~free ~~the~~of ~~changes~~charge, inthrough ~~fair~~its ~~value~~internet ofsite ~~the~~www.gleacher.com, ~~Company's~~its ~~investment~~annual inreports ~~FATV~~on Form 10-K, ~~which~~quarterly isreports ~~comprised~~on ofForm 10-Q, 19current reports ~~holdings~~on ~~primarily~~Form 8-K, inand 7other ~~privately~~information ~~held~~publicly ~~companies.~~filed ~~Refer~~with tothe ~~Note 10~~SEC. ~~within~~These ~~the~~filings ~~footnotes~~and toinformation ~~the~~will ~~consolidated~~become ~~financial~~available ~~statements~~as ~~contained~~soon inas ~~Item 8~~reasonably ofpracticable ~~this~~after ~~Annual~~such ~~Report~~material onis electronically filed ~~Form 10-K~~with or furnished to the SEC.

The Company ~~Interest~~also ~~Income~~makes available, on the Corporate Governance page of its website, (i) its Corporate Governance Guidelines, (ii) its Code of Business Conduct and Ethics, (iii) the charters of the Audit and Executive Compensation Committees of its Board of Directors, and (iv) its Procedures for Reporting Violations of Compliance Standards. These documents are also available in print without charge to any person who requests them by writing or telephoning: Gleacher & ~~Expense~~ Company, Inc., 677 Broadway, 2nd Floor, Albany, NY 12207, U.S.A., Attn: Investor Relations, telephone number (212) 273-7100.

Interest income is recognized principally within the Company's MBS & Rates division on its portfolio of fixed income securities. The Company incurs interest expense primarily as a result of funding its trading portfolio through its clearing broker and, to a lesser extent, through the repurchase markets. The Company's ClearPoint division recognized interest income in connection with its residential mortgage lending activities and incurred interest expense on its short-term secured mortgage warehouse lines of credit. The decrease in net interest income during the year ending December 31, 2012 compared to the prior years is primarily due to reduced inventory levels.

Fees and Other

Fees and other revenues generally relate to miscellaneous fees earned in connection with ClearPoint's residential mortgage lending activities and to investment management fees earned by FA Technology Ventures Corporation. Fees and other revenues, during the year ended December 31, 2012,

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~~also include~~ ~~$2.6 million related to the clawback of certain stock-based compensation grants subject to non-competition provisions (Refer to~~ Item ~~7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" herein for additional information)~~1A. Risk Factors

An ~~Bargain~~investment ~~Purchase~~in ~~Gain~~ our common stock entails a variety of serious risks and uncertainties. You should carefully consider the risk factors described below. If any of the following risks actually occur, or if our underlying assumptions prove to be incorrect, our actual results may vary from what we projected, and our financial condition or results of operations could be materially and adversely affected. These risk factors are intended to highlight factors that may affect our financial condition and results of operations and are not meant to be an exhaustive discussion. Additional risks and uncertainties of which we are currently unaware or that we currently believe to be immaterial may also adversely affect us.

We have organized the risk factor discussion below around certain categories, although there is some overlap of specific risk factor disclosure between categories. The ~~Company~~order ~~recorded~~of athe ~~bargain~~categories ~~purchase~~set ~~gain~~forth ~~during~~below, and the ~~year~~order ~~ended~~of ~~December 31~~particular risk factors within each category, ~~2011~~is ~~related~~not tonecessarily ~~its~~indicative ~~acquisition~~of the likelihood of ~~ClearPoint~~the onoccurrence of any of the ~~January 3,~~risks ~~2011.~~described below or the magnitude of the effect on us in the event any such risks should occur.

~~Recent~~ ~~Developments~~ Risks Related to the Proposed Dissolution and Liquidation of the Company

Set ~~Departure~~forth below is a description of ~~Executive~~significant ~~Officer~~ risks associated with the proposed dissolution and liquidation of the Company.

~~Effective~~ If ~~January 28,~~our ~~2013,~~stockholders ~~Mr. Gleacher~~do ~~resigned~~not asapprove athe ~~director~~proposed ~~and~~dissolution ~~executive officer~~ of the Company., ~~Mr. Gleacher agreed~~our toresources may continue to ~~provide~~diminish. If ~~services~~our stockholders todo not approve the proposed dissolution of the Company inor ~~connection~~if ~~with~~the adissolution ~~pending~~is ~~investment~~abandoned ~~banking~~by ~~transaction.~~our Inboard ~~return~~or ~~for~~otherwise ~~these~~not ~~continued~~implemented, ~~services~~our board of directors will explore what, Mrif any, strategic alternatives are available for our company. ~~Gleacher~~ ~~will~~Possible ~~receive~~alternatives include, among other things, reconsidering proposals previously considered and rejected, seeking voluntary dissolution at a ~~payment~~later intime and with anpotentially ~~amount~~diminished ~~determined~~assets inor ~~accordance~~seeking ~~with~~bankruptcy anprotection ~~existing~~(should ~~formula~~our net assets decline precipitously for ~~payments~~some tounforeseen ~~employees~~reason). ~~relating~~There tocan ~~advisory~~be ~~fees~~no assurance that ~~may~~any beof ~~received~~these byalternatives would result in greater stockholder value than the ~~Company~~proposed indissolution ~~respect~~and liquidation of the ~~client~~Company. ~~transaction~~Moreover, asany ~~well~~alternative ~~as related~~we ~~costs~~select may have unanticipated negative consequences, and ~~expenses.~~we will face a number of risks, including:

•: We expect to continue incurring net losses from our continuing operations, and our cash resources will continue to diminish as a result;
•: If stockholders do not approve the proposed dissolution of the Company, there can be no assurance that the holders of our common stock, including one or more of the holders of 5% or more of our common stock, will not sell their shares and thereby potentially impair our ability to utilize our net operating loss carryforwards by causing an "ownership change" (as defined in Section 382 of the Internal Revenue Code of 1986, as amended, or the "Code"); and
•: We may continue to incur expenses associated with being a public reporting company, including ongoing SEC reporting obligations. These expenses would accelerate the depletion of our existing cash resources.

We ~~Departure~~may not be able to receive reasonable value when selling or otherwise monetizing our assets, including our investment in FATV. The value that stockholders ultimately realize upon the liquidation of ~~Professionals~~the Company is dependent in part on the ~~Credit~~monetization ~~Products~~of ~~Division~~ certain assets, the most substantial of which is our investment in FATV. At December 31, 2013, we valued this investment at approximately $17.6 million. However, this investment is illiquid and not subject to rapid monetization. We expect that some or all of the assets in which FATV is invested will experience a "liquidity event" (i.e., there will be a disposition of the assets generating cash distributions to FATV's investors, including the Company), but the timing of any such liquidity event is uncertain, and the value realized for any of the investment assets is similarly uncertain. In the event we instead attempt to sell this asset, we may not be able to find a buyer. In addition, it may be difficult to obtain a favorable return when attempting to

On February 20, 2013, the Company confirmed the departure of approximately 20 professionals previously employed in the Company's Credit Products division, reducing this division's headcount to approximately 70. As a result, revenues from this group have declined significantly.

Prospective Departure of Certain Members of the Board of Directors

In a letter dated February 23, 2013, four current directors of the Company, Henry S. Bienen, Robert A. Gerard, Bruce Rohde and Robert S. Yingling, informed the Company that they do not intend to stand for re-election at the Company's Annual Meeting. These directors stated that their decision was based on communications from MatlinPatterson indicating that MatlinPatterson would oppose their re-election. These directors further stated that they had reason to believe that Mr. Gleacher would also vote his shares against them were they to run and that, as a result, it is a virtual certainty that if they were to stand for re-election, they would not be re-elected. The letter also stated that should the situation change in the interim, they may be willing to reconsider their decision not to stand. The directors' decision not to stand for re-election was not the result of any disagreement with the Company relating to the Company's operations, policies or practices.

Director Nominations by MatlinPatterson

Decline in Business Operations and Revenue

We have recently experienced a significant decline in our business operations and revenue. We cannot predict when, or if, we will be able to reduce or reverse this decline and associated losses. See Item 7, "Management Discussion and Analysis of Financial Condition and Results of Operations" and Note 1 of the footnotes to the consolidated financial statements contained in Item 8 to this Annual Report on Form 10-K.

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sell this ~~Operations~~ investment in connection with the liquidation and dissolution of the Company. Because we are seeking to consummate the liquidation, we may not realize as much value for this investment as we might have if we had been able to sell this investment as a going concern. We may not realize cash or any other liquid asset from these investments in the near future, and the amounts we do realize, if any, may be far less than the value we ascribe to these assets now.

The ~~Company's~~timing ~~broker-dealer~~of ~~subsidiaries~~liquidating ~~clear~~payments ~~customers'~~and ~~securities~~the ~~transactions~~total ~~primarily~~value ~~through~~stockholders areceive ~~third~~upon ~~party~~liquidation ~~under~~is asubject ~~clearing~~to many variables and risks, many of which will not be known at the time of ~~agreement~~the stockholder vote. After ~~Under~~we ~~this~~file ~~agreement,~~our ~~transactions~~certificate ~~are~~of ~~deemed~~dissolution, we intend to bemake ~~either~~liquidating ~~receive~~cash ~~versus~~distributions ~~payment~~to our stockholders, ~~delivery~~which ~~versus~~will ~~payment~~reflect "hold-backs," or ~~cash~~"reserves," ~~transactions~~for creditor claims. ~~Gleacher~~The ~~Securities~~amount ~~self-clears~~and ~~its~~timing ~~trading~~of these distributions will be at the discretion of the Board. The distribution of our assets to stockholders may be delayed for ~~activities~~a innumber Uof reasons.S. ~~government~~For ~~securities~~example, (one or more of our creditors might seek an injunction against our making the ~~"Rates~~proposed ~~business"),~~distributions to stockholders under the terms of the proposed dissolution and liquidation. asThe aamounts ~~result~~distributed ~~became~~to astockholders ~~member~~will depend upon various factors and risks, including the proceeds received from the monetization of non-cash assets, the ~~Depository~~timing ~~Trust~~of receipt of those proceeds and ~~Clearing~~the ~~Corporation~~amount of our actual and potential liabilities. If our liabilities prove to be greater than anticipated, ~~Government~~additional ~~Securities~~claims ~~Clearing~~are ~~Corporation~~made, ~~and~~or ~~Fixed~~legal action is brought against us by ~~Income~~creditors ~~Securities~~or ~~Clearing~~others, ~~Corporation~~planned ~~("FICC")~~distributions to stockholders could be delayed or reduced, or there could be nothing remaining available to distribute to stockholders.

Stockholders ~~Discontinued~~could ~~Operations~~ be held liable to creditors, up to the amount actually distributed to such stockholder in dissolution. If the Company's dissolution is approved by our stockholders, we expect to file a Certificate of Dissolution with the Delaware Secretary of State dissolving the Company. Pursuant to the Delaware General Corporation Law (the "DGCL"), we will continue to exist for three years after our dissolution or for such longer period as the Delaware Court of Chancery shall direct, for the purpose of prosecuting and defending suits against us and enabling us gradually to close our business, to dispose of our property, to discharge our liabilities and to distribute to our stockholders any remaining assets. Under applicable law, in the event we fail to create during this three-year period an adequate reserve for payment of our expenses and liabilities (and otherwise do not have sufficient assets for payment of our expenses and liabilities), each stockholder who receives a liquidating distribution could be held liable for payment to our creditors of such stockholder's pro rata share of amounts owed to creditors in excess of the reserve, up to the amount actually distributed to such stockholder in dissolution.

~~The~~This means ~~Company~~that ~~has~~a ~~classified~~stockholder could be required to return all liquidating distributions previously made to such stockholder and receive nothing from us under the ~~results~~dissolution ofand liquidation. Moreover, in the ~~Equities~~event ~~division~~a asstockholder ~~discontinued~~has ~~operations~~paid ~~due~~taxes toon amounts previously received, a repayment of all or a portion of such amount could result in a stockholder incurring a net tax cost if the ~~exit~~stockholder's repayment of ~~this~~an ~~business~~amount onpreviously distributed does not cause a commensurate reduction in taxes payable. There can be no guarantee that the reserves established by us will be ~~August 22,~~adequate ~~2011~~to cover all such expenses and liabilities.

We ~~Competition~~ may not be able to retain two of our executive officers, whom we believe are essential to our day-to-day operations and to the completion of our proposed dissolution and liquidation. On October 18, 2013, we entered into key employee retention agreements with each of Ms. Patricia Arciero-Craig, General Counsel and Secretary, and Mr. Bryan Edmiston, Controller. These retention agreements expire on November 30, 2014. We cannot guarantee that we will be able to retain either or both of Ms. Arciero-Craig or Mr. Edmiston, and the loss of either or both individuals could significantly hinder our day-to-day operations as well as our ability to complete the proposed dissolution of the Company in an orderly and efficient manner.

As Our ancontinued ~~investment~~listing ~~bank,~~on ~~all~~NASDAQ ~~aspects~~is ~~of the Company's business are intensely competitive~~uncertain. We ~~The~~received ~~Company~~a ~~competes~~letter ~~with~~from ~~other~~NASDAQ ~~investment banks,~~requesting ~~commercial~~certain ~~banks or bank holding companies~~information, ~~brokerage~~pursuant ~~firms, merchant banks and financial advisory firms. The Company competes with firms nationally as well as on a regional, product or~~to ~~business line basis. Many of the Company~~NASDAQ's ~~competitors have substantially greater capital and resources and offer a broader range of financial products. The Company believes that the principal factors~~discretionary ~~affecting~~authority ~~competition~~under inListing ~~its businesses include client relationships~~Rule 5250(a)(1), ~~reputation,~~regarding ~~quality and price of our products and services, market focus and~~ the ~~ability of our professionals. Competition is intense for the recruitment and retention of qualified professionals. The~~ Company's ~~ability~~ongoing tobusiness ~~compete effectively~~ in ~~its~~light ~~businesses~~of ~~will depend upon~~ its ~~continued~~prior ~~ability~~disclosures tothat ~~retain~~it ~~and~~had ~~motivate~~exited its ~~existing~~ ~~professionals and attract new professionals.~~

Regulation

The securities industry in the United States is subject to extensive regulation under federal and state laws. The SEC is the federal agency charged with administration of the federal securities laws. Much of the direct oversight of broker-dealers, however, has been delegated to self-regulatory organizations, principally FINRA, NFA and the U.S. securities exchanges. These self-regulatory organizations adopt rules (subject to approval by the SEC) that govern the securities industry and conduct periodic examinations of member broker-dealers. Securities firms are also subject to substantial regulation by state securities authorities in the U.S. jurisdictions in which they are registered. Gleacher Securities and Gleacher Partners are registered as broker-dealers in all 50 states, the District of Columbia and Puerto Rico. Gleacher Securities is also registered in the U.S. Virgin Islands.

The U.S. regulations to which broker-dealers are subject cover many aspects of the securities business, including sales and trading practices and financial responsibility, the safekeeping of customers' funds and securities, the capital structure of securities firms, books and record keeping, and the conduct of associated persons. Salespeople, traders, investment bankers and others are required to pass examinations administered by FINRA and all principal exchanges as well as state securities authorities in order to both obtain and maintain their securities license registrations. Certain employees of our broker-dealer subsidiaries are required to be registered with FINRA and to participate annually in the firm's continuing education program.

As a mortgage originator, ClearPoint is licensed and authorized to conduct lending activities in a number of states. Its activities included the origination, processing and underwriting of single and multi-family mortgage loans. ClearPoint is under the regulatory oversight of the HUD, as well as various regulatory bodies in the states in which it conducts business. In connection with the Homeward Transaction, ClearPoint will be winding down its operations, including surrendering its licenses to conduct business and voluntarily withdrawing from HUD related activities.

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~~Regulatory~~Investment ~~scrutiny~~Banking ofand ~~the~~Fixed ~~financial~~Income ~~services~~businesses ~~industry~~and ~~has~~had ~~increased~~no inmeaningful ~~recent years, including through the passage of the Dodd~~revenue-~~Frank~~producing ~~Wall Street Reform and Consumer Protection Act ("Dodd-Frank") which was signed into law in July 2010~~operations. ~~Dodd-Frank~~We ~~was~~have ~~passed~~discussed ~~to address (i)~~ the ~~perceived~~matter ~~insufficient~~with ~~oversight~~NASDAQ and ~~regulation~~provided of the ~~U.S.~~ ~~financial~~requested ~~system,~~information. ~~(ii) the~~NASDAQ ~~unregulated~~has ~~over-the-counter derivatives market and (iii) the lack of a consumer protection authority. Dodd-Frank~~indicated ~~covers~~to aus ~~broad~~in ~~spectrum~~our ofmost ~~reforms~~recent ~~aimed~~discussions atthat ~~bringing~~it ~~accountability~~does tonot ~~the~~currently ~~U.S.~~plan ~~financial~~on ~~system~~taking ~~and~~any ~~limiting~~action ~~those~~that ~~risks~~would ~~considered~~lead to ~~have~~our ~~contributed~~common tostock ~~the~~being ~~economic crisis of 2008-2009~~delisted. ~~This legislation~~However, asNASDAQ ~~well~~has asbroad ~~other~~discretion ~~federal~~in ~~and~~interpreting ~~state~~its listing ~~laws,~~eligibility ~~changes in~~ rules, ~~promulgated by the SEC~~ and bythere ~~self-regulatory~~can ~~organizations~~be asno ~~well~~guarantee asthat ~~changes~~NASDAQ bywill ~~state securities~~not ~~authorities,~~take ~~and/or~~action ~~changes~~to interminate ~~the~~our ~~interpretation~~listing oron ~~enforcement of existing laws and rules often directly affect~~ the ~~method~~NASDAQ ofGlobal ~~operation~~Market. ~~and~~If ~~profitability~~our ofcommon ~~broker-dealers.~~stock ~~In light of~~is ~~the~~delisted ~~uncertainty~~from ~~of future regulatory developments~~NASDAQ, ~~the~~a ~~full~~market ~~extent~~for ~~of the impact of any new requirements on~~ our ~~Company's~~common ~~business~~stock ismay ~~unknown~~not atdevelop ~~this~~in ~~time.~~the ~~Any new or amendments to existing regulations resulting from Dodd~~over-~~Frank may impact~~ the-counter ~~Company's~~market ~~profitability, business practices~~ or ~~activities, obligations concerning capital, liquidity or leverage, and potential liabilities~~otherwise. ~~Any~~The ~~changes~~delisting inof ~~the~~our ~~regulatory~~common ~~requirements~~stock ~~may~~could ~~also~~adversely ~~necessitate~~affect ~~changes to~~ the ~~Company's~~trading ~~policies~~activity, liquidity ~~procedures~~and orprice ~~practices~~of inour ~~order~~common ~~to comply with new requirements~~stock, ~~which~~decrease ~~may~~analyst ~~require additional capital investment and attention from Company management. The SEC~~coverage, ~~self-regulatory~~investor ~~organizations,~~demand and ~~state~~available ~~securities~~information ~~regulators~~concerning ~~have~~trading ~~broad~~prices ~~authority to conduct examinations~~ and ~~inspections~~volume ~~and~~of toour ~~initiate~~common ~~administrative proceedings which can result in censure~~stock, ~~fine,~~make ~~suspension,~~it ormore ~~expulsion~~difficult offor investors ato ~~broker-dealer,~~buy ~~its officers,~~ or ~~employees.~~sell ~~The~~shares ~~principal purpose~~ of ~~U.S. broker-dealer~~our ~~regulation~~common isstock ~~the protection of customers~~ and ~~the~~potentially ~~securities~~impair ~~markets~~our ~~rather~~ability ~~than~~to ~~protection~~enter ofinto ~~stockholders~~certain ofstrategic ~~broker-dealers~~transactions.

~~Regulatory~~ ~~Requirements~~ Risks Specific to our Company

AsThe ~~broker-dealers,~~disclosures ~~Gleacher~~below ~~Securities~~describe ~~and~~risks ~~Gleacher~~related ~~Partners~~to ~~are~~our ~~subject~~business that we will continue to ~~the~~face, ~~net~~at ~~capital~~least ~~requirements~~to some extent, regardless of ~~Rule 15c3-1~~whether ~~promulgated~~the ~~under~~proposed ~~the~~dissolution ~~Exchange~~and ~~Act~~liquidation is implemented. ~~Gleacher~~The ~~Securities~~risks isand ~~also~~uncertainties ~~subject~~described tobelow are not the ~~net~~only ~~capital~~ones ~~requirements~~facing ~~promulgated~~our ~~under~~company. ~~the~~Additional ~~Commodity~~considerations ~~Futures~~not ~~Trading~~presently ~~Commissions~~known to ~~(Regulation 1.16).~~us ~~These~~or ~~net~~that ~~capital~~we ~~rules~~currently believe are ~~designed~~immaterial tomay ~~measure~~also impair our business operations. If any of the ~~general~~following risks actually occur, our financial condition or operating results could be materially and ~~liquidity~~adversely affected, the value of aour ~~broker-dealer,~~common stock could decline and ~~they~~you ~~impose~~may alose ~~required~~all ~~minimum~~or ~~amount~~part of ~~net~~your ~~capital~~investment. In addition, in reviewing the financial statements, data and other information ~~deemed~~contained ~~necessary~~in tothis ~~meet~~Annual aReport ~~broker~~on Form 10-~~dealer's~~K, ~~continuing~~readers ~~commitments~~are cautioned that, in accordance with accounting principles generally accepted in the United States, no adjustments have been made to ~~its~~the financial ~~customers~~statements and data contained herein as a result of the dissolution proposal.

~~Compliance with~~ Recent ~~these~~developments ~~net~~have ~~capital~~adversely ~~rules~~affected ~~may~~the ~~limit~~Company, ~~those~~and ~~operations~~the ~~that~~future ~~require~~of the ~~use~~Company ofremains ~~capital,~~highly ~~such~~uncertain. As asdiscussed above ~~trading~~under Item 1—"Business" inthe ~~securities~~Company ~~and~~currently ~~underwriting~~has ~~securities~~no meaningful revenue-producing operations. ~~Net~~Given ~~capital~~the ~~changes~~Company's ~~from day~~condition, towe ~~day~~cannot predict when, ~~based~~or inif, ~~part~~we onwill ~~the~~be ~~Company's~~able ~~inventory~~to ~~positions~~generate revenues ~~and~~or ~~the~~become ~~portion~~profitable. ofIn ~~the~~addition, ~~inventory~~there ~~value~~can ~~that~~be ~~the~~no ~~net~~assurance ~~capital~~that ~~rules~~we ~~require~~will ~~the~~be ~~firm~~able to ~~exclude~~consummate ~~from~~any ~~its~~strategic ~~capital.~~transactions ~~(Refer~~or toreinvest ~~Note 22~~our assets in profitable operations if we do not proceed ~~within~~with the ~~footnotes~~dissolution toand ~~the~~liquidation ~~consolidated~~as ~~financial~~proposed, ~~statements~~and ~~contained~~it inis ~~Item 8~~possible ofthat ~~this~~we ~~Annual~~will ~~Report~~nevertheless onneed ~~Form 10-K~~to wind down our business and ultimately, cease operations.)

At We may be unable to fully capture the expected value from any strategic transaction. To the extent that we consummate a ~~December 31~~strategic transaction, ~~2012~~such as a merger or sale of the Company, ~~net~~we ~~capital~~face numerous risks and ~~excess~~uncertainties. ~~net~~We ~~capital~~might not be able to complete any announced transaction, and even if completed, the transaction might not result in enhanced value to our stockholders. A merger may involve the issuance of a large number of shares of our common stock, which would dilute our stockholders' ownership of our firm, or we may borrow funds or use cash on hand, which may impact our funding and liquidity. In the event the Company experiences an ownership change under Internal Revenue Code Section 382, the Company's ~~broker~~net operating losses (estimated to be $159 million on pre-~~dealer~~tax ~~subsidiaries~~basis ~~were~~at asDecember 31, ~~follows:~~2013) would be fully impaired, reduced nearly to zero. This could have a negative impact on our ability to consummate a transaction. If we consummate a strategic transaction but are unable to successfully navigate any risks and uncertainties, we may not be able to capture the maximum value of such transaction for stockholders, and the Company may be further adversely affected.

(In millions)		Net Capital			Excess Net Capital
Gleacher Securities		$	56.2		$	55.9
Gleacher Partners		$	0.8		$	0.5

We have a history of losses and may not return to profitability in the near future or at all. We have incurred losses in recent years, including net losses of approximately $99.5 million, $77.7 million and $82.1 million for the years ended December 31, 2013, 2012 and 2011, respectively. We cannot predict

ClearPoint is subject to net worth requirements mandated by HUD. At December 31, 2012, minimum net worth required and adjusted net worth of ClearPoint was as follows:

(In millions)		Net Worth			Net Worth above amount Required
ClearPoint		$	10.3		$	9.3

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with certainty ~~Business~~when ~~Continuity~~or ~~Plan~~ if we will be able to reduce or reverse these losses, and there can be no assurance that we will be able to do so.

~~The~~ Our ~~Company~~assets ~~maintains~~include ailliquid ~~Business~~investments, ~~Continuity~~which ~~Plan~~we ~~("BCP")~~may not be able to ~~allow~~monetize ~~for~~at antheir ~~effective~~recorded ~~response~~values toin athe ~~significant~~near ~~business~~term ~~disruption,~~or at all. We have ~~either~~investments ~~internal~~in orsecurities ~~external~~that are not publicly traded, inprincipally ~~order~~FATV, which is therefore subject to ~~(i)~~an inherent liquidity risk. At December ~~safeguard~~31, ~~our~~2013, ~~employees'~~FATV ~~lives~~was ~~and~~carried ~~Company~~at $17.6 million, ~~property~~or 18.3%, of our total assets. (~~ii)~~Refer to Note ~~make~~10 awithin the footnotes to the consolidated financial ~~and~~statements ~~operational~~contained ~~assessment~~in ~~and~~Item 8 ~~quickly~~of ~~recover~~this ~~and~~Annual ~~resume~~Report on ~~operations,~~Form 10-K.) This investment is susceptible to changes in the financial condition or prospects of the companies underlying these investments. We expect that some or all of the assets in which FATV is invested will experience a "liquidity event" (~~iii)~~i.e., ~~protect~~there will be a disposition of the ~~Company~~assets generating cash distributions to FATV's ~~books~~investors, ~~and~~including ~~records~~the Company), the timing of any such liquidity event is uncertain, and ~~(iv) allow~~the ~~our~~value ~~customers~~realized for any of the investment assets is similarly uncertain. Even if this investment proves to ~~continue~~be profitable, it may be several years or longer before any profits can be realized in cash. If we choose or are required to ~~transact~~accelerate ~~business~~an exit in this investment, we may realize substantially less in proceeds than if we had monetized the investment through the harvesting of the underlying portfolio companies.

~~The~~ Our infrastructure may malfunction or fail. Our financial, accounting or other data processing systems may fail to operate ~~BCP~~properly ~~provides~~or ~~for~~become disabled ~~the~~as ~~following:~~a result of events that are wholly or partially beyond our control, including a disruption of electrical or communications services or our inability to occupy one or more of our buildings. If any of these systems do not operate properly or are disabled or if there are other shortcomings or failures in our internal processes, people or systems, we could suffer financial loss and impairment to our liquidity, as well as, regulatory intervention or reputational damage.

In addition, ~~many~~our ofoperations ~~the~~may ~~Company's~~be ~~mission-critical~~adversely ~~systems,~~impacted ~~which~~by ~~are~~a ~~those~~disruption in the infrastructure that ~~ensure~~supports ~~prompt~~us and ~~accurate~~the ~~processing~~communities ofin ~~securities~~which ~~transactions,~~we are ~~external~~located. ~~These~~This may include ~~systems~~a disruption ~~through~~involving ~~which~~electrical, ~~the~~communications, ~~Company~~transportation ~~clears~~or ~~its~~other ~~customers~~services ~~securities~~used ~~transactions~~by ~~and~~us ~~our~~or ~~contracts~~third ~~with~~parties, ~~these~~whether ~~clearing~~due ~~firms~~to ~~provide~~fire, ~~that~~other ~~they~~natural ~~also~~disaster, ~~maintain~~power aor ~~business~~communications ~~continuity~~failure, ~~plan~~act of terrorism or war or otherwise.

~~The~~Our ~~Company~~operations ~~reviews~~also rely on the ~~BCP~~secure atprocessing, ~~least~~storage ~~annually~~and transmission of confidential and ~~updates~~other itinformation ~~whenever~~in ~~there~~our iscomputer asystems ~~material~~and ~~change~~networks. Although we take protective measures and endeavor to modify them as circumstances warrant, our computer systems, software and networks may be vulnerable to unauthorized access, computer viruses or other malicious code and other events that could have a security impact. If one or more of such events occur, this could potentially jeopardize information processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in our operations. We may be required to expend additional resources to modify our protective measures or to investigate and remediate vulnerabilities or other exposures, ~~structure~~and we may be subject to litigation and /financial losses that are either not insured against or ~~business~~not fully covered through any insurance maintained by us.

Moreover, we ~~Available~~have ~~Information~~ experienced a dramatic decline in personnel levels in 2013 as a result of exiting our previous business lines. This has included terminating many administrative personnel in accounting, regulatory compliance, legal, information technology and other functions. Without some degree of personnel redundancy, we are more exposed to business disruptions and potential liabilities resulting from unexpected departures of personnel.

~~The~~ Our ~~Company~~exposure ~~files~~to ~~with~~legal ~~the~~liability ~~SEC~~is ~~current,~~significant. ~~annual~~Damages ~~and~~that ~~quarterly~~we ~~reports,~~may ~~proxy~~be ~~statements and other information as~~ required byto ~~the Securities~~pay ~~Exchange~~could ~~Act~~materially ofadversely ~~1934,~~affect asour ~~amended~~financial ~~(the~~position ~~"Exchange Act"). You may read~~ and/or ~~copy~~our ~~any~~results ~~document~~of operations. Due weto ~~file with~~ the ~~SEC~~nature atof the ~~SEC~~Company's ~~Public~~previous ~~Reference~~business ~~Room~~operations, ~~located~~the atCompany ~~100 F~~and ~~Street,~~its ~~N.E., Washington,~~subsidiaries DChave ~~20549.~~been ~~Information~~exposed onto ~~the~~risks ~~operation~~associated ofwith ~~the~~a ~~Public~~variety of ~~Reference~~legal ~~Room~~proceedings ~~may~~and beclaims. ~~obtained~~These byinclude ~~calling~~litigations, ~~the~~arbitrations ~~SEC~~and atother ~~1-800-SEC-0330.~~proceedings Ininitiated ~~addition,~~by ~~the~~private ~~SEC~~parties ~~maintains an~~and ~~internet~~arising ~~website~~from atunderwriting, ~~www.sec.gov~~financial ~~from~~advisory, ~~which~~securities ~~interested~~trading ~~persons~~or other ~~can~~transactional ~~electronically~~activities, ~~access~~client ~~the~~account ~~Company's~~activities, ~~SEC~~mortgage ~~filings.~~lending,

The Company will make available free of charge, through its internet site www.gleacher.com, its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and other information. These filings and information will become available as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.

The Company also makes available, on the Corporate Governance page of its website, (i) its Corporate Governance Guidelines, (ii) its Code of Business Conduct and Ethics, (iii) the charters of the Audit, Executive Compensation, and Directors and Corporate Governance Committees of its Board of Directors, and (iv) its Procedures for Reporting Violations of Compliance Standards. These documents are also available in print without charge to any person who requests them by writing or telephoning: Gleacher & Company, Inc., 1290 Avenue of the Americas, New York, NY 10104, U.S.A., Attn: Investor Relations, telephone number (212) 273-7100.

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employment matters and stockholder claims. Third parties who assert claims may do so for monetary damages that are substantial, particularly relative to the Company's financial position. These ~~Item 1A~~proceedings and claims typically involve associated legal costs incurred by the Company in connection with defending against these matters, which could be significant. ~~Risk~~ ~~Factors~~ In recent years, the volume of claims and amount of damages sought in litigation and regulatory proceedings against financial institutions have been increasing. We have been in the past, and are currently, subject to a variety of litigation, most of which we consider to be routine. Risks inherent in our prior business activities include potential liability under securities, mortgage lending or other laws. We are also at risk for employment-based claims alleging discrimination, harassment, wrongful discharge or breach of an employment agreement or other contractual arrangement, among other things, and seeking recoupment of compensation claimed to be owed (whether for cash or forfeited equity awards), and other damages, including demands for payment by each of our former Chief Executive Officer and former Chief Operating Officer for payments under their retention plan agreements, as described below. These risks often may be difficult to assess or quantify, and their existence and magnitude often remain unknown for substantial periods of time.

~~Our~~In August ~~business~~2012, the Company adopted the Senior Management Compensation and ~~operations~~Retention ~~face~~Plan a("Retention ~~variety~~Plan"). ofOur ~~serious~~former ~~risks~~Chief Executive Officer and ~~uncertainties.~~former ~~You~~Chief ~~should~~Operating ~~carefully~~Officer, ~~consider~~each of whom had entered into an agreement with the ~~risk~~Company ~~factors~~under ~~described~~the ~~below~~Retention ~~and~~Plan, inwere ~~our~~terminated ~~other~~as ~~public~~employees ~~reports.~~by Ifthe ~~any~~Company in May 2013. Each of ~~the~~them ~~following~~has ~~risks~~made ~~actually~~a ~~occur,~~demand orfor ifpayment ~~our~~of ~~underlying~~severance payments ~~assumptions~~under ~~prove~~certain to"change bein ~~incorrect~~control" provisions in his respective retention plan agreement, ~~our~~and ~~actual~~following ~~results~~the ~~may~~Company's ~~vary~~rejection ~~from~~of their demands, commenced an arbitration proceeding on ~~what~~September 17, we2013 ~~projected~~before ~~and~~FINRA ~~our~~seeking ~~financial~~money ~~condition~~damages orin ~~results~~an approximate amount of ~~operations~~$7.9 million, ~~could~~vesting beof ~~materially~~unvested equity awards and ~~adversely~~other ~~affected.~~relief, ~~These~~all ~~risk~~of ~~factors~~which they claim are ~~intended~~due toas ~~highlight~~a result ~~factors~~of their respective terminations. The Company has determined that ~~may~~no ~~affect~~severance ~~our~~payments ~~business, financial~~or ~~condition~~other ~~and~~benefits ~~results~~based ofupon ~~operations~~a ~~and~~"Change ~~are~~in ~~not~~Control" ~~meant~~(as defined in the applicable agreements) are due to these beformer anofficers ~~exhaustive~~inasmuch ~~discussion~~as the Company has concluded that no "Change in Control" has occurred. ~~Additional~~We ~~risks~~believe ~~and~~that ~~uncertainties~~these ofindividuals' ~~which~~claims wethat a Change in Control has occurred are ~~currently~~without ~~unaware~~merit. A orFINRA ~~that~~hearing weof the matter is currently ~~believe~~expected to ~~be immaterial~~occur ~~may~~in ~~also~~the ~~adversely~~summer ~~affect~~of us2014.

WePursuant to ~~have~~his ~~organized~~employment ~~the~~agreement, ~~risk~~in ~~factor~~the ~~discussion~~absence ~~below~~of ~~around~~a ~~certain~~Change ~~categories~~in Control, ~~although~~Mr. Hughes ~~there~~would ishave ~~some~~been ~~overlap~~entitled ofto ~~specific~~a ~~risk~~severance ~~factor~~payment ~~disclosure~~of ~~between~~$750,000 (not accrued at ~~categories.~~December 31, ~~The~~2013), ~~order~~and ofpursuant ~~the~~to ~~categories~~his ~~set~~Restricted ~~forth~~Stock ~~below~~Award Agreement, ~~and~~Mr. Griff ~~the~~would ~~order~~have been entitled to vesting of ~~particular~~20,833 ~~risk~~unvested ~~factors~~shares ~~within~~of ~~each~~restricted ~~category~~stock, issubject ~~not~~in ~~necessarily~~each case ~~indicative~~to of the ~~likelihood~~execution ofand ~~the~~delivery ~~occurrence~~within ofa ~~any~~specified oftime ~~the risks~~period ~~described~~(and ~~below~~non-revocation) orof ~~the~~a ~~magnitude~~release of claims against the ~~effect~~Company onand uscontinued incompliance ~~the~~with ~~event~~certain ~~any~~restrictive ~~such~~covenants. ~~risks~~These conditions ~~should~~were ~~occur~~not satisfied.

No amounts ~~Risks~~in ~~Specific~~respect of Messrs. Hughes' and Griff's claims have been accrued as of December 31, 2013, and we consider all unvested equity awards previously held by them to have ~~our~~been ~~Company~~ forfeited.

~~Recent~~ Our previous ~~developments~~activities ~~have~~as ~~adversely~~underwriter ~~affected~~on ~~our~~underwritings ~~relations~~or ~~with~~as ~~customers~~advisor ~~and~~for ~~employees,~~mergers and ~~relations~~acquisitions ~~may worsen. We have experienced several events in the recent past that have adversely affected relations with both our clients~~ and ~~our~~other ~~employees.~~transactions Asinvolved ~~discussed~~complex ~~above~~analysis ~~under Item 1, "Business—Overview," uncertainties regarding the implications of our net losses~~ and ~~management and employee turnover have been aggravated by~~ the ~~absence~~exercise of ~~a strategic transaction~~professional judgment, ~~the~~including ~~departure~~rendering of"fairness ~~Mr. Gleacher,~~opinions" ~~the departures of key personnel and a prospective turnover on our Board, resulting~~ in ~~further~~connection ~~questions~~with ~~regarding~~mergers ~~the stability~~ and ~~strategic~~other ~~direction of the Company~~transactions. ~~For~~Those ~~example,~~activities amay ~~number of our clients~~ have ~~reduced~~subjected ~~or suspended trading operations with~~ us. ~~Moreover,~~to ~~at least in part because of~~ the ~~perceived~~risk ~~instability~~ of ~~our~~significant ~~business,~~legal ~~new~~liabilities ~~investment banking mandates have dwindled. Employee morale has also been weakened. These uncertainties may exacerbate themselves by causing additional employees~~ to ~~resign~~our ~~or additional customers to reduce or suspend trading activities with us. The Company's ability to~~clients ~~recruit new personnel, build new or strengthen existing customer relations~~ and ~~generally~~aggrieved ~~conduct~~third ~~business are also greatly impaired by these circumstances~~parties, ~~which~~including ~~could~~stockholders ~~result in further significant declines in the level~~ of ~~the~~our ~~Company's~~clients ~~business~~who ~~operations~~could ~~despite~~bring ~~the~~securities ~~efforts~~class ofaction ~~management~~lawsuits toagainst ~~restore confidence and recruit personnel~~us.

~~We have~~ As a ~~history~~result of ~~losses and may not return to profitability in~~ the ~~near~~foregoing ~~future~~factors, orwe ~~at all. We~~ have ~~incurred losses~~ in ~~recent years, including net losses of approximately $77.7 million, $82.1 million and $20.6 million for~~ the ~~years ended December 31~~past, ~~2012, 2011~~ and ~~2010,~~are ~~respectively.~~reasonably ~~Moreover,~~likely ~~the~~to ~~recent events described above have resulted~~ in athe ~~further~~future, ~~decline~~incur insignificant ~~our~~legal ~~business operations~~ and ~~resulting~~other ~~revenue.~~expenses ~~This decline will result~~ in ~~significantly~~defending ~~greater~~against ~~losses~~litigation ~~than~~and ~~we had previously anticipated. We~~may ~~cannot predict with certainty when or if we will~~ be ~~able~~required to ~~reduce~~pay orsubstantial ~~reverse~~damages ~~these~~for ~~losses~~settlements and ~~return~~adverse ~~to profitable operations~~judgments. IfSubstantial welegal ~~are~~liability ~~not~~or ~~successful~~significant inregulatory ~~eliminating~~action ~~our~~against ~~recurring~~us ~~losses~~could ~~and achieving~~have ~~profitable operations, or are not able to consummate~~ a ~~strategic~~material ~~transaction,~~adverse weeffect ~~would~~on ~~need to wind down~~ our ~~business and, ultimately, cease operations. There can be no assurance that we~~ ~~will~~financial beposition ~~able to reduce~~ or ~~reverse~~results ~~our~~of ~~operating losses or consummate a strategic transaction~~operations.

~~Our ability to hire and retain our senior professionals is critical to the success of our business. In order to operate our~~ See ~~business~~also ~~successfully~~Part II, ~~we rely heavily on key professionals. Their personal reputation~~Item 1, ~~judgment,~~"Legal ~~business generation capabilities and project execution skills are a critical element in obtaining and executing client engagements~~Proceedings." Any loss of professionals, particularly key senior professionals or groups of related professionals, could impair our ability to secure or successfully complete engagements, result in loss of sales and trading business, materially and adversely affect our revenues and make it more difficult to operate profitably.

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In the past, we have lost investment banking, brokerage, research, and other senior professionals and executives. For example, in February 2013, approximately 20 professionals previously employed in our Credit Products division resigned and began working for a competitor. We ~~also~~may ~~experienced~~be ~~approximately~~required 70to ~~departures~~register inunder ~~our~~the ~~MBS &~~Investment ~~Rates~~Company ~~division~~Act ~~since~~of ~~April 2012~~1940, which ~~were subsequently~~could ~~replaced~~increase by the ~~hiring~~regulatory ofburden ~~approximately~~on 50us ~~professionals.~~and Incould ~~addition,~~negatively ~~over~~affect the ~~past~~price ~~three~~and ~~years,~~trading ~~we have experienced significant turnover~~ of ~~senior management, including multiple chief~~our ~~executive~~securities. We ~~and~~may ~~chief~~be ~~financial~~required ~~officers,~~to asregister ~~well~~ as ~~the~~an ~~heads~~investment ofcompany ~~our~~under ~~divisions. The several events in~~ the ~~recent~~Investment ~~past~~Company ~~discussed~~Act ~~above~~of ~~under~~1940 ~~Item 1,~~(the "~~Business—Overview~~40 Act") ~~have~~and ~~weakened employee~~analogous ~~morale,~~state ~~which~~law. ~~may~~We ~~lead~~do not propose to, ~~additional~~nor ~~resignations.~~do ~~Such~~we ~~turnover~~hold ~~can~~ourselves ~~result,~~out ~~and~~as ~~has~~being ~~resulted,~~engaged inprimarily ~~disruptions and inefficiencies~~ in ~~our~~the business. Asof ~~a result~~investing, wereinvesting ~~have~~or ~~experienced~~trading ~~a significant decline~~ in ~~revenue in the first quarter of 2013~~securities, and weour ~~cannot~~Board ~~predict~~of ~~when,~~directors orhas ~~if,~~passed wea ~~will~~resolution ~~be able~~ to ~~reduce or reverse~~ this ~~decline in associated losses~~ effect. ~~Moreover~~Nevertheless, ~~this~~if ~~type~~we ofare ~~turnover forces~~required us to ~~commit~~register ~~greater~~as ~~amounts~~an ofinvestment ~~resources~~company, toeither ~~recruiting.~~immediately ~~These~~or ~~factors~~at ~~have~~some ~~adversely~~point ~~impacted~~in ~~our~~the ~~stock price~~future, ~~our~~there ~~client~~would ~~relationships,~~be ~~our~~an ~~business~~increased ~~and~~regulatory ~~operating~~burden ~~results,~~on ~~and~~us ~~may~~which ~~make~~would ~~recruiting~~negatively ~~for~~affect ~~future~~our ~~management~~financial ~~positions~~position ~~more~~and ~~difficult~~results of operations.

~~We also~~ Financial ~~encounter~~services ~~intense~~firms ~~competition~~have tobeen ~~recruit~~subject ~~qualified~~to ~~employees.~~increased ~~Companies~~scrutiny ~~with~~and ~~which~~enforcement weactivity ~~compete~~over ~~for~~the ~~employees~~last ~~include~~several ~~those~~years, inincreasing the ~~investment~~risk ~~banking~~of financial liability resulting from adverse regulatory actions. The financial services industry ashas ~~well~~experienced asincreased scrutiny and enforcement activity from ~~businesses~~ ~~outside~~a variety of regulators, including the ~~investment~~SEC, Commodity ~~banking~~Futures ~~industry~~Trading Commission, ~~such~~FINRA, asNYSE, ~~hedge~~NFA, ~~funds~~NASDAQ, ~~private~~HUD, ~~equity~~the ~~funds~~state securities commission and ~~venture~~state ~~capital~~attorneys ~~funds~~general. AtThis ~~any~~regulatory ~~time,~~environment ~~there~~has ~~could~~created beuncertainty awith ~~shortage~~respect to a number of ~~qualified~~transactions ~~personnel~~that ~~whom~~had wehistorically ~~could hire.~~been ~~Recent~~entered ~~adverse~~into ~~developments~~by financial services firms and ~~publicity~~that ~~involving~~were ~~the~~generally ~~Company~~believed ~~have~~to ~~made~~be ~~hiring~~permissible ~~particularly~~and ~~challenging~~appropriate. ~~These~~We ~~challenges~~ may ~~hinder~~be ~~our~~adversely ~~ability~~affected toby ~~expand~~changes in the interpretation or ~~cause~~enforcement aof ~~backlog~~existing inlaws ~~our~~and ~~ability~~rules ~~to conduct~~by ~~our~~these ~~business,~~governmental ~~including~~authorities ~~the~~and ~~handling~~self-regulatory oforganizations ~~investment~~relating ~~banking~~to ~~transactions~~our ~~and~~prior ~~the~~business ~~processing~~activities ofin ~~brokerage~~this ~~orders~~area.

~~Our~~ We are ~~financial~~also ~~results~~involved, ~~may~~from ~~fluctuate~~time ~~substantially~~to ~~from~~time, ~~period~~in toother ~~period~~reviews, ~~which~~investigations, ~~may~~examinations ~~impact~~and ~~our~~proceedings ~~stock~~(both ~~price. In~~formal ~~recent~~and ~~years,~~informal) ~~we have~~by ~~incurred~~governmental ~~losses~~ and ~~experienced~~self-regulatory ~~significant~~agencies ~~turnover~~regarding our prior business activities, including, among ~~our~~other ~~senior~~things, ~~management~~accounting and ~~business~~operational ~~leaders~~matters, certain of ~~our~~which ~~operating~~may ~~segments~~result in adverse judgments, settlements, fines, penalties, injunctions or other relief. Although no longer active, our broker-dealer subsidiaries are currently subject to both routine and unscheduled examinations and audits by FINRA while they remain registered as ~~well~~broker-dealers. These subsidiaries intend to submit Forms BDW to withdraw their registrations as abroker-dealers ~~number~~from ofthe ~~departures~~SEC, ~~generally~~self-regulatory organizations, ~~throughout~~and the ~~ranks~~states. ofAudits ~~our~~may result in any adverse findings ~~organization.~~by ~~Recently~~FINRA, asand ~~discussed~~we ~~under~~may ~~Item 1~~incur fines or other censure. The Company and its subsidiaries have received in the past, ~~"Business—Overview~~and while registered," wemay ~~have~~continue ~~experienced~~to ~~several~~receive ~~events~~in ~~that~~the ~~have~~future, ~~adversely~~inquiries ~~affected~~and ~~our~~subpoenas ~~business~~from the ~~operations~~SEC, FINRA, state securities regulators and ~~resulted~~other inself-regulatory aorganizations. The Company does not always know the purpose behind these communications or the status or target of any related ~~further~~investigation. ~~deterioration~~Some of ~~our~~these ~~financial~~communications ~~results.~~have, Wein ~~cannot~~the ~~predict~~past, ~~when~~resulted in disciplinary actions which have sometimes included monetary sanctions, and citations for regulatory deficiencies. Substantial legal liability or ~~if,~~regulatory action weagainst ~~will~~us bewould ~~able~~likely tohave ~~reduce~~material adverse financial effects or ~~reverse~~cause ~~this~~significant ~~decline~~reputational inharm to us, which could seriously harm our ~~results~~business prospects.

In ~~addition,~~ ~~variations~~connection inwith ~~our~~the ~~financial~~sale ~~results~~of ~~are~~substantially ~~also~~all ~~attributed~~of inthe ~~part~~ClearPoint's assets to ~~trading~~Homeward, ~~activity~~we ~~and~~became ~~the~~subject ~~fact~~to ~~that~~certain ~~our~~indemnification ~~investment~~provisions, ~~banking~~and ~~revenues~~retain ~~are~~the ~~typically~~risk ~~earned~~of ~~upon~~loan putbacks ~~the~~and ~~successful~~other ~~completion~~related ~~of a transaction~~matters, ~~the~~for ~~timing~~loans oforiginated ~~which~~by isClearPoint ~~uncertain~~existing ~~and~~prior ~~beyond~~to ~~our~~the ~~control.~~closing ~~Our~~of ~~business~~the isHomeward ~~highly~~Transaction. On ~~dependent~~February 14, on2013, ~~market~~the ~~conditions~~Company and certain ~~the~~of ~~interest~~its inaffiliates, ~~the~~including ~~market~~ClearPoint, ~~for~~entered ~~the~~into ~~products and~~an ~~services~~Asset wePurchase ~~trade~~Agreement ~~and~~("Purchase ~~offer, as~~Agreement") ~~well~~with asHomeward. ~~the~~This ~~decisions~~transaction ~~and~~closed ~~actions~~on ofFebruary 22, ~~our~~2013. ~~clients~~Pursuant ~~and~~to ~~interested~~the Purchase ~~third~~Agreement, ~~parties.~~Homeward ~~This~~acquired ~~risk~~substantially ~~may~~all beof ~~intensified~~ClearPoint's byassets ~~focusing~~and onassumed ~~companies~~certain inliabilities ~~specific~~of ~~industries or sectors~~ClearPoint. ~~For~~The ~~example,~~Purchase ~~our~~Agreement ~~investment banking~~provides ~~segment~~for ~~focuses~~customary onindemnification ~~companies~~provisions. In inconnection with the ~~real~~indemnification ~~estate~~provisions, ~~leveraged~~ClearPoint ~~finance,~~is ~~financial~~required ~~services,~~to ~~aerospace~~maintain ~~and~~an ~~defense,~~escrow ~~technology,~~account ~~media~~of ~~and~~$5.0 million ~~telecom,~~for ~~paper~~a ~~and~~three-year ~~packaging,~~period ~~general~~following ~~industrial~~the closing date, and ~~financial~~ ~~sponsor~~the ~~coverage~~Parent ~~industries.~~has also ~~Concentrating~~provided infor a ~~specific~~guaranty ~~sector~~of orClearPoint's ~~industry~~indemnification ~~exposes~~obligations us to ~~volatility~~Homeward, inup ~~that~~to ~~area~~a ~~that~~maximum ~~may~~of ~~not~~an ~~affect~~additional ~~the~~$2.5 million. ~~broader~~Indemnity ~~markets.~~claims, Inif ~~addition~~any, ~~our~~will ~~results~~be ~~of operations~~paid ~~experience~~first ~~some~~from ~~seasonality~~the escrow amount, ~~with~~and then, to the ~~third~~extent ~~quarter~~necessary, ~~typically~~drawn ~~being~~upon ~~less~~the ~~robust~~guaranty. ~~than~~If ~~other~~during ~~quarters,~~the ~~because~~three-year ofperiod ~~typical~~following ~~summer~~the ~~month~~closing ~~activity~~date, ~~slow-down~~sums held in ~~July~~the ~~and~~escrow ~~August~~account ~~of each~~are ~~year~~not ~~for~~available ~~our~~to ~~sales~~satisfy indemnification ~~and~~claims, ~~trading~~indemnity ~~operations,~~claims asof ~~well~~Homeward aswill ~~the~~be ~~impact~~paid ofunder the ~~holiday~~guaranty ~~season~~up onto ~~fourth~~a ~~quarter~~maximum ~~operating~~of ~~results.~~

Our business is subject to significant credit risk, and the financial difficulty of another prominent financial institution could adversely affect financial markets. In the normal course of our businesses, we are involved in the execution and settlement of various customer transactions and financing of various principal securities transactions. These activities are transacted on a cash or delivery-versus-payment basis and are subject to the risk of counterparty or customer nonperformance. Although transactions are generally collateralized by the underlying security or other securities, we still face the risks associated with changes in the market value of securities that we may be obligated to purchase or have

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~~purchased~~$7.5 million. inAny ~~principal~~amounts orpaid ~~riskless~~under ~~principal~~the ~~trades~~guaranty ~~where~~will abe ~~counterparty~~released ~~or customer fails~~ to ~~perform. We may also incur credit risk in our derivative transactions to~~ the ~~extent~~Company ~~such~~from ~~transactions result in uncollateralized credit exposure to our counterparties. We seek to control~~ the ~~risk~~escrow ~~associated~~account ~~with~~on ~~these~~a ~~transactions~~dollar-for-dollar bybasis ~~establishing~~(assuming ~~and~~funds ~~periodically~~are ~~monitoring credit limits, collateral and transaction levels~~available).

~~Our~~ Outstanding claims ~~assets include illiquid investments in private equity funds,~~ which weare ~~may~~expected ~~not~~to be ~~able~~paid tofrom ~~monetize in~~ the ~~near~~escrow ~~term~~account ~~or at all. We have made principal investments~~ in ~~private~~satisfaction ~~equity~~of ~~funds~~certain ~~and~~claims ~~may~~made ~~make~~by ~~additional~~Homeward ~~investments~~include in(i) losses ~~future~~incurred ~~funds. These investments are typically made~~ in ~~securities~~connection ~~that~~with ~~are~~two ~~not~~loan repurchase ~~publicly~~requests ~~traded~~(currently ~~and~~estimated ~~therefore are subject~~ to anbe ~~inherent~~less ~~liquidity~~than ~~risk. At December 31, 2012,~~ $200.41 million) ofand ~~our total assets consisted of relatively illiquid private equity investments.~~ (~~Refer to Note~~ii) ~~10 within~~reimbursements ~~the footnotes to the consolidated financial statements contained in Item 8~~ of ~~this~~premiums ~~Annual~~received ~~Report on Form 10-K.) Our interests~~ in ~~these~~connection ~~private~~with ~~equity~~certain ~~funds~~loans ~~are susceptible~~that torefinanced ~~changes in the financial condition or prospects of the portfolio companies in which investments are made, changes in national or international economic conditions or changes in laws,~~within ~~regulations,~~180 days ~~fiscal~~following ~~policies or political conditions of countries in which investments are made. It takes a substantial period of time to identify attractive investment opportunities and then to realize~~ the ~~cash~~date ~~value~~ of ~~the~~purchase ~~investments~~by ~~through~~Homeward ~~resale.~~(approximately ~~Even if a private equity investment proves to be profitable, it may be several years or longer before any profits can be realized in cash~~$0. If we choose or are required to accelerate an exit in one or more of these investments, we would likely realize substantially less in proceeds than if we had sold any such investment at a more opportune time1 million).

We In addition ~~may be unable~~ to ~~fully capture~~ the ~~expected~~indemnification ~~value~~provisions ~~from~~related ~~acquisitions~~to ~~and~~the ~~investments~~Homeward ~~and~~Transaction, ~~personnel. To~~in the ~~extent~~ordinary ~~that~~course weof ~~make acquisitions or enter into~~ business ~~combinations~~, weClearPoint ~~face~~also ~~numerous~~indemnified ~~risks~~its ~~and~~other ~~uncertainties. We might not be able to complete an announced business combination~~counterparties, ~~and even if completed the acquisition or combination~~against ~~might~~potential ~~not~~losses ~~provide~~incurred ~~sufficient~~by ~~earnings~~such ~~power~~parties orincluding ~~other~~under ~~value to justify~~ its ~~cost.~~warehouse ~~Moreover,~~line weagreements ~~could experience expensive~~ and ~~time-consuming~~loan ~~problems~~sale ~~integrating~~agreements ~~the~~related ~~relevant~~to ~~operations, accounting~~originated ~~and~~mortgage ~~data~~loans ~~processing~~since ~~systems,~~inception ~~management~~(June ~~controls,~~2008). ~~relationships~~Subsequent ~~with~~to ~~clients and business partners and other systems and operations of~~ the ~~acquired or combined business. In addition,~~ ~~acquisitions~~Homeward ~~may involve the issuance of shares of our common stock~~Transaction, ~~which~~ClearPoint ~~would~~paid ~~dilute~~approximately ~~our stockholders' ownership of our firm, or we may borrow funds or use cash on hand, which may impact our funding and liquidity~~$0.1 million ~~Furthermore,~~in ~~acquisitions~~satisfaction ~~entail a number~~ of ~~risks~~its orindemnification ~~other~~obligations ~~problems,~~under ~~including~~loan ~~the~~sale ~~inability~~agreements torelated ~~maintain key pre-acquisition business relationships, increased operating costs, exposure~~ to ~~unanticipated~~losses ~~liabilities~~incurred ~~and difficulties~~ in ~~realizing~~connection ~~projected~~with ~~efficiencies, synergies and cost savings. If we are not able to integrate acquisitions successfully, our~~two ~~results~~repurchase ofrequests ~~operations may be materially and adversely affected. Also, expansions or acquisitions divert our management's attention~~ from ~~our~~counterparties other ~~operations~~than Homeward.

~~Our~~ClearPoint maintains ~~trading~~a inreserve ~~mortgage~~for ~~backed~~the ~~securities~~previously ~~exposes~~discussed usloan torepurchase ~~prepayment risk. The majority of our securities owned are related to our MBS & Rates division~~ and ~~are~~indemnification ~~primarily comprised of agency mortgage backed securities~~claims. ~~Our~~At ~~holdings in these securities are subject to prepayment risk~~December 31, ~~which~~2013 ~~have resulted~~ and ~~may~~December 31, ~~continue~~2012 tothis ~~result~~reserve ~~in losses or~~was ~~lower~~approximately ~~returns than originally anticipated~~$0.4 million ~~The low interest rate environment~~ and ~~government initiatives to help underwater homeowners refinance their mortgages subject us to prepayment risk~~$0. ~~In addition~~4 million, ~~other industry developments such as delinquent loan buy-backs at par~~respectively, orand ~~modifications~~is toincluded ~~mortgage~~within ~~loans,~~Accounts ~~including~~payable ~~those~~and ~~that~~accrued ~~may~~expenses ~~reduce~~in the ~~principal~~Consolidated ~~balance~~Statements ~~owed,~~of ~~could~~Financial ~~have an adverse impact on our trading revenues~~Condition.

~~Certain~~Historical losses ofare ~~our~~not ~~businesses~~necessarily ~~focus~~indicative ~~principally on specific sectors~~ of ~~the~~losses ~~economy.~~which ~~Deterioration~~may inbe ~~the~~incurred ~~business environment~~ in ~~these sectors generally or decline in~~ the ~~market for securities of companies within these sectors could materially and adversely affect our business~~future. ~~Our~~ investment banking business focuses principally on the real estate, leveraged finance, financial services, aerospace and defense, technology, media and telecom, paper and packaging, general industrial and financial sponsor coverage industries. Volatility in the business environment in these sectors, or in the market for securities of companies within these sectors, could substantially affect our financial results and the market value of our

Our subsidiaries, on which we depend to fund our obligations, are subject to restrictions and requirements that could hinder their ability to conduct operations and make payments to us. We depend on dividends, distributions and other payments from our subsidiaries to fund our obligations. Regulatory and other legal restrictions limit our ability to transfer funds freely, either to or from our subsidiaries. In particular, our broker-dealer subsidiaries are subject to laws and regulations that authorize regulatory bodies to monitor and/or restrict the flow of funds to the parent holding company, or that prohibit such transfers altogether in certain circumstances. Gleacher Securities recently terminated its memberships associated with its prior self-clearing activities and is therefore no longer subject to FINRA Rule 4110(c)(2). Under this rule, Gleacher Securities was unable to make an unsecured advance or loan, pay a dividend or otherwise effect a similar distribution to the Parent and/or its affiliates in any rolling 35-calendar-day period, on a net basis, in excess of 10% of their "excess net capital," as defined under Rule 15c3-1 of the Exchange Act, without prior written FINRA approval. However, in particular, as registered broker-dealers, Gleacher Securities and Gleacher Partners must provide notice to FINRA and the SEC two days prior to any distributions that exceed in the aggregate in any 30 calendar day period, 30% of the broker-dealer's excess net capital. These laws and regulations may hinder our ability to access funds that we may need to make payments on our obligations. As previously mentioned, our broker-dealer subsidiaries intend to submit Forms BDW to withdraw their registrations as broker-dealers from the SEC, self-regulatory organizations, and the states. Withdrawal from registration becomes effective 60 days after the filing of Form BDW, unless a firm consents to a longer period or the SEC institutes a proceeding, delays or shortens the date of effectiveness, or otherwise imposes terms or conditions upon such withdrawal. If and when the withdrawals become effective, the rules relating to the withdrawal of capital will no longer apply. At December 31, 2013, our regulated broker-dealer subsidiaries held cash of approximately $32.1 million (of which $31.0 million was held at Gleacher Securities).

In addition, because our interests in the Company's subsidiaries consist of equity interests, our rights may be subordinated to the claims of the creditors of these subsidiaries. Also, our broker-dealer subsidiaries are subject to the net capital requirements of the SEC and various self-regulatory organizations of which they are members. These requirements typically specify the minimum level of

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~~common~~net ~~stock.~~capital ~~The~~a ~~market for securities in each of our target sectors may also be subject to industry~~broker-~~specific~~dealer ~~risks.~~must ~~Underwriting transactions, strategic advisory engagements and trading activities in our target sectors represent a significant portion of our business~~maintain. ~~This~~Any ~~concentration~~failure ~~exposes us~~ to ~~the~~comply ~~risk~~with ofsuch ~~substantial~~regulatory ~~declines~~requirements ~~in revenues in the event of downturns in these sectors of the economy. Any future downturns in our target sectors~~ could ~~materially~~impair ~~and~~their ~~adversely~~ability ~~affect~~to ~~our~~conduct ~~business and results of~~ operations.

Our principal trading and investments expose us to risk of loss. We maintain securities trading positions primarily in our MBS & Rates division and may incur significant losses from these positions due to market fluctuations. For example, to the extent that we own securities, a downturn in the value of those securities would result in losses. Conversely, to the extent that we have sold securities we do not own, an upturn in value could expose us to potentially unlimited losses. We seek to minimize market risk associated with these positions by trading out of them as quickly as possible and/or through hedging strategies. Certain positions, however, may be held by us for longer periods of time while we are seeking buyers for those positions, thereby exposing us to greater risk of loss. The risk of loss is accentuated, both in terms of likelihood and amount, in times of market volatility such as experienced over the past few years. In addition, our hedging strategies may not successfully mitigate losses in our principal positions. If our hedging strategies are not successful, we could suffer significant losses.

Our risk management policies and procedures may leave us exposed to unidentified or unanticipated financial risk. Our risk management strategies and techniques may not be fully effective in mitigating our risk exposure in all market environments or against all types of risk.

Our risk-hedging strategies also expose us to the risk that counterparties that owe us money, securities or other assets will not perform on their obligations. These counterparties may default on their obligations to us due to bankruptcy, lack of liquidity, operational failure, breach of contract or other reasons. Although we review credit exposures to specific clients and counterparties and to specific industries and regions that we believe may present credit concerns, default risk may arise from events or circumstances that are difficult to detect or foresee. In addition, concerns about, or a default by, one institution could lead to significant liquidity problems, losses or defaults by other institutions, which in turn could adversely affect us. If any of the strategies we utilize to manage our exposure to risk are not effective, we may incur significant losses.

Our operations and infrastructure may malfunction or fail. Our businesses are highly dependent on our ability to process, on a daily basis, a large number of transactions across diverse markets, and the transactions we process have become increasingly complex and involve many different types of securities with a wide variety of terms. Our financial, accounting or other data processing systems may fail to operate properly or become disabled as a result of events that are wholly or partially beyond our control, including a disruption of electrical or communications services or our inability to occupy one or more of our buildings. The inability of our systems to accommodate an increasing volume of transactions could also constrain our ability to expand our businesses. If any of these systems do not operate properly or are disabled or if there are other shortcomings or failures in our internal processes, people or systems, we could suffer impairment to our liquidity, financial loss, a disruption of our businesses, liability to clients, regulatory intervention or reputational damage.

We also face the risk of operational failure or termination of any of the clearing agents, exchanges, clearing houses or other financial intermediaries we use to facilitate our securities transactions. Any such failure or termination could adversely affect our ability to execute transactions and to manage our exposure to risk.

In addition, our ability to conduct business may be adversely impacted by a disruption in the infrastructure that supports our businesses and the communities in which we are located. This may include a disruption involving electrical, communications, transportation or other services used by us or third parties, including our customers, with which we conduct business, whether due to fire, other

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natural disaster, power or communications failure, act of terrorism or war or otherwise. Nearly all of our employees in our primary locations, including New York, NY and Roseland, NJ, work in close proximity to each other. If a disruption occurs in one location and our employees in that location are unable to communicate with or travel to other locations, our ability to service and interact with our clients may suffer and we may not be able to implement successfully contingency plans that depend on communication or travel.

Our operations also rely on the secure processing, storage and transmission of confidential and other information in our computer systems and networks. Although we take protective measures and endeavor to modify them as circumstances warrant, our computer systems, software and networks may be vulnerable to unauthorized access, computer viruses or other malicious code and other events that could have a security impact. If one or more of such events occur, this could potentially jeopardize our clients' or our counterparties' confidential and other information processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in the operations of our clients, our counterparties or third parties. We may be required to expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities or other exposures, and we may be subject to litigation and financial losses that are either not insured against or not fully covered through any insurance maintained by us.

We seek to manage these risks through our Business Continuity Plan. See Item 1 under the heading "Business Continuity" for additional information.

Our exposure to legal liability is significant. Damages that we may be required to pay and the reputational harm that could result from legal action against us could materially adversely affect our businesses. Due to the nature of the Company's business, the Company and its subsidiaries are exposed to risks associated with a variety of legal proceedings and claims. These include litigations, arbitrations and other proceedings initiated by private parties and arising from underwriting, financial advisory, securities trading or other transactional activities, client account activities, mortgage lending, employment matters and stockholder claims. Third parties who assert claims may do so for monetary damages that are substantial, particularly relative to the Company's financial position. These proceedings and claims typically involve associated legal costs incurred by the Company in connection with defending against these matters, which could be significant. We face significant legal risks in our businesses and, in recent years, the volume of claims and amount of damages sought in litigation and regulatory proceedings against financial institutions have been increasing. We have been in the past, and are currently, subject to a variety of litigation arising from our business, most of which we consider to be routine. Risks in our business include potential liability under securities, mortgage lending or other laws. We are also subject to claims by employees alleging discrimination, harassment or wrongful discharge, among other things, and seeking recoupment of compensation claimed to be owed (whether for cash or forfeited equity awards), and other damages. These risks often may be difficult to assess or quantify, and their existence and magnitude often remain unknown for substantial periods of time.

As a brokerage and investment banking firm, we depend on our reputation to help attract and retain clients. As a result, an unsatisfied client could be more damaging to us than if we operated in other industries. Moreover, our role as underwriter on underwritings or as advisor for mergers and acquisitions and other transactions involves complex analysis and the exercise of professional judgment, including rendering "fairness opinions" in connection with mergers and other transactions. Therefore, our activities may subject us to the risk of significant legal liabilities to our clients and aggrieved third parties, including stockholders of our clients who could bring securities class action lawsuits against us. As a result, we may incur significant legal and other expenses in defending against litigation and may be required to pay substantial damages for settlements and adverse judgments. Substantial legal liability or significant regulatory action against us could have a material adverse effect on our results of operations or cause significant reputational harm to us, which could seriously harm our business and prospects.

See also—Item 3, "Legal Proceedings."

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Risks Common to Companies in the Financial Services Industry

Operating in the financial services industry exposes us to particular risks unlike those attendant to operating in other segments of the economy. We summarize the most significant of these risks below.

Difficult market conditions have adversely affected and may continue to adversely affect our business in many ways. Our businesses, by their nature, do not produce predictable earnings and are materially affected by conditions in the financial markets and economic and geopolitical conditions generally, both in the U.S. and around the world. Ongoing events relating to the European debt crisis and the budget debates in Congress, combined with continuing uncertainties about the global economic outlook, have led to volatile global markets and challenging economic conditions. Market volatility can lead to unanticipated, severe and rapid depreciation in asset values accompanied by a reduction in asset liquidity. Market uncertainty and unfavorable economic conditions may also cause clients to curtail their investment activities or even cease doing business. Such adverse conditions could also negatively affect our ability to retain our clients and attract new clients. It is impossible to predict the long-term impact of this market and economic environment, whether it will persist or recur, or the extent to which our markets, products and businesses will be adversely affected. In addition, the passing and implementation of Dodd-Frank has and will continue to result in various programs, initiatives and actions being implemented in the U.S. and other markets in order to stabilize the markets, increase liquidity and restore investor confidence. It is unclear whether such initiatives will in fact be positive or negative for the financial markets over either the short or long-term.

If the economic recovery remains weak and uncertain, our operations, including sales and trading and investment banking, could be negatively impacted by a reduction of trading volumes, continued tightening of spreads, fewer completed investment banking transactions, a reduced backlog and decreased size of transactions, and our diminished role in these businesses, resulting in reduced principal transactions and investment banking revenues. In the event of extreme market events, such as a recurrence of the global credit crisis, we could incur substantial loss on the value of our securities due to market volatility.

Our business is also significantly affected by interest rates, which can change suddenly and unexpectedly. The Federal Reserve (the "Fed") continues to implement programs designed to further stimulate the economy by keeping interest rates low. However, the long-term impact of such programs, and the extent to which the Fed will continue these programs, remains uncertain. These programs, as well as other possible changes to the Fed's monetary policy, could significantly impact interest rates. An increase in interest rates could decrease the level of customer activity, increase our cost of funding, likely decrease new issues in the debt capital markets, decrease the value of securities owned by us and create a business environment in which mergers and acquisitions activity decreases.

Any or all of these conditions could adversely affect our financial condition and results of operations.

The financial services industry and the markets in which we operate are subject to systemic risk that could adversely affect our business and results. Participants in the financial services industry and markets increasingly are closely interrelated as a result of credit, trading, clearing, technology and other relationships. A significant adverse development with one participant (such as a bankruptcy or default) may spread to others and lead to significant concentrated or market-wide problems (such as defaults, liquidity problems or losses) for other participants, including the clearing organizations, clearing houses, banks, exchanges and other intermediaries with which we conduct business. This was evident during the credit crisis of 2008-2009, and the resulting events had a negative impact on many other industry participants. Dodd-Frank and other legislation, intended to prevent or minimize another financial crisis as a result of systemic risk, may not be effective in doing so. Systemic risk is inherently difficult to assess and quantify, and its form and magnitude can remain unknown for significant periods of time and could have a negative impact on us.

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The volume of anticipated investment banking transactions may differ from actual results. Our investment banking revenues are typically earned upon the completion of a transaction. In most cases, we receive little or no payment for investment banking engagements that are not successfully completed. Furthermore, the completion of investment banking transactions for which we have been engaged is uncertain and beyond our control. For example, a client's transaction may be delayed or terminated because of a failure to agree upon final terms with the counterparty, failure to obtain necessary regulatory consents or board or stockholder approvals, failure to secure necessary financing, adverse market conditions or unexpected financial or other problems in the client's or counterparty's business. If parties fail to complete a transaction on which we are advising or an offering in which we are participating, we earn little or no revenue but may incur significant expenses (for example, travel and legal expenses) associated with the transaction. Accordingly, our business is highly dependent on market conditions as well as the decisions and actions of our clients and third parties, many of which have no interest in, or are adverse to, the completion of a given transaction. The number of transactions for which we have been engaged is subject to change and is not necessarily indicative of future revenues.

Financing and advisory services engagements are singular in nature and do not generally provide for subsequent engagements. Even though we work to represent our clients at every stage of their lifecycle, we are typically retained on a short-term, engagement-by-engagement basis in connection with specific capital markets, mergers and acquisitions, or advisory engagements. As a result, high activity levels in any period are not necessarily predictive of continued high levels of activity in any subsequent period. If we are unable to generate a substantial number of new engagements and generate fees from the successful completion of those transactions, our business and results of operations will likely be adversely affected.

Pricing pressures may negatively impact the revenues and profitability of our brokerage business. In recent years, we have experienced pricing pressures on commissions and trading margins. The Dodd-Frank legislation may result in further pricing pressures and even lower margins. We believe that pricing pressures in these and other areas will continue as institutional investors continue to implement cost-reduction strategies, including reducing the number of brokerage firms they use, and some of our competitors seek to obtain market share by reducing fees, commissions, spreads or other margins.

Increases in capital commitments in our trading, underwriting and other businesses increases the potential for significant losses. Capital commitment needs in the capital markets industry may result in larger and more frequent commitments of capital by financial services firms in many of their activities. Relative to many of our competitors, we have limited access to additional capital, which could put us at a competitive disadvantage. As a result, we may be forced to commit greater percentages of capital, relative to our competitors, to facilitate our business activities.

Our underwriting activities may place our capital at risk. We may incur losses and be subject to reputational harm to the extent that, for any reason, we are unable to sell at anticipated price levels, securities we purchase as an underwriter. As an underwriter, we also are subject to heightened standards regarding liability for material misstatements or omissions in prospectuses and other offering documents relating to offerings we underwrite.

Increased competition, including from larger firms, may adversely affect our revenues and profitability. The brokerage and investment banking industries are intensely competitive, and we expect them to remain so. We compete directly with other investment firms, brokers and dealers, and commercial banks, many of which are much larger. In addition to competition from firms currently in the securities business, there has been increased competition from others offering financial services, including automated trading and other services based on technological innovations.

We compete on the basis of a number of factors, including client relationships, reputation, the abilities of our professionals, market focus and the relative quality and price of our services and

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products. We have experienced price competition in our MBS & Rates and Credit Products divisions, particularly in the form of compression in trading commissions and spreads. In addition, pricing and other competitive pressures in investment banking, have continued and could adversely affect our revenues. We will likely experience competitive pressures in these and other areas in the future, as competitors seek to obtain market share by competing on the basis of price.

Many of our competitors in the brokerage and investment banking industries have a broader range of products and services, greater financial and marketing resources, larger client bases, greater name recognition, more professionals to serve their clients' needs, greater global reach and more established relationships with clients than we have. These larger and better-capitalized competitors may be better able to respond to changes in the brokerage and investment banking industries, to compete for skilled professionals, to finance acquisitions, to fund internal growth and to compete for market share generally. They also have the ability to support investment banking with commercial banking, insurance and other financial services in an effort to gain market share, which has resulted, and could further result, in pricing pressure in our businesses. For example, many of our larger competitors have in the past provided bridge lending and equity participation and otherwise committed their own capital to facilitate transactions. The ability to provide financing is an important advantage for some of our larger competitors, and if this trend continues, it would adversely affect us competitively because we do not regularly provide such financing. Additionally, these broader, more robust investment banking and financial services platforms may be more appealing to investment banking professionals than our business, making it more difficult for us to recruit new employees and retain those we have.

If we are unable to compete effectively in our markets, our business, financial condition and results of operations will be adversely affected.

Financial services firms have been subject to increased scrutiny and enforcement activity over the last several years, increasing the risk of financial liability and reputational harm resulting from adverse regulatory actions. The financial services industry has experienced increased scrutiny and enforcement activity from a variety of regulators, including the SEC, Commodity Futures Trading Commission, FINRA, NYSE, NFA, NASDAQ, HUD, the state securities commission and state attorneys general. This regulatory environment has created uncertainty with respect to a number of transactions that had historically been entered into by financial services firms and that were generally believed to be permissible and appropriate. We may be adversely affected by changes in the interpretation or enforcement of existing laws and rules by these governmental authorities and self-regulatory organizations. We also may be adversely affected as a result of new or revised legislation or regulations imposed by Congress, individual state legislatures, the SEC, other U.S. or foreign governmental regulatory authorities or self-regulatory organizations that supervise the financial markets, such as the Dodd-Frank legislation, as well as proposals that have been made both domestically and internationally, including additional capital and liquidity requirements. For example, we could be fined, prohibited from engaging in some of our business activities or subject to limitations or conditions on our business activities. Moreover, penalties and fines sought by regulatory authorities have increased substantially over the last several years.

We are also involved, from time to time, in other reviews, investigations, examinations and proceedings (both formal and informal) by governmental and self-regulatory agencies regarding our business, including, among other things, accounting and operational matters, certain of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief. The Company's broker-dealer subsidiaries are subject to routine audits by FINRA and the NFA. If these audits result in any adverse findings by FINRA or the NFA, we may incur fines or other censure. In the ordinary course of business, the Company and its subsidiaries receive inquiries and subpoenas from the SEC, state securities regulators and self-regulatory organizations. The Company does not always know the purpose behind these communications or the status or target of any related investigation. The responses to these communications have in the past resulted in the Company and/or its subsidiaries

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being cited for regulatory deficiencies, although to date these communications have not had a material adverse effect on the Company's business. Substantial legal liability or significant regulatory action against us could have material adverse financial effects or cause significant reputational harm to us, which could seriously harm our business prospects.

In addition, financial services firms are subject to numerous conflicts or perceived conflicts of interests. The SEC and other federal and state regulators have increased their scrutiny of potential conflicts of interest. We have adopted various policies, controls and procedures to address or limit actual or perceived conflicts and regularly seek to review and update our policies, controls and procedures. However, appropriately dealing with conflicts of interest is complex and difficult, and our reputation could be damaged if we fail, or appear to fail, to deal appropriately with conflicts of interest. Our policies and procedures to address conflicts may also result in increased costs, additional operational personnel and increased regulatory risk. Failure to adhere to these policies and procedures may result in regulatory sanctions or client litigation.

Extensive regulation of public companies in the U.S. could reduce our revenues and otherwise adversely affect our business. Highly publicized financial scandals in past years have led to investor concerns over the integrity of the U.S. financial markets and have prompted Congress and various regulatory agencies to significantly expand corporate governance, internal control over financial reporting and public disclosure requirements. In addition, the Dodd-Frank legislation is leading to more regulation of both public companies and the financial services industry. Any new corporate governance rules may divert a company's attention away from capital markets/investment banking transactions, including securities offerings and acquisition and disposition transactions. These factors, in addition to adopted or proposed accounting and disclosure changes, may have an adverse effect on our business.

Our business and results of operations could be adversely affected by governmental fiscal and monetary policies. Our cost of funds for borrowing, investment activities and capital raising are affected by the fiscal and monetary policies of the U.S. and foreign governmental and banking authorities, changes to which are not within our control or wholly predictable. Such changes may also affect the value of the securities we hold.

Employee misconduct could harm us and is difficult to detect and deter. There have been a number of highly publicized cases involving fraud or other misconduct by employees in the financial services industry in recent years. We also are exposed to the risk of employee misconduct. For example, misconduct by employees could involve the improper use or disclosure of confidential information or inappropriate sales techniques or engaging in unauthorized trading or other business. Any of these events could result in regulatory sanctions and serious reputational or financial harm. It is not always possible to deter employee misconduct, and the precautions we take to detect and prevent this activity may not be fully effective.

Risks Relating to our Liquidity and Access to Capital

The financial services industry is characterized by transacting in very large sums of money. It is typical for companies like ours to finance their operations in part through credit lines and other short-term financing arrangements. This dynamic gives rise to serious risks in the event that we or another participant in this industry loses a source of financing or otherwise is required to satisfy a substantial payment obligation at a time when adequate capital is not otherwise available to it. The risk factors below describe many of the different varieties of this risk, some specific to us and others facing most or all participants in the financial services industry. For more information, see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources" herein for more information.

Limitations on our access to capital could impair our liquidity and our ability to conduct our businesses. Liquidity, or ready access to funds, is essential to financial services firms. Recent failures of financial

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institutions have often been directly attributable to a very sudden and unexpected need for large amounts of cash, which was not available. Liquidity is of particular importance to our trading business, and perceived liquidity issues may affect the willingness of our clients and counterparties to engage in brokerage transactions with us. Our liquidity could be impaired due to circumstances that we are unable to control, such as a general market disruption, negative views about the financial services industry generally or an operational problem that affects our trading clients, third parties or us. We currently do not have committed sources of borrowing through bank financing arrangements. We rely on cash and assets that have historically traded in readily active markets, such as our securities held in inventory, to collateralize and finance our operations generally and to maintain our margin requirements, particularly with our principal clearing firm, Pershing LLC. Our broker-dealer's inventory is financed by our clearing firm and periodically through repurchase agreements. The recent adverse events could result, at a minimum, in a reduction in the amount we are able to borrow with our clearing firm or through the repurchase agreements. Our ability to continue to draw on these forms of liquidity could also be terminated in their entirety. To the extent any such events were to occur, they would have a material adverse effect on our ability to operate our sales and trading businesses, which could have a material and adverse effect on the Company.

In connection with the sale of substantially all of the Clear Point's assets to Homeward, we became subject to certain indemnification provisions, and retain the risk of loan putbacks and other related matters, for loans originated by ClearPoint existing prior to the closing of the Homeward Transaction. On February 14, 2013, the Company and certain of its affiliates, including ClearPoint, entered into an Asset Purchase Agreement ("Purchase Agreement") with Homeward. This transaction closed on February 22, 2013. Pursuant to the Purchase Agreement, Homeward acquired substantially all of ClearPoint's assets and assumed certain liabilities of ClearPoint. The Purchase Agreement provides for customary indemnification provisions. In connection with the indemnification provisions, the Company is required to maintain an escrow account of $5.0 million for a three-year period following the closing date, and the Parent has also provided for a guarantee of ClearPoint's indemnification obligations to Homeward, up to a maximum of an additional $2.5 million. Indemnity claims, if any, will be paid first from the escrow amount, and then, to the extent necessary, drawn upon the guarantee. If during the three-year period following the closing date, the payment of sums from the escrow amount is not permitted, indemnity claims of Homeward will be paid under the guarantee, up to a maximum of $7.5 million. Any amounts paid under the guarantee will be released to the Company from the escrow amount on a dollar-for-dollar basis.

ClearPoint is also subject to loan putback risk in connection with representations and warranties made to purchasers of mortgage loans originated prior to the Homeward Transaction. ClearPoint is required to indemnify its loan purchasers under certain circumstances and may be required to repurchase the loans under others. The Company believes its exposure under these indemnifications, under the most likely scenarios, will not have a material adverse impact on the Parent and/or its subsidiaries. This belief is based in large part on recent past experience, as well as the expectation of ClearPoint (or the Parent) ultimately receiving the proceeds from the sale of these loans to finance, or offset, any payments made to the parties to which the guaranties were provided.

Regulatory capital requirements may impede our ability to conduct our business. Gleacher Securities and Gleacher Partners, our broker-dealer subsidiaries, are subject to the net capital requirements of the SEC and various self-regulatory organizations of which they are members. These requirements typically specify the minimum level of net capital a broker-dealer must maintain. Gleacher Securities is also subject to the customer reserve requirements in connection with its self-clearing activities associated with its Rates business, which requires a certain amount of cash or qualifying securities to be maintained in a segregated bank account. Any failure to comply with such regulatory requirements could impair our ability to conduct these related business activities.

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We are a holding company and depend on payments from our subsidiaries. We depend on dividends, distributions and other payments from our subsidiaries to fund our obligations. Regulatory and other legal restrictions limit our ability to transfer funds freely, either to or from our subsidiaries. In particular, our broker-dealer subsidiaries are subject to laws and regulations that authorize regulatory bodies to monitor and/or restrict the flow of funds to the parent holding company, or that prohibit such transfers altogether in certain circumstances. The most restrictive of these regulations is FINRA Rule 4110(c)(2). Under this rule, our broker-dealer subsidiaries may not make an unsecured advance or loan, pay a dividend or otherwise effect a similar distribution to the Parent and/or its affiliates in any rolling 35-calendar-day period, on a net basis, in excess of 10% of their excess "net capital," as defined under Rule 15c3-1 of the Exchange Act, without prior written FINRA approval. These laws and regulations may hinder our ability to access funds that we may need to make payments on our obligations. In addition, because our interests in the Company's subsidiaries consist of equity interests, our rights may be subordinated to the claims of the creditors of these subsidiaries.

Risks Related to Ownership of Our Common Stock

~~Our~~Provisions ~~common~~of ~~stock~~our ~~may~~Certificate beof ~~delisted~~Incorporation ~~from~~and ~~The~~Bylaws, ~~NASDAQ~~agreements ~~Global~~to ~~Market,~~ which ~~could~~we ~~have~~are ana ~~adverse~~party, ~~impact~~laws ~~on the liquidity~~ and ~~market~~regulations ~~price~~to ofwhich ~~our~~we ~~common stock. Our~~are ~~common~~subject ~~stock~~could ~~currently~~delay isor ~~listed~~prevent ona ~~The~~change ~~NASDAQ~~in control ~~Global~~of our ~~Market~~company. Our Incharter ~~order~~and tobylaws ~~maintain~~contain ~~that~~provisions ~~listing,~~whose weapplication ~~must~~could ~~satisfy~~have ~~certain requirements. On June 19, 2012, we received a letter from~~ the ~~listing~~effect ~~qualifications department staff~~ of ~~The~~deterring ~~NASDAQ~~a ~~Stock~~takeover ~~Market LLC~~or ~~notifying~~other ~~the~~offer ~~Company~~for ~~that~~our itsecurities. ~~was~~Any ~~not~~such actions, intogether ~~compliance~~ with ~~the~~provisions ~~$1.00 minimum~~of ~~closing~~our ~~bid~~Certificate ~~price~~of ~~per~~Incorporation ~~share~~and ~~required~~Bylaws, byas ~~NASDAQ~~well ~~Listing~~as ~~Rule 5450(a)(1)~~Delaware ~~(the "Rule"). Under NASDAQ's rules~~law, wecould ~~had~~make ~~until~~efforts ~~December 17,~~by ~~2012~~stockholders to ~~regain~~change ~~compliance~~our ~~with~~Board ~~the~~of ~~Rule.~~Directors ~~We did~~or ~~not~~management ~~regain compliance at that time~~more difficult.

On December 18, 2012, the Company received a delisting notification from NASDAQ that it had not regained compliance with the Rule during the applicable period and that the Company's common stock is therefore subject to delisting unless it requested a hearing with NASDAQ's Hearings Panel (the "Panel"). The Company requested a hearing with the Panel which was held on February 21, 2013. At the hearing, the Company presented its plan to regain compliance with the Rule, pursuant to which the Company intends to seek approval for a reverse stock split from stockholders at its 2013 annual stockholders' meeting. The Company requested that the Panel allow it to remain listed on The NASDAQ Global Market for an additional 180 calendar days from the date of the NASDAQ Staff's delisting notification, the maximum allowed under the NASDAQ Rules, while it executes its plan to implement a reverse stock split.

On February 26, 2013, the Company received notice from NASDAQ informing the Company that the Panel had granted the Company's request to remain listed on The NASDAQ Global Market for an additional 180 calendar days, or until June 17, 2013, subject to the condition that on or before that date the Company shall have evidenced a closing bid price of $1.00 or more for a minimum of ten consecutive trading days. The Panel stated that depending on particular facts and circumstances, it may, in its discretion, require that the Company evidence a bid price of at least $1.00 per share for a period in excess of ten consecutive trading days. The Panel also reserved the right to reconsider its decision based on any event, condition or circumstance that might make the Company's continued listing on NASDAQ inadvisable or unwarranted.

While we are preparing for the Company's Annual Meeting, there can be no assurance that we will implement the reverse stock split or, even if implemented, that we will be able to regain compliance during the applicable time period set forth above or keep our listing on The NASDAQ Global Market.

If our common stock were to be delisted from The NASDAQ Global Market and our trading price remained below $5.00 per share, trading in our common stock also might become subject to the requirements of certain rules promulgated under the Securities Exchange Act of 1934, as amended, which require broker-dealers to disclose additional information in connection with any trade involving a

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stock defined as a "penny stock." The delisting of our common stock could adversely affect the trading activity, liquidity and price of our common stock, decrease analyst coverage and investor demand and information available concerning trading prices and volume of our common stock and make it more difficult for investors to buy or sell shares of our common stock.

Provisions of our Certificate of Incorporation and Bylaws, agreements to which we are a party, regulations to which we are subject and provisions of our equity incentive plans could delay or prevent a change in control of our company and entrench current management. Our charter and bylaws contain provisions whose application could have the effect of deterring a takeover or other offer for our securities. Any such actions, together with provisions of our Certificate of Incorporation and Bylaws, as well as Delaware law and compensation arrangements with our employees, could make efforts by stockholders to change our Board of Directors or management more difficult.

Our Certificate of Incorporation and Bylaws provide:

•: for limitations on the personal liability of our directors to the Company and to our stockholders to the fullest extent permitted by law, which may reduce the likelihood of derivative litigation against directors and may discourage or deter stockholders or management from bringing a lawsuit against directors for breach of their duty of care;
•: that special meetings of stockholders can be called only by our Chairman of the Board, by resolution of the Board of Directors, or by our Chief Executive Officer, President or Secretary (and do not provide our stockholders with the right to call a special meeting or to require the Board of Directors to call a special meeting); and
•: that subject to the rights of any series of preferred stock or any other series or class of stock set forth in our Certificate of Incorporation, any vacancy on the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause or newly created directorships, may be filled only by the affirmative vote of a majority of the remaining directors, and a director can be removed from office without cause only by the affirmative vote of the holders of at least 80% of the voting power of the then outstanding voting stock, voting together as a single class.

~~In addition~~Also, we ~~certain~~are ofgoverned by the ~~Company's~~provisions ~~compensation arrangements provide for payments or acceleration~~ of ~~equity~~Section 203 ~~vesting under certain circumstances involving a change~~ of ~~control~~the ofDelaware ~~the Company.~~General ~~For~~Corporation ~~example~~Law, wewhich ~~have~~may, ~~agreements~~unless ~~with~~other ~~four~~criteria ofare ~~our~~met, ~~executive~~prohibit ~~officers~~large ~~that~~stockholders, ~~would require us to make cash payments to these executives of approximately $10 million~~ in ~~the aggregate should~~ ~~their~~particular ~~employment~~those ~~with~~owning ~~the~~15% ~~Company~~or ~~terminate~~more ~~under certain circumstances, including an acquisition~~ of the ~~Company~~voting orrights ~~the sale~~ of ~~all~~our orcommon ~~substantially~~stock, ~~all~~from, ofamong ~~the~~other ~~Company's~~things, ~~assets~~merging or acombining ~~liquidation~~with ofus ~~the Company.~~for ~~These~~a ~~arrangements~~prescribed ~~could~~period ~~make an acquisition~~ of ~~the Company more expensive, and therefore less attractive, to a potential acquirer~~time.

~~Also,~~In weaddition, ~~are~~our ~~governed~~brokerage bysubsidiaries ~~the~~are ~~provisions~~heavily ofregulated, ~~Section 203~~and some of ~~the~~our ~~Delaware~~regulators ~~General~~require ~~Corporation~~that ~~Law,~~they ~~which~~approve ~~may~~transactions, ~~unless~~that ~~other~~could ~~criteria~~result ~~are~~in ~~met,~~a ~~prohibit~~change ~~large~~of ~~stockholders~~control, inas defined by ~~particular~~the ~~those~~then-applicable ~~owning~~rules ~~15%~~of orour ~~more~~regulators. ofSo ~~the~~long ~~voting~~as ~~rights~~these ofsubsidiaries ~~our~~remain ~~common~~registered ~~stock~~broker-dealers, ~~from~~the ~~merging~~requirement that this approval be obtained may prevent or ~~combining~~delay ~~with~~transactions usthat ~~for~~would result in a ~~prescribed~~change ~~period~~ of ~~time~~control.

~~In addition,~~ Our ~~our~~stock ~~brokerage~~price ~~businesses~~may ~~are~~fluctuate ~~heavily~~experience ~~regulated,~~greater ~~and~~volatility. With ~~some~~the announcement of our ~~regulators~~intention ~~require~~to ~~that~~dissolve, ~~they~~our ~~approve~~progress toward ~~transactions,~~a ~~that~~planned dissolution ~~could~~and ~~result~~ultimate inliquidation acould ~~change~~become the subject of ~~control~~considerable speculation, asespecially ~~defined~~regarding by the ~~then-applicable~~timing ~~rules~~and amounts of ~~our~~any ~~regulators~~liquidating distributions and the lingering possibility of an alternative transaction. ~~The~~Speculation, ~~requirement~~and ~~that~~market ~~this~~activity ~~approval~~influenced beby ~~obtained~~speculation, may ~~prevent~~bear little resemblance to the actual facts or ~~delay~~value ~~transactions~~of ~~that~~the ~~would~~company. ~~result~~This incould make it more difficult for you to sell your shares at a ~~change~~price ofapproximating ~~control~~its inherent value or at all.

~~Our~~Because ~~stock~~MatlinPatterson ~~price~~FA ~~may~~Acquisition LLC, ~~fluctuate as~~ a ~~result~~Delaware oflimited ~~several~~liability ~~factors,~~company ~~including but not limited to~~("MatlinPatterson"), ~~changes in revenues~~ and ~~operating~~Eric ~~results~~J. We ~~have experienced,~~Gleacher ~~and~~each ~~expect~~controls toa ~~experience~~significant inpercentage ~~the~~of ~~future, fluctuations in~~ the voting power ~~market price~~ of our common stock, ~~due~~they tocan ~~factors~~exert ~~that~~considerable ~~relate~~influence toover the ~~nature~~Company. As of ~~our~~March 17, ~~business generally~~2014, ~~including~~MatlinPatterson ~~but~~controlled ~~not~~approximately ~~limited~~29% of the tovoting ~~changes~~power inof our ~~revenues~~common stock and ~~operating~~Mr. Eric ~~results~~J. ~~Our~~Gleacher, our former

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~~business~~Chairman, bycontrolled ~~its~~approximately ~~nature,~~12% ~~does~~of ~~not~~the ~~produce~~voting ~~steady~~power ~~and~~of ~~predictable earnings on a quarterly basis, which causes fluctuations in~~ our ~~stock~~common ~~price that may be significant~~stock. ~~Other~~Either ~~factors~~MatlinPatterson ~~that~~or ~~have affected, and may further affect, our stock price include the recent adverse events described above under Item~~Mr. 1Gleacher, ~~"Business—Overview,"~~acting astogether ~~well as changes in news related to economic~~ or ~~market events or conditions~~alone, ~~changes~~can inexert ~~market~~considerable ~~conditions~~influence inover corporate ~~the~~actions ~~financial~~requiring ~~services~~stockholder ~~industry,~~approval. ~~including~~As ~~developments~~a ~~in regulation affecting our business~~result, ~~departures~~it ofmay ~~personnel,~~be ~~changes~~difficult infor ~~our business strategies or operations, rumors about us or~~ other ~~participants~~investors ~~in our industry, failure~~ to ~~meet~~affect the ~~expectations~~outcome of ~~market~~any ~~analysts,~~stockholder ~~changes in recommendations or outlook by market analysts, and aggressive short selling~~vote.

~~Because MatlinPatterson FA Acquisition LLC~~ In addition, aif ~~Delaware~~any ~~limited~~of ~~liability~~our ~~company~~stockholders, ("including MatlinPatterson~~"),~~ and ~~Eric J~~Mr. Gleacher, ~~each~~that ~~controls~~in athe ~~significant~~aggregate ~~percentage~~own ofa ~~the voting power~~majority of our common stock choose to act together, they ~~can~~would ~~exert~~be able ~~considerable~~to ~~influence~~determine ~~over~~ the ~~Company. As~~outcome of ~~February 28,~~most ~~2013,~~matters ~~MatlinPatterson~~submitted ~~controlled~~to ~~approximately~~a ~~29%~~vote of ~~the~~ ~~voting~~our ~~power~~stockholders, ofincluding ~~our~~matters ~~common~~involving ~~stock~~mergers ~~and~~or ~~Mr. Gleacher~~other ~~controlled~~business ~~approximately~~combinations, ~~11%~~the ofacquisition ~~the~~or ~~voting~~disposition ~~power~~of assets, the incurrence of ~~our~~indebtedness, ~~common~~the ~~stock.~~issuance ~~Either~~of ~~MatlinPatterson~~any oradditional ~~Mr. Gleacher,~~shares ~~acting~~of ~~together~~common stock or ~~alone,~~ ~~can~~other ~~exert~~equity ~~considerable~~securities ~~influence~~and ~~over~~the ~~corporate~~payment ~~actions~~of ~~requiring~~dividends ~~stockholder~~on ~~approval~~common stock. AsThese astockholders ~~result,~~might itchoose ~~may~~to betake actions ~~difficult~~that ~~for~~are ~~other~~favorable ~~investors~~ to ~~affect~~them ~~the~~but ~~outcome~~not ofto ~~any~~our ~~stockholder~~other ~~vote~~stockholders.

~~In addition,~~ Future ifsales ~~any~~or anticipated future sales of our ~~stockholders~~common stock in the public market, ~~including~~by us, by MatlinPatterson ~~and~~or Mr. Gleacher, ~~that~~by inour ~~the~~current ~~aggregate~~or ~~own~~former aemployees ~~majority~~or ofby ~~our~~others, could ~~common~~cause our stock ~~choose~~price to ~~act~~decline. The ~~together,~~sale ~~they~~or ~~will~~anticipated ~~be able~~future tosale ~~direct~~of ~~the~~a ~~election~~significant ofnumber ~~all~~ of ~~the~~shares ~~members~~ of our ~~Board~~common ofstock ~~Directors~~in ~~and~~the ~~determine~~open ~~the~~market ~~outcome~~by MatlinPatterson, ofMr. Gleacher ~~most~~or ~~matters~~others, ~~submitted~~whether pursuant to a ~~vote~~resale ofprospectus ~~our~~or ~~stockholders,~~pursuant ~~including~~to ~~matters~~Rule 144 ~~involving~~promulgated ~~mergers~~under ~~or other business combinations,~~ the ~~acquisition~~Securities orAct ~~disposition~~ of ~~assets~~1933, ~~the~~as ~~incurrence~~amended ~~of indebtedness,~~ (the ~~issuance~~"Securities ofAct"), could ~~any~~cause ~~additional~~the ~~shares~~market price of our common stock orto ~~other~~decline. ~~equity~~Any ~~securities~~such ~~and~~decline ~~the~~could ~~payment of~~impair ~~dividends~~our ~~on common~~ability ~~stock.~~to ~~These~~raise ~~stockholders~~capital ~~might~~through ~~choose~~the tosale ~~take~~of ~~actions~~additional ~~that~~equity ~~are~~securities ~~favorable~~at toa ~~them~~price ~~but~~we ~~not~~deem ~~to our other stockholders~~appropriate.

OnWe ~~February 23,~~have ~~2013,~~granted ~~four~~rights ofto ~~the~~certain ~~Company's~~of ~~independent~~our ~~directors~~stockholders, ~~notified~~with ~~the~~respect ~~Company~~to ~~that~~registration ~~they~~under ~~would~~the ~~not~~Securities ~~seek~~Act ~~re-election~~of at the ~~Company's~~offer ~~Annual~~and ~~Meeting.~~sale Inof ~~a letter~~our tocommon ~~the~~stock. ~~Company,~~These ~~these~~rights ~~directors~~include ~~stated~~both ~~that~~"demand" registration ~~they~~rights, ~~were~~which ~~aware~~require ~~that~~us ~~the~~to ~~opposition of MatlinPatterson and Mr.~~file ~~Gleacher~~a toregistration ~~their~~statement ~~re-election~~if ~~meant~~asked ~~that~~by itsuch ~~was~~holders, aas ~~virtual~~well ~~certainty that~~as ~~they~~incidental, ~~would~~or ~~not~~"piggyback," beregistration ~~re-elected.~~rights Ongranting the ~~same~~right ~~day,~~to ~~the~~such ~~Company~~holders ~~received~~to be included in a ~~submission~~registration ~~from~~statement ~~MatlinPatterson~~filed ~~proposing~~by aus. ~~slate~~As of ~~eight~~March 17, ~~nominees~~2014, ~~for~~there ~~election~~were toapproximately ~~the~~2.5 million ~~Company's~~shares ~~Board~~ of ~~Directors~~ atour ~~the~~common ~~Company's~~stock ~~Annual~~to ~~Meeting.~~which Of these ~~eight~~rights ~~nominees,~~pertain. ~~three~~These ~~are~~sales might ~~currently~~impact ~~directors~~the liquidity of ~~the~~our ~~Company.~~common ~~Any~~stock ~~influence~~making ~~that~~it ~~MatlinPatterson~~more isdifficult ~~able~~for us to ~~exert~~sell ~~over~~equity ~~these~~or ~~persons~~equity-related ~~(if~~securities ~~elected) would~~in ~~increase~~the ~~MatlinPatterson's~~future ~~ability~~at toa ~~impact~~time ~~the policies~~ and ~~business~~price ~~operations~~that ofwe ~~the~~deem ~~Company~~appropriate.

~~Future~~ In addition, ~~sales~~a orstrategic ~~anticipated~~transaction ~~future~~(in ~~sales~~lieu of ~~our~~dissolution ~~common~~and ~~stock~~liquidation), inmay ~~the~~entail ~~public~~issuing ~~market,~~additional byshares ~~us,~~of bycommon ~~MatlinPatterson~~stock or ~~Mr. Gleacher,~~securities bythat ~~management,~~are byconvertible ~~our~~into ~~employees~~ or exchangeable ~~by others~~for, ~~could cause~~ ~~our~~or ~~stock~~that ~~price~~represent tothe ~~decline. The~~right ~~sale~~to purchase or ~~anticipated~~receive, ~~future~~common ~~sale~~stock. ofThe aissuance ~~significant~~of ~~number~~any ofadditional shares of ~~our~~ common stock inor ~~the~~securities ~~open~~convertible ~~market~~into byor ~~MatlinPatterson,~~exchangeable for common ~~Mr. Gleacher~~stock or ~~others,~~that ~~whether~~represent ~~pursuant~~the right to apurchase ~~resale~~or ~~prospectus~~receive common stock, or ~~pursuant~~the toexercise ~~Rule 144~~of ~~promulgated~~such ~~under~~securities, ~~the~~could ~~Securities~~be ~~Act~~substantially dilutive to holders of ~~1933,~~our ascommon ~~amended~~stock. ~~(the~~Such ~~"Securities~~sales ~~Act"),~~or offerings could result ~~cause~~in ~~the~~ increased dilution to our stockholders. The market price of our common stock tocould decline. ~~Any~~as ~~such~~a ~~decline~~result ~~could~~of ~~impair~~sales ~~our~~of, ~~ability~~or toan ~~raise~~expectation ~~capital~~of ~~through~~sales ~~the~~of, ~~sale~~shares of ~~additional~~our ~~equity~~common stock or securities convertible atinto aor ~~price~~exchangeable wefor ~~deem~~common ~~appropriate~~stock.

We have granted to certain of our stockholders, rights with respect to registration under the Securities Act of the offer and sale of our common stock. These rights include both "demand" registration rights, which require us to file a registration statement if asked by such holders, as well as incidental, or "piggyback," registration rights granting the right to such holders to be included in a registration statement filed by us. As of February 28, 2013, there were approximately 50.0 million shares of our common stock to which these rights pertain. These sales might impact the liquidity of our common stock making it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate.

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In addition, we may in the future issue additional shares of common stock or securities that are convertible into or exchangeable for, or that represent the right to receive, common stock. The issuance of any additional shares of common stock or securities convertible into or exchangeable for common stock or that represent the right to receive common stock, or the exercise of such securities, could be substantially dilutive to holders of our common stock. Such sales or offerings could result in increased dilution to our stockholders. The market price of our common stock could decline as a result of sales of, or an expectation of sales of, shares of our common stock or securities convertible into or exchangeable for common stock.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties

~~The~~A list ~~Company currently leases all~~ of ~~its~~principal office ~~space.~~locations ~~The~~as ~~Company's~~of ~~lease for its current headquarters in New York~~December 31, ~~New~~2013 ~~York (approximately~~is ~~84,000~~as ~~square~~follows: ~~foot space) expires on April 30, 2025.~~

ANew ~~list~~York, ofNY ~~principal~~(approximately ~~office~~2,000 ~~locations~~square asfeet) Albany, ofNY ~~December 31~~(approximately 3,000 ~~2012~~square isfeet) Waltham, asMA ~~follows:~~(approximately 1,000 square feet)

~~New York, NY Roseland, NJ Westborough, MA~~ 14

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Item 3. Legal Proceedings

The Company is not a party to any legal proceeding required to be disclosed in this Annual Report on Form 10-K per applicable SEC regulations. ~~Moreover, based on~~For ~~currently~~further ~~available~~discussion ~~information,~~regarding ~~the~~litigations ~~Company~~and ~~does not believe that any current litigation~~arbitrations, ~~proceeding,~~refer ~~claim or other matter~~ to ~~which~~Note 17 itwithin isthe afootnotes ~~party~~to orthe ~~otherwise~~consolidated ~~involved, including any associated defense costs, will have a material adverse effect on its~~ financial ~~position~~statements orcontained ~~cash flows, although an adverse development, or an increase~~ in ~~associated~~Item 8 ~~legal fees, could be material to the Company's results~~ of ~~operations~~this inAnnual aReport ~~particular period, depending in part~~ on ~~the Company's operating results in that period~~ Form 10-K.

For further discussion, refer to Note 19 within the footnotes to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K.

Item 4. Mine Safety Disclosures

None

2315

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PART II

Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities

The Company's common stock trades on The NASDAQ Global Market under the symbol "GLCH." As of February 28, ~~2013~~2014 there were approximately ~~3,000~~140 holders of record of the Company's common stock. No dividends have been declared or paid on our common stock since February 2005. WeRefer doto ~~not~~Part I, ~~anticipate~~Item I ~~that~~"Business weOverview" ~~will~~for ~~pay~~discussion regarding ~~any~~the ~~cash~~Company's ~~dividends~~proposed ondissolution ~~our~~and ~~common stock in the foreseeable future~~liquidation.

The following table sets forth the high and low sales prices for the common stock during each quarter for the fiscal years ended.

	Quarter Ended
	Mar 31		Jun 30		Sep 30		Dec 31
2013
Stock Price Range
High	$	19.60	$	17.60	$	14.18	$	13.70
Low		10.00		11.00		12.81		9.94
2012
Stock Price Range
High	$	137.8860	$	127.3980	$	019.9860	$	016.8240
Low		1.25.00		010.5360		013.6500		012.6360
2011
Stock Price Range
High	$	2.58	$	2.47	$	2.15	$	1.72
Low		1.64		1.74		0.99		1.00

~~The~~On ~~Company~~May 30, ~~has~~2013, ~~received~~the ~~written~~Company ~~notice~~implemented ~~that~~a ~~its~~reverse ~~common~~ stock issplit ~~subject~~of toits ~~delisting~~shares ~~from~~of ~~the~~common ~~NASDAQ~~stock ~~Global~~at ~~Market as~~ a ~~result~~ratio of ~~its failure to meet the minimum bid price requirement under the NASDAQ Listing Rules~~1-for-20. OnAs ~~February 21, the Company presented~~ a ~~plan~~consequence of ~~compliance~~the toreverse astock ~~NASDAQ~~split, ~~Hearings~~every ~~Panel.~~20 ~~The purpose~~ shares of ~~that hearing was to consider~~ the Company's ~~request~~outstanding ~~that~~common ~~it be~~stock ~~allowed~~were tocombined ~~remain~~into ~~listed~~one ~~on the NASDAQ Global Market until June 17~~share, ~~2013,~~without ~~during~~any ~~which~~change ~~time~~to itthe ~~intends~~par tovalue ~~seek~~per ~~stockholder~~share. ~~approval~~All ~~for,~~share and ifshare-related ~~approved,~~information ~~implement,~~herein ahas ~~reverse~~been ~~stock~~adjusted, ~~split. The reverse stock split is expected~~ to ~~result in~~ the ~~Company's compliance with the NASDAQ minimum bid price requirement. On February 26~~extent necessary, ~~the~~to ~~Company~~reflect ~~received~~this ~~notice~~reverse ~~from~~stock ~~NASDAQ that the Hearings Panel had approved its request~~split.

Information relating to compensation plans under which our common stock is authorized for issuance will be set forth in our definitive proxy statement for our Annual Meeting and is incorporated herein by reference.

Issuance of Unregistered Securities

There were no undisclosed issuances of unregistered equity securities during ~~2012.~~the ~~Any~~year ~~such~~ended ~~issuances have been previously disclosed in a previously filed Quarterly Report on Form~~December ~~10-Q~~31, ~~or in a Current Report on Form 8-K~~2013.

Issuer Purchases of Equity Securities

WeIn ~~did~~February ~~not~~2013, ~~repurchase~~the ~~any~~Board ~~shares~~ of ~~our~~Directors ~~common~~renewed ~~stock in~~ the ~~fourth~~Company's ~~quarter~~share ofrepurchase ~~2012.~~program, ~~For~~authorizing ~~information~~up ~~regarding~~to ~~the~~$10 million ~~repurchase~~in additional ofrepurchases ~~shares~~ of ~~our~~Company common stock. ~~during~~No ~~previous~~shares ~~quarters~~have inbeen ~~2012,~~repurchased ~~refer~~since ~~to Note 18 within~~ the ~~footnotes~~renewal toof ~~the~~this ~~consolidated~~program. ~~financial~~This ~~statements~~program ~~contained~~expired ~~within~~on ~~Item~~March 813, of2014 ~~this~~and ~~Annual~~has ~~Report~~not ~~on Form 10-K~~been renewed.

~~Refer to Note 18 within the footnotes to the consolidated financial statements contained within Item 8 of this Annual Report on Form 10-K for information regarding the renewal of this share~~ 16

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repurchase program and repurchases, if any, of our common stock since the fiscal year ended December 31, 2012.

Stockholder Return Performance Presentation

Set forth below are line graphs comparing the yearly change in cumulative total stockholder return on our common stock against cumulative total return of the Standard & Poor's 500 and Standard & Poor's 500 Financials Indices, assuming an investment of $100 on December 31, ~~2007~~2008.

The following table has been included for the period of five fiscal years, commencing December 31, ~~2007~~2008 and ending December 31, ~~2012~~2013:

~~Shareholder Returns (5 years)~~ 17

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Item 6. Selected Financial Data

The following selected financial data has been derived from the consolidated financial statements of the Company. This information should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and related notes thereto included within Item 8 of this Annual Report on Form 10-K. The financial results set forth in the following table may not be representative of future results due to recent developments described under Item 1, "Business—Overview" and elsewhere in this Annual Report on Form 10-K.

For the years ended December 31, (In thousands, except for per share amounts)	2012			2011			2010			2009			2008
For the years ended December 31, In thousands, except for per share amounts)	2013			2012			2011			2010			2009
Statement of Operations Data:
Total revenues	$	~~216~~1,~~422~~933		$	~~273~~2,~~085~~082		$	~~259~~4,~~900~~062		$	~~331~~(2,~~139~~018	)	$	~~134~~3,~~472~~609
Interest expense		12,827			11,913			11,318			12,523			10,712
Total expenses		29,542			29,088			23,233			46,018			21,734
Net revenues		203,595			261,172			248,582			318,616			123,760

Expenses (excluding interest)		256,948			323,049			274,365			257,260			129,352
Loss before income taxes, discontinued operations		(27,609	)		(27,006	)		(19,171	)		(48,036	)		(18,125	)
(Loss)/income before income taxes, discontinued operations		(53,353	)		(61,877	)		(25,783	)		61,356			(5,592	)
Income tax (benefit)/expense		(1,082	)		22,940			(7,422	)		(19,848	)		(28,089	)
Income tax expense/(benefit)		24,602			2,207			(9,778	)		6,757			665

(Loss)/income from continuing operations		(7726,~~955~~527	)		(6449,~~084~~946	)		(1611,~~005~~749	)		54(28,~~599~~188	)		(69,~~257~~964	)
Income/(loss) from discontinued operations, net of taxes		265			(18,040	)		(4,616	)		321			(11,105	)
(Loss)/income from discontinued operations, net of taxes		(73,005	)		(27,744	)		(70,375	)		7,567			44,956
Net (loss)/income	$	(77,690	)	$	(82,124	)	$	(20,621	)	$	54,920		$	(17,362	)

Basic (loss)/earnings per share:
Net (loss)/income	$	(99,532	)	$	(77,690	)	$	(82,124	)	$	(20,621	)	$	54,920
Continuing operations	$	(0.66	)	$	(0.52	)	$	(0.13	)	$	0.56		$	(0.09	)
Basic (loss)/income per share:
Discontinued operations		—			(0.15	)		(0.04	)		0.00			(0.16	)
Continuing operations	$	(4.33	)	$	(8.40	)	$	(1.90	)	$	(4.65	)	$	2.06
Net (loss)/income per share	$	(0.65	)	$	(0.67	)	$	(0.17	)	$	0.57		$	(0.25	)
Discontinued operations		(11.93	)		(4.66	)		(11.40	)		1.25			9.28
Diluted (loss)/earnings per share:

Continuing operations	$	(0.66	)	$	(0.52	)	$	(0.13	)	$	0.52		$	(0.09	)
Net (loss)/income per share	$	(16.26	)	$	(13.06	)	$	(13.30	)	$	(3.40	)	$	11.34
Discontinued operations		—			(0.15	)		(0.04	)		0.00			(0.16	)

Diluted (loss)/earnings per share	$	(0.65	)	$	(0.67	)	$	(0.17	)	$	0.53		$	(0.25	)

Diluted (loss)/income per share:
Continuing operations	$	(4.33	)	$	(8.40	)	$	(1.90	)	$	(4.65	)	$	1.91
Discontinued operations		(11.93	)		(4.66	)		(11.40	)		1.25			8.63

Diluted (loss)/income per share	$	(16.26	)	$	(13.06	)	$	(13.30	)	$	(3.40	)	$	10.54

December 31, (In thousands)	2012		2011		2010		2009		2008
December 31, (In thousands, except for per share amounts)	2013		2012		2011		2010		2009
Balance Sheet Data:
Total assets	$	195,~~229,638~~964	$	31,~~303~~229,~~556~~306	$	13,~~657~~303,~~932~~556	$	1,~~216~~657,~~163~~932	$	~~694~~1,~~271~~216,163
Mandatorily redeemable preferred stock		—		—		—		~~24,419~~—		24,~~187~~419
Subordinated debt		~~595~~409		~~801~~595		~~909~~801		~~1,197~~909		1,~~662~~197
Stockholders' equity		~~180~~83,~~995~~854		~~259~~180,~~123~~995		~~346~~259,~~159~~123		~~328~~346,~~985~~159		98328,~~290~~985

Other data:
Cash dividend per share		—		—		—		—		—
Book value per share		113.4558		229.1409		242.6587		252.6592		152.2391

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Reclassification

Certain amounts in operating results for ~~2008~~2009 through ~~2011~~2012 have been reclassified to conform to the ~~2012~~2013 presentation with no impact to previously reported net (loss) / income or stockholders' equity. This includes ~~professional~~the ~~fees,~~prior ~~which~~period ~~have~~results ~~previously~~of ~~been~~the ~~reported~~Investment ~~within Other expenses~~Banking, MBS &Rates, ~~now~~Credit ~~reported~~Products asand ~~its~~ClearPoint ~~own~~divisions, ~~line~~which ~~item~~are ~~within the~~now ~~Consolidated~~being ~~Statements~~reported ofas ~~Operations~~discontinued operations.

~~Discontinued Operations and Business Combinations~~ 18

During the past several years, the Company has restructured certain components of its operations. As previously mentioned, the Company exited the Equities business in August 2011. The results of these operations have been reclassified within Discontinued operations within the Selected Financial Data.

In addition, during the past several years, the Company completed certain acquisitions. In November 2012, the Company acquired certain assets and assumed certain liabilities from RangeMark Financial Services, Inc. and certain of its affiliates and other parties ("RangeMark"), which specializes in providing quantitative research, advanced analytics and customizing solutions for its clients. In January 2011, the Company acquired ClearPoint. In June 2009, the Company acquired Gleacher Partners, Inc., a financial advisory boutique. In October 2008, the Company acquired American Technology Research, Inc., a broker-dealer specializing in institutional research, sales and trading in the information technology, clean tech and defense areas. In March 2008, the Company hired the employees of the Fixed Income Division of BNY Capital Markets, Inc. and acquired certain related assets.

On February 14, 2013, the Company entered into an agreement to sell substantially all of ClearPoint's assets to Homeward. This transaction closed on February 22, 2013. As a result of this transaction, the residential mortgage lending business conducted by ClearPoint will be reported as a discontinued operation in the first quarter of 2013. Refer to Note 29 within the footnotes to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K for additional information.

As a result of these discontinued operations and business combinations, period-to-period comparisons of the Company's financial results may not, in any given case, be meaningful.

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In addition, certain items which have previously been reported within the Company's Other segment have been reclassified as discontinued operations, as follows:

(In thousands of dollars)	2013			2012			2011			2010			2009

Items reclassified as discontinued operations
Revenue
Net interest income	$	574		$	5,627		$	6,330		$	7,339		$	9,928
Investment banking		—			—			—			—			1,196
Gain from bargain purchase—ClearPoint acquisition		—			—			2,330			—			—


		574			5,627			8,660			7,339			11,124


Expenses
Compensation expense		2,717			7,870			6,826			9,178			6,755
Professional fees		733			2,243			1,162			1,631			1,047
Occupancy expense		1,458			1,753			998			4,902			1,776
Goodwill and intangible asset impairment		—	(1)		21,533			82,045			3,699			3,622
Communications and data processing		356			727			1,271			592			284
Other		488			406			526			2,258			942


Total expenses:		5,752			34,532			92,828			22,260			14,426


Net items reclassified to discontinued operations	$	(5,178	)	$	(28,905	)	$	(84,168	)	$	(14,921	)	$	(3,302	)

(1): Impairment of intangible assets of $3.9 million for the year ended December 31, 2013, recognized in connection with the Company's exits from Investment Banking, Fixed Income and ClearPoint is recorded as restructuring expense and included within discontinued operations (Refer to Notes 21 and Note 22 within the footnotes to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K).

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GLEACHER & COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

This ~~document~~ ~~contains~~Annual orReport ~~incorporates~~on byForm 10-K ~~reference~~contains "forward-looking statements." within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. These statements are not historical facts but instead represent the Company's belief or plans regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company's control. ~~The~~These ~~Company~~statements ~~often~~include, ~~but~~for ~~not always~~example, ~~identifies~~the ~~forward-looking statements~~expectations byregarding ~~using~~the ~~words~~Company's orproposed ~~phrases such as "anticipate~~dissolution," ~~"estimate,"~~further discussed ~~"plan," "project," "target," "expect," "continuing," "ongoing," "believe" and "intend~~below." The Company's forward-looking statements are ~~based~~subject to onvarious ~~facts~~risks asand ~~the~~uncertainties, ~~Company~~including ~~understands~~the ~~them~~risks atand ~~the~~factors ~~time~~identified ~~the~~herein ~~Company~~and ~~makes~~in ~~any~~other ~~such~~public ~~statement~~disclosures asmade ~~well~~by asthe ~~estimates~~Company ~~and~~from ~~judgments~~time ~~based~~to ontime, ~~these~~including ~~facts.~~in ~~The~~the Company's ~~forward-looking~~periodic ~~statements~~and current ~~may~~reports ~~turn~~and ~~out to~~other befilings ~~inaccurate~~with ~~for~~the aSecurities ~~variety~~and ofExchange ~~reasons~~Commission. As a result, ~~many~~the ofCompany's ~~which~~actual ~~are~~results ~~outside~~may ofdiffer ~~its~~materially ~~control.~~from ~~Factors~~those ~~that~~expressed ~~could~~or ~~render~~implied ~~the~~by ~~Company's~~these forward-looking statements. ~~subsequently~~Readers ~~inaccurate~~are ~~include~~cautioned ~~the~~that ~~conditions of~~these ~~the~~forward-looking ~~securities~~statements, ~~markets~~including, ~~generally~~without limitation, statements regarding the dissolution and ~~demand~~liquidation ~~for~~of the Company's, ~~services~~the ~~within~~availability, ~~those~~amount ~~markets~~or timing of liquidating distributions to stockholders, the ~~risk~~adequacy of ~~further~~reserves ~~credit~~established ~~rating~~to ~~downgrades~~satisfy ofthe Company's obligations, the ~~U.S.~~belief ~~government~~that bythere ~~major~~is ~~credit~~a ~~rating~~reasonable ~~agencies, the~~possibility ~~impact~~that a portion of ~~international~~the contingency ~~and~~reserves ~~domestic~~will ~~sovereign~~ultimately ~~debt~~be ~~uncertainties,~~distributed to the ~~possibilities~~stockholders ofand ~~localized~~the orpossibility ~~global~~that ~~economic~~an ~~recession~~alternative, ~~and~~value-creating ~~other~~transaction ~~risks~~may ~~and~~be ~~factors~~proposed, ~~identified~~and ~~from~~other ~~time~~statements tocontained ~~time~~herein ~~in the~~that ~~Company's~~are ~~filings~~not ~~with~~historical ~~the~~facts, ~~Securities~~are ~~and~~only ~~Exchange~~estimates ~~Commission~~or predictions. You are cautioned not to place undue reliance on ~~these~~any forward-looking statements. The Company does not undertake to update any of its forward-looking statements.

~~In addition,~~As ~~the~~used Company has recently experienced several adverse events that have significantly affected our business operations and have resulted in a recent and serious decline in our financial results. In order to address these issuesherein, the terms "Company," ~~is seeking~~"Gleacher," ~~and may continue to seek a strategic transaction with a third party that could result~~"we," ~~for example~~"us," ~~in an acquisition of the Company~~ or ~~sale of substantially all of~~ "our" ~~assets.~~refer ~~Whether~~to ~~the~~Gleacher & Company ~~can effect such a transaction~~, Inc. and ~~if so, the terms of any such transaction, will greatly affect the Company's future and,~~its ~~as a result, the ultimate accuracy of our forward-looking statements~~subsidiaries.

Any forward-looking statement should be read and interpreted together with ~~these~~any ~~documents~~cautionary statements we make publicly, ~~including~~and ~~the~~in ~~following~~particular those made in this report, including:

•: the description of our business contained in this report under Item 1, "Business,"
•: the risk factors contained in this report under Item 1A, "Risk Factors,"
•: the discussion of our legal proceedings contained in this report under Item 3, "Legal Proceedings,"
•: the discussion of our analysis of financial condition and results of operations contained in this report under this Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations,"
•: the discussion of market, credit, operational and other risks impacting our business contained in this report under Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," and
•: the notes to the consolidated financial statements contained in this report under Item 8, "Financial Statements and Supplementary Data."

AsIn ~~used~~reviewing ~~herein,~~ the ~~terms~~financial ~~"Company~~statements," ~~"Gleacher,"~~data ~~"we~~and other information contained in this annual report," readers are directed to the disclosures under the caption "~~us,"~~Business Overview—Planned orDissolution and Liquidation"~~our,"~~ ~~refer~~and elsewhere herein with respect to ~~Gleacher &~~the approval by the Company~~, Inc.~~'s Board of Directors of a plan to dissolve the Company and liquidate its assets. ~~subsidiaries~~In accordance with accounting principles generally accepted in the United States, pending stockholder approval of such plan, no adjustments have been made to the financial statements or other financial data contained herein to reflect that plan.

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Business Overview

~~The~~Gleacher & Company, Inc. is(the an"Parent" ~~independent investment bank that provides corporate~~ and ~~institutional~~together ~~clients~~ with ~~strategic~~its ~~and~~subsidiaries, ~~financial~~"Gleacher" ~~advisory services.~~or ~~The~~the "Company") ~~also~~is ~~provides~~incorporated under ~~capital~~the ~~raising,~~laws ~~research-based~~of ~~investment~~the ~~analysis,~~State ~~and~~of ~~securities brokerage services~~Delaware. The Company's ~~offers~~common astock ~~range~~is oftraded ~~products~~on ~~through~~The ~~its~~NASDAQ ~~Investment~~Global ~~Banking, MBS &~~Market ~~Rates~~("NASDAQ") ~~and~~under ~~Credit~~the ~~Products~~symbol ~~divisions~~"GLCH."

The Company ~~also~~recently ~~provided~~announced ~~residential mortgage lending services through ClearPoint. On February 14~~that, ~~2013,~~after ~~the Company entered into~~ an ~~agreement~~extensive toevaluation ~~sell substantially all~~ of ~~ClearPoint's~~ ~~assets~~other ~~to Homeward~~alternatives, ~~with~~its ~~the~~Board ~~remaining~~of ~~business~~Directors ~~activities~~has ~~being~~determined ~~wound~~that ~~down.~~it ~~This~~is ~~transaction~~in ~~closed~~the onbest ~~February 22,~~interests ~~2013. Refer to "Sale~~ of ~~ClearPoint"~~the ~~below, as well as~~Company's ~~Note 29~~stockholders ~~within~~that the ~~footnotes~~Company todissolve, ~~the~~liquidate ~~consolidated~~and ~~financial~~distribute ~~statements~~to ~~contained~~stockholders inits ~~Item 8~~available ~~of this Annual Report on Form 10-K for additional information~~assets.

~~Our business~~ isPlanned ~~dependent~~Dissolution ~~on our ability to attract, develop~~ and retain highly skilled employees who are motivated and committed to providing the highest quality service and guidance to our clients. The Company is well capitalized, with no significant long-term debt. Liquidation

~~During~~As previously announced, the Company has been engaged in a lengthy and intensive evaluation of potential strategic alternatives in order to preserve and maximize stockholder value. Those potential alternatives included (i) pursuing a strategic transaction with a third party, such as a merger or sale of the ~~year~~Company; ~~ended~~(ii) the ~~December~~reinvestment of the Company's liquid assets in favorable opportunities; and (iii) 31dissolving the Company, ~~2012~~winding wedown ~~operated~~its remaining ~~through~~operations and distributing its net assets to its stockholders, after making appropriate reserves for liabilities and expenses. The Board of Directors and the ~~following~~Company, ~~four~~together ~~business~~with ~~segments:~~its external advisors, devoted substantial time and effort in seeking, identifying and pursuing opportunities and other alternatives to enhance stockholder value; however, that process had not at that time yielded any opportunities viewed by the Board as reasonably likely to provide greater realizable value to stockholders than the complete dissolution and liquidation of the Company.

The Company's dissolution was unanimously approved by the Board of Directors on March 12, 2014, but is subject to stockholder approval. The Company intends to present this proposal to its stockholders of record as of April 21, 2014 at the 2014 Annual Meeting, currently scheduled for May 29, 2014. The Company will file prescribed proxy materials with the Securities and Exchange Commission in advance of that meeting. In connection with the dissolution, the Company intends to distribute to its stockholders all available cash other than as may be required to pay expenses and pay or make reasonable provision for known and potential claims and obligations of the Company, as required by applicable law. The Board of Directors' decision contemplates an orderly wind down of the Company's remaining business and operations, including the dissolution and winding-up of subsidiaries. If approved by the Company's stockholders, the Company intends to file a certificate of dissolution, pay, satisfy, resolve or make reasonable provisions for claims and obligations as well as anticipated costs associated with the Company's dissolution and liquidation, and seek to convert its remaining assets into cash or cash equivalents as soon as reasonable, practicable and financially prudent.

If the Company's stockholders approve the proposal, the Company currently expects to make an initial liquidating distribution to stockholders of approximately $20 million ($3.23 per share). The Company expects to make this initial liquidating distribution as soon as practicable following receipt of stockholder approval and filing of a certificate of dissolution. The amount of this initial distribution reflects the Company's current liquid assets offset in part by provisions, or reserves, for future operating costs and expenses associated with dissolution and liquidation and, as required by law, for other known and potential claims and obligations. Delaware law requires that, in connection with a dissolution, the Company's Board of Directors make reasonable provision for known and potential claims and obligations of the Company and maintain those reserves until resolution of such matters, and similar legal requirements apply to our subsidiaries. The Board of Directors, in consultation with its advisors, has evaluated the liabilities, expenses, and known potential claims and obligations of the Company and its subsidiaries, as well as other matters, in order to estimate the amount that will be reserved. Insofar as the reserves required by applicable law exceed, in the view of the Board of Directors, the ultimate amounts the Company will likely be required to pay creditors, the Board of Directors believes there is a reasonable possibility that a portion of the reserves will ultimately be

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~~Other~~distributed ~~Activities~~to stockholders. The Board of Directors currently believes that these subsequent distributions could range between $40 million and $70 million ($6.47 and $11.32 per share), for a total aggregate distribution to stockholders ranging between $60 million and $90 million ($9.70 and $14.55 per share). The Board will evaluate the Company's reserves on a periodic basis and will approve liquidating distributions when and as it deems appropriate. Additional liquidating distributions will be made to the extent the required contingency reserves are released and upon the Company's non-cash assets being monetized, which would likely span a multi-year period. Further details regarding anticipated future distributions will be disclosed in the Company's proxy materials to be filed in connection with the Company's 2014 Annual Meeting.

The ~~Company~~amount ~~also~~distributable ~~recognizes~~to ~~investment~~stockholders, ~~gains/(losses)~~both initially and ~~earns~~in ~~fees~~total, ~~related~~may tovary substantially from the ~~Company's~~amounts ~~investment~~currently inestimated ~~and~~based ~~management~~on ofmany FAfactors, ~~Technology~~including the resolution of ~~Ventures L.P.~~outstanding ~~("FATV"~~known orclaims and obligations, the ~~"Partnership")~~possible aassertion ~~fund~~of claims that ~~holds~~are ~~investments~~currently inunknown ~~privately~~to ~~held~~the ~~companies.~~Company, ~~The~~the ~~Company's~~ability ~~results~~to ~~also~~receive ~~include~~reasonable ~~expenses~~value ~~not~~when ~~directly~~selling ~~associated~~or ~~with~~otherwise ~~specific reportable~~monetizing ~~segments~~its assets, including ~~goodwill~~its ~~impairment~~investment ~~charges~~in FA Technology Ventures L.P. ("FATV"), and costs ~~related~~incurred to ~~corporate~~wind ~~overhead~~down ~~and~~the ~~support~~Company's business. Further, ~~such~~if asadditional ~~various~~amounts ~~fees~~are ~~associated~~ultimately ~~with~~determined ~~financing,~~to ~~legal~~be necessary ~~and~~to ~~consulting~~satisfy ~~expenses~~or ~~and amortization~~make provision for any of ~~certain~~these ~~intangible~~obligations, ~~assets~~stockholders ~~from~~may ~~business~~receive ~~acquisitions~~substantially ~~not~~less ~~reported~~than ~~within~~the ~~discontinued~~current ~~operations~~estimates.

Until such ~~Recent~~time, ~~Adverse~~if ~~Events~~ any, as the stockholders approve the Company's dissolution, and the Board of Directors decides, and instructs management, to proceed with a dissolution, the Company will continue to investigate and consider any feasible, alternative, value-creating transactions of which it becomes aware. If prior to its dissolution, the Company receives an offer for a transaction that, in the view of the Board, would be expected to provide superior value to stockholders than the value of the currently estimated distributions, taking into account factors that could affect valuation, including timing and certainty of payment or closing, proposed terms and other factors, the dissolution could be abandoned in favor of such a transaction, even if dissolution has been previously approved by the Company's stockholders.

In ~~recent~~Going ~~years,~~Concern ~~we have incurred losses~~ and ~~experienced~~Basis ~~significant turnover, including among our senior management and business leaders~~ of our operating segments, as well as a number of departures, generally, throughout the ranks of our organization. Most recently, we have experienced several events that have adversely affected business operations and resulted in a further deterioration of our financial results. As discussed above under Item 1, "Business—Overview," uncertainties regarding the implications of our net losses and management and employee turnover have been aggravated by the absence of a strategic alternative, the departure of Mr. Gleacher, the departures of key personnel and a prospective turnover on our Board, resulting in further questions regarding the stability and strategic direction of the Company and adversely affecting relations with both our clients and our employees. A number of our trading customers have reduced or suspended trading activities with us, adversely impacting our revenues. Moreover, at least in part because of the perceived instability of our business, new investment banking mandates have dwindled. These events have weakened employee morale, which may lead to additional resignations. As a result, we have experienced a significant decline in revenue, and we cannot predict when, or if, we will be able to reduce or reverse this decline and associated losses. Presentation

~~In order~~As tonoted ~~address these issues and preserve value for our stockholders~~above, the Company's isBoard ~~seeking,~~of ~~and~~Directors ~~may~~approved ~~continue to seek,~~ a ~~strategic~~dissolution ~~transaction~~and ~~with~~liquidation aof ~~third~~the ~~party~~Company, ~~that~~subject ~~could~~to ~~result,~~stockholder ~~for~~approval. ~~example,~~In inconnection anwith ~~acquisition~~this ofintention, the Company orintends ~~the~~to ~~sale~~distribute ofto ~~all~~its orstockholders ~~substantially~~ all ofavailable ~~our~~cash ~~assets.~~other ~~Subsequent~~than toas ~~our~~may ~~February 15~~be ~~update~~required onto ~~our~~pay ~~review~~or ofmake ~~strategic~~reasonable ~~alternatives,~~provision wefor ~~have~~known ~~been~~and ~~approached~~potential byclaims ~~third~~and ~~parties~~obligations ~~regarding~~of ~~potential~~the ~~strategic alternatives~~Company. IfThe weBoard ~~are~~of ~~unable~~Directors' todecision ~~consummate~~also contemplates a ~~strategic transaction~~further, weorderly ~~will~~wind ~~consider~~down ~~such~~of ~~alternatives,~~the ifCompany's ~~any,~~business ~~as may be available to us at such time. In doing so, we will consider all relevant factors, including our financial condition~~ and ~~operating~~operations ~~results~~and, ~~our~~if ~~access~~approved toby ~~financial~~the Company's ~~resources~~stockholders, the ~~market~~filing ~~environment~~of ~~and~~a ~~our~~certificate ~~financial~~of ~~and operational prospects. Depending on the circumstances~~dissolution, ~~courses~~among ofother ~~action~~matters. ~~could~~All ~~consist~~ of ~~expeditious~~these ~~reduction~~factors ofraise ~~operating~~substantial ~~and~~doubt ~~overhead~~about ~~expenses~~the ~~and/or~~Company's ~~monetization~~ability ofto ~~assets,~~continue ~~among~~as ~~other~~a ~~steps~~going concern.

Accounting principles ~~Sale~~generally accepted in the United States of ~~ClearPoint~~America (~~February 2013~~"GAAP") require financial statements to be prepared on a going concern basis. A liquidation basis of accounting is only appropriate to the extent liquidation is imminent. In order to meet this criteria, among other factors, the plan for dissolving the Company, which would be followed by liquidation must be approved by the person or persons with the authority to make such a plan effective, which in this instance, is the Company's stockholders. If the plan of dissolution is approved by the Company's stockholders at the Company's 2014 Annual Stockholders Meeting, currently scheduled for May 29, 2014, the Company would then prospectively prepare its financial statements on a liquidation basis of accounting. The Company's accompanying financial statements contained within Item 8 of this Annual Report on Form 10-K, and the discussion and financial information contained herein, have been prepared on a going concern basis as liquidation currently is not imminent.

On January 3, 2011, the Company acquired ClearPoint with the intent to add an element of competitive differentiation for the Company's MBS Business. That differentiation was to have been achieved by offering customers of the Company's MBS Business, institutional investors, the ability to purchase mortgage backed securities backed by loans that conformed to customized specified pool characteristics. ClearPoint intended to originate loans according to customers' desired specifications, deliver those loans to a Government Sponsored Enterprise (GSE, or FNMA, FHLMC, or GNMA) in exchange for a security backed by those loans, and sell that security to the Company's MBS unit—for onward sale to the MBS unit's customers. The strategy required ClearPoint to have GSE seller servicer approvals, the application for which required the development of adequate infrastructure, and sustained profitability in the ClearPoint subsidiary as a standalone business unit. 22

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~~ClearPoint is~~ aDiscontinuation ~~"wholesale third party originator"~~ of ~~conforming~~Operations ~~residential~~and ~~loans.~~Appointment ~~The original business strategy included three options for the sale~~ of ~~loans~~Capstone ~~that~~Advisory ~~ClearPoint originates~~Group, namely: 1. sell to "aggregators" (who may retain the loans for their balance sheets, or deliver them to a "GSE window"); 2. sell to a GSE "window" for cash; 3. sell to a GSE window and receive a GSE security in return—for onward sale, as described above, through the Company or other broker dealers, to MBS buyers. Since inception, without GSE approvals, ClearPoint has been forced to sell all the loans it originates to aggregators. LLC

~~Since implementing~~The ~~our~~Company ~~mortgage~~has ~~origination~~no ~~strategy,~~meaningful ~~beginning~~revenue-producing ~~with~~operations. In the ~~acquisition~~first quarter of ~~ClearPoint~~2013, ~~market dynamics have changed dramatically. As~~ the ~~effects~~Company ofoperated ~~the~~an ~~mortgage~~investment ~~crisis have~~banking ~~rippled~~business, ~~through~~predominately ~~the~~fixed-income ~~market,~~sales ~~representation~~ and ~~warranty~~trading ~~risk~~and ~~became~~financial anadvisory ~~intense focus. Moreover~~services, asthrough ~~mentioned~~three ~~above,~~principal ~~without~~business ~~GSE~~units: ~~approvals,~~Investment ~~ClearPoint is confined to selling loans to a limited universe of aggregators~~Banking, ~~thus~~MBS & ~~providing~~Rates noand ~~benefit~~Credit ~~to the Company's MBS customers~~Products. ~~These~~The ~~factors led the~~ Company also toengaged ~~conclude~~in ~~that~~residential ~~the~~mortgage ~~commercial~~lending ~~prospects~~operations ~~for~~through its ~~mortgage~~subsidiary ~~origination~~ClearPoint ~~activity have greatly diminished. As a result~~Funding, ~~on February~~ ~~14,~~Inc. ~~2013, the Company entered into an agreement to sell substantially all of~~ ("ClearPoint~~'s assets to Homeward~~"). This transaction closed on February 22, 2013. Refer to Note 29 within the footnotes to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K for additional information.

~~The~~During ~~Company~~the ~~estimates~~second itquarter ~~will~~of ~~recognize~~2013, athe ~~loss~~Company's Board of ~~approximately~~Directors ~~$5.0~~approved plans to discontinue operations in its MBS ~~million~~& Rates (including RangeMark Financial Services ("RangeMark")) and Credit Products divisions (together, "Fixed Income" or the "Fixed Income businesses") as well as, later in ~~connection~~the ~~with~~quarter, ~~this~~its ~~disposition~~Investment Banking division. ~~ClearPoint~~Exiting ~~will~~these bebusinesses impacted ~~reclassified~~approximately as150 aemployees. The ClearPoint business was discontinued, ~~operation~~and the business sold to Homeward Residential, Inc. ("Homeward") in February 2013 (the "Homeward Transaction"). In addition, in the ~~first~~third quarter of ~~2013~~2011, the Company exited the Equities business. Exiting the Equities business impacted 62 employees. As of March 17, 2014, the Company had 13 employees.

On May 31, ~~Realignment~~2013, the Board of ~~Investment~~Directors ~~Banking~~appointed Christopher J. Kearns of Capstone Advisory Group, LLC ("Capstone") as the Company's Chief Restructuring Officer and ~~Exit~~Chief Executive ~~from~~Officer. The Company also entered into an agreement with Capstone and Mr. Kearns, pursuant to which Capstone was engaged to provide a number of services to the ~~Equities~~Company, ~~Business~~including (i) evaluating and implementing, subject to the approval of the Company's Board of Directors, the chosen course of action to preserve asset value and maximize recoveries to stockholders under the circumstances; (~~August~~ii) overseeing ~~2011~~the operations of the Company through execution of the selected course of action; (iii) ascertaining personnel and potential funding required and taking key steps to effectuate the selected course of action; and (iv) soliciting and evaluating expressions of interest in certain assets of the Company and effectuating such sales where appropriate and practical under the circumstances.

In the second quarter of 2011, the Company appointed a new Chief Executive Officer ("CEO") and Chief Operating Officer ("COO") with a mandate to engage in a comprehensive review of the Company's business operations, its resources and competitive landscape. The focus of this review included:

In August 2011, the Company announced the implementation of a new strategic plan. The plan elements included the continued service to clients through the fixed income business and the realignment and investment in the core investment banking practice.

As part of this strategic plan, the Company exited the Equities business, effective August 22, 2011 impacting 62 employees. (Refer to Notes 25 and 26 within the footnotes to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K for additional information.) The Company also terminated 32 investment banking employees as well as certain administrative positions.

Financial Position

At December 31, 2012, we held over $1 billion of financial instruments in inventory of primarily highly liquid securities which are sensitive to market movements. We do not have any significant direct exposure to the sub-prime or European sovereign debt markets, but we are subject to market fluctuations resulting from news and corporate events in such markets, associated write-downs by other financial services firms and interest rate and prepayment speed fluctuations. The financial instruments are financed by our clearing agent and, to a lesser extent, through repurchase agreements.

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The Company had no material open commitments to fund FATV's portfolio at December 31, 2012 and 2011. The fair value of the Company's investment at December 31, 2012 and 2011 was approximately $17.1 million and $15.9 million, respectively with gains of $1.2 million and $2.1 million, respectively.

2012 Business Environment and Impact on Us

Unfavorable or uncertain economic and market conditions impact our results and can be caused by a number of factors, including declines in economic growth, business activity or investor confidence, limitations on the availability or increases in the cost of credit and capital, increases in inflation, interest rates, outbreaks of hostilities or other geopolitical instability, corporate, political or other scandals that reduce investor confidence in the capital markets, or a combination of these or other factors. Such factors influence levels of debt and equity security issuance and merger and acquisition activity, which affects our investment banking business. The same factors also affect trading volumes and valuations in secondary financial markets, which affect our sales and trading businesses. Commission rates, market volatility and other factors also affect our sales and trading revenues and may cause these revenues to vary from period to period.

Ongoing uncertainties about the global economic outlook including those stemming from the most recent presidential election together with long-term domestic fiscal challenges such as continued debt ceiling, budget and tax reform debates, the ongoing European debt crisis, prolonged weakness in the housing markets and high levels of unemployment, both of which are beginning to show improvement, and the after-effects of Hurricane Sandy, have led to volatile global markets and challenging economic conditions. The lingering effects of these macroeconomic headwinds have led to a persistent risk-averse market environment, resulting in spread compression and lower trading volumes, as well as sustained pressures on investment banking activities.

We have no direct exposure to European sovereign debt. The majority of our financial instruments owned are agency mortgage-backed securities which are susceptible to prepayment and interest rate risk. Ongoing housing-rescue efforts including programs aimed at helping struggling homeowners refinance their homes, coupled with the low interest rate environment, has caused these securities to experience a high level of prepayments and thus put pressure on the valuation of these securities. We also hold to a lesser extent, non-agency mortgage backed securities positions.

A substantial portion of our revenues are derived from trading in agency mortgage-backed securities within our MBS & Rates division and riskless principal trading in fixed income within our Credit Products divisions. Our MBS & Rates division experienced lower volumes compared to the prior year due to among other things, the challenging market conditions, as well as the Federal Reserve's quantitative easing program which has the effect of removing supply from the market and hampering volatility. Volumes in our Credit Products division improved as a result of the low interest rate environment and investors continuing search for attractive yields.

High yield and high grade new issue volumes in the financial markets also improved compared to the prior year. However, M&A advisory activities continued to be adversely impacted by the global economic environment. The total M&A global dollar deal volume in 2012 was roughly in-line with 2011 and was hampered by the prolonged lack of confidence in the financial markets. It is quite possible that these trends will continue into 2013.

The year ended December 31, 2012 proved to be challenging. Given the continued uncertainties both domestically and abroad, the results of our operations, which are largely dependent on the environment in which our businesses operates, may not necessarily be indicative of what may be recognized in the future.

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FINANCIAL OVERVIEW

The Company prepares its consolidated financial statements using accounting principles generally accepted in the United States of America ("GAAP"). These consolidated financial statements are contained within Item 8 of this Annual Report on Form 10-K. The ~~financial~~prior period results ~~set~~of ~~forth~~the inCompany's ~~the~~Investment ~~foregoing~~Banking, ~~table~~Fixed ~~may~~Income ~~not~~and beClearPoint ~~representative~~divisions ofhave ~~future~~been ~~results~~reclassified ~~due~~ to ~~recent~~discontinued ~~developments~~operations ~~described~~in ~~under~~order ~~Item 1,~~to ~~"Business—Overview"~~conform ~~and~~to ~~elsewhere~~the incurrent ~~this~~year ~~Annual Report on Form 10-K~~presentation.

The financial results set forth in the following table may not be representative of future results due to recent developments described under Item 1, "Business—Overview" and elsewhere in this Annual Report on Form 10-K.

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Results of Operations

	Years ended December 31,
(In thousands of dollars)	2012			2011			2010
	2013			2012			2011
Revenues
Principal transactions	$	52,771		$	89,108		$	79,433
Investment gains, net	$	1,267		$	1,233		$	2,996
Commissions		71,418			71,347			76,817
Fees and other		666			849			1,066
Investment banking		30,553			33,069			43,400

Investment banking revenues from related party		—			—			1,947
Total revenue		1,933			2,082			4,062
Investment gains, net		1,233			2,996			7

Interest income		48,796			66,194			57,292
Expenses
Gain from bargain purchase—ClearPoint Funding, Inc. acquisition (Refer to Note 11 contained in Item 8 of this Annual Report on Form 10-K)		—			2,330			—
Compensation and benefits		9,098			13,053			12,017
Fees and other		11,651			8,041			1,004
Professional fees		11,184			9,643			4,503
Total revenues		216,422			273,085			259,900
Settlement of arbitration and other claims		3,146			—			—
Interest expense		12,827			11,913			11,318
Communications and data processing		1,181			1,935			2,105
Net revenues		203,595			261,172			248,582
Occupancy, depreciation and amortization		1,349			1,577			1,346
Expenses (excluding interest)
Other		3,584			2,880			3,262
Compensation and benefits		143,414			162,537			222,833

Clearing, settlement and brokerage		40,281			35,203			4,314
Total expenses		29,542			29,088			23,233
Impairment of goodwill and intangible assets (Refer to Note 12 contained in Item 8 of this Annual Report on Form 10-K)		21,096			80,244			—

Professional fees		15,504			8,135			7,966
Loss from continuing operations before income taxes and discontinued operations		(27,609	)		(27,006	)		(19,171	)
Communications and data processing		12,806			13,471			11,464
Income tax (benefit)/expense		(1,082	)		22,940			(7,422	)
Occupancy, depreciation and amortization		8,919			8,455			11,941

Business development		3,719			4,620			4,825
Loss from continuing operations		(26,527	)		(49,946	)		(11,749	)
Loss from extinguishment of mandatorily redeemable preferred stock (Refer to Note 17 contained in Item 8 of this Annual Report on Form 10-K)		—			—			1,608
Loss from discontinued operations, net of taxes (Refer to Note 22 contained in Item 8 of this Annual Report on Form 10-K)		(73,005	)		(27,744	)		(70,375	)
Other		11,209			10,384			9,414

Total expenses (excluding interest)		256,948			323,049			274,365
Net loss	$	(99,532	)	$	(77,690	)	$	(82,124	)
Loss before income taxes and discontinued operations		(53,353	)		(61,877	)		(25,783	)

Income tax expense/(benefit)		24,602			2,207			(9,778	)

Loss from continuing operations		(77,955	)		(64,084	)		(16,005	)
Income/(loss) from discontinued operations, net of taxes		265			(18,040	)		(4,616	)
Net loss	$	(77,690	)	$	(82,124	)	$	(20,621	)

33 Years Ended December 31, 2013 and 2012

Revenues

As previously mentioned, the Company has no meaningful revenue-producing operations. Revenues are currently earned from investment gains and losses of the Company's legacy investments. Refer to Note 10 within the footnotes to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K. In addition, the Company may recognize other miscellaneous income, including revenues related to the clawback of certain stock-based compensation grants subject to non-competition provisions.

For the year ended December 31, 2013, net revenue from continuing operations was $1.9 million, relatively unchanged compared to the year ended December 31, 2012.

Expenses

Expenses for the year ended December 31, 2013 of $29.5 million increased $0.4 million, or 1.6%, compared to $29.1 million for the year ended December 31, 2012.

Compensation and benefits expense from continuing operations for the year ended December 31, 2013 of approximately $9.1 million, includes approximately $2.0 million of compensation associated with certain former administrative employees (including the Company's former Chief Executive Officer and Chief Operating Officer), incurred principally during the six months ended June 30, 2013. In addition, compensation and benefits expense for the year ended December 31, 2013 includes (i) approximately $2.7 million incurred in connection with the Company entering into retention agreements with Company employees, including with the Company's General Counsel and Secretary, and its Controller and (ii) approximately $0.4 million of fees paid to Capstone associated with services provided by

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Mr. Christopher J. ~~Years~~Kearns ~~Ended~~in ~~December 31,~~connection ~~2012~~with his role as the Company's Chief Restructuring Officer and ~~2011~~ Chief Executive Officer. Compensation and benefits expense declined when compared to the prior year due to lower average headcount, resulting from the previously mentioned headcount reductions in administrative functions due to the Company's restructuring that occurred in the second quarter of 2013.

~~For~~Professional fees of $11.2 million for the year ended December 31, ~~2012,~~2013 ~~net~~increased ~~revenues~~by ~~from~~approximately ~~continuing operations were~~ $~~203~~1.65 million, when compared to the year ended December 31, ~~$261~~2012.~~2 million~~ Included within professional fees for the year ended December 31, ~~2011.~~2013 ~~The~~were 22reimbursements to MatlinPatterson of approximately $1.0%1 million ~~decrease~~incurred in ~~net~~connection ~~revenues~~with ~~was~~the preparation, ~~primarily~~distribution ~~due~~and tosolicitation ~~decreased~~of ~~net~~their ~~revenues~~proxy inmaterials associated with the ~~MBS &~~2013 ~~Rates~~Annual ~~segment. Non-interest~~Meeting ~~expenses~~of ~~for~~Stockholders ~~the~~and ~~year~~advisory ~~ended~~fees ~~December 31,~~paid ~~2012~~to Capstone of approximately $~~256~~1.98 million, which ~~decreased~~excludes ~~$66~~the previously mentioned fees within compensation and benefits.1 In addition, in the 2013 period, the Company has incurred legal fees in connection with matters associated with the terminations of its former Chief Executive Officer and Chief Operating Officer, as well as legal fees incurred in connection with the settlement of compensation and other claims brought by a former employee (both matters of which are further described within Note ~~million~~17 contained in Item 8 of this Annual Report on Form 10-K), orhigher 20legal fees associated with the Company's 2013 Annual Meeting of Stockholders and other matters.~~5%,~~ ~~compared~~Offsetting tothese increases were lower fees incurred in connection with the Company's strategic review process which were approximately $~~323~~1.03 million for the year ended December 31, ~~2011,~~2013 ~~principally~~(and ~~due~~includes approximately $1.0 million prior to the ~~goodwill~~Company's ~~and~~restructuring ~~intangible~~in ~~impairment~~the ~~charge~~second quarter of 2013), compared to approximately $~~80.~~2.7 million ~~recorded~~for in the ~~third~~prior ~~quarter~~year. ofThe ~~2011,~~2012 ~~compared~~period to(but anot ~~goodwill~~the ~~impairment~~2013 ~~charge~~period) of also includes approximately $212.18 million ~~recorded~~of inconsulting ~~the~~fees ~~second~~associated ~~quarter~~with the Company's exploration of ~~2012~~launching an asset management business.

~~The~~During ~~Company reported a net loss from continuing operations of $78.0 million and $64.1 million for~~ the ~~years~~year ended December 31, ~~2012 and 2011~~2013, ~~respectively.~~the ~~Net~~Company ~~loss per~~recorded ~~diluted~~a ~~share~~charge ~~from~~of ~~continuing~~approximately ~~operations was~~ $03.662 million ~~and~~in ~~$0.52~~connection ~~for~~with the ~~years~~settlement ~~ended~~of ~~December 31,~~compensation ~~2012~~ and ~~2011,~~other ~~respectively.~~claims brought ~~Income/(loss)~~by ~~from~~a ~~discontinued~~former ~~operations,~~employee. ~~net~~Refer ofto ~~taxes,~~Note 17 ~~for~~contained ~~the years~~in ~~ended December~~Item ~~31,~~8 ~~2012~~of ~~and~~this ~~2011~~Annual ~~were~~Report ~~$0.3~~on Form ~~million~~10-K ~~and~~for ~~($18.1)~~additional ~~million, respectively~~information.

~~Net~~ Communications ~~Revenues~~and data processing expense of $1.2 million for the year ended December 31, 2013 decreased by 39.0%, or $0.8 million, primarily due to ongoing cost reductions in connection with the Company's restructuring.

~~For~~Occupancy ~~the year ended December 31, 2012, net revenues from continuing operations were $203.6 million, compared to $261.2 million for the year ended December 31, 2011. Commissions~~ and ~~principal~~depreciation ~~transactions~~expense ~~revenues decreased $26.3 million, or 22.6%, to $124.2 million for the year ended December 31, 2012 from $160.4 million for the year ended December 31, 2011 due to a decrease~~ of $461.4 million in the MBS & Rates segment, partially offset by an increase in ClearPoint of $6.5 million and the Credit Products segment of $3.4 million. Investment banking revenues decreased $2.5 million, or 7.6%, to $30.6 million for the year ended ~~December 31,~~ ~~2012. Investment gains/(losses), which represent the change in the value of the Company's investment in FATV, were gains of $1.2 million for the year ended~~ December 31, ~~2012~~2013 ~~compared~~remained torelatively ~~gains~~unchanged ~~of $3.0 million for the year ended December 31, 2011. Net interest income of $36.0 million as of December 31, 2012, decreased $18.3 million~~ compared to ~~$54.3 million for~~ the year ended December 31, ~~2011. This was primarily due to lower average inventory and coupon interest received. Fees and other revenues of $11.7 million for the year ended December 31,~~ 2012 ~~increased $3~~.~~6 million~~ primarily due $2.6 million related to the clawback of certain stock-based compensation grants subject to non-competition provisions and an increase in fees earned in connection with the mortgage lending activities of ClearPoint, partially offset by the ClearPoint bargain purchase gain of $2.3 million recorded in the prior-year period.

~~Non~~ Other expenses of $3.6 million for the year ended December 31, 2013 increased $0.7 million, or 24.4%, compared to the year ended December 31, 2012. During the fourth quarter of 2013, the Company recorded a non-~~Interest~~cash charge of approximately $0.7 million related to a reduction of an indemnification receivable, associated with an uncertain tax position ~~Expense~~for which the statute of limitations has expired (of which this charge is offset by a benefit recorded within the Company's provision for income taxes). Other expenses for the year ended December 31, 2013 also includes a charge of $0.4 million related to a reserve taken on an outstanding loan receivable. Partially offsetting these items were prior year miscellaneous expenses of $0.2 million associated with the Company's strategic review process, as well as other miscellaneous items.

Non-interest expenses for the year ended December 31, 2012 of $256.9 million decreased $66.1 million, or 20.5%, compared to $323.0 million for the year ended December 31, 2011.

Compensation and benefits expense was $143.4 million for the year ended December 31, 2012, a decline of $19.1 million compared to the year ended December 31, 2011. The decline was primarily attributable to lower net revenues in the MBS & Rates division. Compensation and benefits for the year ended December 31, 2012 was also reduced by $4.1 million related to stock-based compensation forfeitures, which included $2.9 million related to employees within the MBS & Rates division recognized during the second quarter of 2012 (Refer to "Segment Highlights—MBS & Rates"). These declines were partially offset by the Company's decision to pay year-end bonus compensation primarily in the form of cash. In making this determination, the Company considered a variety of factors including the significant discount to which the Company's stock trades in relation to its book value. The cash bonuses were fully vested awards and entirely recognized during the year ending December 31, 2012. Compensation expense was also impacted by $1.6 million of compensation guarantees principally incurred in the MBS & Rates division in connection with the division's rebuild.

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Compensation and benefits expense for the year ended December 31, 2011 included severance and stock-based compensation expense of $1.9 million recognized in connection with the Investment Banking division realignment, as well as compensation expense of $1.7 million recognized in the second quarter of 2011 due to the resignation of the former interim CEO. In addition, annual compensation expense in 2011 for members of senior management included an element of stock-based compensation, which is recognized over a future vesting period, which is generally three years.

Compensation and benefits expense from continuing operations, as a percentage of net revenues, was 70.4% for the year ended December 31, 2012, compared to 62.2% for the year ended December 31, 2011. The increase in the ratios year-over-year is directly related to the lower net revenues, as well as the Company's election to pay primarily cash compensation in the current year, compared to a mix of cash and stock in the prior year.

Clearing, settlement and brokerage costs of $40.3 million for the year ended December 31, 2012 increased by $5.1 million, or 14.4%, compared to the year ended December 31, 2011. The increase was primarily due to ClearPoint broker fees resulting from higher loan commitment volumes.

The Company recorded a goodwill and intangible impairment charge of $21.1 million during the year ended December 31, 2012 (recognized in the second quarter) due to the duration and severity of the decline in the Company's stock price in relation to its book value. During the year ended December 31, 2011, the Company recorded an impairment charge of $80.2 million as a result of the previously mentioned Investment Banking realignment (Refer to Notes 12 within the footnotes to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K for additional information).

Professional fees of $15.5 million for the year ended December 31, 2012 increased by $7.4 million, or 90.6%, primarily due to higher legal, consulting and advisory fees incurred in connection with our strategic alternatives process, as well as costs incurred in connection with the Company's asset management initiative.

Communications and data processing expense of $12.8 million for the year ended December 31, 2012 remained relatively unchanged compared to the year ended December 31, 2011.

Occupancy and depreciation expense of $8.9 million for the year ended December 31, 2012 remained relatively unchanged compared to the year ended December 31, 2011.

Business development expense of $3.7 million for the year ended December 31, 2012 decreased by $0.9 million, or 19.5%, compared to the year ended December 31, 2011, primarily due to the realignment of the Investment Banking division which took place in the third quarter of 2011 and the resulting decreased headcount.

Other expenses of $11.2 million for the year ended December 31, 2012 increased $0.8 million, or 7.9% compared to the year ended December 31, 2011, primarily due to ClearPoint loan processing fees from increased loan commitment volumes.

Income Taxes

Year Ended December 31, 2013

The Company provided for a full valuation allowance against the net operating losses ("NOLs") generated during the year ended December 31, 2013. The Company's pre-tax NOL at December 31, 2013 is estimated to be approximately $159 million. In the event that the Company experiences an

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ownership change under Internal Revenue Code Section 382, the Company's NOLs would be fully impaired (reduced nearly to zero). Absent an ownership change, including in the event of a dissolution, the Company's NOLs would be available to offset any income it may recognize, if any. The Company's income tax benefit from continuing operations of $1.1 million for the year ended December 31, 2013 is primarily due to the reduction of an uncertain tax position of approximately $0.7 million due to the expiration of the statute of limitations and provision to return adjustments of approximately $0.5 million.

Year Ended December 31, 2012

~~The~~In ~~Company's effective income tax rate from continuing operations for~~ the ~~year~~second ~~ended~~quarter ~~December 31,~~of 2012, ~~was~~the ~~negative~~Company ~~46.1%, resulting~~entered ininto ~~income~~a ~~tax~~three-year ~~expense~~cumulative ofloss ~~approximately $24~~position.~~6 million.~~ ~~The~~This ~~abnormal~~cumulative ~~tax~~loss ~~rate~~position, ~~differs~~along with ~~from~~other ~~the~~evidence, ~~federal~~merited ~~statutory tax rate of 35% primarily due to~~ the establishment of a valuation allowance against ~~substantially all of~~ the ~~Company's~~ deferred tax assets ~~(negative 61%), as well as the non-deductible discrete item attributable to the write-off of goodwill (negative 14%) and tax expense associated with stock-based compensation shortfalls (negative 6%)~~.

35 Income tax expense from continuing operations for the year ended December 31, 2012 was $22.9 million and was primarily due to the establishment of a valuation allowance against substantially all of the Company's deferred tax assets, of which a substantial portion has been allocated to continuing operations.

Net Loss

The Company reported a net loss from continuing operations of $26.5 million and $49.9 million for the years ended December 31, 2013 and 2012, respectively. Net loss per share from continuing operations was $4.33 and $8.40 for the years ended December 31, 2013 and 2012, respectively. Loss from discontinued operations, net of taxes for the years ended December 31, 2013 and 2012 were $73.0 million (or $11.93 per share) and $27.7 million (or $4.66 per share), respectively.

Years Ended December 31, 2012 and 2011

Revenues

For the year ended December 31, 2012, net revenue from continuing operations was $2.1 million, compared to $4.1 million for the year ended December 31, 2011. The decrease in net revenue was due to changes in the fair value of the Company's investments and lower fees and other.

Expenses

Expenses for the year ended December 31, 2012 of $29.1 million increased $5.9 million, or 25.2%, compared to $23.2 million for the year ended December 31, 2011.

Compensation and benefits expense from continuing operations of $13.1 million for the year ended December 31, 2012 increased by approximately $1.0 million when compared to the year ended December 31, 2011. The increase was primarily related to a full year of amortization of stock-based compensation during the year ended December 31, 2012, related to awards granted to the Company's former CEO and former COO in connection with their hiring in the second and third quarter of 2011, respectively.

Professional fees of $9.6 million for the year ended December 31, 2012 increased by approximately $5.1 million when compared to the year ended December 31, 2011. This increase was a result of fees incurred with the Company's strategic review process of approximately $3.0 million, as well as approximately $2.8 million of consulting fees associated with the Company's exploration of launching an asset management business. Partially offsetting these items were recruiting fees paid in connection with the hiring of our former CEO during the year ended December 31, 2011.

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InCommunications ~~the~~and ~~second~~data ~~quarter~~processing ofexpense ~~2012, the Company established a valuation allowance against substantially all~~ of ~~the Company's deferred tax assets~~$1.9 million Infor ~~assessing~~ the ~~need~~year ~~for~~ended ~~a valuation allowance~~December 31, ~~the~~2012 ~~Company~~remained ~~considered~~relatively ~~both~~unchanged ~~positive~~compared ~~and negative evidence related~~ to the ~~likelihood~~year ofended realization of the deferred tax assets. The weight given to the positive and negative evidence is commensurate with the extent to which the evidence can be objectively verified. GAAP states that a cumulative loss in recent years is a significant piece of negative evidence that is difficult to overcome in determining that a valuation allowance is not needed against deferred tax assets. As suchDecember 31, ~~it is generally difficult for~~ ~~positive~~2011 ~~evidence regarding projected future taxable income exclusive of reversing taxable temporary differences to outweigh objective negative evidence of recent financial reporting losses.~~

~~During~~Occupancy ~~the~~and ~~second~~depreciation ~~quarter~~expense of ~~2012,~~$1.6 million for the ~~Company entered into a three-~~year ~~cumulative~~ended ~~loss position. This cumulative loss position~~December 31, ~~along~~2012 ~~with~~also ~~other~~remained ~~evidence,~~relatively ~~merited~~unchanged ~~the establishment~~compared ofto ~~a valuation allowance against~~ the ~~deferred~~year ~~tax~~ended ~~assets~~December 31, 2011.

Other expenses ~~Year~~of ~~Ended~~$2.9 million for the year ended December 31, 2012 decreased $0.4 million, or 11.7%, compared to the year ended December 31, 2011 , primarily due to lower accruals for capital-based taxes.

The Company's effective income tax rate from continuing operations for the year ended December 31, 2011 of negative 3.6% resulted in income tax expense of approximately $2.2 million. The Company's tax rate differs from the federal statutory rate of 35% primarily due to non-deductible items primarily associated with the write-off of goodwill related to the Investment Banking segment.

Discontinued Operations

The Company has classified the results of the Equities division as discontinued operations due to the Company's decision to exit this business on August 22, 2011. The results for the year ended December 31, 2011 include a restructuring charge of approximately $7.1 million and a goodwill and intangible impairment charge of $14.3 million.

Refer to Notes 25 and 26 within the footnotes to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K for additional information.

Years Ended December 31, 2011 and 2010

For the year ended December 31, 2011, net revenues from continuing operations were $261.2 million, compared to $248.6 million for the year ended December 31, 2010. The 5.1% increase in net revenues was primarily attributable to ClearPoint net revenues of $46.9 million, which commenced operations at the Company on January 3, 2011, and higher investment gains of $3.0 million, resulting primarily from the change in value of the Company's FATV investment. These increases were partially offset by decreased net revenues of $16.2 million in the Credit Products segment, $14.8 million in the MBS & Rates segment and $10.8 million in the Investment Banking segment. The year ended December 31, 2011 also included a gain from bargain purchase of approximately $2.3 million related to the acquisition of ClearPoint. Non-interest expenses for the year ended December 31, 2011 of $323.0 million increased $48.7 million, or 17.7%, compared to $274.4 million for the year ended December 31, 2010, primarily due to a goodwill and intangible asset impairment charge of $80.2 million related to the Investment Banking division, partially offset by lower compensation expense of $73.5 million, excluding ClearPoint. Non-interest expenses also include expenses related to ClearPoint of $50.6 million.

The Company reported a net loss from continuing operations for the years ended December 31, 2011 and 2010 of $64.1 million and $16.0 million, respectively. Net loss per diluted share from continuing operations for the years ended December 31, 2011 and 2010 was $0.52 and $0.13, respectively. Losses from discontinued operations, net of taxes for the years ended December 31, 2011 and 2010 were $18.0 million and $4.6 million, respectively.

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Net Revenues

For the year ended December 31, 2011, net revenues from continuing operations were $261.2 million, which included the ClearPoint acquisition gain from bargain purchase of approximately $2.3 million, compared to $248.6 million for the year ended December 31, 2010. Commissions and principal transactions revenues increased $4.2 million, or 2.7%, to $160.5 million from $156.3 million primarily due to $46.9 million related to the mortgage lending activities of ClearPoint, which was partially offset by a decrease in the MBS & Rates segment of $23.1 million and $12.7 million in the Credit Products segment. Investment banking revenues decreased $12.3 million, or 27.1%, to $33.1 million for the year ended December 31, 2011 and is comprised of advisory fees of $24.4 million and capital markets fees of $8.7 million. Investment gains were $3.0 million for the year ended December 31, 2011, resulting primarily from the change in value of the Company's FATV investment, as well as gains from the sale of an investment security. There were no investment gains during the year ended December 31, 2010. Net interest income of $54.3 million as of December 31, 2011, increased $8.3 million, or 18.0%, compared to the prior year. This was due to higher average inventory levels which were partially offset by lower coupon interest received. In addition, the year ended December 31, 2010 included interest expense related to our mandatorily redeemable preferred stock which was redeemed on September 28, 2010. Fees and other revenues of $8.0 million for the year ended December 31, 2011 increased $7.0 million primarily due to fees earned in connection with the mortgage lending activities of ClearPoint.

Non-Interest Expense

Non-interest expenses for the year ended December 31, 2011 of $323.0 million increased $48.6 million, or 17.7%, compared to $274.4 million for the year ended December 31, 2010.

Compensation and benefits expense for the year ended December 31, 2011 was $162.5 million, a decrease of $60.3 million, or 27.1%, over 2010. This was primarily due to lower variable compensation expense as a result of lower net revenues in the MBS & Rates and Credit Products segments, as the Company pays many of its professional personnel with a percentage of, or otherwise based on, the net revenues generated by that professional or his or her business unit. Variable compensation expense also decreased in the Investment Banking segment as a result of the realignment which occurred in the third quarter of 2011. This action better aligned compensation as a percentage of revenue with management's goals. In addition, annual compensation expense in 2011 for members of senior management was lower and compensation expense for certain leaders of the Company's business segments was weighted more heavily toward stock-based compensation (which is recognized over the future vesting period, generally three years) when compared to the prior year. Compensation expense related to ClearPoint partially offset these decreases.

Compensation and benefits expense for the year ended December 31, 2010 of $222.8 million included approximately $13.3 million of expense related to the separations of our former CEO and our former CFO from the Company. Compensation and benefits expense was also impacted by $12.7 million related to the recognition of 100% of stock-based compensation expense associated with equity awards granted in connection with 2010 year-end bonuses. It was determined in the fourth quarter of 2010 that the vesting terms for those awards would exclude continued employment as a condition to vesting. Outstanding awards granted in connection with year-end bonuses for years prior to 2010 were modified to include the same vesting terms, which resulted in the acceleration of expense associated with those awards. This compensation methodology was changed in the third quarter of 2011, at the recommendation of the Company's Chief Executive Officer hired in May of 2011, with the expectation that the terms of equity awards to be granted in connection with future annual bonuses will generally provide for continued employment as a vesting condition, resulting in expensing awards over the future vesting period rather than immediately.

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Also included within compensation and benefits expense for the year ended December 31, 2010 was (i) $2.3 million of non-cash compensation expense associated with a modification to a senior executive's unvested restricted stock units and options and (ii) $1.9 million from the restructuring of an employment arrangement.

The Company recorded a goodwill and intangible asset impairment charge of $80.2 million as a result of the realignment of its Investment Banking division. (Refer to Note 12 within the footnotes to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K for additional information.)

Clearing, settlement and brokerage costs of $35.2 million for the year ended December 31, 2011 increased by $30.9 million compared to the year ended December 31, 2010. This increase was due primarily to broker fees incurred related to the mortgage lending activities of ClearPoint, as ClearPoint pays originating mortgage brokers a fee, consisting of a percentage of the loan amount, when the loan closes.

Communications and data processing expense of $13.5 million for the year ended December 31, 2011 increased by $2.0 million compared to the year ended December 31, 2010. This increase was due to enhancements to our communications systems and increased market data services expense.

Occupancy, depreciation and amortization expenses of $8.5 million for the year ended December 31, 2011 decreased by $3.5 million compared to the year ended December 31, 2010, primarily due to a $3.2 million charge recorded during the year ended December 31, 2010 related to the termination of the Company's lease of its prior headquarters. Cost savings realized due to the consolidation of our offices were offset by occupancy expense related to ClearPoint.

Professional fees of $8.1 million for the year ended December 31, 2011 remained relatively unchanged compared to the year ended December 31, 2010.

Business development expense of $4.6 million for the year ended December 31, 2011 decreased by $0.2 million compared to the year ended December 31, 2010, primarily due to decreases in Credit Products and Investment Banking related activities, partially offset by expense related to ClearPoint.

Loss from extinguishment of mandatorily redeemable preferred stock of approximately $1.6 million is related to the Company's early redemption of its mandatorily redeemable preferred stock ("Series B Preferred Stock") on September 28, 2010. (Refer Note 17 within the footnotes to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K for additional information.)

Other expenses of $10.4 million for the year ended December 31, 2011 increased by $1.0 million compared to the year ended December 31, 2010, primarily due to loan processing fees related to ClearPoint and to lower intangible amortization expense resulting from the impairment recorded in connection with the realignment of the Investment Banking division. Other expenses for the year ended December 31, 2010 also includes $0.7 million related to a partial revaluation of an indemnification receivable from the former stockholders of Gleacher Partners, Inc.

Income Tax Expense (Benefit)

Year Ended December 31, 2012

Income tax expense from continuing operations for the year ended December 31, 2012 was $22.9 million and was primarily due to the previously mentioned establishment of a valuation allowance against substantially all of the Company's deferred tax assets, of which a substantial portion has been allocated to continuing operations.

Year Ended December 31, 2011

The Company's effective income tax rate from continuing operations for the year ended December 31, 2011 of ~~negative 3~~38.67% resulted in an income tax ~~expense~~benefit of approximately $27.24 million. The Company's tax rate differs from the federal statutory rate of 35% primarily due to ~~non-deductible~~state ~~items~~and ~~primarily associated~~local ~~with~~taxes, ~~the~~partially ~~write-off~~offset ofby ~~goodwill~~provision ~~related~~ to return ~~the Investment Banking segment~~adjustments.

38Net Loss

The Company reported a net loss from continuing operations of $49.9 million and $11.7 million for the years ended December 31, 2012 and ~~Table~~2011, respectively. Net loss per share from continuing operations was $8.40 and $1.90 for the years ended December 31, 2012 and 2011, respectively. Loss from discontinued operations, net of taxes ~~Contents~~for the years ended December 31, 2012 and 2011 were $27.7 million (or $4.66 per share) and $70.4 million (or $11.40 per share), respectively.

Year Ended December 31, 2010

The effective income tax rate from continuing operations for the year ended December 31, 2010 of 37.9% resulted in an income tax benefit of approximately $9.8 million. The effective rate differs from the federal statutory rate of 35% primarily due non-deductible Series B Preferred Stock dividends recognized through September 2010 and the related non-deductible loss on early redemption. This was partially offset by state and local income taxes and a reduction in unrecognized tax benefits which is primarily a result of settlements during the year.

Discontinued Operations

~~The Company~~During ~~has classified~~ the ~~results~~second quarter of 2013, the ~~Equities~~Board ~~division~~of asDirectors ~~discontinued~~of ~~operations~~the asCompany aapproved ~~result~~plans ofto discontinue its ~~decision~~Investment toBanking ~~exit~~and ~~the business on~~Fixed ~~August 22,~~Income ~~2011~~businesses. ~~The~~In ~~results~~addition, ~~for~~during the ~~year~~first ~~ended~~quarter ~~December 31~~of 2013, ~~2011~~substantially ~~include~~all aof ~~restructuring~~ClearPoint's ~~charge~~assets ofwere ~~approximately~~sold ~~$7.1 million~~to ~~and~~Homeward a(resulting ~~goodwill~~in ~~and~~a ~~intangible~~loss ~~impairment~~of ~~charge~~approximately of $141.31 million). ~~(Refer~~As toa ~~Notes 25~~result of ~~and~~these 26exits, ~~within~~ the ~~footnotes~~ toresults ~~the consolidated financial statements contained in Item 8~~ of ~~this~~these ~~Annual~~businesses ~~Report~~have onbeen ~~Form 10-K~~classified ~~for~~as ~~additional~~discontinued ~~information~~operations.)

Discontinued operations ~~Segment~~also ~~Highlights~~ include residual profits and losses related to the Equities division due to the Company's decision to exit this business on August 22, 2011.

For presentation purposes, net revenues within each of the businesses are classified, if applicable, into commissions, principal transactions, investment banking, investment gains/(losses), net interest, and other. Commissions represent revenues primarily earned on a riskless principal basis, and to a lesser extent, revenues earned on agency transactions. Principal transactions represent gains and losses from sales and trading activities, other than riskless principal trading. Investment banking includes revenues generated from capital raising through underwritings and private placements of equity and debt securities, and financial advisory service fees in regards to mergers and acquisitions, restructuring and corporate finance related matters. Investment gains/(losses) reflect gains and losses on the Company's FATV investment. Other revenues reflect management fees received from FATV, fees earned related to the residential mortgage lending activities of ClearPoint, and other miscellaneous revenues, including clawbacks of certain stock-based compensation grants subject to non-competition provisions. Net interest includes interest income net of interest expense and reflects the effect of funding rates on the Company's inventory levels. 27

The Company's Equities segment results have been reclassified as discontinued operations and are therefore no longer reported below. In connection with this development, the goodwill and intangible asset impairment related to the Equities segment and any previously reported intangible asset amortization related to the Equities segment, which was previously included within "Other," has also been reclassified within discontinued operations. The realignment of the Investment Banking segment had no impact on comparability to prior period results.

In addition, on February 14, 2013, the Company entered into an agreement to sell substantially all of ClearPoint's assets to Homeward. This transaction closed on February 22, 2013. As a result of this transaction, the residential mortgage lending business conducted by ClearPoint will be reported as a discontinued operation in the first quarter of 2013.

The financial results set forth and discussed below may not be representative of future results due to recent developments described under Item 1, "Business—Overview" and elsewhere in this Annual Report on Form 10-K.

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~~Refer~~Amounts toreflected ~~Note 27~~in ~~within~~ the ~~footnotes~~Consolidated toStatements ~~the~~of ~~consolidated~~Operations ~~financial~~for ~~statements~~the ~~contained~~years inended ~~Item~~December 831, of2013, ~~this~~2012 ~~Annual~~and ~~Report~~2011 onrelated ~~Form 10-K~~to ~~for~~these ~~information~~discontinued ~~on assets~~operations byare ~~segment~~presented in the following table.

	Year Ended December 31,
(In thousands of dollars)	2013			2012			2011
Investment Banking (In thousands)	2012			2011			2010
Net revenue
Net revenues
Investment Banking	$	15,056		$	27,441		$	26,610
Investment banking	$	27,441		$	26,610		$	37,276
MBS & Rates		(4,412	)		40,638			103,858
Other		—			—			90
Credit Products		13,049			74,432			71,056
Total net revenues	$	27,441		$	26,610		$	37,366
ClearPoint		4,356			53,375			46,924
Operating expenses		22,863			24,320			39,586
Equities division		76			54			13,064
Pre-tax contribution/(loss)	$	4,578		$	2,290		$	(2,220	)
Other items reclassified from continuing operations		574	(1)		5,627	(1)		8,660	(1)

Total net revenue		28,699			201,567			270,172

Total expenses (excluding restructuring expense)
Investment Banking		12,633			22,863			24,320
MBS & Rates		11,003			40,511			70,738
Credit Products		14,521			70,687			61,318
ClearPoint		6,611			59,265			50,610
Equities division		169			98			31,714
Other items reclassified from continuing operations		5,752	(1)		34,532	(1)		92,828	(1)

Total expenses (excluding restructuring expense)		50,689			227,956			331,528

(Loss)/income from discontinued operations before income taxes (excluding restructuring expense)
Investment Banking		2,423			4,578			2,290
MBS & Rates		(15,415	)		127			33,120
Credit Products		(1,472	)		3,745			9,738
ClearPoint		(2,255	)		(5,890	)		(3,686	)
Equities division		(93	)		(44	)		(18,650	)
Other items reclassified from continuing operations		(5,178	)		(28,905	)		(84,168	)

Subtotal		(21,990	)		(26,389	)		(61,356	)
Restructuring expense		(50,830	)(2)		447	(2)		(7,094	)(2)

Loss from discontinued operations before income taxes		(72,820	)		(25,942	)		(68,450	)
Income tax expense		185			1,802			1,925

Loss from discontinued operations, net of taxes	$	(73,005	)	$	(27,744	)	$	(70,375	)

~~Years~~ ~~Ended~~ ~~December~~ (1)Refer to Note ~~31,~~1 ~~2012~~contained ~~vs.~~in ~~2011~~Item 8 of this Annual Report on Form 10-K (2)Refer to Note 21 contained in Item 8 of this Annual Report on Form 10-K

~~Net~~The ~~revenues~~Company's ofnet ~~the~~revenue ~~Investment~~from ~~Banking~~operations ~~segment~~now ~~were~~discontinued ~~$27.4 million~~was ~~for the year ended December 31, 2012, an improvement of~~ $028.87 million ~~compared to the year ended December 31~~, ~~2011. Net revenues were comprised of~~ $24201.36 million and $3270.12 million ~~of advisory and capital markets revenues, respectively,~~ for the ~~year~~ years ended December 31, 2013 2012 ~~compared to $21.0 million~~ and ~~$5.6 million of advisory and capital markets revenues~~ 2011, respectively~~, for the year ended December 31, 2011~~.

~~Operating~~Net ~~expenses~~revenue ~~were $22.9 million~~ for the year ended December 31, ~~2012,~~2013 awas ~~decline~~$28.7 million, of which $131.54 million ~~compared~~were togenerated during the ~~year~~first ~~ended December 31~~quarter, ~~2011.~~including ~~Included~~all revenue from ~~within~~Investment ~~the~~Banking. ~~prior-year~~The ~~period~~revenue isgenerating ~~compensation~~capabilities ~~and~~of ~~other~~the ~~charges~~Fixed ofIncome ~~$2.5 million~~businesses ~~incurred~~for inthe ~~connection~~current ~~with~~year suffered from the ~~previously~~uncertainties ~~mentioned~~and ~~investment~~adverse ~~banking~~developments, ~~realignment.~~summarized above and under ~~Pre~~Item I, "Business-~~tax~~Overview." ~~contribution~~Results ~~for~~of the ~~year~~MBS & ~~ended~~Rates ~~December 31,~~division ~~2012~~reflect ~~was~~sales ~~$4.6 million~~and trading losses, ~~compared~~including tolosses on the wind down of the Company's financial instruments owned of $29.34 million. ~~for~~The ~~the~~sales ~~year~~and ~~ended~~trading ~~December 31,~~losses ~~2011~~were partially mitigated by net interest income earned prior to the Company's restructuring. The Credit

~~Years Ended December 31, 2011 vs. 2010~~ 28

Net revenues of the Investment Banking segment were $26.6 million for the year ended December 31, 2011, a decline of $10.7 million compared to the year ended December 31, 2010. Net revenues were comprised of $21.0 million and $5.6 million of advisory revenues and capital markets revenues, respectively, for the year ended December 31, 2011, compared to $30.8 million and $6.5 million of advisory and capital markets revenues, respectively, for the year ended December 31, 2010.

Operating expenses were $24.3 million for the year ended December 31, 2011, a decline of $15.3 million compared to the year ended December 31, 2010. The decrease was primarily due to lower compensation expense resulting from the realignment of the investment banking division, which occurred in the third quarter of 2011. This action better aligned compensation expense as a percentage of revenue with management's goals. The lower compensation expense was partially offset by $2.3 million of severance and stock-based compensation expense and other non-compensation expenses resulting from the termination of 32 investment banking employees in connection with the realignment. In addition, compensation expense for the year ended December 31, 2010 was impacted by $2.3 million of non-cash compensation expense resulting from the previously mentioned changes in the vesting provisions to equity compensation awards to be granted in connection with 2010 year-end bonuses and the related impact of the changes to certain outstanding equity awards granted in connection with

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~~year-end~~Products ~~bonuses~~division ~~for~~suffered ~~prior~~significant ~~years.~~declines ~~Pre-tax~~in ~~contribution~~revenue ~~for~~upon the ~~year~~departure ~~ended~~of ~~December 31,~~approximately ~~2011~~20 ~~was~~professionals $2in mid-February 2013.~~3 million~~ Those and other subsequent departures, ~~compared~~which further contributed to athe ~~pre-tax~~Company's ~~loss~~instability, ofhad ~~($2.2) million~~a ~~for~~material adverse impact on the ~~year~~Credit ~~ended~~Products ~~December 31,~~division's ~~2010~~sales and trading activities.

	Year Ended December 31,
MBS & Rates (In thousands)	2012		2011		2010
Net revenues
Principal transactions	$	1,685	$	47,550	$	72,344
Commissions		5,663		6,203		4,552
Investment banking		682		3,924		1,513
Net interest		30,152		46,166		40,030
Other		2,456		15		218
Total net revenues	$	40,638	$	103,858	$	118,657
Operating expenses		40,511		70,738		85,310
Pre-tax contribution	$	127	$	33,120	$	33,347

The pre-tax results from discontinued operations for the year ended December 31, 2013 (excluding restructuring expenses) was a loss of $22.0 million and was directly affected by the drastic decline in revenue. Discontinued operations for the year ended December 31, 2013 was also impacted by a restructuring charge of $50.8 million. Refer to "Liquidity and Capital Resources," below.

~~Years Ended~~ ~~December 31,~~Financial ~~2012 vs. 2011~~ Condition

~~Net revenues~~The ofCompany's ~~the~~total ~~MBS &~~assets ~~Rates~~at ~~segment were $40.6~~December ~~million~~31, ~~for~~2013 ~~the~~and ~~year ended~~ December 31, 2012, awere ~~decline~~approximately of $6396.20 million ~~compared~~ ~~to the year ended December~~and $1.2 31billion, ~~2011~~respectively. The ~~decrease~~92.2% decline in ~~net~~assets ~~revenues~~ was ~~largely~~directly attributable to the ~~leadership~~sale ~~transition~~of ~~which occurred in~~ the ~~second~~Company's ~~quarter~~financial ofinstruments ~~2012.~~owned ~~This turnover led to a disruption~~ in ~~sales~~connection ~~and~~with ~~trading~~its ~~activities~~exit ~~and~~from the aFixed ~~re-positioning~~Income ofbusinesses ~~inventory.~~during ~~The division experienced approximately 70 personnel departures since April 2012 (primarily within~~ the second ~~and third~~ quarter), ~~which were subsequently replaced by the hiring~~ of ~~approximately 50 professionals~~2013. ~~Headcount~~At ~~stood at approximately 60 professionals at~~ December 31, ~~2012~~2013, ~~and~~ the Company's ~~views~~assets ~~the~~were ~~division now as~~ substantially ~~rebuilt.~~comprised Inof ~~addition,~~cash ~~the division recognized lower investment banking revenues, as well as lower net interest income year-over-year on reduced average inventory levels~~ and ~~lower~~cash ~~coupon~~equivalents ~~interest received~~ and ~~the prior year also includes non-agency asset-backed securities gains of approximately $26~~investments.~~5 million.~~ Partially offsetting these declines were approximately $2.3 million of other revenues recorded during the year ended December 31, 2012, related to the clawback of certain stock-based compensation grants subject to non-competition and/or other forfeiture provisions.

~~Operating expenses~~ were $40.5 million for the year ended December 31, 2012, a decline of $30.2 million compared to the year ended December 31, 2011. The decrease was primarily due to lower compensation expense due to the lower revenues, as well as a reduction in compensation expense of $2.6 million related to stock-based compensation forfeitures recorded during the second quarter of 2012 due to the previously mentioned leadership transition and voluntary terminations experienced during that quarter. These declines were partially offset by $1.6 million of compensation guarantees principally incurred in connection with the division's rebuild. Pre-tax contribution for the year ended December 31, 2012 was $0.1 million, compared to $33.1 million for the year ended December 31, 2011. Investments

~~Years~~ Included within total assets are investments of approximately $18.9 million and $20.5 million at December 31, 2013 ~~Ended~~and December 31, ~~2011~~2012, vsrespectively. ~~2010~~The Company's investments consist of interests in privately held securities, the valuations of which are based predominantly on unobservable inputs and are therefore classified as Level 3.

~~Net revenues~~ ofInvestments—Quantitative ~~the~~Disclosure ~~MBS &~~About ~~Rates~~Significant ~~segment~~Unobservable were $103.9 million for the year ended December 31, 2011, a decline of $14.8 million compared to the year ended December 31, 2010. The decrease was primarily due to lower principal transaction revenues, due to net revenue declines on non-agency asset-backed securities and lower trading volumes. Net interest income increased $6.1 million due to increased average inventory levels, partially offset by lower coupon interest received. Inputs

~~Operating expenses~~The ~~were~~Company's ~~$70.7 million~~investments ~~for~~are primarily associated with the ~~year~~Company's ~~ended~~limited ~~December 31,~~partnership ~~2011,~~investment ain ~~decline~~FATV of approximately $1417.6 million ~~compared~~(6 toprivately ~~the~~held ~~year~~companies) ~~ended~~and $17.1 million (7 privately held companies) at December 31, ~~2010~~2013 and December 31, 2012, respectively. ~~The decrease~~Refer ~~was~~to ~~primarily~~Note 10 within ~~due~~the footnotes to ~~lower~~the ~~variable~~consolidated ~~compensation~~financial ~~expense~~statements ~~due~~contained towithin ~~the~~Item 8 ~~lower~~of ~~revenues.~~this ~~Compensation~~Annual ~~expense~~Report ~~for~~on ~~the~~Form 10-K ~~year~~for ~~ended~~additional information.

41 Unobservable Inputs—December 31, 2013

Valuation Technique	Unobservable Input	Range (Weighted Average)

Market comparable companies	Enterprise value/Revenue multiple	2.7x–7.0x (5.5x)
	Discount applied to multiples	30%–35% (30%)
Venture capital method	Enterprise value/EBITDA multiple	5.0x
	Discount applied to enterprise value	55%

Unobservable Inputs—December 31, 2012

Valuation Technique	Unobservable Input	Range (Weighted Average)

Market comparable companies	Enterprise value/Revenue multiple	4.3x–6.7x (5.7x)
	Discount applied to multiples	25.0%–40.0% (22.0%)

An increase in the enterprise value/revenue and EBITDA multiples would result in a higher fair value for these investments, whereas, an increase in the discounts applied would reduce fair value.

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~~December 31, 2010~~ ~~was~~Restructuring also impacted by $5.7 million of non-cash compensation expense resulting from the previously mentioned changes in the vesting provisions to equity compensation awards to be granted in connection with 2010 year-end bonuses and the related impact of the changes to certain outstanding equity awards granted in connection with year-end bonuses for prior years. Pre-tax contribution for the year ended December 31, 2011 was $33.1 million, compared to $33.3 million for the year ended December 31, 2010. Reserve

	Year Ended December 31,
Credit Products (In thousands)	2012		2011		2010
Net revenues
Principal transactions	$	4,884	$	1,544	$	7,092
Commissions		65,755		65,144		72,265
Investment banking		2,430		2,535		6,558
Net interest		386		1,266		1,246
Other		977		567		73
Total net revenues	$	74,432	$	71,056	$	87,234
Operating expenses		70,687		61,318		81,898
Pre-tax contribution	$	3,745	$	9,738	$	5,336

In addition, during the year ended December 31, 2013, the Company paid approximately $38.1 million associated with its restructuring, including $21.5 million in connection with lease commitments (of which $19.5 million is associated with the Company's lease termination of its headquarters at 1290 Avenue of the Americas, New York, New York), $11.7 million in severance and $4.9 million related to the termination of third party vendor contracts. Refer to Note 21 within the footnotes to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K.

~~Years Ended~~ ~~December 31,~~Liquidity ~~2012~~and ~~vs.~~Capital ~~2011~~ Resources

~~Net revenues~~ ofProposed ~~the~~Dissolution Credit Products segment were $74.4 million for the year ended December 31, 2012, an improvement of $3.4 million compared to the year ended December 31, 2011. The increase was primarily due to higher commissions and principal transaction revenues, due to higher volumes and an expanded product profile, partially offset by spread compression. On February 20, 2013, the Company confirmed the departure of approximately 20 professionals previously employed within this division (current headcount within this division is approximately 70). As a result, revenues from this group have declined significantly. Liquidation

~~Operating~~As previously mentioned, the Company's Board of Directors has determined, after an extensive evaluation of other alternatives, that it ~~expenses~~is ~~were~~in ~~$70~~the best interests of the Company's stockholders to dissolve, liquidate and distribute to stockholders its available assets.~~7 million~~ ~~for~~The Company's dissolution was unanimously approved by the ~~year~~Board ~~ended~~of Directors ~~December~~on March 3112, ~~2012~~2014, anbut ~~increase~~is ofsubject $9to stockholder approval.~~4 million~~ ~~compared~~The Company intends to present this proposal to its stockholders of record as of April 21, 2014 at the ~~year~~2014 ~~ended~~Annual Meeting, ~~December~~currently scheduled for May 3129, ~~2011~~2014. The Company will file prescribed proxy materials with the Securities and Exchange Commission in advance of that meeting. In connection with the ~~increase~~dissolution, isthe ~~primarily~~Company ~~due~~intends to ~~higher~~distribute ~~variable~~to its stockholders all available cash ~~compensation~~other ~~expense.~~than ~~These~~as ~~increases~~may ~~were~~be ~~partially~~required ~~offset~~to bypay aexpenses ~~reduction~~and ofpay ~~compensation~~or ~~expense~~make ofreasonable ~~$1.1 million~~provision ~~related~~for toknown ~~stock-based~~and potential claims ~~compensation~~and ~~forfeitures~~obligations of the Company, as required by applicable law. ~~Pre-tax~~The ~~contribution~~Board ~~for~~of Directors' decision contemplates an orderly wind down of the ~~year~~Company's ~~ended~~remaining ~~December 31~~business and operations, ~~2012~~including ~~was~~the dissolution $3and winding-up of subsidiaries.~~7 million~~ If approved by the Company's stockholders, ~~compared~~the Company intends to ~~$9.7~~file ~~million~~a certificate of dissolution, pay, satisfy, resolve or make reasonable provisions for claims and obligations as well as anticipated costs associated with the ~~year~~Company's ~~ended~~dissolution ~~December 31~~and liquidation, and seek to convert its remaining assets into cash or cash equivalents as ~~2011~~soon as reasonable, practicable and financially prudent.

~~Years~~ If ~~Ended~~the ~~December~~Company's stockholders approve the proposal, the Company currently expects to make an initial liquidating distribution to stockholders of approximately $20 31million ($3.23 per share). The Company expects to make this initial liquidating distribution as soon as practicable following receipt of stockholder approval and filing of a certificate of dissolution. The amount of this initial distribution reflects the Company's current liquid assets offset in part by provisions, ~~2011~~or vsreserves, for future operating costs and expenses associated with dissolution and liquidation and, as required by law, for other known and potential claims and obligations. ~~2010~~Delaware law requires that, in connection with a dissolution, the Company's Board of Directors make reasonable provision for known and potential claims and obligations of the Company and maintain those reserves until resolution of such matters, and similar legal requirements apply to our subsidiaries. The Board of Directors, in consultation with its advisors, has evaluated the liabilities, expenses, and known potential claims and obligations of the Company and its subsidiaries, as well as other matters, in order to estimate the amount that will be reserved. Insofar as the reserves required by applicable law exceed, in the view of the Board of Directors, the ultimate amounts the Company will likely be required to pay creditors, the Board of Directors believes there is a reasonable possibility that a portion of the reserves will ultimately be distributed to stockholders. The Board of Directors currently believes that these subsequent distributions could range between $40 million and $70 million ($6.47 and $11.32 per share), for a total aggregate distribution to stockholders ranging between $60 million and $90 million ($9.70 and $14.55 per share). The Board will evaluate the Company's reserves on a periodic basis and will approve liquidating distributions when and as it deems appropriate. Additional liquidating distributions will be made to the extent the required contingency reserves are released and upon the Company's non-cash assets being monetized, which would likely span a multi-year period. Further details regarding

Net revenues of the Credit Products segment were $71.1 million for the year ended December 31, 2011, a decline of $16.2 million compared to the year ended December 31, 2010. The decrease was primarily due to lower commissions and principal transaction revenues, primarily due to a decrease in spreads during the year, partially offset by higher volumes. Investment banking revenue also declined $4.0 million compared to the prior year. 30

Operating expenses were $61.3 million for the year ended December 31, 2011, a decline of $20.6 million compared to the year ended December 31, 2010. The decrease was a result of a larger portion of compensation expense expected to be paid in stock-based compensation compared to the prior year. In addition, compensation expense for the year ended December 31, 2010 was also impacted by $4.7 million of non-cash compensation expense resulting from the previously mentioned changes in the vesting provisions to equity compensation awards to be granted in connection with 2010 year-end bonuses and the related impact of the changes to certain outstanding equity awards granted in

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~~connection~~anticipated ~~with~~future ~~year-end~~distributions ~~bonuses~~will ~~for~~be ~~prior~~disclosed ~~years.~~in ~~Pre-tax contribution for~~ the ~~year~~Company's ~~ended~~proxy ~~December 31,~~materials ~~2011~~to ~~was~~be ~~$9.7 million,~~filed ~~compared~~in toconnection ~~$5.3 million~~with ~~for~~ the ~~year~~Company's ~~ended~~2014 ~~December 31,~~Annual ~~2010~~Meeting.

	Year Ended December 31,
ClearPoint (In thousands)	2012			2011			2010
Net revenues
Principal transactions	$	46,283		$	40,120		$	—
Net interest		(196	)		519			—
Other		7,288			6,285			—
Total net revenues	$	53,375		$	46,924		$	—
Operating expenses		59,266			50,610			—
Pre-tax loss	$	(5,891	)	$	(3,686	)	$	—

The amount distributable to stockholders, both initially and in total, may vary substantially from the amounts currently estimated based on many factors, including the resolution of outstanding known claims and obligations, the possible assertion of claims that are currently unknown to the Company, the ability to receive reasonable value when selling or otherwise monetizing its assets, including its investment in FATV, and costs incurred to wind down the Company's business. Further, if additional amounts are ultimately determined to be necessary to satisfy or make provisions for any of these obligations, stockholders may receive substantially less than the current estimates.

~~Year~~ Until ~~Ended~~such ~~December 31~~time, ~~2012~~if vsany, as the stockholders approve the Company's dissolution, and the Board of Directors decides, and instructs management, to proceed with a dissolution, the Company will continue to investigate and consider any feasible, alternative, value-creating transactions of which it becomes aware. ~~2011~~If prior to its dissolution, the Company receives an offer for a transaction that, in the view of the Board, would be expected to provide superior value to stockholders than the value of the currently estimated distributions, taking into account factors that could affect valuation, including timing and certainty of payment or closing, proposed terms and other factors, the dissolution could be abandoned in favor of such a transaction, even if dissolution has been previously approved by the Company's stockholders.

~~Net revenues~~ ~~were~~Ability ~~$53.4 million for the year ended December 31, 2012, an increase of $6.5 million compared~~ to ~~the~~Access ~~year~~Capital—Broker ~~ended December 31,~~Dealer 2011. The increase was due to higher daily loan commitments primarily arising in the first quarter of 2012, prior to origination limits implemented late in the second quarter in order to align ClearPoint's daily average loan commitments with its distribution capabilities. Revenues resulting from prior loan commitment levels were not commercially sustainable. Subsidiaries

~~Operating expenses~~Our ~~were~~regulated ~~$59.3 million~~broker-dealer ~~for~~subsidiaries ~~the~~are ~~year~~subject ~~ended~~to ~~December 31~~various laws and regulations including those that authorize regulatory bodies to monitor and/or restrict, ~~2012~~in certain circumstances, anthe ~~increase~~flow of $8funds to the parent holding company or any other affiliates.~~7 million~~ ~~compared~~Such regulations may prevent the Parent from withdrawing capital from our regulated broker-dealer subsidiaries when and as needed to conduct business activities or satisfy the ~~year~~obligations ~~ended~~of ~~December 31,~~the ~~2011~~Parent and/or any of its subsidiaries. Gleacher Securities recently terminated ~~Operating~~its ~~expenses~~memberships ~~include~~associated ~~$39.2 million~~with its prior self-clearing activities and ~~$33.1~~is therefore no longer subject to FINRA Rule ~~million~~4110(c)(2). ofUnder ~~broker~~this ~~and~~rule, Gleacher Securities was unable to make an unsecured advance or loan, ~~processing~~pay ~~fees~~a ~~for~~dividend or otherwise effect a similar distribution to the ~~years~~Parent ~~ended~~and/or ~~December~~its affiliates in any rolling 35-calendar-day period, on a net basis, in excess of 10% of "excess net capital," as defined under Rule 3115c3-1 of the Exchange Act, ~~2012~~without ~~and~~prior ~~2011~~written FINRA approval. However, ~~respectively~~in particular, ~~which~~as ~~are~~registered ~~variable~~broker-dealers, Gleacher Securities and ~~expenses~~Gleacher ~~directly~~Partners ~~related~~must provide notice to FINRA and the ~~level~~SEC oftwo ~~loan~~days ~~commitments~~prior ~~for~~to ~~each~~any ~~particular~~distributions that exceed in the aggregate in any 30 calendar day period., ~~Pre~~30% of the broker-~~tax~~dealer's ~~loss~~excess ~~for~~net capital. As previously mentioned, the ~~year~~broker-dealer ~~ended~~subsidiaries ~~December 31~~intend to submit Forms BDW to withdraw their registrations as broker-dealers from the SEC, ~~2012~~self-regulatory oforganizations, ~~$5.9 million~~and ~~increased~~the $2states.~~2 million~~ ~~compared~~Withdrawal tofrom registration becomes effective 60 days after the ~~year~~filing ~~ended~~of ~~December~~Form 31BDW, ~~2011~~unless ~~and~~a firm ~~was~~consents ~~primarily~~to ~~due~~a tolonger period or the ~~limits~~SEC ~~placed~~institutes ona ~~loan~~proceeding, ~~origination~~delays ~~activities~~or asshortens athe ~~result~~date of ~~liquidity~~effectiveness, ~~constraints~~or ~~experienced~~otherwise ~~in the~~imposes ~~first~~terms ~~quarter~~or ofconditions ~~2012~~upon ~~and~~such ~~fully~~withdrawal. ~~disclosed~~If ~~within~~and when the withdrawals ~~Company's~~become ~~Annual~~effective, ~~Report~~the onrules ~~Form 10-K~~relating ~~for~~to the ~~year~~withdrawal ~~ended~~of capital will no longer apply. At December 31, ~~2011~~2013, our regulated broker-dealer subsidiaries held cash of approximately $32.1 million (of which $31.1 million was held at Gleacher Securities).

~~On February 14,~~ ~~2013,~~Restructuring ~~the~~Charge—Exit ~~Company~~from ~~entered~~Various into an agreement to sell substantially all of ClearPoint's assets to Homeward. This transaction closed on February 22, 2013, and all remaining business activities of ClearPoint are being wound down. The Company estimates it will recognize a loss of approximately $5.0 million in connection with this disposition. Refer to "Sale of ClearPoint" within the "Business Overview" discussion above, as well as Note 29 within the footnotes to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K for additional information. Businesses

	Year Ended December 31,
Other (In thousands)	2012			2011			2010
Net revenues
Principal transactions	$	(81	)	$	(106	)	$	(3	)
Investment gains		1,233			2,996			7
Net interest		5,627			6,330			4,698
Gain from bargain purchase—ClearPoint Funding, Inc. acquisition		—			2,330			—
Other		930			1,174			623
Total net revenues	$	7,709		$	12,724		$	5,325
Operating expenses		63,621			116,063			67,571
Pre-tax loss	$	(55,912	)	$	(103,339	)	$	(62,246	)

In connection with the Company's exits from Investment Banking (second quarter of 2013), Fixed Income (second quarter of 2013), ClearPoint (first quarter of 2013) and Equities (third quarter of 2011), the Company recognized charges during the years ended December 31, 2013, 2012 and 2011 of approximately $50.8 million, (-$0.4) million and $7.1 million (of which $38.3 million, (-$0.4) million and

4331

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~~Years~~$5.4 million ~~Ended~~were ~~December 31~~cash expenditures), ~~2012 vs~~respectively. ~~2011~~The major costs associated with these charges are as follows:

•: severance and other compensation costs of approximately $11.7 million, $0.0 million and $2.6 million for the years ended December 31, 2013, 2012 and 2011 respectively;
•: termination of third-party vendor contracts and other costs of approximately $6.7 million, (-$0.2) million and $2.2 million for the years ended December 31, 2013, 2012 and 2011, respectively;
•: costs associated with exiting our lease commitments, including the Company's headquarters and other office locations of approximately $19.9 million, (-$0.1) million and $0.6 million, for the years ended December 31, 2013, 2012 and 2011, respectively;
•: non-cash charges related to the vesting of stock-based compensation and other deferred compensation of approximately $4.6 million, (-$0.1) million and $1.4 million for the years ended December 31, 2013, 2012 and 2011 respectively; and
•: non-cash charges related to the impairment of fixed assets, leasehold improvements, goodwill and intangible assets of approximately $7.9 million, $0.0 million and $0.3 million for the years ended December 31, 2013, 2012 and 2011 respectively.

~~Net~~As ~~revenues~~of ~~were $7.7~~December ~~million~~31, ~~for~~2013, the ~~year~~Company's ~~ended~~remaining ~~December 31,~~obligation ~~2012,~~associated awith ~~decline~~these ofexits was approximately $52.05 million, ~~compared~~and was primarily related to ~~the~~costs ~~year~~associated ~~ended~~with ~~December 31~~the termination of third party vendor contracts, ~~2011~~and to a lesser extent, lease commitments. The ~~decline~~Company ~~was~~expects ~~primarily~~the ~~attributable~~majority of its remaining liability to ~~the~~be ~~ClearPoint~~settled ~~bargain~~within ~~purchase~~the ~~gain~~next ofsix $2months.~~3 million~~ ~~recorded~~No other ~~during~~material ~~the~~charges ~~prior~~are ~~year,~~expected asto ~~well~~be asincurred. ~~lower~~The ~~revenues~~Company ~~resulting~~intends ~~from~~ to satisfy the ~~changes~~cash inobligations ~~value~~associated ofwith ~~the~~these ~~Company's~~exits ~~FATV~~from ~~investment~~available cash on hand.

~~Operating~~Refer ~~expenses were $63.6 million for the year ended December 31, 2012, a decline of $52.4 million compared~~ to ~~the year ended December~~Note ~~31,~~21 ~~2011.~~within ~~The decrease was primarily a result of~~ the ~~previously~~footnotes ~~mentioned $80.2 million goodwill and intangible asset impairment charge related~~ to the ~~Investment~~consolidated ~~Banking~~financial ~~division~~statements ~~realignment~~contained ~~which occurred~~ in ~~the third quarter of 2011, partially offset by the previously mentioned goodwill impairment charge of $21.1~~Item ~~million~~8 ~~recognized in the second quarter~~ of ~~2012.~~this ~~This~~Annual ~~decrease~~Report ~~was~~on partially offset by higher legal, consulting and advisory fees, including costs incurred in connection with our strategic review process. Operating expenses also increased as a result of costs incurred in connection with the Company's asset management initiative. PreForm 10-~~tax loss was $55~~K.~~9 million~~ ~~for the year ended December 31, 2012 compared to $103.3 million for the year ended December 31, 2011.~~

~~Years Ended~~ ~~December 31,~~Litigations ~~2011~~and ~~vs. 2010~~ Arbitrations

~~Net revenues~~Arbitration—Thomas ~~were $12~~J.~~7 million~~ ~~for~~Hughes ~~the~~(former ~~year~~Chief ~~ended~~Executive ~~December 31,~~Officer) 2011, an increase of $7.4 million compared to the year ended December 31, 2010. The increase in net revenue was attributable to higher investment gains from the change in value of the Company's investment in FATV and aJohn ~~gain~~Griff of(former ~~$0.9 million~~Chief ~~resulting~~Operating from the sale of an investment security. Net revenues for the year ended December 31, 2011 also include the gain from bargain purchase of $2.3 million related to the ClearPoint acquisition. Net interest income increased by $1.6 million, primarily due to interest expense no longer being incurred on the Series B Preferred Stock, which was redeemed in September 2010. Officer)

~~Operating~~In ~~expenses~~August ~~were~~2012, ~~$116.1 million for~~ the ~~year~~Company ~~ended~~adopted ~~December 31,~~the ~~2011,~~Senior anManagement ~~increase~~Compensation ofand ~~$48.5 million~~Retention ~~compared~~Plan to("Retention ~~the~~Plan") ~~year~~and ~~ended~~entered ~~December 31,~~into ~~2010. Operating~~related ~~expenses~~agreements ~~for~~with ~~the~~Thomas ~~year~~J. ~~ended December 31~~Hughes, ~~2011~~our ~~include~~former aChief Executive ~~goodwill~~Officer, and ~~intangible~~John ~~asset~~Griff, ~~impairment~~our ~~charge~~former ~~related~~Chief toOperating Officer. Under the ~~investment~~Retention ~~banking~~Plan, ~~division~~termination of ~~$80.2 million~~employment under certain circumstances in connection with the ~~realignment~~occurrence of ~~the~~a ~~division~~Change in Control, as defined by the ~~third~~Retention ~~quarter~~Plan, ofcould ~~2011~~trigger ~~and~~payments $1to the covered executive officers.~~7 million~~ ofIn ~~severance~~general, ~~expense~~a ~~due~~cash topayment ~~the~~would ~~resignation~~be required following an involuntary termination of employment by the ~~former~~Company ~~interim~~(or ~~CEO.~~a ~~These~~resignation ~~items~~by ~~were~~the ~~partially offset~~covered byexecutive ~~lower~~officer ~~variable~~for ~~compensation~~good ~~costs~~reason, ~~compared~~as todefined) ~~the~~within ~~prior~~six ~~year,~~months ~~for~~before ~~members~~or oftwo ~~senior~~years ~~management~~after a Change in Control.

~~Operating~~Effective ~~expenses for the year ended December~~May 3124, ~~2010~~2013, ~~includes~~ the ~~previously~~employment ~~mentioned~~of ~~(i) $13.3 million~~each of ~~compensation~~Thomas ~~expense~~J. ~~related~~Hughes toand ~~the~~John ~~separations~~Griff ofwas ~~the former~~terminated ~~CEO~~by ~~and~~ the ~~former~~Company. ~~CFO~~Messrs. Hughes ~~from~~and ~~the~~Griff ~~Company~~each ~~during~~participated in the ~~first~~Retention Plan ~~quarter~~and ofhad ~~2010~~entered ~~(ii) $3.9 million~~into ofa ~~occupancy expense~~ related toretention ~~lease~~plan ~~terminations~~agreement ~~associated~~ with the ~~consolidation~~Company. ~~of certain~~To of the ~~Company's~~extent ~~offices~~a toChange ~~its~~in ~~current~~Control ~~location~~had inoccurred ~~New~~by ~~York~~November 24, ~~City~~2013 (~~iii) $2.3 million~~six ofmonths ~~non-cash~~after ~~compensation expense associated with~~ the ~~modification~~applicable todates ~~a senior~~of ~~executive's~~termination), ~~unvested~~cash ~~share-based~~payments ~~compensation~~totaling ~~awards,~~approximately ~~(iv) the~~ $17.60 million ~~loss~~(and onother ~~extinguishment~~incidental ofbenefits) ~~the~~would ~~Series B~~have ~~Preferred~~become ~~Stock~~payable ~~and~~to these former employees (~~v) the~~subject ~~partial~~to ~~revaluation~~satisfaction ofby anthe former ~~indemnification~~employees ~~receivable~~ of $0certain conditions).~~7 million.~~

~~Pre-tax~~Subsequent ~~loss~~to ~~for~~ the ~~year~~Company's ~~ended~~termination ~~December 31,~~of ~~2011~~these ~~was~~former ~~$103~~officers, Messrs.3 ~~million,~~Hughes ~~compared~~and Griff made a demand to ~~$62.2 million~~the Company for benefits under the ~~year~~Retention ~~ended~~Plan ~~December~~and their related agreements, and following the Company's rejection of their demand, commenced an arbitration proceeding on September 3117, ~~2010.~~2013 before the Financial Industry Regulatory Authority ("FINRA") seeking money

4432

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damages in ~~Explanation~~an approximate amount of $7.9 million, vesting of unvested equity awards and ~~Reconciliation~~other relief, all of which they claim are due as a result of their respective terminations. The Company has determined that no severance payments or other benefits based upon a "Change in Control" (as defined in the applicable agreements) are due to these former officers inasmuch as the Company has concluded that no "Change in Control" has occurred. We believe that these individuals's ~~Use~~claims that a Change in Control has occurred are without merit. A FINRA hearing of ~~Non-GAAP~~the ~~Financial~~matter ~~Results~~ is currently expected to occur in the summer of 2014.

~~The~~Pursuant to ~~Company~~his ~~has~~employment ~~included~~agreement, in ~~this~~the ~~Annual~~absence ~~Report~~of ~~certain~~a ~~financial~~"Change ~~metrics that were not prepared~~ in ~~accordance~~Control," ~~with GAAP~~Mr. Hughes ~~These non-GAAP~~would ~~financial~~have ~~results,~~been ~~which~~entitled ~~include~~to ~~presentations~~a ofseverance ~~net~~payment ~~revenues,~~of ~~compensation and benefits~~$750,000 ~~non-compensation~~(not ~~expenses,~~accrued ~~income before income taxes from continuing~~at operations, provision for income taxes, net income from continuing operations, compensation expense ratios, pre-tax margin, return on average tangible equity and diluted earnings per share, are presented as an additional aid in understanding and analyzing the Company's financial results for the years ended December 31, ~~2012~~2013), ~~2011~~ and ~~2010,~~pursuant ~~respectively.~~to ~~Specifically,~~his ~~the Company~~Restricted ~~believes~~Stock ~~that~~Award ~~the~~Agreement, ~~non-GAAP~~Mr. Griff ~~results~~would ~~provide~~have ~~useful~~been ~~information~~entitled byto ~~excluding~~vesting ~~certain~~of ~~items~~20,833 ~~that~~unvested ~~may~~shares ~~not be indicative~~ of ~~the~~restricted ~~Company's~~stock, ~~core~~subject ~~operating~~in ~~results or business outlook and~~each ~~also~~case to ~~emphasize information that~~ the ~~Company~~execution ~~believes~~and isdelivery ~~important in understanding the Company's performance. These non-GAAP amounts exclude items reflected as adjustments~~ within ~~the "Reconciliation~~a ofspecified ~~GAAP~~time toperiod ~~Non-GAAP~~ (~~Loss)/Income~~and ~~from Continuing Operations" table below. The Company believes these~~ non-~~GAAP~~revocation) ~~results~~of ~~will allow for~~ a ~~better~~release ~~evaluation~~ of ~~the operating~~claims ~~performance~~against of the Company's ~~business~~ and ~~facilitate~~continued acompliance ~~meaningful~~with ~~comparison~~certain ofrestrictive ~~the Company's results in the current period to those in prior periods and future periods~~covenants. ~~References to these~~These ~~non-GAAP~~conditions ~~results~~were ~~should~~ not ~~be considered a substitute for results that are presented in a manner consistent with GAAP~~satisfied.

ANo ~~limitation~~amounts ofin ~~utilizing~~respect ~~these non-GAAP financial results is that the GAAP accounting effects~~ of ~~these~~Messrs. Hughes' ~~excluded~~and ~~items~~Griff's doclaims inhave ~~fact~~been ~~reflect~~accrued ~~the~~as ~~underlying financial results~~ of ~~the~~ ~~Company's~~December 31, ~~business~~2013, and ~~these~~we ~~effects~~consider ~~should~~all ~~not~~unvested beequity ~~ignored~~awards inpreviously ~~evaluating~~held ~~and~~by ~~analyzing~~them ~~its financial results. Therefore, the Company believes that non-GAAP results should always be~~to ~~considered~~have ~~together~~been ~~with their corresponding GAAP results~~forfeited.

~~The non-GAAP~~ ~~financial~~Contingent results set forth below have not been adjusted for the recent developments described under Item 1, "Business—Overview" and elsewhere in this Annual Report on Form 10-K and may not be representative of future results. Gains

45 The Company has made claims against certain third parties for monetary damages. Recoveries, if any, made as a result of these claims could be material, although there can be no assurance that the Company will prevail in its claims or that any recoveries will be made. The Company would recognize any such recoveries once realized. In connection with these matters, the Company has, and may continue to, incur substantial expenses, including legal fees, in pursuing these claims.

Litigations and Arbitrations—General

From time to time, the Company and its subsidiaries are involved in legal proceedings or disputes (See Part I—Item 3, Legal Proceedings).

Due to the nature of the Company's prior business activities and ongoing operations, the Company and its subsidiaries have been exposed to risks associated with a variety of legal proceedings and claims. These include litigations, arbitrations and other proceedings initiated by private parties and arising from underwriting, financial advisory, securities trading or other transactional activities, client account activities, mortgage lending and employment matters and stockholder claims. Third parties who assert claims may do so for monetary damages that are substantial, particularly relative to the Company's financial position. These proceedings and claims typically involve associated legal costs incurred by the Company in connection with defending against these matters, which could be significant. The Company has been in the past, and currently is, subject to a variety of claims and litigations arising from its former business activities and its ongoing operations, most of which it considers to be routine.

Expenses associated with investigating and defending against legal proceedings can put a strain on the Company's cash resources. In addition, any fines, penalties, or damages assessed against the Company could also impact materially the Company's liquidity. As a result of their prior business activities and ongoing operations, the Company and its subsidiaries are also subject to both routine and unscheduled regulatory examinations of their prior business activities and investigations of securities industry practices by governmental agencies and self-regulatory organizations. In recent years, securities and mortgage lending firms have been subject to increased scrutiny and regulatory enforcement activity. Regulatory investigations can result in substantial fines being imposed on the Company and/or its subsidiaries. As a result of prior business activities, the Company and its subsidiaries have received, and may receive in the future, inquiries and subpoenas from the SEC, FINRA, state regulators and other regulatory organizations. The Company does not always know the purpose behind these communications or the status or target of any related investigation. Some of these communications

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have, in ~~Reconciliation~~the past, resulted in disciplinary actions which have sometimes included monetary sanctions and citations for regulatory deficiencies. To date, none of ~~GAAP~~these communications have had a material adverse effect on the Company nor does the Company believe that any pending communications are likely to ~~Non~~have such an effect. Nevertheless, there can be no assurance that any pending or future communications will not have a material adverse effect on the Company. In addition, the Company is at risk for employment-~~GAAP~~based claims alleging discrimination, harassment, wrongful discharge or breach of an employment agreement or other contractual arrangement, among other things. Employees could seek recoupment of compensation claimed (~~Loss~~whether for cash or forfeited equity awards)~~/Income~~, ~~from~~severance payments, ~~Continuing~~vesting ~~Operations~~ of equity awards and other damages. These claims could involve significant amounts.

	Year Ended December 31, 2012									Year Ended December 31, 2011
(In thousands, expect per share and ratio data)
	GAAP			Adjustments			Non-GAAP			GAAP			Adjustments			Non-GAAP
Net revenues	$	203,595		$	—		$	203,595		$	261,172		$	(2,330	)(1)	$	258,842
Non-interest expenses:
Compensation and benefits		143,414			(330	)(2)		143,084			162,537			(3,632	)(3)		158,905
Non-compensation expenses		113,534			(24,084	)(4)		89,450			160,512			(80,842	)(5)		79,670
Total non-interest expense		256,948			(24,414	)		232,534			323,049			(84,474	)		238,575
(Loss)/income from continuing operations before income taxes		(53,353	)		24,414			(28,939	)		(61,877	)		82,144			20,267
Provision for income taxes		24,602			(29,144	)(6)		(4,542	)		2,207			5,928	(7)		8,135
Net (loss)/income from continuing operations	$	(77,955	)	$	53,558		$	(24,397	)	$	(64,084	)	$	76,216		$	12,132
Earnings per share:
Diluted—continuing operations	$	(0.66	)				$	(0.21	)(8)	$	(0.52	)				$	0.09	(8)
As a percentage of net revenues:
Compensation and benefits		70.4	%					70.3	%		62.2	%					61.4	%
(Loss)/income from continuing operations before income taxes		(26.2	)%					(14.2	)%		(23.7	)%					7.8	%

The Company recognizes a liability in its financial statements with respect to legal proceedings or claims when incurrence of a loss is probable and the amount of loss is reasonably estimable. However, accurately predicting the timing and outcome of legal proceedings and claims, including the amounts of any settlements, judgments or fines, is inherently difficult insofar as it depends on obtaining all of the relevant facts (which is sometimes not feasible) and applying to them often-complex legal principles. It is reasonably possible that the Company incurs losses pertaining to these matters in the form of settlements and/or adverse judgments and incurs legal and other expenses in defending against these matters. In either case, losses and/or expenses could be different in character or amount than anticipated by management when preparing the accompanying financial statements. Based on currently available information, the Company does not believe that any current litigation, proceeding, claim or other matter to which it is a party or otherwise involved, including any associated defense costs, will have a material adverse effect on its financial position or cash flows, although an adverse development, or an increase in associated legal fees, could be material to the Company's results of operations in a particular period, depending in part on the Company's operating results in that period.

(1)Represents the bargain purchase gain related to the ClearPoint acquisition on January 3, 2011. (2)Represents severance expense recognized during the first quarter of 2012. (3)Includes (i) severance and stock-based compensation expense of $1.9 million, related to the investment banking realignment which resulted in the termination of 32 investment banking employees and certain administrative positions and (ii) $1.7 million due to the resignation of the former interim CEO in the second quarter of 2011. (4)Represents the goodwill impairment charge recognized during the second quarter of 2012 of $21.1 million, as well as $3.0 million of legal, consulting and advisory fees incurred in connection with our strategic review process. (5)Includes goodwill and intangible impairment charges of $80.2 million and other non-compensation expenses of $0.6 million as a result of the investment banking realignment. (6)Represents the change in the valuation allowance on the Company's deferred tax assets. (7)The effective income tax rate of 7.2% differs from the federal statutory rate of 35% primarily due to non-tax deductible goodwill, the non-taxable bargain purchase gain and state and local taxes. (8)Non-GAAP net (loss)/income from continuing operations divided by 119.0 million and 129.5 million dilutive shares for the year ended December 31, 2012 and 2011, respectively.

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Reconciliation of GAAP to Non-GAAP (Loss)/Income from Continuing Operations (Continued)

	Year Ended December 31, 2011									Year Ended December 31, 2010
(In thousands, except per share and ratio data)
	GAAP			Adjustments			Non-GAAP			GAAP			Adjustments			Non-GAAP
Net revenues	$	261,172		$	(2,330	)(1)	$	258,842		$	248,582		$	—		$	248,582
Non-interest expenses:
Compensation and benefits		162,537			(3,632	)(2)		158,905			222,833			(23,184	)(3)		199,649
Non-compensation expenses		160,512			(80,842	)(4)		79,670			51,532			(6,130	)(5)		45,402
Total non-interest expense		323,049			(84,474	)		238,575			274,365			(29,314	)		245,051
(Loss)/income from continuing operations before income taxes		(61,877	)		82,144			20,267			(25,783	)		29,314			3,531
Provision for income taxes		2,207			5,928(6	)		8,135			(9,778	)		13,292	(7)		3,514
Net (loss)/income from continuing operations	$	(64,084	)	$	76,216		$	12,132		$	(16,005	)	$	16,022		$	17
Earnings per share:
Diluted—continuing operations	$	(0.52	)				$	0.09(8	)	$	(0.13	)				$	0.00	(8)
As a percentage of net revenues:
Compensation and benefits		62.2	%					61.4	%		89.6	%					80.3	%
(Loss)/income from continuing operations before income taxes		(23.7	)%					7.8	%		(10.4	)%					1.4	%

(1)Represents the bargain purchase gain related to the ClearPoint acquisition on January 3, 2011. (2)Includes (i) severance and stock-based compensation expense of $1.9 million, related to the investment banking realignment which resulted in the termination of 32 investment banking employees and certain administrative positions and (ii) $1.7 million due to the resignation of the former interim CEO in the second quarter of 2011. (3)Includes (i) $13.3 million of severance expense related to the separations of our former CEO and former CFO from the Company recorded in the first quarter of 2010 (ii) $5.7 million in non-cash compensation resulting from a modification to the vesting terms of certain outstanding equity awards granted in connection with year-end bonuses for prior years (iii) $2.3 million related to the modification of a senior executive's unvested share based compensation awards and (iv) $1.9 million from the restructuring of an employment arrangement. (4)Includes goodwill and intangible impairment charges of $80.2 million and other non-compensation expenses of $0.6 million as a result of the investment banking realignment.

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(5)Includes (i) $3.9 million of occupancy expense associated with the consolidation of certain of the Company's offices to its current location in New York City (ii) $1.6 million loss on extinguishment of the mandatorily redeemable preferred stock and (iii) $0.6 million related to the partial revaluation of the previously mentioned indemnification receivable which occurred during the third quarter of 2010. (6)The effective income tax rate of 7.2% differs from the federal statutory rate of 35% primarily due to non-tax deductible goodwill, the non-taxable bargain purchase gain and state and local taxes. (7)The effective income tax rate of 45.3% differs from the federal statutory rate of 35% primarily due to state and local taxes and the $1.6 million loss on extinguishment of the mandatorily redeemable preferred stock, which is not deductible for tax. (8)Non-GAAP net (loss)/income from continuing operations divided by 129.5 million and 121.3 million dilutive shares for the year ended December 31, 2011 and 2010, respectively.

Return on Average Tangible Stockholders' Equity (Non-GAAP)

Presented below is information on the Company's annualized return on average tangible stockholders' equity (Non-GAAP):

	Twelve Months Ended December 31,
(Dollars in thousands)	2012			2011			2010
Net (loss)/income from continuing operations (non-GAAP)	$	(24,397	)(1)	$	12,132	(1)	$	17	(1)
Plus: Amortization of intangibles, net of tax		278			1,540			2,108
Net (loss)/income from continuing operations, adjusted (non-GAAP)	$	(24,119	)	$	13,672		$	2,125
Average total stockholders' equity (GAAP)	$	215,356		$	314,313		$	344,699
Less: Average intangible assets		(13,042	)		(79,938	)		(123,254	)
Average tangible stockholders' equity (non-GAAP)	$	202,314		$	234,375		$	221,445
Annualized return on tangible stockholders' equity (non-GAAP)		(11.9	)%		5.8	%		1.0	%

Return on Average Stockholders' Equity (GAAP)

Presented below is information on the Company's annualized return on average stockholders' equity, which is the most directly comparable GAAP metric to the Non-GAAP metric above:

	Twelve Months Ended December 31,
(Dollars in thousands)	2012			2011			2010
Net loss from continuing operations	$	(77,955	)	$	(64,084	)	$	(16,005	)
Average stockholders' equity		215,356			314,313			344,669
Annualized return on stockholders' equity		NM	(2)		NM	(2)		(4.6%	)

(1)Designates non-GAAP financial results. A reconciliation of the Company's GAAP results to non-GAAP financial results is set forth above under the caption "Reconciliation of GAAP to Non-GAAP Income from Continuing Operations." (2)Not meaningful, as these respective periods include substantial goodwill and deferred tax impairment charges.

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Financial Condition

The Company's matched book repurchase activities were wound down during the year ended December 31, 2012 (and comprised approximately 47.1% of the Company's total assets at December 31, 2011). The unwinding of these activities did not have a material impact to the Company's results of operations.

The Company's financial instruments owned at December 31, 2012 were $1.1 billion, a decline of $458.5 million, or 29.5%, since December 31, 2011. Contributing to this decline were reduced loan balances in connection with the previously mentioned loan origination limits implemented by ClearPoint.

Financial instruments owned and securities sold, but not yet purchased consisted of the following at December 31:

	2012				2011
(In thousands)	Owned		Sold, but not yet Purchased		Owned		Sold, but not yet Purchased
Financial Instruments
Agency mortgage-backed securities	$	905,038	$	—	$	1,085,621	$	—
Loans		77,573		—		228,226		—
Federal agency obligations		46,021		—		158,774		11,796
Non-agency mortgage-backed securities		28,124		—		56,573		—
Corporate debt securities		30,246		2,520		14,524		12,254
U.S. Government obligations		2,096		128,504		5,789		158,059
Preferred stock		2,439		—		1,617		914
Equities		703		2		1,001		2
Other debt obligations		2,745		—		839		—
Derivatives		1,196		1,704		1,696		1,971
Total	$	1,096,181	$	132,730	$	1,554,660	$	184,996

Refer to Notes 1 and 8 within the footnotes to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K for further information regarding the Company's accounting policy over valuation of these financial instruments and classification of such financial instruments in accordance with ASC 820 "Fair Value Measurements and Disclosures" ("ASC 820").

Liquidity and Capital Resources

Liquidity is of paramount importance to the success of our operations. The Company manages its liquidity by monitoring its funding and cash flow needs daily and measuring them against available cash levels in order to maintain available cash at its clearing agents so there is liquidity available for operations and for meeting financial obligations even under stressful market conditions. The Company also maintains conservative leverage ratios and generally holds inventory that is traded in active markets. The majority of the Company's inventory is financed by our clearing broker and, to a lesser extent, through repurchase agreements. We use these financing sources, and periodically consider others in order to reduce funding/liquidity risk.

The Company had cash and cash equivalents of $44.9 million and $36.7 million, respectively at December 31, 2012 and 2011. In addition, the Company's securities positions in trading accounts that are readily marketable and actively traded were approximately $960.5 million and $1.3 billion at December 31, 2012 and 2011, respectively. These financial instruments are substantially financed by the Company's payable to its clearing broker and secured borrowings. The level of assets and liabilities will fluctuate due to changing market conditions and customer demand.

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The majority of the cash and readily marketable securities are assets of Gleacher Securities, a regulated broker-dealer, which is subject to various laws and regulations including those that authorize regulatory bodies to monitor and/or restrict the flow of funds, in certain circumstances, to the parent holding company or any other affiliates. Such regulations may prevent the Parent from withdrawing capital from Gleacher Securities when and as needed to conduct business activities or satisfy the obligations of the Parent and/or any of its subsidiaries. The most restrictive of these regulations is FINRA Rule 4110(c)(2). Under this rule, Gleacher Securities may not make an unsecured advance or loan, pay a dividend or otherwise effect a similar distribution to the Parent and/or its affiliates in any rolling 35-calendar-day period, on a net basis, in excess of 10% of Gleacher Securities' excess "net capital," as defined under Rule 15c3-1 of the Exchange Act, without prior written FINRA approval. These capital withdrawal limitations do not limit Gleacher Securities from using its cash resources to manage its own capital needs.

Recent Adverse Events

The Company does not believe that the previously discussed recent adverse events will have a significant near-term impact on its liquidity. The Company's available liquidity, which consists primarily of cash and financial instruments that are traded in active markets, net of financing from our clearing broker and, to a lesser extent, through repurchase agreements, is sufficient to meet its ongoing financial obligations for a reasonable period of time. However, our ability to operate our sales and trading businesses is critically dependent on financing made available principally by our clearing broker and, to a lesser extent, the repurchase markets. To the extent these sources of financing were to be reduced, or in a more extreme scenario, terminated, our ability to operate our sales and trading businesses would be adversely effected, which could have a material and adverse effect on the Company.

ClearPoint and Related Matters

As previously mentioned, on February 14, 2013, the Company ~~entered~~and ~~into~~certain ~~an agreement to sell substantially all~~ of ~~ClearPoint's assets~~its toaffiliates, ~~Homeward.~~including ~~This transaction closed on February 22~~ClearPoint, ~~2013.~~entered Asinto aan Asset ~~result~~Purchase ofAgreement ~~this~~("Purchase ~~transaction,~~Agreement") ~~the~~in ~~Company~~connection ~~will~~with ~~improve its liquidity through~~ the ~~expected~~Homeward ~~recapture~~Transaction. ofThe ~~approximately $20 million~~Purchase ofAgreement, ~~cash~~among ~~currently~~other ~~held~~things, inprovides ~~the~~for ~~ClearPoint~~customary ~~business~~indemnification provisions. ~~This~~Pursuant ~~cash will become available~~ to these ~~the~~provisions, ~~Company as~~ ClearPoint ~~sells~~established ~~down~~an ~~its~~escrow ~~mortgage~~account ~~loan inventory as part~~ of ~~its general wind down. An additional~~ $5.0 million ~~of cash currently held in the ClearPoint business was deposited into an escrow account~~ for a three-year period following the closing date ~~in order to satisfy indemnification claims of Homeward~~(February 22, ~~if any~~2016). The Parent has also ~~guaranteed~~provided for a guaranty of ClearPoint's indemnification obligations to Homeward, up to a maximum of $27.5 million, of which $5.0 million Ifis ~~during~~payable by Parent under the guaranty only in limited circumstances in which, during the three-year period following the closing date, the ~~payment of~~ sums ~~from~~held in the escrow ~~amount~~account isare not ~~permitted,~~available ~~indemnity claims of Homeward will be paid under the guaranty, up~~ to asatisfy ~~maximum~~indemnification ~~of $7~~claims.~~5 million.~~ Any amounts paid under the guaranty will be released to the Company from the escrow ~~amount~~account on a dollar-for-dollar basis (assuming funds are available). Indemnity claims of Homeward, if any, will be paid first from the escrow account, and then, to the extent necessary, drawn upon the guaranty.

InOutstanding ~~connection~~claims ~~with~~which ~~the~~are ~~Homeward~~expected ~~Transaction,~~to ~~the~~be ~~Company~~paid ~~entered~~from ~~into~~the ~~Consent~~escrow ~~and~~account ~~Wind-down Agreements~~ in ~~favor~~satisfaction of ~~ClearPoint's~~certain ~~warehouse~~claims ~~lenders,~~made ~~pursuant to which any funded loan that has not been purchased~~ by ~~the thirty-first day following the closing date of the~~ Homeward ~~Transaction~~include ~~shall~~(i) losses ~~become~~incurred ~~immediately~~in ~~due~~connection ~~and~~with ~~payable~~two ~~under the respective credit facilities.~~loan Asrepurchase ofrequests ~~March 15,~~(currently ~~2013,~~estimated ~~ClearPoint had no remaining exposure~~ to ~~these~~be ~~credit~~less ~~facilities~~than $0.1 million) Inand ~~addition,~~(ii) reimbursements ~~the~~of ~~separate~~premiums ~~limited~~received ~~guaranties~~in ~~entered~~connection ~~into~~with bycertain ~~the~~loans ~~Parent~~that onrefinanced ~~February~~within 180 ~~29,~~days ~~2012~~following ~~and amended~~the asdate of ~~March 15,~~purchase ~~2012,~~by ~~with~~Homeward ~~ClearPoint's warehouse lenders~~ (~~"Curtailment~~approximately ~~Guaranties"~~$0.1 million) ~~have terminated~~.

In ~~connection~~addition ~~with~~to the ~~Homeward~~indemnification ~~Transaction,~~provisions ~~ClearPoint~~related ~~has~~to ~~agreed~~the toHomeward ~~provide~~Transaction, ~~transition~~in ~~services~~the ~~which~~ordinary ~~includes~~course ~~loan~~of ~~origination~~business, ~~services~~ClearPoint inalso ~~Massachusetts~~indemnified ~~and~~its ~~Virginia~~other counterparties, ~~currently~~against ~~through~~potential ~~the~~losses ~~earlier~~incurred ofby ~~March 31,~~such ~~2013~~parties orincluding ~~such~~under ~~date~~its aswarehouse ~~Homeward~~line ~~receives~~agreements ~~the~~and ~~applicable~~loan ~~licenses~~sale ~~required~~agreements related to ~~originate~~originated mortgage loans insince ~~these~~inception ~~states~~(June 2008). ~~ClearPoint~~Subsequent ~~has~~to ~~arranged~~the Homeward ~~for~~Transaction, aClearPoint ~~temporary~~paid ~~credit facility~~approximately $0.1 million in ~~order~~satisfaction of its indemnification obligations under loan sale agreements related to ~~finance~~losses ~~this~~incurred in connection with two repurchase requests from counterparties other than Homeward.

50 ClearPoint maintains a reserve for the previously discussed loan repurchase and indemnification claims. At December 31, 2013 and December 31, 2012 this reserve was approximately $0.4 million and $0.4 million, respectively, and is included within Accounts payable and accrued expenses in the Consolidated Statements of Financial Condition.

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origination activity. Capacity under this credit facility is $10 million and the facility can be terminated with five days written notice, or otherwise expires on September 30, 2013. Homeward will reimburse ClearPoint for the costs of providing the loan origination services and has provided a payment and performance guaranty of ClearPoint's obligations to the lender of this facility.

Refer to Note 29 within the footnotes to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K for additional information.

Share Repurchases

During the years ended December 31, 2012 and 2011, the Company had repurchased 1.3 million and 5.3 million shares of its common stock, respectively, for approximately $1.2 million and $10.6 million, respectively, under its previously announced stock-repurchase program. In February 2013, the Board of Directors renewed ~~this~~the Company's share repurchase program, authorizing up to $10 million in additional repurchases of Company common stock. ~~through~~No ~~the~~shares ~~date~~have onbeen ~~which~~repurchased since the ~~Company~~renewal ~~publicly releases its results~~ of ~~operations~~this ~~for fiscal 2013~~program. NoThis ~~additional~~program ~~shares~~expired ~~have~~on ~~been~~March 13, ~~repurchased~~2014 ~~since~~and ~~the~~has ~~renewal~~not ofbeen ~~this program~~renewed.

In addition, on November 22, 2011, the Company closed its modified "Dutch auction" tender offer. The Company accepted for purchase 6,601,313 shares of its common stock at a purchase price of $1.25 per share, or approximately $8.3 million in the aggregate. Included within the shares accepted for purchase were 601,313 additional common shares that the Company elected to purchase pursuant to its option to increase the size of the offering by up to 2% of the outstanding shares of common stock. The shares repurchased represented 5.17% of the shares immediately outstanding prior to the consummation of the tender offer.

Restructuring and Strategic Plan

In August 2011, the Company announced the implementation of a new strategic plan, which included the closure of the Company's Equities business, effective on the date of announcement, and realignment of the Investment Banking division. This resulted in the termination of 62 employees of the Equities division and 32 employees of the Investment Banking division as well as certain administrative positions. In connection with these actions, during the year ended December 31, 2011, the Company recorded (i) a restructuring charge of approximately $7.3 million (of which approximately $1.6 million was a non-cash charge) related to the closure of the Equities business, which was reported as a component of discontinued operations and (ii) approximately $2.5 million of expenses in connection with the realignment of the Investment Banking division (of which approximately $1.0 million was a non-cash charge). The Company's remaining liability resulting from the restructuring and realignment is not material as of December 31, 2012, and therefore, such actions are not expected to have a significant adverse effect on our liquidity or future sources and uses of capital.

Series B Preferred Stock Redemption

On September 28, 2010, the Company redeemed all of the issued and outstanding shares of its Series B Preferred Stock at a redemption price of approximately $26.6 million, representing par value, plus all unpaid dividends accruing subsequent to June 30, 2010 (the last payment date), multiplied by a premium call factor of 1.035. This redemption was funded by an increase in the Company's payable to its clearing broker and will favorably impact the Company's effective income tax rate in future reporting periods as the Series B Preferred Stock dividends, which were accruing at 14% per annum, were non-deductible for tax purposes.

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Regulatory

As of December 31, 2012, each of the Company's registered broker-dealer subsidiaries, Gleacher Securities and Gleacher Partners, were in compliance with the net capital requirements of FINRA and, in the case of Gleacher Securities, the NFA. The net capital rules restrict the amount of a broker-dealer's net assets that may be distributed. Also, a significant operating loss or extraordinary charge against net capital could compel the Company to make additional contributions to one or more of these subsidiaries or adversely affect the ability of the Company's broker-dealer subsidiaries to expand or maintain their present levels of business and the ability to support the obligations or requirements of the Company. As of December 31, 2012, Gleacher Securities had net capital of $56.2 million, which exceeded minimum net capital requirements of FINRA and the NFA by $55.9 million, and Gleacher Partners had net capital of $0.8 million, which exceeded net capital requirements of FINRA by $0.5 million.

Derivatives

The Company utilizes derivatives for various economic hedging strategies to actively manage its market and liquidity exposures. In addition, ClearPoint entered into mortgage loan interest rate lock commitments ("IRLCs") in connection with its mortgage lending activities, which are being discontinued as a result of the Homeward Transaction. Refer to Note 9, within the footnotes to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K for additional information.

Legal Proceedings

From time to time, the Company and its subsidiaries are involved in legal proceedings or disputes (See Part I—Item 3, Legal Proceedings).

Due to the nature of the Company's business, the Company and its subsidiaries are exposed to risks associated with a variety of legal proceedings and claims. These include litigations, arbitrations and other proceedings initiated by private parties and arising from underwriting, financial advisory, securities trading or other transactional activities, client account activities, mortgage lending, employment matters and stockholder claims. Third parties who assert claims may do so for monetary damages that are substantial, particularly relative to the Company's financial position. These proceedings and claims typically involve associated legal costs incurred by the Company in connection with defending against these matters, which could be significant. The Company has been in the past, and currently is, subject to a variety of claims and litigations arising from its business, most of which it considers to be routine.

Expenses associated with investigating and defending against legal proceedings can put a strain on our cash resources. In addition, any fines, penalties, or damages assessed against us, could also impact materially our liquidity. The Company and its subsidiaries are also subject to both routine and unscheduled regulatory examinations of their respective businesses and investigations of securities industry practices by governmental agencies and self-regulatory organizations. In recent years, securities and mortgage lending firms have been subject to increased scrutiny and regulatory enforcement activity. Regulatory investigations can result in substantial fines being imposed on the Company and/or its subsidiaries. In the ordinary course of business, the Company and its subsidiaries receive inquiries and subpoenas from the SEC, FINRA, state regulators and other regulatory organizations. The Company does not always know the purpose behind these communications or the status or target of any related investigation. Some of these communications have, in the past, resulted in disciplinary actions which have sometimes included monetary sanctions, and in the Company and/or its subsidiaries being cited for regulatory deficiencies. To date, none of these communications have had a material adverse effect on the Company's business nor does the Company believe that any pending communications are likely

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to have such an effect. Nevertheless, there can be no assurance that any pending or future communications will not have a material adverse effect on the Company's business. In addition, the Company is also subject to claims by employees alleging discrimination, harassment or wrongful discharge, among other things, and seeking recoupment of compensation claimed (whether for cash or forfeited equity awards), and other damages.

Based on currently available information, the Company does not believe that any current litigation, proceeding, claim or other matter to which it is a party or otherwise involved, including any associated defense costs, will have a material adverse effect on its financial position or cash flows, although an adverse development, or an increase in associated legal fees, could be material to the Company's results of operations in a particular period, depending in part on the Company's operating results in that period.

Deferred Tax Assets

Liquidity also arises from the Company's ability to utilize its net deferred tax assets in order to reduce current tax obligations. During the second quarter of 2012, the Company entered into a three-year cumulative loss position. This cumulative loss position, along with other evidence, merited the establishment of a valuation allowance against the deferred tax assets. As of December 31, 2012, the valuation allowance was $33.3 million.

A sustained period of profitability is required before the Company would change its judgment regarding the need for a valuation allowance against its net deferred tax assets. The realization of the net deferred tax assets is ultimately dependent upon the Company's ability to produce sufficient future taxable income prior to their expiration and the Company's stock price.

Off-Balance Sheet Arrangements

Certain liabilities or commitments of the Company that are not recorded on the Company's Consolidated Statements of Financial Condition as of December 31, ~~2012~~2013 are identified or described in the "Contractual Obligations" section which follows, and within the footnotes to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K.

In addition, refer to "Risk Factors—Risks Relating to our Liquidity and Access to Capital" ~~as well as Note 29 within the footnotes to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K~~ for ~~discussion~~additional ~~regarding the Parent's obligations under certain guaranties issued with respect to ClearPoint~~information.

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Contractual Obligations

The following table sets forth the contractual obligations which require us to make future cash payments which are described below by year:

(In thousands)	Total		~~2013~~2014		~~2014~~2015		~~2015~~2016		~~2016~~2017		~~2017~~2018		Thereafter		All Others
Amounts related to off-balance sheet obligations
ClearPoint loan commitments(1)	$	125,111	$	125,111	$	—	$	—	$	—	$	—	$	—	$
Employee retention agreements(1)	$	2,752	$	2,752	$	—	$	—	$	—	$	—	$	—	$	—
Operating leases (net of sublease rental income)(2)		~~68,594~~43		~~6,989~~43		~~6,062~~		~~5,791~~		~~5,850~~		~~5,538~~		~~38,364~~		—
Employment commitment(3)		363		363		—		—		—		—		—		—
Amounts related to on-balance sheet obligations
ClearPoint secured borrowings(4)		64,908		64,908		—		—		—		—		—		—
Restructuring—third party vendor contracts(3)		1,867		1,867		—		—		—		—		—		—
Merger agreement commitment(5)		594		—		160		—		—		—		—		434
Operating leases (net of sublease rental income)(4)		586		404		182		—		—		—		—		—
Asset Purchase—RangeMark Financial Services(6)		2,500		500		1,000		1,000		—		—		—		—
Merger agreement commitment(5)		399		—		—		—		—		—		—		399
Liabilities from unrecognized tax benefits(7)		3,755		3,029		464		262		—		—		—		—
Liabilities from unrecognized tax benefits(6)		3,331		3,066		265		—		—		—		—		—
Subordinated debt(8)		593		185		320		63		25		—		—		—
Subordinated debt(7)		409		320		63		26		—		—		—		—
Total	$	266,418	$	201,085	$	8,006	$	7,116	$	5,875	$	5,538	$	38,364	$	434

Total	$	9,387	$	8,452	$	510	$	26	$	—	$	—	$	—	$	399

(1)~~Represents~~As ~~the~~a ~~amount~~result of ~~ClearPoint~~the Company's ~~committed~~restructuring, ~~loans~~the ~~(of~~Company ~~which~~entered ~~$100.1 million~~into ~~are~~agreements ~~expected~~with toits ~~fund).~~remaining ~~These~~employees ~~commitments~~designed ~~will~~to beretain ~~funded~~these byemployees through ~~ClearPoint's~~specified ~~secured~~dates. ~~mortgage~~The ~~warehouse~~agreements ~~lines~~provide offor ~~credit~~continued toemployment and the ~~extent~~payment ~~there~~of isguaranteed ~~available~~compensation ~~capacity~~ (and ~~ClearPoint's~~other ~~lenders~~incidental ~~extend~~benefits) ~~financing,~~contingent asupon ~~the~~service ~~lenders~~through ~~have~~such nospecified ~~firm financing commitment~~dates. ~~(2)~~ The ~~Company's~~amounts ~~headquarters~~disclosed ~~and~~within ~~sales~~the ~~offices,~~table ~~and~~above ~~certain~~represent ~~office~~the ~~and~~portion ~~communication~~of ~~equipment,~~compensation ~~are~~payable ~~leased~~subsequent ~~under~~to ~~non-cancelable operating leases~~December 31, ~~certain~~ 2013 (of which ~~contain~~$0.9 million ~~renewal~~was ~~options~~accrued at December 31, ~~free~~2013). (2)Represents remaining ~~rent~~commitments ~~periods~~under ~~and~~non-cancelable ~~escalation~~operating ~~clauses~~leases ~~which~~for ~~expire~~office atspace ~~various~~still ~~times~~occupied ~~through~~by ~~2025~~Company employees. Refer to ~~Note 19~~item ~~within~~#4 ~~the~~below ~~footnotes to the consolidated~~for ~~financial~~commitments ~~statements~~under ~~contained~~non-cancelable inoperating ~~Item 8~~leases offor ~~this~~unoccupied ~~Annual~~office ~~Report on Form 10-K~~space. (3)InRepresents ~~connection with~~ the Company's ~~acquisition~~remaining ofobligation ~~ClearPoint~~with onrespect ~~January 3,~~to ~~2011,~~ the ~~former~~termination ~~stockholder~~ of ~~ClearPoint~~third isparty ~~entitled~~vendor tocontracts ~~receive~~incurred ~~payments consisting of no more than $2.0 million payable~~ in ~~installments and reduced for certain matters for which the Company is indemnified. In~~ connection with the discontinuation ~~closing~~ of ~~the Homeward Transaction, the Company settled~~ its ~~remaining~~Fixed ~~obligation~~Income ~~with~~and aInvestment ~~payment~~Banking tobusinesses ~~the former stockholder of $0.1 million on March 1, 2013 ($0.3 million was paid~~ in ~~connection with~~ the second ~~installment~~ inquarter ~~January~~of 2013. (4)Represents remaining ~~and~~commitments ~~the~~under ~~indemnification~~non-cancelable ~~arrangement~~operating ~~from~~leases ~~the~~for ~~former~~unoccupied ~~stockholder~~office ~~has been terminated~~space. ~~(4)Represents the~~ ~~amount~~Refer ~~borrowed~~to byitem ~~ClearPoint~~#2 onabove ~~its~~for ~~secured~~commitments ~~mortgage~~under non-cancelable ~~warehouse~~operating ~~lines~~leases offor ~~credit,~~office ~~which~~space isstill ~~collateralized~~occupied by ~~approximately $77.6 million~~Company ~~of loans~~employees. (5)In connection with the acquisition of Gleacher Partners Inc., the Company agreed to pay $10 million to the selling parties five years after closing the Transaction, subject to acceleration in certain circumstances. During the year ended December 31, 2013 and 2012, the Company paid $0.2 million and $4.4 million of this obligation, respectively ($4.9 million was paid during the year ended December 31, 2010). The remaining $0.74 million is recorded within the Company's Consolidated Statements of Financial Condition contained in Item 8 of this Annual Report on Form 10-K. ~~(6)In connection~~ ~~with the Company's acquisition of certain assets and the assumption of certain liabilities from RangeMark Financial Services, Inc. and~~ ~~certain~~ of its affiliates and other parties ("RangeMark"), the Company agreed to pay $2.5 million, payable in installments commencing September 20, 2013 through March 31, 2015. (7)At December 31, 2012, the Company had a reserve for unrecognized tax benefits including related interest of $3.8 million. We currently anticipate that total unrecognized tax benefits will decrease by an amount between $0.0 million and $2.3 million in the next twelve months. (8)A select group of management and highly compensated employees were eligible to participate in the Key Employee Plan. The employees entered into subordinated loans with Gleacher Securities to provide for the deferral of compensation and employer allocations under the Key Employee Plan. Maturities of the subordinated debt were based on the distribution election made by each participant, which may be deferred to a later date by the participant. The Company no longer permits any new amounts to be deferred under the Key Employee Plan.

5435

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(6): At December 31, 2013, the Company had a reserve for unrecognized tax benefits including related interest of $3.3 million. We currently anticipate that total unrecognized tax benefits will decrease by up to $3.1 million in the next twelve months.
(7): A group of management and highly compensated employees were eligible to participate in the Key Employee Plan. The employees entered into subordinated loans with Gleacher Securities to provide for the deferral of compensation and employer allocations under the Key Employee Plan. Maturities of the subordinated debt were based on the distribution election made by each participant, which may be deferred to a later date by the participant. The Company no longer permits any new amounts to be deferred under the Key Employee Plan.

Critical Accounting Policies

The following is a summary of the Company's critical accounting policies, prepared on a going concern basis. For a full description of these and other accounting policies, refer to Note 1 within the footnotes to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K.

As previously mentioned, the Company's Board of Directors approved a dissolution and liquidation of the Company, subject to stockholder approval. If the plan of dissolution and liquidation is approved by Company stockholders at the Company's 2014 Annual Stockholders Meeting, currently scheduled for May 29, 2014, the Company would then prospectively prepare its financial statements on a liquidation basis of accounting. Refer to "Recent Accounting Pronouncements (ASU 2013-07)" herein, for a summary of principles for recognition and measurement of assets and liabilities and requirements for financial statements prepared using the liquidation basis of accounting.

Preparing financial statements in accordance with GAAP requires management to make estimates and assumptions. Due to their nature, estimates and assumptions involve judgments, which management makes based upon available information. In making these judgments, there is often a range of reasonable estimates or assumptions that could, appropriately, be made under GAAP. The estimates and assumptions chosen by management affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results or amounts could differ from estimates and judgments, and the difference could be material. Therefore, understanding these policies, and estimates and assumptions they require, is important in understanding the reported results of operations and the financial position of the Company.

The Company believes that accounting for the topics listed below requires the greatest amount of, and therefore is most sensitive to, estimates and assumptions made by management:

•: contingencies,
•: valuation,
•: income taxes, and
•: stock-based compensation.

Valuation of Securities and Other Assets

Substantially all of the financial instruments of the Company are reported on the Consolidated Statements of Financial Condition at fair value, or at carrying amounts that approximate fair value, because of their short term nature, with the exception of the subordinated debt. Financial instruments recorded at carrying amounts approximating fair value consist largely of Receivables from and Payables to brokers, dealer and clearing organizations, related parties and others, Securities purchased under agreements to resell and Securities sold under agreements to repurchase. The fair value of the subordinated debt at December 31, 2012 and 2011 approximated fair value based on current rates available.

Securities transactions in regular-way trades and the related profit and loss arising from such transactions are recorded on their trade date as if they had settled. Unrealized gains and losses from valuing investments at fair value, as determined by management (including the Company's investment in FATV), are included as revenues from investment gains/(losses). Financial instruments owned and securities sold, but not yet purchased, are recorded at fair value, which is the price that would be received upon the sale of an asset or paid upon transfer of a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date. These financial instruments are primarily comprised of holdings in fixed income securities, mortgage loans originated by ClearPoint, and the Company's investment in FATV.

Fixed income securities include securities traded in active markets, such as on-the-run treasuries, federal agency obligations, agency mortgage-backed securities, corporate debt, certain preferred stock, asset-backed and non-agency residential and commercial mortgage-backed securities and certain other debt obligations. In determining fair value for these financial instruments, management considers recent purchases or sales of the financial assets, benchmark securities and yields, discounted cash flow

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techniques, recently executed market transactions of comparable size, issuer spreads and bids/offers. These inputs relate either directly to the financial assets being evaluated or indirectly to a similar security (for example, another bond of the same issuer or a bond of a different issuer in the same industry with similar maturity, terms and conditions).

Fixed income securities also include certain securities not traded in active markets such as certain non-agency commercial and residential mortgage-backed securities positions and certain other debt obligations. In determining fair value for these financial instruments, management maximizes the use of market observable inputs when available. Management considers factors such as recent purchases or sales of the financial assets, discounted cash flow techniques, bids that were received, and various benchmarking techniques, including spread comparisons to other similar financial assets recently traded, or spreads to observable factors such as yield curves. Management considers its valuation methodologies consistent with the assumptions made by other market participants in valuing similar financial assets.

Fair value of residential mortgage loans originated by ClearPoint are determined primarily based upon the prospective investor buy price. For the Company's investment in FATV, which includes holdings in illiquid and privately held securities that do not have readily determinable fair values, the general partner applies certain valuation techniques, including consideration of comparable market transactions and the use of valuation models to determine the discounted value of estimated future cash flows, adjusted as appropriate for market and/or other risk factors.

Financial instruments owned and investments include, at December 31, 2012 and 2011, $23.4 million and $80.8 million, respectively, of financial instruments whose fair value is determined predominantly by unobservable inputs that reflects management's own assumptions (i.e., Level 3 classification as defined by ASC 820).

Refer to Note 8 within the footnotes to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K for further information regarding the Company's financial instruments and classification of such financial instruments in accordance with ASC 820.

Goodwill and Intangible Assets

The Company amortizes intangible assets over their estimated useful life, which is the period over which the assets are expected to contribute directly or indirectly to the future cash flows of the Company, and tests for impairment at the time of a triggering event, if one were to occur. Goodwill is not amortized; instead, it is reviewed on an annual basis for impairment. Goodwill may be impaired when the carrying amount of the reporting unit exceeds the implied fair value of the reporting unit, which is determined based upon significant unobservable inputs. A reporting unit is defined by the Company as an operating segment or a component of an operating segment provided that the component constitutes a business for which discrete financial information is available and management regularly reviews the operating results of that component. For impairment testing purposes, goodwill has been allocated to each reporting unit based upon the goodwill derived from each specific acquisition.

The Company generally uses a combination of the market and income approaches to determine the fair value of the reporting unit. Key assumptions utilized in the market approach include the use of multiples of earnings before interest and taxes and earnings before interest, taxes, depreciation and amortization based upon available comparable company market data. The income approach, which is a discounted cash flow analysis, utilizes a discount rate which includes an estimated cost of debt and cost of equity and capital structure based upon observable market data. There is a degree of uncertainty associated with the key assumptions utilized within the annual goodwill impairment tests. The discounted cash flow assumptions includes an estimated growth rate which may not be indicative of actual future results. In addition, a downturn in the market may widen credit spreads resulting in a

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larger discount rate being utilized in the discounted cash flow analysis and could also have an adverse effect on the market multiples of our guideline companies.

During the year ended December 31, 2011, the Company recorded impairments of $75.7 million of goodwill and $4.6 million of intangible assets allocated to the Investment Banking reporting unit and impairments of all of the goodwill and intangible assets of the Equities reporting unit (classified as part of discontinued operations). These impairments were recognized in connection with Company's realignment of its core investment banking practice and the underperformance of the Company's equities division (the Company exited the Equities business, effective August 22, 2011). In addition, during the second quarter of 2012, the Company determined that all of its then remaining goodwill of approximately $21.1 million had been impaired, due to the duration and severity of the decline in the Company's stock price in relation to its book value.

Goodwill of approximately $1.2 million remaining on the Company's consolidated statements of financial condition relates to the Company's acquisition of certain assets and assumption of certain liabilities from RangeMark, which closed on November 7, 2012. This goodwill has been allocated to the Company's MBS & Rates segment and the annual impairment testing date has been designated to be November 1.

Refer to Note 12 within the footnotes to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K for additional information.

Contingencies

The Company is subject to contingencies, including judicial, regulatory and arbitration proceedings, tax, stockholder claims, former employee claims and other claims. The Company will recognize a liability ~~in its financial statements~~ related to legal and other claims in Accrued expenses within the Consolidated Statements of Financial Condition contained in Item 8 of this Annual Report on Form 10-K when incurrence of a loss is probable and the amount of the loss is reasonably estimable. The determination of these amounts requires ~~significant~~ significant judgment on the part of management. Management considers many factors including, but not limited to the amount of the claim; the amount of the loss, if any, incurred by the other party; the basis and validity of the claim; the possibility of wrongdoing on the part of the Company; likely insurance coverage (to the extent collection is probable); previous results in similar cases; and legal precedents and case law. Pending legal proceedings and potential claims are reviewed with counsel in each accounting period and the reserve, if any, is adjusted as deemed appropriate by management. Any change in the reserve amount is recorded in the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K, and is recognized as a charge/credit to earnings in that period. The assumptions of management in determining the estimates of reserves may prove to be incorrect, which could materially affect results in the period the claims are ultimately resolved.

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other party; the basis and validity of the claim; the possibility of wrongdoing on the part of the Company; likely insurance coverage (to the extent collection is probable); previous results in similar cases; and legal precedents and case law. Pending legal proceedings and potential claims are reviewed with counsel in each accounting period and the reserve, if any, is adjusted as deemed appropriate by management. Any change in the reserve amount is recorded in the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K, and is recognized as a charge/credit to earnings in that period. The assumptions of management in determining the estimates of reserves may prove to be incorrect, which could materially affect results in the period the claims are ultimately resolved.

In addition, the Company has made claims against certain third parties for monetary damages. Recoveries, if any, made as a result of these claims could be material, although there can be no assurance that the Company will prevail in its claims or that any recoveries will be made. The Company would recognize any such recoveries once realized. In connection with these matters, the Company has, and may continued to, incur substantial expenses, including legal fees, in pursuing these claims.

Valuation—Investments

Unrealized gains and losses from valuing investments at fair value, as determined by management (including the Company's investment in FATV), are included as revenues from investment gains/(losses). For the Company's investment in FATV, which includes holdings in illiquid and privately held securities that do not have readily determinable fair values, the general partner applies certain valuation techniques, including consideration of comparable market transactions and the use of valuation models to determine the discounted value of estimated future cash flows, adjusted as appropriate for market and/or other risk factors. Refer to Note 8 and Note 10 within the footnotes to the consolidated financial statements contained within Item 8 of this Annual Report on Form 10-K for additional information.

Income Taxes

Significant judgment is required in determining whether a valuation allowance should be provided against the Company's deferred tax assets ("DTAs"), which is provided when it is more likely than not that such DTAs will not be realized. In assessing the need for a valuation allowance, the Company considers both the positive and negative evidence related to the likelihood of realization of the DTAs. The weight given to the positive and negative evidence is commensurate with the extent to which the evidence can be objectively verified. GAAP states that a cumulative loss in recent years is a significant piece of negative evidence that is difficult to overcome in determining that a valuation allowance is not needed against DTAs. As such, it is generally difficult for positive evidence regarding projected future taxable income exclusive of reversing taxable temporary differences to outweigh objective negative evidence of recent financial reporting losses.

57 During the second quarter of 2012, the Company entered into a three-year cumulative loss position. This cumulative loss position, along with other evidence, merited the establishment of a valuation allowance against the deferred tax assets. As of December 31, 2013, the Company carried a valuation allowance of $76.3 million. A sustained period of profitability is required before the Company would change its judgment regarding the need for a valuation allowance against its net deferred tax assets.

In addition, the Company's pre-tax NOL at December 31, 2013 is estimated to be approximately $159 million (or $73.0 million tax-effected). In the event that the Company experiences an ownership change under Internal Revenue Code Section 382, the Company's NOLs would be fully impaired (reduced nearly to zero). Absent and ownership change, including in the event of a dissolution, the Company's NOLs would be available to offset any income it may recognize, if any.

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During the second quarter of 2012, the Company entered into a three-year cumulative loss position. This cumulative loss position, along with other evidence, merited the establishment of a valuation allowance against the deferred tax assets. As of December 31, 2012, the Company carried a valuation allowance of $33.3 million. A sustained period of profitability is required before the Company would change its judgment regarding the need for a valuation allowance against its net deferred tax assets.

Stock-Based Compensation

The cost of employee services received in exchange for a stock-based compensation award is measured based upon the grant-date fair value of the award. Option grants to employees include judgments with respect to inputs utilized to calculate grant date fair value, including volatility, expected term and related discount rate assumptions. Compensation expense for awards that contain performance conditions are recognized when it becomes probable that such performance conditions will be met. Awards that do not require future service are expensed immediately. Such awards that require future service are amortized over the relevant service period on a straight-line basis. Expected forfeitures are included in determining stock-based employee compensation expense.

Recent Accounting Pronouncements

In ~~January~~July 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2013-01 11 "~~Clarifying~~Presentation ~~the~~of ~~Scope~~an ofUnrecognized ~~Disclosures~~Tax ~~about~~Benefit ~~Offsetting~~When ~~Assets~~a ~~and~~Net ~~Liabilities~~Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists" ("ASU 2013-0111"). ~~The~~Current ~~main~~GAAP ~~objective~~does not include explicit guidance on the financial statement presentation of ~~ASU~~an ~~2013-01~~unrecognized istax tobenefit ~~address implementation~~when ~~issues~~a ~~about~~net ~~the~~operating ~~scope~~loss ofcarryforward, ~~ASU~~a Nosimilar tax loss, or a tax credit carryforward exists. ~~2011~~ The objective of ASU 2013-11 ~~"Disclosures~~is ~~about~~to ~~Offsetting~~eliminate ~~Assets~~diversity ~~and~~in ~~Liabilities"~~practice. ("ASU ~~2011~~2013-11~~"),~~ ~~which~~ requires ~~new~~that ~~disclosures~~an ~~about balance~~unrecognized ~~sheet~~tax ~~offsetting~~benefit, ~~and~~or ~~related~~a ~~arrangements.~~portion ~~For~~of ~~derivative~~an ~~financial~~unrecognized ~~assets~~tax ~~and liabilities~~benefit, should be presented in the ~~amendments~~financial ~~require~~statements ~~disclosure~~as ofa reduction ~~gross~~to a deferred tax asset ~~and~~for ~~liability~~a ~~amounts~~net operating loss carryforward, ~~amounts~~a ~~offset~~similar ontax loss, or a tax credit carryforward except as follows. To the ~~balance~~ ~~sheet,~~extent ~~and~~a ~~amounts~~net ~~subject~~operating toloss ~~offsetting~~carryforward, ~~requirements~~a ~~but~~similar ~~not~~tax ~~offset~~loss, inor ~~the~~a ~~balance~~tax ~~sheet.~~credit ~~ASU~~carryforward ~~2013-01~~is not ~~clarifies~~available ~~that~~at the ~~scope~~reporting ofdate ~~ASU~~under ~~2011-11~~the ~~applies~~tax tolaw ~~derivatives, including~~of ~~embedded~~the ~~bifurcated~~applicable ~~derivatives,~~jurisdiction ~~repurchase~~to ~~agreements~~settle ~~and~~any ~~reverse~~additional ~~repurchase~~income ~~agreements,~~taxes ~~and~~would ~~securities~~result ~~borrowing~~from ~~and~~the ~~securities~~disallowance ~~lending~~of ~~transactions~~tax ~~that~~position ~~are~~or ~~offset~~the intax ~~accordance~~law ~~with~~of the applicable ~~accounting~~jurisdiction ~~literature~~does ornot ~~subject~~require the entity to anuse, ~~enforceable~~and ~~master~~the ~~netting~~entity ~~arrangement~~does ornot ~~similar~~intend ~~agreement.~~to ~~This~~use, ~~guidance~~the isdeferred ~~effective~~tax asset for ~~annual~~such ~~reporting~~purpose, ~~periods~~the ~~beginning~~unrecognized ontax orbenefit ~~after January 1,~~should ~~2013~~be ~~and~~presented isin tothe financial bestatements ~~applied~~as ~~retrospectively.~~a ~~This~~liability ~~guidance~~and ~~does~~should not ~~amend~~be ~~the~~combined ~~existing~~with ~~guidance~~deferred ontax ~~when~~assets. itThis guidance is ~~appropriate~~effective tofor ~~offset~~fiscal years, and ~~since~~interim ~~these~~periods ~~amended~~within ~~principles~~those ~~require~~years, ~~only additional~~beginning ~~disclosures~~after December 15, 2013. The Company does not expect the adoption of ASU ~~2011~~2013-11 ~~will~~to ~~not~~have ~~affect~~a material impact on the Company's consolidated financial ~~condition, results of operations or cash flows~~statements.

In ~~June~~April ~~2011~~2013, the FASB issued ASU No. ~~2011~~2013-~~05,~~07 "Presentation of ~~Comprehensive~~Financial ~~Income~~Statements (Topic 205)" ("ASU ~~2011~~2013-0507"),. inThe ~~order~~objective of ASU 2013-07 is to ~~improve~~clarify when an entity should apply the ~~comparability,~~liquidation ~~consistency~~basis of accounting. In addition, the guidance provides principles for recognition and ~~transparency~~measurement of ~~financial~~assets ~~reporting~~and liabilities and torequirements ~~increase~~for ~~prominence~~financial ofstatements ~~items~~prepared using ~~reported~~the inliquidation ~~other~~basis ~~comprehensive~~of ~~income~~accounting. ~~The~~ASU ~~amendments~~2013-07 inrequires ~~this~~an ~~ASU~~entity ~~include~~to prepare its financial statements using the ~~requirement~~liquidation ~~that~~basis ~~all~~of ~~non-owner~~accounting when liquidation is imminent. Liquidation is ~~changes~~imminent inwhen ~~stockholders'~~the ~~equity~~likelihood beis ~~presented~~remote inthat the entity will return from liquidation and either (a) a ~~single~~plan ~~continuous~~for ~~statement~~liquidation is approved by the person or persons with the authority to make such a plan effective and the likelihood is remote that the execution of ~~comprehensive~~the ~~income~~plan will be blocked by other parties or in(b) a ~~two~~plan ~~separate~~for ~~but~~liquidation ~~consecutive~~is ~~statements~~being imposed by other forces (for example, involuntary ~~and~~bankruptcy). ~~eliminates~~ASU 2013-07 requires financial statements prepared using the ~~option~~liquidation basis of accounting to present ~~components~~relevant ofinformation about the entity's expected resources in ~~other~~liquidation ~~comprehensive~~by ~~income~~measuring asand ~~part~~presenting assets at the amount of the ~~statement~~expected cash proceeds from liquidation. The entity should include in its presentation of ~~changes~~assets any items it had not previously recognized under GAAP but that it expects to either sell in ~~stockholders'~~liquidation ~~equity.~~or ~~ASU~~use ~~2011-05~~in issettling ~~effective~~liabilities. ~~for~~An ~~fiscal~~entity ~~years,~~should recognize and ~~interim~~measure ~~periods~~its ~~within~~liabilities ~~those~~in ~~years,~~accordance ~~beginning~~with ~~after~~GAAP that otherwise ~~December 15,~~applies ~~2011,~~to ~~except~~those ~~for~~liabilities. ~~new~~The ~~presentation~~entity ~~requirements~~should ~~about~~not ~~reclassification~~anticipate ofthat ~~items~~it ~~out~~will ofbe ~~accumulated~~legally ~~other~~released ~~comprehensive~~from ~~income~~being ~~which~~the ~~are~~primary ~~currently~~obligor ~~deferred~~under ~~indefinitely~~those liabilities, either judicially or by creditor(s). ~~ASU 2011-05~~The entity is ~~not~~also ~~applicable~~required to accrue and separately present the ~~Company~~costs asthat it ~~has~~expects noto ~~items~~incur ~~reported~~and asthe ~~other~~income ~~comprehensive~~it ~~income~~expects to earn during the expected duration of the liquidation, including any costs associated with sale or settlement of those assets and liabilities. ASU 2013-07 also requires disclosure about an entity's plan for liquidation, the methods and significant assumptions used to measure assets and liabilities, the

In May 2011, the FASB issued ASU No. 2011-04 "Fair Value Measurements: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS" ("ASU 2011-04"), in order to develop common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with GAAP and International Financial 38

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~~Reporting~~type ~~Standards~~and ~~("IFRS").~~amount ~~The amendments in this ASU include clarification~~ of ~~(i) the~~costs ~~application of the highest~~ and ~~best~~income ~~use valuation premise concepts and specifies that such concepts are relevant only when measuring the fair value of nonfinancial assets~~accrued, ~~(ii) the requirement to measure certain instruments classified in stockholders' equity at fair value, such as equity interests issued as consideration in a business combination~~ and ~~(iii) disclosure requirements regarding quantitative information about~~ the ~~unobservable~~expected ~~inputs~~duration ~~used in a fair value measurement that is categorized within Level 3~~ of the ~~fair~~liquidation ~~value hierarchy~~process. InThis ~~addition,~~guidance ~~ASU~~is ~~2011-04~~effective ~~changes particular principles or requirements~~ for ~~measuring fair value or for disclosing information about fair value measurements, including (a) measuring the fair value of financial instruments that are managed within a portfolio by permitting~~ entities ~~to measure such financial instruments on a net basis if such entities manage such financial instruments on the basis of their net exposure, (b) clarifying~~ that ~~premiums~~determine orliquidation ~~discounts~~is ~~related~~imminent toduring ~~size as a characteristic~~annual ~~of the~~ reporting ~~entity's~~periods ~~holding~~beginning ~~(specifically~~after December 15, ~~a blockage factor) rather than as a characteristic of the asset or liability (for example~~2013, ~~a control premium) are not permitted in a fair value measurement~~ and ~~(c) the~~interim ~~expansion~~reporting ofperiods ~~disclosures~~therein. ~~about~~Entities ~~fair~~should ~~value~~apply ~~measurements, including~~ the ~~valuation~~requirements ~~processes~~prospectively offrom ~~financial instruments categorized within Level 3 of~~ the ~~fair~~day ~~value hierarchy~~that ~~and~~liquidation ~~sensitivity~~becomes ~~of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs, if any~~imminent. Early ~~ASU~~adoption ~~2011-04~~ is ~~effective during interim and annual periods beginning after December 15, 2011~~permitted. The adoption of ASU ~~2011~~2013-0407 did not ~~have~~affect ~~a material impact on~~ the Company's ~~consolidated~~ financial statements, as liquidation is not imminent. Refer to Note 81 within the footnotes to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K ~~which~~for ~~includes~~additional ~~the disclosures as required by this ASU~~information.

In ~~April~~February ~~2011~~2013, the FASB issued Accounting Standards Update ("ASU") No. ~~2011~~2013-0302 "~~Transfers~~Other ~~and~~Comprehensive ~~Servicing:~~Income—Reporting ~~Reconsideration~~Amounts ofReclassified ~~Effective~~Out ~~Control~~of ~~for~~Accumulated ~~Repurchase~~Other Comprehensive ~~Agreements~~Income" ("ASU ~~2011~~2013-0302")~~, in~~. ~~order~~The objective of ASU 2013-02 is to improve the ~~accounting~~reporting ~~for~~of ~~repurchase~~reclassifications ~~agreements~~out ~~and~~of accumulated other ~~agreements~~comprehensive ~~that~~income. ~~both~~This ~~entitle~~ASU ~~and~~seeks ~~obligate~~to aattain ~~transferor~~that objective toby ~~repurchase~~requiring oran ~~redeem~~entity ~~financial~~to ~~assets~~report ~~before~~the ~~their~~effect ~~maturity.~~of ~~The amendments~~significant inreclassifications ~~this~~out ~~ASU~~of ~~remove~~accumulated ~~from~~other comprehensive income on the ~~assessment~~respective ofline ~~effective~~items ~~control~~in ~~(i) the~~net ~~criterion~~income ~~requiring~~if the ~~transferor~~amount being reclassified is required under GAAP to ~~have~~be ~~the~~reclassified ~~ability~~in its entirety to ~~repurchase~~net orincome. ~~redeem~~For ~~financial~~other ~~assets~~amounts onthat ~~substantially the~~are ~~agreed~~not ~~terms,~~required ~~even~~under GAAP to be reclassified in ~~the~~their ~~event~~entirety ofto ~~default~~net byincome in the ~~transferee~~same reporting period, ~~and~~an ~~(ii) the~~entity ~~collateral~~is ~~maintenance~~required ~~implementation~~to ~~guidance~~cross-reference ~~related~~other todisclosures required under GAAP that ~~criterion~~provide additional detail about those amounts. ~~ASU~~This ~~2011-03~~guidance is effective prospectively for ~~the~~reporting ~~first~~periods ~~interim or annual period~~ beginning ~~on or~~ after December 15, ~~2011~~2012. ~~The adoption of~~ ASU ~~2011~~2013-0302 ~~did~~is not ~~have~~applicable ato ~~material~~the ~~impact~~Company onas ~~the~~it ~~Company's~~has ~~consolidated~~no ~~financial statements.~~items reported as other comprehensive income.

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GLEACHER & COMPANY, INC. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

~~Given~~The ~~the~~Company's ~~amount~~exposure ofto ~~capital~~market werisk ~~deploy,~~has ~~the~~been ~~financial~~substantially ~~products~~reduced wein ~~trade~~connection ~~and~~with the ~~large~~discontinuation ~~number~~ of ~~counterparties~~ClearPoint's weoperations in ~~deal~~the ~~with~~first inquarter ~~our~~of ~~daily transactions,~~2013 ~~management~~and ~~believes~~the ~~that~~exit ~~comprehensive~~from ~~and~~its ~~effective~~Fixed ~~risk~~Income ~~management~~businesses isduring athe ~~key~~three ~~component~~months ~~for~~ended ~~our~~June 30, ~~success~~2013.

~~Our risk~~ ~~management~~Market ~~mission~~Risk—Equity ~~includes:~~Price (i) proactively avoiding/minimizing risk events that would have negative impact on the Company's earnings and value objectives and (ii) enabling more efficient allocation of capital and other resources based on performance and risk attribution quantification, which entails properly sizing our risk appetite/limits based upon Company-wide objectives. Risk

~~These risks~~The ~~and~~Company ~~our~~is exposed to equity price risk ~~management~~to ~~processes~~the ~~and~~extent ~~procedures~~it ~~are~~holds ~~summarized~~investments ~~below~~in equity securities. Equity price risk results from changes in the level or volatility of equity prices, which affect the value of equity securities or instruments that derive their value from equity securities.

The Company's ~~Risk~~principal exposure to equity price risk relates to its investment in F.A. Technology Ventures L.P. ("FATV"). At December 31, 2013 and ~~Risk~~December 31, ~~Management~~ 2012 the fair market value of FATV was approximately $17.6 million and $17.1 million, respectively. Equity price risk is estimated as the potential loss in fair value resulting from a hypothetical 10% adverse change in equity security prices or valuations of the underlying portfolio companies. This risk measure for the Company's investment in FATV amounted to $1.8 million at December 31, 2013 and $1.7 million at December 31, 2012. Equity prices may decrease more than the amount assumed above, and consequently, the actual change in fair value may exceed the change computed above. Refer to Note 8 within the footnotes to the consolidated financial statements contained within Item 8 of this Annual Report on Form 10-K for additional information.

~~Senior~~ ~~management~~Liquidity is responsible for the day-to-day management of risk, while the Company's Board, as a whole and through its committees, has responsibility for the oversight of risk management. Management directly participates in setting risk limits and allocating risk capital and intervenes if significant risk issues arise. Our risk oversight manager understands the products and markets and is independent of the business units, which promotes an unbiased analysis of our risk exposures. Risk

~~Our risk~~Refer ~~management~~to ~~process~~"Risk ~~sets~~Factors—Risks ~~risk~~Relating ~~capital~~to ~~and~~our ~~risk~~Liquidity ~~parameters~~and ~~for~~Access ~~each~~to ~~business,~~Capital" ~~approves~~contained ~~new~~in ~~businesses and products~~Part I, ~~monitors~~Item 1A ~~daily~~of this ~~business~~Annual ~~activities~~Report ~~and~~on ~~inventory~~Form 10-K ~~exposure~~ and ~~intervenes~~ ~~when~~"Liquidity ~~risk issues arise. Daily risk reports are generated~~ and ~~distributed~~Capital toResources" ~~trading~~contained ~~management~~in asPart II, ~~well~~Item 7 asof ~~senior~~this ~~management.~~Annual ~~Whenever~~Report ~~risk~~on ~~issues~~Form 10-K ~~arise, those responsible~~ for ~~risk~~additional ~~oversight will initiate discussions with the business units, trading management and/or senior management~~information.

~~Our risk~~ ~~management~~ClearPoint ~~process measures, monitors and manages various types of risks we encounter in our business activities, including market, credit, liquidity, funding, operational, legal and reputational risks.~~ Risks

As ~~Market~~previously ~~Risk~~ mentioned, the Company engaged in residential mortgage lending operations through ClearPoint until this business was discontinued, and the business sold to Homeward in

Market risk represents the risk of loss that may result from the potential change in the value of our trading or investment positions, or loans held for sale as a result of fluctuations in interest rates, prepayment speeds, credit spreads and equity prices, as well as changes in the implied volatility of interest rates and equity prices. The Company's exposure to market risk is primarily related to securities transactions in its MBS & Rates division, and to a lesser extent, loans related to the residential mortgage lending activities of ClearPoint. 39

The Company maintains inventory in agency mortgage-backed securities, debt securities issued by U.S. Government and federal agency obligations, non-agency residential and commercial mortgage-backed securities, corporate debt, listed equities, preferred stock and certain other debt obligations. In addition, the Company originates residential mortgage loans for resale through ClearPoint, the activities of which are being discontinued as a result of the Homeward Transaction. In order to mitigate exposure to market risk, the Company enters into derivatives including the sale of TBAs and exchange traded treasury futures contracts, or by selling short U.S. Government securities.

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~~The~~February ~~following~~2013. ~~table~~In ~~categorizes~~connection with the Homeward transaction, the Company and certain of its affiliates, including ClearPoint, entered into a Purchase Agreement, which among other things, provides for customary indemnification provisions. Pursuant to these provisions, ClearPoint established an escrow account of $5.0 million for a three-year period following the closing date (February 22, 2016). The Parent also provided for a guaranty of ClearPoint's ~~market~~indemnification ~~risk~~obligations ~~sensitive~~to ~~financial~~Homeward, ~~instruments~~up to a maximum of $7.5 million, of which $5.0 million is payable by Parent under the guaranty only in limited circumstances in which, during the three year-period following the closing date, the sums held in the escrow account are not available to satisfy indemnification claims.

	Market Value (net)
(In thousands)	December 31, 2012		December 31, 2011
Trading risk
Interest rate	$	962,572	$	1,368,484
Equity		—		—
Foreign exchange		—		—
Commodity		—		—
Total trading risk	$	962,572	$	1,368,484
Other than trading risk
Equity	$	21,180	$	19,910
Interest rate		177		180
Foreign exchange		—		—
Commodity		—		—
Total other than trading risk		21,357		20,090
Total market value, net	$	983,929	$	1,388,574

In addition to the indemnification provisions related to the Homeward Transaction, in the ordinary course of business, ClearPoint also indemnified its other counterparties, against potential losses incurred by such parties including under its warehouse line agreements and loan sale agreements related to originated mortgage loans since the inception (June 2008). ClearPoint maintains a reserve for these loan repurchase and indemnification claims, which at December 31, 2013 and 2012 was $0.4 million and $0.4 million, respectively.

Refer to Note 117 "Commitments and ~~Note 8~~Contingencies" within the footnotes to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K for ~~further~~additional information ~~regarding the Company's accounting policy for valuation of these financial instruments and classification of such financial instruments in accordance with ASC 820~~.

The following is a discussion of the Company's primary market risk exposures as of December 31, 2012, including a discussion of how those exposures are currently managed.

Interest Rate Risk and Related Prepayment Risk

In connection with trading and residential mortgage lending activities, the Company is exposed to interest rate risk arising from changes in the level or volatility of interest rates or the shape and slope of the yield curve. Interest rate risk exposure is a result of maintaining inventory positions (including originated residential mortgage loans) and trading in interest-rate-sensitive financial instruments. These financial instruments include agency mortgage-backed securities, debt securities issued by U.S. Government and federal agency obligations, non-agency residential and commercial mortgage-backed securities, corporate debt, preferred stock, certain other debt obligations and residential mortgage loans.

Prepayment risk arises from the possibility that the rate of principal repayment on mortgages will fluctuate, affecting the value of mortgage-backed securities. Prepayments are the full or partial repayment of principal prior to the original term to maturity of a mortgage loan and typically occur due to refinancing of mortgage loans and turnover in housing ownership. Prepayment rates on mortgage-related securities vary from time to time and may cause changes in the amount of the Company's net interest income, the valuations of mortgage-backed securities in inventory and the effectiveness of our interest rate hedging. Prepayments of mortgage loans usually can be expected to increase when mortgage interest rates fall below the then-current interest rates on such loans and decrease when mortgage interest rates exceed the then-current interest rate on such loans, although such effects are uncertain. Prepayment experience also may be affected by the conditions in the housing and financial markets, including the Government Sponsored Entities buying back delinquent loans at par value, general economic conditions and the relative interest rates on fixed-rate and adjustable-rate mortgage loans underlying mortgage-backed securities. The purchase prices of mortgage-backed

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securities are generally based in part upon assumptions regarding the expected rates of prepayments. The Company's mortgage loans related to the residential mortgage lending activities of ClearPoint are subject to prepayment risk, however, these loans tend to be sold within a short period of time subsequent to origination which mitigates this risk to the Company.

The Company economically hedges its exposure to interest rate risk by shorting mortgage pass-through TBAs, government securities and exchange traded treasury futures contracts. Hedging using government securities and exchange traded treasury futures contracts protects the Company from movements in the yield curve and changes in general levels of interest rates. Hedging using TBAs reduces the basis risk between the mortgage-backed securities market and government securities market.

A large portion of the Company's inventory consists of specified mortgage-backed securities pass-through pools, whose prices are linked to TBAs, which also, however, display their own idiosyncratic pricing behavior based on their underlying mortgage loan characteristics. The Company believes that TBAs are the best hedging tool for these pools, but as with most hedges they cannot completely eliminate risk.

The fair market value of securities exposed to interest rate and related prepayment risk included in the Company's inventory at December 31, 2012 and 2011 was $1.0 billion and $1.4 billion, respectively. Interest rate risk is measured as the potential loss in fair value resulting from a hypothetical one-half percent increase in interest rates across the yield curve, including its related effect on prepayment speeds. At December 31, 2012 and 2011, the potential change in fair value under this stress scenario was a loss of $3.3 million and $4.1 million, respectively. Interest rates may increase more than the amount assumed above and consequently, the actual change in fair value may exceed the change computed above.

The following table shows a breakdown of our interest rate exposure on December 31, 2012 and December 31, 2011.

Market value change per one hundredth of one percent interest rate increase

(In thousands)	2012			2011
U.S. government and federal agency obligations	$	22		$	17
Agency mortgage-backed securities		(58	)		(85	)
Non-agency mortgage-backed securities		(8	)		(12	)
Corporate debt securities		(19	)		(1	)
Preferred stock		(2	)		(1	)
Total	$	(65	)	$	(82	)
Average duration (years)		1.16			0.82

Credit Spread and Credit Rating Risk

The Company actively makes markets in various credit instruments, including corporate bonds (both high yield and investment grade), emerging market debt and structured securities (MBS/ABS/CMBS/CDO/CLO). As a consequence, the Company is exposed to credit spread and credit rating changes in these markets. Credit spread and credit rating risk results from changes in the level or volatility of credit spreads, either as a result of macro market conditions (e.g., risk aversion sentiment) or from idiosyncratic development of certain debt issuers or their sectors. The Company has generally not been exposed to significant credit risk related to the residential mortgage lending activities of ClearPoint as the loans are underwritten using standards prescribed by conventional mortgage lenders

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and loan buyers such as the Federal National Mortgage Association and Federal Home Loan Mortgage Corporation.

The Company believes the optimum strategy to manage credit spread and credit rating risk is high inventory turnover, thereby minimizing the amount of time during which we hold these types of securities, in some cases by arranging the sale before committing to the purchase. Given this strategy, the Company maintains a low inventory level in these securities relative to the Company's total securities owned.

The following tables show a breakdown of our exposure in these markets on December 31, 2012 and December 31, 2011.

Credit Sensitive Holdings Market Value as of December 31, 2012

(In thousands)	Non-agency mortgage- backed securities		Corporate debt securities, net		Preferred stock		Other debt obligations		Total
Investment grade	$	7,927	$	19,904	$	1,150	$	2,074	$	31,055
Non-investment grade		20,197		7,822		1,289		671		29,979
Total	$	28,124	$	27,726	$	2,439	$	2,745	$	61,034

Credit Sensitive Holdings Market Value as of December 31, 2011

(In thousands)	Non-agency mortgage- backed securities		Corporate debt securities, net		Preferred stock			Other debt obligations		Total
Investment grade	$	19,250	$	224	$	871		$	192	$	20,537
Non-investment grade		37,323		2,046		(168	)		647		39,848
Total	$	56,573	$	2,270	$	703		$	839	$	60,385

Equity Price Risk

The Company is exposed to equity price risk to the extent it holds equity securities in inventory. Equity price risk results from changes in the level or volatility of equity prices, which affect the value of equity securities or instruments that derive their value from equity securities. The Company attempts to reduce the risk of loss inherent in its inventory of equity securities by monitoring those security positions throughout each day.

The Company had no significant net long or short positions in marketable equity securities at December 31, 2012 and December 31, 2011. The Company's investment in FATV at December 31, 2012 and December 31, 2011 had a fair market value of $17.1 million and $15.9 million, respectively. Equity price risk is estimated as the potential loss in fair value resulting from a hypothetical 10% adverse change in equity security prices or valuations of the underlying portfolio companies. This risk measure, for the Company's investment in FATV amounted to $1.7 million at December 31, 2012 and $1.6 million at December 31, 2011. Equity prices may increase more than the amount assumed above, and consequently, the actual change in fair value may exceed the change computed above.

Counterparty Credit Risk

Counterparty credit risk is the risk of loss due to failure of our counterparty to meet its obligations. The Company is engaged in various trading and brokerage activities whose counterparties primarily include broker-dealers, banks, and other financial institutions. In the event counterparties do not fulfill their obligations, the Company may be exposed to risk. The risk of default depends on the

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credit worthiness of the counterparty or issuer of the instrument. In order to mitigate this risk, credit exposures are monitored in light of changing counterparty and market conditions.

Agency and principal securities transactions with customers of the Company's subsidiaries, other than the Rates business, are cleared through a third party clearing agreement on a fully disclosed basis. Under this agreement, transactions are deemed to be either receive versus payment, delivery versus payment or cash transactions.

In the normal course of business, Gleacher Securities guarantees certain service providers, such as clearing and custody agents, trustees, and administrators, against specified potential losses in connection with their acting as an agent of, or providing services to, the Company or its affiliates. Gleacher Securities also indemnifies some clients against potential losses incurred in the event of non-performance by specified third-party service providers, including sub-custodians. The maximum potential amount of future payments that Gleacher Securities could be required to make under these indemnifications cannot be estimated. However, Gleacher Securities has historically made no material payments under these arrangements and believes that it is unlikely it will have to make material payments in the future. Therefore, the Company has not recorded any contingent liability in the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K, for these indemnifications.

In the ordinary course of business, ClearPoint indemnified counterparties, including under its loan sale and warehouse line agreements, against potential losses incurred by such parties in connection with particular arrangements. Reserves for the exposure to these obligations is included within Accrued expenses in the Consolidated Statements of Financial Condition contained in Item 8 of this Annual Report on Form 10-K. Amounts reserved as of December 31, 2012 and 2011 are not material. In connection with the Company's acquisition of ClearPoint in January 2011, the Company was indemnified for any such losses with respect to any loans presented to ClearPoint or originated on or prior to January 3, 2011. In connection with the closing of the Homeward Transaction, the Company settled its remaining obligation with a payment to the former stockholder of $0.1 million on March 1, 2013 and the indemnification arrangement from the former stockholder has been terminated.

The Company is required to maintain a deposit at the FICC in connection with the self-clearing activities associated with the Rates business. The size of the deposit is subject to change from time to time and is dependent upon the volume of business transacted. At December 31, 2012 and 2011, the Company had a deposit with the FICC of approximately $8.8 million and $15.2 million, respectively, which is recorded within Receivable from brokers, dealers and clearing organizations in the Consolidated Statements of Financial Condition contained in Item 8 of this Annual Report on Form 10-K.

Liquidity and Funding Risk

Liquidity risk is the risk that it takes longer or it is more costly than anticipated to sell inventory to raise cash due to adverse market conditions. Funding risk is the risk that we are unable to meet margin calls or cash flow needs due to lack of cash or are unable to maintain leveraged positions due to margin calls.

Liquidity is of paramount importance to our success and operations. Lack of liquidity tends to be the biggest contributor to the rapid failure of financial institutions. The Company has various strategies, policies and processes in place to monitor and mitigate liquidity risk.

Our liquidity risk management consists of the following components:

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Excess Liquidity

Having ample access to cash is critical for financial firms in times of crisis and market turmoil and is critical to allow us to take advantage of market opportunities whenever they arise. We monitor our funding and cash flow needs daily and measure them against available cash levels in order to maintain available cash at our clearing agents so we have liquidity for operations and for meeting financing obligations even under stressful market conditions.

Leverage Ratios

Leverage increases the risks (and potential rewards) we take. To balance this risk/reward equation, we maintain weighted average target leverage ratios well below 10x, so that the risk from leveraging would still be manageable even in the event of market crisis. This target excludes securities purchased under agreements to resell, as they are generally self-financed through matched book repurchase transactions and are therefore considered lower risk. We view the resulting measure of adjusted leverage, also a non-GAAP financial measure, as a more relevant measure of financial risk when comparing financial services companies.

(In thousands of dollars)	December 31, 2012		December 31, 2011
Total assets	$	1,229,638	$	3,303,556
Less: Securities purchased under agreements to resell		—		(1,523,227	)
Adjusted assets (non-GAAP)		1,229,638		1,780,329
Stockholders' equity	$	180,995	$	259,123
Leverage ratio(1)		6.8x		12.7x
Leverage ratio—adjusted (non-GAAP)(2)		6.8x		6.9x

(1)Leverage ratio equals total assets divided by total Stockholders' equity. (2)Adjusted leverage ratio equals adjusted assets divided by total Stockholders' equity.

Diversified Funding Sources

The Company funds its trading operations through secured borrowings, mainly from our clearing firm. The Company has also diversified by accessing the repurchase market as an additional funding source.

Asset/Liability Management

The risk of being forced to sell leveraged positions in a down market as a result of a loss of short-term financing sources is limited, as the majority of our inventory is financed through our clearing broker, which provides for no defined maturity. We also periodically finance our inventory through the repurchase market on a short term basis. To the extent we no longer have access to this market, we would generally be able to obtain equivalent financing with our clearing broker.

Refer to "Liquidity and Capital Resources" in Part II, Item 7 of this Annual Report on Form 10-K for further information about our liquidity.

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Operating Risk

Operating risk is the potential for loss arising from limitations in the Company's financial systems and controls, deficiencies in legal documentation and the execution of legal and fiduciary responsibilities, deficiencies in technology and the risk of loss attributable to operational problems. These risks are less direct than credit and market risk, but managing them is critical, particularly in a rapidly changing environment with increasing transaction volumes. In order to reduce or mitigate these risks, the Company has established and maintains an internal control environment that incorporates various control mechanisms at different levels throughout the organization and within such departments as Finance, Information Technology, Operations, Legal, Compliance and Internal Audit. These control mechanisms are designed to ensure that operational policies and procedures are being followed and that the Company's various businesses are operating within established corporate policies and limits.

Other Risks

~~Other~~In ~~risks encountered by~~ the ~~Company~~normal ~~include~~course ~~political,~~of ~~regulatory~~its ~~and~~prior ~~tax~~business ~~risks.~~activities, ~~These risks reflect~~ the ~~potential~~Company ~~impact~~provided ~~that changes~~guarantees into ~~local~~third ~~laws,~~parties ~~regulatory~~with ~~requirements~~respect orto ~~tax~~the ~~statutes~~obligations of ~~have~~certain onof ~~the~~its ~~economics~~subsidiaries. ~~and~~The ~~viability~~majority of ~~current~~these orarrangements, ~~future~~discussed ~~transactions.~~below, Inare anconnected ~~effort~~ to ~~mitigate~~the ~~these~~sales ~~risks,~~and trading activities of the Company's ~~reviews~~prior ~~new~~MBS & Rates and Credit Products ~~pending~~divisions, ~~regulations~~the ~~and~~activities ~~legislation~~of ~~and~~which ~~their~~were ~~potential~~discontinued ~~impact~~in onthe ~~its~~second ~~business~~quarter of 2013.

66 In the normal course of business, Gleacher Securities indemnified certain service providers, such as clearing and custody agents, trustees, and administrators, against specified potential losses in connection with their acting as an agent of, or providing services to, the Company or its affiliates. Gleacher Securities also indemnified some clients against potential losses incurred in the event of non-performance by specified third-party service providers, including sub-custodians. The maximum potential amount of future payments that Gleacher Securities could be required to make under these indemnifications cannot be estimated. However, Gleacher Securities has historically made no material payments under these arrangements and believes that it is unlikely it will have to make material payments in the future. Therefore, the Company has not recorded any contingent liability in the consolidated financial statements, contained in Item 8 of this Annual Report on Form 10-K, for these indemnifications.

The Company provided representations and warranties to counterparties in connection with a variety of transactions and occasionally agreed to indemnify them against potential losses caused by the breach of those representations and warranties and occasionally other liabilities. The maximum potential amount of future payments that the Company could be required under these indemnifications cannot be estimated. However, the Company has historically made no material payments under these agreements and believes that it is unlikely it will have to make material payments in the future; therefore it has not recorded any contingent liability in the consolidated financial statements, contained in Item 8 of this Annual Report on Form 10-K, for these indemnifications.

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Item 8. Financial Statements and Supplementary Data

Index to Financial Statements and Supplementary Data	Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	68	42
FINANCIAL STATEMENTS:
Consolidated Statements of Operations for the Years Ended December 31, 2012, 2011 and 2010	69
Consolidated Statements of Operations for the Years Ended December 31, 2013, 2012 and 2011		43
Consolidated Statements of Financial Condition as of December 31, 2012 and 2011	70
Consolidated Statements of Financial Condition as of December 31, 2013 and 2012		44
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 2012, 2011 and 2010	71
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 2013, 2012 and 2011		45
Consolidated Statements of Cash Flows for the Years Ended December 31, 2012, 2011 and 2010	73
Consolidated Statements of Cash Flows for the Years Ended December 31, 2013, 2012 and 2011		47
Notes to Consolidated Financial Statements	75	49
SUPPLEMENTARY DATA:
Selected Quarterly Financial Data (Unaudited)	~~123~~	93

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of
Gleacher & Company, Inc.:

In our opinion, the accompanying consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Gleacher & Company, Inc. and its subsidiaries at December 31, ~~2012~~2013 and December 31, ~~2011~~2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, ~~2012~~2013 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2012~~2013, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

AsThe ~~more~~accompanying ~~fully~~financial ~~discussed~~statements have been prepared assuming that the Company will continue as a going concern. The Board has determined that it is in the best interests of the Company's stockholders for the Company to dissolve, liquidate and distribute to stockholders its available assets. The Company's dissolution is subject to stockholder approval. These factors, further described in Note 1 to the ~~consolidated~~Financial Statements, raise substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements, ado ~~combination~~not ofinclude ~~events~~any adjustments ~~have~~that ~~impacted~~might result from the ~~Company's~~outcome ~~ongoing~~of ~~business~~this ~~activities~~uncertainty.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP ~~New~~ ~~York, NY March 18, 2013~~

68New York, NY March 17, 2014

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GLEACHER & COMPANY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands of dollars, except for per share amounts)

CONSOLIDATED STATEMENTS OF OPERATIONS

	Years ended December 31,

	2013			2012			2011
Revenues
Investment gains, net	$	1,267		$	1,233		$	2,996
Fees and other		666			849			1,066


Total revenue		1,933			2,082			4,062


Expenses
Compensation and benefits		9,098			13,053			12,017
Professional fees		11,184			9,643			4,503
Settlement of arbitration and other claims (Refer to Note 17)		3,146			—			—
Communications and data processing		1,181			1,935			2,105
Occupancy, depreciation and amortization		1,349			1,577			1,346
Other		3,584			2,880			3,262


Total expenses		29,542			29,088			23,233


Loss from continuing operations before income taxes and discontinued operations		(27,609	)		(27,006	)		(19,171	)
Income tax (benefit)/expense		(1,082	)		22,940			(7,422	)


Loss from continuing operations		(26,527	)		(49,946	)		(11,749	)
Loss from discontinued operations, net of taxes (Refer to Note 22)		(73,005	)		(27,744	)		(70,375	)


Net loss	$	(99,532	)	$	(77,690	)	$	(82,124	)




Per share data:
Basic loss per share:
Continuing operations	$	(4.33	)	$	(8.40	)	$	(1.90	)
Discontinued operations		(11.93	)		(4.66	)		(11.40	)


Net loss per share	$	(16.26	)	$	(13.06	)	$	(13.30	)




Diluted loss per share:
Continuing operations	$	(4.33	)	$	(8.40	)	$	(1.90	)
Discontinued operations		(11.93	)		(4.66	)		(11.40	)


Net loss per share	$	(16.26	)	$	(13.06	)	$	(13.30	)




Weighted average shares of common stock:
Basic		6,120			5,949			6,172
Diluted		6,120			5,949			6,172

(In thousands, except for per share amounts)

	Years ended December 31,
	2012			2011			2010
Revenues
Principal transactions	$	52,771		$	89,108		$	79,433
Commissions		71,418			71,347			76,817
Investment banking		30,553			33,069			43,400
Investment banking revenues from related party		—			—			1,947
Investment gains, net		1,233			2,996			7
Interest income		48,796			66,194			57,292
Gain from bargain purchase—ClearPoint Funding, Inc. acquisition (Refer to Note 11)		—			2,330			—
Fees and other		11,651			8,041			1,004
Total revenues		216,422			273,085			259,900
Interest expense		12,827			11,913			11,318
Net revenues		203,595			261,172			248,582
Expenses (excluding interest)
Compensation and benefits		143,414			162,537			222,833
Clearing, settlement and brokerage		40,281			35,203			4,314
Impairment of goodwill and intangible assets (Refer to Note 12)		21,096			80,244			—
Professional fees		15,504			8,135			7,966
Communications and data processing		12,806			13,471			11,464
Occupancy, depreciation and amortization		8,919			8,455			11,941
Business development		3,719			4,620			4,825
Loss from extinguishment of mandatorily redeemable preferred stock (Refer to Note 17)		—			—			1,608
Other		11,209			10,384			9,414
Total expenses (excluding interest)		256,948			323,049			274,365
Loss before income taxes and discontinued operations		(53,353	)		(61,877	)		(25,783	)
Income tax expense/(benefit)		24,602			2,207			(9,778	)
Loss from continuing operations		(77,955	)		(64,084	)		(16,005	)
Income/(loss) from discontinued operations, net of taxes (Refer to Note 26)		265			(18,040	)		(4,616	)
Net loss	$	(77,690	)	$	(82,124	)	$	(20,621	)
Per share data:
Basic loss per share:
Continuing operations	$	(0.66	)	$	(0.52	)	$	(0.13	)
Discontinued operations		—			(0.15	)		(0.04	)
Loss per share	$	(0.65	)	$	(0.67	)	$	(0.17	)
Diluted loss per share:
Continuing operations	$	(0.66	)	$	(0.52	)	$	(0.13	)
Discontinued operations		—			(0.15	)		(0.04	)
Loss per share	$	(0.65	)	$	(0.67	)	$	(0.17	)
Weighted average shares of common stock:
Basic		118,977			123,439			121,301
Diluted		118,977			123,439			121,301

The accompanying notes are an integral part of these consolidated financial statements.

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GLEACHER & COMPANY, INC. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In thousands of dollars, except for share and per share amounts)

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

	December 31, 2013			December 31, 2012

Assets
Cash and cash equivalents	$	51,353		$	44,868
Cash and securities segregated for regulatory and other purposes		6,000			13,000
Receivables from:
Brokers, dealers and clearing organizations		9,173			12,824
Related parties		856			1,474
Others		908			12,563
Financial instruments owned, at fair value (includes financial instruments pledged of $0 and $1,095,431 at December 31, 2013 and 2012, respectively)		664			1,096,181
Investments		18,889			20,478
Office equipment and leasehold improvements, net		115			5,311
Goodwill		—			1,212
Intangible assets		—			5,303
Income taxes receivable		4,116			7,062
Other assets		3,890			9,030


Total Assets	$	95,964		$	1,229,306




Liabilities and Stockholders' Equity
Liabilities
Payables to:
Brokers, dealers and clearing organizations	$	—		$	638,009
Related parties		475			2,944
Others		1,868			2,251
Securities sold under agreements to repurchase		—			159,386
Securities sold, but not yet purchased, at fair value		—			132,730
Secured borrowings		—			64,908
Restructuring reserve		2,491			108
Accrued compensation		1,907			34,199
Accounts payable and accrued expenses		1,629			9,426
Income taxes payable		3,331			3,755
Subordinated debt		409			595


Total Liabilities		12,110			1,048,311


Commitments and Contingencies (Refer to Note 17)
Stockholders' Equity
Common stock; $.01 par value; authorized 10,000,000 shares, issued 6,688,387 and 6,688,387 shares; and outstanding 6,174,990 and 6,221,959 shares, at December 31, 2013 and 2012, respectively		1,337			1,337
Additional paid-in capital		455,910			453,938
Deferred compensation		101			124
Accumulated deficit		(363,109	)		(263,577	)
Treasury stock, at cost (513,397 shares and 466,428 shares, at December 31, 2013 and December 31, 2012, respectively)		(10,385	)		(10,827	)


Total Stockholders' Equity		83,854			180,995


Total Liabilities and Stockholders' Equity	$	95,964		$	1,229,306

(In thousands, except for share and per share amounts)

	December 31, 2012			December 31, 2011
Assets
Cash and cash equivalents	$	44,868		$	36,672
Cash and securities segregated for regulatory and other purposes		13,000			9,612
Securities purchased under agreements to resell		—			1,523,227
Receivables from:
Brokers, dealers and clearing organizations		12,824			58,776
Related parties		1,474			1,337
Others		12,563			16,161
Financial instruments owned, at fair value (includes financial instruments pledged of $1,095,431 and $1,553,610 at December 31, 2012 and 2011, respectively)		1,096,181			1,554,660
Investments		20,478			18,310
Office equipment and leasehold improvements, net		5,311			6,735
Goodwill		1,212			21,096
Intangible assets		5,303			4,311
Income taxes receivable		7,394			12,102
Deferred tax assets, net		—			30,766
Other assets		9,030			9,791
Total Assets	$	1,229,638		$	3,303,556
Liabilities and Stockholders' Equity
Liabilities
Payables to:
Brokers, dealers and clearing organizations	$	638,009		$	1,108,664
Related parties		2,944			4,939
Others		2,251			3,243
Securities sold under agreements to repurchase		159,386			1,478,081
Securities sold, but not yet purchased, at fair value		132,730			184,996
Secured borrowings		64,908			213,611
Accrued compensation		34,199			26,274
Accounts payable and accrued expenses		9,866			18,223
Income taxes payable		3,755			3,979
Deferred tax liabilities		—			1,622
Subordinated debt		595			801
Total Liabilities		1,048,643			3,044,433
Commitments and Contingencies (Refer to Note 19)
Stockholders' Equity
Common stock; $.01 par value; authorized 200,000,000 shares, issued 133,769,219 and 133,714,786 shares; and outstanding 124,440,655 and 120,883,601 shares, at December 31, 2012 and 2011, respectively		1,337			1,337
Additional paid-in capital		453,938			463,497
Deferred compensation		124			161
Accumulated deficit		(263,577	)		(185,887	)
Treasury stock, at cost (9,328,564 shares and 12,831,185 shares, at December 31, 2012 and December 31, 2011, respectively)		(10,827	)		(19,985	)
Total Stockholders' Equity		180,995			259,123
Total Liabilities and Stockholders' Equity	$	1,229,638		$	3,303,556

The accompanying notes are an integral part of these consolidated financial statements.

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GLEACHER & COMPANY, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY For the Years Ended December 31, ~~2012~~2013, ~~2011~~2012 and ~~2010~~2011

	Common Stock										Treasury Stock
					Additional Paid-In Capital			Accumulated Deficit									Deferred Compensation			Total Stockholders' Equity
(In thousands, except for number of shares)	Shares		Amount								Shares			Amount
Balance December 31, 2009		125,056,247	$	1,251	$	411,633		$	(83,142	)		(699,084	)	$	(1,291	)	$	534		$	328,985
Balance December 31, 2010		6,572,879	$	1,315	$	449,754		$	(103,763	)		(32,386	)	$	(1,423	)	$	276		$	346,159
Issuance of common stock for stock-based compensation		5,875,577		59		(59	)		—			—			—			—			—

Common stock issued into treasury to satisfy share based compensation exercises and vesting		180,719		2		—			—			(180,719	)		(2	)		—			—
Issuance of common stock for stock-based compensation		112,860		22		(22	)		—			—			—			—			—
Purchases of treasury stock		—		—		—			—			(596,776	)		(18,898	)		—			(18,898	)
Common stock issued for grants of restricted stock
Amortization of stock-based compensation		—		—		4115,~~890~~074			—			—			—			—			4115,~~890~~074
Reclassification of prior year liability classified stock-based compensation upon issuance of awards		—		—		112,~~499~~446			—			—			—			—			112,~~499~~446
Excess net tax benefit related to stock-based compensation		—		—		308			—			—			—			—			308
Net tax benefits/(shortfalls) related to stock-based compensation		—		—		(5,480	)		—			—			—			—			(5,480	)
Issuance of treasury stock for restricted stock grants, restricted stock unit settlements and option exercises		—		—		(54,~~213~~763	)		—			2120,~~462,846~~072			54,~~213~~763			—			—
Forfeitures of restricted stock		—		—		21,~~533~~514			—			(152,~~210,560~~760	)		(21,~~533~~514	)		—			—
Shares withheld for minimum withholding taxes for vested restricted stock, restricted stock units and options exercises		—		—		(4,~~699~~907	)		—			(~~670~~80,~~802~~656	)		(2,~~035~~694	)		—			(67,~~734~~601	)
Settlement of contingent consideration related to the American Technology Holdings, Inc. acquisition (Refer to Note 28)		345,043		3		1,514			—			—			—			—			1,517
Payment of expenses to purchase treasury stock		—		—		—			—			—			(257	)		—			(257	)
Shares reclaimed from escrow—Gleacher Partners, Inc. indemnification (Refer to Note 28)		—		—		—			—			(308,701	)		(685	)		—			(685	)
Distributions of deferred compensation related to the employee stock trust		—		—		77			—			947			38			(115	)		—
Shares returned as excess collateral from clearing broker		—		—		189			—			(105,066	)		(189	)		—			—
Other		—		—		(196	)		—			—			—			—			(196	)
Distributions of deferred compensation related to the employee stock trust		—		—		159			—			64,368			99			(258	)		—
Net loss		—		—		—			(82,124	)		—			—			—			(82,124	)
Net loss		—		—		—			(20,621	)		—			—			—			(20,621	)

Balance December 31, 2010		131,457,586	$	1,315	$	449,754		$	(103,763	)		(647,718	)	$	(1,423	)	$	276		$	346,159
Balance December 31, 2011		6,685,739	$	1,337	$	463,497		$	(185,887	)		(641,559	)	$	(19,985	)	$	161		$	259,123

Purchases of treasury stock		—		—		—			—			(66,470	)		(1,151	)		—			(1,151	)
Amortization of stock-based compensation		—		—		6,800			—			—			—			—			6,800
Net tax benefits/(shortfalls) related to stock-based compensation		—		—		(377	)		—			—			—			—			(377	)
Issuance of treasury stock for restricted stock grants, restricted stock unit settlements and option exercises		—		—		(15,856	)		—			524,088			15,856			—			—
Forfeitures of restricted stock		—		—		4,199			—			(236,429	)		(4,199	)		—			—
Clawback of certain stock-based compensation grants subject to non-competition provisions		—		—		(2,630	)		—			—			—			—			(2,630	)
Shares withheld for minimum withholding taxes for vested restricted stock, restricted stock units and options exercises		—		—		(1,695	)		—			(46,270	)		(1,310	)		—			(3,005	)
Payment of expenses to purchase treasury stock		—		—		—			—			—			(75	)		—			(75	)
Distributions of deferred compensation related to the employee stock trust		—		—		—			—			212			37			(37	)		—
Other		2,648		—		—			—			—			—			—			—
Net loss		—		—		—			(77,690	)		—			—			—			(77,690	)

Balance December 31, 2012		6,688,387	$	1,337	$	453,938		$	(263,577	)		(466,428	)	$	(10,827	)	$	124		$	180,995

71 The accompanying notes are an integral part of these consolidated financial statements.

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GLEACHER & COMPANY, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Continued)

For the Years Ended December 31, ~~2012~~2013, ~~2011~~2012 and ~~2010~~ 2011

	Common Stock										Treasury Stock
					Additional Paid-In Capital			Accumulated Deficit									Deferred Compensation			Total Stockholders' Equity
(In thousands, except for number of shares)	Shares		Amount								Shares			Amount
Balance December 31, 2010		131,457,586	$	1,315	$	449,754		$	(103,763	)		(647,718	)	$	(1,423	)	$	276		$	346,159
Balance December 31, 2012		6,688,387	$	1,337	$	453,938		$	(263,577	)		(466,428	)	$	(10,827	)	$	124		$	180,995
Issuance of common stock for stock based compensation		2,257,200		22		(22	)		—			—			—			—			—

Purchases of treasury stock		—		—		—			—			(11,935,513	)		(18,898	)					(18,898	)
Amortization of stock-based compensation		—		—		5,592			—			—			—			—			5,592
Common stock issued into treasury to satisfy share based compensation exercises and vesting
Issuance of treasury stock for restricted stock grants and restricted stock unit settlements		—		—		(3,324	)		—			157,174			3,324			—			—
Amortization of stock-based compensation		—		—		15,074			—			—			—			—			15,074
Forfeitures of restricted stock		—		—		1,731			—			(123,450	)		(1,731	)		—			—
Reclassification of prior year liability classified stock-based compensation upon issuance of awards		—		—		12,446			—			—			—			—			12,446
Clawback of certain stock-based compensation grants subject to non-competition provisions		—		—		(577	)		—			—			—			—			(577	)
Net tax benefits/(shortfalls) related to stock-based compensation		—		—		(5,480	)		—			—			—			—			(5,480	)
Shares withheld for minimum withholding taxes for vested restricted stock, restricted stock units and options exercises		—		—		(1,450	)		—			(80,840	)		(1,174	)		—			(2,624	)
Issuance of treasury stock for restricted stock grants, restricted stock unit settlements and option exercises		—		—		(4,763	)		—			2,401,443			4,763			—			—
Distributions of deferred compensation related to the employee stock trust		—		—		—			—			147			23			(23	)		—
Forfeitures of restricted stock		—		—		1,514			—			(1,055,200	)		(1,514	)		—			—
Net loss		—		—		—			(99,532	)		—			—			—			(99,532	)
Shares withheld for minimum withholding taxes for vested restricted stock, restricted stock units and options exercises		—		—		(4,907	)		—			(1,613,139	)		(2,694	)		—			(7,601	)

Payment of expenses to purchase treasury stock		—		—		—			—			—			(257	)					(257	)
Balance December 31, 2013		6,688,387	$	1,337	$	455,910		$	(363,109	)		(513,397	)	$	(10,385	)	$	101		$	83,854
Shares reclaimed from escrow—Gleacher Partners, Inc. indemnification (Refer to Note 28)

Distributions of deferred compensation related to the employee stock trust		—		—		77			—			18,942			38			(115	)		—

Other		—		—		(196	)		—			—			—			—			(196	)
Net loss		—		—		—			(82,124	)		—			—			—			(82,124	)
Balance December 31, 2011		133,714,786	$	1,337	$	463,497		$	(185,887	)		(12,831,185	)	$	(19,985	)	$	161		$	259,123

	Common Stock										Treasury Stock
					Additional Paid-In Capital			Accumulated Deficit									Deferred Compensation			Total Stockholders' Equity
(In thousands, except for number of shares)	Shares		Amount								Shares			Amount
Balance December 31, 2011		133,714,786	$	1,337	$	463,497		$	(185,887	)		(12,831,185	)	$	(19,985	)	$	161		$	259,123
Purchases of treasury stock		—		—		—			—			(1,329,400	)		(1,151	)		—			(1,151	)
Amortization of stock-based compensation		—		—		6,800			—			—			—			—			6,800
Reclassification of prior year liability classified stock-based compensation upon issuance of awards		—		—		—			—			—			—			—			—
Net tax shortfalls related to stock-based compensation		—		—		(377	)		—			—			—			—			(377	)
Issuance of treasury stock for restricted stock grants and restricted stock unit settlements		—		—		(15,856	)		—			10,481,753			15,856			—			—
Forfeitures of restricted stock		—		—		4,199			—			(4,728,578	)		(4,199	)		—			—
Clawback of certain stock-based compensation grants subject to non-competition provisions		—		—		(2,630	)		—			—			—			—			(2,630	)
Shares withheld for minimum withholding taxes for vested restricted stock, restricted stock units and options exercises		—		—		(1,695	)		—			(925,402	)		(1,310	)		—			(3,005	)
Payment of expenses to purchase treasury stock		—		—		—			—			—			(75	)		—			(75	)
Distributions of deferred compensation related to the employee stock trust		—		—		—			—			4,248			37			(37	)		—
Other		54,433		—		—			—			—			—			—			—
Net loss		—		—		—			(77,690	)		—			—			—			(77,690	)
Balance December 31, 2012		133,769,219		1,337		453,938			(263,577	)		(9,328,564	)		(10,827	)		124			180,995

The accompanying notes are an integral part of these consolidated financial statements.

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GLEACHER & COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of dollars)

	For the years ended December 31,
	2012			2011			2010
	2013			2012			2011
Cash flows from operating activities:
Net loss	$	(7799,~~690~~532	)	$	(8277,~~124~~690	)	$	(2082,~~621~~124	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Deferred income taxes		29,144			1,394			(17,444	)
Impairment of fixed assets and leasehold improvements—restructuring		4,006			—			—
Impairment of goodwill and intangible assets—Investment Banking		3,732			80,244			—
Amortization of stock-based compensation		5,592			6,800			15,074
Impairment of goodwill—MBS & Rates		17,364			—			—
Impairment of goodwill and intangible assets		3,907			21,096			94,555
Amortization of stock-based compensation		6,800			15,074			54,338
Investment gains, net		(1,267	)		(1,233	)		(2,996	)
Clawback of stock-based compensation awards subject to non-competition provisions		(~~2,630~~577	)		—(2,630	)		—
Investment gains, net		(1,233	)		(2,996	)		(7	)
Bad debts reserve—loan receivable		400			—			—
Depreciation and amortization		~~1,882~~699			1,~~936~~882			1,~~624~~936
Amortization of intangible assets		~~538~~196			~~2,099~~538			32,~~698~~099
Impairment of goodwill and intangible assets—Equities		—			14,311			—
Gain from bargain purchase—ClearPoint Funding, Inc. acquisition		—			—			(2,330	)
Gain from bargain purchase—ClearPoint Funding, Inc. acquisition		—			(2,330	)		—
Loss from disposal of office equipment and leasehold improvements		—			—			316
Loss from extinguishment of mandatorily redeemable preferred stock		—			—			1,608
Deferred income taxes		—			29,144			1,394
Loss from disposal of office equipment and leasehold improvements		—			316			419
Amortization of discount of mandatorily redeemable preferred stock		—			—			173
Amortization of debt issuance costs		—			—			125
Changes in operating assets and liabilities:
Cash and securities segregated for regulatory purposes		(37,~~388~~000	)		(93,~~512~~388	)		—(9,512	)
Securities purchased under agreements to resell		~~1,523,227~~—			(1,~~436~~523,~~743~~227	)		(861,~~484~~436,743	)
Net receivable/payable from/to related parties		—			861			(1,349	)
Receivable/payable from/to related parties, net		17			—			861
Net receivable from others		2,712			4,019			(1,787	)
Receivable from others, net		10,872			2,712			4,019
Financial instruments owned, at fair value		~~458~~1,~~479~~096,462			~~(226~~458,~~574~~479	)		(~~301~~226,~~542~~574	)
Income taxes receivable/payable, net		43,~~099~~557			(24,~~526~~099	)		(162,~~105~~526	)
Other assets		~~707~~5,243			~~2,482~~707			12,~~763~~482
Net payable to brokers, dealers, and clearing organizations		(424,703	)		(25,831	)		404,021
Payable to brokers, dealers, and clearing organizations, net		(634,358	)		(424,703	)		(25,831	)
Securities sold, but not yet purchased, at fair value		(52132,~~266~~730	)		72(52,~~348~~266	)		3972,~~287~~348
Securities sold under agreements to repurchase		(1159,~~318,695~~386	)		(1,~~478~~318,~~081~~695	)		—1,478,081
Accounts payable and accrued expenses		(8,893	)		5,868			1,411
Restructuring reserve (gross payments of $38.1 million, Refer to Note 21)		2,383			—			—
Accrued compensation		7,925			(35,853	)		(7,477	)
Accounts payable and accrued expenses		(8,234	)		(8,893	)		5,868
Drafts payable		(2	)		(847	)		388
Accrued compensation		(32,292	)		7,925			(35,853	)
Net cash provided by/(used in) operating activities		167,109			(146,303	)		56,039
Drafts payable		105			(2	)		(847	)

Net cash provided by/(used in) operating activities		72,063			167,109			(146,303	)

Cash flows from investing activities:
Purchases of office equipment and leasehold improvements		(~~458~~11	)		(~~2,230~~458	)		(52,~~627~~230	)
Payment to former stockholders of Gleacher Partners, Inc. (Refer to Note 28)		(4,373	)		—			(4,920	)
Payment to former stockholders of Gleacher Partners, Inc. (Refer to Note 24)		(195	)		(4,373	)		—
Purchase of investments		(~~950~~946	)		(~~1,462~~950	)		(~~691~~1,462	)
ClearPoint acquisition—net cash acquired (Refer to Note 11)		—			626
ClearPoint sale—net payment to Homeward Residential, Inc.		(510	)		—			—
Return of capital—investments		—			3,385			1,819
ClearPoint acquisition—net cash acquired		—			—			626
Payment to sellers of American Technology Holdings, Inc.		—			—			(1,382	)
Return of capital—investments		3,802			—			3,385
Net cash (used in)/provided by investing activities		(5,781	)		319			(10,801	)

Net cash provided by/(used in) investing activities		2,140			(5,781	)		319

Cash flows from financing activities:
Proceeds from secured borrowings		1185,~~492,063~~381			1,~~645~~492,~~217~~063			—1,645,217
Repayments of secured borrowings		(1250,~~640,766~~289	)		(1,~~475~~640,~~945~~766	)		—(1,475,945	)
Purchases of treasury stock		~~(1,151~~—	)		(181,~~898~~151	)		—(18,898	)
Extinguishment of mandatorily redeemable preferred stock		—			—			(25,905	)
Payments for employee tax withholding on stock-based compensation		(2,624	)		(3,005	)		(7,601	)
Payments for employee tax withholding on stock-based compensation		(3,005	)		(7,601	)		(6,735	)
Excess tax benefits related to stock-based compensation		—			8			239
Excess tax benefits related to stock-based compensation		8			239			2,702
Payment of expenses to purchase treasury stock		—			(75	)		(257	)
Payment of expenses to purchase treasury stock		(75	)		(257	)		—
Repayment of subordinated debt		(186	)		(206	)		(108	)
Repayment of subordinated debt		(206	)		(108	)		(288	)

Net cash (used in)/provided by financing activities	$	(~~153~~67,~~132~~718	)	$	~~142~~(153,~~647~~132	)	$	~~(30~~142,~~226~~647	)
Increase/(decrease) in cash and cash equivalents	$	8,196		$	(3,337	)	$	15,012

Cash and cash equivalents at beginning of the year		36,672			40,009			24,997
Increase/(decrease) in cash and cash equivalents	$	6,485		$	8,196		$	(3,337	)
Cash and cash equivalents at the end of the year	$	44,868		$	36,672		$	40,009

Cash and cash equivalents at beginning of the year		44,868			36,672			40,009

Cash and cash equivalents at the end of the year	$	51,353		$	44,868		$	36,672


SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid during the year for:
Income taxes	$	~~382~~78		$	~~735~~382		$	~~17,016~~735
Interest	$	121,~~827~~898		$	1112,~~174~~827		$	11,~~256~~174

The accompanying notes are an integral part of these consolidated financial statements.

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GLEACHER & COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(In thousands of dollars)

NON CASH INVESTING AND FINANCING ACTIVITIES

During the years ended December 31, ~~2012~~2013, ~~2011~~2012 and ~~2010~~2011, the Company issued ~~approximately 5.8 million, 1.3 million and 1.2 million~~ shares of treasury stock, net of forfeitures, of approximately 33,724, 287,659 and 67,312 shares respectively, for stock-based compensation exercises and vesting and distributions of deferred compensation related to the employee stock trust.

During the years ended December 31, ~~2012~~2013, ~~2011~~2012 and ~~2010~~2011, the Company issued approximately ~~0.0 million~~zero, 2~~.3 million~~,722 and ~~5.9 million~~112,860 shares of common stock for settlement of stock-based compensation awards.

The fair value of non-cash assets acquired and liabilities assumed in the ClearPoint Funding, Inc. acquisition on January 3, 2011 were $51.6 million and $49.9 million, respectively (Refer to Note 11).

The fair value of non-cash assets acquired and liabilities assumed in connection with the acquisition of certain assets and assumption of certain liabilities from RangeMark Financial Services, Inc. and certain affiliates and other parties ("RangeMark") on November 8, 2012 were $2.9 million and $2.9 million, respectively (Refer to Note 11).

During the year ended December 31, 2010, the Company reclaimed approximately 0.3 million shares of common stock from escrow, related to the indemnification from Gleacher Partners, Inc. in connection with certain pre-acquisition tax liabilities.

During the year ended December 31, 2010, approximately 0.1 million shares of common stock were returned from a clearing broker as excess collateral.

During the year ended December 31, 2011 and 2010, the Company issued approximately 15,000 and 345,000 shares of common stock, respectively to the former stockholders of American Technology Holdings, Inc. ("AmTech") in connection with a contingent consideration arrangement (Refer to Note 28).

The accompanying notes are an integral part of these consolidated financial statements.

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GLEACHER & COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. ~~Significant~~Basis ~~Accounting~~of ~~Policies~~Presentation

~~Organization~~ Gleacher & Company, Inc. (the "Parent" and ~~Nature~~together with its subsidiaries, "Gleacher" or the "Company") is incorporated under the laws of ~~Business~~the State of Delaware. The Company's common stock is traded on The NASDAQ Global Market ("NASDAQ") under the symbol "GLCH."

~~Gleacher &~~The Company~~, Inc.~~ ~~(the~~recently ~~"Parent"~~announced ~~and together with its subsidiaries~~that, ~~the~~after ~~"Company") is~~ an ~~independent~~extensive ~~investment~~evaluation ~~bank~~of ~~that~~other ~~provides corporate and institutional clients with strategic and financial advisory services. The Company also provides capital raising~~alternatives, ~~research-based~~its ~~investment~~Board ~~analysis, and securities brokerage services. The Company offers a range~~ of ~~products~~Directors ~~through~~has ~~its~~determined ~~Investment~~that ~~Banking,~~it ~~Mortgage Backed Securities & Rates ("MBS & Rates") , Credit Products and ClearPoint divisions. The Company~~ is ~~incorporated~~ ~~under~~in the ~~laws~~best interests of the ~~State of Delaware. The~~ Company's stockholders ~~common~~that ~~stock~~the isCompany ~~traded~~dissolve, onliquidate ~~The~~and ~~NASDAQ~~distribute ~~Global~~to ~~Market~~stockholders ~~("NASDAQ")~~its ~~under~~available ~~the symbol "GLCH~~assets."

~~The~~Planned ~~Company~~Dissolution also provided residential mortgage lending services through its subsidiary ClearPoint Funding Inc. ("ClearPoint"). On February 14, 2013, the Company entered into an agreement to sell substantially all of ClearPoint's assets to Homeward Residential, Inc. ("Homeward Transaction"). This transaction closed on February 22, 2013, and ~~all~~Liquidation remaining business activities of ClearPoint are being wound down. ClearPoint's results will be reclassified as discontinued operations in the first quarter of 2013. Refer to Note 29 herein for additional information.

~~Recent~~ As ~~Developments~~previously announced, the Company has been engaged in a lengthy and intensive evaluation of potential strategic alternatives in order to preserve and maximize stockholder value. Those potential alternatives included (i) pursuing a strategic transaction with a third party, such as a merger or sale of the Company; (ii) the reinvestment of the Company's liquid assets in favorable opportunities; and (iii) dissolving the Company, winding down its remaining operations and distributing its net assets to its stockholders, after making appropriate reserves for liabilities and expenses. The Board of Directors and the Company, together with its external advisors, devoted substantial time and effort in seeking, identifying and pursuing opportunities and other alternatives to enhance stockholder value; however, that process had not at that time yielded any opportunities transaction viewed by the Board as reasonably likely to provide greater realizable value to stockholders than the complete dissolution and liquidation of the Company.

InThe ~~recent~~Company's ~~years,~~dissolution wewas ~~have~~unanimously ~~incurred~~approved ~~losses~~by ~~and~~the ~~experienced~~Board ~~significant~~of ~~turnover~~Directors on March 12, ~~including~~2014, ~~among~~but ~~our~~is ~~senior~~subject ~~management~~to ~~and~~stockholder ~~business~~approval. ~~leaders~~The ofCompany ~~our~~intends ~~operating~~to present this ~~segments,~~proposal asto ~~well~~its asstockholders aof ~~number~~record as of ~~departures~~April 21, ~~generally,~~2014 ~~throughout~~at the ~~ranks~~Company's of2014 ~~our~~Annual ~~organization.~~Stockholders ~~Recently~~Meeting we(the ~~have~~"2014 ~~experienced~~Annual ~~several~~Meeting"), ~~events~~currently ~~that~~scheduled ~~have~~for ~~adversely~~May 29, ~~affected~~2014. ~~our~~The Company ~~business~~will ~~operations~~file ~~and resulted~~prescribed inproxy amaterials ~~further~~with ~~deterioration~~the inSecurities ~~our~~and ~~financial~~Exchange ~~results.~~Commission Inin ~~August~~advance ~~2012~~of wethat ~~announced~~meeting. ~~that~~In weconnection ~~were~~with ~~engaged~~the indissolution, ~~exploring~~the ~~and~~Company ~~evaluating~~intends ~~strategic~~to ~~alternatives~~distribute ~~for~~to ~~the~~its stockholders ~~Company,~~all ~~including~~available ~~partnering with~~cash ~~one~~other orthan ~~more~~as ~~equity~~may ~~investors,~~be ~~strategic~~required ~~acquisitions~~to pay expenses and ~~divestitures~~pay or amake ~~business~~reasonable ~~combination~~provision ~~involving~~for ~~the~~known ~~Company.~~and Inpotential ~~this~~claims ~~process~~and weobligations ~~explored~~of athe ~~wide~~Company, ~~variety~~as ofrequired ~~potential strategic~~by ~~transactions~~applicable law. ByThe ~~February~~Board ~~2013,~~of weDirectors' ~~had~~decision ~~not~~contemplates ~~yet~~an ~~been~~orderly ~~presented~~wind ~~with~~down aof ~~suitable~~the ~~strategic~~Company's ~~alternative.~~remaining Webusiness ~~intended,~~and ~~however~~operations, toincluding ~~continue~~the todissolution ~~examine~~and ~~strategic~~winding-up ~~alternatives~~of ~~should~~subsidiaries. ~~appropriate~~If ~~opportunities~~approved ~~arise.~~by Wethe ~~announced~~Company's ~~this~~stockholders, ~~update~~the onCompany ~~February 15,~~intends ~~2013.~~to Asfile a ~~would~~certificate beof ~~expected~~dissolution, ~~our~~pay, ~~strategic~~satisfy, ~~review~~resolve ~~introduced~~or ~~uncertainty~~make ~~with~~reasonable ~~our~~provisions ~~trading~~for ~~partners~~claims and ~~employees~~obligations ~~and~~as ~~consumed~~well as ~~significant~~anticipated ~~amounts~~costs ofassociated ~~our~~with ~~senior~~the ~~management~~Company's ~~time~~dissolution and ~~attention.~~liquidation, ~~This~~and ~~uncertainty~~seek ~~increased~~to ~~after~~convert ~~our~~its ~~February 15~~remaining ~~update~~assets into cash or cash equivalents as soon as reasonable, practicable and financially prudent.

InUntil ~~January~~such ~~2013~~time, ~~Eric~~if J.any, ~~Gleacher~~as the stockholders approve the Company's dissolution, ~~our~~and ~~then-chairman~~the Board of Directors decides, and instructs management, to proceed with a ~~significant~~dissolution, ~~stockholder~~the Company will continue to investigate and consider any feasible, ~~resigned~~alternative, asvalue-creating transactions of which it becomes aware. If prior to its dissolution, the Company receives an offer for a ~~director~~transaction that, in the view of the Board, would be expected to provide superior value to stockholders than the value of the currently estimated distributions, taking into account factors that could affect valuation, including timing and ~~executive~~certainty ~~officer~~of payment or closing, proposed terms and other factors, the dissolution could be abandoned in favor of such a transaction, even if dissolution has been previously approved by the Company's stockholders.

In mid-February, 20 sales and trading professionals from our Credit Products group left together to join another securities firm, reducing the headcount of this group to approximately 70. As a result, revenues from this group have declined significantly. 49

Table of Contents

GLEACHER & COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1. ~~Significant~~Basis ~~Accounting~~of ~~Policies~~Presentation (Continued)

~~would~~Discontinuation ~~not~~of beOperations ~~re-elected.~~and ~~The~~Appointment letter also stated that, should the situation change in the interim, they may be willing to reconsider their decision not to stand. The directors' decision not to stand for re-election was not the result of ~~any~~Capstone ~~disagreement~~Advisory ~~with the Company relating to the Company's operations~~Group, LLC ~~policies or practices.~~

~~Also~~The onCompany ~~February 23,~~has ~~2013,~~no ~~the~~meaningful ~~Company~~revenue-producing ~~received~~operations. aIn ~~submission~~the byfirst ~~MatlinPatterson~~quarter of a2013, ~~slate~~the ofCompany ~~eight~~operated ~~nominees~~an ~~for~~investment ~~election~~banking tobusiness, ~~the~~predominately fixed-income ~~Company's~~sales ~~Board~~and oftrading ~~Directors~~and atfinancial ~~the~~advisory ~~Annual Meeting. In their proposal~~services, ~~MatlinPatterson~~through ~~nominated~~three ~~current~~principal ~~directors~~business ~~Marshall~~units: ~~Cohen~~Investment Banking, ~~Mark~~MBS & R.Rates ~~Patterson~~ and ~~Christopher~~Credit ~~Pechock,~~Products. asThe ~~well~~Company asalso ~~nominees~~engaged ~~Carl~~in residential ~~McKinzie,~~mortgage ~~Jaime~~lending ~~Lifton,~~operations ~~Edwin~~through ~~Banks,~~its ~~Keith B.~~subsidiary ~~Hall~~ClearPoint ~~and Nasir A~~Funding, Inc. ~~Hasan~~("ClearPoint").

~~Uncertainties~~During ~~regarding~~ the ~~implications~~second quarter of ~~our~~2013, ~~net~~the ~~losses~~Company's ~~and~~Board ~~management~~of ~~and~~Directors ~~employee~~approved ~~turnover~~plans ~~have~~to ~~been~~discontinue ~~aggravated~~operations byin ~~these~~its ~~more~~MBS & ~~recent~~Rates ~~events,~~(including ~~resulting~~RangeMark inFinancial ~~further questions regarding~~Services ~~the~~("RangeMark")) ~~stability~~ and ~~strategic~~Credit ~~direction~~Products ofdivisions ~~the~~(together, ~~Company~~"Fixed ~~and~~Income" ~~adversely~~or ~~affecting relations with both~~ the ~~Company's~~"Fixed ~~clients~~Income ~~and~~businesses") ~~its~~as ~~employees.~~well Aas, ~~number~~later ofin the ~~Company's~~quarter, ~~trading~~its ~~customers~~Investment ~~have~~Banking ~~reduced~~division. ~~or suspended~~Exiting ~~trading~~these ~~activities~~businesses impacted ~~with~~approximately us150 employees. ~~Moreover,~~The atClearPoint ~~least~~business inwas ~~part~~discontinued, ~~because~~and of the ~~perceived~~business ~~instability~~sold ofto ~~our~~Homeward ~~business~~Residential, Inc. ~~new~~("Homeward") ~~investment~~in ~~banking~~February ~~mandates~~2013 ~~have~~(the ~~dwindled.~~"Homeward ~~These events have weakened~~Transaction"). ~~employee~~In ~~morale~~addition, ~~which~~in ~~may~~the ~~lead~~third toquarter ~~additional~~of ~~resignations. As a result~~2011, the Company ~~has~~exited ~~experienced~~the aEquities ~~significant~~business. ~~decline~~Exiting inthe ~~revenue,~~Equities ~~and~~business itimpacted ~~cannot~~62 ~~predict~~employees. ~~when,~~As orof ifMarch 17, it2014, ~~will~~the beCompany ~~able~~had to13 ~~reduce or reverse this decline and associated losses~~employees.

InOn ~~order~~May 31, to2013, ~~address~~the ~~these~~Board ~~issues~~of ~~and~~Directors ~~preserve~~appointed ~~value~~Christopher ~~for~~J. ~~our~~Kearns ~~stockholders,~~of ~~the~~Capstone ~~Company~~Advisory ~~is seeking~~Group, LLC ~~and~~("Capstone") ~~may~~as ~~continue~~the toCompany's ~~seek,~~Chief aRestructuring ~~strategic~~Officer ~~transaction~~and ~~with a third party that could result,~~Chief ~~for~~Executive ~~example,~~Officer. inThe ~~an acquisition of the~~ Company oralso ~~the~~entered ~~sale~~into ofan ~~all~~agreement orwith ~~substantially~~Capstone ~~all~~and ~~of our assets~~Mr. Kearns, ~~Subsequent~~pursuant to ~~our~~which ~~February 15~~Capstone ~~update~~was onengaged ~~our~~to ~~review~~provide number of ~~strategic~~services ~~alternatives,~~to wethe ~~have~~Company, ~~been~~including ~~approached~~(i) evaluating byand ~~third~~implementing, ~~parties~~subject ~~regarding~~to ~~potential~~the ~~strategic~~approval ~~alternatives.~~of Ifthe weCompany's ~~are~~Board ~~unable~~of ~~to conclude a strategic transaction~~Directors, the ~~Company~~chosen ~~will~~course ~~consider~~of ~~such~~action ~~alternatives,~~to ifpreserve ~~any,~~asset asvalue ~~may~~and bemaximize ~~available~~ recoveries to itstockholders atunder the ~~such~~circumstances; ~~time.~~(ii) overseeing Inthe ~~doing~~operations ~~so,~~of the Company ~~will~~through ~~consider~~execution ~~all~~of ~~relevant~~the ~~factors,~~selected ~~including~~course ~~its~~of ~~financial~~action; ~~condition~~(iii) ascertaining personnel and ~~operating~~potential ~~results,~~funding ~~its~~required ~~access~~and taking tokey ~~financial~~steps ~~resources,~~to effectuate the ~~market~~selected ~~environment~~course ~~and our~~of ~~financial~~action; and ~~operational~~(iv) soliciting ~~prospects.~~and ~~Depending~~evaluating onexpressions ~~the circumstances, courses~~ of ~~action~~interest ~~could~~in ~~consist~~certain assets of ~~expeditious~~the ~~reduction~~Company ofand ~~operating~~effectuating ~~and~~such ~~overhead~~sales ~~expenses~~where appropriate and~~/or~~ ~~monetization~~practical ofunder ~~assets, among~~the ~~other steps~~circumstances.

~~The~~Going ~~Company~~Concern ~~does not believe that these recent adverse events will have a significant near-term impact on its liquidity. The Company's available liquidity, which consists primarily of cash~~ and ~~financial~~Basis ~~instruments that are traded in active markets, net~~ of ~~financing~~Presentation from our clearing broker and, to a lesser extent, through repurchase agreements, is sufficient to meet its ongoing financial obligations for a reasonable period of time. However, our ability to operate our sales and trading businesses is critically dependent on financing made available principally by our clearing broker and, to a lesser extent, the repurchase markets. To the extent these sources of financing were to be reduced, or in a more extreme scenario, terminated, our ability to operate our sales and trading businesses would be adversely affected, which could have a material and adverse effect on the Company.

~~Basis~~ As noted above, the Company's Board of ~~Presentation~~Directors approved a dissolution and liquidation of the Company, subject to stockholder approval. In connection with this intention, the Company intends to distribute to its stockholders all available cash other than as may be required to pay or make reasonable provision for known and potential claims and obligations of the Company. The Board of Directors' decision also contemplates a further, orderly wind down of the Company's business and operations and, if approved by the Company's stockholders, the filing of a certificate of dissolution, among other matters. All of these factors raise substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~The~~Accounting ~~consolidated~~principles ~~financial~~generally ~~statements~~accepted ~~include~~in the ~~accounts~~United States of ~~Gleacher &~~America ~~Company, Inc.~~("GAAP") ~~and~~requires ~~all~~financial ~~other~~statements ~~entities~~to inbe ~~which~~prepared iton ~~has~~ a ~~controlling~~going concern basis. A liquidation basis of accounting ~~financial~~is ~~interest~~only appropriate to the extent liquidation is imminent. ~~This~~In ~~includes~~order ~~Gleacher &~~to ~~Company~~meet ~~Securities~~this criteria, ~~Inc.~~ ~~("Gleacher~~among ~~Securities")~~other factors, ~~Gleacher~~the ~~Partners~~plan for dissolving the Company, ~~LLC~~ ~~("Gleacher~~which ~~Partners")~~would ~~and~~be ~~ClearPoint~~followed by liquidation must be approved by the person or persons with the authority to make such a plan effective, which ~~are~~in ~~regulated~~this instance, ~~wholly~~ ~~owned~~is ~~subsidiaries~~the Company's stockholders. ~~Gleacher~~If ~~Securities~~the plan of dissolution is ~~registered~~approved ~~with~~by Company stockholders at the ~~Securities~~Company's ~~and~~2014 ~~Exchange~~Annual ~~Commission~~Stockholders ~~("SEC")~~Meeting, iscurrently ascheduled ~~member~~for ofMay 29, 2014, the ~~Financial~~Company ~~Industry~~would ~~Regulatory~~then ~~Authority~~prospectively prepare its financial statements on a liquidation basis of accounting. The

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GLEACHER & COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1. ~~Significant~~Basis ~~Accounting~~of ~~Policies~~Presentation (Continued)

~~("FINRA"),~~Company's ~~the~~accompanying ~~National~~financial ~~Futures~~statements ~~Association~~have ~~("NFA")~~been ~~and~~prepared ~~various~~on ~~exchanges. Gleacher Partners, which was acquired by the Company in 2009, is~~ a ~~broker-dealer~~going ~~registered~~concern ~~with~~basis ~~the SEC and is a member of FINRA. ClearPoint is under the regulatory oversight of the Department of Housing and Urban Development ("HUD"),~~ as ~~well~~liquidation ascurrently ~~various regulatory bodies in the states in which it conducts business. The Company also consolidates any variable interest entities ("VIEs"), if it~~ is ~~ultimately~~not ~~determined to be the primary beneficiary based upon applicable authoritative guidance~~imminent. ~~All significant inter-company balances and transactions have been eliminated in consolidation.~~

The consolidated financial statements include the accounts of Gleacher & Company, Inc. and all other entities in which it has a controlling financial interest. All significant inter-company balances and transactions have been eliminated in consolidation.

Use of Estimates

These consolidated financial statements have been prepared in accordance with ~~accounting principles generally accepted in the United States of America ("~~GAAP"). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Accounting Policies—Continuing Operations

Cash and Cash Equivalents

The Company has defined cash equivalents as highly liquid investments, with original maturities of less than 90 days that are not segregated for regulatory purposes or held for sale in the ordinary course of business.

Financial Instruments Owned (including legacy deferred compensation assets) & Investments

~~Securities transactions~~The inCompany's ~~regular-way~~financial ~~trades~~instruments ~~and~~owned ~~the~~are ~~related~~equity ~~profit~~securities ~~and~~primarily ~~loss~~associated ~~arising~~with ~~from~~legacy ~~such~~deferred ~~transactions~~compensation plans provided by the Company. These financial instruments are recorded on their trade date asand ifaccounted for at fair value, which is the price that would be received upon the sale of an asset or paid upon transfer ~~they~~of ~~had~~a ~~settled~~liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date. Changes in fair value of these assets are recorded within compensation expense, offset by corresponding changes in the associated deferred compensation liability.

~~Securities~~Changes ~~owned~~in ~~and~~the ~~securities~~carrying ~~sold, but not yet purchased, are recorded at fair~~ value, ~~which is the price that would be received upon the sale~~ of ~~an asset or paid upon transfer of a liability (i.e.,~~ the ~~"exit~~Company's ~~price") in an orderly transaction between market participants at the measurement date. These financial instruments are primarily comprised of holdings in fixed income securities~~investments, ~~mortgage~~including ~~loans originated by ClearPoint, and~~ the Company's investment in FA Technology Ventures, L.P. ("FATV" or the "Partnership") and other investments in privately held companies, are recorded within investment gains/(losses), net.

~~Resale and~~ ~~Repurchase~~Office ~~Agreements~~Equipment and Leasehold Improvements

~~Transactions involving~~Office ~~sales~~equipment ofis ~~securities~~stated ~~under~~at ~~agreements~~cost toless ~~repurchase~~accumulated ~~("repurchase~~depreciation ~~agreements")~~and oris ~~purchases~~tested offor ~~securities~~impairment ~~under~~at ~~agreements~~the totime ~~resell ("resale~~of ~~agreements") are presented on~~ a ~~net-by-counterparty~~triggering ~~basis~~event, ~~when~~if ~~a legal right of offset exists and are accounted for as collateralized financing transactions and~~one ~~recorded~~were atto ~~their contracted amounts plus accrued interest~~occur. ~~The~~Depreciation ~~Company~~ is ~~required~~provided toon ~~provide~~a ~~securities~~straight-line tobasis ~~counterparties~~over inthe ~~order~~estimated touseful ~~collateralize~~life ~~repurchase~~of ~~agreements~~the ~~and~~asset ~~receives~~(generally ~~securities~~2 ~~from counterparties~~to ~~as collateral under resale agreements~~5 years). ~~The~~Leasehold ~~Company's~~improvements ~~agreements~~are ~~with~~stated ~~counterparties~~at ~~generally~~cost ~~contain~~less ~~contractual~~accumulated amortization ~~provisions~~and ~~allowing~~are ~~for~~amortized ~~additional~~on ~~collateral~~a tostraight-line bebasis ~~provided,~~over orthe ~~excess collateral~~initial ~~returned,~~term ~~when~~of ~~necessary. The Company values~~ the ~~collateral daily and retrieves or returns excess collateral from/to counterparties, when appropriate~~lease.

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GLEACHER & COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1. ~~Significant~~Basis ~~Accounting~~of ~~Policies~~Presentation (Continued)

Fees and Other Revenues

Other revenues are recognized when the services have been performed and collection is reasonably assured. Other revenues also include revenues related to the clawback of certain stock-based compensation grants subject to non-competition provisions.

Stock-Based Compensation

The cost of employee services received in exchange for a stock-based compensation award is measured based upon the grant-date fair value of the award. Awards that do not require future service are expensed immediately. Awards that require future service are amortized over the relevant service period on a straight-line basis. Expected forfeitures are included in determining stock-based employee compensation expense.

Contingencies

The Company is subject to contingencies, including judicial, regulatory and arbitration proceedings, tax, stockholder claims, former employee claims and other claims. The Company will recognize a liability related to legal and other claims in Accrued expenses within the Consolidated Statements of Financial Condition when incurrence of a loss is probable and the amount of the loss is reasonably estimable. The determination of these amounts requires significant judgment on the part of management. Management considers many factors including, but not limited to the amount of the claim; the amount of the loss, if any, incurred by the other party; the basis and validity of the claim; the possibility of wrongdoing on the part of the Company; likely insurance coverage (to the extent collection is probable); previous results in similar cases; and legal precedents and case law. Pending legal proceedings and potential claims are reviewed with counsel in each accounting period and the reserve, if any, is adjusted as deemed appropriate by management. Any change in the reserve amount is recorded in the consolidated financial statements and is recognized as a charge/credit to earnings in that period.

Matters giving rise to contingent gains are recognized when realized or realizable.

Income Taxes

Deferred income taxes are determined under the asset and liability method and are recognized for the tax consequences of "temporary differences" by applying enacted statutory tax rates expected to apply to taxable income in the periods in which the deferred tax liability or asset is expected to be settled or realized. The effect of tax rate changes on deferred taxes is recognized in the income tax provision in the period that includes the enactment date. The Company provides a valuation allowance against deferred tax assets when it is more likely than not that such deferred tax assets ("DTAs") will not be realized.

The Company recognizes tax benefits from uncertain tax positions only when tax positions meet the minimum probability threshold, as defined by ASC 740, "Income Taxes," which is a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority. The Company recognizes interest and penalties related to income tax matters as a component of income tax.

Table of Contents

GLEACHER & COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1. Basis of Presentation (Continued)

Comprehensive Income

The Company has no components of other comprehensive income, and therefore, comprehensive income equals net income.

Accounting Policies—Discontinued Operations

Set forth below are the Company's accounting policies which were applicable to operations now discontinued (refer to "Organization and Nature of Business," above). The results of these activities are reported within discontinued operations. Refer to Note 22 herein.

Resale and Repurchase Agreements

Transactions which involved sales of securities under agreements to repurchase ("repurchase agreements") or purchases of securities under agreements to resell ("resale agreements") were presented on a net-by-counterparty basis when a legal right of offset exists and are accounted for as collateralized financing transactions and recorded at their contracted amounts plus accrued interest. The Company was required to provide securities to counterparties in order to collateralize repurchase agreements and receives securities from counterparties as collateral under resale agreements. The Company's agreements with counterparties generally contained contractual provisions allowing for additional collateral to be provided, or excess collateral returned, when necessary. The Company valued the collateral daily and retrieved or returned excess collateral from/to counterparties, when appropriate.

Securities Transactions (former Sales & Trading businesses)

Securities transactions in regular-way trades and the related profit and loss arising from such transactions were recorded on their trade date as if they had settled.

Securities owned and securities sold, but not yet purchased, were recorded at fair value, which is the price that would be received upon the sale of an asset or paid upon transfer of a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date. These financial instruments were primarily comprised of holdings in fixed income securities and mortgage loans originated by ClearPoint.

Loans

The Company ~~accounts~~accounted for all of ClearPoint's originated residential mortgage loans under the fair value option ("FVO") as prescribed by Accounting Standards Codification ("ASC") 820 "Fair Value Measurements and Disclosures" ("ASC 820"). Upfront costs and fees related to the loans ~~are~~were immediately recognized. Fees earned ~~are~~ were recorded within Fees and other within the Consolidated Statements of Operations. All mortgage loans ~~are~~were sold on a servicing-released basis pursuant to various sale contracts. These contracts ~~include~~ included recourse provisions related to loan repurchases if certain events occur.

Mortgage loans and any related hedging instruments ~~are~~were recorded within Financial instruments owned and Securities sold, but not yet purchased within the Consolidated Statements of Financial Conditions. Changes in the fair value of these items are ~~recorded~~included within ~~Principal~~discontinued ~~transactions within the Consolidated Statements of Operations~~operations.

~~Goodwill and Intangible Assets~~ 53

The Company amortizes intangible assets over their estimated useful life, which is the period over which the assets are expected to contribute directly or indirectly to the future cash flows of the Company, and tests for impairment at the time of a triggering event, if one were to occur. Goodwill is not amortized; instead, it is reviewed on an annual basis for impairment. Goodwill may be impaired when the carrying amount of the reporting unit exceeds the implied fair value of the reporting unit. A reporting unit is defined by the Company as an operating segment or a component of an operating segment provided that the component constitutes a business for which discrete financial information is available and management regularly reviews the operating results of that component. For impairment testing purposes, goodwill has been allocated to each reporting unit based upon the goodwill derived from each specific acquisition. The Company has designated November 1st as its annual impairment testing date for the goodwill related to the acquisition of certain assets and assumption of certain liabilities of RangeMark.

The Company uses a combination of the market and income approaches to determine the fair value of the reporting unit. The income approach utilizes a discounted cash flow analysis based on management's projections, while the market approach derives the fair value of the reporting unit by applying market multiples of a group of selected publicly traded companies that can be used for comparison to the operating performance of the reporting unit. Goodwill and intangible assets are also tested for impairment at the time of a triggering event requiring a re-evaluation, if one were to occur.

Derivative Financial Instruments

Derivative financial instruments are recorded at fair value in the Consolidated Statements of Financial Condition and are included within Financial instruments owned and Securities sold, but not yet purchased. Derivatives entered into by the Company include purchase and sale agreements of to-be-announced securities ("TBAs"), which are forward mortgage-backed securities whose collateral remain "to be announced" until just prior to the trade settlement. The settlement of these transactions is not expected to have a material effect upon the Company's consolidated financial statements. The Company also enters into interest rate lock commitments ("IRLCs") in connection with the mortgage lending activities of ClearPoint (which are being discontinued in the year 2013 as a result of the Homeward Transaction). To a lesser extent, the Company enters into exchange traded futures and options contracts. Derivatives are primarily utilized for economic hedging and trading related purposes.

Table of Contents

GLEACHER & COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1. ~~Significant~~Basis ~~Accounting~~of ~~Policies~~Presentation (Continued)

~~Derivatives involve~~ ~~varying~~Goodwill ~~degrees~~and ofIntangible off-balance sheet risk, whereby changes in the level or volatility of interest rates, or market values of the underlying financial instruments may result in changes in the value of a particular financial instrument in excess of its carrying amount. Changes in the fair value of derivatives are recorded in Principal transactions in the Consolidated Statements of Operations on a trade date basis. Assets

~~Office~~ The Company amortized intangible assets over their estimated useful life, which was the period over which the assets were expected to ~~Equipment~~contribute directly or indirectly to the future cash flows of the Company, and ~~Leasehold~~tested ~~Improvements~~for impairment at the time of a triggering event, if one were to occur. Goodwill was not amortized; instead, it was reviewed on an annual basis for impairment. Goodwill may be impaired when the carrying amount of the reporting unit exceeds the implied fair value of the reporting unit. A reporting unit is defined by the Company as an operating segment or a component of an operating segment provided that the component constitutes a business for which discrete financial information is available and management regularly reviews the operating results of that component. For impairment testing purposes, goodwill had been allocated to each reporting unit based upon the goodwill derived from each specific acquisition.

~~Office~~The ~~equipment~~Company isused ~~stated~~a atcombination ~~cost~~of ~~less~~the ~~accumulated~~market ~~depreciation~~and income approaches to determine the fair value of the reporting unit. ~~Depreciation~~The isincome ~~provided~~approach onutilized a ~~straight-line~~discounted ~~basis~~cash ~~over~~flow analysis based on management's projections, while the ~~estimated~~market ~~useful~~approach ~~life~~ derived the fair value of the ~~asset~~reporting ~~(generally~~unit 2by toapplying ~~5 years).~~market ~~Leasehold~~multiples ~~improvements~~of ~~are~~a ~~stated~~group atof ~~cost~~selected ~~less~~publicly ~~accumulated~~traded ~~amortization~~companies that could be used for comparison to the operating performance of the reporting unit. Goodwill and intangible assets are ~~amortized~~also ontested for impairment at the time of a ~~straight-line~~triggering ~~basis~~event ~~over~~requiring ~~the~~a ~~initial~~re-evaluation, ~~term~~if ~~of the~~one ~~lease~~were to occur.

Derivative Financial Instruments

Derivative financial instruments were recorded at fair value in the Consolidated Statements of Financial Condition and were included within Financial instruments owned and Securities sold, but not yet purchased. Derivatives entered into by the Company included purchase and sale agreements of to-be-announced securities ("TBAs"), which are forward mortgage-backed securities whose collateral remain "to be announced" until just prior to the trade settlement. The settlement of these transactions did have a material effect upon the Company's consolidated financial statements. The Company also entered into interest rate lock commitments ("IRLCs") in connection with the mortgage lending activities of ClearPoint (which have been discontinued in the year 2013 as a result of the Homeward Transaction). To a lesser extent, the Company entered into exchange traded futures and options contracts. Derivatives were primarily utilized for economic hedging and trading related purposes. Derivatives involve varying degrees of off-balance sheet risk, whereby changes in the level or volatility of interest rates, or market values of the underlying financial instruments may result in changes in the value of a particular financial instrument in excess of its carrying amount.

Principal Transactions

Principal transaction revenues ~~are~~were recorded on a trade date basis and primarily ~~relate~~related to trading activities in financial instruments owned, securities sold, but not yet purchased, derivative transactions and mortgage loans originated by ClearPoint, all of which ~~are~~were accounted for at fair value and is included within discontinued operations.

Commission Income

Commission income iswas recorded on a trade-date basis as securities transactions ~~occur~~occurred. This income

Filing Compare · GLEACHER & COMPANY, INC.