UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, ~~2008~~2009.

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: 000-51730

Thomas Weisel Partners Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware		20-3550472
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One Montgomery Street

San Francisco, California 94104

(415) 364-2500

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive office)

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

None

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

Common Stock, par value $0.01 per share

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 þ

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

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 þ 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 the Annual Report on Form 10-K or any amendment to this Annual Report on Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Accelerated filer þ

Non-accelerated filer o

Smaller reporting company o

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

The aggregate market value of the common stock held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter, based upon the closing sale price of the registrants’ common stock on June 30, ~~2008~~2009 as reported on The NASDAQ Stock Market, Inc. was $~~149~~162,~~040~~235,~~844~~551.

As of March 1310, ~~2009~~2010 there were 3032,~~789~~852,~~415~~852 shares of the registrant’s common stock outstanding, including 6,~~639~~183,~~478~~121 shares of TWP Acquisition Company (Canada), Inc., a wholly-owned subsidiary of the registrant. Each exchangeable share is exchangeable at any time into common stock of the registrant on a one-for-one basis, entitles the holder to dividend and other rights economically equivalent to those of the common stock, and through a voting trust, votes at meetings of stockholders of the registrant.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement for the registrants’ Annual Meeting of Shareholders to be held on May 20, ~~2009~~2010 have been incorporated by reference into Part III of this Annual Report on Form 10-K.

	TABLE OF CONTENTS
Item Number		Page
PART I
1.	Business	1
1A.	Risk Factors	8
1B.	Unresolved Staff Comments	18
2.	Properties	19
3.	Legal Proceedings	19
4.	Submission of Matters to a Vote of Security Holders	19
PART II
5.	Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	23
6.	Selected Financial Data	26
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
7A.	Quantitative and Qualitative Disclosures About Market Risk	44
8.	Financial Statements and Supplementary Data	47
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	47
9A.	Controls and Procedures	47
9B.	Other Information	48
PART III
10.	Directors, Executive Officers, and Corporate Governance of the Registrant	48
11.	Executive Compensation	48
12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	48
13.	Certain Relationships and Related Transactions, and Director Independence	48
14.	Principal Accountant Fees and Services	48
PART IV
15.	Exhibits and Financial Statement Schedules	49
SIGNATURES		S-1
EXHIBIT INDEX		E-1

Table of Contents

	TABLE OF CONTENTS
Item Number		Page
PART I
1.	Business	1
1A.	Risk Factors	8
1B.	Unresolved Staff Comments	18
2.	Properties	18
3.	Legal Proceedings	19
4.	Submission of Matters to a Vote of Security Holders	19
PART II
5.	Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	23
6.	Selected Financial Data	26
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
7A.	Quantitative and Qualitative Disclosures About Market Risk	40
8.	Financial Statements and Supplementary Data	43
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	43
9A.	Controls and Procedures	43
9B.	Other Information	43
PART III
10.	Directors, Executive Officers, and Corporate Governance of the Registrant	44
11.	Executive Compensation	44
12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	44
13.	Certain Relationships and Related Transactions, and Director Independence	44
14.	Principal Accountant Fees and Services	44
PART IV
15.	Exhibits and Financial Statement Schedules	44
SIGNATURES		S-1
EXHIBIT INDEX		E-1

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Table of Contents

Special Note Regarding Forward-Looking Statements

This Annual Report on Form 10-K in Item 1 – “Business”, Item 1A – “Risk Factors”, Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in other sections of includes forward-looking statements within the meaning of Section ~~27A~~ 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In some cases, you can identify these statements by forward-looking words such as “may”, “might”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “intend” or “continue”, the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include expectations as to our future financial performance, which in some cases may be based on our growth strategies and anticipated trends in our business. These statements are based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the numerous risks outlined in Part I, Item 1A – “Risk Factors” in this Annual Report on Form 10-K.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update any of these forward-looking statements after the date of this filing to conform our prior statements to actual results or revised expectations, except as required by Federal securities law.

Forward-looking statements include, but are not limited to, the following:

· Our statement in Part III, Item 71 – “~~Management’s~~Business” ~~Discussion~~that ~~and~~we ~~Analysis~~believe ofour ~~Financial~~efforts ~~Condition~~to ~~and~~reduce ~~Results~~costs ofand ~~Operations”~~preserve ~~that~~capital, ~~with~~while ~~respect~~maintaining tothe anbreadth ~~aggregate~~ of ~~$4.3~~our ~~million~~coverage ofwill ~~remaining~~lead ~~commitments we have made~~ to ~~unaffiliated~~a ~~funds,~~significant weimprovement ~~currently~~in ~~anticipate~~our ~~transferring~~financial ~~these~~results ~~commitments~~as tocapital ~~funds~~market ~~sponsored~~activity ~~by us~~returns.

· Our statement in Part III, Item 71 – “~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~Competition” that aswe ofbelieve ~~December~~that ~~31,~~we ~~2008,~~have ~~there~~the ~~was~~capital ~~(i)~~and ~~$1.2~~resources ~~million of unrecognized compensation expense related~~ to ~~non-vested~~provide ~~restricted stock unit awards made in connection with~~ our ~~initial~~products ~~public~~and ~~offering~~services and that ~~this~~our ~~cost~~product isofferings ~~expected~~are tosuited ~~be recognized over a weighted-average period of 0.1 years, and (ii) $38.8 million of unrecognized compensation expense related~~ to ~~non-vested restricted stock unit awards made subsequent to~~ our ~~initial~~clients ~~public offering and that this cost is expected to be recognized over a weighted-average period of 2~~needs.~~7 years, in each case because these statements depend on estimates of employee attrition in the future.~~

· ~~The~~Our ~~following~~statements in Part I, Item 11A – “~~Business~~Risk Factors” –that

o ~~our~~We ~~statement~~believe ~~that~~ we ~~believe~~may ~~that~~experience ~~our~~competitive ~~focus~~pressures onas ~~the~~some ~~growth sectors~~ of ~~the~~our ~~economy~~competitors ~~will~~seek ~~allow us~~ to ~~capitalize~~obtain onmarket ~~the~~share ~~business opportunities created~~ by ~~many~~competing ofon the ~~primary~~basis ~~drivers~~ of ~~innovation, growth and capital investment in the U~~price.~~S. economy;~~

o ~~our~~We ~~statements~~may ~~that~~grow ~~(i) in the future we expect to continue to sponsor and raise follow-on or new investment funds and (ii) we expect to continue to expand~~ our ~~asset management~~ business ~~and~~through ~~provide~~both ~~additional~~internal ~~seed~~expansion ~~investment~~and ~~funds~~through ~~for~~strategic ~~new~~investments, ~~asset~~acquisitions ~~management~~or ~~products;~~joint ~~and~~ventures.

o We intend to retain any future earnings to fund the operation and expansion of our ~~statement~~business, ~~that~~and therefore, we ~~believe~~do ~~that~~not ~~the~~anticipate ~~trend~~paying tocash ~~alternative~~dividends ~~trading~~in ~~systems~~the ~~will~~foreseeable ~~continue~~future.

·o ~~The~~We ~~following~~may incur significant expenses in ~~Part~~connection I,with ~~Item~~initiating 1Anew –business ~~“Risk~~activities ~~Factors”~~or –in connection with any expansion of our underwriting, brokerage or asset management businesses.

o ~~our~~We ~~statement~~may ~~that~~engage wein ~~plan~~strategic toacquisitions ~~continue~~and toinvestments ~~expand~~for ~~our~~which ~~international~~we ~~operations;~~may incur significant expenses.

o· ~~our~~Our ~~statement~~statements ~~that~~in wePart ~~intend~~II, toItem ~~grow~~7 ~~our~~– ~~business~~“Management’s ~~through~~Discussion ~~both internal expansion~~ and ~~through~~Analysis ~~strategic~~of ~~investments,~~Financial ~~acquisitions~~Condition orand ~~joint~~Results ~~ventures;~~of ~~and~~Operations” that

o ~~our~~We ~~statement~~believe ~~that we expect to use~~ the ~~remaining~~near-term ~~net~~investment ~~proceeds~~banking ofopportunity ~~our~~in ~~follow-on~~the ~~offering~~technology ofand ~~common~~resource ~~stock~~sectors ~~for~~to ~~general~~be ~~corporate~~significant ~~purposes, including support~~ and ~~expansion~~that of our ~~underwriting~~banking platform, ~~trading~~with ~~and~~a ~~asset~~focus ~~management~~on ~~businesses~~these ~~and~~growth ~~strategic~~sectors, ~~acquisitions~~will ~~and investments~~benefit.

·o ~~The~~A ~~following~~significant inportion ~~Part~~of ~~II,~~our ~~Item~~new 7hires –have ~~“Management’s~~been ~~Discussion~~in brokerage operations and ~~Analysis~~are ofprofessionals ~~Financial~~who ~~Condition~~bring ~~and~~incremental ~~Results~~relationships ofto ~~Operations”~~the –firm, which should positively impact future revenues.

o ~~our~~We ~~statement~~increased ~~that~~the wenumber ~~expect~~of ~~to expand~~ our ~~trading~~senior ininvestment ~~Canadian~~banking ~~securities~~calling ~~as our energy and mining analysts begin to make a greater impact on our U.S. and European accounts~~officers, ~~and~~which we believe will bepositively ~~hiring~~impact ~~U.S.~~future ~~based energy bankers and analysts to capitalize on our capabilities in these sectors;~~results.

o We may carry out repurchases of our ~~statement~~common ~~that~~stock wefrom ~~expect~~time ~~the~~to ~~electronic~~time ~~trading~~in the future and ~~commission~~our ~~sharing~~Board ~~programs~~of toDirectors ~~increase~~may ~~our~~authorize ~~market~~additional ~~share~~repurchases ofin the ~~expanding~~future, ~~volume~~in each case for the purpose of ~~shares~~settling ~~traded~~obligations byto ~~institutional~~deliver ~~clients~~common ~~through~~stock ~~alternative~~to ~~trading~~employees ~~platforms;~~who have received Restricted Stock Units under our Equity Incentive Plan.

o ~~our~~We ~~statement~~believe that weour ~~currently~~current ~~plan~~level of equity capital, current cash balances, funds anticipated to ~~continue~~be provided by operating activities and funds available to ~~selectively~~be ~~upgrade~~drawn ~~our~~under ~~talent~~temporary ~~pool~~loan agreements, ~~particularly~~will inbe ~~revenue~~adequate ~~generating~~to ~~areas;~~meet our liquidity and regulatory capital requirements for the next 12 months.

o our statement that we may carry out repurchases of our common stock from time to time in the future and our Board of Directors may authorize additional repurchases in the future, in each case for the purpose of settling obligations to deliver common stock to employees who have received Restricted Stock Units under our Equity Incentive Plan; and

o our statement that we believe that our current level of equity capital, current cash balances, funds anticipated to be provided by operating activities and funds available to be drawn under temporary loan agreements, will be adequate to meet our liquidity and regulatory capital requirements for the next 12 months.

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Table of Contents

PART I

Item 1. Business

Overview

We are an investment bank focused principally on growth companies and growth investors. On ~~February~~We provide 7,a ~~2006,~~combination ~~Thomas~~of ~~Weisel~~bulge ~~Partners~~bracket ~~Group,~~capabilities ~~Inc. (“TWPG”),~~and aspecialized ~~Delaware~~services ~~corporation,~~to this ~~succeeded~~segment toof the ~~business~~market. Our ofservice ~~Thomas~~offerings ~~Weisel~~include strategic ~~Partners~~advice ~~Group~~on ~~LLC~~mergers and ~~completed~~acquisitions anand ~~initial~~raising public ~~offering~~and ofprivate ~~its common~~equity, ~~stock. Our~~independent ~~business~~equity isresearch ~~managed~~insights, asasset amanagement ~~single~~services ~~operating segment,~~ and weproven ~~generate~~brokerage ~~revenues~~transaction byexecution ~~providing~~capabilities. We ~~financial~~focus ~~services~~on ~~that~~building and ~~include~~maintaining ~~investment banking,~~long-term ~~brokerage,~~strategic ~~research~~advisory ~~and~~relationships ~~asset~~with ~~management.~~growth Wecompanies and take a ~~comprehensive~~ lifecycle approach into ~~providing~~servicing these ~~services~~companies. We combine our industry knowledge base with our corporate, venture capital and professional relationships to identify leading growth companies for our services.

InOur ~~January~~executive ~~2008,~~offices weare ~~completed~~located ~~our~~at ~~acquisition~~One ofMontgomery ~~Westwind~~Street, ~~Capital~~San ~~Corporation~~Francisco, an ~~independent,~~California. ~~institutional~~We ~~investment~~have ~~bank~~offices ~~focused~~in onmore ~~growth~~than ~~companies~~12 ~~and growth~~cities ~~investors,~~throughout ~~particularly~~North inAmerica ~~the energy~~ and ~~mining~~ ~~sectors~~Europe.

We ~~have~~were ~~offices~~formed in 1998 as Thomas Weisel Partners Group LLC and on February 7, 2006, Thomas Weisel Partners Group, Inc. (“TWPG”), a Delaware corporation, succeeded to the ~~following~~business ~~locations:~~of Thomas Weisel Partners Group LLC and completed an initial public offering of its common stock.

~~United~~We ~~States~~are committed ~~Canada~~to ~~Baltimore~~being ~~Toronto~~a ~~Boston~~premier ~~Calgary~~global, ~~Chicago~~growth-focused, ~~Cleveland~~investment ~~Europe~~bank. ~~Denver~~In ~~London~~January 2008, ~~New~~we ~~York~~completed ~~Zurich~~our ~~Portland~~acquisition ~~San~~of ~~Francisco~~Westwind ~~Silicon~~Capital ~~Valley~~Corporation, an independent, institutional investment bank focused on growth companies and growth investors, particularly in the energy and mining sectors. Through the acquisition, we expanded our coverage of growth verticals, adding energy and mining, and significantly enhanced our global presence.

We are exposed to volatility and trends in the general securities market, ~~and~~ the ~~economy,~~ economy and wein ~~are~~particular ~~currently~~the ~~facing~~growth ~~difficult~~sectors ~~market~~of ~~and~~the ~~economic conditions~~economy. ~~Due~~ toThe ~~these~~global ~~conditions,~~credit ~~we have experienced a~~crisis, ~~significant~~corporate ~~decrease~~consolidation inand ~~client~~failures, ~~activity~~lack ~~levels~~of ~~that~~investor ~~have~~confidence ~~resulted~~and ~~in, among~~further ~~other~~economic ~~things,~~deterioration ~~lower~~all ~~overall~~led ~~investment banking activity. It is difficult~~ to ~~predict~~a ~~when~~dramatic ~~conditions~~slowdown ~~will~~in ~~change. Notwithstanding~~ the ~~exposure~~capital markets, towhich ~~volatility~~in ~~and~~turn ~~trends~~impacted ~~and~~ the ~~current~~number ~~difficult~~of ~~economic~~our ~~conditions,~~investment inbanking ~~order~~transactions. During tothis ~~provide value to our clients~~period, we ~~have~~ made a ~~long-term~~concerted ~~commitment~~effort to ~~maintaining~~ areduce ~~substantial,~~costs ~~full-service~~and ~~integrated~~preserve ~~business~~capital, while ~~platform.~~maintaining Asthe ~~a result~~breadth of ~~this~~our ~~commitment,~~coverage. ifWe ~~business~~believe ~~conditions~~these ~~result~~efforts inwill lead ~~decreases~~ to ~~our revenues,~~a wesignificant ~~may~~improvement ~~not~~in ~~experience~~our ~~corresponding~~financial ~~decreases~~results inas ~~the~~capital ~~expense of~~market ~~operating~~activity ~~our business~~returns.

Principal Business Lines

Our business is organized into four service offerings: investment banking, brokerage, equity research and asset management.

Investment Banking

Our investment bankers provide two primary categories of services: (i) corporate finance and (ii) strategic advisory. Our corporate finance practice is comprised of industry coverage groups that are dedicated to establishing long-term relationships and executing a broad range of capital raising transactions. Our strategic advisory practice focuses on developing tailored solutions to meet client goals and objectives through industry expertise, transaction experience and corporate relationships with leading growth companies. In addition, through our commitment to providing senior-level attention, we focus on building and maintaining long-term strategic advisory relationships with growth companies.

WeCorporate ~~take~~Finance. aOur ~~lifecycle~~corporate ~~approach~~finance topractice ~~servicing~~is ~~growth~~comprised ~~companies.~~of Weindustry ~~combine~~coverage ~~our~~groups ~~industry~~that advise ~~knowledge~~on ~~base~~and ~~with~~structure capital raising solutions for our corporate, ~~venture~~clients ~~capital~~through public and ~~professional relationships~~private toofferings ~~identify~~of ~~leading~~equity ~~growth~~and ~~companies~~debt ~~for~~securities, ~~our~~including convertible ~~services~~debt. ~~The execution~~We ~~capabilities~~offer ofa ~~our~~wide ~~investment~~range ~~banking~~of ~~professionals~~financial ~~enable~~services usdesigned to meet ~~provide~~the ~~these~~needs of growth companies, ~~with~~including ainitial ~~full~~public ~~range~~offerings, offollow-on ~~investment~~and confidentially ~~banking~~marketed ~~services~~offerings, equity-linked offerings, private investments ~~including~~in public equity and private placements of debt and equity securities. Within corporate finance, our capital markets group executes a variety of transactions, both public underwritten securities offerings and ~~strategic~~private ~~advisory~~agented ~~services~~offerings, ~~throughout~~assists ~~their~~clients ~~lifecycle~~with asinvestor ~~they~~relations ~~engage~~advice inand ~~more~~introduces ~~complex~~companies seeking to raise capital ~~markets~~to ~~and~~investors that we believe will be supportive long-term ~~strategic~~investors. ~~transactions~~We assist the efforts of our corporate finance practice by providing aftermarket trading support for our corporate finance clients.

Corporate Finance. Our corporate finance practice advises on and structures capital raising solutions for our corporate clients through public and private offerings of equity and debt securities, including convertible debt. We offer a wide range of financial services designed to meet the needs of growth companies, including initial public offerings, follow-on and secondary offerings, equity-linked offerings, private investments in public equity and private placements of both debt and equity securities. Within corporate finance, our capital markets group executes a variety of transactions, both public underwritten securities offerings and private offerings, assists clients with investor relations advice and introduces companies seeking to raise capital to investors that we believe will be supportive long-term investors. We assist the efforts of our corporate finance practice by providing aftermarket trading support for our corporate finance clients.

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Strategic Advisory. Our strategic advisory services include general strategic advice as well as transaction specific advice regarding mergers and acquisitions, divestitures, spin-offs, privatizations, special committee assignments and takeover defenses. Our specialized advisory professionals work in conjunction with our industry coverage groups in advising our corporate clients. We seek to become a trusted advisor to the leading growth companies and to achieve a balance between our buy- and sell-side assignments. Our buy- and sell-side assignments are generated through our network of business relationships and by our reputation for quality execution. Our strategic advisory services are also supported by our capital markets professionals, who provide assistance in acquisition financing and market intelligence in connection with mergers and acquisitions transactions.

Brokerage

We provide two principal categories of services within our brokerage operations: (i) institutional brokerage, which comprises institutional sales, sales trading, trading, ~~and~~ special situations and non-deal road shows and (ii) private client services.

Institutional Brokerage. We provide equity and ~~convertible~~non-equity ~~debt~~ securities sales and trading services to more than 1,000 institutional investors.

~~Institutional~~- ~~Sales. Our~~1 institutional sales professionals provide equity and convertible debt securities sales services to institutional investors and seek to develop strong relationships with the portfolio managers they serve by developing expertise and working closely with our equity research department. Our institutional sales professionals focus on growth companies identified by our equity research department and seek to develop a thorough understanding of those companies.-

Table of Contents

Institutional Sales. Our institutional sales professionals provide equity and non-equity securities sales services to institutional investors and seek to develop strong relationships with the portfolio managers they serve by developing expertise and working closely with our equity research department. Our institutional sales professionals focus on growth companies identified by our equity research department and seek to develop a thorough understanding of those companies.

Sales Trading. Our sales traders are experienced in the industry and are knowledgeable regarding both the markets for growth company securities and the institutional traders who buy and sell them. Through our sales trading professionals, we connect with many large and active buy-side trading desks in the United States, Canada and Europe.

Trading. Our trading professionals provide support to our institutional clients in their pursuit of best execution, including facilitating block trades, providing electronic trading services, committing capital and otherwise providing liquidity. In addition, our convertible debt trading desk maintains securities inventory in connection with the execution of customer trades and to service the needs of clients, which include both investors and issuers of convertible debt securities, and in connection with certain proprietary trading activities.

Special Situations. Our special situations group focuses on sourcing liquidity via overnight block trades, reverse inquiries and quiet accumulations for investment banking, institutional, private equity and high net worth clients in a confidential manner and in connection with these activities engages in certain proprietary trading activities.

Non-Deal Road Shows. We work to leverage our industry knowledge and relationships by helping our institutional clients maintain and build corporate contacts through coordinating company and investor meetings that are unrelated to planned or pending investment banking transactions, commonly referred to as non-deal road shows. We believe these non-deal road shows underscore our high-service approach, promote our brokerage services and are valued by our institutional brokerage clients. Non-deal road shows present an environment for investors to further their understanding of companies in which they have an equity position or that may be attractive investment opportunities and for company executives to broaden relationships with their investors and develop relationships with potential investors.

Private Client Services. Our private client services department offers brokerage and advisory services to high-net-worth individuals ~~and cash management services to corporate clients~~. Our private client professionals emphasize capital preservation and growth through prudent planning and work closely with clients to personalize solutions that address their individual needs.

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Table of Contents

Equity Research

Our research analysts perform independent research to help our clients understand the dynamics that drive the sectors and companies they cover. We seek to differentiate ourselves through originality of perspective, depth of insight and ability to uncover industry trends.

As of December 31, ~~2008~~2009, our equity research professionals covered 500 companies headquartered in 1821 countries. Approximately 8987% of the companies covered had market capitalizations of $10 billion or less.

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Equity Research by Geographic Location of Company Headquarters

(as of December 31, ~~2008~~2009)

Equity Research by Market Capitalization

(as of December 31, 2008)

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Table of Contents

Equity Research by Market Capitalization

(as of December 31, 2009)

The sectors and industry components we focus on within equity research are set forth in the table and chart below:

Technology Healthcare Energy Hardware • Biotechnology • Alternative Energy • Applied Technologies • Healthcare Information Technology and • Energy Equipment & Services • Communications Equipment Pharmaceutical Services • International Oil & Gas • Computer Systems and Storage • ~~Life~~Healthcare ~~Science~~Services ~~and Diagnostics~~ • Oil & Gas Exploration and Production • Electronic Supply Chain • Life Science and Medical ~~Devices~~Technology • Information & Financial Technology Services • Pharmaceuticals: Specialty Metals and Mining • Semiconductors: Analog & Mixed Signal • Base Metals and Uranium • Semiconductors: Processors & Components ~~Internet~~Consumer ~~Media and Telecom~~ • Gold and Precious Metals • ~~Broadcasting~~Retailing: ~~and~~Hardlines ~~Entertainment~~ Software & Services • ~~Internet~~Retailing: ~~Services~~Softlines Other • Software: Applications & Communications • ~~Telecom~~Sports ~~Services~~and Lifestyle Brands • ~~Financial~~Special ~~Services~~Situations • Software: Infrastructure • ~~Special~~Financial ~~Situations~~Services ~~Consumer~~ • ~~Restaurants~~Fertilizers •/ ~~Sports~~Materials Internet Media and ~~Lifestyle~~Telecom ~~Brands~~• Internet Services • ~~Retailing:~~Media ~~Hardlines~~& Entertainment • ~~Retailing:~~Telecom ~~Softlines~~Services

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Table of Contents

Equity Research by Sector

(based on number of companies covered as of December 31, ~~2008~~2009)

Our research analysts analyze major trends, publish research on new areas of growth, provide fundamental, company-specific coverage and work with our institutional clients to identify and evaluate investment opportunities in publicly traded companies. They periodically publish comprehensive “white-paper” studies of an industry or a long-term investment theme, provide analysis and commentary on growth companies and publish detailed primary research on investment opportunities.

We annually host several sector conferences targeting growth companies and investors, including ~~our~~an ~~Technology,~~Alternative ~~Telecom~~Energy ~~and Internet~~ Conference, ~~Alternative~~Consumer ~~Energy~~ Conference, Emerging ~~Healthcare~~Communications Conference, ~~Consumer~~Energy Conference, ~~Natural~~Healthcare ~~Resource~~ Conference, Metals ~~Small~~ and ~~Mid-Cap~~Mining ~~One-on-One~~ Conference and ~~Growth~~Technology ~~Stock~~and ~~One-on-One~~ Telecom Conference. We use these specialized events to showcase companies to institutional investors focused on investing in these growth sectors. We believe that our conferences differentiate us from smaller investment banks that may lack the relationships and resources to host broadly attended industry events.

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Asset Management

Our asset management division is divided into three principal units: (i) private investment funds, (ii) public equity investment products and (iii) distribution management.

Private Investment Funds. We are currently the managing general partner of three groups of investment funds:

· Thomas Weisel Global Growth Partners is a fund of funds for private primary fund investments ~~with~~formed ain 2000 with capital ~~commitment~~commitments of $287.6 million ~~in 2000~~. A fund for secondary private equity fund investments with a capital ~~commitment~~commitments of $130.9 million was formed in 2002, ~~and~~ a third fund for private equity secondary investments with a capital ~~commitment~~commitments of $4654.0 million was formed in 2008. Asand ofa ~~December~~fourth ~~31,~~fund ~~2008,~~for ~~the~~private ~~total~~equity ~~amount~~investments ~~that~~with ~~has~~capital ~~been~~commitments ~~invested~~of by$45.5 ~~these~~million ~~funds~~ was ~~$397.1~~formed ~~million~~in 2009.

· Thomas Weisel Healthcare Venture Partners is a healthcare venture capital fund that invests in the emerging life sciences and medical technology sectors. The fund was formed in 2003 with a capital ~~commitment~~commitments of $121.8 million~~, $79~~.~~3 million of which has been invested as of December 31, 2008.~~

· Thomas Weisel Venture Partners is a venture capital fund that invests in information technology companies, particularly in the broadly defined software and communications industries. The fund was formed in 2000 with a capital ~~commitment~~commitments of approximately $252.5 million~~, $202~~.~~8 million of which has been invested as of December 31, 2008.~~

As manager of these funds, we receive management fees generally based on committed capital or net assets of the partnerships. ~~In the future we expect to continue to sponsor and raise follow-on or new investment funds.~~

InWe ~~December~~maintain ~~2008,~~a non-managing special limited partner interest in Thomas Weisel ~~Capital~~India Opportunity ~~Management~~Fund, ~~LLC~~L.P. (“~~TWCM~~TWIOF”), as a ~~subsidiary~~result of a transaction in December 2008 ~~TWPG~~under which (i) Thomas Weisel Capital Management LLC, ~~completed~~the aformer ~~transaction~~investment advisor ~~with~~of TWIOF, assigned its rights, responsibilities and obligations as advisor of TWIOF to Guggenheim Partners India Management, LLC, inan ~~which~~affiliate anof Guggenheim Partners, (ii) Guggenheim Partners India GP, LLC , an affiliate of Guggenheim Partners, became the ~~managing~~ general partner of ~~Thomas~~TWIOF ~~Weisel~~and (iii) affiliates of ~~India~~Guggenheim ~~Opportunity~~Partners ~~Fund~~acquired, ~~L.P.~~directly or indirectly, ~~and~~assets related to the operation of TWIOF, including assets from our India subsidiary, Thomas Weisel International ~~India~~Private ~~Opportunity~~Limited. ~~LLC,~~As a result of the transaction, neither us nor ~~subsidiary~~any of ~~TWCM~~ our affiliates manages TWIOF but an affiliate of ours continues to maintain an immaterial economic interest in TWIOF, ~~became~~consisting ~~the~~of ~~non-managing~~an ~~special~~investment of ~~limited~~less than $0.6 million and a right to participate in a portion of the carried ~~partner~~interest of the fund.

~~Public Equity Investment Products. We have a small/mid~~-~~cap~~ ~~growth public equity investment team~~5 based in Portland, Oregon. We have provided approximately $20 million of seed investment capital for the products they manage. This public equity investment team manages these products through an asset management subsidiary and collectively is entitled to receive approximately 50% of the profits generated.-

InTable ~~the future,~~of ~~we expect to continue to expand our asset management business and provide additional seed investment capital for new asset management products.~~Contents

Public Equity Investment Products. We have a small/mid-cap growth public equity investment team based in Portland, Oregon. We have provided approximately $18 million of seed investment capital for the products they manage. This public equity investment team also manages products through an asset management subsidiary and is entitled to receive approximately 50% of net profits generated.

Distribution Management. Distribution management actively manages securities distributions from private equity and venture capital funds. We seek to enhance the returns realized by distributions made from private equity and venture capital funds. The distribution management services we provide include dedicated portfolio management, execution, consolidated reporting and administrative support.

Employees

AtAs of December 31, ~~2008~~2009, we had ~~approximately~~453 ~~570~~ employees~~. In 2009~~, we ~~reduced~~excluding ~~our~~those ~~headcount by approximately 70~~ employees, ~~net,~~who ~~and~~have given asnotice ofto ~~March~~leave ~~13, 2009,~~or wethose ~~now~~on ~~have~~garden ~~approximately 500 employees~~leave.

Our professionals draw upon their experience and market expertise to provide differentiated advice and customized services to our clients. We believe our professionals are attracted to our company by our specialized market focus, entrepreneurial culture and commitment to our clients. None of our employees are represented by collective bargaining agreements. We have not experienced any work stoppages and believe our relationship with our employees to be ~~good~~satisfactory.

Competition

As an investment bank, all aspects of our business are intensely competitive. Our competitors are investment banking firms, other brokerage firms, ~~merchant banks~~ and financial advisory firms. We compete with some of our competitors nationally or regionally and with others on a product or service ~~basis~~level. Many of our competitors have substantially greater capital and resources than we do and offer a broader range of financial products. We believe that the principal factors affecting competition in our business include client relationships, reputation, the abilities of our professionals, market focus and the relative quality and price of our services and products.

In recent years there has been substantial consolidation and convergence among companies in the financial services industry. Legislative and regulatory changes in the United States have allowed commercial banks to enter businesses previously limited to investment banks, and a number of large commercial banks, insurance companies and other broad-based financial services firms have established or acquired broker-dealers or merged with other financial institutions. This trend toward consolidation and convergence has significantly increased the capital base and geographic reach of many of our competitors. Many of our competitors have the ability to offer a wider range of products and services that may enhance their competitive position. They may also have the ability to support investment banking and securities products and services with commercial banking, insurance and other financial services capabilities in an effort to gain market share, which could result in pricing pressure in our businesses.

-We experience 5price competition with respect to our investment banking business. -One trend, particularly in the equity underwriting business, toward multiple book runners has increased the competitive pressure in the investment banking industry and may lead to lower average transaction fees.

We experience price competition with respect to our ~~investment~~brokerage ~~banking~~ business., including ~~One~~large ~~trend~~block trades, ~~particularly~~spreads inand ~~the~~trading ~~equity~~commissions. ~~underwriting~~The ~~business,~~ability ~~toward~~to ~~multiple~~execute ~~book~~trades ~~runners~~electronically and ~~co-managers~~through ~~has~~other alternative trading systems has increased the ~~competitive~~pricing pressure inon ~~the~~trading commissions and spreads, as well as ~~investment~~affected ~~banking~~the ~~industry~~volume ~~and~~of ~~may~~trades ~~lead~~being toexecuted ~~lower~~through ~~average~~traditional ~~transaction~~full-service ~~fees~~platforms.

We ~~also~~ experience ~~intense price~~ competition with respect to our ~~brokerage~~asset management business, both in the ~~including~~pursuit ~~large~~of ~~block~~investors ~~trades,~~for ~~spreads~~our investment funds and ~~trading~~products ~~commissions.~~and ~~The~~in ~~ability~~the identification toand completion of investments in attractive portfolio companies ~~execute~~for ~~trades~~our ~~electronically~~investment ~~and~~funds. ~~through~~We ~~other~~compete ~~alternative~~for ~~trading~~individual ~~systems~~and ~~has increased~~institutional clients on the ~~pricing~~basis ~~pressure~~of onprice, ~~trading~~the ~~commissions~~range ~~and~~of ~~spreads~~products we offer, the quality of our services as well as ~~affected~~ on the ~~volume~~basis of ~~trades~~financial ~~being~~resources ~~executed~~available ~~through~~to ~~traditional~~us ~~full-service~~and invested in ~~platforms~~our products. We may be competing with other investors and corporate buyers for the investments that we make.

In addition, we experience competition with respect to our asset management business both in the pursuit of investors for our investment funds and products and in the identification and completion of investments in attractive portfolio companies for our investment funds. We compete for individual and institutional clients on the basis of price, the range of products we offer, the quality of our services as well as on the basis of financial resources available to us and invested in our products. We may be competing with other investors and corporate buyers for the investments that we make.

We may experience competitive pressures in these and other areas in the future, including if some of our competitors seek to increase market share by reducing prices.

Competition is also intense for the recruitment and retention of qualified professionals. Our ability to continue to compete effectively in our businesses will depend upon our continued ability to attract new professionals and retain and motivate our existing professionals.

Despite the competition that we face, we believe our investment banking, brokerage and research products compare favorably with those of our competitors. We believe that we have the capital and resources to provide our products and services and that our product offerings are suited to our clients needs. We believe that our focus and reputation for providing these products and services to growth companies and the relationships we have built within these communities differentiates us from our competition.

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Table of Contents

As compared to our competitors, we may be limited in providing our investment banking and brokerage products and services by our regulatory capital.

The competitive landscape in Canada and Europe is similar to that of the United States where we face competition from investment banking firms, other brokerage firms and financial advisory firms, many of who have substantially greater capital resources than us and offer a broader range of financial products.

Regulation

Our business, as well as the financial services industry in general, is subject to extensive regulation in the United States, Canada and elsewhere. As a matter of public policy, regulatory bodies in the United States, Canada and the rest of the world are charged with safeguarding the integrity of the securities and other financial markets and with protecting the interests of customers participating in those markets. These regulatory bodies adopt and amend rules (which are subject to approval by government agencies) for regulating the industry and conduct periodic examinations of members. In the United States, the Securities and Exchange Commission (the “SEC”) is the federal agency responsible for the administration of the federal securities laws.

Thomas Weisel Partners LLC (“TWP”), our wholly-owned subsidiary, is registered as a broker-dealer with the SEC and the Financial Industry Regulatory Authority (“FINRA”) ~~and in all 50 states and the District of Columbia. Accordingly~~, ~~Thomas~~ ~~Weisel Partners LLC is subject to regulation and oversight by the SEC and FINRA,~~ a self-regulatory organization which is itself subject to oversight by by the SEC and which adopts and enforces rules governing the conduct, and ~~examines~~ examines the activities, of its member firms. Inin ~~2007~~all 50 states and the District of Columbia. Accordingly, ~~Thomas~~TWP ~~Weisel~~is ~~Partners~~subject ~~LLC~~to ~~opened~~regulation and oversight by the SEC and FINRA. In 2007, TWP opened and registered branch offices in London, England, Zurich, Switzerland, Chicago, Illinois, ~~Palo Alto, California,~~ Cleveland, Ohio and Baltimore, Maryland. In 2008, ~~Thomas~~TWP ~~Weisel Partners LLC~~ opened and registered branch offices in Denver, Colorado, Toronto, Ontario, Canada, and Calgary, Alberta, Canada. ~~deregistered~~In ~~its~~2009, TWP opened and registered a branch office in ~~Mumbai~~Dallas, ~~India~~Texas. State securities regulators also have regulatory or oversight authority over ~~Thomas Weisel Partners LLC~~TWP. In addition, ~~Thomas~~TWP ~~Weisel Partners LLC~~ and several ~~other~~ other wholly-owned subsidiaries of ours, including Thomas Weisel Capital ~~Management~~ Management LLC, Thomas Weisel Asset Management LLC, TW Asset Management LLC and ~~Thomas~~ Thomas Weisel Global Growth Partners LLC, are registered as investment advisers ~~with~~ with the SEC and therefore are subject to their regulation and oversight. ~~Thomas~~TWP ~~Weisel Partners LLC~~ is also a member of, and is subject to regulation by, the New York Stock Exchange (“NYSE”), ~~and~~ the American Stock Exchange. ~~Thomas~~and ~~Weisel~~the ~~Partners LLC~~Ontario Securities Commission. TWP is also registered as an introducing broker with the Commodity Futures ~~Trading~~ Trading Commission and is a member of the National Futures Association.

Broker-dealers are subject to regulations that cover all aspects of the securities business, including sales methods, trade practices among broker-dealers, use and safekeeping of customers’ funds and securities, capital structure, record-keeping, the financing of customers’ purchases and the conduct and qualifications of directors, officers and employees. InWe ~~particular~~are required by the SEC to be a member of the Securities Investors Protection Corporation (“SIPC”). SIPC’s primary role is investor protection. As a member firm we may be assessed fees on our revenues. The SIPC provides protection for securities and cash held in client accounts up to $500,000 asper client, with cash claims not to exceed $100,000. This coverage does not protect against market fluctuations. As a registered broker-dealer and member of various self-regulatory organizations, ~~Thomas~~TWP ~~Weisel Partners LLC~~ is subject to the SEC’s uniform net capital rule, Rule 15c3-1. The uniform net capital rule specifies the minimum level of net capital a broker-dealer must ~~maintain and also requires that a significant part~~ ~~of its assets be kept in relatively liquid form~~maintain. The SEC and various self-regulatory organizations impose rules that require notification when net capital falls below certain predefined criteria, that limit the ratio of subordinated debt to equity in the regulatory capital composition of a broker-dealer and that constrain the ability of a broker-dealer to expand its business under certain circumstances. Additionally, the SEC’s uniform net capital rule imposes certain requirements that may have the effect of of prohibiting a broker-dealer from distributing or withdrawing capital and requiring prior notice to the SEC for certain withdrawals of capital. The SEC has adopted rule amendments that establish alternative net capital requirements for broker-dealers that are part of a consolidated supervised entity. As a condition to its use of the alternative method, a broker-dealer’s ultimate holding company and affiliates (referred to collectively as a consolidated supervised entity) must consent to group-wide supervision and examination by the SEC. If we elect to become subject to the SEC’s group-wide supervision, we will be required to report to the SEC computations of our capital adequacy.

Thomas Weisel Partners Canada, Inc. (“TWPC”), our registered Canadian broker-dealer subsidiary, 6is subject to regulation by the securities commissions of Ontario, Quebec, Alberta, British Columbia, Manitoba, Saskatchewan and Nova Scotia, is a member of the Investment Industry Regulatory Organization of Canada (“IIROC”) and is a participating organization of the Toronto Stock Exchange and the TSX Venture Exchange. TWPC is required by the IIROC to belong to the Canadian Investors Protection Fund (“CIPF”), whose primary role is investor protection. The CIPF may charge member firms assessments based on revenues and risk premiums. The CIPF provides protection for securities and cash held in client accounts up to CDN$1,000,000 per client with separate coverage of CDN$1,000,000 for certain types of accounts. This coverage does not protect against market fluctuations. TWPC is subject to the minimum capital rule (By-Law No. 17 of the IIROC) and the early warning system (By-Law No. 30 of the IIROC). The minimum capital rule requires that every member shall have and maintain at all times risk adjusted capital greater than zero calculated in accordance with Form 1 (Joint Regulatory Financial Questionnaire and Report) and with such requirements as the Board of Directors of the IIROC may from time to time prescribe. Insufficient risk adjusted capital may result in suspension from membership of the IIROC.

~~Thomas Weisel Partners Canada, Inc. (“TWPC”), our registered Canadian broker~~-~~dealer subsidiary,~~ ~~is subject to regulation by the securities commissions of Ontario,~~7 Quebec, Alberta, British Columbia, Manitoba, Saskatchewan and Nova Scotia, is a member of the Investment Industry Regulatory Organization of Canada (“IIROC”) and is a participating organization of the Toronto Stock Exchange, the TSX Venture Exchange and Canada’s New Stock Exchange. Thomas Weisel Partners Canada, Inc. is required by the IIROC to belong to the Canadian Investors Protection Fund (“CIPF”), whose primary role is investor protection. The CIPF may charge member firms assessments based on revenues and risk premiums. The CIPF provides protection for securities and cash held in client accounts up to CDN$1,000,000 per client with separate coverage of CDN$1,000,000 for certain types of accounts. This coverage does not protect against market fluctuations. Thomas Weisel Partners Canada, Inc. is subject to the minimum capital rule (By-Law No. 17 of the IIROC) and the early warning system (By-Law No. 30 of the IIROC). The minimum capital rule requires that every member shall have and maintain at all times risk adjusted capital greater than zero calculated in accordance with Form 1 (Joint Regulatory Financial Questionnaire and Report) and with such requirements as the Board of Directors of the IIROC may from time to time prescribe. Insufficient risk adjusted capital may result in suspension from membership of the IIROC. Thomas Weisel Partners Canada, Inc. had sufficient Risk Adjusted Capital at all times during the years ended December 31, 2008, 2007 and 2006.

~~Thomas Weisel~~Table Partners International Limited a registered U.K. broker-dealer subsidiary, is subject to regulation by the Financial Securities Authority in the United Kingdom. Our broker-dealer branch office in Zurich, Switzerland is subject to the oversight of ~~the Swiss Federal Banking Commission (“SFBC”).~~Contents

Thomas Weisel Partners International Limited, a registered U.K. broker-dealer subsidiary, is subject to regulation by the Financial Securities Authority in the United Kingdom. Our broker-dealer branch office in Zurich, Switzerland is subject to the oversight of the Swiss Federal Banking Commission.

The effort to combat money laundering and terrorist financing is a priority in governmental policy with respect to financial institutions. The USA PATRIOT Act of 2001 contains anti-money laundering and financial transparency laws and mandates the implementation of various new regulations applicable to broker-dealers and other financial services companies, including standards for verifying client identification at account opening and obligations to monitor client transactions and report suspicious activities. Anti-money laundering laws outside the United States contain some similar provisions. The obligation of financial institutions, including us, to identify their customers, watch for and report suspicious transactions, respond to requests for information by regulatory authorities and law enforcement agencies, and share information with other financial institutions, has required the implementation and maintenance of internal practices, procedures and controls which have increased, and may continue to increase, our costs, and any failure with respect to our programs in this area could subject us to regulatory consequences, including substantial fines and potentially other liabilities.

In addition to U.S. federal regulations, certain of our businesses are subject to compliance with laws and regulations of U.S. state governments, non-U.S. governments, their respective agencies and/or various self-regulatory organizations or exchanges relating to the privacy of client information. Any failure to comply with these regulations could expose us to liability and/or reputational damage.

Additional legislation, changes in rules promulgated by the SEC and self-regulatory organizations or changes in the interpretation or enforcement of existing laws and rules, either in the United States, Canada or elsewhere, may directly affect the mode of our operations and profitability.

U.S. and non-U.S. government agencies and self-regulatory organizations, as well as state securities commissions in the United States, are empowered to conduct administrative proceedings that can result in censure, fine, the issuance of cease-and-desist orders or the suspension or expulsion of a broker-dealer or its directors, officers or employees. Occasionally, our subsidiaries have been subject to investigations and proceedings, and sanctions have been imposed for infractions of various regulations relating to our activities.

Where You Can Find More Information

We are required to file annual, quarterly and current reports, proxy statements and other information required by the ~~Securities~~ Exchange Act ~~of 1934~~, ~~as amended,~~ with the SEC. 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, D.C. 20549, U.S.A. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our SEC filings are also available to the public from the SEC’s internet site at http://www.sec.gov.

We maintain a public internet site at http://www.tweisel.com and make available free of charge through this site our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements and Forms 3, 4 and 5 filed on behalf of directors and executive officers, as well as any amendments to those reports filed or furnished pursuant to the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. We also post on our website the charters for our Board of Directors’ Audit Committee, Compensation Committee and Corporate Governance and Nominations Committee, as well as our Corporate Governance Guidelines, our Code of Conduct and Ethics governing our directors, officers and employees and other related materials. In addition, we also post on our website, under “Investment Banking – Transactions”, links to listings of our completed, ~~filed~~investment ~~and~~banking ~~announced~~transactions ~~investment~~and ~~banking~~our transactions in registration. The information on our website is not part of this Annual Report.

Our Investor Relations Department can be contacted at Thomas Weisel Partners Group, Inc., One Montgomery Street, San Francisco, California 94104, Attention: Investor Relations; telephone: 415-364-2500; e-mail: investorrelations@tweisel.com.

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Item 1A. Risk Factors

We face a variety of risks in our business, many of which are substantial and inherent in our business and operations. The following are some of the important risk factors that could affect our business, our industry and holders of our common stock. These risks are not exhaustive. Other sections of this Annual Report on Form 10-K may include additional factors which could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

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Risks Related to Our Business

Our businesses have been and may continue to be adversely affected by conditions in the global financial markets and economic conditions generally.

Our businesses, by their nature, do not produce predictable earnings, and are affected by changes in economic conditions generally and in particular by conditions in the financial markets. ~~Over~~Beginning ~~the~~in ~~past year~~mid-2007, ~~economic~~these conditions ~~and~~ ~~the state of the financial markets~~ have changed suddenly, ~~significantly~~ and ~~negatively~~, ~~which~~for ~~has~~a ~~affected~~period ~~and~~of ~~continues~~time toin ~~affect~~the ~~our~~fall ~~business~~of 2008 and ~~results~~into of2009, ~~operations~~very negatively.

~~Since mid-2007,~~In ~~and particularly during~~ the fall ~~second half~~ of 2008 and into 2009, the financial services industry and the securities markets generally experienced significant valuation declines in virtually all asset categories. This was initially triggered by the subprime mortgage crisis, but eventually spread to other asset classes, including equities. Financial markets over this period have been characterized by substantially higher volatility, a lack of liquidity and a general loss of investor confidence, initially in financial institutions, ~~but more~~and ~~recently~~eventually in companies in a number of other industries and in the broader markets, including the industries in which we specialize. While the markets have generally stabilized and improved since the early part of 2009, asset values for many asset classes have not returned to previous levels. Business, financial and economic conditions continue to be negatively impacted by the events of recent years.

~~Tighter credit has forced investors and other market participants to reduce leverage rapidly, which has exacerbated market volatility and contributed to further declines in asset values.~~ Market conditions have also led to the failure or merger of a number of prominent financial institutions with which we compete. Financial institution failures or near-failures have resulted in further losses and have also impacted the trading prices of shares in all financial institutions, including ours. In addition, ~~as of the~~ ~~end~~during ~~of 2008~~2009, the United States and many other international markets ~~are~~experienced a inrecession. Business activity across a wide range of industries and regions, ~~recession~~including the sectors in which we specialize, has been greatly reduced, and many companies were, and some continue to be, in serious difficulty.

~~Business~~Our ~~activity~~investment ~~across~~banking abusiness ~~wide~~has ~~range~~been ofand ~~industries,~~may ~~including~~continue ~~the~~to ~~sectors~~be inadversely ~~which we~~affected ~~specialize,~~by ismarket ~~greatly reduced~~conditions. ~~The~~Poor ~~weakness~~economic inconditions ~~equity~~and ~~markets~~other ~~has~~adverse ~~resulted~~conditions incan ~~diminished~~adversely ~~trading~~affect ~~volume~~and ofhave ~~securities~~adversely ~~that~~affected ~~could~~investor ~~adversely~~confidence, ~~impact~~resulting ~~our~~in ~~brokerage~~significant ~~business. Industry~~industry-wide declines in the size and number of underwritings and of ~~mergers~~financial ~~and~~advisory ~~acquisitions~~ transactions, ~~has~~which ~~had~~could have an adverse effect on our revenues and our profit margins. ~~Reductions~~ In addition, reductions in the trading prices for equity securities tend to reduce the deal value of investment banking transactions, such as underwritings and mergers and acquisitions transactions, which in turn may reduce the fees we earn from these transactions. Also, difficult market conditions have decreased the value of assets under management in our asset management and private client business, which decrease the amount of asset-based fees we receive, and may also affect our ability to attract additional, or retain existing, assets under management within these businesses.

In certain circumstances, market uncertainty or general declines in market or economic activity may affect our brokerage businesses by decreasing levels of overall activity or by decreasing volatility, but at other times market uncertainty and even declining economic activity may result in higher trading volumes or higher spreads or both.

Also, difficult market conditions have decreased the value of certain assets under management in our asset management and private client business, which decrease the amount of asset-based fees we receive, and may also affect our ability to attract additional, or retain existing, assets under management within these businesses.

In addition, as an investment bank focused principally on the growth sectors of the economy, we depend significantly on transactions by venture capital-backed companies for sources of revenues and potential business opportunities. To the extent venture capital investment activities slow due to difficult market conditions or otherwise, our business, financial condition, results of operations and cash flows may be adversely affected.

Our financial performance depends to a great extent on the economic environment in which we operate. ~~Overall,~~While ~~fiscal~~the ~~2008 was characterized by a~~ business environment ~~that~~has ~~was~~generally ~~extremely~~improved ~~adverse for our businesses and those of many of~~since ~~our~~early ~~clients~~2009, ~~and~~ there can be no assurance that these conditions will ~~improve~~continue in ~~the~~ the near or long term. ~~Until~~ ~~they do~~Accordingly, ~~we expect~~ our results of operations will continue to fluctuate beand ~~adversely~~may ~~affected~~not improve until the business environment stabilizes.

We focus principally on specific sectors of the economy, and a deterioration in the business environment in these sectors generally or decline in the market for securities of companies within these sectors could materially adversely affect our businesses.

We focus principally on the technology, healthcare, ~~industrial~~energy ~~growth,~~and ~~consumer,~~alternative energy, mining and ~~mining~~consumer sectors of the economy. Underwriting transactions, strategic advisory engagements and related trading activities in our focus sectors represent a significant portion of our businesses. Therefore, volatility in the ~~business~~ business environment in these sectors generally, or in the market for securities of of companies within these sectors particularly, could substantially affect our financial results and the market value of our common stock. The business environment for companies in these sectors can experience substantial volatility, and our financial results may consequently be subject to significant variations from year to year. The market for securities in each of our focus sectors may also be subject to industry-specific risks. For example, changes in policies by the United States Food and Drug Administration may affect the market for securities of biotechnology and healthcare companies and volatility in the commodities markets may affect the market for securities of energy or mining companies that operate in the affected markets. ~~Underwriting~~Any ~~transactions, strategic~~future ~~advisory~~downturns ~~engagements and related trading activities~~ in our ~~focus~~ focus sectors ~~represent~~could amaterially ~~significant~~adversely ~~portion~~affect of our ~~businesses.~~business ~~This~~and ~~concentration exposes~~results ~~us to the risk~~ of ~~substantial declines in revenues in the event of~~ ~~downturns in these sectors of the economy~~operations.

Any future downturns in our focus sectors could materially adversely affect our business, financial condition, results of operations and cash flows.

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Our investment banking revenues may fluctuate substantially from period to period, which may impair our stock price.

We have experienced, and expect to experience in the future, significant periodic variations in our investment banking revenues which may be attributable in part to the fact that they are typically earned upon the successful completion of a transaction, the timing of which is uncertain and beyond our control. In most cases we receive little or no payment for investment banking engagements that do not result in the successful completion of a transaction. As a result, our business is highly dependent on market conditions as well as the decisions and actions of our clients and interested third parties. For example, a client’s acquisition 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 shareholder approvals, failure to secure necessary financing, adverse market conditions or unexpected financial or other problems in the client’s or counterparty’s business. If the parties fail to complete a transaction on which we are advising or an offering in which we are participating, we will earn little or no revenue from the transaction. This risk may be intensified by our focus on growth companies as the market for securities of many of these companies has experienced significant variations in the number and size of equity offerings. Recently, more companies initiating the process of an initial public offering are simultaneously exploring merger and acquisition opportunities. If we are not engaged as a strategic advisor in any such dual-tracked process, our investment banking revenues would be adversely affected in the event that an initial public offering is not consummated.

In addition, we receive warrants from time to time as compensation for investment banking services which are adjusted to fair value through earnings in accordance with accounting principles generally accepted in the United States of America (“GAAP”) at the end of each quarter. These fair value adjustments could increase the volatility of our quarterly earnings.

As a result, we are unlikely to achieve steady and predictable earnings on a quarterly basis, which could in turn adversely affect our stock price.

Our ability to retain our professionals and recruit additional professionals is critical to the success of our business, and our failure to do so may materially adversely affect our reputation, business, financial condition, results of operations and cash flows.

Our ability to obtain and successfully execute our business depends upon the personal reputation, judgment, business generation capabilities and project execution skills of our senior professionals, particularly Thomas W. Weisel, our founder, Chairman and Chief Executive Officer, Lionel F. Conacher, our President and Chief Operating Officer, and the other members of our Executive Committee. Our senior professionals’ personal reputations and relationships with our clients are a critical element in obtaining and executing client engagements. We encounter intense competition for qualified employees from other companies in the investment banking industry as well as from businesses outside the investment banking industry, such as investment advisory firms, hedge funds, private equity funds and venture capital funds. From time to time, we have experienced losses of investment banking, brokerage, equity research and other professionals, and losses of our key personnel may occur in the future. The departure or other loss of Mr. Weisel, Mr. Conacher, any other member of our Executive Committee or any other senior professional who manages substantial client relationships and possesses substantial experience and expertise, could impair our ability to secure or successfully complete engagements, protect our market share or retain assets under management, each of which, in turn, could materially adversely affect our business, financial condition, results of operations and cash flows. Certain of our investment funds may be subject to key man provisions which, upon the departure or other loss of some or all of the investment professionals managing the fund, may permit the investors in the fund to dissolve the fund or may result in a reduction of the management fees paid with respect to the investment fund.

In connection with our initial public offering and our conversion to corporate form, many of our professionals received substantial amounts of common stock in exchange for their membership interests. Ownership of, and the ability to realize equity value from our common stock, unlike that of membership interests in Thomas Weisel Partners Group LLC (the predecessor to Thomas Weisel Partners Group, Inc.), does not depend upon continued employment and our professionals are not restricted from leaving us by the potential loss of the value of their ownership interests. Similarly, in connection with our acquisition of Westwind, many of the Westwind professionals received substantial amounts of common stock (or shares exchangeable for common stock) in consideration of their ownership interests in Westwind. Ownership of, and the ability to realize equity value from our common stock (or shares exchangeable for our common stock), unlike that of ownership interests in Westwind, does not depend on continued employment and these professionals are not restricted from leaving us by potential loss of the value of their ownership interests. These shares of common stock (and shares exchangeable for common stock) are subject to certain restrictions on transfer and a portion are pledged to secure liquidated damages obligations to us as set forth in the Partners’ Equity Agreement and the Westwind Capital Corporation Shareholders’ Equity Agreement, each of which has been filed as an exhibit to this Annual Report on Form 10-K. However, these agreements will survive for only a limited period and will permit any professional that is party thereto to leave us without losing any of their shares of common stock (or shares exchangeable for common stock) if they comply with these agreements, and, in some cases, compliance with these agreements may also be waived. Consequently, the steps we have taken to encourage the continued service of these individuals after our initial public offering may not be effective.

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IfTable ~~any~~ of ~~our~~ professionals were to join an existing competitor or form a competing company, some of our clients could choose to use the services of that competitor instead of our services. The compensation arrangements, non-competition agreements and lock-up agreements we have entered into with certain of our professionals may not prove effective in preventing them from resigning to join our competitors and the non-competition agreements may not be upheld if we were to seek to enforce our rights under these agreements.Contents

IfRegulatory weand ~~are~~legal ~~unable~~developments related to ~~retain~~auction ~~our~~rate ~~professionals~~securities orcould ~~recruit~~adversely ~~additional~~affect ~~professionals,~~ our ~~reputation,~~ business, financial condition, ~~results of~~ operations and cash ~~flows may be materially adversely affected~~flow.

~~Our~~Since ~~efforts~~February to2008, ~~limit~~the ~~compensation~~auctions ~~and~~through ~~benefits~~which ~~expense~~most ~~may~~auction ~~hinder~~rate ~~our~~securities ~~ability to~~(“ARS”) ~~retain~~are ~~our~~sold ~~professionals~~ and ~~recruit~~interest ~~additional~~rates are determined have failed, resulting in a lack of ~~professionals~~liquidity for these securities.

~~Competitive~~We, ~~pressures~~together ~~may~~with ~~require~~many ~~that~~other ~~our~~firms ~~compensation and benefits expense increase~~ in ~~order~~ tothe ~~retain~~financial ~~our~~services ~~professionals and recruit additional professionals. Further~~industry, ~~new~~have ~~business initiatives and efforts to~~received ~~expand~~inquiries ~~existing~~from ~~businesses~~FINRA ~~generally~~requesting ~~require~~information ~~that~~concerning wepurchases ~~incur~~of ~~compensation~~ARS ~~and benefits~~by ~~expense before realizing associated additional revenues~~our customers. ~~Additionally~~Separately, we have ~~granted~~been ~~equity~~named ~~awards~~ in ~~connection~~FINRA ~~with~~arbitrations ~~our~~filed ~~initial~~by ~~public offering and as part of our compensation and hiring process, the full expense of which is recognized pro rata over a~~ three~~- or four-year vesting period. The~~ ~~future~~retail ~~expense~~customers ~~associated~~who ~~with~~purchased ~~these grants could result in an increase to our compensation and benefits expense in 2009 and subsequent years~~ARS.

AsWe ofdid ~~December 31~~not, ~~2008~~at any time, ~~there~~underwrite ~~was~~ARS ~~(i)~~or $1manage the associated auctions.~~2 million~~ ofWe ~~unrecognized~~acted ~~compensation~~as ~~expense~~agent ~~related~~for toour ~~non-vested~~customers ~~restricted~~when ~~stock~~buying ~~unit~~in ~~awards~~auctions ~~made~~managed inby ~~connection~~underwriters. ~~with~~Nevertheless, some combination of FINRA and/or our ~~initial~~customers ~~public~~could ~~offering~~seek to compel us to purchase ARS from our customers, ~~which~~although iswe ~~expected~~do not have sufficient regulatory capital nor do we have cash or borrowing capacity to berepurchase ~~recognized~~all of ~~over~~the aARS held by those customers. We are and have been exploring potential ~~weighted-average~~solutions ~~period~~for our Private Client Services customers and have supported the efforts of ~~0.1~~industry ~~years~~participants, including particularly the efforts of those underwriters of ARS who have entered into settlements with the SEC and ~~(ii)~~other regulators anthat ~~additional~~contain ~~$38~~“best efforts” commitments to repurchase ARS, to resolve issues relating to the lack of liquidity for ARS.8 ~~million~~We have filed Statements of ~~unrecognized~~Claims ~~compensation~~with ~~expense~~FINRA ~~related~~against tothe ~~non-vested~~various ~~restricted~~investment ~~stock~~banks ~~unit~~who acted as the ~~awards~~underwriters ~~made~~and ~~subsequent~~auction tomanagers of most of the ARS currently held by our customers. ~~initial~~Through ~~public~~this ~~offering~~process, ~~which~~we hope to secure for our customers relief that is ~~expected~~the same as or equivalent to ~~be recognized~~the ~~over~~relief athat ~~weighted-average~~these ~~period~~entities ofhave 2agreed to provide to their own retail customers.~~7 years.~~

On July 23, 2009, the Staff of the Enforcement Department of FINRA advised the Company that the Staff has made a preliminary determination to recommend disciplinary action against the Company relating to certain activities involving ARS. The Staff’s recommendation involves potential violations of FINRA and Municipal Securities Rulemaking Board rules and certain anti-fraud and other provisions of the Federal securities laws in connection with particular transactions involving ARS. A Staff preliminary determination is neither a formal allegation nor is it evidence of wrongdoing.

The Company has responded to the Staff’s preliminary determination and continues to communicate with the Staff in an effort to try to resolve the matter. Based upon its discussions with the Staff, the Company believes that it has reached an understanding in principle, subject to documenting that understanding in a letter of acceptance, waiver and consent acceptable to FINRA, that would resolve all aspects of the investigation of the Company. In light of the terms of that agreement in principle, the Company has established in total a $4.0 million provision for loss contingencies related to the FINRA investigation, all of which would be paid to FINRA as a fine in connection with the resolution of all aspects of the investigation of the Company.

There can be no assurance, however, that the Company’s efforts to resolve these matters will be successful or that a disciplinary proceeding will not be brought. The Company is prepared to contest vigorously any formal disciplinary action that would result in a censure, fine, or other sanction that could be material to its business, financial condition, operations and cash flows. If FINRA were to institute disciplinary action, it is possible that such action could result in a material adverse effect on the Company’s business, financial condition, operations and cash flows. However, the Company is unable to determine at this time the impact of the ultimate resolution of this matter.

Our financial results may fluctuate substantially from period to period, which may impair our stock price.

We have experienced, and expect to experience in the future, significant periodic variations in our revenues and results of operations. These variations may be attributable in part to the fact that our investment banking revenues are typically earned upon the successful completion of a transaction, the timing of which is uncertain and beyond our control. In most cases we receive little or no payment for investment banking engagements that do not result in the successful completion of a transaction. As a result, our business is highly dependent on market conditions as well as the decisions and actions of our clients and interested third parties. For example, a client’s acquisition 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 shareholder approvals, failure to secure necessary financing, adverse market conditions or unexpected financial or other problems in the client’s or counterparty’s business. If the parties fail to complete a transaction on which we are advising or an offering in which we are participating, we will earn little or no revenue from the transaction. This risk may be intensified by our focus on growth companies, as the market for securities of many of these companies has experienced significant variations in the number and size of equity offerings. Recently, more companies initiating the process of an initial public offering are simultaneously exploring merger and acquisition opportunities. If we are not engaged as a strategic advisor in any such dual-tracked process, our investment banking revenues would be adversely affected in the event that an initial public offering is not consummated.

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Our ability to obtain and successfully execute our business depends upon the personal reputation, judgment, business generation capabilities and project execution skills of our senior professionals, particularly Thomas W. Weisel, our founder, Chairman and Chief Executive Officer, Lionel F. Conacher, our President and Chief Operating Officer, and the other members of our Executive Committee. Our senior professionals’ personal reputations and relationships with our clients are a critical element in obtaining and executing client engagements. We encounter intense competition for qualified employees from other companies in the investment banking industry as well as from businesses outside the investment banking industry, such as investment advisory firms, hedge funds, private equity funds and venture capital funds. From time to time, we have experienced losses of investment banking, brokerage, research and other professionals, and losses of our key personnel may occur in the future. The departure or other loss of Mr. Weisel, Mr. Conacher, any other member of our Executive Committee or any other senior professional who manages substantial client relationships and possesses substantial experience and expertise, could impair our ability to secure or successfully complete engagements, protect our market share or retain assets under management, each of which, in turn, could materially adversely affect our business and results of operations. Certain of our investment funds may be subject to key man provisions which, upon the departure or other loss of some or all of the investment professionals managing the fund, may permit the investors in the fund to dissolve the fund or may result in a reduction of the management fees paid with respect to the investment fund.

In connection with our initial public offering and our conversion to corporate form, many of our professionals received substantial amounts of common stock in exchange for their membership interests. Ownership of, and the ability to realize equity value from, our common stock, unlike that of membership interests in Thomas Weisel Partners Group LLC (the predecessor to TWPG), does not depend upon continued employment, and our professionals are not restricted from leaving us by the potential loss of the value of their ownership interests. Similarly, in connection with our acquisition of Westwind, many of the Westwind professionals received substantial amounts of common stock (or shares exchangeable for our common stock) in consideration of their ownership interests in Westwind. Ownership of, and the ability to realize equity value from our common stock (or shares exchangeable for our common stock), unlike that of ownership interests in Westwind, does not depend on continued employment, and these professionals are not restricted from leaving us by potential loss of the value of their ownership interests. These shares of common stock (and shares exchangeable for our common stock) are subject to certain restrictions on transfer, and a portion are pledged to secure liquidated damages obligations to us as set forth in the Partners’ Equity Agreement and the Westwind Capital Corporation Shareholders’ Equity Agreement, each of which has been filed as an exhibit to our Annual Report on Form 10-K for the fiscal year ended December 31, 2008. However, these agreements will survive for only a limited period and will permit any professional that is party thereto to leave us without losing any of their shares of common stock (or shares exchangeable for our common stock) if they comply with these agreements, and, in some cases, compliance with these agreements may also be waived. Consequently, the steps we have taken to encourage the continued service of these individuals after our initial public offering and after the acquisition of Westwind may not be effective.

If any of our professionals were to join an existing competitor or form a competing company, some of our clients could choose to use the services of that competitor instead of our services. The compensation arrangements, non-competition agreements and lock-up agreements we have entered into with certain of our professionals may not prove effective in preventing them from resigning to join our competitors, and the non-competition agreements may not be upheld if we were to seek to enforce our rights under these agreements.

If we are unable to retain our professionals or recruit additional professionals, our reputation, business, results of operations, financial condition and cash flows may be materially adversely affected.

Pricing and other competitive pressures may impair the revenues and profitability of our brokerage business.

We derive a significant portion of our revenues from our brokerage business. Along with other brokerage ~~companies~~firms, we have experienced intense price competition in this business in recent years. In particular, the ability to execute trades electronically and through other alternative trading systems has increased the pressure on trading commissions, volume and spreads and has required us to make investments in our brokerage business in order to compete. We expect this trend toward alternative trading systems to continue. We believe we may experience competitive pressures in these and other areas as some of our competitors seek to obtain market share by competing on the basis of price. In addition, we face pressure from our larger competitors, which may be better able to offer a broader range of complementary products and services to brokerage clients in order to win their trading business. As we are committed to maintaining our comprehensive research coverage to support our brokerage business, we may be required to make substantial investments in our research capabilities. If we are unable to compete effectively with our competitors in these areas, brokerage revenues may decline and our business, financial condition, and results of operations ~~and cash flows~~ may be adversely affected.

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We face strong competition from larger firms.

The brokerage, investment banking and asset management industries are intensely competitive, and we expect them to remain so. We compete on the basis of a number of factors, including client relationships, reputation, the abilities and past performance of our professionals, market focus and the relative quality and price of our services and products. We have experienced intense price competition with respect to our brokerage business, including large block trades, spreads and trading commissions, as well as competition due to the increased use of commission sharing arrangements. ~~Pricing~~Other ~~and other~~ competitive pressures in investment banking, including the trends toward multiple book runners, ~~co-managers~~ and multiple financial advisors handling transactions, have continued and could adversely affect our ~~revenues~~average fee per transaction, even during periods where the volume and number of investment banking transactions are increasing. Competitive factors with respect to our asset management activities include the amount of firm capital we can invest in new products and our ability to increase assets under management, including our ability to attract capital for new investment funds. We believe we may continue to experience competitive pressures in these and other areas in the future ~~as some of our competitors seek to obtain market share by competing on the basis of price~~.

~~We are a relatively small investment bank with approximately 500 employees as of March 13, 2009 and had approximately $51.8 million of excess regulatory capital at December 31, 2008.~~ Many of our competitors in the brokerage, investment banking and asset management industries have a broader range of products and services, greater financial and marketing resources, larger customer bases, greater name recognition, more senior 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, investment banking and asset management industries, to compete for skilled professionals, to finance acquisitions, to fund internal growth and to compete for market share generally.

The scale of our competitors has increased over time as a result of substantial consolidation among companies in the brokerage and investment banking industries. In addition, a number of large commercial banks, insurance companies and other broad-based 10financial services firms have established or acquired underwriting or financial advisory practices and broker-dealers or have merged with other financial institutions. These firms have the ability to offer a wider range of products than we do, which may enhance their competitive position. 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. In particular, the ability to provide financing has become an important advantage for some of our larger competitors and, because we do not provide such financing, we may be unable to compete as effectively for clients in a significant part of the brokerage and investment banking market. If we are unable to compete effectively with our competitors, our business, financial condition and results of operations will be adversely affected.

Notwithstanding the displacement in the financial services industry that occurred in 2008, the scale of our competitors has increased over time as a result of substantial consolidation among companies in the brokerage and investment banking industries. In addition, a number of large commercial banks, insurance companies and other broad-based financial services firms have established or acquired underwriting or financial advisory practices and broker-dealers or have merged with other financial institutions. These firms have the ability to offer a wider range of products than we do, which may enhance their competitive position. 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. In particular, the ability to provide financing has become an important advantage for some of our larger competitors and, because we do not provide such financing, we may be unable to compete as effectively for clients in a significant part of the brokerage and investment banking market.

If we are unable to compete effectively with our competitors, our business, financial condition, results of operations and cash flows will be adversely affected.

We have incurred losses and may incur losses in the future.

We recorded net losses of $203.3 million, including a goodwill impairment charge of $92.6 million, for the year ended December 31, 2008 and $63.7 million for the year ended December 31, 2009, and we may incur additional losses in the future. If we are unable to finance future losses, those losses may have a significant effect on our liquidity as well as our ability to operate.

In addition, we may incur significant expenses in connection with initiating new business activities or in connection with any expansion of our underwriting, brokerage or asset management businesses. We may also engage in strategic acquisitions and investments for which we may incur significant expenses. Accordingly, we will need to increase our revenues at a rate greater than our expenses to achieve and maintain profitability. If our revenues do not increase sufficiently, or even if our revenues increase but we are unable to manage our expenses, we will not achieve and maintain profitability in future periods.

Our capital markets and strategic advisory engagements are singular in nature and do may not ~~generally~~ provide for subsequent engagements.

Our strategy is to take a lifecycle approach in providing investment banking services to our clients, however, our investment banking clients generally retain us on a short-term, engagement-by-engagement basis in connection with specific capital markets or mergers and acquisitions transactions, rather than on a recurring basis under long-term contracts. ~~As these transactions are typically singular in nature and our engagements with these clients may not recur~~Therefore, we must seek out new engagements when our current engagements are successfully completed or are terminated. As a result, high activity levels in any period are not necessarily indicative 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 these transactions, our business, ~~financial~~and ~~condition,~~ results of operations ~~and cash flows~~ would likely be adversely affected.

A significant portion of our brokerage revenues are generated from a relatively small number of institutional clients.

A significant portion of our brokerage revenues are generated from a relatively small number of institutional clients. For example, in 2008 we generated 26% of our brokerage revenue, or approximately 18% of our net revenues, from our ten largest brokerage clients. Similarly, in 2007 we generated 22% of our brokerage revenue, or approximately 9% of our net revenues, from our ten largest brokerage clients. If any of our key clients departs or reduces its business with us and we fail to attract new clients that are capable of generating significant trading volumes, our business, financial condition, results of operations and cash flows will be adversely affected.

Poor investment performance, pricing pressure and other competitive factors may reduce our asset management revenues or result in losses.

~~As part~~Asset ~~of our strategy, we are investing in the expansion of our asset~~ management ~~business.~~ ~~Our~~ revenues ~~from this business~~ are primarily derived from management fees which are based on committed capital and/or assets under management and incentive fees, which are earned if the return of our investment funds exceeds certain threshold returns. Our ability to maintain or increase assets under management is subject to a number of factors, including investors’ perception of our past performance, market or economic conditions, competition from other fund managers and our ability to negotiate terms with major investors.

Investment performance is one of the most important factors in retaining existing clients and competing for new asset management and private equity business, and our historical performance may not be indicative of future results. Poor investment performance and other competitive factors could reduce our revenues and impair our growth in many ways, including:

existing clients may withdraw funds from our asset management business in favor of better performing products;

our incentive fees could decline or be eliminated entirely;

firms with which we have business relationships may terminate these relationships with us;

our capital investments in our investment funds or the seed capital we have committed to new asset management products may diminish in value or may be lost; and

our key employees in the business may depart, whether to join a competitor or otherwise.

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~~Our investment~~Table ~~funds include gains and losses that have not yet been realized through sales or other transactions. These unrealized gains and losses are recognized in our results~~ of operations because these investments are accounted for in accordance with GAAP using the fair value method based on the percentage interest in the underlying partnerships. The underlying investments held by such partnerships are valued based on quoted market prices or estimated fair value if there is no public market. Due to the inherent uncertainty of valuation, fair values of these non-marketable investments may differ from the values that would have been used had a ready market existed for these investments, which differences could be material, and these differences may result in increased volatility in our asset management revenues.Contents

Our investment funds include gains and losses that have not yet been realized through sales or other transactions. These unrealized gains and losses are recognized in our results of operations because these investments are accounted for in accordance with accounting principles generally accepted in the United States of America (“GAAP”) using the fair value method. In most cases, pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment. The inputs used in the determination of fair value require significant management judgment or estimation. Due to the inherent uncertainty of valuation, fair values of these non-marketable investments may differ from the values that would have been used had a ready market existed for these investments, which differences could be material, and these differences may result in increased volatility in our asset management revenues.

To the extent our future investment performance is perceived to be poor in either relative or absolute terms, our asset management revenues will likely be reduced and our ability to raise new funds will likely be impaired. Even when market conditions are generally favorable, our investment performance may be adversely affected by our investment style and the particular investments that we make.

InThe ~~addition,~~contraction ~~over the past several years, the size and number~~ of ~~investment funds, including exchange-traded funds, hedge funds and private equity funds, has continued to increase. This trend came to an end recently with~~ the ~~contraction of the~~ credit markets and the general downturn of the economy, ~~which~~ have ~~been~~ been major contributors to a reduction in the available investor capital pool. This, coupled with the over-allocation of many institutional investors to the alternative asset fund class, could make it increasingly difficult for us to raise capital for new investment funds. Also, difficult market conditions have decreased the value of assets under management in our asset management and private client business, which decreases the amount of asset-based fees we receive, and may also affect our ability to attract additional, or retain existing, assets under management within these businesses.

Increases in capital commitments in our trading, underwriting and other businesses increase the potential for significant losses.

The trend in capital markets is toward larger and more frequent commitments of capital by financial services firms in many of their activities. For example, in order to attract clients, investment banks are increasingly committing capital to purchase large blocks of stock from publicly-traded issuers or their significant shareholders, instead of the more traditional marketed underwriting process, in which marketing is typically completed before an investment bank commits capital to purchase securities for resale. We have participated in this trend and expect to continue to do so. As a result, we will be subject to increased risk as we commit greater amounts of capital to facilitate primarily client-driven business. Furthermore, we may suffer losses even when economic and market conditions are generally favorable for others in the industry.

We may enter into large transactions in which we commit our own capital as part of our trading business. The number and size of these large transactions may materially affect our ~~financial condition,~~ results of operations ~~and cash flows~~ in a given period. We may also incur significant losses from our trading activities due to market fluctuations and volatility from quarter to quarter. ~~We maintain trading positions in the fixed income and equity markets to facilitate client trading activities, and, at times, these positions can be large and concentrated in a single issuer.~~ To the extent that we own assets, ~~(hold~~i.e., ~~long~~have long positions), a downturn in the value of those assets or in those markets ~~could~~ could result in losses. Conversely, to the extent that we have sold assets we do ~~not~~ not own, ~~(hold~~i.e., have short positions), an upturn in those markets could expose us to to potentially unlimited losses as we attempt to cover our short positions by acquiring assets in a rising market.

We also commit capital to investment funds we sponsor and utilize our own funds as seed capital for new products and services in our asset management business. These investments may diminish in value or may be lost entirely if market conditions are not favorable.

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. Failures of financial institutions have often been attributable in large part to insufficient liquidity. Liquidity is of particular importance to our trading business, and perceived liquidity issues may affect our clients’ and counterparties’ willingness to engage in brokerage transactions with us. Our liquidity could be impaired due to circumstances that we may be unable to control, such as a general market disruption or an operational problem that affects our trading clients, third parties or us. Further, our ability to sell assets may be impaired if other market participants are seeking to sell similar assets at the same time.

~~Our asset management business is also subject to liquidity risk due to investments in high~~-~~risk,~~ ~~illiquid assets. We have made substantial principal investments in~~13 our investment funds and may make additional investments in future funds, which often invest in securities that are not publicly traded. There is a significant risk that we may be unable to realize our investment objectives by sale or other disposition at attractive prices or may otherwise be unable to complete any exit strategy. In particular, these risks could arise from 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, regulations, fiscal 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 value of our investments through resale. Even if an investment proves to be profitable, it may be several years or longer before any profits can be realized in cash.-

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WeOur ~~have~~asset ~~several~~management ~~broker-dealer~~business ~~subsidiaries~~is inalso ~~several different jurisdictions which are each~~ subject to ~~the~~liquidity ~~capital~~risk ~~requirements~~due ofto ~~the~~investments ~~relevant governmental and~~in ~~self~~high-~~regulatory~~risk, ~~authorities~~illiquid ~~in those jurisdictions~~assets. ~~For~~We ~~example,~~have ~~Thomas~~made ~~Weisel Partners~~substantial ~~LLC,~~principal ~~our~~investments ~~largest broker-dealer subsidiary, is subject to the net~~in ~~capital~~our ~~requirements~~investment offunds ~~the SEC~~ and ~~various~~may ~~self-regulatory~~make ~~organizations~~additional ~~of which~~investments itin isfuture afunds, ~~member. These requirements typically specify the minimum level of~~which ~~net~~often ~~capital~~invest ain ~~broker-dealer~~securities ~~must~~that ~~maintain~~are ~~and~~not ~~also~~publicly ~~mandate~~traded. ~~that~~There is a significant ~~part~~risk ofthat ~~its~~we ~~assets~~may be ~~kept~~unable into ~~relatively~~realize ~~liquid~~our ~~form.~~investment ~~Any~~objectives ~~failure~~by tosale ~~comply~~or ~~with~~other ~~these~~disposition ~~net~~at ~~capital~~attractive ~~requirements~~prices ~~could~~or ~~impair~~may ~~our~~otherwise ~~ability~~be unable to ~~conduct~~complete ~~our~~any ~~core~~exit ~~business as a brokerage firm~~strategy. ~~Furthermore~~In particular, ~~Thomas~~these ~~Weisel~~risks ~~Partners~~could ~~LLC~~arise ~~and~~from ~~our other~~changes ~~broker-dealer~~in ~~subsidiaries~~the ~~are subject to laws and regulations that~~financial ~~authorize~~condition ~~regulatory bodies to block~~ or ~~reduce~~prospects of the ~~flow~~portfolio ofcompanies ~~funds~~in ~~from~~which ~~them~~investments toare made ~~Thomas~~and ~~Weisel~~from ~~Partners~~changes ~~Group,~~in ~~Inc.~~national Asor ainternational ~~holding~~economic ~~company,~~conditions ~~Thomas~~or ~~Weisel~~changes ~~Partners~~in ~~Group~~laws, ~~Inc.~~regulations, ~~depends~~fiscal onpolicies ~~distributions~~or ~~and~~political ~~other~~conditions ~~payments~~of ~~from~~countries ~~its~~in ~~subsidiaries to~~which ~~fund~~investments ~~all~~are ~~payments on its obligations, including debt obligations~~made. AsEven aif ~~result, regulatory~~an ~~actions~~investment ~~could~~proves ~~impede access~~ to ~~funds~~be ~~that~~profitable, ~~Thomas~~it ~~Weisel~~may ~~Partners~~be ~~Group,~~several ~~Inc.~~years ~~needs~~or tolonger ~~make~~before ~~payments~~any onprofits ~~obligations,~~can ~~including~~be ~~debt obligations~~realized in cash.

We have several broker-dealer subsidiaries in several different jurisdictions which are each subject to the capital requirements of the relevant governmental and self-regulatory authorities in those jurisdictions. For example, TWP, our largest broker-dealer subsidiary, is subject to the net capital requirements of the SEC and various self-regulatory organizations of which it is a member. These requirements typically specify the minimum level of net capital a broker-dealer must maintain. Any failure to comply with these net capital requirements could impair our ability to conduct our core business as a brokerage firm.

TWP and our other broker-dealer subsidiaries are subject to laws and regulations that authorize regulatory bodies to block or reduce the flow of funds from them to TWPG. As a holding company, TWPG depends on distributions and other payments from its subsidiaries to fund payments on its obligations, including debt obligations. As a result, regulatory actions could impede access to funds that TWPG needs to make payments on these obligations.

Our ability to refinance existing notes could affect our liquidity and our ability to conduct our services.

TWPG has two outstanding senior notes with an aggregate principal amount of $23 million, both of which will mature in February 2011. If TWPG is unable to refinance those senior notes before they mature there could be a material negative impact on the cash and capital of TWPG and its subsidiaries that could impair our ability to conduct our business.

Our risk management policies and procedures may leave us exposed to unidentified or unanticipated 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.

Among other risks, we are exposed to the risk that third parties that owe us money, securities or other assets will not perform their obligations. These parties may default on their obligations to us due to bankruptcy, lack of liquidity, operational failure, breach of contract or other reasons. We are also subject to the risk that our rights against third parties may not be enforceable in all circumstances. As a clearing member firm, we finance our customer positions and could be held responsible for the defaults or misconduct of our customers. Although we regularly 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. Also, risk management policies and procedures that we utilize with respect to investing our own funds or committing our capital with respect to investment banking, trading activities or asset management activities may not protect us or mitigate our risks from those activities. If any of the variety of instruments, processes and strategies we utilize to manage our exposure to various types of risk are not effective, we may incur 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 ~~increasingly~~ complex transactions across diverse markets. Our brokerage ~~financial~~operations, 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 offices. The inability of our systems to accommodate anthese ~~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, if we experience difficulties in conforming these systems to changes in law or regulation or changes in our business activities or if there are other shortcomings or failures in our internal processes, people or systems, we could suffer an impairment to our liquidity, financial loss, disruption of our businesses, liability to clients, regulatory intervention or reputational damage.

We also face the risk of operational failure of any of our clearing agents, the exchanges, clearing houses or other financial intermediaries we use to facilitate our securities transactions. Any such failure could adversely affect our ability to effect 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~~ the communities in which we are located. This may include a disruption due to transitioning from one third-party service provider to another or due to a disruption involving electrical, communications, transportation or other services used by us or third parties with which we conduct business, whether due to fire, other natural disaster, power or communications failure, act of terrorism or war or otherwise. Nearly all of our employees in our primary locations, ~~including San Francisco, New York, Toronto, London and Boston,~~ work in close proximity to each other. If a disruption occurs in one ~~location~~ 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 implement contingency plans that depend on communication or travel. Insurance policies to mitigate these risks may not be available or may be more expensive than the perceived benefit. Further, any insurance that we may purchase to mitigate certain of these risks may not cover our loss.

Our operations also rely on ~~the~~ secure electronic processing, storage and transmission of confidential ~~and other~~ information ~~in our computer systems and networks~~. 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 potentially could jeopardize our or our clients’ or counterparties’ confidential and other information processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in our, our clients’, our counterparties’ or third parties’ operations. 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.

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Strategic investments or acquisitions and joint ventures may result in additional risks and uncertainties in our business.

We ~~intend~~may to grow our business through both internal expansion and through strategic investments, acquisitions or joint ventures. To the extent we make strategic investments or acquisitions or enter into joint ventures, we face numerous risks and uncertainties combining or integrating businesses, including integrating relationships with customers, business partners and internal data processing systems. In the case of joint ventures, we are subject to additional risks and uncertainties in that we may be dependent upon, and subject to liability, losses or reputational damage relating to, systems, controls and personnel that are not under our control. In addition, conflicts or disagreements between us and our joint venture partners may negatively impact our businesses.

Any future acquisitions or joint ventures could entail a number of risks, including problems with the effective integration of operations, the inability to maintain key pre-acquisition business relationships, the inability to retain key employees, increased operating costs, exposure to unanticipated liabilities, risks of misconduct by employees not subject to our control, difficulties in realizing projected efficiencies, synergies and cost savings, and exposure to new or unknown liabilities.

Any future growth of our business may require significant resources and/or result in significant unanticipated losses, costs or liabilities. In addition, expansions, acquisitions or joint ventures may require significant managerial attention, which may be diverted from our other operations.

Our international activities are subject to political, economic, legal, operational and other risks that are inherent in operating in a foreign country.

In connection with our business activities in Canada, England and Switzerland, and to the extent that we pursue other business opportunities outside the United States, we will be subject to political, economic, legal, operational and other risks that are inherent in operating in a foreign country, including risks of possible nationalization, expropriation, price controls, capital controls, exchange controls and other restrictive governmental actions, as well as the outbreak of hostilities. In many countries, the laws and regulations applicable to the securities and financial services industries are uncertain and evolving, and it may be difficult for us to determine the exact requirements of local laws in every market. Our inability to remain in compliance with local laws in a particular foreign market could have a significant and negative effect not only on our businesses in that market but also on our reputation generally. We are also subject to the enhanced risk that transactions we structure might not be legally enforceable in the relevant jurisdictions.

AsWe weare ~~expand~~exposed ~~our international operations, we will increase our exposure~~ to foreign currency risk.

As a result of ~~the~~our ~~expanded~~ international operations, we hold assets, incur liabilities, earn revenues and pay expenses in foreign currencies, including the Canadian dollar, the Swiss franc and the pound sterling. Because our financial statements will continue to be presented in U.S. dollars, we will be required to translate assets, liabilities, income and expenses that relate to our international operations and that are denominated in foreign currencies into U.S. dollars at the then-applicable exchange rates. ~~Consequently~~Additionally, ~~increases and~~we ~~decreases~~do innot ~~the~~enter ~~value~~into ofcontracts to ~~the~~hedge ~~U.S. dollar~~against ~~versus the various~~ foreign ~~currencies~~ ~~will~~exchange ~~affect~~variability ~~the~~inherent ~~value of these items~~ in ~~our financial statements,~~transactions ~~even~~denominated ~~if their value has not changed~~ in ~~such~~ foreign currencies. As a result, ~~our~~increases and decreases in ~~financial~~the ~~results~~value ~~could~~of bethe ~~more~~U.S. ~~volatile~~dollar asversus athe ~~result~~various offoreign ~~our~~currencies ~~international~~will increase ~~operations~~volatility in our financial results.

~~Evaluation of~~- ~~our prospects may be more difficult in light of our limited operating~~15 ~~history.~~-

~~Our company~~Table was formed in 1998 and we have a limited operating history upon which to evaluate our business and prospects. In addition, we acquired Westwind in 2008, which was formed in 2002 and which also has a limited operating history. As a relatively young enterprise, we are subject to the risks and uncertainties that face a company during its formative development. Some of these risks and uncertainties relate to our ability to attract and retain clients on a cost-effective basis, expand and enhance our service offerings, raise additional capital and respond to competitive market conditions. We may not be able to address these risks adequately, and our failure to do so may adversely affect our business and the value of an investment in our common stock.Contents

Despite the completion of the Thomas Weisel Partners and Westwind integration, the combined company may not realize synergies, efficiencies or cost savings.

Prior to the completion of the acquisition of Westwind in 2008, Thomas Weisel Partners and Westwind operated independently. Despite the completion of the integration of Westwind and Thomas Weisel Partners, there can be no assurance that the combined company will realize any synergies, efficiencies or cost savings or that any of these benefits will be achieved within a specific time frame.

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We could be subject to unknown liabilities of Westwind, which could cause us to incur substantial financial obligations and harm our business.

Although the former Westwind shareholders are required to indemnify us for certain breaches of representations and warranties made in the arrangement agreement governing our acquisition of Westwind, the shareholders’ obligation is subject to monetary and time limitations. In addition, if we are entitled to indemnification by the former Westwind shareholders, it may be costly to enforce those rights and/or we may not be successful in collecting amounts we are entitled to. If there are liabilities of Westwind of which we are not aware, we may have little or no recourse against the former Westwind shareholders and may be obligated to bear the costs of those liabilities. In addition, many of the former Westwind shareholders have continued as employees of the combined company following closing of the transaction. Accordingly, if an indemnifiable claim does arise, we may need to weigh the need to be indemnified for that claim against the potential employee distraction or damage to employee relations that may result if we were to seek recourse for that claim.

As a result of the acquisition of Westwind, we are subject to additional risks relating to Westwind’s business.

As a result of the acquisition of Westwind, we are subject to the risks relating to Westwind’s business. Because the risks and uncertainties facing us may differ from those that faced Westwind, the market price, financial condition, results of operations and cash flows of the combined company may be affected by risks and uncertainties different from those affecting us prior to the acquisition. These risks include the following:

· Westwind’s focus on specific sectors of the economy – Westwind’s investment banking business focused principally on the mining and energy sectors of the economy. As a result of the acquisition of Westwind, the combined company’s business has more exposure to these sectors than Thomas Weisel Partners’ business had prior to the transaction. Volatility in the business environment in these sectors generally, including the related commodities markets, or in the market for securities of companies within these sectors, could substantially affect our business, financial condition, results of operations and cash flows.

· Westwind’s focus on Canada – Westwind generated a substantial majority of its revenues from Canadian-based clients. As a result, Westwind’s business and results of operations was highly dependent on the strength of the Canadian economy. As a result of the acquisition of Westwind, we expect that a significant portion of the combined company’s business will be derived from Canadian-based clients. Accordingly, our business will be affected by changes in the Canadian economy and investment activity in Canada. To the extent that we experience a decline in business in Canada, due to unfavorable conditions in the Canadian economy or otherwise, we may not be able to offset these declines by increases in other aspects of our business and our financial results could suffer.

Risks Related to Our Industry

Risks associated with regulatory impact on capital markets.

Highly-publicized financial scandals in recent years have led to investor concerns over the integrity of the U.S. financial markets, and have prompted Congress, the SEC and FINRA to significantly expand corporate governance and public disclosure requirements. To the extent that private companies, in order to avoid becoming subject to these new requirements, decide to forgo initial public offerings, our equity underwriting business may be adversely affected. In addition, provisions of the Sarbanes-Oxley Act of 2002 and the corporate governance rules imposed by self-regulatory organizations have diverted many companies’ attention away from capital market transactions, including securities offerings and acquisition and disposition transactions. In particular, companies that are or are planning to be public are incurring significant expenses in complying with the SEC and accounting standards relating to internal control over financial reporting, and companies that disclose material weaknesses in such controls under the new standards may have greater difficulty accessing the capital markets. These factors, in addition to adopted or proposed accounting and disclosure changes or changes in laws and regulations governing brokerage and research activities, may have an adverse effect on our business.

Financial services firms have been subject to increased scrutiny over the last several years, increasing the risk of financial liability and reputational harm resulting from adverse regulatory actions.

Firms in the financial services industry have been operating in a difficult regulatory environment. The U.S. financial services industry has experienced increased scrutiny from a variety of regulators, including the SEC, FINRA and state attorneys general. Penalties and fines sought by regulatory authorities have increased substantially over the last several years. This regulatory and enforcement 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 the SEC, other United States or foreign governmental regulatory authorities or self-regulatory organizations that supervise the financial markets. Among other things, we could be fined, prohibited from engaging in some of our business activities or subject to limitations or conditions on our business activities. 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, 15financial services firms are subject to numerous conflicts of interest -or perceived conflicts. 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 or limit actual or perceived conflicts may also result in increased costs. Failure to adhere to these policies and procedures may result in regulatory sanctions or client litigation.

In addition, financial services firms are subject to numerous conflicts of interest or perceived conflicts. 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 or limit actual or perceived 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.

Our exposure to legal liability is significant, and 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.

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. These risks include potential liability under securities or other laws for materially false or misleading statements made in connection with securities offerings and other transactions, potential liability for “fairness opinions” and other advice we provide to participants in strategic transactions and disputes over the terms and conditions of complex trading arrangements. We are also subject to claims arising from disputes with employees for alleged discrimination or harassment, among other things. These risks often may be difficult to assess or quantify, and their existence and magnitude often remain unknown for substantial periods of time.

Our role as advisor to our clients on important underwriting or mergers and acquisitions 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 shareholders of our clients who could bring securities class actions against us. Our investment banking engagements typically include broad indemnities from our clients and provisions to limit our exposure to legal claims relating to our services, but these provisions may not protect us or may not be enforceable in all cases. For example, an indemnity from a client that subsequently is placed into bankruptcy is likely to be of little value to us in limiting our exposure to claims relating to that client. 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~~ adverse judgments. Substantial legal liability or significant regulatory action ~~against~~ against us could have a material adverse effect on our ~~financial condition,~~ results of operations ~~and cash flows~~ or cause significant reputational harm to us, which could seriously harm our business and prospects.

Regulatory and legal developments related to auction rate securities could adversely affect our business.

Since February 2008, the auctions through which most auction rate securities are sold and interest rates are determined have failed, resulting in a lack of liquidity for these securities. The failure of those auctions was a direct result of decisions without warning by the broker-dealers that underwrote those auction rate securities and managed the associated auctions not to commit the capital needed to maintain those auctions.

We, together with many other firms in the financial services industry, have received inquiries from FINRA requesting information concerning purchases through the Company of auction rate securities by Private Client Services customers. Separately, we have been named in a FINRA arbitration filed by a Private Client Services retail customer who purchased auction rate securities.

The Company did not, at any time, underwrite auction rate securities or manage the associated auctions. In connection with such auctions, the Company merely served as agent for its Private Client Services customers when buying in auctions managed by underwriters. Nevertheless, some combination of FINRA and/or the Company’s Private Client Services customers could seek to compel the Company to purchase auction rate securities from the Company’s customers, and the Company does not have sufficient regulatory capital and cash or borrowing capacity to repurchase all of the auction rate securities held by those customers. The Company is and has been exploring a range of potential solutions for its Private Client Services customers and strongly supports the efforts of industry participants, including particularly the efforts of those underwriters of auction rate securities who have entered into settlements with the SEC and other regulators that contain “best efforts” commitments to repurchase auction rate securities, to resolve issues relating to the lack of liquidity for auction rate securities.

While the Company’s review of the need for any loss contingency reserve in accordance with Statement of Financial Accounting Standards No. 5, Accounting for Contingencies, has led the Company to conclude that, based upon currently available information and consultation with its counsel, the Company does not currently need to establish a provision for loss related to auction rate securities held by retail clients, the Company is not able to predict with certainty the outcome of auction securities related matters and there can be no assurance that those matters will not have a material adverse effect on the Company’s results of operations in any future period, and a significant judgment or settlement could have a material adverse impact on the Company’s consolidated statements of financial condition, operations and cash flows.

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, and we run the risk that employee misconduct could occur at our company. For example, misconduct by employees could involve the improper use or disclosure of confidential information, which 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 effective in all cases, and we may suffer significant reputational harm for any misconduct by our employees.

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While our review of loss contingencies has led us to conclude that, based upon currently available information, we have established an adequate provision for loss related to these matters, we are not able to predict with certainty the outcome of such matters, and there can be no assurance that those matters will not have a material adverse effect on our results of operations in any future period, and a significant judgment or settlement could have a material adverse impact on our results of operations, consolidated statements of financial condition and cash flows.

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, and we run the risk that employee misconduct could occur at our company. For example, misconduct by employees could involve the improper use or disclosure of confidential information, which 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 effective in all cases, and we may suffer significant reputational harm for any misconduct by our employees.

Risks Related to Ownership of Our Common Stock

Taken together, a significant percentage of our outstanding common stock and shares exchangeable for common stock is owned or controlled by our senior professionals and their interests may differ from those of other shareholders.

Our Chief Executive Officer, Thomas W. Weisel, beneficially owns approximately 8% of our common stock outstanding, and our President and Chief Operating Officer, Lionel F. Conacher, beneficially owns approximately 5% of our common stock outstanding (including shares exchangeable for common stock). Mr. Weisel and Mr. Conacher, together with the other members of our Executive Committee, collectively own approximately 18% of our common stock outstanding (including shares exchangeable for common stock), and together with our current employees own a significant percentage of our common stock outstanding. As a result of these shareholdings, our current employees are effectively able to elect our entire board of directors, control our management and policies, in general, determine without the consent of the other stockholders the outcome of any corporate transaction or other matter submitted to the shareholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets. Our senior professionals are effectively able to prevent or cause a change in control of us. These actions may be taken even if other shareholders oppose them.

Provisions of our organizational documents may discourage an acquisition of us.

Our organizational documents contain provisions that could impede the removal of directors and may discourage a third party from making a proposal to acquire us. For example, our board of directors may, without the consent of shareholders, issue preferred stock with greater voting rights than our common stock. If a change of control or change in management that shareholders might otherwise consider to be favorable is prevented or delayed, the market price of our common stock could decline.

Future sales of our common stock could cause our stock price to decline and the trading volume of our common stock may be volatile.

Sales of substantial amounts of common stock by our senior professionals, employees and other shareholders, or the possibility of such sales, may adversely affect the price of our common stock, may impede our ability to raise capital through the issuance of equity securities, and may cause trading volume in our common stock to be volatile.

As of December 31, 2008, there are 30,788,586 shares of our common stock outstanding, including 6,639,478 exchangeable shares of TWP Acquisition Company (Canada) Inc., one of our wholly-owned subsidiaries. Each exchangeable share is exchangeable at any time into common stock of the registrant on a one-for-one basis, entitles the holder to dividend and other rights economically equivalent to those of the common stock, and through a voting trust, votes at our stockholder meetings.

Of these shares, up to approximately 13.7 million shares are freely transferable without restriction or further registration under the Securities Act of 1933. Subject to certain exceptions, the remaining approximately 17.1 million shares of common stock and shares exchangeable for common stock will be available for future sale upon the expiration or the waiver of transfer restrictions or in accordance with registration rights. In addition, since we became a public company, we have granted (and will continue to grant in the future) equity awards to our employees. Upon vesting and delivery of the shares of common stock underlying these awards many employees may decide to sell all or a portion of their shares in the public markets and these sales may happen at or around the same time due to similar vesting dates or due to the limited periods of time (trading windows) when we allow our employees to trade our common stock. These factors may affect both the price of our common stock and the volume of shares traded. For further information refer to the “Securities Authorized for Issuance under Equity Compensation Plans” within Item 5 – “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” of this Annual Report on Form 10-K.

The market price of our common stock may decline.

The price of our common stock may fluctuate ~~widely~~greatly, depending upon many factors, ~~which may~~ ~~include,~~including ~~among others, actual or anticipated variations in quarterly operating results, changes in financial estimates by us or by any securities analysts who might cover~~ our ~~stock,~~perceived orprospects ~~our~~and ~~failure~~those toof ~~meet~~ the ~~estimates~~financial ~~made~~services ~~by securities~~industry ~~analysts,~~in ~~announcements by us or our competitors or significant acquisitions~~general, ~~strategic~~ ~~partnerships~~differences orbetween ~~divestitures, announcements by~~ our ~~competitors~~actual ~~of their~~ financial orand operating results, ~~to the extent~~ and those ~~announcements~~expected ~~are perceived~~ by investors, tochanges bein ~~indicative~~general ofeconomic ~~our future financial results~~ or market conditions, ~~additions or departures of key personnel, sales of our common~~ ~~stock,~~broad ~~including~~market ~~sales~~fluctuations ofand ~~our~~failure ~~common~~to ~~stock~~be bycovered ~~our directors, officers and employees or~~ by ~~our~~securities ~~other principal stockholders, and cyclical changes in the~~analysts. ~~market~~Declines in the ~~growth~~price ~~sectors~~ of ~~the economy. For example, between February 2, 2006 and December 31, 2008~~ our stock ~~price~~may onadversely ~~the~~affect ~~Nasdaq~~our ~~stock market~~ability ~~has~~to ~~fluctuated between a low of $2.65 per share~~ recruit and aretain ~~high~~key ~~of $24.35 per~~employees, ~~share.~~including ~~The closing price of~~ our ~~common~~senior ~~stock on December 31, 2008 was $4~~professionals.~~72 per share.~~

~~Declines~~Factors inthat ~~the~~could ~~price~~cause offluctuations in our stock price may ~~adversely~~include, ~~affect~~among others, actual or anticipated variations in quarterly operating results, changes in financial estimates by us or by any securities analysts who might cover our stock, ~~ability~~our failure to ~~recruit~~meet ~~and~~the ~~retain~~estimates made by securities analysts, announcements by us or our competitors of significant acquisitions, strategic partnerships or divestitures, announcements by our competitors of their financial or operating results, to the extent those announcements are perceived by investors to be indicative of our future financial results or market conditions, additions or departures of key ~~employees~~personnel, sales of our common stock, including sales of our ~~senior~~common ~~professionals~~stock by our directors, officers and employees or by our other principal stockholders, and cyclical changes in the market in the growth sectors of the economy.

Taken together, a significant percentage of our outstanding common stock and exchangeable shares is owned or controlled by our senior professionals and other employees, and their interests may differ from those of other shareholders.

Our Chief Executive Officer, Thomas W. Weisel, beneficially owns approximately 8% of our common stock, and our President and Chief Operating Officer, Lionel F. Conacher, beneficially owns approximately 4% of our common stock (including exchangeable shares). Mr. Weisel and Mr. Conacher, together with the other members of our Executive Committee, collectively own approximately 16% of our common stock (including exchangeable shares) and together with our current employees own a significant percentage of our common stock outstanding. As a result of these shareholdings, our current employees have significant influence over the outcome of elections of our board of directors, control over our management and policies, in general, and influence the outcome of any corporate transaction or other matter submitted to the shareholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets, and their interests may differ from those of other shareholders.

Future sales of our common stock may cause the price of our common stock to decline or affect the trading volume of our common stock.

In connection with our initial public offering and our acquisition of Westwind, many of our employees received substantial amounts of common stock or exchangeable shares, which are currently subject to transfer restrictions. Once those restrictions lapse, future sales of those shares may cause the price of our common stock to decline or affect the trading volume of our common stock.

Approximately 14,630,000 outstanding shares of common stock or exchangeable shares are currently restricted and not freely transferable. Those shares of common stock and exchangeable shares will no longer be restricted upon the expiration of the transfer restrictions contained in the relevant shareholders’ equity agreements, which will occur on or before February 2011. If those employees decide to sell all or a portion of their shares in the public markets, and those sales happen at or around the same time due to the limited periods of time (trading windows) when we allow our employees to trade our common stock, the price of our common stock may decline and the trading volume of our common stock may be affected.

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TWPG has granted a substantial number of equity awards to our employees. Future sales of our common stock associated with those equity awards may cause the price of our common stock price to decline or affect the trading volume of our common stock.

We have granted and will continue to grant in the future equity awards to our employees. Upon vesting and delivery of the shares of common stock underlying those awards, many employees may decide to sell all or a portion of their shares in the public markets, and those sales may happen at or around the same time due to similar vesting dates or due to the limited periods of time (trading windows) when we allow our employees to trade our common stock. Those factors may cause the price of our common stock to decline or affect the trading volume of our common stock. As of December 31, 2009 there were 9,172,635 restricted stock units outstanding.

Your interest in our firm may be diluted due to issuance of additional shares of common stock.

Owners of our common stock may experience dilution of their equity investment as a result of our issuance of additional shares of common stock or securities that are convertible into, or exercisable for, shares of our common stock. We may issue additional shares of common stock in connection with any merger or acquisition we undertake, in future public or private offerings to raise additional capital or in satisfaction of currently outstanding restricted stock units, warrants and options. For example, on January 2, 2008, we issued a total of 7,009,112 shares of our common stock (and shares exchangeable for common stock) to former shareholders of Westwind in connection with our acquisition of Westwind. We also have granted and will continue to grant equity awards under our Equity Incentive Plan as part of our compensation and hiring processes, and when these awards are vested or become deliverable we will issue additional shares of common stock in satisfaction thereof. ~~As of December 31, 2008, there were 7,316,712 restricted stock units outstanding.~~

For further information refer to the “Securities Authorized for Issuance under Equity Compensation Plans” within Item 5 –— “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” of this Annual Report on Form 10-K.

We may be required to make substantial payments under indemnification agreements.

In connection with our initial public offering and our conversion to corporate form, we entered into agreements that provide for the indemnification of our members, partners, directors, officers and certain other persons authorized to act on our behalf against certain losses that may arise out of our initial public offering or the related reorganization transactions, certain liabilities of our partners relating to the time they were members of Thomas Weisel Partners Group LLC, and certain tax liabilities of our former members that may arise in respect of periods prior to our initial public offering when we operated as a limited liability company.

In addition, in connection with acquisition transactions, such as our acquisition of Westwind, and in connection with the ordinary conduct of our business, such as in our relationship with our clearing brokers, we have provided and will continue to provide indemnities to counterparties. We may be required to make payments under these indemnification agreements, which could adversely affect our financial condition.

We may be required to make payments under these indemnification agreements, which could adversely affect our financial condition.

We do not expect to pay any cash dividends in the foreseeable future.

We intend to retain any future earnings to fund the operation and expansion of our business, and, therefore, we do not anticipate paying cash dividends in the foreseeable future. Accordingly, our shareholders must rely on sales of their shares of common stock after price appreciation, which may never occur, as the ~~only~~primary way to realize any future gains on an investment in our common stock. Investors seeking cash dividends should not purchase our common stock.

Provisions of our organizational documents may discourage an acquisition of us.

Our organizational documents contain provisions that will impede the removal of directors and may discourage a third party from making a proposal to acquire us. For example, our board of directors may, without the consent of shareholders, issue preferred stock with greater voting rights than our common stock. If a change of control or change in management that shareholders might otherwise consider to be favorable is prevented or delayed, the market price of our common stock could decline.

Item 1B. Unresolved Staff Comments

~~Not~~There are ~~applicable~~no unresolved written comments that were received from the SEC staff 180 days or more before the end of our 2009 fiscal year relating to our periodic or current reports filed under the Securities Exchange Act of 1934.

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Item 2. Properties

Our principal operating locations are as follows, all of which are leased facilities:

Location	Lease Expiration Year(s)	~~Lease Expiration Year(s)~~	Approximate Size (in square feet)	~~Approximate Size (in square feet)~~	~~Area Subleased to Others (in square feet)~~	Area Subleased to Others (in square feet)	~~Facility Character and Principal Business Use~~	Facility Character and Principal Business Use
San Francisco, California	2010, 2012 and 2015	~~2010, 2012 and 2015~~		140,400	~~18,000~~		~~Corporate Headquarters~~58, ~~Brokerage, Research, Investment Banking, Asset Management~~400	Corporate Headquarters, Brokerage, Research, Investment Banking, Asset Management
New York, New York	2010 and 2016	~~2010 and 2016~~		7555,500	~~20,400~~		~~Brokerage, Research, Investment Banking, Asset Management~~—	Brokerage, Research, Investment Banking, Asset Management
Boston, Massachusetts	2010	~~2010~~		19,100	~~3,800~~		~~Brokerage~~3, ~~Research, Investment Banking, Asset Management~~800	Brokerage, Research, Investment Banking, Asset Management
Toronto, Canada	2019	~~2019~~		20,000	—		~~Brokerage, Research, Investment Banking~~—	Brokerage, Research, Investment Banking
Calgary, Canada	2013	~~2013~~		8,100	~~2,600~~		~~Brokerage~~2, ~~Research, Investment Banking~~600	Brokerage, Research, Investment Banking
East Palo Alto, California		2009		6,300	—		Asset Management, Research
Zurich, Switzerland	2011			5,400			—	Brokerage
Zurich, Switzerland		2011		5,400	—		Brokerage
Portland, Oregon	2010			5,300			—	Asset Management
Portland, Oregon		2009		5,300	—		Asset Management
London, U.K.	2010			4,200			—	Brokerage, Investment Banking, Research
London, U.K.		2014		4,200	—		Brokerage, Investment Banking, Research
Denver, Colorado	2011			3,300			—	Brokerage, Research
Denver, Colorado		2011		3,300	—		Research
Chicago, Illinois	2010			2,000			—	Brokerage, Research
Chicago, Illinois		2010		2,000	—		Brokerage

In addition, we lease approximately 19,100 square feet of office space in Menlo Park, California, however all such office space has been sublet under separate agreements. These sublease agreements are for the full term of our ~~original~~ original lease, both of which expire in 2010.

Item 3. Legal Proceedings

A discussion of Legal Proceedings is included in Note 16 – Commitments, Guarantees and Contingencies to the consolidated financial statements included in Item 15 of this Annual Report ofon Form 10-K.

Item 4. Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of security holders during the fourth quarter of our year ended December 31, ~~2008~~2009.

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Directors and Executive Officers of the Registrant

Set forth below is information concerning our board of directors and executive officers. Each director will hold office until our next annual meeting of shareholders to be held on May 20, ~~2009~~2010, and until a successor has been duly elected and qualified. Executive officers are appointed by and serve at the discretion of our board of directors.

Name	Age		~~Title~~	Title
Thomas W. Weisel	68	69	~~Director, Chairman and Chief Executive Officer~~	Director, Chairman and Chief Executive Officer
Thomas I.A. Allen	68		Director
Matthew R. Barger		52		Lead Director
Matthew R. Barger	51		Director
Thomas I.A. Allen		69		Director
Michael W. Brown	63	64	~~Director~~	Director
B. Kipling Hagopian	67		Director
Robert E. Grady		52		Director
Alton F. Irby III	68		Director
B. Kipling Hagopian		68		Director
Timothy A. Koogle	57		Director
Alton F. Irby III		69		Director
Michael G. McCaffery	55		Director
Timothy A. Koogle		58		Director
Lionel F. Conacher	46	47	~~President and Chief Operating Officer~~	President and Chief Operating Officer
Shaugn S. Stanley	49	50	~~Chief Financial Officer~~	Chief Administrative Officer
Tom Carbeau	36		Head of Institutional Sales
Ryan Stroub		41		Chief Financial Officer
Mark P. Fisher	39		General Counsel
Tom Carbeau		37		Head of Institutional Sales
Keith Gay	50		Head of Research
Mark P. Fisher		40		General Counsel
William L. McLeod	43		Co-Head of Investment Banking
Keith Gay		51		Head of Research
Brad Raymond	43		Co-Head of Investment Banking
Keith Harris		55		President and Chief Financial Officer of Thomas Weisel Partners Canada Inc.
Paul C. Slivon	50		Chairman of Wealth Management
William L. McLeod		44		Co-Head of Investment Banking
Anthony V. Stais	43		Head of Trading
Brad Raymond		44		Co-Head of Investment Banking
Paul C. Slivon		51		Chairman of Wealth Management
Anthony V. Stais		44		Head of Trading

A brief biography of each director and executive officer follows:

Thomas W. Weisel has served as our Chairman and Chief Executive Officer since October 1998 and has been a director of Thomas Weisel Partners Group, Inc. since October 2005. Prior to founding Thomas Weisel Partners, from 1978 until September 1998, Mr. Weisel ~~was~~ was Chairman and Chief Executive Officer of Montgomery Securities, an investment banking and financial services firm. Mr. Weisel also founded and served as President of Montgomery Sports, which was also known as Tailwind Sports. Mr. Weisel served as a director on the NASDAQ Stock Market Board of Directors from 2002 to 2006. Mr. Weisel received a bachelor of arts degree from Stanford University and an M.B.A. from Harvard Business School.

~~Thomas~~Matthew IR.A. ~~Allen~~Barger has ~~been~~served as our Lead Director since September 2009 and a director of Thomas Weisel Partners Group, Inc. since February ~~2008~~2007. Mr. ~~Allen was~~Barger ~~formerly~~is currently a ~~Partner~~Senior Advisor ~~and of Counsel~~ to ~~Ogilvy~~Hellman ~~Renault~~& ~~LLP~~Friedman LLC, ana ~~international law~~private ~~firm~~equity ~~based in Canada~~firm. Mr. ~~Allen~~Barger ~~served as a director of Westwind~~joined ~~Capital~~Hellman ~~Corporation,~~& ~~prior~~Friedman ~~to its acquisition by Thomas Weisel Partners~~ in ~~January~~ ~~2008. Mr.~~1984 ~~Allen~~and ~~also~~has ~~serves~~held asseveral apositions ~~director~~during ofhis ~~Mundoro Mining Inc.~~tenure, ~~Terra~~including ~~Nova~~that ~~Minerals~~of ~~Inc.,~~Managing YMGeneral ~~BioSciences Inc~~Partner. ~~and~~Prior ~~Middlefield~~to ~~Bancorp~~joining Hellman & ~~Limited.~~ Friedman, Mr. ~~Allen~~Barger iswas aan ~~Fellow~~associate ofin the ~~Chartered~~Corporate ~~Institute~~Finance ofDepartment ~~Arbitrators~~of ~~(London,~~Lehman ~~England)~~Brothers Kuhn Loeb. HeMr. isBarger ~~also~~serves ~~past~~as ~~Chairman~~a director of ~~the~~Hall ~~Accounting Standards~~Capital ~~Oversight~~Partners, ~~Council~~an ofinvestment ~~Canada~~advisory firm, and aalso ~~former~~serves ~~member~~as ofan ~~the~~ Advisory Board ~~of the~~ ~~Office~~member of ~~the~~Artisan ~~Superintendent~~Partners ~~of Financial Institutions of Canada~~ and ~~past Chairman~~ of ~~the~~Mondrian ~~Corporate Finance Committee of the~~ Investment ~~Dealers Association of Canada (IDA)~~Partners, aboth ~~former public director of the IDA, and a former~~investment ~~member~~advisory ~~of the IDA’s Executive Committee~~firms. Mr. ~~Allen~~Barger holds a bachelor’s ~~of arts~~ degree from Yale University and an LL M.B,.A. ~~both~~ from the ~~University~~Stanford Graduate School of ~~Western Ontario~~Business.

~~Matthew~~Thomas RI.A. ~~Barger~~Allen has been a director of Thomas Weisel Partners Group, Inc. since February ~~2007~~ 2008. Mr. ~~Barger~~Allen was isa ~~currently~~Partner aof, ~~Senior~~and ~~Advisor~~is of Counsel to, ~~Hellman~~Ogilvy ~~& Friedman~~Renault ~~LLC~~LLP, aan ~~private~~international ~~equity~~ law firm based in Canada. Mr. ~~Barger~~Allen ~~joined~~served ~~Hellman~~as &a director of Westwind Capital ~~Friedman~~Corporation, inprior ~~1984~~to ~~and~~its ~~has~~acquisition ~~held~~by ~~several~~Thomas ~~positions~~Weisel ~~during~~Partners ~~his~~in ~~tenure,~~January ~~including~~2008. ~~that~~Mr. Allen also serves as a director of ~~Managing~~Mundoro ~~General~~Capital ~~Partner~~Inc. ~~Prior~~, toTerra ~~joining~~Nova ~~Hellman~~Minerals ~~& Friedman~~Inc., MrYM BioSciences Inc. ~~Barger~~and ~~was~~Middlefield anBancorp ~~associate~~Limited. inMr. ~~the~~Allen ~~Corporate~~is ~~Finance~~a ~~Department~~Fellow of ~~Lehman~~the ~~Brothers~~Chartered ~~Kuhn~~Institute ~~Loeb. Mr.~~of ~~Barger~~Arbitrators ~~serves~~(London, asEngland). aHe ~~Director~~is ofalso ~~Hall~~past ~~Capital~~Chairman ~~Partners,~~of anthe ~~investment~~Accounting ~~advisory~~Standards ~~firm,~~Oversight Council of Canada and asa anformer member of the Advisory Board ~~member~~ of ~~Artisan~~the ~~Partners~~Office of the Superintendent of Financial Institutions of Canada and past Chairman of ~~Mondrian~~the Corporate Finance Committee of the Investment ~~Partners~~Dealers Association of Canada (IDA), ~~both~~a ~~investment~~former public director of ~~advisory~~the ~~firms~~IDA, and a former member of the IDA’s Executive Committee. Mr. ~~Barger~~Allen holds a bachelor’s ~~degree~~of ~~from~~arts ~~Yale University~~degree and an MLL.B~~.A.~~, both from the ~~Stanford~~University ~~Graduate School~~ of Western ~~Business~~Ontario.

Michael W. Brown has been a director of Thomas Weisel Partners Group, Inc. since February 2007. Mr. Brown was an officer of Microsoft Corporation from December 1989 through July 1997, serving as Vice President and Chief Financial Officer from August 1994 to July 1997, as Vice President - Finance from April 1993 to August 1994 and as Treasurer from January 1990 to April 1993. Prior to joining Microsoft, Mr. Brown spent 18 years with Deloitte & Touche LLP in various positions. Mr. Brown is also a Director of EMC Corporation, a provider of information management systems, software and services, a Director of VMware, Inc., a provider of computer virtualization solutions, and a Director of Administaff, Inc., a professional employer organization providing services such as payroll and benefits administration. Mr. Brown is also a director of several private companies. Mr. Brown is a past Chairman of the Nasdaq Stock Market Board of Directors and a past governor of the National Association of Securities. Mr. Brown holds a bachelor of science degree in economics from the University of Washington in Seattle.

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~~B. Kipling~~Table ~~Hagopian has been a director~~ of Thomas Weisel Partners Group, Inc. since January 2006. Mr. Hagopian was a founder of Brentwood Associates, a venture capital investment company, and was a general partner of all of the funds started by Brentwood Associates from inception in 1972 until 1996. He has been a Special Limited Partner of each of the five Brentwood funds started since 1989, and he is a Special Advisory Partner to Redpoint Ventures I, which is a successor to Brentwood Associates’ information technology funds. Mr. Hagopian is also Chairman and President of Segue Productions, a feature film production company, and he is a Managing Partner of Apple Oaks Partners LLC, a private investment company which manages his own capital and the capital of one other individual. Mr. Hagopian serves as Chairman of the board of directors of Maxim Integrated Products, a semiconductor company. Mr. Hagopian holds a bachelor of arts degree and an M.B.A., both from the University of California, Los Angeles.Contents

~~Alton~~Michael FW. ~~Irby~~Brown ~~III~~ has been a director of Thomas Weisel Partners, Group, Inc. since February ~~2008~~2007. Mr. ~~Irby is~~Brown awas ~~founding~~an ~~partner~~officer of ~~London~~Microsoft ~~Bay~~Corporation ~~Capital~~from ~~LLC,~~December a1989 ~~privately~~through ~~held~~July ~~investment firm~~1997, ~~which~~serving ~~was~~as ~~founded~~Vice inPresident ~~May 2006~~ and heChief ~~was~~Financial ~~founding~~Officer ~~partner~~from ofAugust ~~Tricorn~~1994 ~~Partners~~to July ~~LLP~~1997, aas ~~privately~~Vice ~~held~~President ~~investment~~– ~~bank~~Finance from ~~May~~April ~~2003~~1993 to ~~May~~August ~~2006~~1994 and as Treasurer from January 1990 to April 1993. Prior to ~~founding~~ ~~Tricorn~~joining ~~Partners~~Microsoft, Mr. ~~Irby~~Brown spent ~~was~~18 ~~Chairman~~years ~~and~~with ~~Chief~~Deloitte ~~Executive~~& ~~Officer~~Touche ~~of HawkPoint~~LLP ~~Partners,~~in ~~formerly~~various ~~known~~positions. asMr. ~~National~~Brown ~~Westminster~~is also ~~Global~~a ~~Corporate Advisory,~~director ~~and~~of ~~was~~EMC Corporation, a ~~founding~~provider ~~partner~~ of ~~Hambro~~information ~~Magan~~management systems, ~~Irby~~software ~~Holdings.~~and Heservices, isa ~~the chairman~~director of ~~ContentFilm~~VMware, ~~plc~~Inc., ~~and~~a ~~also~~provider ~~serves~~of computer asvirtualization solutions, and a director of ~~McKesson~~Administaff, Inc., a ~~Corporation~~professional ~~(and~~employer oforganization ~~one~~providing ofservices ~~McKesson~~such ~~Corporation’s~~as Upayroll and benefits administration.K Mr. ~~subsidiaries)~~Brown ~~and~~is ~~several other~~also ~~privately~~a ~~held~~director ~~firms~~of several private companies. Mr. ~~Irby~~Brown ~~holds~~is a ~~bachelor’s~~past ~~degree~~Chairman ~~from~~of the ~~Georgia~~ ~~Institute~~Nasdaq ofStock ~~Technology~~Market Board of Directors and ~~served~~a ~~four~~past ~~years~~governor onof ~~active~~the ~~duty~~National asAssociation anof Securities Dealers. ~~intelligence~~Mr. ~~officer~~Brown holds a bachelor of science degree in economics from the ~~U.S.~~University ~~Marine~~of Washington ~~Corps~~in Seattle.

Robert E. Grady has been a director of Thomas Weisel Partners Group, Inc. since September 2009. Mr. Grady is currently a partner and managing director at Cheyenne Capital, a private equity investment firm. Prior to joining Cheyenne Capital, from 2000 -2009, Mr. Grady served as a partner at The Carlyle Group, one of the world’s largest private equity firms, where he was Chairman and Managing Partner of Carlyle Venture Partners, the firm’s U.S. venture and growth capital organization. Mr. Grady joined Carlyle in 2000 as global head of Venture Capital and served as a Member of Carlyle’s Management Committee. Mr. Grady served as Chairman of the National Venture Capital Association’s Board of Directors from 2006 – 2007, having joined the Board of Directors in 2002. Prior to joining Carlyle, Mr. Grady was a Managing Director and member of the Management Committee at Robertson Stephens. Mr. Grady previously served in the White House as Deputy Assistant to President George H.W. Bush and as Executive Associate Director of the Office of Management and Budget. Mr. Grady also served for a decade on the faculty of the Stanford Graduate School of Business where he taught courses on environmental policy and regulation. Mr. Grady is also a Director of AuthenTec, Inc., Maxim Integrated Products and several privately-held companies. Mr. Grady holds a bachelors degree from Harvard College and an M.B.A. from the Stanford Graduate School of Business.

B. Kipling Hagopian has been a director of Thomas Weisel Partners Group, Inc. since January 2006. Mr. Hagopian was a founder of Brentwood Associates, a venture capital investment company, and was a general partner of all of the funds started by Brentwood Associates from inception until 1996. He has been a Special Limited Partner of each of the five Brentwood funds started since 1989, and is a Special Advisory Partner to Redpoint Ventures I which is a successor to Brentwood Associates’ information technology funds. Mr. Hagopian is also a Managing Partner of Apple Oaks Partners LLC, a private investment company which manages his own capital and the capital of one other individual. Mr. Hagopian serves as Chairman of the Board of Directors of Maxim Integrated Products, a semiconductor company. Mr. Hagopian holds a bachelor of arts degree and an M.B.A., both from the University of California, Los Angeles.

Alton F. Irby III has been a director of Thomas Weisel Partners Group, Inc. since February 2008. Mr. Irby is a founding partner of London Bay Capital LLC, a privately held investment firm, which was founded in May 2006 and he was founding partner of Tricorn Partners LLP, a privately held investment bank from May 2003 to May 2006. Prior to founding Tricorn Partners, Mr. Irby was Chairman and Chief Executive Officer of HawkPoint Partners, formerly known as National Westminster Global Corporate Advisory, and was a founding partner of Hambro Magan Irby Holdings. He is the chairman of ContentFilm plc and also serves as a director of McKesson Corporation (and of one of McKesson Corporation’s U.K. subsidiaries) and several other privately held firms. Mr. Irby holds a bachelor’s degree from the Georgia Institute of Technology and served four years on active duty as an intelligence officer in the U.S. Marine Corps.

Timothy A. Koogle has been a director of Thomas Weisel Partners Group, Inc. since January 2006. In 1978, Mr. Koogle founded Phase 2, Inc., which was sold to Motorola, Inc. in 1981. Mr. Koogle served in a number of executive management positions with Motorola between 1981 and 1990. He was President of Intermec Corporation and Corporate Vice President of its parent company, Western Atlas/ Litton, a multinational technology company from 1990 to 1995. Mr. Koogle was the founding Chief Executive Officer of Yahoo! Inc. from July 1995 to May 2001 and Chairman of the Board of Directors of Yahoo! from 1999 to 2001. Mr. Koogle served as Vice Chairman and Director of Yahoo! from May 2001 to August 2003. He is currently a private venture investor engaged in the formation and growth of early stage technology companies. He is also founder and Chief Executive Officer of Serendipity Land Holdings, LLC, a private land development company, and the Managing Director of The Koogle Foundation, a private philanthropic organization focused on the education of underprivileged youth. Mr. Koogle holds a bachelor of science degree from the University of Virginia and M.S. and D. Engr. degrees in mechanical engineering from Stanford University.

~~Michael~~Lionel GF. ~~McCaffery~~Conacher ~~has been~~joined ~~a director of~~ Thomas Weisel Partners ~~Group,~~as ~~Inc.~~President ~~since~~in January ~~2006.~~2008 ~~Mr. McCaffery~~in ~~was~~connection ~~the~~with ~~President and Chief Executive Officer of Stanford Management~~the ~~Company,~~acquisition ~~a division~~ of ~~Stanford~~Westwind ~~University~~Capital ~~that~~Corporation ~~manages the university’s financial~~ and ~~real~~was ~~estate~~also ~~assets,~~named ~~from~~our ~~September~~Chief Operating ~~2000~~Officer toin ~~June~~March ~~2006~~2008. Prior to joining ~~Stanford~~Thomas ~~Management~~Weisel ~~Company~~Partners, Mr. Conacher ~~McCaffery~~served ~~spent~~as ~~twelve~~an ~~years~~officer ~~at Robertson~~of ~~Stephens~~Westwind &since ~~Company Group~~2002, ~~L.L.C.,~~first anas ~~investment~~a ~~banking~~Managing Director and ~~financial~~ ~~services~~then ~~firm, serving~~ as ~~President~~the ~~and~~ Chief Executive Officer ~~from January 1993 to December 1999~~ and ~~subsequently~~President. asPrior ~~Chairman from January 2000~~ to his ~~December~~employment ~~2000.~~by Westwind, Mr. ~~McCaffery~~Conacher isheld apositions ~~director~~with ofCitigroup, ~~KB Home and serves as the Chief~~Brookfield ~~Executive~~Asset ~~Officer~~Management and asNational aBank ~~director of Makena Capital LLC, an investment management firm~~Financial. Mr. ~~McCaffery~~Conacher ~~received~~holds a bachelor ~~of arts~~ ’s degree from ~~Princeton University~~Dartmouth ~~and~~College anin ~~M.B.A.~~economics ~~from Stanford Business School. He also holds a B.A. Honours~~ and anart MHistory.~~A. as a Rhodes Scholar from Merton College at Oxford University.~~

~~Lionel~~Shaugn FS. ~~Conacher~~Stanley joined Thomas Weisel Partners asin ~~President~~1998 inand ~~January~~has ~~2008~~served inas ~~connection~~Chief ~~with~~Administrative ~~the acquisition~~Officer of Thomas ~~Westwind~~Weisel ~~Capital~~Partners ~~Corporation~~since ~~and~~April ~~was~~2009. ~~also~~Previously, ~~named~~Mr. ~~our~~Stanley served as Chief ~~Operating~~Financial Officer inof ~~March~~Thomas ~~2008. Prior~~Weisel toPartners ~~joining~~from ~~Thomas~~its ~~Weisel Partners,~~founding ~~Mr.~~in ~~Conacher~~1998 ~~served~~to as2001 and anfrom ~~officer~~March of2008 ~~Westwind~~to ~~since~~April ~~2002,~~2009 ~~first~~and as a Managing Director ~~and~~from ~~then~~2001 asto ~~the Chief Executive Officer and President~~2008. Prior to ~~his~~joining ~~employment~~Thomas byWeisel ~~Westwind~~Partners, Mr. ~~Conacher~~Stanley ~~held~~was Chief Financial Officer ~~positions~~of ~~with~~Montgomery ~~Citigroup,~~Securities ~~Brookfield~~from ~~Asset~~1996 ~~Management~~to 1998 and ~~National~~Chief ~~Bank~~ Financial Officer for the brokerage division of Fidelity Investments from 1990 to 1996. Mr. ~~Conacher~~Stanley received ~~holds~~ a ~~bachelor’s~~Bachelor of Science in Accounting degree from ~~Dartmouth~~Stephen ~~College~~F. inAustin State ~~Economics~~University and ~~Art~~is ~~History~~a Certified Public Accountant.

Shaugn S. Stanley joined Thomas Weisel Partners in 1998 and has served as Chief Financial Officer of Thomas Weisel Partners since March 2008. Previously, Mr. Stanley served as Chief Financial Officer of Thomas Weisel Partners from its founding in 1998 to 2001 and as a Managing Director from 2001 to 2008. Prior to joining Thomas Weisel Partners, Mr. Stanley was Chief Financial Officer of Montgomery Securities from 1996 to 1998 and Chief Financial Officer for the brokerage division of Fidelity Investments from 1990 to 1996. Mr. Stanley received a Bachelor of Science in Accounting degree from Stephen F. Austin State University and is a Certified Public Accountant.

Tom Carbeau joined Thomas Weisel Partners in 2006 and has served as Senior Managing Director and Head of Institutional Sales since April 2008. Prior to serving as Head of Institutional Sales, Mr. Carbeau served as Director of Sales. Mr. Carbeau has over 14 years of experience in institutional sales, equity capital markets and corporate finance. Prior to joining Thomas Weisel Partners, Mr. Carbeau was Executive Director at CIBC World Markets from 2002 to 2006 and Vice President at Morgan Stanley from 2000 to 2002. Mr. Carbeau received a Bachelor of Science degree in finance from Georgetown University.

Mark P. Fisher has served as our General Counsel since May 2005. From January 1998 until May 2005, prior to joining Thomas Weisel Partners, Mr. Fisher practiced corporate and securities law at Sullivan & Cromwell LLP. Mr. Fisher received a bachelor of arts degree from Stanford University, a J.D. from Harvard Law School and a Ph.D. in economics from the University of Chicago.

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Ryan Stroub joined Thomas Weisel Partners in 2006 and has served as Chief Financial Officer of Thomas Weisel Partners since April 2009. Previously, Mr. Stroub served as Chief Accounting Officer of Thomas Weisel Partners. Prior to joining Thomas Weisel Partners, Mr. Stroub was with E*TRADE Financial Corporation for seven years serving as the Corporate Controller. Mr. Stroub holds a degree in accounting from the University of California at Santa Barbara.

Tom Carbeau joined Thomas Weisel Partners in 2006 and has served as Senior Managing Director and Head of Institutional Sales since April 2008. Prior to serving as Head of Institutional Sales, Mr. Carbeau served as Director of Sales. Mr. Carbeau has over 14 years of experience in institutional sales, equity capital markets and corporate finance. Prior to joining Thomas Weisel Partners, Mr. Carbeau was Executive Director at CIBC World Markets from 2002 to 2006 and Vice President at Morgan Stanley from 2000 to 2002. Mr. Carbeau received a bachelor of science degree in finance from Georgetown University.

Keith Gay joined Thomas Weisel Partners in 1999 and has served as our Head of Research since February 2008 and served as our Associate Director of Research prior to that time. Prior to his becoming Associate Director of Research, Mr. Gay was a Research Analyst who followed Applications Software in the Technology sector from 2000 to 2005 at Thomas Weisel Partners. From 1996 until 1999, he was a Managing Director and a Senior Research Analyst at NationsBanc Montgomery Securities, where he followed the Education and Training sectors. Prior to his employment with NationsBanc Montgomery Securities, Mr. Gay was a Vice President in Investment Banking at Merrill Lynch & Co., where he covered the General Industrials sector. He entered the investment banking business following a ten-year career in the U.S. Air Force, where he was an Assistant Professor at the U.S. Air Force Academy Department of Management. Mr. Gay received a Bachelor of Arts degree in Economics from the University of California at Los Angeles and a Master of Business Administration degree from the Anderson School at the University of California at Los Angeles.

~~William~~Keith L.Harris ~~McLeod~~ joined ~~Thomas~~ Thomas Weisel Partners in ~~2004~~January ~~and~~2008 ~~has~~in ~~served~~connection aswith ~~Co-Head~~the acquisition of ~~Investment Banking~~Westwind ~~and~~Capital ~~Director~~Corporation ofand ~~Capital~~is ~~Markets~~Treasurer ~~since~~of ~~July~~Thomas ~~2007.~~Weisel ~~Prior~~Partners toas ~~serving~~well as ~~Co-Director~~ ofPresident ~~Investment~~and ~~Banking,~~Chief ~~Mr.~~Financial ~~McLeod~~Officer ~~served~~of asThomas aWeisel ~~Managing~~Partners ~~Director~~Canada ~~with Thomas~~Inc. ~~Weisel~~Prior ~~Partners’~~to ~~Investment~~joining ~~Banking~~Thomas ~~department.~~Weisel Partners, Mr. ~~McLeod~~Harris ~~has~~was ~~over 17 years~~Chief Financial Officer of ~~Wall~~Westwind ~~Street~~Partners ~~investment~~Inc. ~~banking~~from ~~experience,~~its ~~including,~~start-up ~~prior~~in to2002. ~~joining Thomas~~For ~~Weisel~~the ~~Partners~~period from 1989 to 2002, atMr. ~~Banc~~Harris ofheld ~~America~~senior ~~Securities,~~positions asin Coinstitutional broker-~~Head~~dealer boutiques, Chief Financial Officer of ~~U.S.~~Octagon ~~Equity~~ Capital ~~Markets,~~Corporation and atChief ~~J.P.~~Operating Officer ~~Morgan~~of Sanwa McCarthy Securities. Mr. ~~McLeod~~Harris ~~has~~holds a ~~bachelor’s~~Bachelor of Commerce degree from ~~Southern~~the ~~Methodist~~ University ~~and~~of anToronto ~~M.B.A.~~and ~~from~~is ~~the~~a ~~University~~Canadian ofChartered ~~Chicago~~Accountant.

~~Brad~~William ~~Raymond~~L. ~~joined~~McLeod ~~Thomas~~joined Thomas Weisel Partners in 2004 and has served as Co-Head of Investment Banking and Director of Capital Markets since July 2007. Prior to serving as Co-Director of Investment Banking, Mr. ~~Raymond~~ McLeod served as a Managing Director and Head Capital Markets with Thomas Weisel Partners~~’ Investment Banking department~~. Mr. ~~Raymond~~McLeod has ~~more~~over 17 ~~than 14~~ years of Wall Street investment banking experience, ~~with~~ aincluding, ~~focus~~prior ~~on the technology sector. Prior~~ to joining Thomas Weisel Partners, ~~Mr.~~ ~~Raymond~~at ~~was~~Banc ~~affiliated~~of ~~with~~America ~~Morgan Stanley from 1999 to 2004~~Securities, ~~including serving~~ as Co-Head of ~~Software Investment Banking~~U.S. InEquity ~~addition~~Capital Markets, ~~Mr.~~and ~~Raymond worked within the technology investment banking groups~~ at ~~both~~ J.P. Morgan ~~Securities~~ ~~and Alex~~Securities. ~~Brown & Sons.~~ Mr. ~~Raymond~~McLeod has a bachelor’s degree from ~~Harvard~~Southern ~~College~~Methodist University and an M.B.A. from the ~~Haas~~University ~~School~~ of ~~Business at the University~~ ~~of California at Berkeley~~Chicago.

Brad Raymond joined Thomas Weisel Partners in 2004 and has served as Co-Head of Investment Banking since July 2007. Prior to serving as Co-Director of Investment Banking, Mr. Raymond served as a Managing Director with Thomas Weisel Partners’ Investment Banking department. Mr. Raymond has more than 14 years of investment banking experience, with a focus on the technology sector. Prior to joining Thomas Weisel Partners, Mr. Raymond was affiliated with Morgan Stanley from 1999 to 2004, including serving as Co-Head of Software Investment Banking. In addition, Mr. Raymond worked within the technology investment banking groups at both J.P. Morgan Securities and Alex Brown & Sons. Mr. Raymond has a bachelor’s degree from Harvard College and an M.B.A. from the Haas School of Business at the University of California at Berkeley.

Paul C. Slivon joined Thomas Weisel Partners in 1999 and has served as our Chairman of Wealth Management since April 2008. Prior to serving as our Chairman of Wealth Management, Mr. Slivon was Head of Institutional Sales from 2001 to 2008 and a Partner in Institutional Sales from 1999 to 2001. Prior to joining Thomas Weisel Partners, Mr. Slivon served as Managing Director of Institutional Sales at Robertson Stephens & Company Group, L.L.C., an investment banking and financial services firm from January 1993 until January 1999. Previously, Mr. Slivon was Senior Vice President of Kemper Securities. Mr. Slivon received a bachelor of arts degree from Amherst College and an M.B.A. from the University of California, Los Angeles.

Anthony V. Stais has served as our Head of Trading since September 2006, and previously served as Co-Director of Trading since June 2005. Mr. Stais joined Thomas Weisel Partners in January 2001 and served as our Director of Sales-Trading from January 2001 to June 2005. Prior to joining Thomas Weisel Partners, between August 1987 and January 2001, Mr. Stais worked at Goldman Sachs, Merrill Lynch and Salomon Brothers in both institutional sales trading and wealth management. Mr. Stais received a bachelor of arts degree from Bowdoin College.

There are no family relationships among any of our directors and executive officers. There are no contractual obligations regarding election of our directors, except that we have agreed with Mr. Weisel in his employment agreement to take all reasonable action to cause him to be appointed or elected to our board of directors during his employment with us.

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PART II

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

Issuer Purchases of Equity Securities

During the three months ended December 31, ~~2008~~2009, we repurchased the following shares of our common stock:

Month	Number of Shares	~~Number of Shares~~	Average Purchase Price per Share	~~Average Purchase Price per Share~~
October
Employee transactions (1)	2,166	~~4,667~~	$	$6.25	~~6.96~~
November
Employee transactions (1)	688	~~670~~		4.87	~~4.74~~
December
Share repurchase (2)		27,039			4.04
Employee transactions (1)	5,310			3.93
Total	8,164	~~32,376~~	$	$4.63	~~4.48~~

(1)

Includes shares of common stock that were otherwise scheduled to be delivered to employees in respect of vesting Restricted Stock Units. These shares were withheld from delivery (under the terms of grants under the Equity Incentive Plan) to offset tax withholding obligations of the employee recipients that occur upon the vesting of Restricted Stock Units. In lieu of delivering these shares to the employee recipients, we satisfied a portion of their tax withholding obligations with cash in an amount equivalent to the value of such shares on the scheduled delivery date.

~~(2)~~ In March ~~These~~2008, ~~repurchases~~the ~~were~~Board ~~funded~~of ~~through~~Directors ~~cash~~authorized ~~and~~the ~~cash~~repurchase ~~equivalents.~~up ~~The~~to 2,000,000 shares ~~were~~of ~~classified~~common asstock ~~treasury~~for the purpose of settling obligations to deliver common stock ~~upon~~in ~~repurchase~~the ~~and~~future weto ~~intend~~employees who have received restricted stock units under our Equity Incentive Plan. Additional repurchases pursuant to ~~use~~this ~~these~~authority ~~shares~~may be carried out from time to ~~settle~~time in the future. As of December 31, 2009, 1,544,323 shares had been repurchased. Furthermore, our Board of Directors may authorize additional repurchases for the purpose of settling obligations to deliver common stock in the future to employees who have received ~~Restricted~~restricted stock ~~Stock~~units ~~Units~~ under our Equity Incentive Plan.

The repurchases referred to in the table above as “Share repurchases” were executed pursuant to an authorization by our Board of Directors to repurchase up to 2,000,000 shares of common stock for the purpose of settling obligations to deliver common stock in the future to employees who have received Restricted Stock Units under our Equity Incentive Plan. Additional repurchases pursuant to this authority may be carried out from time to time in the future. Furthermore, our Board of Directors may authorize additional repurchases for the purpose of settling obligations to deliver common stock in the future to employees who have received Restricted Stock Units under our Equity Incentive Plan.

Market Information and Dividend Policy

Our common stock is traded on The Nasdaq Stock Market, Inc. (“Nasdaq”) under the symbol “TWPG”. In 2008, we voluntarily requested that our common stock be delisted from the Toronto Stock Exchange where it traded under the symbol “TWP”. The Toronto Stock Exchange subsequently granted our request. The following table sets forth the quarterly high and low ~~closing~~sales ~~sale~~ prices per share of our common stock as reported by Nasdaq for each quarter during the following years ended:

	December 31, 2008				December 31, 2007
	December 31, 2009				December 31, 2008
	High		Low		High		Low
First Quarter	$	135.9100	$	62.3536	$	2113.5291	$	176.0835
Second Quarter		76.4307		53.0147		207.8043		155.7501
Third Quarter		96.3316		3.9068		179.1133		113.1190
Fourth Quarter		86.9936		23.6556		178.3299		112.4165

As of December 31, ~~2008~~2009, there were approximately ~~110~~123 holders of record of our common stock. This number does not include stockholders for whom shares were held in “nominee” or “street” name. No dividends have been declared or paid on our common stock. We do not currently anticipate that we will pay any cash dividends on our common stock in the foreseeable future.

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Table of Contents

Securities Authorized for Issuance under Equity Compensation Plans

The following table provides information as of December 31, ~~2008~~2009 with respect to compensation plans under which equity securities of the registrant are authorized for issuance:

Plan Category	Plan Name	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights		Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans
Equity compensation plans approved by security holders	Thomas Weisel Partners Group, Inc. Equity Incentive Plan (1)	89,~~863~~616,~~408~~184	(2)	$ 107.4087	(3)	26,~~286~~066,~~592~~525	(4)~~(5)~~
Equity compensation plans not approved by security holders	None	—		—		—
Total		89,~~863~~616,~~408~~184	(2)	$ 107.4087	(3)	26,~~286~~066,~~592~~525	(4)~~(5)~~

(1) Approved by Thomas Weisel Partners Group LLC as sole shareholder of ~~Thomas~~TWPG ~~Weisel Partners~~ prior to our initial public offering. Subsequent amendments to the Equity Incentive Plan were approved by the shareholders of ~~Thomas~~TWPG ~~Weisel Partners~~ at the 2007 and 2008 Annual Meetings of Shareholders and the 2009 Special Meeting of Shareholders. Total number of shares issuable under the plan as of December 31, ~~2008~~2009 is 1117,150,000.

(2) These shares of common stock may be issued pursuant to 89,~~594~~172,~~859~~635 outstanding restricted stock units and ~~268~~443,549 outstanding options.

(3) Under the Thomas Weisel Partners Group, Inc. Equity Incentive Plan, no exercise price is applicable to restricted stock units. The weighted-average exercise price stated relates solely to the options issued under the Equity Incentive Plan. As of December 31, ~~2008~~2009, there were ~~268~~443,549 outstanding options with a weighted-average exercise price of $107.4087.

(4) Number of securities remaining available for future issuance does not reflect ~~the~~approximately ~~amendment~~731,000 torestricted ~~the~~stock ~~Equity~~units ~~Incentive~~that ~~Plan~~were withheld from delivery to ~~increase~~offset bytax ~~6,000,000~~withholding obligations of the ~~number~~employee ofrecipients ~~shares~~upon the vesting of ~~our~~the ~~common~~restricted stock ~~available~~units, ~~for~~as ~~awards~~well ~~thereunder~~as forfeitures that occurred from January 1, ~~which~~2010 ~~was~~through ~~approved~~February by28, 2010. Also not included in the ~~shareholders~~number of ~~Thomas~~securities ~~Weisel~~remaining ~~Partners~~available ~~Group,~~for ~~Inc.~~future atissuance ~~the~~are ~~Special~~approximately ~~Meeting~~3,500,000 ofshares ~~Shareholders~~granted onfrom January 1, 2010 through February 528, ~~2009~~2010.

(5) Number of securities remaining available for future issuance does not reflect approximately 400,000 restricted stock units that were withheld from delivery to offset tax withholding obligations of the employee recipients upon the vesting of the restricted stock units in February 2009.

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Performance Graph

The following graph and table compare:

· the performance of an investment in our common stock over the period of February 3, 2006 through January 24, ~~2009~~2010, beginning with an investment at the closing market price on February 3, 2006, the end of the first day our common stock traded on the Nasdaq following our initial public offering, and thereafter based on the closing price of our common stock on the Nasdaq; with

an investment in the Russell 2000 Growth Index and an investment in the Standard and Poor’s Mid Cap Investment Banking & Brokerage Index Sub-Industry Index (the “S&P Brokerage Sub-Industry Index”), in each case, beginning with an investment at the closing price on February 2, 2006 and thereafter based on the closing price of the index.

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Table of Contents

The graph and table assume $100 was invested on the starting date at the price indicated above and that dividends, if any, were reinvested on the date of payment without payment of any commissions. The performance shown in the graph and table represents past performance and should not be considered an indication of future performance.

	2/3/06		7/3/06		1/3/07		7/3/07		1/3/08		7/3/08		1/2/09		7/3/2009		1/4/10
Thomas Weisel Partners Group, Inc.	$	100.00	$	100.26	$	110.94	$	88.85	$	61.61	$	26.51	$	22.34	$	31.87	$	20.89
Russell 2000 Growth Index	$	100.00	$	98.72	$	103.94	$	115.75	$	108.23	$	97.00	$	69.01	$	73.35	$	92.45
S&P Brokerage Sub-Industry Index	$	100.00	$	113.74	$	118.43	$	137.78	$	118.89	$	92.20	$	73.95
S&P 500 / Diversified Financials	$	100.00	$	104.22	$	119.62	$	119.30	$	92.04	$	63.36	$	38.63	$	39.82	$	49.87

The information provided above under the heading “Performance Graph” shall not be considered “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

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Table of Contents

Item 6. Selected Financial Data

Set forth below is selected consolidated financial and other data of Thomas Weisel Partners Group, Inc. (in thousands, except Selected Data and Ratios). The Selected Data and Ratios have been obtained or derived from our records. The data below should be read in conjunction with Item 1A – “Risk Factors”, Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, our consolidated financial statements and the notes to our consolidated financial statements. In January 2008, we acquired Westwind. The results of Westwind have been included in our consolidated financial statements since January 2, 2008.

	As of or For the Year Ended December 31,
	2008			2007			2006			2005			2004
	2009			2008			2007			2006			2005
Statement of Operations
Revenues:
Investment banking	$	6371,~~305~~165		$	~~127~~63,~~228~~305		$	~~124~~127,~~136~~228		$	75124,~~300~~136		$	8475,~~977~~300
Brokerage		~~131~~103,~~939~~170			~~120~~131,~~187~~939			~~123~~120,~~809~~187			~~138~~123,~~497~~809			~~154~~138,~~746~~497
Asset management		(721,~~120~~464	)		33(7,~~414~~120	)		2533,~~752~~414			3625,~~693~~752			4436,~~009~~693
Interest income		~~7,341~~913			177,~~718~~341			1317,~~525~~718			513,~~510~~525			35,~~148~~510
Other revenue		—			~~920~~—			—920			—			—
Total revenues		~~195~~196,~~465~~712			~~299~~195,~~467~~465			~~287~~299,~~222~~467			~~256~~287,~~000~~222			~~286~~256,~~880~~000
Interest expense		(51,~~938~~656	)		(105,~~418~~938	)		(10,~~905~~418	)		(510,~~114~~905	)		(35,~~470~~114	)
Net revenues		~~189~~195,~~527~~056			~~289~~189,~~049~~527			~~276~~289,~~317~~049			~~250~~276,~~886~~317			~~283~~250,~~410~~886
Expenses excluding interest:
Compensation and benefits		~~147~~133,~~186~~355			~~187~~147,~~902~~186			~~152~~187,~~195~~902			~~154~~152,~~163~~195			~~146~~154,~~078~~163
Non-compensation expenses		~~237~~125,~~893~~550			~~103~~237,~~920~~893			97103,~~997~~920			~~101~~97,~~594~~997			~~112~~101,~~606~~594
Total expenses excluding interest		~~385~~258,~~079~~905			~~291~~385,~~822~~079			~~250~~291,~~192~~822			~~255~~250,~~757~~192			~~258~~255,~~684~~757
Income (loss) before taxes		(~~195~~63,~~552~~849	)		(2195,~~773~~552	)		26(2,~~125~~773	)		(426,~~871~~125	)		24(4,~~726~~871	)
Provision for taxes (tax benefit)		~~7,700~~(171	)		(27,~~793~~700	)		(82,~~796~~793	)		2(8,~~187~~796	)		2,~~044~~187
Net income (loss)		(~~203~~63,~~252~~678	)		20(203,252	)		~~34,921~~20			(734,~~058~~921	)		22(7,~~682~~058	)
Less: Preferred dividends and accretion		—			—			~~(1,608~~—	)		(151,~~654~~608	)		(15,~~761~~654	)
Net income (loss) attributable to common shareholders and to Class A, B and C shareholders	$	(~~203~~63,~~252~~678	)	$	20(203,252	)	$	~~33,313~~20		$	~~(22~~33,~~712~~313	)	$	6(22,~~921~~712	)
Net income (loss) per share:
Basic net income (loss) per share	$	(61.2996	)	$	—(6.29	)	$	~~1.39~~—		$	1.39
Diluted net income (loss) per share	$	(61.2996	)	$	—(6.29	)	$	~~1.34~~—		$	1.34
Statement of Financial Condition
Total assets	$	~~281~~253,~~650~~777		$	~~586~~281,~~680~~650		$	~~483~~586,~~189~~680		$	~~312~~483,~~823~~189		$	~~309~~312,~~174~~823
Total liabilities		~~109~~123,~~749~~940			~~313~~109,~~053~~749			~~216~~313,~~135~~053			~~199~~216,~~428~~135			~~178~~199,~~206~~428
Total redeemable convertible preference stock		—			—			—			~~223,792~~—			~~221~~223,~~635~~792
Shareholders’ and members’ equity (deficit)		~~171~~129,~~901~~837			~~273~~171,~~627~~901			~~267~~273,~~054~~627			~~(110~~267,~~397~~054	)		(90110,~~667~~397	)
Debt, including capital lease obligations		22,~~253~~813			2722,~~420~~253			3227,~~499~~420			1932,~~539~~499			1619,~~336~~539
Selected Data and Ratios
Cash dividends declared per common share	$	—		$	—		$	—		$	—		$	—
Investment banking:
Number of transactions		82115			8382			8783			6387			8863
Revenue per transaction (in millions)	$	0.7762		$	10.5377		$	1.4353		$	1.1543		$	01.9315
Brokerage:
Average daily brokerage revenue (in millions)	$	0.5241		$	0.4852		$	0.4948		$	0.5549		$	0.6155
Equity research:
Publishing analysts		3734			2937			3029			3930			3239
Companies covered		500			~~480~~500			~~485~~480			~~565~~485			~~469~~565
Number of companies covered per publishing analyst		1415			1714			1617			1416			1514
Other:
Average number of employees		~~641~~488			~~632~~641			~~565~~632			~~548~~565			~~540~~548

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Table of Contents

	For the Year Ended
	December 31, 2006
Pro forma, as adjusted (unaudited) (1)
Pro forma net revenues (2)	$	276,179
Pro forma income before tax (2)		25,987
Pro forma tax benefit (3)		(7,363	)
Pro forma net income (2) (3)		33,350
Pro forma preferred dividends and accretion		—
Pro forma net income attributable to common shareholders and to Class A, B and C shareholders (2) (3)		33,350

Pro forma earnings per share:
Pro forma basic earnings per share	$	1.39
Pro forma diluted earnings per share	$	1.34

Pro forma weighted average shares used in the computation of per share data:
Pro forma basic weighted average shares outstanding		23,980
Pro forma diluted weighted average shares outstanding		24,945

(1) The pro forma, as adjusted amounts depict results we estimate we would have had during the year ended December 31, 2006 if the reorganization transactions had taken place on January 1, 2006, as these amounts change tax expense to amounts that we estimate we would have paid if we were a corporation beginning January 1, 2006. Additionally, these amounts decrease net revenues by the amount of interest expense on notes payable issued to preferred shareholders upon consummation of the reorganization transactions. The amounts for the year ended December 31, 2006 reflect pro forma results of operations as if these transactions had occurred on January 1, 2006. ~~See Note 20 – Pro Forma, As Adjusted (Unaudited) to the consolidated financial statements.~~

(2)	Reflects decrease in net revenues and net income before tax of $0.1 million for the estimated interest expense for the notes issued to Class D and D-1 preferred shareholders.

(3)

On a pro forma basis, the tax benefit for the year ended December 31, 2006 was decreased by the estimated additional tax expense of $1.5 million as if we were a corporation beginning January 1, 2006. The additional tax expense is attributable to our applicable tax rate, a combination of Federal, state and local income tax rates, of 42% applied to our pro forma net income for the period beginning January 1, 2006 through February 6, 2006.

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

Overview

WeThe economic ~~are~~environment ~~an investment~~at ~~bank~~the ~~focused~~beginning ~~principally~~of on2009 ~~growth~~was ~~companies~~a ~~and~~continuation ~~growth~~of ~~investors~~the consumer-led recession of 2008. The global credit crisis, corporate ~~Our~~consolidation ~~business~~and isfailures, ~~managed~~lack asof investor confidence and further economic deterioration all led to a ~~single~~dramatic ~~operating~~slowdown ~~segment~~in ~~and~~the wecapital ~~generate~~markets, ~~revenues~~which in byturn ~~providing~~impacted ~~financial~~the ~~services~~number ~~that~~of ~~include~~our investment banking transactions. In the latter half of 2009, ~~brokerage~~an economic recovery began to take hold. Investment banking revenues rebounded as the capital market activity increased for emerging growth companies. During this period, we raised capital for companies across the ~~equity~~majority ~~research~~of our industry sectors with mining, technology and ~~asset~~energy ~~management~~being the most active. WeAdditionally, ~~take~~our amergers ~~comprehensive~~and ~~approach~~acquisitions team completed several visible transactions, primarily in technology and healthcare. We believe the ~~providing~~near-term ~~these~~investment ~~services~~banking opportunity in the technology and resource sectors to be significant and that our banking platform, with a focus on these growth sectors, ~~companies~~will benefit.

~~We are~~During ~~exposed~~the cyclical downturn, we took significant steps to ~~volatility~~reduce our compensation and non-compensation ~~trends~~costs in ~~the~~order ~~general~~to ~~securities~~align ~~market~~costs with expected revenues and ~~the~~to ~~economy,~~preserve ~~and~~capital. During 2009, we ~~are~~further ~~currently~~reduced ~~facing~~our ~~difficult~~net ~~market~~headcount ~~and~~by approximately ~~economic~~100 employees, which follows a net headcount reduction in 2008 of ~~conditions~~approximately 200 employees. ~~Due~~ toAs ~~the~~of ~~recent~~December ~~downturn~~31, in2009, ~~the~~we ~~market~~had ~~and~~453 employees, a 40% reduction from the ~~economic~~beginning of 2008. Other significant non-compensation ~~recession,~~cost ~~client~~reductions ~~activity~~are ~~levels~~attributed ~~have~~to ~~decreased~~our ~~resulting~~initiatives ~~in,~~to ~~among~~consolidate ~~other~~facilities and ~~things,~~renegotiate ~~lower~~rates ~~overall~~for ~~investment~~technology ~~banking~~and ~~activity~~communication services. It isWe ~~difficult~~believed that these measures were necessary in the near-term to preserve capital and that they ~~predict~~advantageously positioned us in the long term to demonstrate our earnings capabilities when ~~conditions~~capital ~~will~~market ~~change~~activity returns to the levels we experienced prior to the downturn.

~~Fiscal~~Over the ~~year~~course ~~2008~~of ~~was~~the apast ~~very~~two ~~challenging~~years, ~~environment~~we ~~for~~have ~~the~~opportunistically ~~capital~~hired ~~markets~~investment ~~given the~~banking ~~unprecedented~~and ~~events~~brokerage onprofessionals ~~Wall~~to ~~Street~~expand ~~that~~or ~~led~~strengthen toour ~~increased~~platform ~~uncertainty~~in ~~and~~specific ~~turmoil~~areas. inA ~~the~~significant ~~U.S.~~portion ~~economy~~of ~~and~~our ~~global~~new ~~financial~~hires ~~markets. We~~have been in brokerage operations and are professionals who bring incremental relationships to the firm, which ~~focused~~should onpositively ~~making~~impact future revenues. Over the ~~necessary~~same ~~adjustments~~period, towe increased the number of our ~~business~~senior ~~and~~investment ~~adapting~~banking tocalling ~~the~~officers, which we believe will ~~current~~also ~~environment. We~~positively ~~are~~impact ~~planning~~future ~~for~~results. ~~2009~~As we begin to besee amore ~~continuation~~activity in the growth sectors of the economy, we should benefit from maintaining our presence ~~2008~~and coverage of the consumer, energy and ~~are~~alternative ~~focused~~energy, onhealthcare, ~~the~~mining and ~~following~~technology ~~items:~~growth sectors.

·We ~~Preserving~~have maintained ~~capital~~the breadth of our platform while broadening our industry verticals and ~~retaining~~geographic ~~key~~exposure. ~~people~~We inbelieve ~~order~~that tothe ~~emerge~~improving ascapital market environment and related opportunities in 2010 could provide a ~~strong~~foundation ~~player~~which would ~~once~~lead ~~market~~to ~~stability~~a ~~returns,~~significant improvement in our financial results.

· Reducing compensation and non-compensation expenses in order to operate break-even on a cash basis or better, and

· Enhancing the value of our franchise with opportunistic hires, particularly in the advisory business, to be ready to build market share when stability returns to the capital markets.

In January 2008, our headcount increased by approximately 100 employees as a result of our acquisition of Westwind. Subsequent to the acquisition, during 2008 and through February 2009, we reduced our total headcount by approximately 250 employees, or approximately 34%. The reductions were primarily in underperforming areas of our business as well as non-revenue producing departments. As of March 13, 2009, we have approximately 500 employees. We will continue to selectively hire to upgrade our talent pool, particularly in revenue generating areas, and make additional key hires as appropriate.

In addition to the headcount reductions noted above, base salaries for employees with titles of Vice President and above were reduced by 10% as of January 1, 2009.

- 27 -

~~During 2008,~~Table inof ~~addition to the headcount and salary reductions discussed above, we executed on the following initiatives:~~Contents

· Acquisition and Integration of Westwind – On January 2, 2008, we completed our acquisition of Westwind, and integrating Westwind has been a primary focus during 2008. In September 2008, our two U.K. broker-dealer subsidiaries, Thomas Weisel Partners International Limited and Thomas Weisel Partners (UK) Limited, successfully merged into one entity. In October 2008, we completed an internal reorganization of our U.S. broker-dealer subsidiaries to eliminate redundancies and unnecessary expense. As a result of this reorganization, the business of Thomas Weisel Partners (USA) Inc. was consolidated with that of Thomas Weisel Partners LLC. One of our ongoing integration strategies has been to expand our trading in Canadian securities as our energy and mining analysts begin to make a greater impact on our U.S. and European accounts, and we currently plan to hire U.S. based energy bankers and analysts to capitalize on Westwind’s capabilities in Canada. In Europe, where we integrated our offices in early 2008, we have combined our sales forces and are marketing the combined companies’ products and expertise.

· Repurchase of Common Stock – During 2008, we repurchased a total of 1,544,286 shares of our common stock. The shares were classified as treasury stock upon repurchase, and we intend to use these shares to settle obligations to deliver common stock in the future to employees who have received Restricted Stock Units under our Equity Incentive Plan. These repurchases were executed pursuant to an authorization by our Board of Directors to repurchase up to 2,000,000 shares of common stock for the purpose of settling obligations to deliver common stock to employees who have received restricted stock units under our Equity Incentive Plan. Additional repurchases pursuant to this authority may be carried out and our Board of Directors may authorize additional repurchases in the future.

· Key Producer Restricted Stock Unit Plan – As part of a special retention and incentive program, we granted restricted stock unit equity awards to senior employees of the Company as a means of incentivizing and retaining our key producers. An aggregate of 2,970,000 restricted stock units were granted to employees in August 2008 and vest after the end of a three-year period. In addition, we granted 550,000 performance-based awards to certain members of the Executive Committee that vest upon the attainment of the Company’s long-term performance goals.

· Reduction of the Convertible Book Size – We have significantly reduced our convertible trading book from approximately $190 million at December 31, 2007 to approximately $6 million at December 31, 2008. We experienced losses during the year ended December 31, 2008 related to the convertible book which we do not expect to incur in 2009 due to the fact that we have significantly reduced our exposure to convertible securities.

· Exiting of Facilities – We exited portions of our office facilities in San Francisco, New York, Montreal and London due to staff reductions. As a result, we recorded a lease loss provision of $6.0 million during the year ended December 31, 2008.

Consolidated Results of Operations

Our ~~results~~businesses, ofby ~~operations~~their ~~depend on a number of market factors~~nature, ~~including~~do ~~market conditions~~not ~~and~~produce ~~valuations~~predictable ~~for~~earnings ~~growth companies~~ and ~~growth investors, as well as general securities market conditions. Trends in the securities markets~~ are ~~also~~ affected by ~~general~~changes in economic ~~trends,~~conditions ~~including~~generally ~~fluctuations~~and in ~~interest~~particular ~~rates,~~by ~~flows~~conditions ofin ~~funds into and out of~~ the financial markets ~~and~~as ~~other~~well ~~conditions.~~as ~~In addition to these market factors, our revenues from period to period are substantially affected by~~ the ~~timing~~growth ofsectors ~~investment~~and ~~banking transactions in~~ companies which we ~~are involved~~service. ~~Fees~~For ~~for~~a ~~many~~further discussion of the ~~services~~factors wethat ~~provide~~may ~~are~~affect ~~earned only upon the completion of a~~our ~~transaction.~~future ~~Accordingly,~~operating ~~our~~ results, ofsee ~~operations~~Part inI, ~~any~~Item ~~individual~~1A ~~year~~– ~~or quarter~~“Risk ~~may~~Factors” beof ~~affected~~this ~~significantly by whether and when significant~~Annual ~~transactions~~Report ~~are~~on ~~completed~~Form 10-K.

Notwithstanding this exposure to volatility and trends, in order to provide value to our clients, we have made a long-term commitment to maintaining a substantial, full-service integrated business platform. As a result of this commitment, if business conditions result in decreases to our revenues, we may not experience corresponding decreases in the expense of operating our business.

- 28 -

The following table provides a summary of our results of operations (dollar amounts in thousands):

	For the Year Ended December 31,										~~2007-~~2008-2009			~~2006-~~2007-2008
		2008			2007			2006			% Change			% Change
		2009			2008			2007			% Change			% Change
Net revenues		$	~~189~~195,~~527~~056		$	~~289~~189,~~049~~527		$	~~276~~289,~~317~~049			~~(34~~2.49	)%		4(34.64	)%
Income (loss) before taxes			(203,252	)		(2,773	)		26,125			nm			nm
Loss before taxes			(63,849	)		(195,552	)		(2,773	)		(67.3	)		nm
Net income (loss)			(~~203~~63,~~252~~678	)		20(203,252	)		~~34,921~~20			nm(68.7	)		~~(99.9~~nm	)%
Net income (loss) attributable to common shareholders and to Class A, B and C shareholders			(203,252	)		20			33,313
Net loss per share:
Net income (loss) per share:
Basic net loss per share		$	(1.96	)	$	(6.29	)	$	—
Basic net income (loss) per share		$	(6.29	)	$	—		$	1.39
Diluted net loss per share		$	(1.96	)	$	(6.29	)	$	—
Diluted net income (loss) per share		$	(6.29	)	$	—		$	1.34

nm – Not meaningful.

Revenues

The following table sets forth our revenues, both in dollar amounts and as a percentage of net revenues (dollar amounts in thousands):

	For the Year Ended December 31,									~~2007-~~2008-2009			~~2006-~~2007-2008
	2008			2007			2006			% Change			% Change
	2009			2008			2007			% Change			% Change
Revenues:
Investment banking	$	6371,~~305~~165		$	~~127~~63,~~228~~305		$	~~124~~127,~~136~~228			~~(50~~12.24	)%		2(50.52	)%
Brokerage		~~131~~103,~~939~~170			~~120~~131,~~187~~939			~~123~~120,~~809~~187			(921.8	)		~~(2.~~9.8	)
Asset management		(721,~~120~~464	)		33(7,~~414~~120	)		2533,~~752~~414			~~(121.3~~nm	)		29(121.83	)
Interest income		~~7,341~~913			177,~~718~~341			1317,~~525~~718			(5887.6	)		31(58.06	)
Other revenue		—			~~920~~—			—920			~~(100.0~~—	)		(100.0	)
Total revenues		~~195~~196,~~465~~712			~~299~~195,~~467~~465			~~287~~299,~~222~~467			~~(34~~0.76	)		4(34.37	)
Interest expense		( 51,~~938~~656	)		(10 5,~~418~~938	)		(10,~~905~~418	)		( 4372.01	)		(4 43.50	)
Net revenues	$	~~189~~195,~~527~~056		$	~~289~~189,~~049~~527		$	~~276~~289,~~317~~049			~~(34~~2.49	)%		4(34.64	)%
Percentage of net revenues:
Investment banking		3336.45	%		4433.04	%		44.90	%
Brokerage		6952.69			4169.6			4441.86
Asset management		(311.80	)		11(3.68	)		911.36
Interest income		30.94			63.19			46.91
Other revenue		—			~~0.3~~—			—0.3
Total revenues		~~103~~100.18			103.61			103.96
Interest expense		(30.18	)		(3.61	)		(3.96	)
Net revenues		100.0	%		100.0	%		100.0	%

Investment Banking Revenue

Our investment banking revenue includes (i) management fees, underwriting fees, selling concessions and agency placement fees earned through our participation in public offerings and private placements of equity and debt securities, including convertible debt, (ii) fees earned as a strategic advisor in mergers and acquisitions and similar transactions and (iii) the value of warrants received as partial payment for investment banking services. Investment ~~Banking~~banking ~~Revenue~~revenues are typically recognized at the completion of each transaction. Underwriting revenues are presented net of related expenses. Non-reimbursable expenses associated with private placement and advisory transactions are recorded as non-compensation expenses.

~~Our investment~~- ~~banking revenue includes (i) management fees, underwriting fees,~~28 selling concessions and agency placement fees earned through our participation in public offerings and private placements of equity and debt securities, including convertible debt, (ii) fees earned as strategic advisor in mergers and acquisitions and similar transactions and (iii) the value of warrants received as partial payment for investment banking services. Investment banking revenues are typically recognized at the completion of each transaction. Underwriting revenues are presented net of related expenses. Unreimbursed expenses associated with private placement and advisory transactions are recorded as non-~~compensation expenses.~~

-Table ~~29 -~~of Contents

With the significant decline in market conditions and capital raising activity during 2008, we focused our efforts towards our strategic advisory business which resulted in strategic advisory revenues representing 55% of investment banking revenues during 2008 as compared to 39% of investment banking revenues during 2007.

The following table sets forth our investment banking revenue and the number of investment banking transactions (dollar amounts in thousands):

	For the Year Ended December 31,						~~2007-~~2008-2009			~~2006-~~2007-2008
	2008		2007		2006		% Change			% Change
	2009		2008		2007		% Change			% Change
Investment banking revenue:
Capital raising	$	2845,~~183~~188	$	7728,~~634~~183	$	9377,~~063~~634		~~(63~~60.73	)%		(1663.67	)%
Strategic advisory		3525,~~122~~977		4935,~~594~~122		3149,~~073~~594		(2926.20	)		59(29.62	)
Total investment banking revenues	$	6371,~~305~~165	$	~~127~~63,~~228~~305	$	~~124~~127,~~136~~228		~~(50~~12.24	)%		2(50.52	)%
Investment banking transactions:
Capital raising		5992		6659		7266
Strategic advisory		23		1723		1517
Total investment banking transactions		82115		8382		8783
Average revenue per transaction (1)	$	~~772~~619	$	~~1,533~~772	$	1,~~427~~533

(1)	Revenue per investment banking transaction is generally higher in the U.S. than in Canada.

~~2008~~2009 versus ~~2007~~2008. ~~Investment~~ ~~banking~~Investment banking revenue ~~decreased~~increased $637.9 million in ~~2008~~2009 from ~~2007~~2008. ~~Our~~This ~~average revenue per~~was ~~transaction~~due ~~decreased to $0.8 million during 2008 from $1.5 million~~ in ~~2007. As~~ ~~noted~~part ~~above,~~to ~~revenue~~significant ~~per~~activity ~~investment banking transaction is generally higher~~ in the ~~U.S.~~mining ~~than~~sector ~~in Canada. During 2008~~ and ~~2007,~~the weeconomic ~~closed~~recovery 82that ~~and~~began 83in ~~investment~~the ~~banking~~latter ~~transactions, respectively. Excluding~~half ~~the~~of ~~impact~~2009, ~~from~~which ~~the~~resulted ~~Westwind~~in ~~acquisition, we~~increased ~~closed~~capital 37market ~~investment~~activity ~~banking~~for ~~transactions~~emerging ingrowth ~~2008~~companies. ~~The~~ ~~change~~Our ~~in our~~average revenue per transaction iswas ~~primarily~~$0.6 million ~~due~~and to$0.8 ~~our~~million ~~acquisition~~in of2009 ~~Westwind~~and ~~which~~2008, ~~historically,~~respectively. ~~has~~During ~~completed~~2009 aand ~~larger~~2008 ~~number~~we ofclosed ~~smaller~~115 ~~sized~~and ~~transactions.~~82 ~~In addition, during 2007 our~~ investment banking ~~revenue included $13.4 million in~~ ~~revenue~~transactions, ~~generated from a single strategic advisory transaction~~respectively. During ~~2008~~both 2009 and ~~2007~~ 2008, ~~approximately~~ 36% ~~and 31%, respectively,~~ of our investment banking revenue was earned from the ten largest transactions during the ~~respective~~ respective periods.

Capital raising revenue accounted for ~~approximately 45~~63% and 6145% of our investment banking revenue in 2009 ~~2008~~ and ~~2007~~2008, respectively. Capital raising revenue ~~decreased~~ increased $4917.50 million to $2845.2 million in 2009 from 2008. Our average revenue per capital raising transaction ~~decreased~~was to $0.5 million ~~during 2008 from $1.2 million~~ in ~~2007.~~both ~~During~~2009 ~~2008~~ and ~~2007 we closed 59 and 66 capital raising transactions, respectively. Excluding the impact from the Westwind acquisition, we closed 18 capital raising transactions in~~ 2008.

Strategic advisory revenue accounted for ~~approximately 55~~37% and 3955% of our investment banking revenue in 2009 ~~2008~~ and ~~2007~~2008, respectively. Strategic advisory revenue decreased $149.51 million to $3526.10 million in 2009 from 2008. Our average revenue per ~~strategic~~ strategic advisory transaction decreased to $1.51 million ~~during~~in ~~2008~~2009 from $21.9 5 million in ~~2007~~ 2008. The decrease in our average revenue per ~~strategic advisory~~ transaction ~~was~~is ~~primarily~~ due to athree ~~single~~large transactions ~~strategic~~during ~~advisory transaction~~the ~~which~~2008, ~~resulted~~representing inapproximately $1310.47 million of ~~revenue during~~our ~~2007. During 2008 and 2007, we closed 23 and 17~~ strategic advisory ~~transactions,~~ ~~respectively~~revenues. ~~Excluding the impact from the Westwind acquisition, we closed 19 strategic advisory transactions in 2008.~~

~~2007~~In ~~versus 2006. Investment~~2009, investment banking ~~revenue~~transactions ~~increased $3.1 million~~ in ~~2007~~the ~~from~~mining ~~2006.~~sector, ~~Our~~primarily ~~average~~in ~~revenue~~Canada, ~~per~~resulted ~~transaction increased to $1.5 million~~ in ~~2007~~the ~~from~~increase ~~$1.4 million~~ in ~~2006.~~ ~~During~~our ~~2007~~capital ~~and~~raising ~~2006, we closed 83 and 87~~ investment banking ~~transactions, respectively.~~revenues ~~During 2007 and 2006, approximately 31% and 34%, respectively, of~~over ~~our investment banking revenue was earned from~~ the ~~ten~~prior ~~largest transactions during the respective year~~period. We ~~joint~~also ~~book-managed~~experienced ~~our~~increased ~~own~~activity ~~initial public offering and follow-on offering~~ in ~~2006~~the ~~but~~energy ~~did~~and technology ~~not~~sectors ~~include~~during ~~those~~the ~~transactions in~~fourth ~~our~~quarter ~~transaction~~of ~~count~~2009, ~~did~~which ~~not~~represented ~~recognize~~15% ~~revenue relating to those~~and ~~transactions~~32% ~~and~~of ~~did~~investment ~~not~~banking ~~include~~revenues ~~those~~during ~~transactions~~2009, ~~in calculating our revenue per transaction measures~~respectively.

~~Capital raising~~2008 versus 2007. Investment banking revenue ~~accounted~~decreased ~~for~~$63.9 ~~61%~~million ~~and~~in ~~75%~~2008 offrom ~~our~~2007. ~~investment~~This ~~banking~~was due ~~revenue~~principally to the unprecedented turmoil in the financial markets and ~~2007~~the economic recession, which resulted in decreased client activity levels and ~~2006~~a corresponding decrease in the number of investment banking transactions, excluding ~~respectively.~~the ~~Capital~~impact ~~raising~~of the Westwind acquisition. Our average revenue ~~decreased~~per transaction was $150.48 million and $1.5 million in 2008 and 2007, respectively. During 2008 and 2007, we closed 82 and 83 investment banking transactions, respectively. Excluding the impact from ~~2006~~the Westwind acquisition, we closed 37 investment banking transactions in 2008. ~~Our~~The ~~average~~change ~~revenue~~in our revenue per ~~capital~~transaction ~~raising~~is ~~transaction~~primarily ~~decreased~~due to our acquisition of Westwind which, $1historically, has completed a larger number of smaller sized transactions.2 ~~million~~In addition, induring 2007 ~~from~~our investment banking revenue included $113.3 4 million in revenue ~~2006~~generated from a single strategic advisory transaction. During 2008 and 2007, 36% and ~~2006~~31%, ~~we closed~~respectively, 66of ~~and~~our 72investment ~~capital~~banking ~~raising~~revenue was earned from the ten largest transactions, ~~respectively~~during the respective periods.

-Capital raising 30revenue accounted for 45% and 61% of our investment banking revenue in -2008 and 2007, respectively. Capital raising revenue decreased $49.5 million to $28.2 million in 2008. Our average revenue per capital raising transaction decreased to $0.5 million during 2008 from $1.2 million in 2007. During 2008 and 2007 we closed 59 and 66 capital raising transactions, respectively. Excluding the impact from the Westwind acquisition, we closed 18 capital raising transactions in 2008.

Strategic advisory revenue accounted for 3955% and 2539% of our ~~total~~ investment banking revenue in 2008 ~~2007~~ and ~~2006~~2007, respectively. Strategic advisory revenue ~~increased~~ decreased $1814.5 million to $35.1 million in ~~2007 from 2006~~2008. Our average revenue per strategic advisory transaction ~~increased~~decreased to $21.9 5 million induring ~~2007~~2008 from $2.1 9 million in ~~2006~~ 2007. The decrease ~~increase~~ in our average revenue per strategic advisory transaction was ~~primarily~~ primarily due to a single strategic advisory transaction which resulted in $13.4 ~~million~~ million of revenue during 2007. During ~~2007~~2008 and ~~2006~~2007, we closed 1723 and 1517 strategic ~~advisory~~ advisory transactions, respectively. Excluding the impact from the Westwind acquisition, we closed 19 strategic advisory transactions in 2008.

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Table of Contents

Brokerage Revenue

Our brokerage revenue includes (i) commissions paid by customers for brokerage transactions in equity securities, (ii) spreads paid by customers on convertible debt securities, (iii) trading gains ~~and~~ (losses) which result from market making activities, from our commitment of capital to facilitate customer transactions and from proprietary trading activities relating to our convertible debt and special situations trading groups, (iv) advisory fees paid to us by high-net-worth individuals and institutional clients of our private client services group, which are generally based on the value of the assets we manage and (v) fees paid to us for equity research.

~~The~~2009 vs. 2008. ~~concentration~~Brokerage inrevenue ~~brokerage~~decreased ~~revenues~~$28.8 ~~among~~million ~~our~~in ~~ten~~2009 ~~largest~~from 2008. The decrease in brokerage ~~clients~~revenue was ~~26%,~~ ~~22%~~primarily ~~and~~attributable ~~26%~~to lower commission revenue from our institutional business in ~~2008~~the United States, ~~2007~~Canada and ~~2006,~~Europe. Also contributing ~~respectively,~~to ~~which~~the ~~represents approximately~~decrease ~~$35~~in ~~million~~brokerage revenue was our private client services group, ~~$26~~whose ~~million~~asset-based ~~and~~fees ~~$32~~decreased ~~million~~as a result of ~~brokerage~~the ~~revenues,~~decrease in ~~respectively~~the value of the assets they managed.

The decrease in institutional commissions was primarily driven by a general decrease in market volume and a higher loss ratio on net commissions. The combined average daily volume on the New York Stock Exchange and the Nasdaq was approximately 3.6 billion in 2009, a decrease of 4.3% from 2008. Our combined average daily customer trading volume in 2009 decreased 12.7% from 2008. Another significant contributing factor to the decrease in our combined average daily customer trading volume was our clients, who sought to reduce risk during the capital market downturn, which led to reduced trading activity in the latter half of 2009. The decrease in volume, coupled with an increase in volatility in the growth stocks we trade and an increase in competition for these trades requiring us to commit more capital to facilitate trades, led to the higher loss ratio.

2008 versus 2007. Brokerage revenue increased by $11.8 million in 2008 from 2007. This increase is primarily due to our acquisition of Westwind in January 2008 and our expansion into Europe in late 2007. During 2008, brokerage revenues of $13.3 million were generated from former Westwind clients. These increases were offset by net trading losses in our convertible debt trading business as we considerably reduced our proprietary convertible debt trading book in the latter part of 2008.

The combined average daily volume on the New York Stock Exchange, Nasdaq and the Toronto Stock Exchange was approximately 4.0 billion shares during 2008, an increase of 3.0% from 2007. Our combined average daily customer trading volume increased 36.9% in 2008 from 2007 primarily due to our acquisition of Westwind.

In addition to our acquisition of Westwind, we believe the steps we ~~have~~took ~~taken~~in ~~over the past year~~2008, including (i) broadening our geographic coverage and (ii) developing our product offerings within electronic trading in order to attract and retain trading volume from customers who are shifting away from utilizing full-service brokerage services and increasing their use of alternative trading systems, ~~have~~ resulted in our increased trading volume from institutional customers.

2007 versus 2006. Brokerage revenue decreased $3.6 million in 2007 from 2006. The decreases were primarily attributable to decreases in trading volumes in our institutional equity business, partially offset by improvements in our convertible debt trading and private client services businesses.

The combined average daily volume on the New York Stock Exchange and Nasdaq was approximately 3.7 billion shares during 2007, an increase of 3.4% from 2006. Our combined average daily customer trading volume decreased 11.0% in 2007 from 2006 primarily due to declines in the volume of shares we traded for our institutional brokerage customers. We believe the decline in our trading volume for institutional customers was partially due to the increased use of alternative trading systems by our customers and a decrease in the willingness of our traditional brokerage customers to pay full-service commissions in order to access our equity research.

Asset Management Revenue

Our asset management revenue includes (i) fees from investment partnerships we manage, (ii) allocation of the appreciation and depreciation in the fair value of our investments in the underlying partnerships, (iii) fees we earn from the management of equity distributions received by our clients, (iv) other ~~asset~~ asset management-related realized and unrealized gains and losses on investments ~~not~~ not associated with investment partnerships and (v) realized and unrealized ~~gains~~ gains and losses on warrants received as partial payment for investment banking services. Our investments in partnerships include the following private investment funds: Thomas Weisel Capital Partners (“TWCP”), Thomas Weisel Global Growth Partners (“TWGGP”), Thomas Weisel Healthcare Venture Partners (“TWHVP”) and Thomas Weisel Venture Partners (“TWVP”).

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The following table sets forth our asset management revenue (dollar amounts in thousands):

	For the Year Ended December 31,									~~2007-~~2008-2009			~~2006-~~2007-2008
	2008			2007			2006			% Change			% Change
	2009			2008			2007			% Change			% Change
Asset management revenue:
Management fees	$	1415,~~691~~205		$	1514,~~946~~691		$	1215,~~420~~946			(73.95	)%		28(7.49	)%
Investments in partnerships realized and unrealized gains and losses—net		(~~13,414~~952	)		17(13,~~662~~414	)		1217,~~323~~662			nm(92.9	)		~~43.3~~nm
Other securities realized and unrealized gains and losses—net		(8,397	)		(194	)		1,009			nm			(119.2	)
Other investments realized and unrealized gains and losses—net		7,211			(8,397	)		(194	)		(185.9	)		nm
Total asset management revenue	$	(721,~~120~~464	)	$	33(7,~~414~~120	)	$	2533,~~752~~414			~~(121.3~~nm	)%		29(121.83	)%

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Table of Contents

2009 versus 2008. Investments in partnerships realized and unrealized gains (losses) were as follows (dollar amounts in thousands):

	For the Year Ended December 31,
	2009			2008			% Change
Investments in partnerships realized and unrealized gains (losses)—net:
TWCP	$	(1,432	)	$	(3,155	)		(54.6	)%
TWGGP		(133	)		(2,271	)		(94.2	)
TWHVP		(2,316	)		(4,530	)		(48.9	)
TWVP		(731	)		(2,956	)		(75.3	)
Other		3,660			(502	)		nm

Total investments in partnerships realized and unrealized gains (losses)—net	$	(952	)	$	(13,414	)		(92.9	)%

The net realized and unrealized investment loss during 2009 was attributable to our partnership interests in private portfolio companies caused by both downward valuations of those companies seeking capital in the current environment and declining operating results. Stock price decreases associated with our interests in public companies held in these partnerships also contributed to the loss. This loss was partially offset by an unrealized gain attributable to our interest in a partnership which has invested in a privately held company that experienced significant growth in its operating results since our interest was acquired at the beginning of 2008.

We recorded net investment gains in other investments of $7.2 million in 2009 compared to net investment losses of $8.4 million in 2008 primarily due to an increase in unrealized and realized gains on warrants and equity securities in 2009, partially offset by unrealized losses on ARS.

Management fees increased $0.5 million in 2009 from 2008 as a result of an increase in assets under management in TWGGP.

2008 versus 2007. Investments in partnerships realized and unrealized gains and losses were as follows (dollar amounts in thousands):

	For the Year Ended December 31,
	2008			2007		% Change
Investments in partnerships realized and unrealized gains and losses:
Investments in partnerships realized and unrealized gains (losses)—net:
Thomas Weisel Healthcare Venture Partners	$	(4,530	)	$	4,226		(207.2	)%
TWCP	$	(3,155	)	$	763		(513.4	)%
Thomas Weisel Venture Partners		(2,956	)		9,591		(130.8	)
TWGGP		(2,271	)		2,654		(185.6	)
Thomas Weisel Global Growth Partners		(2,271	)		2,654		(185.6	)
TWHVP		(4,530	)		4,226		(207.2	)
Thomas Weisel Capital Partners		(3,155	)		763		(513.4	)
TWVP		(2,956	)		9,591		(130.8	)
Other		(502	)		428		(217.2	)
Total investments in partnerships realized and unrealized gains and losses	$	(13,414	)	$	17,662		(175.9	)%
Total investments in partnerships realized and unrealized gains (losses)—net:	$	(13,414	)	$	17,662		(175.9	)%

The net realized and unrealized investment loss ~~from Thomas Weisel Healthcare Venture Partners~~ during 2008 was ~~due~~attributable to ~~fair~~our partnership ~~value~~interests ~~adjustments~~in ofprivate ~~two public~~ portfolio companies ~~within~~caused ~~this~~by ~~fund. The remaining partnerships net unrealized~~downward ~~losses~~valuations ~~were~~of ~~primarily~~those ~~due~~companies toseeking ~~fair~~capital ~~value~~during ~~adjustments~~a ~~resulting~~period ~~generally~~of ~~from a~~ decline in the equity markets and lack of liquidity in the capital markets. ~~These~~ ~~conditions~~Stock ~~combined~~price decreases toassociated ~~create~~with aour ~~lack~~interests ofin ~~available financing~~public atcompanies ~~previous~~held ~~valuation levels resulting~~ in ~~downward fair value~~these ~~adjustments~~partnerships ~~for~~also ~~certain~~contributed ~~companies~~to ~~held~~the ~~by these funds~~loss.

We recorded investment losses in other ~~securities~~investments of $8.4 million in 2008 compared to investment losses of $0.2 million in 2007. The investment losses in 2008 were primarily due to net realized and unrealized losses on warrants ~~of $6.2 million~~ acquired through the Westwind acquisition of $6.2 million and declines in the value of equity securities held by our small/mid cap funds.

Management fees decreased $1.3 million in 2008 from 2007 as a result of a decrease in assets under management in 2008 as compared to 2007.

2007 versus 2006. Investments in partnerships realized and unrealized gains and losses were as follows (dollar amounts in thousands):

	For the Year Ended December 31,
	2007		2006			% Change
Investments in partnerships realized and unrealized gains and losses:
Thomas Weisel Healthcare Venture Partners	$	4,226	$	2,741			54.2	%
Thomas Weisel Venture Partners		9,591		(6	)		nm
Thomas Weisel Global Growth Partners		2,654		2,077			27.8
Thomas Weisel Capital Partners		763		7,270			(89.5	)
Other		428		241			77.5
Total investments in partnerships realized and unrealized gains and losses	$	17,662	$	12,323			43.3	%

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This realized and unrealized investment gains from Thomas Weisel Venture Partners and Thomas Weisel Healthcare Venture Partners was due to was due to an increase in realized gains allocated to us in respect to our previously waived management fees, increases in gains from investment funds allocated to us with respect to our carried interest and an overall increase in gains within our investment funds. This increase in realized and unrealized investment gains was partially offset by a decrease in investment gains in partnerships from Thomas Weisel Capital Partners.

Management fees increased $3.5 million in 2007 from 2006. This increase was primarily attributable to an increase in fees received from Thomas Weisel Global Growth Partners and Thomas Weisel Healthcare Venture Partners as a result of certain management fees being waived in 2006 that were not waived in 2007. In addition, in 2007 the Thomas Weisel India Opportunity fund was created which resulted in management fees of $0.6 million.

Other Revenue

2007. Other revenue of $0.9 million recorded in 2007 relates to the gain, net of selling costs, on the sale of certain software previously developed for internal use. At the time of sale there were no amounts capitalized relating to this software.

Net Revenues by Geographic Segment

The following table sets forth our net revenues by geographic segment (dollar amounts in thousands):

	For the Year Ended December 31,						~~2007-~~2008-2009			~~2006-~~2007-2008
	2008		2007		2006		% Change			% Change
	2009		2008		2007		% Change			% Change
United States	$	~~161~~139,~~321~~838	$	~~289~~161,~~040~~321	$	~~276~~289,~~315~~040		(4413.23	)%		4(44.62	)%
Other countries		2855,~~206~~218		928,206		29		nm95.8			nm
Total net revenues	$	~~189~~195,~~527~~056	$	~~289~~189,~~049~~527	$	~~276~~289,~~317~~049		~~(34~~2.49	)%		4(34.64	)%

~~2008~~No ~~versus 2007. Net revenues from~~single ~~countries~~customer ~~other~~accounted ~~than~~for ~~the~~10% ~~United~~or ~~States~~more ~~increased $28.2 million during 2008 from 2007 as a result~~ of ~~our acquisition of Westwind in January 2008 and our expansion into Europe in late 2007. During 2008,~~ net revenues ~~from~~during ~~countries other than~~ the ~~United~~years ~~States~~ended December ~~consisted~~31, ~~primarily of net revenues from Canada~~2009, ~~which~~ ~~accounted~~2008 ~~for~~and ~~approximately 75~~2007.~~2% of net revenues from other countries.~~

No2009 ~~single~~versus 2008. Net ~~customer~~revenues ~~accounted~~from ~~for~~countries ~~10%~~other orthan ~~more~~the United States consist primarily of net revenues from Canada. Net revenues from Canada during ~~the~~2009 ~~years~~and ~~ended~~2008 accounted ~~December~~for 3177% and 75%, ~~2008~~respectively, ~~2007~~of ~~and~~net ~~2006~~revenues from other countries.

2008 versus 2007. Net revenues from countries other than the United States increased $28.2 million during 2008 from 2007 as a result of our acquisition of Westwind in January 2008 and our expansion into Europe in late 2007. During 2008, net revenues from countries other than the United States consisted primarily of net revenues from Canada, which accounted for approximately 75% of net revenues from other countries.

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Table of Contents

Expenses Excluding Interest

The following table sets forth information relating to our expenses excluding interest, both in dollar amounts and as a percentage of net revenues (dollar amounts in thousands):

	For the Year Ended December 31,									~~2007-~~2008-2009			~~2006-~~2007-2008
	2008			2007			2006			% Change			% Change
	2009			2008			2007			% Change			% Change
Expenses excluding interest:
Compensation and benefits	$	~~147~~133,~~186~~355		$	~~187~~147,~~902~~186		$	~~152~~187,~~195~~902			(219.74	)%		23(21.57	)%
Non-compensation expenses		~~237~~125,~~893~~550			~~103~~237,~~920~~893			97103,~~997~~920			~~128~~(47.92	)		6128.09
Total expenses excluding interest	$	~~385~~258,~~079~~905		$	~~291~~385,~~822~~079		$	~~250~~291,~~192~~822			(32.08	)%		1632.60	%
Percentage of net revenues:
Compensation and benefits		7768.74	%		6577.07	%		5565.10	%
Non-compensation expenses		~~125~~64.53			36125.05			3536.40
Total		~~203~~132.27	%		~~101~~203.02	%		90101.50	%
Average number of employees		~~641~~488			~~632~~641			~~565~~632

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Compensation and Benefits Expense

Compensation and benefits expense to secure the services of our employees has historically been the largest component of our total expenses. Compensation and benefits ~~expense~~ expense includes salaries, overtime, bonuses, commissions, share-based compensation, benefits, severance, employment taxes and other employee costs.

We pay discretionary bonuses based on a combination of company and individual performance, and we have entered into guaranteed contractual agreements with employees that require specified bonus payments, both of which are accrued over the related service periods. These bonuses make up a significant portion of our compensation and benefits expense.

Share-based awards constitute a portion of our compensation expense, and as a general matter, vest over a three or four-year service period, are subject to continued employment and, accordingly, are recorded as non-cash compensation expense ratably over the service period beginning aton the date of grant. As a result, our aggregate compensation expense has been, and will continue to be, impacted as we recognize ~~multiple years of~~ share-based compensation expense associated with the vesting of prior year grants in current and future periods. As of December 31, ~~2008~~2009, there was ~~(i)~~ $129.28 million of unrecognized compensation expense related to non-vested restricted stock unit awards ~~made in connection with our initial public offering~~, which is expected to be recognized over a ~~weighted-average period of~~ 0.1 years and (ii) an additional $38.8 million of unrecognized compensation expense related to non-vested restricted stock unit awards made subsequent to our initial public offering, which is expected to be recognized over a weighted-average period of 2.70 years.

~~As part~~Since ofJanuary ~~a special retention and incentive program~~2009, ~~in August 2008~~ we ~~granted 2,970,000~~have ~~restricted~~reduced ~~stock~~our ~~unit~~total ~~equity~~headcount ~~awards~~by toapproximately ~~senior~~20% ~~employees~~as part of ~~the~~our ~~Company as~~ongoing aefforts ~~means~~to ofreduce ~~incentivizing and retaining~~ our ~~key~~operating ~~producers. The restricted~~costs ~~stock~~in ~~units~~order ~~vest~~to ~~after~~mitigate the effect ~~end~~ of athe ~~three-year~~decline ~~period~~in revenues. ~~We also~~ ~~granted~~As ~~550,000~~an ~~performance-based~~additional ~~restricted~~temporary ~~stock~~cost ~~unit equity awards to~~saving ~~certain~~measure, ~~members~~we oftemporarily ~~the~~reduced ~~Executive~~base ~~Committee~~salaries ~~that~~for ~~will~~employees ~~vest~~with ~~upon~~titles ~~the attainment~~ of Vice ~~the~~President ~~Company’s~~and ~~long-term~~above ~~performance~~by ~~goals. The~~10% ~~performance-based restricted~~during ~~stock~~2009, ~~unit~~including ~~equity~~our ~~awards~~Chief ~~granted to the~~ Executive ~~Committee are~~Officer, ~~earned~~President and ~~become~~other ~~payable~~executive ~~based on both a service and performance condition~~officers. ~~The~~ ~~service~~For ~~condition requires~~ the ~~executive~~2009-2010 todirector beterm, we ~~employed~~reduced by the ~~Company~~base ~~from~~compensation ~~the date of grant through the vesting date. The performance condition provides~~ for ~~pre~~non-~~established~~employee ~~targets relating~~directors ~~to several performance measures that are determined over a performance period~~ from ~~July 1~~$75,000 ~~2010~~ to ~~June 30~~ $50, ~~2011~~000. ~~Specifically,~~Future ~~these~~headcount ~~performance measures~~levels ~~are~~and ~~based~~resulting ~~on:~~compensation ~~(i)~~costs ~~GAAP~~will ~~revenue per employee, (ii) GAAP net income~~be ~~margin~~significantly ~~and~~dependent ~~(iii) GAAP return~~ on ~~equity. Such~~the ~~targets~~level ~~relate~~of tocapital ~~the Company~~markets ~~as a whole~~activity. If ~~the~~We ~~service and performance conditions~~ are not ~~met,~~anticipating ~~the~~further ~~restricted~~reductions ~~stock~~in ~~unit equity awards will vest on August 6~~headcount, ~~2011,~~ and ~~the~~ ~~underlying~~in ~~shares~~the ~~will~~beginning beof ~~delivered~~2010 ~~on or about the related vesting~~we ~~date. The~~restored ~~total~~our ~~grant~~employees ~~date~~base ~~fair~~salaries, ~~value~~including those of ~~these~~our ~~restricted~~Chief ~~stock unit~~Executive ~~equity~~Officer, ~~awards~~President ~~was~~and ~~$21.0~~other ~~million~~executive officers.

In2009 versus 2008. ~~addition,~~Compensation ~~during~~and benefits expense decreased $13.8 million in 2009 from 2008. This change was the result of a decrease in salary, ~~performance-based~~commissions ~~restricted~~and related ~~stock~~taxes ~~unit~~and ~~equity~~benefits ~~awards~~expense of $16.9 million, $4.9 million and $3.3 ~~have~~million, ~~been~~respectively, ~~granted~~during 2009 from 2008. The decrease was partially offset by an increase in bonus of $11.7 million in 2009 from 2008. The overall decrease was due to the 40% reduction in our headcount from January 2, 2008 through December 2009. We had 453 and 572 employees asat ~~part~~December 31, 2009 and 2008, respectively. Compensation and benefits expense in 2009 and 2008 included $0.2 million and $6.3 million, respectively, of non-cash compensation expense relating to share-based awards made in connection with our ~~regular~~initial ~~hiring~~public ~~process~~offering.

We2008 versus 2007. Compensation and ~~estimate~~benefits ~~the~~expense ~~fair~~decreased ~~value~~$40.7 ofmillion ~~performance-based~~in ~~restricted~~2008 ~~stock~~from ~~units~~2007. ~~awarded~~Included in this decrease are expenses of $18.2 million related to the acquisition of Westwind. ~~employees~~Excluding atthe impact from the ~~grant~~Westwind ~~date~~acquisition, ofcompensation and benefits expense would have decreased $58.9 million during 2008. This fluctuation was primarily the ~~equity~~result ~~instruments~~of a decrease in bonus expense of $56. ~~The~~2 ~~fair~~million. ~~value~~The reduction in bonus expense is ~~based~~due onto the ~~market~~significant ~~price~~decrease ofin our ~~common~~2008 revenue ~~stock~~as onwell as a one-time compensation expense in the ~~grant~~fourth ~~date.~~quarter Weof ~~also~~2007 ~~consider~~attributable to the ~~probability~~acceleration of ~~achieving~~the payment of 2008 mid-year retention bonuses. In addition, salary expense decreased $10.5 million during the ~~established~~same period ~~targets~~due to our reduction in ~~determining~~non-Westwind ~~our~~employee headcount during 2008. This decrease is partially offset by an increase in share-based compensation ~~with~~expense of ~~respect~~$7.3 tomillion ~~these~~as ~~awards~~a result of additional grants of restricted stock units made during 2008. We ~~recognize~~Compensation and benefits expense in 2008 and 2007 included $6.3 ~~compensation~~million ~~cost~~and ~~over~~$6.1 amillion, ~~three~~respectively, of non-~~year~~cash ~~service~~compensation ~~period~~expense relating to share-based awards made in connection with our initial public offering.

We- ~~have~~32 put in place incentive compensation arrangements that are structured under separate limited liability company agreements in order to incentivize certain of our professionals responsible for managing such business. Compensation expense associated with these payments to these individuals was $3.2 million, $2.7 million and $3.0 million for the years ended December 31, 2008, 2007 and 2006, respectively.-

~~As previously~~Table discussed, during 2008 and through February 2009, we reduced our total headcount by approximately 34% as compared to our headcount on January 2, 2008. The reductions were primarily in underperforming areas of our business as well as non-revenue producing departments. In addition, base salaries for employees with titles of Vice President and above were reduced by 10% as of January 1, 2009. These reductions in headcount and base salaries are expected to have a decrease in our compensation expense in future periods.Contents

2008 versus 2007. Compensation and benefits expense decreased $40.7 million in 2008 from 2007. Included in this decrease are expenses of $18.2 million related to the acquisition of Westwind. Excluding the impact from the Westwind acquisition, compensation and benefits expense would have decreased $58.9 million during 2008. This fluctuation was primarily the result of a decrease in bonus expense of $56.2 million. The reduction in bonus expense is due to the overall decrease in our 2008 operations as well as the one-time compensation expense in the fourth quarter of 2007 attributable to the acceleration of the payment of 2008 mid-year retention bonuses. In addition, salary expense decreased $10.5 million during the same period due to our reduction in non-Westwind employee headcount during 2008. This decrease is partially offset by an increase in share-based compensation expense of $ 7.3 million as a result of additional grants of restricted stock units made during 2008. Compensation and benefits expense in 2008 and 2007 included $6.3 million and $6.1 million, respectively, of non-cash compensation expense relating to share-based awards made in connection with our initial public offering.

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2007 versus 2006. Compensation and benefits expense increased $35.7 million in 2007 from 2006. The increase primarily relates to the one-time compensation expense of $24.8 million in the fourth quarter of 2007 attributable to the acceleration of the payment of 2008 mid-year retention bonuses and certain severance expenses, each of which were related to the integration of Westwind. In addition, the average number of employees increased during the year ended December 31, 2007 as compared to the year ended December 31, 2006 which increased the salary related expenses during 2007. Compensation and benefits expense in 2007 and 2006 included $6.1 million and $7.0 million, respectively, of non-cash compensation expense relating to share-based awards made in connection with our initial public offering.

Non-Compensation Expenses

Our non-compensation expenses include (i) brokerage execution, clearance and account administration, (ii) communications and data processing, (iii) depreciation and amortization of property and equipment, (iv) amortization of other intangible assets, (v) goodwill impairment, (vi) marketing and promotion, (vii) occupancy and equipment and (viii) other expenses.

Over the last two years, we have worked diligently to reduce our expense base in order to improve earnings and preserve capital. During 2009, non-compensation expenses decreased by $19.7 million from 2008, excluding the goodwill impairment charge of $92.6 million in 2008. Included in our non-compensation expenses for 2009 and 2008 are non-cash facilities lease loss charges of $2.3 million and $6.0 million as a result of reducing our real estate footprint in San Francisco.

2009 versus 2008. Non-compensation expense decreased $112.3 million in 2009 from 2008. Of this decrease, $92.6 million is attributable to the goodwill impairment recorded during 2008. Other than the goodwill impairment, we reduced non-compensation expense by $19.7 million in 2009 from 2008. Marketing and promotion expense decreased $5.1 million due to a reduction of client related employee travel in 2009, partially driven by our headcount reductions. Occupancy and equipment expense decreased $6.6 million primarily due to exiting or subletting offices in India, New York and San Francisco during 2008. Communications and data processing decreased $4.7 million primarily due to data services no longer needed as a result of the reduction of headcount and to a lesser extent the consolidation of our service providers. Amortization of intangible assets decreased $5.3 million due to the use of an accelerated method of amortization and the full amortization of our investment banking backlog intangible during 2008. The overall decrease in our non-compensation expense is partially offset by a loss occurred in 2009 of approximately $5.1 million due to a customer who failed to pay for several equity purchases that we executed at the customer’s request, which is included in other expenses. Based on our agreement with our primary clearing broker, we were required to settle and pay for those transactions on the customer’s behalf.

2008 versus 2007. Non-compensation expense increased $134.0 million in 2008 from 2007. This increase includes the goodwill impairment of $92.6 million and the amortization of identifiable intangible assets acquired as a result of the Westwind acquisition in January 2008 of $15.3 million. In addition, included in this increase are additional operating expenses of $18.4 million attributable to our acquisition of Westwind. Excluding the goodwill impairment, intangible amortization and the impact from the Westwind acquisition, non-compensation expense would have increased $7.7 million during 2008.

The increase of $7.7 million in non-compensation expense includes an increase in occupancy and equipment expense of $6.0 million during 2008 from 2007 primarily due to our exiting certain office space in September and December 2008 for which we recorded a $6.0 million lease loss charge. In addition, brokerage execution, clearance and account administration increased $4.6 million during 2008 from 2007 primarily as a result of increased brokerage activity during the period ~~as well as the outsourcing of our our NYSE floor brokerage during 2008~~. Communication and data processing expense increased by $1.1 million due to increased costs associated with our expansion into Canada, Europe and the ~~midwest~~ Midwest. This overall increase of $11.7 million is partially offset by a decrease of $3.0 million in marketing and promotion primarily due to a decrease in client related travel and conference expenses in 2008.

2007 versus 2006. Non-compensation expenses increased $5.9 million in 2007 from 2006. The overall increase in non-compensation expenses was primarily due to increases in marketing and promotion expense, other expenses and communication expense of $3.6 million, $3.3 million and $2.3 million, respectively. Marketing and promotion expense increased primarily due to increased travel and entertainment related to the geographic expansion of our business. Other expense increased as a result of expenses related to a third-party private equity management agreement which began in late 2006 and communications expenses increased due to our opening additional offices during 2007. These increases were partially offset by a decrease of $2.3 million in brokerage, execution, clearance and account administration expense due to improved efficiencies in our trade execution practices and lower NYSE exchange rate fees, as well as less clearance charges associated with lower trading volume.

Provision for Taxes

~~Before~~We ~~completion~~account offor ~~our~~income ~~initial~~taxes ~~public~~by ~~offering~~recognizing ondeferred ~~February 7,~~tax ~~2006,~~assets weand ~~were a~~liabilities ~~limited~~based ~~liability~~upon ~~company~~temporary differences between the financial reporting and ~~all~~tax basis of our ~~income~~assets and ~~losses~~liabilities. ~~were~~Valuation ~~reportable~~allowances byare established when ~~our~~necessary ~~individual~~to ~~members,~~reduce ~~and,~~deferred ~~accordingly,~~tax assets when it is more likely than not that a portion or all of the Udeferred tax assets will not be realized.S. ~~Federal~~The ~~and~~change ~~state~~in the ~~income~~effective tax rate in 2009 from 2008 is primarily due to the recognition of ~~taxes~~unrecognized ~~payable~~tax bybenefits ~~our~~in ~~members~~Canada, ~~based~~the ~~upon~~cumulative ~~their~~compensation ~~share~~expense recognized for financial reporting purposes for restricted stock units in excess of ~~our~~the ~~net~~allowable ~~income~~tax deductions, ~~had~~and ~~not been~~the ~~reflected~~increase in ~~our~~the ~~historical~~valuation ~~consolidated~~allowance ~~financial~~as a ~~statements~~result of the U.S. net operating losses.

InDuring ~~connection~~the ~~with~~year ~~our~~ended ~~initial~~December ~~public~~31, ~~offering~~2008, we ~~reorganized~~determined ~~from~~that ait ~~limited liability~~was ~~company into a corporation, and following~~ more-likely-than-not that ~~reorganization~~our ~~became subject to~~ U.S. ~~Federal~~deferred ~~and~~tax ~~state~~assets ~~income~~would ~~taxes~~not be realized. We ~~account~~made ~~for income taxes in~~this ~~accordance~~determination ~~with~~primarily ~~SFAS~~based ~~No. 109,~~on ~~Accounting~~the ~~for~~significant ~~Income~~losses ~~Taxes~~we ~~("SFAS~~incurred ~~No.~~in ~~109"),~~2008 ~~which~~as ~~requires the~~a ~~recognition~~result of ~~deferred~~the ~~tax~~severe ~~assets~~economic downturn and ~~liabilities~~its ~~based~~effect ~~upon~~on ~~temporary differences between~~ the ~~financial~~capital ~~reporting~~markets. ~~and tax bases~~ As of ~~our~~December 31, ~~assets~~2009, ~~and liabilities.~~we ~~Valuation~~continued ~~allowances~~to ~~are~~carry ~~established~~a ~~when~~full ~~necessary~~valuation toallowance ~~reduce~~on ~~deferred~~our ~~tax~~U.S. ~~assets~~and ~~when~~U.K. ~~it is more likely than not that a portion or all of the~~ deferred tax assets ~~will~~due ~~not~~to becontinued ~~realized~~losses incurred during 2009.

Our effective tax rates for 2009, 2008 and 2007 were 0.3%, (3.9)% and 100.7%, respectively. The tax benefit for 2009 relates to our operations in Canada. The change in the effective tax rate in 2009 from 2008 is primarily due to the recognition of unrecognized tax benefits in Canada of $1.1 million in 2009. The decrease in our effective tax rate in 2008 from 2007 is primarily due to the recognition of deferred tax benefits in 2007 resulting in a reduction to our effective tax rate of 49.8%, our recognition of a deferred tax valuation allowance in 2008 of $44.8 million resulting in a reduction to our effective tax rate of 18.7%, and the 2008 impairment charge to goodwill acquired in the Westwind transaction of $92.6 million, which did not provide a tax benefit and resulted in a reduction to our effective tax rate of 17.0%.

Refer to the “Deferred Tax Valuation Allowance” section within “Critical Accounting ~~Policies~~ Policies and Estimates” below for additional disclosures on factors considered by by management in the establishment of the valuation allowance on deferred tax assets.

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Table of Contents

Business Combination

On January 2, 2008, we acquired Westwind and under the agreement, we indirectly acquired 100 percent of Westwind’s outstanding shares and Westwind became our indirect subsidiary. Total consideration was approximately $156 million, which consisted of $45 million in cash, 7,009,112 shares of ~~the~~our ~~Company’s~~ common stock valued at $15.35 per share (based on the average closing price over a five day ~~period~~ period starting two days prior to the acquisition announcement date of October 1, 2007 and ending two days after the announcement date) and direct acquisition costs of $3.1 million consisting primarily of legal, accounting and advisory fees. ~~Common~~ Common stock issued includes 6,639,478 exchangeable shares, which are shares issued by our a Canadian subsidiary ~~of the Company~~ and are exchangeable for shares of ~~the~~our ~~Company’s~~ common stock.

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During the year ended December 31, 2008, we experienced a significant decline in our market capitalization which was affected by the uncertainty in the financial markets. The tightening of the credit markets contributed to a sharp decline in our capital raising investment banking revenues during the same period. Based on the difficult conditions in business climate and our perception that the climate is unlikely to change in the near term, we recorded a full impairment charge to the goodwill asset of $92.6 million that was recorded as part of the Westwind acquisition. The impairment charge was determined based on our fair value utilizing a discounted cash flow analysis, and we considered our market capitalization to determine the reasonableness of the discounted cash flow.

Liquidity and Capital Resources

WeDue to the economic environment and its impact on the capital markets, we incurred net losses for the two year period ended December 31, 2009, which contributed to a reduction in cash in 2009 from 2008 and from 2007. Although we incurred these losses, we believe that our current level of equity capital, current cash balances, funds anticipated to be provided by operating activities and funds available to be drawn under temporary loan agreements, will be adequate to meet our liquidity and regulatory capital requirements for the next 12 months. Our broker dealers have adequate capital with consolidated excess net capital of $44.2 million. Our cash and cash equivalents at December 31, 2009 are $97.1 million, and we have taken significant steps to reduce our compensation expenses by reducing headcount and reduce non-compensation expenses by consolidating facilities and renegotiating rates with vendors, which we expect to have a significant positive impact on operating cash flows.

We currently do not anticipate significant capital expenditure requirements in the foreseeable future. Refer to the “Contractual Obligations” below for a summary of commitments requiring cash payments, which primarily consist of operating lease commitments and commitments to invest in private equity funds. Additionally, included in securities owned is seed capital which we have provided to our small/mid-cap growth public equity investment team which may be available for withdrawal as the investment product obtains additional commitments of capital from third party investors.

Cash Flows

~~Cash~~In 2009, cash and cash equivalents ~~were~~decreased $19.5 million from $116.6 million at December 31, 2008,. A asignificant portion of this decrease was due to our net loss in 2009. Additionally, investing and financing activities used $12.4 million of cash and cash equivalents during 2009 due to the repurchase at par of $4013.3 million of ARS from our customer accounts in July 2009, the net settlement of equity awards that became deliverable to our employees of $2.4 million, the purchase of property plant and equipment of $1.5 million and the purchase of partnership investments and other investments excluding ARS of $1.2 million offset by cash received from the sale or redemption of ARS of $~~157~~3.04 million atand the ~~December~~sale ~~31,~~of ~~2007~~warrants of $3.3 million.

Operating activities used $44.4 million of cash and cash equivalents during 2008. Our net loss excluding non-cash items contributed $26.1 million to the decrease in cash. Additionally, in February 2008, we made aggregate cash bonus payments to our employees of $25.6 million, as well as an aggregate cash payment of $24.8 million to our employees attributable to the acceleration of the payment of 2008 mid-year retention bonuses and certain severance expenses. During 2008, we had a decrease in accrued expenses and other liabilities of $27.4 million which is due to the fact that we have made cash payments to settle accrued expenses that were recorded as of December 31, 2007. The overall decrease in our cash and cash equivalents from operating activities is partially offset by the partial liquidation of our convertible holdings as well as an overall decrease in our net securities owned positions which provided $50.2 million of cash.

Investing activities provided $26.4 million of cash and cash equivalents during 2008. The proceeds from sales of investments in partnerships and other investments during 2008 were $47.0 million primarily relating to the sale of auction rate securities. We used these proceeds to fund our $45.0 million cash payment for the acquisition of Westwind in January 2008 and to fund bonus and severance payments discussed in the operating activities discussion above. Cash received as a result of our acquisition of Westwind was $36.9 million. In addition, during 2008 we purchased investments in partnerships and other investments of $7.2 million and purchased property and equipment of $5.6 million.

Financing activities used $16.7 million of cash and cash equivalents during 2008 primarily due to the repurchase of our common stock from the open market for $9.5 million and the repayment of notes payable of $6.1 million. In addition, we net settled $1.0 million of equity awards that became deliverable to our employees during 2008.

Auction Rate Securities

~~As of December 31, 2008, we held auction rate securities (“~~ARS”) ~~with a par value of $9.7 million and fair value of $8.9 million. The ARS~~ are ~~variable~~ variable rate debt instruments, having long-term maturity dates ~~(approximately~~of approximately 25 to 31 33 years), but whose interest rates are reset through an auction process, ~~most~~ most commonly at intervals of 7, 28 and 35 days. The interest earned on these investments is exempt from Federal income tax. All of our ARS are backed by pools of student loans and ~~are~~were rated ~~either~~AAA, ~~Aaa~~AA, ~~Aa3~~A, orAaa, A1, ~~at December 31~~A3, ~~2008. We~~ ~~continue~~or toBaa3 ~~receive interest when due on our ARS and expect to continue to receive interest when due in the future. The weighted-average Federal tax exempt interest rate was 1.91%~~ at December 31, ~~2008~~ 2009.

InAs ~~January~~of December ~~2008~~31, we2009 ~~sold~~and ~~a substantial~~2008, ~~portion~~we ofheld ~~our~~ ARS ~~holdings~~with ata par ~~and~~value ~~used~~of ~~the~~$19.6 ~~proceeds~~million toand ~~partially fund our acquisition of Westwind~~$9. ~~Subsequent~~7 tomillion, ~~January 2008~~respectively, ~~auction~~and ~~failures~~a ~~increased~~fair ~~significantly.~~value ~~While~~of it$18.1 ~~was~~million ~~not~~and ~~unusual~~$8.9 million, ~~for~~respectively. ~~supply~~The to2009 ~~outweigh~~balance ~~demand,~~includes ~~banks~~the ~~running~~July ~~the~~2009 ~~auctions~~repurchase ~~had~~at ~~historically~~par ~~absorbed~~of $13.3 ~~the~~million ~~excess~~of ~~supply~~ARS inthat ~~order~~we tohad ~~ensure~~previously asold ~~successful~~from ~~auction and a liquid~~our ~~market.~~account in ~~This~~January ~~process~~2008 ~~came~~ to athree ~~halt~~customers aswithout ~~the~~those ~~result~~customers’ ~~of the dislocation in the~~prior ~~credit~~written ~~markets during 2008~~consent.

~~The~~In 2008, widespread auction failures resulted in a lack of liquidity for these previously liquid securities. As a result, the principal balance of our ARS will not be accessible until successful auctions occur, a buyer is found outside of the auction process, the issuers and the underwriters establish a different form of financing to replace these securities or final payments come due according to the contractual maturities. As aOur ~~result~~valuation of ARS assesses the ~~auction~~credit ~~failures,~~and liquidity werisks ~~evaluate~~associated with the ~~credit~~ ~~risk~~securities, ~~and~~compares ~~compare~~ the yields on ~~our~~ ARS to similarly rated municipal issues and determines the fair values based on a discounted cash flow analysis. ~~Our~~ ~~valuation~~We ofdetermined that our ARS ~~assesses~~had ~~the~~a ~~credit~~fair ~~and liquidity~~value ~~risks~~decline ~~associated~~of ~~with~~$0.8 ~~the~~million ~~securities~~in ~~and~~each ~~determines~~of the ~~fair~~years ~~values~~ended ~~based~~December on31, ~~a discounted~~2009 ~~cash~~and ~~flow analysis~~2008. Key assumptions of the discounted cash flow analysis included the following:

Coupon Rate – In determining fair value, we projected future interest rates based on the average near term historical interest rate for these issues, the Securities Industry and Financial Markets Association Municipal Swap Index and benchmark yield curves. The average interest rates assumed ranged from 3.2.5% to 3 4.71% on a taxable equivalent yield basis.

-Discount 36Rate – Our discount -rate was based on a spread over LIBOR and consisted of a spread of 330 to 620 bps over this yield curve which we adjusted down to a spread of 135 to 200 bps over periods of time ranging from 12 to 19 quarters. This spread is included in the discount rate to reflect the current and expected illiquidity, which we expect to moderate over time.

~~Discount~~Timing ~~Rate~~of Liquidation – Our ~~discount~~ ~~rate~~cash ~~was~~flow ~~based~~projections ~~on a spread over the AA Municipal General Education yield curve and~~ consisted of avarious ~~spread~~scenarios offor ~~425~~each tosecurity ~~450~~wherein we ~~bps~~valued ~~over~~the ~~this~~ARS ~~yield~~at ~~curve~~points ~~which~~in ~~we adjusted~~time ~~down~~where toit 50was ~~bps~~in ~~over~~the ~~periods~~interest of ~~time~~the ~~ranging from twelve to nineteen~~issuer, ~~quarters. This~~based ~~spread~~on ~~is included in~~ the ~~discount~~fail rate, to ~~reflect~~redeem the ~~current~~ ~~and~~securities. ~~expected~~We ~~illiquidity,~~concluded ~~which~~values wefor ~~expect~~each security tobased ~~trend~~on ~~toward~~ the ~~mean in the ARS market. The~~ average ~~spread~~valuation ~~between~~of ~~our~~these ~~ARS~~various ~~and~~scenarios. ~~the~~For AAthe ~~Municipal~~securities ~~General Education yield curve between August 2004 and August 2007~~analyzed, ~~a period~~the inshortest ~~which~~time ~~auctions~~to ~~were~~liquidation ~~not~~was ~~likely~~assumed to ~~fail,~~be ~~averaged less than 10 basis~~27 ~~points~~months.

~~Timing~~In of2009, ARS ~~Liquidation~~were –redeemed ~~Our cash~~at ~~flow~~their ~~projections~~par ~~consisted~~value of ~~various~~$3.2 ~~scenarios~~million, ~~for~~and ~~each security wherein we valued the~~ ARS towere ~~points~~sold infor ~~time~~$0.2 million, ~~where~~which itapproximates ~~was~~par invalue. ~~the~~In ~~interest~~January ~~of the issuer~~2010, ~~based~~ onwe ~~the~~sold ~~fail~~ARS ~~rate, to redeem the~~ securities~~. Our concluded~~ ~~values~~ for ~~each~~$2.0 ~~security~~million ~~were~~with ~~based~~a onpar ~~the~~value ~~average valuation~~ of ~~these various scenarios~~$2. ~~For~~2 ~~the securities analyzed, the shortest average time to liquidation was assumed to be 30 months~~million.

Based on the results of the discounted cash flow analysis, we determined that our ARS had a decline in fair value of $0.8 million during the year ended December 31, 2008.

Debt Financing

InOur ~~connection~~outstanding ~~with~~notes ~~our~~consist ~~initial~~of ~~public~~a ~~offering~~note ofin ~~common~~the ~~stock,~~principal weamount ~~issued~~ of $3310 million issued to the California Public Employees’ Retirement System and a note in the principal amount of ~~unsecured~~$13 ~~senior~~million ~~notes~~issued to ~~our~~Nomura ~~former~~America ~~Class D~~Investment, ~~and~~Inc (the ~~Class D-1~~“Senior ~~shareholders~~Notes”). ~~and~~The ~~are~~Senior ~~required~~Notes tohave ~~make~~similar ~~principal~~terms and ~~interest~~covenants. The Senior ~~payments~~Notes onbear ~~these~~interest ~~notes~~at a floating rate equal to the mid-term applicable Federal rate in ~~accordance~~effect ~~with~~from ~~their~~time ~~terms~~to time and mature in 2011. AsA ofthird ~~December~~note ~~31,~~(the “Contingent ~~2008,~~Payment Senior Note”) in the principal amount of $10 million was issued to the ~~outstanding~~California ~~principal~~Public ~~balance~~Employees’ ~~under~~Retirement ~~these~~System ~~notes~~and was ~~$23~~paid in full in September 2008.0 ~~million~~The Senior Notes contain covenants regarding additional debt and isother ~~due~~liabilities that could cause them to become callable and require that the notes be repaid should we enter into a transaction to liquidate or dispose of all or substantially all of our property, business or assets. As of December 31, 2009, we are in ~~January~~compliance ~~2011~~with these covenants.

~~In April 2008, Thomas Weisel Partners LLC, our U.S. broker~~-~~dealer~~ ~~subsidiary, entered~~34 into a $25.0 million revolving note and subordinated loan agreement. Thomas Weisel Partners LLC will need to satisfy certain covenants in order to draw funds under this loan agreement, which have been satisfied at December 31, 2008. These covenants include the following: (i) maintaining a certain level of equity, (ii) meeting specific financial ratios based upon regulatory financial statement filings, (iii) continuing to employ Thomas W. Weisel as Chief Executive Officer, (iv) continuing to operate Thomas Weisel Partners LLC’s investment banking and brokerage operations and (v) demonstrating Thomas Weisel Partner LLC’s investment banking and brokerage operations continue to generate a specified percentage of total revenues. Through the date of this filing, no amounts have been drawn under this loan agreement.-

~~We previously~~Table ~~had a financing arrangement with General Electric Capital Corporation, the balance~~ of ~~which was $3.7 million as of December 31, 2007. We paid all outstanding principal and interest to General Electric Capital Corporation in May 2008.~~Contents

Bonus and Net Settlement of Share-Based Compensation

The timing of bonus compensation payments to our employees may significantly affect our cash position and liquidity from period to period. While our employees are generally paid salaries semi-monthly during the year, bonus payments, which make up a larger portion of total compensation, have historically been paid in February and July. In 2008, we made aggregate cash discretionary bonus payments to our employees of $65.2 million, excluding payments of $12.6 million attributable to 2007 bonuses earned by Westwind employees. In 2009, we made aggregate cash bonus payments to our employees of $29.1 million. In January and February of 2010, we made aggregate cash bonus payments to our employees of approximately $33.3 million.

InDuring ~~February~~2009, ~~2008~~approximately 1,700,000 weshares ~~made~~of ~~aggregate~~freely ~~cash~~transferable ~~bonus~~common ~~payments~~stock became deliverable to our employees ~~of approximately~~in ~~$25.6~~respect ~~million~~of ~~and~~share-based awards previously granted. ~~equity~~We ~~awards~~elected ~~with~~to settle a ~~grant~~portion ~~date~~of ~~fair~~these vesting shares through a net ~~value~~settlement offeature ~~$22.4~~to ~~million. In~~meet ~~addition,~~the inminimum ~~February~~employee ~~2008~~statutory income tax withholding requirements. During 2009, we made ~~aggregate~~ ~~cash~~ payments of $242.84 million related to ~~our~~the ~~employees~~net settlement ~~attributable~~of shares. Our cash position and liquidity will be effected to the ~~acceleration~~extent ~~and~~we ~~cessation~~elect ofto ~~the mid-year~~continue ~~retention~~to ~~bonuses,~~settle ~~which~~a ~~had historically~~portion ~~been~~of ~~paid~~vesting inshares ~~July,~~through ~~and~~net settlement ~~certain~~in ~~severance~~the ~~expenses~~future.

In ~~July~~ ~~2008~~February 2010, weapproximately ~~made~~1,770,000 ~~aggregate~~shares ~~cash~~of ~~bonus~~freely ~~payments~~transferable common stock became deliverable to our ~~Canadian~~employees ~~based~~in ~~employees~~respect of share-based awards ~~approximately~~previously granted, and we made payments of $82.76 million related to the net settlement of these shares.

In February 2009, we made aggregate cash bonus payments to our employees of approximately $19.2 million and granted equity awards with a grant date fair value of $7.9 million.

During the year ended December 31, 2008, approximately 350,300 shares of freely transferable common stock became deliverable to our employees in respect of share-based awards previously granted. We elected to settle a portion of these vesting shares through a net settlement feature provided for in SFAS No. 123(R), Share-Based Payment, to meet the minimum employee statutory income tax withholding requirements. During the year ended December 31, 2008, we made payments of $1.0 million related to the net settlement of shares. Our cash position and liquidity will be affected to the extent we elect to continue to settle a portion of vesting shares through net settlement in the future.

In February 2009, approximately 1,100,000 shares of freely transferable common stock became deliverable to our employees in respect of share-based awards previously granted, and we made payments of $1.5 million related to the net settlement of these shares.

Regulatory Net Capital and Other Amounts Required to be Maintained at Broker-Dealer Subsidiary

We have the following registered securities broker-dealers:

· Thomas Weisel Partners LLC ~~(“TWP”)~~

· Thomas Weisel Partners Canada Inc. ~~(“TWPC”)~~

Thomas Weisel Partners International Limited (“TWPIL”)

-TWP 37is a registered U.S. broker-dealer that is subject to the Net Capital Rule administered by the SEC and the Financial Industry Regulatory Authority (“FINRA”), which requires the maintenance of minimum net capital. SEC and FINRA regulations also provide that equity capital may not be withdrawn or cash dividends paid if certain minimum net capital requirements are not met.

TWP is a registered U.S. broker-dealer that is subject to the Uniform Net Capital Rule under the Securities Exchange Act of 1934 administered by the SEC and FINRA, which requires the maintenance of minimum net capital. SEC and FINRA regulations also provide that equity capital may not be withdrawn or cash dividends paid if certain minimum net capital requirements are not met.

TWPC is a registered investment dealer in Canada and is subject to the capital requirements of the Investment Industry Regulatory Organization of Canada. TWPIL is a registered U.K. broker-dealer and is subject to the capital requirements of the Financial Securities Authority.

Our broker dealers maintain sufficient regulatory capital. The table ~~below~~ below summarizes the minimum capital requirements for our broker-dealer subsidiaries (in thousands):

December 31, 2008

December 31, 2009

Required Net Capital

Net Capital

Excess Net Capital

TWP

1,000

4131,~~867~~112

4030,~~867~~112

TWPC

~~203~~238

1012,~~822~~533

1012,~~619~~295

TWPIL

1,~~469~~119

12,~~794~~870

~~325~~1,751

Total

2,~~672~~357

5446,~~483~~515

5144,~~811~~158

~~Regulatory~~Our ~~net~~clearing ~~capital~~brokers ~~requirements~~are ~~change~~also ~~based~~the onprimary ~~certain~~source ~~investment~~of ~~and~~the ~~underwriting~~short-term financing of our ~~activities~~securities inventory. In connection with the provision of the short-term financing, we are required to maintain deposits with our clearing brokers. These deposits are included in our net receivable from or payable to clearing brokers in the consolidated statements of financial condition.

~~Our~~Regulatory ~~clearing~~net ~~brokers~~capital ~~are~~requirements ~~also~~change ~~the~~based ~~primary~~on ~~source~~certain ofinvestment ~~the~~and ~~short-term~~underwriting activities. ~~financing~~Accordingly, ofwe regularly monitor our liquidity position, including ~~securities~~our ~~inventory~~cash and net capital positions. In ~~connection~~April ~~with~~2008, ~~the~~TWP ~~provision~~entered ofinto a $25.0 million revolving note and subordinated loan agreement. The credit period in which TWP could draw on the note ended on April 18, 2009. TWP renewed this ~~short-term~~agreement ~~financing~~on April 30, we2009, ~~are~~and ~~required~~the new credit period expires April 30, 2010. From time to ~~maintain~~time ~~deposits~~we ~~with~~may ~~our~~borrow ~~clearing~~funds under this subordinated loan agreement or ~~brokers~~under similar liquidity facilities. ~~These~~ ~~deposits~~Such ~~are~~funds ~~included~~would inconstitute capital for purposes of calculating our net ~~receivable~~capital ~~from~~position. orThis facility is available ~~payable~~subject to ~~clearing~~certain ~~brokers~~conditions including the following: (i) maintaining a certain level of equity, (ii) meeting a certain level of net capital based upon regulatory financial statement filings, (iii) continuing to employ Thomas W. Weisel as Chief Executive Officer, (iv) continuing to operate TWP’s investment banking and brokerage operations and (v) demonstrating TWP’s investment banking and brokerage operations continue to generate a specified percentage of total revenues. As of December 31, 2009, TWP did not meet the equity threshold specified in the agreement.

Due to the nature of our investment banking and brokerage businesses, liquidity is of critical importance to us. Accordingly, we regularly monitor our liquidity position, including our cash and net capital positions. In April 2008, TWP entered into a $25.0 million revolving note and subordinated loan agreement. From time to time we may borrow funds under this subordinated loan agreement or under similar liquidity facilities. Such funds would constitute capital for purposes of calculating our net capital position.

Acquisition of Westwind

On January 2, 2008, we completed our acquisition of Westwind, and at the closing of this transaction we made a cash payment of $45 million as the cash portion of the consideration for this acquisition. In addition, total costs related to our acquisition of Westwind were $3.1 million.

Off-Balance Sheet Arrangements

In the ordinary course of business we enter into various types of off-balance sheet arrangements including certain reimbursement guarantees ~~meeting the FIN No. 45~~, ~~Guarantor’s~~which ~~Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (“FIN 45”), definition of a guarantee that may require future payments. These~~ include contractual commitments and guarantees. For a discussion of our activities related to these off-balance sheet arrangements, see Note 16 – Contingencies, Commitments and Guarantees and Note 17 – Financial Instruments with Off-Balance Sheet Risk, Credit Risk or Market Risk to our consolidated financial statements.

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Table of Contents

Contractual Obligations

The following table provides a summary of our contractual obligations as of December 31, ~~2008~~2009 (in thousands):

	Contractual Obligation Due by Period
	2009		2010-2011		2012-2013		Thereafter		Total
	2010		2011-2012		2013-2014		Thereafter		Total
Notes payable (1)	$	~~1,040~~621	$	2423,~~143~~069	$	—	$	—	$	2523,~~183~~690
Capital leases (2)		69213		95		—		—		~~164~~308
Operating leases (3)		1816,~~994~~581		2925,~~195~~472		1819,~~937~~967		1711,~~800~~906		8473,926
General partner commitment to invest in private equity funds (4)		269		1,054		161		—		1,484
Commitment to invest in private equity funds (4)		3,927		1,262		285		—		5,474
Unaccrued guaranteed compensation payments		~~620~~307		2,~~634~~224		—		—		32,~~254~~531
Total contractual obligations	$	2021,~~992~~649	$	5752,~~121~~122	$	1920,~~098~~252	$	1711,~~800~~906	$	~~115~~105,~~011~~929

(1)	Represents remaining principal amount and related estimated interest payable for notes issued in connection with our initial public offering.

(2)	Includes estimated interest payable related to capital lease liability.

(3)	Operating lease expense is presented net of sublease rental income.

(4) The private equity fund commitments have no specific contribution dates. The timing of these contributions is presented based upon estimated contribution dates, except for the contributions to unaffiliated funds, which we are unable to estimate and are included as of the earliest possible contribution date.

In addition to the commitments within the table above, we have made commitments to investments in unaffiliated funds. During the year ended December 31, 2008, we funded $3.4 million of these commitments and transferred $22.2 million of these commitments to a fund sponsored by us. Our remaining unfunded commitment as of December 31, 2008 was $4.3 million, which we anticipate transferring to funds sponsored by us. These commitments may be called in full at any time.

The table above excludes $1.1 million of liabilities under Interpretation No. 48, Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109 (“FIN No. 48”). We have not provided a detailed estimate of the payment timing within the table above due to the uncertainty of when the related tax settlements are due.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with ~~U.S.~~accounting principles generally accepted ~~accounting~~ ~~principles~~in the United States of America requires management to make estimates and assumptions about future events that affect the amounts reported in our consolidated financial statements and their notes. Actual results could differ significantly from those estimates. We believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the presentation of our financial condition and results of operations and require management’s most difficult, subjective and complex judgments.

Fair Value of Financial Instruments

Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS No. 157”), establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The objective of a fair value measurement is to determine the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price), other than in a forced or liquidation sale. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurements). Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our financial assets and liabilities measured and reported at fair value are classified and disclosed in one of the ~~following~~ following categories:

· Level 1 – Quoted prices are available in active markets for identical investments as of the reporting date. Investments included in this category are money market funds, listed equities. Asand ~~required~~equity byindex ~~SFAS No~~funds. ~~157,~~We we do not adjust the quoted price of these investments, even in situations where we hold a large position and a sale could reasonably be expected to affect the quoted price.

· Level 2 – Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Investments ~~which are~~ generally included in this category are convertible bonds.

· Level 3 – Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment. The inputs ~~into~~used in the determination of fair value require significant management judgment or estimation. Investments generally included in this category ~~generally~~ are ~~general~~ partnership interests in private investment funds, warrants, ~~auction~~ARS ~~rate~~and securities ~~and convertible bonds~~ that cannot be publicly offered or sold unless registration has been affected under the Securities Act ~~of 1933~~.

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Securities owned, securities sold, but not yet purchased and investments in partnerships and other investments on our consolidated statements of financial condition consist of financial instruments carried at fair value, with related unrealized gains or losses recognized in our results of operations. The use of fair value to measure these financial instruments, with related unrealized gains and losses recognized immediately in our results of operations, is fundamental to our consolidated financial statements.

The fair value of financial instruments is derived using observable market prices, observable market parameters or broker or dealer prices (bid and ask prices), if available. In the case of financial instruments transacted on ~~recognized~~ recognized exchanges, the observable market prices represent quotations for ~~completed~~ completed transactions from the exchange on which the financial instrument is ~~principally~~ principally traded. For offsetting positions in the same financial instrument, the same price within the bid-ask spread is used to measure both the long and short positions. For financial instruments that do not have readily determinable fair values through quoted market prices, the determination of fair value is derived using techniques appropriate for each particular product. ~~These techniques involve some degree of management judgment.~~

~~A substantial~~The ~~percentage of the~~ fair value of ~~our~~Level ~~securities~~1 ~~owned~~assets ~~and~~is ~~securities sold, but not yet purchased are~~ based on observable market prices, observable ~~market~~ market parameters, or is derived from broker or dealer prices. The availability of observable market prices and pricing parameters can vary from product to product. When available, observable market prices and pricing or market parameters in a product may be used to derive a price without ~~requiring~~ requiring significant judgment. In certain markets, observable market prices or market parameters are not available for all products, and fair value is determined using techniques appropriate for each particular product. These techniques involve some degree of management judgment.

~~For~~Level 3 investments in illiquid or ~~privately~~private ~~held~~company equity securities that do not have ~~readily~~ readily determinable fair values, ~~the~~require ~~determination of fair value requires~~ us to estimate ~~the~~fair value ~~of the securities~~ using the best information available. Among the factors considered by us in determining the fair value ~~of financial instruments~~ are the cost, terms and liquidity of the investments, the financial condition and operating results of the issuer, the quoted market price of publicly traded securities with similar quality and yield and other factors generally pertinent to the valuation of investments. In instances where a security is subject to transfer restrictions, the value of the security is based primarily on the quoted price of a similar security without restriction but may be reduced by an amount estimated to reflect such restrictions. Even where the value of a security is derived from an independent source, certain assumptions may be required to determine the security’s fair value. For example, we assume that the size of positions that we hold would not be large enough to affect the quoted price of the securities if we sell them, and that any such sale would happen in an orderly manner. The actual value realized upon disposition could be ~~different~~ different from the current estimated fair value. Private investments may also be be valued at cost for a period of time after an acquisition as the best ~~indicator~~ indicator of fair value. At December 31, 2009 and 2008, our Level 3 assets were $57.0 million and $44.2 million, respectively. This balance primarily consists of investments in funds managed by our Asset Management Subsidiaries and unaffiliated general partners, warrants received as partial payment for investment banking services, ARS and private investments in the equity of operating companies.

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Table of Contents

Financial instruments carried at contract amounts have short-term maturities (one year or less), are repriced frequently or bear market interest rates and, accordingly, those contracts are carried at amounts approximating fair value. Financial instruments carried at contract amounts on our consolidated statements of financial condition include receivables from and payables to clearing brokers and corporate finance and syndicate receivables.

~~Instruments~~During ~~that~~the ~~trade~~year ~~infrequently~~ended orDecember ~~have~~31, no2008, ~~market~~ARS ~~and~~for ~~therefore~~which ~~have~~the ~~little~~auctions orfailed nowere ~~price~~moved ~~transparency~~to ~~are classified within~~ Level 3 ~~based~~as on the ~~results~~assets ofwere ~~our price~~subject ~~verification~~to ~~process.~~valuation ~~Our~~using ~~Level 3~~unobservable ~~assets were $44~~inputs.~~2 million at~~ ~~December~~These 31ARS, ~~2008.~~as ~~This~~well ~~balance~~as ~~primarily consists of investments in funds managed by~~ the ~~Company’s~~ARS ~~Asset~~purchased ~~Management~~subsequent ~~Subsidiaries~~to ~~and~~December ~~unaffiliated~~31, ~~general partners~~2008, continue ~~ARS~~to ~~and~~be ~~private~~classified ~~investments~~as inLevel ~~the~~3 ~~equity~~instruments ofat ~~operating~~December 31, ~~companies~~2009.

In January 2008, we experienced a significant increase in ARS failures. While it was not unusual for supply to outweigh demand, banks running the auctions had historically absorbed the excess supply in order to ensure a successful auction and a liquid market. This process came to a halt as the result of the dislocation in the credit markets during 2008, at which point we transferred our auction rate securities into the Level 3 category. The valuation of our ARS is based on a discounted cash flow method which assesses the credit and liquidity risks associated with the securities to determine the fair values.

Investments in Partnerships and Other Investments

Investments in partnerships and other investments include our general and limited partnership interests in investment partnerships and direct investments in non-public companies. These interests are carried at estimated fair value. The net assets of investment partnerships consist primarily of investments in non-marketable securities. The underlying investments held by such partnerships and direct investments in non-public companies are valued based on estimated fair value ultimately determined by us in our capacity as general partner or investor and, in the case of an investment in an unaffiliated investment partnership, are based on financial statements prepared by an unaffiliated general partner. Due to the inherent uncertainty of valuation, fair values of these non-marketable investments may differ from the values that would have been used had a ready market existed for these investments, and the differences could be material. Increases and decreases in estimated fair value are recorded based on underlying information of these non-public company investments ~~including~~ including third-party transactions evidencing a change in value, market comparables, operating cash flows and financial performance of the companies, trends within sectors and/or regions, underlying business models, expected exit timing and strategy, and specific rights or terms associated with the investment, such as conversion features and liquidation preferences. In cases where an estimate of fair value is determined based on financial statements prepared by an unaffiliated general partner, such financial statements are generally unaudited other than audited year-end financial statements. Upon receipt of audited financial statements from an investment partnership, we adjust the fair value of the investments ~~in our subsequent financial statements~~ to reflect the audited partnership results if they differ from initial estimates. We also perform procedures to evaluate fair value estimates provided by unaffiliated general partners.

-The investment 40partnerships in which we are general partner may allocate carried -interest and make carried interest distributions, which represent an additional allocation of net realized and unrealized gains to the general partner if the partnerships’ investment performance reaches a threshold as defined in the respective partnership agreements. These allocations are recognized in revenue as realized and unrealized gains and losses on investments in partnerships. Our recognition of allocations of carried interest gains and losses from the investment partnerships in revenue is not adjusted to reflect expectations about future performance of the partnerships.

~~The~~ As the investment partnerships inrealize gains ~~which~~from wethe ~~are~~sale aof ~~general~~their ~~partner~~investments, they may ~~allocate~~make ~~carried~~cash distributions as ~~interest~~provided ~~and~~for ~~make~~in the partnership agreements. Distributions that result from carried interest ~~distributions~~may tosubsequently ~~the~~become ~~general~~subject ~~partner~~to claw back if the ~~partnerships’~~ ~~investment~~fair ~~performance~~value of ~~reaches~~private aequity ~~threshold~~partnership asassets ~~defined~~subsequently decrease in fair value. To the ~~respective~~extent ~~partnership~~these ~~agreements. We~~decreases ~~recognize~~in ~~the~~fair value and allocated ~~carried~~losses exceed our capital ~~interest~~account ~~when~~balance, ~~this~~a ~~threshold~~liability is ~~met,~~recorded ~~however~~by ~~future~~us. These liabilities for claw back obligations are not required to be paid to the investment ~~underperformance~~partnerships until the ~~may~~dissolution ~~require~~of such partnerships, and are only required to be paid if the cumulative amounts ~~previously~~actually distributed toexceed usthe toamount due based on the cumulative operating results of the partnerships. Accordingly, such liabilities may be ~~returned~~reversed toif returns in the investment partnerships increase in the ~~partnership~~future. At December 31, 2009 and 2008, we had a liability for such claw back obligation of approximately $2 million and zero, respectively.

We earn fees from the investment partnerships which we manage or of which we are a general partner. Such management fees are generally based on the net assets or committed capital of the underlying partnerships. Through March 31, 2007, we agreed in certain cases to waive management fees, in lieu of making a cash contribution, in satisfaction of our general partner investment commitments to the investment partnerships. In these cases, we generally recognize our management fee revenues at the time when we are allocated a special profit interest in realized gains from these partnerships. With respect to the investment partnerships existing as of March 31, 2007, we will no longer waive management fees subsequent to March 31, 2007.

Liability for Lease Losses

Our accrued expenses and other liabilities include a liability for lease losses related to office space that we subleased or vacated due to staff reductions in ~~2008~~2009 and in prior years. ~~The~~At ~~liability~~December ~~for~~31, 2009, and 2008 the lease ~~losses~~loss liability was $7.4 million and $9.6 million, ~~at December 31~~respectively, ~~2008~~ and will expire with the termination of the relevant facility leases through 2012. We estimate our liability for lease losses as the net present value of the differences between lease payments and receipts under sublease agreements. At December 31, 2009 we have subleases on all floors or facilities we vacated that are co-terminus with our lease commitments.

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Table of Contents

Legal and Other Contingent Liabilities

We are involved in ~~various~~a ~~pending~~number ~~and~~of ~~potential complaints~~judicial, ~~arbitrations,~~regulatory ~~legal actions, investigations~~ and ~~proceedings~~arbitration ~~related to our business. Some of these~~ matters ~~involve~~arising ~~claims for substantial amounts, including claims for punitive~~in ~~and~~connection ~~other~~with ~~special~~its ~~damages~~business. The ~~number~~outcome of ~~complaints,~~matters ~~arbitrations,~~we ~~legal actions,~~are ~~investigations~~involved ~~and~~in ~~regulatory proceedings against financial~~cannot ~~institutions~~be ~~like~~determined usat ~~has~~this ~~been increasing in recent years. We have~~time, ~~after consultation with counsel~~ and ~~consideration~~the ofresults ~~facts~~cannot ~~currently~~be ~~known~~predicted ~~by management, recorded estimated losses in accordance~~ with ~~Statement of Financial Accounting Standards No~~certainty. ~~5, Accounting for Contingencies,~~ toThere ~~the~~can ~~extent~~be weno ~~have~~assurance ~~determined~~that athese ~~claim~~matters will ~~result~~not inhave a ~~probable~~material ~~loss and the~~adverse ~~amount~~effect ofon ~~the~~our ~~loss~~results ~~can~~of beoperations ~~reasonably~~in ~~estimated.~~any ~~The~~future ~~determination~~period, ofand ~~these reserve~~a ~~amounts requires~~ significant judgment oncould ~~the~~have ~~part~~a ofmaterial ~~management~~adverse ~~and~~impact on our ~~ultimate~~ ~~liabilities~~consolidated ~~may~~statements ~~be materially different. In making these~~of ~~determinations,~~financial ~~management considers many factors~~condition, ~~including,~~operations ~~but not limited to, the loss~~ and ~~damages~~cash ~~sought~~flows. byWe ~~the~~may ~~plaintiff~~in ~~or claimant,~~ the ~~basis~~future ~~and~~become ~~validity~~involved ofin ~~the~~additional ~~claim,~~litigation ~~the~~in ~~likelihood of successful defense against~~ the ~~claim and~~ordinary ~~the~~course ~~potential for, and magnitude~~ of, ~~damages~~our ~~or settlements from such pending and potential complaints~~business, ~~arbitrations, legal actions, investigations~~ ~~and~~including ~~proceedings,~~litigation ~~and~~that ~~fines~~could ~~and~~be ~~penalties~~material ~~or orders from regulatory agencies. See Note 16 – Commitments, Guarantees and Contingencies~~ to ~~the~~our ~~consolidated financial statements included in Item 15 of this Annual Report of Form 10-K for a further description of legal proceedings~~business.

~~Additionally,~~We review wethe ~~will~~need ~~record receivables~~ for ~~insurance~~any ~~recoveries~~loss ~~for~~contingency ~~legal~~reserves ~~settlements~~ and ~~expenses~~ establish reserves when, ~~such~~in ~~amounts~~the opinion ~~are~~of ~~covered~~management, byit ~~insurance~~is ~~and~~probable ~~recovery~~that ofa ~~such~~matter ~~losses or~~would ~~costs~~result ~~are~~in ~~considered~~liability, and ~~probable~~the amount of ~~recovery. These~~loss, ~~amounts~~if ~~will~~any, can be ~~recorded~~ asreasonably ~~other~~estimated. ~~assets~~Generally, in view of the ~~consolidated~~inherent ~~statements~~difficulty of ~~financial~~predicting ~~condition~~the outcome of those matters, ~~and~~particularly ~~will~~in ~~reduce~~cases ~~other~~in ~~expense~~which claimants seek substantial or indeterminate damages, it is not possible to ~~the~~determine ~~extent~~whether ~~such~~a ~~losses~~liability has been incurred or ~~costs~~to ~~have~~reasonably ~~been~~estimate the ultimate or minimum amount of that liability until ~~incurred~~the case is close to resolution, in ~~the~~which case no reserve is established until that time. See Note 16 – Commitments, Guarantees and Contingencies to the consolidated financial statements included in Item 15 of ~~results~~this Annual Report of Form ~~operations~~10-K for a further description of legal proceedings.

Additionally, we will record receivables for insurance recoveries for legal settlements and expenses when such amounts are covered by insurance and recovery of such losses or costs are considered probable of recovery. These amounts will be recorded as other assets in the consolidated statements of financial condition and will reduce other expense to the extent such losses or costs have been incurred, in the consolidated statements of operations.

Allowance for Doubtful Accounts

Our receivables include corporate finance and syndicate receivables relating to our advisory and investment banking engagements. Weand also ~~have~~include ~~receivables from~~ our ~~clearing~~ ~~brokers~~related ~~in connection with the clearing of our brokerage transactions.~~party receivables. We record an allowance for doubtful accounts on these receivables based on a specific identification basis. Management is continually evaluating ~~our~~ our receivables for collectibility and possible write-off by examining the facts ~~and~~ and circumstances surrounding each specific case where a loss is deemed a possibility.

Deferred Tax Valuation Allowance

In determining our provision for income taxes, we recognize deferred tax assets and liabilities based on the difference between the carrying value of assets and liabilities for financial and tax reporting purposes. For our investments in partnerships, adjustments to the carrying value are made based on determinations of the fair value of underlying investments held by such partnerships. Both upward and downward adjustments to the carrying value of investment partnerships, which are recorded as unrealized gains and losses in ~~our~~asset management revenue in our consolidated statements of operations, represent timing differences until such time as these gains and losses are realized.

~~SFAS~~Guidance ~~No.109~~ states that a deferred tax asset should be reduced by a valuation allowance if based on the weight of all available evidence, it is more likely than not (a likelihood of more than 50%) that some portion or the entire deferred tax asset will not be realized. The valuation allowance should be sufficient to reduce the deferred tax asset to the amount that is more likely than not to be realized. The determination of whether a deferred tax asset is realizable is based on weighing ~~weighting~~ all available evidence, including both positive and negative evidence. The ~~SFAS~~guidance ~~No. 109~~ provides that the realization of deferred tax assets, including carryforwards and deductible temporary differences, depends upon the existence of sufficient taxable income of the same character during the carryback or carryforward period. ~~SFAS~~The ~~No.109~~guidance requires the consideration of all sources of taxable income available to realize the deferred tax asset, including the future reversal of existing temporary differences, future taxable income exclusive of reversing temporary differences and carryforwards, taxable income in carryback years and tax-planning strategies.

Our operations are in a cumulative loss position for the three-year 41period ended -December 31, 2009 primarily created by significant operating losses in 2008 and 2009 due to the challenging environment for the capital markets. For purposes of assessing the realization of the deferred tax assets, this cumulative taxable loss position is considered significant negative evidence and has caused us to conclude that it is more likely than not that we will not be able to realize the deferred tax assets in the future. As of December 31, 2008, we recorded full valuation allowances of $44.8 million and $1.7 million on our U.S. and U.K. deferred tax assets, respectively. As of December 31, 2009, the valuation allowances increased to $67.0 million on U.S. deferred tax assets and $1.8 million on the U.K. deferred tax asset. We will reassess the realization of the deferred tax assets each reporting period. To the extent that our financial results improve and the deferred tax assets become realizable, we will be able to reduce the valuation allowance through earnings.

~~Our~~In 2007, ~~operations~~we ~~are~~reduced in a ~~cumulative~~previously ~~loss~~established ~~position~~$1.4 ~~for~~million ~~the~~valuation ~~three-year~~allowance ~~period~~to ~~ended~~zero ~~December 31,~~resulting ~~2008, primarily created by poor operating results~~ in ~~2008 due to~~ the ~~challenging~~recognition ~~environment~~of ~~for~~a ~~the capital markets~~$1.4 ~~For~~million ~~purposes of assessing the realization of the~~ deferred tax ~~assets,~~benefit. ~~this cumulative taxable~~The ~~loss~~valuation ~~position~~allowance iswas ~~considered~~recorded ~~significant~~due ~~negative~~to ~~evidence~~uncertainty ~~and~~of ~~has~~our ~~caused~~ability us to generate ~~conclude~~future ~~that~~capital itgains ~~is more likely than not we will not be able~~ to ~~realize~~offset ~~the~~ a deferred tax ~~assets in the future. As of December 31~~benefit, ~~2008,~~which weresulted ~~recorded a~~from ~~full~~unrealized ~~valuation~~capital ~~allowance~~losses ofin ~~$44.8 million~~our oninvestments ~~our~~in Upartnerships.~~S. deferred~~ ~~tax assets.~~ In ~~addition~~2007, we recorded ~~have~~net acapital ~~valuation~~gains ~~allowance~~ of $117.7 million onin our ~~U.K.~~investments in partnerships, ~~deferred~~which ~~tax~~included ~~asset~~the asrecognition of ~~December~~previously ~~31,~~recorded ~~2008~~unrealized gains. ~~Management will reassess the~~The ~~realization~~valuation ofallowance ~~the~~was ~~deferred~~reduced ~~tax~~due ~~assets~~to ~~based on~~ the ~~criteria~~significant recognition of ~~SFAS No.109 each~~capital ~~reporting~~gains, ~~period. To~~ the ~~extent~~continued ~~that~~performance of our ~~financial~~investments ~~results improve~~ and the ~~deferred~~ ~~tax~~expectation ~~asset~~of ~~becomes~~being able ~~realizable,~~to wereduce ~~will~~unrealized becapital ~~able~~losses tothrough ~~reduce~~recognition ~~the~~and ~~valuation~~future ~~allowance~~unrealized ~~through~~capital ~~earnings~~gains.

During the three months ended March 31, 2006, we recognized a one-time tax benefit upon conversion to a corporation in connection with the establishment of our deferred tax asset balances, partially offset by a valuation allowance of $9.9 million. The valuation allowance was recorded because management at that time, concluded that a portion of the deferred tax benefit, which resulted from unrealized capital losses, more likely than not would not be realized due to the uncertainty of our ability to generate future capital gains to offset such capital losses. During 2006 however, the performance of the underlying investments in our investments in partnerships exceeded our estimates, significantly reducing our net unrealized capital loss and accordingly, our valuation allowance by $8.5 million. As of December 31, 2006, the deferred tax asset recorded to reflect these net unrealized losses was $1.4 million, and the related valuation allowance was $1.4 million.

In 2007, we recorded net capital gains of $17.7 million, which included the recognition of previously recorded unrealized gains. As a result, our deferred tax asset associated with our net unrealized loss increased by $1.6 million for the period ending December 31, 2007. However, due to the significant recognition of capital gains in the current year, the continued performance of our investments and our expectation of being able to reduce unrealized capital losses through recognition and future unrealized capital gains, we reduced our valuation allowance to zero. In reducing our valuation allowance, we recognized deferred tax benefit of $1.4 million during 2007 resulting in a 49.8% reduction in the effective tax rate.

Business Combinations

InWe ~~accordance with business combination accounting under Statement of Financial Accounting Standards No. 141, Business Combinations, we~~ allocate the purchase price of acquired businesses to the tangible and intangible assets acquired and liabilities assumed based on estimated fair values. Such allocations require management to make significant estimates and assumptions, especially with respect to intangible assets acquired.

Management’s estimates of fair value are based upon assumptions believed to be reasonable. These estimates are based on information obtained from management of the acquired companies and are inherently uncertain. Critical estimates in valuing certain of the intangible assets include, but are not limited to, (i) future expected cash flows from acquired businesses, (ii) future expected cash flows from employees subject to non-compete agreements and (iii) the acquired company’s market position.

Unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions, estimates or actual results.

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Table of Contents

Goodwill and Long-Lived Assets

InWe ~~accordance with Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (“SFAS No. 142”), we~~ are required to evaluate goodwill annually to determine whether it is impaired. Goodwill is also required to be tested between annual impairment tests if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying amount. We selected the fourth quarter to perform our annual goodwill impairment testing. The ~~provisions~~guidance ofrequires ~~SFAS No. 142 require that~~ a two-step impairment test be performed on goodwill. In the first step, we compare the fair value of the reporting unit to its carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is considered not impaired and we are not required to perform ~~further~~ further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then we must perform the second step of the impairment test in order to determine the implied fair value of the reporting unit’s goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then we would record an impairment loss equal to the difference.

During the year ended December 31, 2008, we experienced a significant decline in our market capitalization which was affected by the uncertainty in the financial markets. The tightening of the credit markets contributed to a sharp decline in our capital raising investment banking revenues during the same period. Based on this ~~the~~operating ~~difficult~~environment ~~conditions in business climate~~ and our perception that the climate iswas unlikely to change in the near term, we recorded a full impairment charge to the goodwill asset of $92.6 million. The impairment charge was determined based on our fair value utilizing a discounted cash flow analysis, and we considered our market capitalization to determine the reasonableness of the discounted cash flow.

-We 42review impairment and disposal of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverability of an asset is measured by a comparison of the carrying amount of an asset to its estimated undiscounted future cash flows expected to be generated. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

WeWhile we ~~account~~believe ~~for~~our ~~the~~estimates ~~impairment~~ and ~~disposal~~judgments ofabout ~~long-lived~~future ~~assets~~cash ~~utilizing~~flows ~~Statement of~~are ~~Financial Accounting Standards No. 144~~reasonable, ~~Accounting for the Impairment or~~ ~~Disposal~~future ~~of Long-Lived Assets (“SFAS No. 144”). SFAS No. 144 requires that long-lived assets, such as property and equipment, and purchased intangible assets subject to amortization, are reviewed for~~ impairment ~~whenever~~charges ~~events or changes in circumstances indicate that the carrying amount of an asset~~ may ~~not~~ be ~~recoverable.~~required ~~The~~if ~~recoverability of an asset is measured by a comparison of~~ the ~~carrying~~expected ~~amount of an asset to its estimated undiscounted future~~ cash ~~flows expected~~flow ~~to be generated. If the carrying amount of an asset exceeds its~~estimates, ~~estimated~~as ~~future cash flows~~projected, ando ~~impairment~~not ~~charge~~occur isor ~~recognized~~if byevents ~~the~~change ~~amount~~requiring ~~by which~~us ~~the~~to ~~carrying~~revise ~~amount of the asset exceeds the fair value of the asset.~~our estimates.

While we believe our estimates and judgments about future cash flows are reasonable, future impairment charges may be required if the expected cash flow estimates, as projected, do not occur or if events change requiring us to revise our estimates, and thereby result in non-cash charges to our earnings in the period in which we make the adjustment.

Recently Issued Accounting Pronouncements

~~Statement~~Accounting offor ~~Financial~~Assets ~~Accounting~~Acquired and ~~Standards~~Liabilities ~~No.~~Assumed ~~157~~in –a ~~“Fair~~Business ~~Value~~Combination ~~Measurements”~~That ~~(“SFAS~~Arise ~~No.~~from ~~157”).~~Contingencies – In April ~~September 2006~~2009, the Financial Accounting Standards Board (“FASB”) issued ~~SFAS No.~~amending ~~157, which defines fair value, establishes a framework for measuring fair value in GAAP~~ and ~~expands disclosures about fair value measurements. The primary~~ ~~focus~~clarifying ofguidance ~~SFAS~~over ~~No.~~business ~~157~~combinations is to ~~increase~~address ~~consistency~~application ~~and~~issues raised ~~comparability~~by ~~in fair value measurements~~preparers, asauditors ~~well~~and asmembers ~~provide~~of ~~better information about~~ the ~~extent~~legal toprofession ~~which~~on initial ~~fair~~recognition ~~value is used to measure recognized assets~~ and ~~liabilities~~measurement, ~~the~~subsequent ~~inputs~~measurement ~~used to develop the measurements~~ and ~~the~~accounting ~~effect fair value measurements have on~~and ~~earnings~~disclosure ~~for the period, if any. We adopted SFAS No. 157 as~~ of ~~January~~assets ~~1, 2008. Adoption~~and ofliabilities ~~SFAS~~arising ~~No.~~from ~~157~~contingencies ~~did~~in ~~not have~~ a ~~material impact on our~~business ~~consolidated statements of financial condition, operations and cash flows~~combination. ~~Under provisions~~This ~~set~~guidance ~~forth~~is ineffective ~~FSP~~for ~~157-2,~~acquisitions ~~Effective~~on ~~Date~~or ofafter ~~FASB Statement No.~~the ~~157~~beginning ~~(“FSP 157-2”), we elected to defer adoption~~ of ~~SFAS~~the ~~No.~~first ~~157~~annual ~~until January~~reporting 1,period ~~2009~~beginning ~~for~~on ~~nonfinancial assets and nonfinancial liabilities that are not recognized~~ or ~~disclosed~~after ~~at fair value in the financial statements on a~~December ~~recurring~~15, ~~basis~~2008. We adopted ~~FSP~~the ~~157-2~~guidance onupon ~~January 1~~issuance, ~~2009,~~ and the adoption did not have a material impact on our consolidated statements of financial condition, ~~results of~~ operations orand cash flows.

~~Statement~~Determining ofWhether ~~Financial~~a ~~Accounting Standards~~Market ~~No.~~Is ~~159~~Not Active –and ~~“The~~a ~~Fair~~Transaction ~~Value~~Is ~~Option~~Not ~~for~~Distressed ~~Financial~~– ~~Assets and Financial Liabilities” (“SFAS No. 159”).~~ In ~~February~~April ~~2007~~2009, the FASB issued ~~SFAS~~guidance ~~No. 159,~~providing ~~which~~additional ~~permits~~guidance ~~entities~~on todetermining ~~choose~~whether toa ~~measure~~market for ~~many~~a financial ~~instruments~~asset ~~and certain~~is ~~other~~not ~~items~~active atand ~~fair~~a ~~value~~transaction ~~that~~is ~~are~~ not ~~currently~~distressed ~~required~~for tofair value bemeasurements. ~~measured at~~The ~~fair~~guidance ~~value~~was ~~and~~effective ~~establishes~~for ~~presentation~~interim and ~~disclosure~~annual ~~requirements designed~~periods toending ~~facilitate~~after ~~comparisons~~March ~~between~~15, ~~entities~~2009 ~~that~~and ~~choose~~is ~~different~~applied ~~measurement attributes~~prospectively. ~~for~~We ~~similar~~adopted ~~types~~the guidance ofon ~~assets~~March 31, 2009, and ~~liabilities.~~the Weadoption ~~adopted~~did ~~SFAS~~not ~~No.~~have ~~159 as~~a ofmaterial ~~January~~impact 1,on our ~~2008~~consolidated ~~and~~statements ~~elected~~of ~~not~~financial tocondition, ~~apply~~operations ~~the~~and ~~provisions~~cash flows.

~~Statement~~Determining ofFair ~~Financial~~Value ~~Accounting~~When the ~~Standards~~Volume ~~No.~~and ~~141R~~Level –of ~~“Business~~Activity ~~Combinations”~~for ~~(“SFAS~~the ~~No.~~Asset ~~141R”). In December~~or ~~2007,~~Liability ~~the~~Have ~~FASB~~Significantly ~~issued~~Decreased ~~SFAS~~and ~~No.~~Identifying ~~141R,~~Transactions ~~which~~That ~~improves~~Are ~~the~~Not ~~relevance,~~Orderly ~~representational~~– In April ~~faithfulness~~2009, ~~and~~the ~~comparability~~FASB ofissued ~~the~~additional ~~information~~guidance ~~that~~for aestimating ~~reporting~~fair ~~entity~~value when the ~~provides~~volume inand ~~its~~level ~~financial~~of ~~reports~~activity ~~about~~for athe ~~business~~asset ~~combination~~or ~~and~~liability ~~its~~have ~~effects.~~significantly ~~SFAS No~~decreased. ~~141R~~This ~~applies~~guidance ~~prospectively~~also toassists ~~business~~in ~~combinations~~identifying ~~for~~circumstances ~~which~~that ~~the~~indicate ~~acquisition~~a ~~date~~transaction is onnot ororderly. ~~after~~This ~~the~~guidance ~~beginning~~was ofeffective ~~the~~for ~~first~~interim ~~annual~~and ~~reporting~~annual ~~period~~reporting ~~beginning~~periods onending or after ~~December~~June 15, ~~2008. Early~~2009 ~~adoption~~and ~~of SFAS~~is ~~No.~~applied ~~141R was not permitted~~prospectively. We adopted ~~SFAS~~the ~~No.~~guidance ~~141R~~ on ~~January~~June 130, 2009, and the adoption did not have ana material impact on our consolidated statements of financial condition, operations and cash flows.

~~Statement of Financial~~ Accounting ~~Standards~~ ~~No.~~for ~~160~~Transfers ~~– “Noncontrolling Interests in~~of ~~Consolidated~~ Financial ~~Statements~~Assets an– ~~amendment of ARB No. 51” (“SFAS No. 160”).~~ In ~~December~~ ~~2007~~June 2009, the FASB issued ~~SFAS~~guidance ~~No.~~to ~~160,~~improve ~~which improves~~ the relevance, ~~comparability~~representational faithfulness and ~~transparency~~ comparability of the ~~financial~~ information that a reporting entity provides in its ~~consolidated~~ financial ~~statements~~reports byabout ~~establishing~~a ~~accounting~~transfer ~~and reporting~~of ~~standards~~financial ~~for~~assets, the ~~noncontrolling~~effects ~~interest~~of in a ~~subsidiary~~transfer ~~and~~on ~~for~~its ~~the~~financial position, financial ~~deconsolidation~~performance ofand cash flows, and a ~~subsidiary.~~transferor’s ~~SFAS~~continuing Noinvolvement in transferred financial assets. ~~160~~This guidance is effective for ~~fiscal~~interim ~~years,~~ and ~~interim~~ annual periods ~~within~~ending ~~those fiscal years, beginning on or~~ after ~~December~~November 15, ~~2008.~~ ~~Early~~2009 ~~adoption~~and ofis ~~SFAS~~applied Noprospectively. ~~160 was not permitted.~~ We adopted the ~~SFAS~~guidance ~~No. 160~~ on ~~January~~December 131, 2009, and the adoption did not have an impact on our consolidated statements of financial condition, operations and cash flows.

~~Statement~~Consolidation of ~~Financial~~Variable ~~Accounting~~Interest ~~Standards~~Entities ~~No. 161~~ – ~~“Disclosures~~In ~~about~~June ~~Derivative Instruments~~2009, ~~and~~the ~~Hedging~~FASB ~~Activities~~issued –new anguidance ~~Amendment~~on consolidation of variable ~~FASB~~interest ~~Statement~~entities ~~No. 133”~~ (“~~SFAS No. 161~~VIE”). ~~In March~~which ~~2008~~is effective January 1, ~~the~~2010. ~~FASB~~This ~~issued~~new ~~SFAS~~guidance ~~No.~~amends ~~161,~~the ~~which~~consolidation ~~enhances~~guidance ~~disclosures~~applicable ~~about~~to anVIEs, ~~entity’s derivative~~including ~~instruments~~changing ~~and~~the ~~hedging~~approach ~~activities~~to ~~and~~determining ~~thereby~~a ~~improves~~VIE’s ~~the~~primary ~~transparency~~beneficiary ~~of financial~~(the reporting. entity ~~SFAS~~that ~~No.~~must ~~161~~consolidate isthe ~~effective~~VIE) ~~for~~and ~~financial~~the ~~statements~~frequency ~~issued for~~of ~~fiscal~~reassessment. ~~years~~In January 2010, ~~and~~the ~~interim~~FASB ~~periods~~voted ~~within~~to ~~those~~defer ~~fiscal~~the ~~years,~~effective ~~beginning~~date ~~after November~~of ~~15,~~this ~~2008.~~new ~~SFAS~~guidance for ~~No.~~a ~~161~~reporting ~~encourages,~~enterprise’s ~~but~~interest ~~does~~in ~~not~~certain ~~require,~~investment ~~comparative disclosures~~companies and for certain ~~earlier~~money ~~periods~~market atfunds. ~~initial~~The adoption. Weof ~~adopted~~this ~~SFAS~~new ~~No.~~guidance, ~~161~~except onthe ~~January~~deferred 1,portion ~~2009,~~which ~~and~~we ~~adoption~~are ~~did~~currently evaluating, is not expected to have ana material impact on our consolidated statements of financial condition, operations and cash flows.

~~FASB~~Measuring ~~Staff~~Liabilities ~~Position~~at ~~157-3 – “Determining the~~ Fair Value of– aIn ~~Financial~~August ~~Asset~~2009, ~~When~~ the ~~Market~~FASB ~~for~~issued ~~That~~guidance ~~Asset~~with isthe ~~Not~~objective ~~Active” (“FSP~~to ~~157-3”).~~provide ~~In October~~clarification ~~2008,~~in ~~the~~circumstances ~~FASB issued~~in ~~FAS 157-3,~~ which ~~clarifies~~a ~~the~~quoted ~~application~~market ofprice ~~SFAS~~in ~~No.~~an active ~~157~~market infor athe ~~market that~~identical liability is not ~~active~~available. ~~and~~The ~~provides~~guidance anis applicable ~~example~~when oftrying ~~key considerations~~ to ~~determine~~ measure the fair value of ~~financial~~a ~~assets~~liability ~~when~~under ~~the~~fair ~~market~~value accounting ~~for~~rules. ~~those~~The ~~assets~~guidance is ~~not active. FSP~~effective ~~157-3~~for ~~was~~the ~~effective~~first ~~upon~~reporting ~~issuance~~period, including ~~prior periods~~interim ~~for~~reporting ~~which~~periods, ~~financial~~beginning ~~statements~~after ~~have~~the ~~not~~standard ~~been~~was issued. ~~The~~We adopted ~~adoption~~the ofguidance ~~FSP 157-3~~upon issuance, and the adoption did not have ana material impact on our consolidated statements of financial condition, operations and cash flows.

~~FASB Staff Position FAS 140~~-4 ~~and~~39 ~~FIN 46(R)~~-8 – “Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities” (“FSP 140-4”). In December 2008, the FASB issued FSP 140-4, which requires additional disclosure related to transfers of financial assets and variable interest entities. FSP 140-4 was effective for the first reporting period ending after December 15, 2008. As FSP 140-4 impacts our disclosures and not our accounting treatment for transfers of financial assets and variable interest entities, our adoption of FSP 140-4 did not have an impact on our consolidated statements of financial condition, operations and cash flows.

-Table ~~43 -~~of Contents

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Our business and financing activities directly expose us to various types of risks, including (i) market risk relating to, among other things, the changes in the market value of equity or debt instruments and (ii) interest rate risk relating to the effect of changes in interest rates and the yield curve on the value of debt instruments that we hold and our payment obligations in respect of notes that we have issued. We are also exposed to other risks in the conduct of our business such as credit risk and the effects of inflation. Our exposure to these risks could be material to our consolidated financial statements. Set forth below is a discussion of some of these risks together with quantitative information regarding the aggregate amount and value of financial instruments that we hold or in which we maintain a position or that we have issued and that remain outstanding, in each case, as of December 31, ~~2008~~2009 and ~~2007~~2008. Due to the nature of our business, in particular our trading business, the amount or value of financial instruments that we hold or maintain a position in will fluctuate on a daily and intra-day basis, and the year-end values and amounts presented below are not necessarily indicative of the exposures to market risk, interest rate risk and other risks we may experience at various times throughout any given year.

Market Risk

Market risk represents the risk of loss that may result from the change in value of a financial instrument due to fluctuations in its market price. Market risk may be exacerbated in times of trading illiquidity when market participants refrain from transacting in normal quantities and/or at normal bid-offer spreads. Our exposure to market risk is directly related to our role as a financial intermediary in customer trading and to our market-making, investment banking and investment activities, which ~~activities~~ include committing from time to time to to purchase large blocks of stock from publicly-traded issuers or their ~~significant~~ significant shareholders. We trade in equity and convertible debt securities as an active participant in both listed and over-the-counter equity and convertible ~~debt~~ ~~markets and typically maintain securities in inventory to facilitate our~~debt ~~market-making activities and customer order flow~~markets. Market risk is inherent in financial instruments.

The following tables categorize our market risk sensitive financial instruments by type of security and, where applicable, by contractual maturity date.

As of December 31, 2009 (in thousands):

	Maturity Date																Carrying Value as of
	2010			2011		2012		2013		2014		Thereafter			Total Principal		December 31, 2009

Inventory positions:
Convertible bonds—long	$	—		$	—	$	—	$	—	$	—	$	—		$	—	$	—
Warrants—long (1)		296			5,282		161		—		—		121			5,860		5,860
Equity securities—long																		16,063
Total—long		296			5,282		161		—		—		121			5,860		21,923

Equity securities—short																		19
Equity index fund—short																		15,560
Total—short																		15,579

Other investments:
Auction rate securities		100	(2)		—		—		—		—		19,500	(3)		19,600		18,087
Other																		2,392

(1)	Maturity date is based on the warrant expiration date. An assumption of expiration date was made when none was available.

(2)	Represents 2010 redemptions as of February 28, 2010.

(3)	Represents contractual maturity date. Please refer to further discussion regarding ARS included in the “Liquidity and Capital Resources” section above.

As of December 31, 2008 (in thousands):

	Maturity Date															Carrying Value as of
	2009		2010		2011		2012		2013		Thereafter			Total Principal		December 31, 2008
Inventory positions
Convertible bonds—long	$	—	$	1,000	$	7,050	$	—	$	—	$	4,500		$	12,550	$	6,402
Warrants—long (1)		250		153		27		—		—		—			430		430
Equity securities—long																	12,095
Total—long		250		1,153		7,077		—		—		4,500			12,980		18,927
Equity securities—short																	1,~~464~~465
Equity index fund—short																	10,~~073~~072
Total—short																	11,537
Other investments
Auction rate securities		—		—		—		—		—		9,650	(2)		9,650		8,913
Other																	2,248

(1)	Maturity date is based on the warrant expiration date. An assumption of expiration date was made when none was available.

(2) Represents contractual maturity date. Please refer to further discussion regarding ~~auction~~ARS ~~rate securities~~ included in the “Liquidity and Capital Resources” section above.

-In connection 44with our asset management activities, we provide seed investment -funds for new asset management products to be invested in long and short positions in publicly traded equities. These seed investments are included in the tables presented above.

AsIn addition to the positions set forth in the table above, we maintain investments in private equity, venture capital and other investment funds. These investments are carried at fair value in accordance with industry guidance, and as of December 31, ~~2007~~2009 ~~(in~~and December 31, 2008, the fair value of these investments was ~~thousands):~~$30.7 million and $32.7 million, respectively.

	Maturity Date																Carrying Value as of
	2008			2009		2010		2011		2012		Thereafter			Total Principal		December 31, 2007
Inventory positions
Convertible bonds—long	$	9,305		$	4,063	$	1,005	$	5,348	$	21,949	$	120,050		$	161,720	$	189,483
Equity securities—long																		30,957
Total—long		9,305			4,063		1,005		5,348		21,949		120,050			161,720		220,440
Convertible bonds—short		—			—		2,705		—		1,000		12,031			15,736		18,351
U.S. Treasury securities—short		—			5,000		—		—		10,000		—			15,000		15,330
Equity securities—short																		116,060
Equity index fund—short																		14,192
Total—short		—			5,000		2,705		—		11,000		12,031			30,736		163,933
Other investments
Auction rate securities		37,600	(1)		—		—		—		—		8,550	(2)		46,150		46,150
Municipal debt securities		4,016			—		—		—		—		—			4,016		4,016
Other																		8,262

(1) Represents earlier of contractual maturity or repricing date, which we believe represents the market risk inherent in the underlying instrument. Please refer to further discussion regarding auction rate securities included in the “Liquidity and Capital Resources” section above.

(2) Represents contractual maturity date. Please refer to further discussion regarding auction rate securities included in the “Liquidity and Capital Resources” section above.

In connection with our asset management activities, we provide seed investment funds for new asset management products to be invested in long and short positions in publicly traded equities and related options and other derivative instruments. These seed investments are included in the tables presented above.

In addition to the positions set forth in the table above, we maintain investments in private equity, venture capital and other investment funds. These investments are carried at fair value in accordance with industry guidance, and as of December 31, 2008 and 2007, the fair value of these investments was $32.7 million and $53.3 million, respectively.

From time to time we may use a variety of risk management techniques and hedging strategies in the ordinary course of our brokerage activities, including establishing position limits by product type and industry sector, closely monitoring inventory turnover, maintaining long and short positions in related securities and using exchange-traded equity options and other derivative instruments.

In connection with our brokerage activities, management reviews reports appropriate to the risk profile of specific trading activities. Typically, market conditions are evaluated and transaction details and securities positions are reviewed. These activities seek to ensure that trading strategies are within acceptable risk tolerance parameters, particularly when we commit our own capital to facilitate client trading. We believe that these procedures, which stress timely communications between our traders, institutional brokerage management and senior management, are important elements in evaluating and addressing market risk.

- 40 -

Table of Contents

Interest Rate Risk

Interest rate risk represents the potential loss from adverse changes in market interest rates. As we may hold U.S. Treasury securities ~~and auction rate securities~~, as ~~well~~ARS asand convertible debt securities, and incur interest-sensitive liabilities from time to time, we are exposed to interest rate risk arising from changes in the level and volatility of interest rates and in the shape of the yield curve. Certain of these interest rate risks may be managed through the use of short positions in U.S. government and corporate debt securities and other instruments. In In addition, we issued floating rate notes to California Public Employees’ Retirement System and Nomura America Investment, Inc., and, therefore, ~~are~~we are exposed to the risk of higher interest payments on those notes if interest rates rise.

-The tables 45below provide information about our financial instruments that are -sensitive to changes in interest rates. For inventory positions, other investments and notes payable, the table presents principal cash flows with contractual maturity dates.

~~The tables~~As ~~below provide information about our financial instruments that are~~of ~~sensitive to changes in interest rates. For inventory positions~~December 31, ~~other~~2009 ~~investments and notes payable the table presents principal cash flows with~~(in ~~contractual maturity dates.~~thousands):

	Maturity Date																Carrying Value as of
	2010			2011		2012		2013		2014		Thereafter			Total Principal		December 31, 2009

Inventory positions:
Convertible bonds—long	$	—		$	—	$	—	$	—	$	—	$	—		$	—	$	—

Other investments:
Auction rate securities (1)		100	(4)		—		—		—		—		19,500	(5)		19,600		18,087

Notes payable:
Senior Note, floating mid-term AFR(2) + 2.25% (3)		—			13,000		—		—		—		—			13,000		12,732
Senior Note, floating mid-term AFR(2) + 2.25% (3)		—			10,000		—		—		—		—			10,000		9,794

(1)	The weighted average Federal tax exempt interest rate was 0.73% at December 31, 2009.

(2)	Applicable Federal Rate.

(3)

We have recorded the debt principal at a discount to reflect the below-market stated interest rate of these notes at inception. We amortize the discount to interest expense so that the interest expense approximates our incremental borrowing rate. The weighted average interest rate was 4.36% at December 31, 2009.

(4)	Represents 2010 redemptions as of February 28, 2010.

(5)	Represents contractual maturity date. Please refer to further discussion regarding ARS included in the “Liquidity and Capital Resources” section above.

As of December 31, 2008 (in thousands):

	Maturity Date															Carrying Value as of
	2009		2010		2011		2012		2013		Thereafter			Total Principal		December 31, 2008
Inventory positions
Convertible bonds—long	$	—	$	1,000	$	7,050	$	—	$	—	$	4,500		$	12,550	$	6,402
Other investments
Auction rate securities (1)		—		—		—		—		—		9,650	(3)		9,650		8,913
Notes payable
Senior Note, floating mid-term AFR + 2.25% (2)		—		—		13,000		—		—		—			13,000		12,492
Senior Note, floating mid-term AFR(2) + 2.25% (3)		—		—		13,000		—		—		—			13,000		12,492
Senior Note, floating mid-term AFR + 2.25% (2)		—		—		10,000		—		—		—			10,000		9,609
Senior Note, floating mid-term AFR(2) + 2.25% (3)		—		—		10,000		—		—		—			10,000		9,609

(1) The weighted average Federal tax exempt interest rate was 1.91% at December 31, 2008.

(2) WeApplicable ~~have~~Federal ~~recorded the debt principal at a discount to reflect the below-market stated interest rate of these notes at inception~~Rate. We amortize the discount to interest expense so that the interest expense approximates our incremental borrowing rate. The weighted average interest rate for notes payable outstanding at December 31, 2008 was 5.17%.

(3) ~~Represents~~We ~~contractual~~have ~~maturity~~recorded ~~date.~~the ~~Please~~debt ~~refer~~principal at a discount to ~~further~~reflect ~~discussion~~the ~~regarding~~below-market ~~auction~~stated interest rate ~~securities~~of ~~included~~these innotes at inception. We amortize the ~~“Liquidity~~discount ~~and~~to ~~Capital~~interest ~~Resources”~~expense ~~section~~so ~~above~~that the interest expense approximates our incremental borrowing rate. The weighted average interest rate was 5.17% at December 31, 2008.

As(4) ~~of December~~Represents ~~31,~~contractual ~~2007~~maturity (date. Please refer to further discussion regarding ARS included in ~~thousands):~~ the “Liquidity and Capital Resources” section above.

	Maturity Date																Carrying Value as of
	2008			2009		2010		2011		2012		Thereafter			Total Principal		December 31, 2007
Inventory positions
Convertible bonds—long	$	9,305		$	4,063	$	1,005	$	5,348	$	21,949	$	120,050		$	161,720	$	189,483
Convertible bonds—short		—			—		2,705		—		1,000		12,031			15,736		18,351
U.S. Treasury securities—short		—			5,000		—		—		10,000		—			15,000		15,330
Total—short		—			5,000		2,705		—		11,000		12,031			30,736		33,681
Other investments
Auction rate securities (1)		37,600	(6)		—		—		—		—		8,550	(7)		46,150		46,150
Municipal debt securities (2)		4,016			—		—		—		—		—			4,016		4,016
Notes payable
Senior Note, floating mid-term AFR + 2.25% (3)		—			—		—		13,000		—		—			13,000		12,267
Senior Note, floating mid-term AFR + 2.25% (3)		—			—		—		10,000		—		—			10,000		9,436
Contingent Payment Senior Note (4)		—			—		—		2,384		—		—			2,384		1,948
Secured Note, floating at LIBOR + 2.85% (5)		3,734			—		—		—		—		—			3,734		3,734

- 41 -

~~(1)~~Table ~~The~~of ~~weighted average interest rate was 5.42% at December 31, 2007.~~Contents

(2) The weighted average interest rate was 3.80% at December 31, 2007.

(3) We have recorded the debt principal at a discount to reflect the below-market stated interest rate of these notes at inception. We amortize the discount to interest expense so that the interest expense approximates our incremental borrowing rate. The weighted average interest rate was 6.65% at December 31, 2007.

(4) The Contingent Payment Senior Note had a variable due date based upon distributions received from certain private equity funds. We recorded the debt principal at a discount and amortized the discount to interest expense so that the interest expense on this non-interest bearing note approximated our incremental borrowing rate. The weighted average interest rate was 6.98% at December 31, 2007.

(5) The weighted average interest rate was 8.17% at December 31, 2007.

(6) Represents earlier of contractual maturity or repricing date, which we believe represents the interest rate risk inherent in the underlying instrument. Please refer to further discussion regarding auction rate securities included in the “Liquidity and Capital Resources” section above.

(7) Represents contractual maturity date. Please refer to further discussion regarding auction rate securities included in the “Liquidity and Capital Resources” section above.

- 46 -

Credit Risk

Our broker-dealer subsidiaries place and execute customer orders. The orders are then settled by unrelated clearing organizations that maintain custody of customers’ securities and provide financing to customers. The majority of our transactions, and consequently the concentration of our credit exposure, is with our clearing brokers. The clearing brokers are also the primary source of our short-term financing (securities sold, but not yet purchased), which is collateralized by cash and securities owned by us and held by the clearing brokers. Our securities owned may be pledged by the clearing brokers. The amount receivable from orand payable to the clearing brokers ~~represents~~in the consolidated statements of financial condition represent amounts receivable or and payable in connection with the proprietary and customer trading activities. As of December 31, ~~2008~~2009 and ~~2007~~December 31, ~~our~~2008, we had cash on deposit with the clearing brokers of $6960.38 million and $~~135~~69.93 million, respectively, that was not collateralizing ~~any~~ liabilities to the clearing brokers. In addition to the clearing brokers, we are exposed to credit risk from other brokers, dealers and other financial institutions with which we transact business.

Through indemnification provisions in our agreement with our clearing organizations, customer activities may expose us to off-balance sheet credit risk. We may be required to purchase or sell financial instruments at prevailing market prices in the event a customer fails to settle a trade on its original terms or in the event cash and securities in customer margin accounts are not sufficient to fully cover customer obligations. We seek to control the risks associated with brokerage services for our customers through customer screening and selection procedures as well as through requirements that customers maintain margin collateral in compliance with governmental and self-regulatory organization regulations and clearing organization policies.

During 2009, we recorded a loss of $5.1 million due to a customer who failed to pay for several equity purchases that we executed at the customer’s request. Based on our agreement with our primary clearing broker, we were required to settle and pay for those transactions on the customer’s behalf. We recorded the loss in bad debt expense which is included in other expense in the consolidated statement of operations. We believe the loss was incurred as a result of fraudulent activity on the part of the customer and are vigorously pursuing that customer for the losses incurred upon liquidating those positions.

Effects of Inflation

Due to the fact that our assets are generally liquid in nature, they are not significantly affected by inflation. However, the rate of inflation affects our expenses, such as employee compensation, office leasing costs and communications charges, which may not be readily recoverable in the price of services offered by us. To the extent inflation results in rising interest rates and has other adverse effects upon the securities markets, it may adversely affect our financial ~~position~~condition, ~~results of~~ operations and cash flows.

Regulatory and Legal Risk

Legal risk includes the risk of customer and/or regulatory claims in connection with ~~auction~~ARS ~~rate securities~~ matters. While these claims may not be the result of any wrongdoing, we do, at a minimum, incur costs associated with investigating and defending against such claims. In addition, we are generally subject to extensive legal and regulatory requirements ~~as described in Item 1. Business – Regulation~~ and are subject to potentially sizable adverse legal judgments or arbitration awards, and fines, penalties, and other sanctions for non-compliance with those legal and regulatory requirements. We have comprehensive procedures addressing issues such as regulatory capital requirements, sales and trading practices, use of and safekeeping of customer funds, the extension of credit, including margin loans, collection activities, money laundering and record keeping. We act as an underwriter or selling group member in equity offerings, and we have potential legal exposure to claims relating to these securities offerings. To manage this exposure, a committee of senior executives reviews proposed underwriting commitments to assess the quality of the offering and the adequacy of due diligence investigation.

- 42 -

Table of Contents

Item 8. Financial Statements and Supplementary Data

The financial statements and supplementary data required by this item are included in Item 15 – “Exhibits and Financial Statement Schedules” of this Annual Report on Form 10-K.

Item 9. Changes in Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Our disclosure controls and procedures are also designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure.

During the year ended December 31, ~~2008~~2009, we carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, ~~2008~~2009.

There were no changes in our internal control over financial reporting in the year ended December 31, ~~2008~~2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The certifications required by Section 302 of the Sarbanes-Oxley Act of 2002 are filed as Exhibits 31.1 and 31.2, respectively, to this Annual Report on Form 10-K.

- 47 -

Report of Management on Internal Control over Financial Reporting

The management of Thomas Weisel Partners Group, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.

Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework and criteria established in Internal Control — Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, ~~2008~~2009.

Our internal control over financial reporting as of December 31, ~~2008~~2009 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which is included in Part IV, Item 15 of this Annual Report on Form 10-K.

Item 9B. Other Information

None.

- 43 -

Table of Contents

PART III

Item 10. Directors, Executive Officers, and Corporate Governance of the Registrant

The information required by this item is included in Item 4 – “Submission of Matters to a Vote of Security Holders” of this Annual Report on Form 10-K, as well as incorporated herein by reference to the sections entitled “The Board of Directors and its Committees”, “Compensation of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance” in our definitive Proxy Statement for the Annual Meeting of Shareholders scheduled to be held on May 20, ~~2009~~2010 (the “Proxy Statement”), which we expect to file with the SEC in April ~~2009~~ 2010.

Item 11. Executive Compensation

The information required by this item is incorporated herein by reference to the sections entitled “Executive Compensation” and “Compensation Discussion and Analysis” in the Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item is included in Item 5 – “Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities” of this Annual Report on Form 10-K, as well as incorporated herein by reference to the section entitled “Security Ownership of Certain Beneficial Owners and Management” in the Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this item is incorporated herein by reference to the section entitled “Certain Relationships and Related Transactions” in the Proxy Statement.

Item 14. Principal Accountant Fees and Services

The information required by this item is incorporated herein by reference to the section entitled “Fees Paid to Independent Auditors” in the Proxy Statement.

- 48-

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)	The following documents are filed as part of this Annual Report on Form 10-K:

1.	Consolidated Financial Statements

· Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements;

· Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting;

· Consolidated Statements of Financial Condition as of December 31, ~~2008~~2009 and ~~2007~~2008;

· Consolidated Statements of Operations for the years ended December 31, ~~2008~~2009, ~~2007~~2008 and ~~2006~~2007;

· Consolidated Statements of Changes in Shareholders’ ~~and Members’~~ Equity ~~(Deficit)~~ for the years ended December 31, ~~2008~~2009, ~~2007~~2008 and ~~2006~~2007;

· Consolidated Statements of Cash Flows for the years ended December 31, ~~2008~~2009, ~~2007~~2008 and ~~2006~~2007; and

·	Notes to the Consolidated Financial Statements

2.	Financial Statement Schedules

Separate financial statement schedules have been omitted either because they are not applicable or because the required information is included in the consolidated financial statements or notes described in Item 15(a)(1) above.

Exhibits

Refer to the Exhibit Index for a list of the exhibits being filed or furnished with or incorporated by reference into this Annual Report on Form 10-K.

- 4944 -

Table of Contents

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements		Page
Report of Independent Registered Public Accounting Firm		F-2
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting		F-3
Consolidated Statements of Financial Condition		F-4
Consolidated Statements of Operations		F-5
Consolidated Statements of Changes in Shareholders’ and Members’ Equity (Deficit)		F-6
Consolidated Statements of Cash Flows		F-7
Notes to the Consolidated Financial Statements		F-98
	Note 1 – Organization	F-98
	Note 2 – Acquisition	F-10
	Note 2 – Significant Accounting Policies	F-8
	Note 3 – Significant Accounting Policies	F-12
	Note 3 – Securities Owned and Securities Sold, But Not Yet Purchased	F-13
	Note 4 – Shareholders’ Equity	F-17
	Note 4 – Investments in Partnerships and Other Investments	F-13
	Note 5 – Securities Owned and Securities Sold, But Not Yet Purchased	F-18
	Note 5 – Related Party Transactions	F-14
	Note 6 – Investments in Partnerships and Other Investments	F-18
	Note 6 – Property and Equipment	F-15
	Note 7 – Related Party Transactions	F-19
	Note 7 – Acquisition	F-15
	Note 8 – Property and Equipment	F-21
	Note 8 – Goodwill and Other Intangible Assets	F-17
	Note 9 – Accrued Expenses and Other Liabilities	F-2117
	Note 10 – Notes Payable	F-2118
	Note 11 – Financial Instruments	F-2218
	Note 12 – Net Income (Loss) Per Share	F-2421
	Note 13 – Share-Based Compensation	F-2422
	Note 14 – Income Taxes	F-2724
	Note 15 – Employee Benefits	F-2926
	Note 16 – Commitments, Guarantees and Contingencies	F-2926
	Note 17 – Financial Instruments with Off-Balance Sheet Risk, Credit Risk or Market Risk	F-3531
	Note 18 – Regulated Broker-Dealer Subsidiaries	F-3531
	Note 19 – Segment Information	F-3632
	Note 20 – Pro Forma, As Adjusted (Unaudited)	F-36
	Note 20 – Quarterly Financial Information (Unaudited)	F-33
	Note 21 – Quarterly Financial Information (Unaudited)	F-38
	Note 21 – Subsequent Event	F-33
	Note 22 – Subsequent Event	F-38

F -1

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

Thomas Weisel Partners Group, Inc. and Subsidiaries

San Francisco, California

We have audited the accompanying consolidated statements of financial condition of Thomas Weisel Partners Group, Inc. and subsidiaries (~~formerly Thomas Weisel Partners Group LLC and subsidiaries) (~~the “Company”) as of December 31, ~~2008~~ 2009 and ~~2007~~2008, and the related consolidated statements of operations, changes in shareholders’ ~~and members’~~ equity ~~(deficit)~~, and cash flows for each of the three years in the period ended December 31, ~~2008~~2009. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. AsAn audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Thomas Weisel Partners Group, Inc. and subsidiaries at December 31, ~~2008~~2009 and ~~2007~~2008, and the results of their operations and their cash flows for each of the three years in the period ended December 31, ~~2008~~2009, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, ~~2008~~2009, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1612, ~~2009~~2010 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/ ~~DELOITTE~~Deloitte & ~~TOUCHE~~Touche LLP

San Francisco, California

March 1612, ~~2009~~2010

F -2

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

Thomas Weisel Partners Group, Inc. and Subsidiaries

San Francisco, California

We have audited the internal control over financial reporting of Thomas Weisel Partners Group, Inc. and subsidiaries (~~formerly Thomas Weisel Partners Group LLC and subsidiaries) (~~the “Company”) as of December 31, ~~2008~~2009, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel 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 (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) 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 (3) 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 the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2008~~2009, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, ~~2008~~2009 of the Company and our report dated March 1612, ~~2009~~2010 expressed an unqualified opinion on those financial statements.

/s/ ~~DELOITTE~~Deloitte & ~~TOUCHE~~Touche LLP

San Francisco, California

March 1612, ~~2009~~2010

F -3

Table of Contents

THOMAS WEISEL PARTNERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(In thousands, except share and per share data)

	December 31,
	December 31, 2009			December 31, 2008
	2008			2007
ASSETS
Cash and cash equivalents	$	~~116~~97,~~588~~055		$	~~157~~116,~~003~~588
Restricted cash		6,~~718~~768			6,718
Securities owned		1816,~~927~~063			~~220~~18,~~440~~497
Receivable from clearing brokers		1220,~~064~~320			—12,064
Corporate finance and syndicate receivables—net of allowance for doubtful accounts of $950 and $725, respectively		5,716			18,609
Corporate finance and syndicate receivables—net of allowance for doubtful accounts of $560 and $950, respectively		9,901			5,716
Investments in partnerships and other investments		4357,~~815~~000			~~111~~44,~~686~~245
Property and equipment—net of accumulated depreciation and amortization of $102,047 and $93,389, respectively		20,581			21,317
Receivables from related parties—net of allowance for doubtful loans of $2,859 and $2,324, respectively		1,543			2,263
Receivables from related parties—net of allowance for doubtful loans of $2,324 and $1,849, respectively		2,263			3,190
Property and equipment—net of accumulated depreciation and amortization of $78,730 and $102,047, respectively		14,853			20,581
Other intangible assets—net of accumulated amortization of $15,254 and zero, respectively		23,229			—
Other intangible assets—net of accumulated amortization of $25,188 and $15,254, respectively		16,401			23,229
Deferred tax assets		—			21,093
Other assets		13,873			31,749
Other assets		31,749			26,624
Total assets	$	253,777		$	281,650
Total assets	$	281,650		$	586,680
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Securities sold, but not yet purchased	$	1115,~~537~~579		$	~~163~~11,~~933~~537
Payable to clearing brokers		1325			~~4,778~~13
Accrued compensation		2135,~~824~~467			5621,~~863~~824
Accrued expenses and other liabilities		4744,~~978~~969			6047,~~059~~978
Capital lease obligations		~~152~~287			35152
Notes payable		22,~~101~~526			2722,~~385~~101
Deferred tax liability		65,~~144~~087			—6,144
Total liabilities		~~109~~123,~~749~~940			~~313~~109,~~053~~749
Commitments and contingencies (See Note 16 to the consolidated financial statements)		—			—
Shareholders’ equity:
Exchangeable common stock—par value $0.01 per share, 6,639,478 and zero shares issued and outstanding, respectively		66			—
Exchangeable common stock—par value $0.01 per share, 6,236,948 and 6,639,478 shares issued and outstanding, respectively		62			66
Common stock—par value $0.01 per share, 100,000,000 shares authorized, 25,693,394 and 25,235,470 shares issued, respectively		257			252
Common stock—par value $0.01 per share, 100,000,000 shares authorized, 26,240,118 and 25,693,394 shares issued, respectively		262			257
Additional paid-in capital		~~484~~495,~~289~~024			~~358~~484,~~720~~289
Accumulated deficit		(~~288~~352,~~440~~118	)		(85288,~~188~~440	)
Accumulated other comprehensive loss		(149,~~745~~305	)		(~~157~~14,745	)
Treasury stock—at cost, 1,544,286 and zero shares, respectively		(9,526	)		—
Treasury stock—at cost, 783,762 and 1,544,286 shares, respectively		(4,088	)		(9,526	)
Total shareholders’ equity		~~171~~129,~~901~~837			~~273~~171,~~627~~901
Total liabilities and shareholders’ equity	$	~~281~~253,~~650~~777		$	~~586~~281,~~680~~650

See accompanying notes to the consolidated financial statements.

F -4

Table of Contents

THOMAS WEISEL PARTNERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Year Ended December 31,
	2008			2007			2006
	2009			2008			2007
Revenues:
Investment banking	$	6371,~~305~~165		$	~~127~~63,~~228~~305		$	~~124~~127,~~136~~228
Brokerage		~~131~~103,~~939~~170			~~120~~131,~~187~~939			~~123~~120,~~809~~187
Asset management		(721,~~120~~464	)		33(7,~~414~~120	)		2533,~~752~~414
Interest income		~~7,341~~913			177,~~718~~341			1317,~~525~~718
Other revenue		—			~~920~~—			—920
Total revenues		~~195~~196,~~465~~712			~~299~~195,~~467~~465			~~287~~299,~~222~~467
Interest expense		(51,~~938~~656	)		(105,~~418~~938	)		(10,~~905~~418	)
Net revenues		~~189~~195,~~527~~056			~~289~~189,~~049~~527			~~276~~289,~~317~~049
Expenses excluding interest:
Expenses, excluding interest:
Compensation and benefits		~~147~~133,~~186~~355			~~187~~147,~~902~~186			~~152~~187,~~195~~902
Brokerage execution, clearance and account administration		2725,~~102~~211			2027,~~363~~102			2220,~~621~~363
Communications and data processing		2217,~~195~~490			1822,~~993~~195			1618,~~650~~993
Depreciation and amortization of property and equipment		7,~~784~~859			67,~~450~~784			86,~~549~~450
Amortization of other intangible assets		159,~~254~~934			—15,254			—
Goodwill impairment		~~92,597~~—			—92,597			—
Marketing and promotion		138,~~915~~860			1513,~~147~~915			1115,~~545~~147
Occupancy and equipment		2619,~~509~~869			1826,~~988~~509			1718,~~926~~988
Other expense		3236,~~537~~327			2332,~~979~~537			2023,~~706~~979
Total expenses excluding interest		385,079			291,822			250,192
Total expenses, excluding interest		258,905			385,079			291,822
Income (loss) before taxes		(195,552	)		(2,773	)		26,125
Loss before taxes		(63,849	)		(195,552	)		(2,773	)
Provision for taxes (tax benefit)		~~7,700~~(171	)		(27,~~793~~700	)		(82,~~796~~793	)
Net income (loss)	$	(~~203~~63,~~252~~678	)	$	20(203,252	)	$	~~34,921~~20
Preferred dividends and accretion:
Net loss per share:
Class D redeemable convertible shares		—			—			(710	)
Basic net loss per share	$	(1.96	)	$	(6.29	)	$	—
Class D-1 redeemable convertible shares		—			—			(380	)
Diluted net loss per share	$	(1.96	)	$	(6.29	)	$	—
Accretion of Class C redeemable preference shares		—			—			(518	)
Net income (loss) attributable to common shareholders and to Class A, B and C shareholders	$	(203,252	)	$	20		$	33,313
Net income (loss) per share:
Basic net income (loss) per share	$	(6.29	)	$	—		$	1.39
Diluted net income (loss) per share	$	(6.29	)	$	—		$	1.34
Weighted average shares used in computation of per share data:
Basic weighted average shares outstanding		32,~~329~~515			2632,~~141~~329			2326,~~980~~141
Diluted weighted average shares outstanding		32,~~329~~515			2632,~~446~~329			2426,~~945~~446
Pro forma, as adjusted (unaudited)*
Pro forma net revenues							$	276,179
Pro forma income before tax								25,987
Pro forma tax benefit								(7,363	)
Pro forma net income								33,350
Pro forma preferred dividends and accretion								—
Pro forma net income attributable to common shareholders and to Class A, B and C shareholders								33,350
Pro forma net income per share (unaudited)*:
Pro forma basic net income per share							$	1.39
Pro forma diluted net income per share							$	1.34
Pro forma weighted average shares used in the computation of per share data (unaudited)*:
Pro forma basic weighted average shares outstanding								23,980
Pro forma diluted weighted average shares outstanding								24,945

* See Note 20 – Pro Forma, As Adjusted (Unaudited) to the consolidated financial statements.

See accompanying notes to the consolidated financial statements.

F -5

Table of Contents

THOMAS WEISEL PARTNERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ ~~AND MEMBERS’~~ EQUITY ~~(DEFICIT)~~

(In thousands)

	Exchangeable Common Stock							Common Stock					Additional Paid-~~In Capital~~in			~~Additional Paid-in~~Accumulated			Accumulated Other Comprehensive			~~Accumulated Other Comprehensive~~Treasury			~~Treasury~~Total Shareholders’			Total ~~Shareholders’~~Comprehensive ~~and Members’ Equity~~Income			~~Total Comprehensive Income~~
	Shares			Amount			Shares			Amount			~~Class A~~Capital			~~Capital~~Deficit			~~Deficit~~Income (Loss)			~~Income (Loss)~~Shares			~~Shares~~Equity			(~~Deficit~~Loss)			~~(Loss)~~
Balance—December 31, 2005		—		$	—			—		$	—		$	26,442		$	—		$	(136,530	)	$	(309	)	$	—		$	(110,397	)	$	(7,070	)
Balance—December 31, 2006		—		$	—			25,754		$	258		$	352,299		$	(85,208	)	$	(295	)	$	—		$	267,054		$	34,935
Net income for the period January 1, to February 7, 2006		—			—			—			—			—			—			3,551			—			—			3,551			3,551
Net income		—			—			—			—			—			20			—			—			20			20
Distributions
Currency translation adjustment		—			—			—			—			—			—			138			—			138			138
Class D redeemable convertible shares		—			—			—			—			—			—			(710	)		—			—			(710	)		—
Share-based compensation expense		—			—			—			—			10,716			—			—						10,716			—
Class D-1 redeemable convertible shares		—			—			—			—			—			—			(380	)		—			—			(380	)		—
Excess tax benefits from share-based compensation		—			—			—			—			12			—			—			—			12			—
Accretion of Class C redeemable preference shares		—			—			—			—			—			—			(518	)		—			—			(518	)		—
Vested and delivered restricted stock units		—			—			48			—			—			—			—			—			—			—
Contributions—Class A shares		—			—			—			—			283			—			—			—			—			283			—
Repurchase or reacquisition of common stock		—			—			(567	)		(6	)		(4,307	)		—			—			—			(4,313	)		—
Currency translation adjustment		—			—			—			—			—			—			—			14			—			14			14
Balance—December 31, 2007		—			—			25,235			252			358,720			(85,188	)		(157	)		—			273,627			158
Reorganization from an LLC to a C Corporation
Net loss		—			—			—			—			—			(203,252	)		—			—			(203,252	)		(203,252	)
Issuance of common shares for Class A and A-1 shares		—			—			13,274			133			(26,725	)		26,592			—			—			—			—			—
Acquisition of Westwind
Issuance of common shares for Class C redeemable preference shares		—			—			1,304			13			—			31,287			18,009			—			—			49,309			—
Issuance of exchangeable shares of common stock		6,639			66			—			—			101,709			—			—			—			101,775			—
Issuance of common shares for Class D and D-1 redeemable convertible shares		—			—			2,769			28			—			145,244			—			—			—			145,272			—
Issuance of common stock		—			—			370			4			5,671			—			—			—			5,675			—
Issuance of common stock in initial public offering—net of underwriting discounts		—			—			4,915			49			—			71,626			—			—			—			71,675			—
Currency translation adjustment		—			—			—			—			—			—			(14,588	)		—			(14,588	)		(14,588	)
Direct costs of initial public offering		—			—			—			—			—			(5,457	)		—			—			—			(5,457	)		—
Share-based compensation expense		—			—			—			—			18,551			—			—			—			18,551			—
Share-based compensation expense		—			—			—			—			—			7,250			—			—			—			7,250			—
Excess tax deficiencies from share-based compensation		—			—			—			—			(12	)		—			—			—			(12	)		—
Issuance of common stock in follow-on offering—net of underwriting discounts		—			—			3,582			35			—			76,811			—			—			—			76,846			—
Vested and delivered restricted stock units		—			—			243			3			(3	)		—			—			—			—			—
Direct costs of follow-on offering		—			—			—			—			—			(821	)		—			—			—			(821	)		—
Repurchase or reacquisition of common stock		—			—			(155	)		(2	)		(347	)		—			—			(9,526	)		(9,875	)		—
Repurchase or reacquisition of common stock		—			—			(90	)		—			—			(233	)		—			—			—			(233	)		—
Balance—December 31, 2008		6,639			66			25,693			257			484,289			(288,440	)		(14,745	)		(9,526	)		171,901			(217,840	)
Net income from February 8, 2006 to December 31, 2006		—			—			—			—			—			—			31,370			—			—			31,370			31,370
Net loss		—			—			—			—			—			(63,678	)		—			—			(63,678	)		(63,678	)
Balance—December 31, 2006		—			—			25,754			258			—			352,299			(85,208	)		(295	)		—			267,054			34,935
Currency translation adjustment		—			—			—			—			—			—			5,440			—			5,440			5,440
Net income		—			—			—			—			—			—			20			—			—			20			20
Share-based compensation expense		—			—			—			—			17,054			—			—			—			17,054			—
Currency translation adjustment		—			—			—			—			—			—			—			138			—			138			138
Vested and delivered restricted stock units		—			—			180			1			(6,138	)		—			—			6,138			1			—
Share-based compensation expense		—			—			—			—			—			10,716			—			—						10,716			—
Converted exchangeable common stock		(367	)		(4	)		367			4			—			—			—			—			—			—
Excess tax benefits from share-based compensation		—			—			—			—			—			12			—			—			—			12			—
Repurchase or reacquisition of common stock		—			—			—			—			—			—			—			(700	)		(700	)		—
Vested and delivered restricted stock units		—			—			48			—			—			—			—			—			—			—			—
Reacquisition of exchangeable common stock		(35	)		—			—			—			(181	)		—			—			—			(181	)		—
Repurchase or reacquisition of common stock		—			—			(567	)		(6	)		—			(4,307	)		—			—			—			(4,313	)		—
Balance—December 31, 2009		6,237		$	62			26,240		$	262		$	495,024		$	(352,118	)	$	(9,305	)	$	(4,088	)	$	129,837		$	(58,238	)
Balance—December 31, 2007		—			—			25,235			252			—			358,720			(85,188	)		(157	)		—			273,627			158
Net income (loss)		—			—			—			—			—			—			(203,252	)		—			—			(203,252	)		(203,252	)
Acquisition of Westwind
Issuance of exchangeable shares of common stock		6,639			66			—			—			—			101,709			—			—			—			101,775			—
Issuance of common stock		—			—			370			4			—			5,671			—			—			—			5,675			—
Currency translation adjustment		—			—			—			—			—			—			—			(14,588	)		—			(14,588	)		(14,588	)
Share-based compensation expense		—			—			—			—			—			18,551			—			—			—			18,551			—
Excess tax deficiencies from share-based compensation		—			—			—			—			—			(12	)		—			—			—			(12	)		—
Vested and delivered restricted stock units		—			—			243			3			—			(3	)		—			—			—			—			—
Repurchase or reacquisition of common stock		—			—			(155	)		(2	)		—			(347	)		—			—			(9,526	)		(9,875	)		—
Balance—December 31, 2008		6,639		$	66			25,693		$	257		$	—		$	484,289		$	(288,440	)	$	(14,745	)	$	(9,526	)	$	171,901		$	(217,840	)

See accompanying notes to the consolidated financial statements.

F -6

Table of Contents

THOMAS WEISEL PARTNERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

		Year Ended December 31,			~~Year Ended December 31,~~
					2008				2007				2006
		2009				2008				2007
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss)	~~Net income (loss)~~	$	(63,678	)	$	~~(203,252~~$	)(203,252	)	$	20$	20		$	~~34,921~~
	Non-cash items included in net income (loss):
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization of property and equipment		~~Depreciation and amortization of property and equipment~~	7,859			~~7,784~~	7,784			~~6,450~~	6,450			~~8,549~~
Amortization of other intangible assets		~~Amortization of other intangible assets~~	9,934			~~15,254~~	15,254			—	—			—
Goodwill impairment		~~Goodwill impairment~~	—			~~92,597~~	92,597			—	—			—
Share-based compensation expense		~~Share-based compensation expense~~	19,406			~~18,969~~	18,969			~~10,900~~	10,900			~~7,250~~
Excess tax benefits from share-based compensation		~~Excess tax benefits from share-based compensation~~	—			—	—			~~(12~~	)(12	)		—
Deferred tax expense (benefit)		~~Deferred tax expense (benefit)~~	(2,797	)		~~14,956~~	14,956			~~(5,231~~	)(5,231	)		~~(15,862~~	)

Filing Compare · Thomas Weisel Partners Group, Inc.