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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2023
Commission File No. 001-31720
PIPER SANDLER COMPANIES
(Exact Name of Registrant as specified in its Charter)
Delaware 30-0168701
(State or Other Jurisdiction of Incorporation or Organization) (IRS Employer Identification No.)
800 Nicollet Mall, Suite 900 
Minneapolis, Minnesota
55402
(Address of Principal Executive Offices) (Zip Code)
(612)303-6000
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange On Which Registered
Common Stock, par value $0.01 per sharePIPRThe New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  No 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes  No  
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   No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No  
The aggregate market value of the 17,182,267 shares of the registrant's Common Stock, par value $0.01 per share, held by non-affiliates based upon the last sale price, as reported on the New York Stock Exchange, of the Common Stock on June 30, 2023 was approximately $2.2 billion.
As of February 20, 2024, the registrant had 17,682,577 shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Annual Report on Form 10-K incorporates by reference information (to the extent specific sections are referred to herein) from the registrant's Proxy Statement for its 2024 Annual Meeting of Shareholders to be held on May 23, 2024.



Table of Contents
Part I
Part II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Part III
Part IV
Piper Sandler Companies | 2

Part I
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K for the year ended December 31, 2023 (this "Form 10-K") contains forward-looking statements. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements. These forward-looking statements include, among other things, statements other than historical information or statements of current conditions and may relate to our future plans and objectives and results, and also may include our belief regarding the effect of various legal proceedings, as set forth under "Legal Proceedings" in Part I, Item 3 of this Form 10-K and in our subsequent reports filed with the Securities and Exchange Commission ("SEC"). Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated, including those factors discussed below under "Risk Factors" in Part I, Item 1A of this Form 10-K, as well as those factors discussed under "External Factors Impacting Our Business" included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of this Form 10-K and in our subsequent reports filed with the SEC. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new information or future events.

Item 1. Business.
OVERVIEW
Piper Sandler Companies is an investment bank and institutional securities firm, serving the needs of corporations, private equity groups, public entities, non-profit entities and institutional investors in the United States ("U.S.") and internationally. Founded in 1895, Piper Sandler Companies provides a broad set of products and services, including financial advisory services; equity and debt capital markets products; public finance services; institutional brokerage services; fundamental equity and macro research services; fixed income services; and alternative asset management strategies. Our headquarters are located in Minneapolis, Minnesota and we have offices across the U.S. and international locations in London, Aberdeen and Hong Kong.

OUR BUSINESS
We operate in one reportable segment providing investment banking services, institutional sales and trading services for various equity and fixed income products, and research services. We are organized as one reportable segment in order to maximize the value we provide to clients by leveraging our diversified expertise and broad relationships of the experienced professionals across our company.

Investment Banking
For our corporate clients and financial sponsors, we provide advisory services, which includes mergers and acquisitions ("M&A"); equity and debt private placements; and debt and restructuring advisory. We also help raise capital through equity and debt financings. We operate in the following focus sectors: healthcare; financial services; energy and power; services and industrials; consumer; technology; and chemicals, primarily focusing on middle-market clients. For our government and non-profit clients, we underwrite municipal issuances, provide municipal financial advisory and loan placement services, and offer various over-the-counter derivative products. Our public finance investment banking capabilities focus on state and local governments, cultural and social service non-profit entities, special districts, project finance, and the education, healthcare, hospitality, senior living, housing and transportation sectors.

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Equity and Fixed Income Institutional Brokerage
We offer both equity and fixed income advisory and trade execution services for institutional investors, corporations, and government and non-profit entities. Integral to our capital markets efforts, we have equity sales and trading relationships with institutional investors in North America and Europe that invest in our core sectors. Our fundamental equity research analysts provide investment ideas and support to our trading clients on approximately 1,000 companies. Our macro research teams provide a comprehensive overview of global trends, such as economic and energy trends, as well as policy actions and political developments. Fixed income services provides advice on balance sheet management, investment strategy and customized portfolio solutions. We provide fixed income sales and trading solutions to banks, registered investment advisors, public entities, credit unions, asset managers, and insurance companies. We principally engage in trading activities to facilitate customer activity.

Alternative Asset Management Funds
We have created alternative asset management funds in merchant banking and healthcare in order to invest firm capital and to manage capital from outside investors.

FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS
As of December 31, 2023, the substantial majority of our net revenues and long-lived assets were located in the U.S.

COMPETITION
Our business is subject to intense competition driven by large Wall Street and international firms, regional broker dealers, boutique and niche-specialty firms and alternative trading systems that effect securities transactions through various electronic venues. Competition is based on a variety of factors, including price, quality of advice and service, reputation, product selection, transaction execution, financial resources and investment performance. Many of our large competitors have greater financial and technology resources than we have and may have greater capacity for risk and potential innovation as well as more flexibility to offer a broader set of products and services than we can.

In addition, there is significant competition within the securities industry for obtaining and retaining the services of qualified employees. Our business is a human capital business, and attracting and retaining employees depends, among other things, on our company's culture, management, work environment, geographic locations and compensation.

HUMAN CAPITAL
Piper Sandler Companies connects capital with opportunity to create value and build a better future, and our employees have been critical to achieving this mission throughout our operating history of more than 125 years. We believe that great people working together as a team are our competitive advantage, and it is crucial that we continue to attract and retain talented employees. As part of these efforts, we strive to offer a competitive compensation and benefits program; provide training and development opportunities; foster a community where everyone feels included and empowered to do their best work; and give employees the opportunity to give back to their communities.

As of December 31, 2023, we had 1,725 full-time employees, of which 1,632 were employed in the U.S. and 93 in the United Kingdom ("U.K.") and Hong Kong. Approximately 1,330 of our employees were registered with the Financial Industry Regulatory Authority, Inc. ("FINRA") as of December 31, 2023. One key metric we use to benchmark our firm to industry peer companies is the number of investment banking managing directors. At December 31, 2023, we had 169 corporate investment banking managing directors.

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Compensation and Benefits Program
Our compensation program is designed to attract, reward and retain employees who possess the skills necessary to support our business objectives and assist in the achievement of our strategic goals. We provide employees with competitive compensation packages that include base salary, annual incentive bonuses, length of service awards, and equity awards. For further information on the restricted shares we grant to employees as part of year-end compensation, see Note 19 to our consolidated financial statements in Part II, Item 8 of this Form 10-K. In addition to cash and equity compensation, we offer benefits such as life and health (medical, dental and vision) insurance, paid time off, tuition reimbursement and a 401(k) plan. We also offer family support services, such as paid parental leave, fertility benefits and adoption assistance, as well as various health and wellness programs. We believe our programs align both individual employees and long-term company performance with shareholder interests.

Training and Development
A core tenet of our talent system is to develop talent from within our company and to supplement with external candidates. We provide opportunities for employees to grow and build their careers through various training and development programs. We also have a talent and succession planning process, which is reviewed annually with our board of directors.

Diversity, Equity and Inclusion ("DEI")
We believe that diverse teams with unique backgrounds, skills and experiences yield more innovative solutions. This is reflected in our commitment to engage, attract, retain and develop a diverse and talented workforce in a high-quality, equitable and inclusive environment.

We maintain several programs and partnerships to help us attract a diverse array of great talent, including the Career Exploration Program, the Piper Sandler MBA Fellowship Program and community partnerships with organizations that focus on coaching, training and mentorship to help close the career opportunity gaps for underrepresented college students. The Career Exploration Program and the Piper Sandler MBA Fellowship Program are designed to attract talented undergraduate students and MBA students, respectively, whose life experiences, demonstrated interests, and achievements will contribute to our commitment to DEI. These programs, which consider all aspects of diversity during the selection process, serve as a direct pipeline for summer internship opportunities that have the potential to convert to full-time positions.

We are focused on building an inclusive culture through a variety of initiatives supported by our DEI council, including mentorship and training. Our employee resource groups also serve as a source of inclusion and engagement for our employees, in addition to supporting our efforts to recruit a diverse workforce. Our employee resource groups consist of Multicultural, Pride, Veterans, Women's, and Young Professionals networks, and each employee resource group is open to all employees and is sponsored and supported by senior leaders across the firm.

Community Leadership
We are committed to contributing our talents and resources to serve the communities in which we live and work through the Piper Sandler Foundation, various charitable campaigns, employee programs and volunteerism. We believe this commitment assists in our efforts to attract and retain employees. In 2023, we donated a total of $7.1 million through employee donations, our corporate matching gifts programs and corporate grants. Our employees supported 1,885 causes in 2023 through our Annual Charitable Giving Campaign, a two-week campaign when Piper Sandler Companies matches each employee's donations up to $5,000.

REGULATION
As a participant in the financial services industry, our business is regulated by U.S. federal and state regulatory agencies, by self-regulatory organizations ("SROs") and securities exchanges, and by foreign governmental agencies, financial regulatory bodies and securities exchanges. We are subject to complex and extensive regulation of most aspects of our business, including the manner in which securities transactions are effected, net capital requirements, financial and electronic recordkeeping and reporting procedures, relationships and conflicts with customers, conduct, experience and training requirements for certain employees, and the manner in which we prevent and detect money-laundering and bribery activities. The regulatory framework of the financial services industry is designed primarily to safeguard the integrity of the capital markets and to protect customers, not creditors or shareholders.

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The laws, rules and regulations comprising this regulatory framework can (and do) change frequently, as can the interpretation and enforcement of existing laws, rules and regulations. Conditions in the global financial markets and economy can cause legislators and regulators to increase the examination, enforcement and rule-making activity directed toward the financial services industry. The intensity of the regulatory environment may correlate with the level and nature of our legal proceedings for a given period, and increased intensity could have an adverse effect on our business, financial condition, and results of operations.

Our U.S. broker dealer subsidiary (Piper Sandler & Co.) is registered as a securities broker dealer with the SEC and is a member of various SROs and securities exchanges. FINRA serves as the primary SRO of Piper Sandler & Co., and the New York Stock Exchange ("NYSE") has oversight over NYSE-related market activities. FINRA regulates many aspects of our U.S. broker dealer business, including registration, education and conduct of our broker dealer employees, examinations, rulemaking, enforcement of these rules and the federal securities laws, trade reporting and the administration of dispute resolution between investors and registered firms. We have agreed to abide by the rules of FINRA (as well as those of the NYSE and other SROs), and FINRA has the power to expel, fine and otherwise discipline Piper Sandler & Co. and its officers, directors and employees. Among the rules that apply to Piper Sandler & Co. are the uniform net capital rule of the SEC (Rule 15c3-1) and the net capital rule of FINRA. Both rules set a minimum level of net capital a broker dealer must maintain and also require that a portion of the broker dealer's assets be relatively liquid. Under the applicable FINRA rule, FINRA may prohibit a member firm from expanding its business or paying cash dividends if resulting net capital falls below FINRA requirements. In addition, Piper Sandler & Co. is subject to certain notification requirements related to withdrawals of excess net capital. As a result of these rules, our ability to make withdrawals of capital from Piper Sandler & Co. may be limited. In addition, Piper Sandler & Co. is licensed as a broker dealer in each of the 50 states, requiring us to comply with applicable laws, rules and regulations of each state. Any state may revoke a license to conduct a securities business and fine or otherwise discipline broker dealers and their officers, directors and employees.

We also operate one entity that is authorized, licensed and regulated by the Financial Conduct Authority of the U.K. and registered under the laws of England and Wales, as well as an entity that is authorized, licensed and regulated by the Hong Kong Securities and Futures Commission and registered under the laws of Hong Kong. The Financial Conduct Authority of the U.K. and the Hong Kong Securities and Futures Commission regulate these entities (in their respective jurisdictions) in areas of capital adequacy, customer protection and business conduct, among others. We also have a subsidiary organized in Guernsey and regulated by the Guernsey Financial Services Commission ("GFSC").

Entities in the jurisdictions identified above are also subject to anti-money laundering regulations. Piper Sandler & Co. is subject to the USA PATRIOT Act of 2001, which contains anti-money laundering and financial transparency laws and mandates the implementation of various regulations requiring us to implement standards for verifying client identification at the time the client relationship is initiated, monitoring client transactions and reporting suspicious activity. Our entities in Hong Kong, the U.K. and Guernsey are subject to similar anti-money laundering laws and regulations in those jurisdictions. We are also subject to the U.S. Foreign Corrupt Practices Act as well as other anti-bribery and anti-corruption laws in the jurisdictions in which we operate. These laws generally prohibit companies and their intermediaries from engaging in bribery or making other improper payments to foreign officials for the purpose of obtaining or retaining business or gaining an unfair business advantage.

We maintain subsidiaries that are registered as investment advisors with the SEC and subject to regulation and oversight by the SEC. PSC Capital Partners LLC, Piper Sandler Advisors LLC, Piper Heartland Healthcare Capital LLC and Piper Sandler Finance Management LLC are asset management subsidiaries and registered investment advisors. As registered investment advisors, these entities are subject to requirements that relate to, among other things, fiduciary duties to clients, maintaining an effective compliance program, solicitation agreements, conflicts of interest, financial and electronic recordkeeping and reporting requirements, disclosure requirements, limitations on agency cross and principal transactions between the advisor and advisory clients, as well as general anti-fraud prohibitions. Piper Sandler & Co. is also a registered investment advisor and subject to these requirements. Parallel General Partner Limited is the general partner of several private equity limited partnerships; it and the limited partnerships are registered and regulated by the GFSC.

Certain of our businesses also are subject to compliance with laws and regulations of U.S. federal and state governments, non-U.S. governments, their respective agencies or various SROs or exchanges governing the privacy of client information, as applicable. Any failure with respect to our practices, procedures and controls in any of these areas could subject us to regulatory consequences, including fines, and potentially other significant liabilities.


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INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Information regarding our executive officers and their ages as of February 20, 2024, are as follows:
NameAgePosition(s)
Chad R. Abraham55Chief Executive Officer
Debbra L. Schoneman55President
Katherine P. Clune
43Chief Financial Officer
James P. Baker56Global Co-Head of Investment Banking and Capital Markets
Michael R. Dillahunt55Global Co-Head of Investment Banking and Capital Markets
Jonathan J. Doyle58Vice Chairman and Head of Financial Services Group
John W. Geelan48General Counsel and Secretary

Chad R. Abraham is our chief executive officer, a position he has held since January 2018. He previously served as global co-head of investment banking and capital markets from October 2010 to December 2017. Prior to that, he served as head of equity capital markets since November 2005. Mr. Abraham joined Piper Sandler Companies in 1991 in our investment banking group and was promoted to managing director and head of technology investment banking in 1999.

Debbra L. Schoneman is our president, a position she has held since January 2018. She previously served as chief financial officer from May 2008 to December 2017, and global head of equities from June 2017 to December 2017. Prior to that, she served as treasurer from August 2006 until May 2008; and as finance director of our corporate and institutional services business from July 2002 until July 2004 when the role was expanded to include our public finance services division. Ms. Schoneman joined Piper Sandler Companies in 1990 in our accounting department.

Katherine P. Clune is our chief financial officer, a position she has held since January 2024. She most recently served as senior vice president of finance from November 2023 to January 2024. Before joining Piper Sandler Companies, Ms. Clune was treasurer and head of planning and strategy at Evercore Inc., from June 2022 to November 2023, and global head of financial planning and analysis at Morgan Stanley from June 2020 to June 2022. Prior to that, Ms. Clune served in various capacities with Morgan Stanley from 2005 through June 2022, including global head, liquidity coverage and planning, and chief financial officer, U.S. banks.

James P. Baker is our global co-head of investment banking and capital markets, a position he has held since January 2019. Prior to that, he served as our co-head of energy investment banking from February 2016 to December 2018. Mr. Baker joined Piper Sandler Companies in February 2016 in connection with our acquisition of Simmons & Company International, where Mr. Baker came to serve as a managing director and leader of its midstream/downstream investment banking group after joining in 2001. Prior to that, Mr. Baker was a director and chief financial officer at Koch Industries and led corporate finance and corporate development for Koch’s energy businesses, and a director for Alton Geoscience where he provided consulting services to refining and marketing companies on the West Coast.

Michael R. Dillahunt is our global co-head of investment banking and capital markets, a position he has held since March 2021. Prior to that, he served as co-head of our services and industrials group from 2011 to 2020, and as vice chairman of investment banking and chairman of M&A and private equity coverage from 2020 to March 2021. Mr. Dillahunt joined Piper Sandler Companies in 1998, prior to which he had been an M&A and corporate attorney at Milbank LLP.

Jonathan J. Doyle is our vice chairman, senior managing principal and head of the financial services group, a position he has held since January 2020. Mr. Doyle joined Piper Sandler Companies in connection with our acquisition of Sandler O'Neill, where Mr. Doyle served as a senior managing principal since January 2012, and partner since January 1995. Mr. Doyle began his career at Marine Midland Bank.

John W. Geelan is our general counsel and secretary. He served as assistant general counsel and assistant secretary from November 2007 until becoming general counsel in January 2013. Mr. Geelan joined Piper Sandler Companies in 2005.

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ADDITIONAL INFORMATION
Our principal executive offices are located at 800 Nicollet Mall, Suite 900, Minneapolis, Minnesota 55402, and our general telephone number is (612) 303-6000. We maintain an Internet Web site at http://www.pipersandler.com. The information contained on and connected to our Web site is not incorporated into this Form 10-K. We make available free of charge on or through our Web site our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and all other reports we file with the SEC, as soon as reasonably practicable after we electronically file these reports with, or furnish them to, the SEC. Such reports are also available on the SEC's Web site at http://www.sec.gov. "Piper Sandler," the "Company," "registrant," "we," "us" and "our" refer to Piper Sandler Companies and our subsidiaries. The Piper Sandler logo and the other trademarks, tradenames and service marks of Piper Sandler Companies mentioned in this report or elsewhere, including, but not limited to, PIPER SANDLER®, PIPER JAFFRAY®, REALIZE THE POWER OF PARTNERSHIP®, CORNERSTONE MACRO®, SIMMONS ENERGY | A DIVISION OF PIPER SANDLER®, SIMMONS ENERGY | A DIVISION OF PIPER JAFFRAY®, SIMMONS ENERGY®, SIMMONS & COMPANY INTERNATIONAL®, SIMMONSCO-INTL®, PIPER SANDLER FINANCESM, BIOINSIGHTS®, TAKING STOCK WITH TEENS®, HEALTHY ACTIVE AND SUSTAINABLE LIVING® and GUIDES FOR THE JOURNEY®, are the property of Piper Sandler & Co., a subsidiary of Piper Sandler Companies.

Item 1A. Risk Factors.
In the normal course of our business activities, we are exposed to a variety of strategic risks, market risks, human capital risks, liquidity risks, credit risks, operational risks, and legal and regulatory risks. A description of each of these principal areas of risk, as well as the primary risk management processes that we use to mitigate our risk exposure in each, is discussed below under the caption "Risk Management" included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of this Form 10-K.

The following discussion sets forth risk factors that we have identified in each principal area of risk as being the most material to our business, future financial condition, and results of operations. Although we discuss these risk factors primarily in the context of their potential effects on our business, financial condition or results of operations, it should be understood that these effects can have further negative implications such as: reducing the price of our common stock; reducing our capital, which can have regulatory and other consequences; affecting the confidence that our clients and other counterparties have in us, with a resulting negative effect on our ability to conduct and grow our business; and reducing the attractiveness of our securities to potential purchasers, which may adversely affect our ability to raise capital and secure other funding or the prices at which we are able to do so. Further, additional risks beyond those discussed below and elsewhere in this Form 10-K or in other of our reports filed with, or furnished to, the SEC could adversely affect us. We cannot provide assurance that the risk factors herein or elsewhere in our other reports filed with, or furnished to, the SEC address all potential risks that we may face.

These risk factors also serve to describe factors which may cause our results to differ materially from those described in forward-looking statements included in this Form 10-K or in other documents or statements that make reference to this Form 10-K. Forward-looking statements, as further described in this Form 10-K under the heading "Cautionary Note Regarding Forward-Looking Statements," and other factors that may affect future results are discussed below under "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of this Form 10-K.

STRATEGIC AND MARKET RISK
Our business success depends in large part upon the strategic decisions made by our executive management, the alignment of business plans developed to act upon those decisions, and the quality of implementation of these business plans. Strategic risk represents the risk associated with our executive management failing to develop and execute on the appropriate strategic vision which demonstrates a commitment to our culture, leverages our core competencies, appropriately responds to external factors in the marketplace, and is in the best interests of our company. In setting out and executing upon a strategic vision for our business, we are faced with a number of inherent risks, including risks relating to external events, market and economic conditions, competition, and business performance that could all negatively affect our ability to execute on our strategic decisions and, therefore, our future financial condition or results of operations. The risks related to external events and overall market and economic conditions are referred to as market risk. The following are material risk factors that could pose a risk to our strategic vision, and the market risks that may impact execution of our strategy.

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Developments in market and economic conditions have in the past adversely affected, and may in the future adversely affect, our business and profitability and cause volatility in our results of operations.
Economic and market conditions have had, and will continue to have, a direct and material impact on our results of operations and financial condition because performance in the financial services industry is heavily influenced by the overall strength of economic conditions and financial market activity. For example:

In 2023, our business continued to be impacted by the U.S. Federal Reserve's efforts to reduce inflation. Although market volatility trended lower, equity indices saw a significant rally as the pace of inflation fell, and the U.S. economy remained relatively resilient, overall financial market activity remained subdued compared to historical levels. During the first half of the year, the U.S. Federal Reserve raised rates four times, which brought the fed funds rate to a 22-year high. These higher interest rates, persistent inflation, and tightened lending standards following two high-profile bank failures in the first quarter of 2023 contributed to macroeconomic uncertainty and muted client activity across our businesses, including advisory, equity capital markets, fixed income institutional brokerage, and public finance. We believe that the trajectory of market conditions in 2024 will be dependent on several factors, including a continued moderation of the pace of inflation, whether the U.S. Federal Reserve is able to cut interest rates, whether the U.S. economy enters a recession and its magnitude and duration, and the effects of macroeconomic or political uncertainty in the U.S. or abroad. Widespread concern or doubts in the market about U.S. or global economic conditions, the potential for financial contagion or widespread corporate or government defaults, the U.S. presidential election, the possibility of the broader outbreak of armed conflict in the Middle East or Eastern Europe, geopolitical tensions concerning Taiwan, or the pace, impact, or effectiveness of the actions by the U.S. Federal Reserve with respect to interest rates, or the efficacy or adequacy of government measures enacted to support the U.S. and global economy, could erode the outlook for macroeconomic conditions, economic growth, and business confidence, which would negatively impact our businesses.

Our equities investment banking revenues from our advisory and equity capital markets businesses are directly related to macroeconomic conditions and corresponding financial market activity. Our equities investment banking business overall, but especially our capital markets business, benefits from cycles of strong financial market activity and company valuations. As an example, a significant portion of our equities investment banking revenues in recent years has been derived from advisory and capital markets engagements in our focus sectors and from financial sponsor clients, and activity in these areas is highly correlated to market conditions and the macroeconomic environment. During periods of heightened economic uncertainty, financial market activity can significantly decline, as we experienced in 2023, and our business may suffer reduced revenues as a result. If the outlook for macroeconomic conditions in 2024 were to remain depressed, or deteriorate further, the level of financial market activity could continue to decrease, which would reduce our equities investment banking revenues more generally. In addition, market volatility or uncertainty related to a decline in the U.S. or global macroeconomic outlook could cause financial market activity to decrease, which would also negatively affect our equities investment banking revenues. Global macroeconomic conditions and U.S. financial markets also remain vulnerable to the potential risks posed by exogenous shocks, which could include, among other things, political or social unrest or economic uncertainty in the U.S. and the European Union, including the potential for financial contagion or widespread corporate or government defaults, renewed concern about China's economy or financial sector, the wider outbreak of armed conflict in the Middle East or Eastern Europe, geopolitical tensions concerning Taiwan, and complications involving terrorism and armed conflicts around the world, or other challenges to global trade. More generally, because our business is closely correlated to the macroeconomic outlook, a significant deterioration in that outlook or an exogenous shock would likely have an immediate and significant negative impact on our equities investment banking business and our overall results of operations.

It is difficult to predict the economic and market conditions for 2024, which are dependent upon global and U.S. economic conditions and geopolitical events globally. Our smaller scale and the cyclical nature of the economy and the financial services industry leads to volatility in our financial results, including our operating margins, compensation ratios, business mix, and revenue and expense levels. Our financial performance may be limited by the fixed nature of certain expenses, the impact from unanticipated losses or expenses during the year, our business mix, and the inability to scale back costs in a timeframe to match decreases in revenue-related changes in market and economic conditions. As a result, our financial results may vary significantly from quarter to quarter and year to year.

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Developments in specific business sectors and markets in which we conduct our business have in the past adversely affected, and may in the future adversely affect, our business and profitability.
Our results for a particular period may be disproportionately impacted by declines in specific sectors of the U.S. or global economy, or for certain products within the financial services industry, due to our business mix and focus areas. For example:

Our equities investment banking business focuses on specific sectors, including healthcare, financial services, energy and power, services and industrials, consumer, technology, and chemicals. Volatility, uncertainty, or slowdowns in any of these sectors may adversely affect our business, sometimes disproportionately, and may cause volatility in the net revenues we receive from our corporate advisory and capital markets activities. Both the healthcare and financial services sectors are significant contributors to our overall results, and negative developments in either of these sectors, including negative developments that result from legislative or regulatory actions, would materially and disproportionately impact our equities investment banking results, even if general economic conditions were strong. In 2023, the financial services sector suffered a significant decline in activity following two high-profile bank failures, which negatively impacted our results of operations. In addition, we may not participate, or may participate to a lesser degree than other firms, in sectors that experience significant activity, such as real estate, and our operating results may not correlate with the results of other firms that participate in these sectors.

Our public finance investment banking business depends heavily upon conditions in the municipal market. It focuses on investment banking activity in sectors that include state and local governments, cultural and social service non-profit entities, special districts, project finance, and the education, healthcare, hospitality, senior living, housing and transportation sectors, with an emphasis on transactions with a par value of $500 million or less. Both refunding and specialty high-yield new issuances have contributed a significant portion of our public finance investment banking revenues in recent years. During 2023, higher nominal rates and interest rate volatility had a disproportionately negative impact on the level of refunding issuances and investor demand for high-yield products as compared to other municipal issuances, which impacted our results of operations. To the extent that those conditions continue or worsen in 2024, and to the extent that there is concern about U.S. economic growth, refunding activity and high-yield sectors may continue to be disproportionately affected, which would impact our results of operations. In addition, our public finance banking business is currently concentrated in the middle market, and to the extent that market conditions for our clients results in lower activity as compared to larger issuers, our results of operations will be negatively impacted.

Our fixed income institutional business derives its revenue from sales and trading activity in the municipal and taxable markets and from hybrid preferreds and U.S. government agency products. Our operating results for our fixed income institutional business may not correlate with the results of other firms or the fixed income market generally because we do not participate in significant segments of the fixed income markets such as credit default swaps, corporate high-yield bonds, currencies or commodities. Our client activity in the fixed income institutional business is currently concentrated in the depositories sector.

Financing and advisory services engagements are transactional in nature and do not generally provide for subsequent engagements.
Even though we work to represent our clients at every stage of their lifecycle, we are typically retained on a short-term, engagement-by-engagement basis in connection with specific advisory or capital markets transactions. As a consequence, the timing of when fees are earned varies, and, therefore, our financial results from advisory and capital markets activities may experience volatility quarter to quarter based on equity market conditions as well as the macroeconomic business cycle more broadly. In particular, our revenues related to advisory transactions tend to be more unpredictable from quarter to quarter due to the one-time nature of the transaction and the size of the fee. As a result, high levels of revenue in one quarter will not necessarily be predictive of continued high levels of revenue in any subsequent period. If we are unable to generate a substantial number of new engagements and generate fees from the successful completion of those transactions, our business and results of operations could be adversely affected.

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We may make strategic acquisitions, enter into new business opportunities, or engage in joint ventures that could cause us to incur unforeseen expenses, have disruptive effects on our business and may not yield the benefits we expect.
A significant portion of our growth in recent years has come through corporate development activities, including acquisitions. There are a number of risks associated with these activities. Costs or difficulties relating to a transaction, including integration of products, employees, technology systems, accounting systems and management controls, or entry into a new business line, may be difficult to predict accurately and be greater than expected causing our estimates to differ from actual results. Importantly, we may be unable to retain key personnel after a transaction, including personnel who are critical to the success of the ongoing business. We may incur unforeseen liabilities of an acquired company or from entry into a new business line that could impose significant and unanticipated legal costs on us. We will need to successfully manage these risks in order to fully realize the anticipated benefits of these transactions.

Our corporate development activities may require increased costs in the form of management personnel, financial and management systems and controls and facilities, which, in the absence of continued revenue growth, could cause our operating margins to decline. In addition, when we acquire a business, a substantial portion of the purchase price is often allocated to goodwill and other identifiable intangible assets. Our goodwill and intangible assets are tested at least annually for impairment. If, in connection with that test, we determine that a reporting unit's fair value is less than its carrying value, we would be required to recognize an impairment to the goodwill associated with that reporting unit. More generally, any difficulties that we experience could disrupt our ongoing business, increase our expenses and adversely affect our operating results and financial condition. We also may be unable to achieve anticipated benefits and synergies from a transaction as fully as expected or within the expected time frame.

Our long-term strategic growth plan relies upon corporate development, and our ability to realize that growth will be dependent on our ability to identify and execute on accretive opportunities. To the extent that we are unable to do so, our long-term growth may be negatively impacted.

We may not be able to compete successfully with other companies in the financial services industry that have significantly greater resources than we do.
The financial services industry remains highly competitive, and our revenues and profitability may suffer if we are unable to compete effectively. We generally compete on the basis of such factors as quality of advice and service, reputation, price, product selection, transaction execution and financial resources. Pricing and other competitive pressures in investment banking, including the use of multiple book runners, co-managers, and multiple financial advisors handling transactions, have affected and could continue to adversely affect our revenues.

We remain at a competitive disadvantage given our relatively small size compared to some of our competitors. Large financial services firms generally have a larger capital base, greater access to capital, and greater technology resources, affording them greater capacity for risk and potential for innovation, an extended geographic reach and flexibility to offer a broader set of products. For example, some of these firms are able to use their larger capital base to offer additional products or services to their investment banking clients, which can be a competitive advantage. With respect to our fixed income institutional brokerage and public finance investment banking businesses, it is more difficult for us to diversify and differentiate our product set, and our fixed income business mix currently is concentrated in investment grade fixed income products, potentially with less opportunity for growth than other firms which have grown their fixed income businesses by investing in, developing and offering non-traditional products (e.g., credit default swaps, interest rate products and currencies and commodities).

Our institutional brokerage business is subject to pricing and competitive pressures.
The ability to execute trades electronically and through alternative trading systems and competitive pressures on our clients have increased the pressure on trading commissions and spreads within the equities institutional brokerage business over the past few years. We expect to continue to experience pricing and other competitive pressures in our equities and fixed income institutional brokerage businesses in the future. In addition, we will need to continue to invest in these businesses in order to continue to meet our clients’ needs and maintain sufficient scale.

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Our inability to identify and address actual, potential, or perceived conflicts of interest may negatively impact our reputation and have a material adverse effect on our business.
We regularly address actual, potential or perceived conflicts of interest in our business, including situations where our services to a particular client or our own investments or other interests conflict, or are perceived to conflict, with the interests of another client. Appropriately identifying and dealing with conflicts of interest is complex and difficult, and we face the risk that our current policies, controls and procedures do not timely identify or appropriately manage such conflicts of interest. It is possible that actual, potential or perceived conflicts could give rise to client dissatisfaction, litigation or regulatory enforcement actions. Our reputation could be damaged if we fail, or appear to fail, to deal appropriately with potential or actual conflicts of interest. Client dissatisfaction, litigation, or regulatory enforcement actions arising from a failure to adequately deal with conflicts of interest, and the reputational harm suffered as a consequence, could have a material adverse effect on our business.

Damage to our reputation could harm our business.
Maintaining our reputation is critical to attracting and maintaining clients, customers, investors, and employees. If we fail to deal with, or appear to fail to deal with, issues that may give rise to reputational risk, such failure or appearance of failure could have a material adverse effect on our business and stock price. These issues include appropriately dealing with potential conflicts of interest, legal and regulatory requirements, perceptions of our environmental, social and governance practices or business selection, ethical issues, money laundering, cybersecurity, and the proper identification of the strategic, market, human capital, liquidity, credit, operational, legal and regulatory risks inherent in our business and products.
The number of anticipated investment banking transactions may differ from actual results.
The completion of anticipated investment banking transactions in our pipeline is uncertain and partially beyond our control, and our investment banking revenue is typically earned only upon the successful completion of a transaction. In most cases, we receive little or no payment for investment banking engagements that do not result in the successful completion of a transaction. 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 director or shareholder approvals, failure to secure necessary financing, adverse market conditions or unexpected financial or other issues in the client's or counterparty's business. More importantly, anticipated advisory or capital markets transactions may be delayed or terminated as a result of a decline in or uncertainty surrounding market or economic conditions. If parties fail to complete a transaction on which we are advising or an offering in which we are participating, we could earn little or no revenue from the transaction and may have incurred significant expenses (e.g., travel and legal expenses) associated with the transaction. Accordingly, our business is highly dependent on market and economic conditions as well as the decisions and actions of our clients and interested third parties, and the number of engagements we have at any given time (and any characterization or description of our deal pipelines) is subject to change and may not necessarily result in future revenues.

HUMAN CAPITAL RISK

Our business is a human capital business, and, therefore, our future financial condition and results of operations are significantly dependent upon our employees and their actions. Our success depends on the skills, expertise, and performance of our employees. Human capital risks represent the risks posed if we fail to attract and retain qualified individuals who are motivated to serve the best interests of our clients, thereby serving the best interests of our company, as well as the risks posed if our culture fails to encourage such behavior. Human capital risk is also present where we fail to detect and prevent employees from acting contrary to our policies and procedures, for example, if an employee were to inadequately safeguard or misuse our clients' confidential information. Any failure by us in creating and maintaining a culture that emphasizes serving our clients' best interests or detecting or preventing employees from engaging in behaviors that run counter to that culture might lead to reputational damage for our firm. The following are material human capital risk factors that could pose a risk to us.

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Our ability to attract, develop and retain highly skilled and productive employees, develop the next generation of our business leadership, and instill and maintain a culture of ethics is critical to the success of our business.
Historically, the market for qualified employees within the financial services industry has been marked by intense competition, and the performance of our business may suffer to the extent we are unable to attract, retain, and develop productive employees, given the relatively small size of our company and our employee base compared to some of our competitors and the geographic locations in which we operate. The primary sources of revenue in each of our business lines are fees earned on advisory and underwriting transactions and customer accounts managed by our employees, who have historically been recruited by other firms and in certain cases are able to take their client relationships with them when they change firms. In some areas of our business, a small number of employees are responsible for producing a significant amount of revenue, and the loss of any of these employees could adversely affect our results of operations.

Further, recruiting and retention success often depends on the ability to deliver competitive compensation, and we may be at a disadvantage to some competitors given our size and financial resources. Our inability or unwillingness to meet compensation needs or demands may result in the loss of some of our professionals or the inability to recruit additional professionals at compensation levels that are within our target range for compensation and benefits expense. Our ability to retain and recruit also may be hindered if we limit our aggregate annual compensation and benefits expense as a percentage of annual net revenues.

A vibrant and ethical corporate culture is critical to ensuring that our employees put our clients' interests first and are able to identify and manage potential conflicts of interest, while also creating an environment in which each of our employees feels empowered to develop and pursue their full potential. Our expectations for our corporate culture and ethics are instilled and maintained by the "tone at the top" set by our management and board of directors. Lapses in our corporate culture could lead to reputational damage or employee loss, either of which could adversely affect our results of operations.

Our business success depends in large part on the strategic decisions made by our leadership team, and the business plans developed and implemented by our senior business leaders. Our ability to identify, develop, and retain future senior business leaders, and our ability to develop and implement successful succession plans for our leadership team and other senior business leaders, is critical to our future success and results of operations.

Our inability to effectively integrate and retain personnel in connection with our acquisitions may adversely affect our financial condition and results of operations.

We invest time and resources in carefully assessing opportunities for acquisitions, and we have made acquisitions in the past several years to broaden the scope and depth of our human capital in various businesses. Despite diligence and integration planning, acquisitions still present certain risks, including the difficulties in integrating and bringing together different work cultures and employees, and retaining those employees for the period of time necessary to realize the anticipated benefits of the acquisition. Difficulties in integrating our acquisitions, including attracting and retaining talent to realize the expected benefits of these acquisitions, may adversely affect our financial condition and results of operations.

LIQUIDITY AND CREDIT RISK

Two of our principal categories of risk as a broker dealer are liquidity and credit risk, each of which can have a material impact on our results of operations and viability as a business. We believe that the effective management of liquidity and credit is fundamental to the financial health of our firm. With respect to liquidity risk, it impacts our ability to timely access necessary funding sources in order to operate our business and our ability to timely divest securities that we hold in connection with our market-making and sales and trading activities. Credit risk, as distinguished from liquidity risk, is the potential for loss due to the default or deterioration in credit quality of a counterparty, customer, client, borrower, or issuer of securities we hold in our trading inventory. The nature and amount of credit risk depends on the type of transaction, the structure and duration of that transaction and the parties involved. The following are material liquidity and credit risk factors that could pose a risk to us.

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An inability to access capital readily or on terms favorable to us could impair our ability to fund operations and could jeopardize our financial condition and results of operations.

Liquidity, or ready access to funds, is essential to our business. To fund our business, we rely on financing provided by Pershing LLC ("Pershing") under our fully disclosed clearing agreement and Canadian Imperial Bank of Commerce ("CIBC") under a clearing arrangement with bank financing, as well as other bank financing. The financing provided by Pershing and CIBC is at their discretion (i.e., uncommitted) and could be denied. In December 2023, we renewed our unsecured revolving credit facility and increased the size from $75 million to $100 million to use for working capital and general corporate purposes. We also renewed our committed line in December 2023 for an additional twelve months and decreased the size from $80 million to $50 million.

Our access to funding sources, particularly uncommitted funding sources, is dependent on factors we cannot control, such as economic downturns, the disruption of financial markets, the failure or consolidation of other financial institutions, and negative news about the financial industry generally or us specifically. We could experience disruptions with our credit facilities in the future, including the loss of liquidity sources or increased borrowing costs, if lenders or investors develop a negative perception of our short- or long-term financial prospects, which could result from decreased business activity. Our liquidity also could be impacted by the activities resulting in concentration of risk, including investments in specific markets or products without liquidity. Our access to funds also may be impaired if regulatory authorities take significant action against us, or if we discover that one of our employees has engaged in serious unauthorized or illegal activity.

In the future, we may need to incur debt or issue equity in order to fund our working capital requirements, as well as to execute our growth initiatives that may include acquisitions and other investments. Similarly, our access to funding sources may be contingent upon terms and conditions that may limit or restrict our business activities and growth initiatives. In addition, we currently do not have a credit rating, which could adversely affect our liquidity and competitive position by increasing our borrowing costs and limiting access to sources of liquidity that require a credit rating as a condition to providing funds.

If we are unable to obtain necessary funding, or if the funding we obtain is on terms and conditions unfavorable to us, it could negatively affect our business activities and operations, and our ability to pursue certain growth initiatives and make certain capital decisions, including the decision whether to pay future dividends to our shareholders, as well as our future financial condition or results of operations.

The use of estimates and valuations in measuring fair value involve significant estimation and judgment by management.

We make various estimates that affect reported amounts and disclosures. Broadly, those estimates are used in measuring fair value of certain financial instruments, investments in private companies, accounting for goodwill and intangible assets, establishing provisions for potential losses that may arise from litigation, and regulatory proceedings and tax examinations. Estimates are based on available information and judgment. Therefore, actual results could differ from our estimates and that difference could have a material effect on our consolidated financial statements. With respect to accounting for goodwill and intangible assets, we complete our annual goodwill and intangible asset impairment testing in the fourth quarter of each year (or earlier if impairment indicators are present). Impairment charges resulting from this valuation analysis could materially adversely affect our results of operations.

Financial instruments and other inventory positions owned, and financial instruments and other inventory positions sold but not yet purchased, are recorded at fair value, and unrealized gains and losses related to these financial instruments are reflected on our consolidated statements of operations. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments' complexity. Difficult market environments may cause financial instruments to become substantially more illiquid and difficult to value, increasing the use of valuation models. Our future results of operations and financial condition may be adversely affected by the valuation adjustments that we apply to these financial instruments.

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Investments in private companies are valued based on an assessment of each underlying security, considering rounds of financing, the financial condition and operating results of the private company, third-party transactions and market-based information, including comparable company transactions, trading multiples (e.g., multiples of revenue and earnings before interest, taxes, depreciation, and amortization ("EBITDA")), discounted cash flow analyses and changes in market outlook, among other factors. These valuation techniques require significant management estimation and judgment.

Concentration of risk increases the potential for significant losses.

Concentration of risk increases the potential for significant losses in our sales and trading, alternative asset management, credit underwriting and syndication platform, and underwriting businesses. We have committed capital to these businesses, and we may take substantial positions in particular types of securities or issuers. This concentration of risk may cause us to suffer losses even when economic and market conditions are generally favorable for our competitors. Further, disruptions in the credit markets can make it difficult to hedge exposures effectively and economically.

Our businesses, profitability and liquidity may be adversely affected by deterioration in the credit quality of, or defaults by, third parties who owe us money, securities or other assets.

The nature of our businesses exposes us to credit risk, or the risk that third parties who 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 or other reasons. Deterioration in the credit quality of securities or obligations we hold could result in losses and adversely affect our ability to rehypothecate or otherwise use those securities or obligations for liquidity purposes. A significant downgrade in the credit ratings of our counterparties could also have a negative impact on our results. Default rates, downgrades and disputes with counterparties as to the valuation of collateral tend to increase in times of market stress and illiquidity. Although we review credit exposures to specific clients and counterparties and to specific industries that we believe may present credit concerns, default risk may arise from events or circumstances that are difficult to detect or foresee. Also, concerns about, or a default by, one institution generally leads to losses, liquidity problems, or defaults by other institutions, which in turn could adversely affect our business.

Particular activities or products within our business expose us to increased credit risk, including inventory positions, nonstandard settlements, interest rate swap contracts with customer credit exposure, counterparty risk with one major financial institution related to customer interest rate swap contracts without customer credit exposure, investment banking and advisory fee receivables, liquidity providers on variable rate demand notes we remarket, and similar activities. With respect to interest rate swap contracts with customer credit exposure, we have retained the credit exposure with four non-publicly rated counterparties totaling $6.7 million at December 31, 2023 as part of our matched-book interest rate swap program. In the event of a termination of the contract, the counterparty would owe us the applicable amount of the credit exposure. If our counterparty is unable to make its payment to us, we would still be obligated to pay our hedging counterparty, resulting in credit losses. Non-performance by our counterparties, clients and others, including with respect to our inventory positions and interest rate swap contracts with customer credit exposures, could result in losses, potentially material, and thus have a significant adverse effect on our business and results of operations.

In addition, reliance on revenues from hedge funds and hedge fund advisors, which are less regulated than many investment company and investment advisor clients, may expose us to greater risk of financial loss from unsettled trades than is the case with other types of institutional investors. Concentration of risk may result in losses to us even when economic and market conditions are generally favorable for others in our industry.

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An inability to readily divest trading positions may result in financial losses to our business.

Timely divestiture of our trading positions, including equity, fixed income and other securities positions, can be impaired by decreased trading volume, increased price volatility, rapid changes in interest rates, concentrated trading positions, limitations on the ability to divest positions in highly specialized or structured transactions and changes in industry and government regulations. While we hold a security, we are vulnerable to valuation fluctuations and may experience financial losses to the extent the value of the security decreases and we are unable to timely divest or hedge our trading position in that security. The value may decline as a result of many factors, including issuer-specific, market or geopolitical events. In addition, in times of market uncertainty, the inability to divest inventory positions may have an impact on our liquidity as funding sources generally become more restrictive, which could limit our ability to pledge the underlying security as collateral. Our liquidity may also be impacted if we choose to facilitate liquidity for specific products and voluntarily increase our inventory positions in order to do so, exposing ourselves to greater market risk and potential financial losses from the reduction in value of illiquid positions.

Our underwriting and alternative asset management activities expose us to risk of loss.

We engage in a variety of activities in which we commit or invest our own capital, including underwriting and alternative asset management. In our role as underwriter for equity and fixed income securities, we commit to purchase securities from the issuer or one or more holders of the issuer's securities, and we then sell those securities to other investors or into the public markets, as applicable. Our underwriting activities, including bought deal transactions and equity block trading activities, expose us to the risk of loss if the price of the security falls below the price we purchased the security before we are able to sell all of the securities that we purchased. For example, as an underwriter, or, with respect to equity securities, a block positioner, we may commit to purchasing securities from an issuer or one or more holders of the issuer's securities without having found purchasers for some or all of the securities. In those instances, we may find that we are unable to sell the securities at a price equal to or above the price at which we purchased the securities, or with respect to certain securities, at a price sufficient to cover our hedges. With respect to alternative asset management, our ability to withdraw our capital from these investments may be limited, and we may not be able to realize our investment objectives by sale or disposition at attractive prices, increasing our risk of losses. Our joint venture entities or other alternative asset management entities that underwrite and syndicate client debt may hold a portion of such debt after syndication, and our invested capital is exposed to a risk of loss to the extent that the debt is ultimately not repaid.

Our results from these activities may vary from quarter to quarter. We may incur significant losses from our underwriting and alternative asset management activities due to equity or fixed income market fluctuations and volatility from quarter to quarter, or from a deterioration in specific business subsectors or the economy more generally. In addition, we may engage in hedging transactions that, if not successful, could result in losses, and the hedges we purchase to counterbalance market rate changes in certain inventory positions are not perfectly matched to the positions being hedged, which could result in losses.

Use of derivative instruments as part of our financial risk management techniques may not effectively hedge the risks associated with activities in certain of our businesses.

We use interest rate swaps and credit default swaps, interest rate locks, U.S. treasury bond futures and options, and equity option contracts as a means to manage risk in certain inventory positions and to facilitate customer transactions. With respect to risk management, we enter into derivative contracts to hedge interest rate and market value risks associated with our security positions, including fixed income inventory positions that we hold for facilitating client activity. Generally, we do not hedge all of our interest rate risk. In addition, these hedging strategies may not work in all market environments and as a result may not be effective in mitigating interest rate and market value risk, especially when market volatility reduces the correlation between a hedging vehicle and the securities inventory being hedged.

There are risks inherent in our use of these products, including counterparty exposure and basis risk. Counterparty exposure refers to the risk that the amount of collateral in our possession on any given day may not be sufficient to fully cover the current value of the swaps if a counterparty were to suddenly default. Basis risk refers to risks associated with swaps where changes in the value of the swaps may not exactly mirror changes in the value of the cash flows they are hedging. We may incur losses from our exposure to derivative interest rate products and the increased use of these products in the future.

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OPERATIONAL RISK

Operational risk is the risk of loss, or damage to our reputation, resulting from inadequate or failed processes, people and systems or from external events. Such loss or reputational damage could negatively impact our future financial condition and results of operations. The following are material operational risk factors that could pose a risk to us.

Our information and technology systems, including outsourced systems, are critical components of our operations, and failure of those systems or other aspects of our operations infrastructure may disrupt our business, cause financial loss and constrain our growth.

We typically transact thousands of securities trades on a daily basis across multiple markets. Our data and transaction processing, financial, accounting and other technology and operating systems are essential to this task. A system malfunction (due to hardware failure, capacity overload, security incident, data corruption, or similar event) or mistake made relating to the processing of transactions could result in financial loss, liability to clients, regulatory intervention, reputational damage and constraints on our ability to grow.

We operate under a fully disclosed model for all of our client clearing activities and for all of our securities inventories with the exception of convertible securities. In a fully disclosed model, we act as an introducing broker for most customer transactions and rely on a clearing broker dealer to handle clearance and settlement of our customers' securities transactions. The clearing services provided by our clearing broker dealer, Pershing, are critical to our business operations, and similar to other important outsourced operations, any failure by the clearing agent with respect to the services we rely on it to provide could significantly disrupt and negatively impact our operations and financial results. We also contract with third parties for market data services, which constantly broadcast news, quotes, analytics and other relevant information to our employees, as well as other critical data processing activities. In the event that any of these service providers fails to adequately perform such services or the relationship between that service provider and us is terminated, we may experience a significant disruption in our operations, including our ability to timely and accurately process transactions or maintain complete and accurate records of those transactions.

Adapting or developing our technology systems to meet new regulatory requirements, client needs, geographic expansion and industry demands also is critical for our business. The introduction of new technologies presents new challenges on a regular basis. We have an ongoing need to upgrade and improve our various technology systems, including our data and transaction processing, financial, accounting, risk management, compliance, and trading systems. This need could present operational issues or require significant capital spending. It also may require us to make additional investments in technology systems and may require us to reevaluate the current value or expected useful lives of our technology systems, which could negatively impact our results of operations.

A disruption in the infrastructure that supports our business due to fire, natural disaster, health emergency (e.g., a pandemic), power or communication failure, act of terrorism or war may affect our ability to service and interact with our clients. If we are not able to implement contingency plans effectively, any such disruption could harm our results of operations.

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Protection of our sensitive and confidential information is critical to our operations, and failure of those systems may disrupt our business, damage our reputation, and cause financial losses.

Our clients routinely provide us with sensitive and confidential information. Secure processing, storage and transmission of confidential and other information in our internal and outsourced computer systems and networks is critically important to our business. We take protective measures and endeavor to modify them as circumstances warrant. However, our computer systems, software and networks, and those of our clients, vendors, service providers, counterparties and other third parties, may be vulnerable to unauthorized access, cyber attacks, security breaches, computer viruses or other malicious code, inadvertent, erroneous or intercepted transmission of information (including by e-mail), human error, and other events that could have an information security impact. We work with our employees, clients, vendors, service providers, counterparties and other third parties to develop and implement measures designed to protect against such an event, but we may not be able to fully protect against such an event, and do not have, and may be unable to put in place, secure capabilities with all of these third parties and we may not be able to ensure that these third parties have appropriate controls in place to protect the confidentiality of the information. 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 those of third parties, 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 reputational harm as well as litigation, regulatory penalties, and financial losses that are either not insured against or not fully covered through any insurance maintained by us.

A failure to protect our computer systems, networks and information, and our clients' information, against cyber attacks, data breaches, and similar threats could impair our ability to conduct our businesses, result in the disclosure, theft or destruction of confidential information, damage our reputation and cause significant financial and legal exposure.

Our operations rely on the secure processing, storage and transmission of confidential and other information in our computer systems and networks. There have been several highly publicized cases involving financial services companies, consumer-based companies and other companies, as well as governmental and political organizations, reporting breaches in the security of their websites, networks or other systems. Some of the publicized breaches have involved sophisticated and targeted cyber attacks intended to obtain unauthorized access to confidential information, destroy data, disrupt or degrade service, sabotage systems or cause other damage, including through the introduction of computer viruses, malware, ransomware, phishing, denial-of-service, and other means. There have also been several highly publicized cases where hackers have requested "ransom" payments in exchange for not disclosing customer information.

A successful penetration or circumvention of the security of our systems could cause serious negative consequences for us, including significant disruption of our operations and those of our clients, customers and counterparties; misappropriation of our confidential information or that of our clients, customers, counterparties or employees; or damage to our computers or systems and those of our clients, customers and counterparties. A cyber attack or other information security events could result in violations of applicable privacy and other laws, financial loss to us or to our customers, loss of confidence in our security measures, customer dissatisfaction, significant litigation exposure and reputational harm, all of which could have a material adverse effect on us.

We continuously monitor and develop our systems to protect our technology infrastructure and data from misappropriation or corruption. Despite our efforts to ensure the integrity of our systems and information, we may not be able to anticipate, detect or implement effective preventive measures against all cyber threats, especially because the techniques used are increasingly sophisticated, change frequently, and are often not recognized until months after the attack. Cyber attacks can originate from a variety of sources, including third parties who are affiliated with foreign governments or other actors or employees acting negligently or in a manner adverse to our interests. Third parties may seek to gain access to our systems either directly or using equipment or security passwords belonging to employees, customers, third-party service providers or other users of our systems. In addition, due to our interconnectivity with third-party vendors, central agents, exchanges, clearing houses and other financial institutions, we could be adversely impacted if any of them are subject to a successful cyber attack or other information security event.

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Although we take protective measures and endeavor to modify them as circumstances warrant, our computer systems, software and networks have been and may be vulnerable to unauthorized access, misuse, computer viruses or other malicious code and other events that could have a security impact. We may be required to expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities, exposures, or information security events. Due to the complexity and interconnectedness of our systems, the process of enhancing our protective measures can itself create a risk of systems disruptions and security issues.

The increased use of cloud technologies can heighten these and other operational risks. Certain aspects of the security of such technologies are unpredictable or beyond our control, and this lack of transparency may inhibit our ability to discover a failure by cloud service providers to adequately safeguard their systems and prevent cyber attacks that could disrupt our operations and result in misappropriation, corruption or loss of confidential and other information. In addition, there is a risk that encryption and other protective measures, despite their sophistication, may be defeated, particularly to the extent that new computing technologies vastly increase the speed and computing power available.

Risk management processes may not fully mitigate exposure to the various risks that we face.

We refine our risk management techniques, strategies and assessment methods on an ongoing basis. However, risk management techniques and strategies, both ours and those available to the market generally, may not be fully effective in identifying and mitigating our risk exposure in all economic market environments or against all types of risk. For example, we may fail to identify or anticipate particular risks that our systems are capable of identifying, or the systems that we use, and that are used within the industry generally, may not be capable of identifying certain risks, or every economic and financial outcome, or the specifics and timing of such outcomes. In addition, our risk management techniques and strategies seek to balance our ability to profit from our market-making and investing positions with our exposure to potential losses. Some of our strategies for managing risk are based upon our use of observed historical market behavior. We apply statistical and other tools to these observations to quantify our risk exposure. Any failures in our risk management techniques and strategies to accurately quantify our risk exposure could limit our ability to manage risks. In addition, any risk management failures could cause our losses to be significantly greater than the historical measures indicate. Further, our quantified modeling does not take all risks into account. Our more qualitative approach to managing those risks could prove insufficient, exposing us to material unanticipated losses.

The financial services industry and the markets in which we operate are subject to systemic risk that could adversely affect our business and results.

Participants in the financial services industry and markets increasingly are closely interrelated as a result of credit, trading, clearing, technology and other relationships between them. A significant adverse development with one participant (such as a bankruptcy or default) may spread to others and lead to significant concentrated or market-wide problems (such as defaults, liquidity problems or losses) for other industry participants, including us. Further, the control and risk management infrastructure of the markets in which we operate often is outpaced by financial innovation and growth in new types of securities, transactions and markets. Systemic risk is inherently difficult to assess and quantify, and its form and magnitude can remain unknown for significant periods of time.

Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could materially affect our business.

We have documented and tested our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), which requires annual management assessments of the effectiveness of our internal controls over financial reporting and a report by our independent auditors regarding our internal control over financial reporting. We are in compliance with Section 404 of the Sarbanes-Oxley Act as of December 31, 2023. However, if we fail to maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Failure to maintain an effective internal control environment could materially adversely affect our business.
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LEGAL AND REGULATORY RISK

Legal and regulatory risk includes the risk of non-compliance with applicable legal and regulatory requirements and the loss to our reputation we may suffer as a result of failure to comply with laws, regulations, rules, related SRO standards and codes of conduct applicable to our business activities. It also includes the risk that legislation could reduce or eliminate certain business activities that we are currently engaged in, which could harm our future financial condition or results of operations. The following are material legal and regulatory risk factors that could pose a risk to us.

Our business is subject to extensive regulation in the jurisdictions in which we operate, and a significant regulatory action against our company may have a material adverse financial effect on, cause significant reputational harm to, or result in other collateral consequences for our company.

As a participant in the financial services industry, we are subject to complex and extensive regulation of many aspects of our business by U.S. federal and state regulatory agencies, SROs (including securities exchanges) and by foreign governmental agencies, regulatory bodies and securities exchanges. Specifically, our operating subsidiaries include broker dealer and related securities entities organized in the U.S., the U.K., and Hong Kong. Each of these entities is registered or licensed with the applicable local regulator and is subject to all the applicable rules and regulations promulgated by those authorities. In addition, our asset management subsidiaries, PSC Capital Partners LLC, Piper Sandler Advisors LLC, Piper Heartland Healthcare Capital LLC and Piper Sandler Finance Management LLC, as well as Piper Sandler & Co., are registered as investment advisors with the SEC and are subject to the regulation and oversight by the SEC, and we have an additional asset management subsidiary subject to regulation in Guernsey.

Generally, the requirements imposed by our regulators are designed to ensure the integrity of the financial markets and to protect customers and other third parties who deal with us. These requirements are not designed to protect our shareholders. Consequently, broker dealer regulations often serve to limit our activities, through net capital, customer protection, market conduct requirements and other restrictions on the businesses in which we may operate or invest. We also must comply with numerous regulations, including requirements related to fiduciary duties to clients, record-keeping, reporting and customer disclosures. Compliance with many of these regulations entails a number of risks, particularly in areas where applicable regulations may be newer or unclear. Regulatory authorities in all jurisdictions in which we conduct business may examine or investigate aspects of our business, and responding to examinations or investigations could increase regulatory costs and adversely affect our results of operations. For example, in 2023, we disclosed ongoing investigations by the SEC and the Commodity Futures Trading Commission (the "CFTC") regarding our compliance with recordkeeping requirements for business-related communications sent over unapproved electronic messaging channels. In addition, we and our employees could be fined or otherwise disciplined for violations or prohibited from engaging in some of our business activities.

Our business also subjects us to the complex income and payroll tax laws of the national and local jurisdictions in which we have business operations, and these tax laws may be subject to different interpretations by the taxpayer and the relevant governmental taxing authorities. We must make judgments and interpretations about the application of these inherently complex tax laws when determining the provision for income and other taxes. We are subject to contingent tax risk that could adversely affect our results of operations, to the extent that our interpretations of tax laws are disputed upon examination or audit, and are settled in amounts in excess of established reserves for such contingencies.

The effort to combat money laundering also has become a high priority in governmental policy with respect to financial institutions. The obligation of financial institutions, including ourselves, 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. Any failure with respect to our programs in this area could subject us to serious regulatory consequences, including substantial fines and potentially other liabilities.

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Our industry is exposed to significant legal liability, which could lead to substantial damages.

We face significant legal risks in our businesses. These risks include potential liability under securities laws and regulations in connection with our capital markets, asset management and other businesses. The volume and amount of damages claimed in litigation, arbitrations, regulatory enforcement actions and other adversarial proceedings against financial services firms has historically been intense. Our experience has been that adversarial proceedings against financial services firms typically increase during and following a market downturn. We also are subject to claims from disputes with our employees and our former employees under various circumstances. Risks associated with legal liability often are difficult to assess or quantify, and their existence and magnitude can remain unknown for significant periods of time, making the amount of legal reserves related to these legal contingencies difficult to determine and subject to future revision. Legal or regulatory matters involving our directors, officers or employees in their individual capacities also may create exposure for us because we may be obligated or may choose to indemnify the affected individuals against liabilities and expenses they incur in connection with such matters to the extent permitted under applicable law. In addition, like other financial services companies, we may face the possibility of employee fraud or misconduct. The precautions we take to prevent and detect this activity may not be effective in all cases, and there can be no assurance that we will be able to deter or prevent fraud or misconduct. Exposures from and expenses incurred related to any of the foregoing actions or proceedings could have a negative impact on our results of operations and financial condition. In addition, future results of operations could be adversely affected if reserves relating to these legal liabilities are required to be increased or legal proceedings are resolved in excess of established reserves.

Legislative and regulatory proposals could significantly curtail the revenue from certain products or services that we currently provide or could otherwise have a material adverse effect on our results of operations.

Proposed changes in laws or regulations relating to our business could decrease, perhaps significantly, the revenue that we receive from certain products or services that we provide, or otherwise have a material adverse effect on our results of operations. Both the healthcare and financial services sectors are significant contributors to our overall results, and negative developments in either of these sectors, including negative developments that result from legislative or regulatory actions, could negatively affect our results of operations, even when general economic conditions are strong.

The business operations that we conduct outside of the U.S. subject us to unique risks.

When we conduct business outside the U.S., we are subject to risks, including the risk that we will be unable to provide effective operational support to these business activities, the risk of noncompliance with foreign laws and regulations, and the general economic and political conditions in countries where we conduct business, which may differ significantly from those in the U.S. For example, the effect of Brexit is still developing and could require us to obtain additional regulatory licenses or impose additional restrictions on our ability to conduct business in Europe. In addition, our international operations require compliance with anti-bribery and anti-corruption laws, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010. These laws generally prohibit companies and their intermediaries from engaging in bribery or making other improper payments to foreign officials for the purpose of obtaining or retaining business or gaining an unfair business advantage. While our employees and agents are required to comply with these laws, we cannot ensure that our internal controls policies and procedures will always protect us from intentional, reckless or negligent acts committed by our employees or agents, which acts could subject our company to fines or other regulatory consequences that could disrupt our operations and negatively impact our results of operations.

Regulatory capital requirements may limit our ability to expand or maintain our present levels of business or impair our ability to meet our financial obligations.

We are subject to the SEC's uniform net capital rule (Rule 15c3-1) and the net capital rule of FINRA, which may limit our ability to withdraw capital from Piper Sandler & Co. The uniform net capital rule sets the minimum level of net capital a broker dealer must maintain and also requires that a portion of its assets be relatively liquid. FINRA may prohibit a member firm from expanding its business or paying cash dividends if resulting net capital falls below its requirements. Underwriting commitments require a charge against net capital and, accordingly, our ability to make underwriting commitments may be limited by the requirement that we must at all times be in compliance with the applicable net capital regulations.

Piper Sandler Companies, our holding company, depends on dividends, distributions and other payments from our subsidiaries to fund its obligations. The regulatory restrictions described above may impede access to funds our holding company needs to make payments on any such obligations.

Piper Sandler Companies | 21

OTHER RISKS TO OUR SHAREHOLDERS

The following are additional risk factors that could pose a material risk to us or our shareholders.

We may change our dividend policy at any time and there can be no assurance that we will continue to declare cash dividends.

Our current dividend policy is to return between 30 percent and 50 percent of our fiscal year adjusted net income to shareholders. Although we expect to pay dividends to our shareholders in accordance with our dividend policy, we have no obligation to pay any dividend, and our dividend policy may change at any time without notice. The declaration and payment of dividends is at the discretion of our board of directors in accordance with applicable law after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs and capital uses, limitations imposed by our indebtedness, legal requirements and other factors that our board of directors deems relevant. As a result, we may not pay dividends at any rate or at all.

Our stock price may fluctuate as a result of several factors, including changes in our revenues, operating results, and return on equity.

We have experienced, and expect to experience in the future, fluctuations in the market price of our common stock due to factors that relate to the nature of our business, including changes in our revenues, operating results, earnings per share, and return on equity. Our business, by its nature, does not produce steady and predictable earnings on a quarterly basis, which may cause fluctuations in our stock price that may be significant. Other factors that have affected, and may further affect, our stock price include changes in or news related to economic, political, or market events or conditions, changes in market conditions in the financial services industry, including developments in regulation affecting our business, a predominantly passive or quantitative shareholder base among the Company's top twenty shareholders, failure to meet the expectations of market analysts, changes in recommendations or outlooks by market analysts, and aggressive short selling.

Provisions in our amended and restated certificate of incorporation and amended and restated bylaws and of Delaware law may prevent or delay an acquisition of our company, which could decrease the market value of our common stock.

Our amended and restated certificate of incorporation and amended and restated bylaws and Delaware law contain provisions that are intended to deter abusive takeover tactics by making them unacceptably expensive to a potential raider and to encourage prospective acquirors to negotiate with our board of directors rather than to attempt a hostile takeover. These provisions include limitations on our shareholders' ability to act by written consent and to call special meetings. Delaware law also imposes some restrictions on mergers and other business combinations between us and any holder of 15 percent or more of our outstanding common stock. We believe these provisions protect our shareholders from coercive or otherwise unfair takeover tactics by requiring potential acquirors to negotiate with our board of directors and by providing our board of directors with more time to assess any acquisition proposal, and are not intended to make our company immune from takeovers. However, these provisions apply even if the offer may be considered beneficial by some shareholders and could delay or prevent an acquisition that our board of directors determines is not in the best interests of our company and our shareholders.

Item 1B. Unresolved Staff Comments.
None.

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Item 1C. Cybersecurity.        
As a trusted advisor to our clients and a regulated financial services firm, information and cybersecurity are critical to our operations and reputation. Our management team takes an active role in identifying, assessing, monitoring and managing material risks from information and cybersecurity threats. Management’s assessment of information and cybersecurity threats is incorporated into our enterprise risk management processes, which include assessing inherent risks posed by the internal operating environment and external factors, assessing the adequacy and design of controls, testing controls, determining residual risk and comparing it to risk appetite thresholds, and taking steps to further mitigate risks as needed. Our board of directors is actively engaged in the oversight of cybersecurity and information technology risks, with primary oversight responsibility delegated to the audit committee of the board of directors. The audit committee is composed of board members with the appropriate expertise, including risk management, cybersecurity and finance, to oversee these risks as well as management's cybersecurity processes and protocols.

Our chief information and operations officer is a member of our leadership team and has been in this role for 15 years. With more than 25 years of experience in information technology in the investment banking industry, he is responsible for overseeing more than 100 employees in our information security and technology departments who possess relevant educational and industry experience. The information security and technology departments are responsible for various functions of our information and cybersecurity program, including implementing and maintaining policies and procedures; developing, implementing and governing various service level agreements; ratifying security standards; reviewing project implementations; performing third-party vendor assessments; and operating programs such as threat intelligence, vulnerability management, security information event management, and information governance.

Our information and cybersecurity program utilizes the National Institute of Standards and Technology ("NIST") Cybersecurity Framework, and our security controls are mapped to the NIST Cybersecurity Framework to ensure alignment with recognized industry best practices. Annually, we engage a third-party consultant to conduct an assessment of the effectiveness of our information and cybersecurity program against the NIST Cybersecurity Framework. This assessment is reviewed with the audit committee, and opportunities for further maturation are incorporated into our information and cybersecurity roadmap.

Additionally, we regularly engage consultants and other third parties to evaluate specific priority areas of our information and cybersecurity program based on our assessment of the current cybersecurity threat landscape. Examples of our engagement with consultants include external penetration testing, application security assessment and cybersecurity incident response tabletop exercises.

Our third-party vendor management program has a tiered approach to assess vendors based on risk profile. We review each third-party vendor’s architectures, security practices and data flows, and integrate stringent contractual terms encompassing breach notifications and other security requirements. The risk profiles associated with our service level agreements are monitored by senior employees in our information security and technology departments. Our vendor management program also includes an annual reassessment of the risk profile of each vendor and interim vendor reviews are completed if service alterations occur.

Senior information security and technology employees, including the chief information and operations officer, meet regularly to discuss potential information and cybersecurity threats that have been identified by our systems, employees or otherwise made known to us by our third-party service providers, vendors and other external users, and to formulate the appropriate response to any identified material information and cybersecurity threats. When high-priority information or cybersecurity risks are identified, certain employees in our information security, privacy, technology, legal and compliance departments meet or communicate to review potential threats in accordance with our internal cybersecurity incident response process.

Potential threats, our response to such threats, and our evaluation of any residual risk are communicated quarterly to the audit committee. As necessary, the chief information and operations officer provides interim updates to the audit committee and, as appropriate, the board of directors, concerning high-priority or material information or cybersecurity threats. Our chief information and operations officer also provides a quarterly update to the audit committee regarding our ongoing information and cybersecurity initiatives; the current cybersecurity landscape and emerging threats; and metrics on the effectiveness of certain aspects of our information and cybersecurity program.

Piper Sandler Companies | 23

Employees, including representatives of management, conduct an annual cybersecurity incident response tabletop exercise to review our processes and procedures in the event of a material information or cybersecurity incident, including the process for assessing the materiality of an incident and communication of an incident to the audit committee and, as appropriate, the board of directors. In addition, to promote a company-wide culture of cybersecurity risk management, we conduct regular phishing email simulations for employees to enhance awareness and responsiveness to possible threats and other kinds of preparedness training. We also require all employees to complete an annual cybersecurity and privacy awareness training.

We believe that we have implemented a comprehensive, cross-functional approach to identifying, preventing and mitigating cybersecurity threats and incidents, as well as controls and procedures that provide for the prompt escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by management in a timely manner.

We are not aware of any cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to affect our company, including our business strategy, results of operations or financial condition. However, we cannot provide assurance that a future cybersecurity incident would not materially affect our business strategy, results of operations or financial condition. Additional information regarding risks related to cybersecurity is included under "Risk Factors" in Part I, Item 1A of this Form 10-K.

Item 2. Properties.
As of February 20, 2024, we conducted our operations through 59 principal offices in 31 states, and the District of Columbia, and in London, Aberdeen and Hong Kong. All of our offices are leased. Our principal executive office is located at 800 Nicollet Mall, Suite 900, Minneapolis, Minnesota 55402 and, as of February 20, 2024, comprises approximately 124,000 square feet of space under a lease which expires November 30, 2025. In December 2022, we entered into a 15-year lease agreement which comprises approximately 113,000 square feet of space for our future principal executive office located at 350 N. 5th Street, Minneapolis, Minnesota 55401.

Item 3. Legal Proceedings.
The discussion of our legal proceedings contained in Note 16 to our consolidated financial statements included in Part II, Item 8 of this Form 10-K is incorporated herein by reference.

Item 4. Mine Safety Disclosures.
Not applicable.
Piper Sandler Companies | 24

Part II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
MARKET INFORMATION
Our common stock is listed on the New York Stock Exchange under the symbol "PIPR."

SHAREHOLDERS
We had 8,473 shareholders of record and approximately 47,559 beneficial owners of our common stock as of February 20, 2024.

DIVIDEND POLICY
Our board of directors has approved a dividend policy with the intention of returning between 30 percent and 50 percent of our fiscal year adjusted net income to shareholders.

Our board of directors has declared a special cash dividend on our common stock of $1.00 per share related to 2023 adjusted net income. This special dividend will be paid on March 15, 2024, to shareholders of record as of the close of business on March 4, 2024. Including this special cash dividend, we will have returned $3.40 per share, or approximately 37 percent of our fiscal year 2023 adjusted net income to shareholders. In addition, our board of directors has declared a quarterly cash dividend on our common stock of $0.60 per share to be paid on March 15, 2024, to shareholders of record as of the close of business on March 4, 2024.

Our board of directors is free to change our dividend policy at any time. Restrictions on our U.S. broker dealer subsidiary's ability to pay dividends are described in Note 24 to the consolidated financial statements included in Part II, Item 8 of this Form 10-K.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
Information about securities authorized for issuance under our equity compensation plans is included in Part III, Item 12 of this Form 10-K, and is incorporated herein by reference.

Piper Sandler Companies | 25

ISSUER PURCHASES OF EQUITY SECURITIES
The table below sets forth the information with respect to purchases made by or on behalf of Piper Sandler Companies or any "affiliated purchaser" (as defined in Rule 10b-18(a)(3) under the Exchange Act), of our common stock during the quarter ended December 31, 2023:
Total Number of SharesApproximate Dollar
Purchased as Part ofValue of Shares Yet to be
Total Number ofAverage PricePublicly AnnouncedPurchased Under the
PeriodShares PurchasedPaid per SharePlans or ProgramsPlans or Programs (1)
Month #1
October 1, 2023 to October 31, 202314,088 $144.13 — $138 million
Month #2
November 1, 2023 to November 30, 20231,787 $152.51 — $138 million
Month #3
December 1, 2023 to December 31, 20234,326 $174.87 — $138 million
Total20,201 $151.45 — $138 million
(1)Effective May 6, 2022, our board of directors authorized the repurchase of up to $150.0 million of common stock through December 31, 2024.
Piper Sandler Companies | 26

STOCK PERFORMANCE GRAPH
This performance graph shall not be deemed "soliciting material" or to be "filed" with the SEC for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act.

The following graph compares the performance of an investment in our common stock from December 31, 2018 through December 31, 2023, with the S&P 500 Index and the S&P 500 Diversified Financials Index. The graph assumes $100 was invested on December 31, 2018 in each of our common stock, the S&P 500 Index and the S&P 500 Diversified Financials Index, and that all dividends were reinvested on the date of payment without payment of any commissions. The performance shown in the graph represents past performance and should not be considered an indication of future performance.

Five Year Total Return
128
Company/Index12/31/201812/31/201912/31/202012/31/202112/31/202212/31/2023
Piper Sandler Companies$100 $123.88 $160.60 $297.64 $227.96 $314.08 
S&P 500 Index100 131.49 155.68 200.37 164.08 207.21 
S&P 500 Diversified Financials100 124.57 138.73 188.49 167.25 193.24 

Item 6. Reserved.

Piper Sandler Companies | 27

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following information should be read in conjunction with the accompanying audited consolidated financial statements and related notes and exhibits included elsewhere in this Form 10-K. Certain statements in this Form 10-K may be considered forward-looking. See "Cautionary Note Regarding Forward-Looking Statements" in this Form 10-K for additional information regarding such statements and related risks and uncertainties.

Item 7 in this Form 10-K discusses our 2023 and 2022 results and the year-over-year comparisons between 2023 and 2022. Discussion of our 2021 results and the year-over-year comparisons between 2022 and 2021 can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 24, 2023.

EXPLANATION OF NON-GAAP FINANCIAL MEASURES
We have included financial measures that are not prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). These non-GAAP financial measures include adjustments to exclude (1) investment (income)/loss and non-compensation expenses related to noncontrolling interests, (2) interest expense on long-term financing from net revenues, (3) amortization of intangible assets related to acquisitions, (4) compensation and non-compensation expenses from acquisition-related agreements, (5) restructuring and integration costs related to acquisitions and/or headcount reductions and (6) the income tax expense/(benefit) allocated to the adjustments. For the year ended December 31, 2023, the U.S. GAAP financial measures include $21.5 million of non-compensation expenses related to potential regulatory settlements with the SEC and the CFTC regarding compliance with recordkeeping requirements for business-related communications. We anticipate the resolution of these matters will include the payment of civil money penalties and have accrued estimated civil penalties of $20.0 million, which are included in other operating expenses on the consolidated statements of operations. Additionally, we have incurred $1.5 million of related outside services expenses in connection with these matters. The non-GAAP financial measures for the year ended December 31, 2023 exclude the non-compensation expenses related to these potential regulatory settlements. The adjusted weighted average diluted shares outstanding used in the calculation of non-GAAP earnings per diluted common share contains an adjustment to include the common shares for unvested restricted stock awards with service conditions granted pursuant to all acquisitions since January 1, 2020. These adjustments affect the following financial measures: net revenues, compensation expenses, non-compensation expenses, income tax expense, net income attributable to Piper Sandler Companies, earnings per diluted common share, total non-interest expenses, pre-tax income and pre-tax margin. Management believes that presenting these results and measures on an adjusted basis in conjunction with the corresponding U.S. GAAP measures provides the most meaningful basis for comparison of our operating results across periods and enhances the overall understanding of our current financial performance by excluding certain items that may not be indicative of our core operating results. The non-GAAP financial measures should be considered in addition to, not as a substitute for, measures of financial performance prepared in accordance with U.S. GAAP.

EXECUTIVE OVERVIEW
Overview of Operations
Our business principally consists of providing investment banking and institutional brokerage services to corporations, private equity groups, public entities, non-profit entities and institutional investors in the U.S. and Europe. We operate through one reportable business segment.

Investment banking services include financial advisory services, management of and participation in underwritings, and municipal financing activities. Revenues are generated through the receipt of advisory and financing fees. Institutional sales, trading and research services focus on the trading of equity and fixed income products with institutions, corporations, and government and non-profit entities. Revenues are generated through commissions and sales credits earned on equity and fixed income institutional sales activities, net interest revenues on trading securities held in inventory, profits and losses from trading these securities, and fees for research services and corporate access offerings. In order to invest firm capital and to manage capital from outside investors, we have created alternative asset management funds in merchant banking and healthcare. We receive management and performance fees for managing these funds, and also record investment gains and losses.

Piper Sandler Companies | 28

Our Business Strategy
Our long-term strategic objectives are to drive revenue growth, expand our market presence, continue to gain market share, and maximize shareholder value. In order to meet these objectives, we are focused on the following:

Continuing to expand our business through strategic investments and selectively adding partners who share our client-centric culture and who can leverage our platform to better serve clients;
Growing our investment banking platform through market share gains, accretive combinations, developing internal talent, and continued sector, product and geographic expansion. We also believe there is an opportunity to continue to capitalize on the strength of our U.S. franchises by expanding in Europe;
Leveraging the scale within the equity brokerage and fixed income services platforms, driven by our expanded client base and product offerings, to continue to grow market share; and
Prudently managing capital to maintain our balance sheet strength with ample liquidity and flexibility through all market conditions.

Strategic Activities
We have taken the following important steps in the execution of our business strategy:

Our corporate investment banking managing directors increased to 169, up 6.3 percent from 2022, with a significant portion of the growth driven by internal promotions. We also strengthened and broadened our industry and product coverage in 2023, notably in healthcare services, real estate, asset and wealth management, and restructuring.
We expanded our fixed income services team in 2023 with the strategic build out of our trading and distribution capabilities of our non-agency structured credit business. Additionally, our continued investment in our research services and specialized sales and trading teams are key differentiators in supporting our finance activity.
In 2023, we grew our market share in our advisory services, equity corporate financing and equity brokerage businesses.
We demonstrated the strength of our differentiated advisory product offerings in 2023 through the generation of record revenues from our restructuring advisory services and agented debt business.
We completed the following acquisitions in 2022 as part of our growth strategy:
On October 7, 2022, we completed the acquisition of DBO Partners Holding LLC, including its subsidiary, DBO Partners LLC (collectively, "DBO Partners"), a technology investment banking firm. The transaction expanded the scale of our technology sector and added general partner advisory services.
On June 10, 2022, we completed the acquisition of Stamford Partners LLP ("Stamford Partners"), a specialist investment bank offering mergers and acquisitions advisory services to European food and beverage and related consumer sectors. The transaction expanded our presence in Europe.
On February 4, 2022, we completed the acquisition of Cornerstone Macro Research LP, including its subsidiary, Cornerstone Macro LLC (collectively, "Cornerstone Macro"), a research firm focused on providing macro research and equity derivatives trading to institutional investors. The transaction added a macro research platform and increased the scale of our equity brokerage operations.

Piper Sandler Companies | 29

Financial Highlights
Year Ended December 31,
(Amounts in thousands, except per share data)2023
20232022v2022
U.S. GAAP
Net revenues$1,347,967 $1,425,638 (5.4)%
Compensation and benefits897,034 983,524 (8.8)
Non-compensation expenses328,347 307,745 6.7 
Income before income tax expense122,586 134,369 (8.8)
Net income attributable to Piper Sandler Companies
85,491 110,674 (22.8)
Earnings per diluted common share$4.96 $6.52 (23.9)

Ratios and margin
Compensation ratio66.5 %69.0 %
Non-compensation ratio24.4 %21.6 %
Pre-tax margin9.1 %9.4 %
Effective tax rate19.3 %24.7 %
Non-GAAP(1)
Adjusted net revenues$1,330,197 $1,433,713 (7.2)%
Adjusted compensation and benefits845,976 895,999 (5.6)
Adjusted non-compensation expenses271,278 268,561 1.0 
Adjusted operating income212,943 269,153 (20.9)
Adjusted net income attributable to Piper Sandler Companies
166,393 201,317 (17.3)
Adjusted earnings per diluted common share$9.28 $11.26 (17.6)
Adjusted ratios and margin
Adjusted compensation ratio63.6 %62.5 %
Adjusted non-compensation ratio20.4 %18.7 %
Adjusted operating margin16.0 %18.8 %
Adjusted effective tax rate19.9 %23.4 %

See the "Results of Operations" section for additional information.
Piper Sandler Companies | 30

(1)Reconciliation of U.S. GAAP to adjusted non-GAAP financial information:
Year Ended December 31,
(Amounts in thousands, except per share data)20232022
 Net revenues:
Net revenues – U.S. GAAP basis$1,347,967 $1,425,638 
Adjustments:
Investment (income)/loss related to noncontrolling interests
(22,916)1,575 
Interest expense on long-term financing5,146 6,500 
Adjusted net revenues$1,330,197 $1,433,713 
Compensation and benefits:
Compensation and benefits – U.S. GAAP basis$897,034 $983,524 
Adjustment:
Compensation from acquisition-related agreements(51,058)(87,525)
Adjusted compensation and benefits$845,976 $895,999 
Non-compensation expenses:
Non-compensation expenses – U.S. GAAP basis$328,347 $307,745 
Adjustments:
Non-compensation expenses related to noncontrolling interests(9,434)(7,919)
Restructuring and integration costs
(7,749)(11,440)
Amortization of intangible assets related to acquisitions(19,440)(15,375)
Non-compensation expenses from acquisition-related agreements1,102 (4,450)
Non-compensation expenses from potential regulatory settlements
(21,548)— 
Adjusted non-compensation expenses$271,278 $268,561 
Income before income tax expense:
Income before income tax expense – U.S. GAAP basis$122,586 $134,369 
Adjustments:
Investment (income)/loss related to noncontrolling interests
(22,916)1,575 
Interest expense on long-term financing5,146 6,500 
Non-compensation expenses related to noncontrolling interests9,434 7,919 
Compensation from acquisition-related agreements51,058 87,525 
Restructuring and integration costs
7,749 11,440 
Amortization of intangible assets related to acquisitions19,440 15,375 
Non-compensation expenses from acquisition-related agreements(1,102)4,450 
Non-compensation expenses from potential regulatory settlements
21,548 — 
Adjusted operating income$212,943 $269,153 
Interest expense on long-term financing(5,146)(6,500)
Adjusted income before adjusted income tax expense$207,797 $262,653 
Income tax expense:
Income tax expense – U.S. GAAP basis
$23,613 $33,189 
Tax effect of adjustments:
Compensation from acquisition-related agreements10,467 20,872 
Restructuring and integration costs
2,053 2,528 
Amortization of intangible assets related to acquisitions5,152 3,599 
Non-compensation expenses from acquisition-related agreements(292)1,148 
Non-compensation expenses from potential regulatory settlements
411 — 
Adjusted income tax expense$41,404 $61,336 
Net income attributable to Piper Sandler Companies:
Net income attributable to Piper Sandler Companies – U.S. GAAP basis
$85,491 $110,674 
 Adjustments:
Compensation from acquisition-related agreements40,591 66,653 
Restructuring and integration costs
5,696 8,912 
Amortization of intangible assets related to acquisitions14,288 11,776 
Non-compensation expenses from acquisition-related agreements(810)3,302 
Non-compensation expenses from potential regulatory settlements
21,137 — 
Adjusted net income attributable to Piper Sandler Companies
$166,393 $201,317 
Piper Sandler Companies | 31

Year Ended December 31,
(Amounts in thousands, except per share data)20232022
Earnings per diluted common share:
Earnings per diluted common share – U.S. GAAP basis
$4.96 $6.52 
Adjustment for inclusion of unvested acquisition-related stock(0.38)(0.60)
$4.58 $5.92 
Adjustments:
Compensation from acquisition-related agreements2.36 3.93 
Restructuring and integration costs
0.33 0.53 
Amortization of intangible assets related to acquisitions0.83 0.69 
Non-compensation expenses from acquisition-related agreements(0.05)0.19 
Non-compensation expenses from potential regulatory settlements
1.23 — 
 Adjusted earnings per diluted common share$9.28 $11.26 
Weighted average diluted common shares outstanding:
Weighted average diluted common shares outstanding – U.S. GAAP basis17,224 16,965 
Adjustment:
Unvested acquisition-related restricted stock with service conditions715 909 
Adjusted weighted average diluted common shares outstanding17,939 17,874 

External Factors Impacting Our Business
Performance in the financial services industry in which we operate is highly correlated to the overall strength of macroeconomic conditions, financial market activity and the effect of geopolitical events. Overall market conditions are a product of many factors, which are beyond our control, often unpredictable and at times inherently volatile. These factors may affect the financial decisions made by investors, including their level of participation in the financial markets. In turn, these decisions may affect our business results. With respect to financial market activity, our profitability is sensitive to a variety of factors, including the demand for investment banking services as reflected by the number and size of advisory transactions, equity and debt corporate financings, and municipal financings; the relative level of volatility of the equity and fixed income markets; changes in interest rates and credit spreads (especially rapid and extreme changes); overall market liquidity; the level and shape of various yield curves; the volume and value of trading in securities; and overall equity valuations.

Factors that differentiate our business within the financial services industry also may affect our financial results. For example, our capital markets business focuses on specific industry sectors while serving principally a middle-market clientele. If the business environment for our focus sectors is impacted adversely, our business and results of operations could reflect these impacts. In addition, our business, with its specific areas of focus and investment, may not track overall market trends. Given the variability of the capital markets and securities businesses, our earnings may fluctuate significantly from period to period, and results for any individual period should not be considered indicative of future results.
Piper Sandler Companies | 32

Market Data
The following table provides a summary of relevant market data:
Year Ended December 31,
2023
20232022v2022
U.S. Market Indices
S&P 500 (a)
4,770 3,840 24.2 %
Nasdaq (a)
15,011 10,466 43.4 
U.S. Middle Market Mergers and Acquisitions
Announced transactions (number of transactions) (b)
2,774 3,714 (25.3)
U.S. Equity Capital Markets
Completed public equity offerings (number of transactions) (c)
566 521 8.6 
Completed initial public offerings (number of transactions) (d)
90 156 (42.3)
Equity fee pool for overall market (in millions) (e)
$4,681 $3,517 33.1 
Equity fee pool for sub-$5 billion (in millions) (f)
$2,820 $2,404 17.3 
U.S. Municipal Negotiated Issuances
Completed issuances (number of transactions) (g)
4,921 5,854 (15.9)
Aggregate par value (in billions) (g)
$313 $313 — 
Average CBOE Volatility Index (VIX)17 26 (34.6)
Average Daily Number of Shares Traded
NYSE (shares in millions)2,185 2,355 (7.2)
Nasdaq (shares in millions)1,822 2,083 (12.5)
Interest Rates
3-month treasury average rate5.28 %2.09 %152.6 
10-year treasury average rate3.96 %2.95 %34.2 
Average 10-year MMD to 10-year Treasury Ratio (h)
0.67 0.83 (19.3)
(a)Data provided is at period end.
(b)Source: Refinitiv (transactions with reported deal value between $100 million and $1 billion and transactions with an undisclosed deal value that had a financial advisor).
(c)Source: Dealogic and Piper Sandler & Co. Equity Capital Markets (IPOs, follow-on offerings and convertible offerings with reported deal value greater than $10 million).
(d)Source: Dealogic and Piper Sandler & Co. Equity Capital Markets (offerings with reported deal value greater than $10 million).
(e)Source: Dealogic and Piper Sandler & Co. Equity Capital Markets (IPOs, follow-on offerings and convertible offerings with deal values greater than $10 million and PIPEs/RDs greater than $5 million; SPAC IPO fees are represented as the standard two percent upfront fee unless noted differently on the IPO cover).
(f)Source: Dealogic and Piper Sandler & Co. Equity Capital Markets (IPOs, follow-on offerings and convertible offerings with deal values greater than $10 million and PIPEs/RDs greater than $5 million for sub-$5 billion market cap issuers; SPAC IPO fees are represented as the standard two percent upfront fee unless noted differently on the IPO cover).
(g)Source: Refinitiv (sole/senior negotiated and private placement transactions).
(h)Calculated based on the 10-year MMD index rate divided by the 10-year treasury rate.





Piper Sandler Companies | 33

Outlook for 2024
We believe U.S. monetary policy will remain a factor impacting the economy and financial markets in 2024. The U.S. Federal Reserve held its short-term benchmark interest rate steady in the fourth quarter of 2023 and is expected to begin reducing rates in 2024, however the timing remains uncertain. Inflation moderated in 2023, however prices for goods and services remain elevated and, combined with labor shortages and tightened lending standards, continue to strain the economy. Geopolitical concerns, including the conflicts in the Middle East and Eastern Europe, could negatively impact financial market activity in 2024. Additionally, the 2024 U.S. presidential election may influence the volatility or direction of the markets based on investors' assessment of the outcome and the overall political outlook in the U.S.

We estimate M&A market activity was down 20 to 30 percent in 2023 as compared to 2022. We experienced more resilient advisory services results compared to the market in 2023 as we benefited from our sector and product diversification, along with balanced coverage of strategic and private equity clients. We experienced an elevated close rate in the fourth quarter of 2023 driven by a slight improvement in market conditions. Our advisory pipeline remains strong and we expect advisory services revenues to strengthen with improving market conditions in 2024.

While equity financing activity improved relative to the prior year, the market activity continues to remain below historical levels. We expect equity and debt capital markets activity to increase in 2024 as clients require access to capital in order to execute on their strategic plans.

The equity markets experienced lower average volatility and moderated volumes in 2023. Despite these softer market conditions, our equity brokerage revenue was consistent with the prior year reflecting market share gains. Our client research votes continue to increase, which we believe will drive further market share gains over time. In 2024, we anticipate a more challenging market environment with a lower research and trading services fee pool, as well as expectations of lower volatility.

Market conditions for our fixed income services business were challenging during the first nine months of 2023 as interest rate volatility and liquidity concerns for banking institutions muted client activity. However, in the fourth quarter we experienced increased client activity from our depository clients resulting from the expectation that the U.S. Federal Reserve will not raise rates further. We expect this higher client activity to continue in 2024 as our clients take advantage of higher yielding securities.

Market conditions were challenging for our municipal financing business for most of the year due to higher interest rates and volatility, as well as weakened investor demand. In 2023, the number of new municipal negotiated issuances in the overall market declined approximately 13 percent from the prior year and the number of new high-yield municipal negotiated issuances decreased approximately 21 percent. While market conditions continue to be challenging, we experienced an improvement in the fourth quarter stemming from declining rates and increased investor demand, and we believe the market for municipal financing will continue to improve as 2024 progresses.

Piper Sandler Companies | 34

RESULTS OF OPERATIONS

Financial Summary
The following table provides a summary of the results of our operations on a U.S. GAAP basis and the results of our operations as a percentage of net revenues for the periods indicated:
As a Percentage of
Net Revenues for the
Year Ended December 31,Year Ended December 31,
20232022
(Amounts in thousands)202320222021v2022v2021202320222021
Revenues
Investment banking$923,812 $1,009,509 $1,553,219 (8.5)%(35.0)%68.5 %70.8 %76.5 %
Institutional brokerage377,539 405,267 387,577 (6.8)4.6 28.0 28.4 19.1 
Interest income26,723 20,365 6,967 31.2 192.3 2.0 1.4 0.3 
Investment income/(loss)30,039 (23)94,032 N/MN/M2.2 0.0 4.6 
Total revenues1,358,113 1,435,118 2,041,795 (5.4)(29.7)100.8 100.7 100.5 
Interest expense10,146 9,480 10,734 7.0 (11.7)0.8 0.7 0.5 
Net revenues1,347,967 1,425,638 2,031,061 (5.4)(29.8)100.0 100.0 100.0 
Non-interest expenses
Compensation and benefits897,034 983,524 1,305,166 (8.8)(24.6)66.5 69.0 64.3 
Outside services51,754 53,189 45,942 (2.7)15.8 3.8 3.7 2.3 
Occupancy and equipment64,356 64,252 56,946 0.2 12.8 4.8 4.5 2.8 
Communications52,718 50,565 44,008 4.3 14.9 3.9 3.5 2.2 
Marketing and business development37,734 42,849 20,902 (11.9)105.0 2.8 3.0 1.0 
Deal-related expenses28,189 31,874 42,921 (11.6)(25.7)2.1 2.2 2.1 
Trade execution and clearance19,972 20,185 16,533 (1.1)22.1 1.5 1.4 0.8 
Restructuring and integration costs7,749 11,440 4,724 (32.3)142.2 0.6 0.8 0.2 
Intangible asset amortization19,440 15,375 30,080 26.4 (48.9)1.4 1.1 1.5 
Other operating expenses46,435 18,016 22,327 157.7 (19.3)3.4 1.3 1.1 
Total non-interest expenses1,225,381 1,291,269 1,589,549 (5.1)(18.8)90.9 90.6 78.3 
Income before income tax expense122,586 134,369 441,512 (8.8)(69.6)9.1 9.4 21.7 
Income tax expense23,613 33,189 111,144 (28.9)(70.1)1.8 2.3 5.5 
Net income98,973 101,180 330,368 (2.2)(69.4)7.3 7.1 16.3 
Net income/(loss) attributable to noncontrolling interests
13,482 (9,494)51,854 N/MN/M1.0 (0.7)2.6 
Net income attributable to Piper Sandler Companies
$85,491 $110,674 $278,514 (22.8)(60.3)6.3 7.8 13.7 
N/M — Not meaningful

Piper Sandler Companies | 35

For the year ended December 31, 2023, we recorded net income attributable to Piper Sandler Companies of $85.5 million. Net revenues for the year ended December 31, 2023 decreased 5.4 percent to $1.35 billion, compared with $1.43 billion in the year-ago period. In 2023, investment banking revenues decreased 8.5 percent to $923.8 million, compared with $1.01 billion in 2022, primarily driven by a decrease in advisory services revenues, as well as lower municipal financing revenues, offset in part by higher corporate financing revenues. For the year ended December 31, 2023, institutional brokerage revenues were $377.5 million, down 6.8 percent compared with $405.3 million in 2022, primarily due to lower fixed income services revenues. In 2023, net interest income was $16.6 million, compared to $10.9 million in 2022, resulting from an increase in interest income on our long inventory and cash balances. For the year ended December 31, 2023, we recorded investment income of $30.0 million primarily related to gains on our investments and the noncontrolling interests in the alternative asset management funds that we manage. Non-interest expenses were $1.23 billion for the year ended December 31, 2023, down 5.1 percent compared to $1.29 billion in the prior year, primarily due to decreased compensation expenses resulting from lower revenues, offset in part by higher other operating expenses.

Consolidated Non-Interest Expenses
Compensation and Benefits
Compensation and benefits expenses, which are the largest component of our expenses, include salaries, incentive compensation, benefits, stock-based compensation, employment taxes, reversal of expenses associated with the forfeiture of stock-based compensation and other employee-related costs. A significant portion of compensation expense is comprised of variable incentive arrangements, including discretionary incentive compensation, the amount of which fluctuates in proportion to the level of business activity, increasing with higher revenues and operating profits and decreasing with lower revenues and operating profits. Other compensation costs, primarily base salaries and benefits, are more fixed in nature. The timing of incentive compensation payments, which is generally in February, has a greater impact on our cash position and liquidity than is reflected on our consolidated statements of operations. In conjunction with our acquisitions, we have granted restricted stock and restricted cash with service conditions, which are amortized to compensation expense over the service period. We have also entered into forgivable loans with service conditions, which are amortized to compensation expense over the loan term. Additionally, expense estimates related to revenue-based earnout arrangements with service conditions entered into as part of our acquisitions are amortized to compensation expense over the service period.

The following table summarizes our future acquisition-related compensation expense for restricted stock and forgivable loans with service conditions, as well as expense estimates related to revenue-based earnout arrangements:
(Amounts in thousands)
2024$40,275 
202521,910 
202614,627 
20279,366 
Total$86,178 

For the year ended December 31, 2023, compensation and benefits expenses decreased 8.8 percent to $897.0 million from $983.5 million in 2022, due to lower revenues. Compensation and benefits expenses as a percentage of net revenues was 66.5 percent in 2023, compared with 69.0 percent in 2022. Excluding the impact of noncontrolling interests, our compensation ratio decreased to 67.7 percent in 2023, compared with 68.9 percent in 2022, primarily due to a decline in acquisition-related compensation expenses.

Outside Services
Outside services expenses include securities processing expenses, outsourced technology functions, outside legal fees, fund expenses associated with our consolidated alternative asset management funds and other professional fees. Outside services expenses decreased 2.7 percent to $51.8 million in 2023, compared with $53.2 million in 2022, primarily due to lower professional fees.

Occupancy and Equipment
For the year ended December 31, 2023, occupancy and equipment expenses increased slightly to $64.4 million, compared with $64.3 million in 2022.
Piper Sandler Companies | 36

Communications
Communication expenses include costs for telecommunication and data communication, primarily consisting of expenses for obtaining third-party market data information. For the year ended December 31, 2023, communication expenses increased 4.3 percent to $52.7 million, compared with $50.6 million in 2022, primarily due to higher market data services expenses.

Marketing and Business Development
Marketing and business development expenses include travel and entertainment costs, advertising and third-party marketing fees. In 2023, marketing and business development expenses decreased 11.9 percent to $37.7 million, compared with $42.8 million for the year ended December 31, 2022. The decrease was primarily due to lower travel expenses.

Deal-Related Expenses
Deal-related expenses include costs we incurred over the course of a completed investment banking deal, which primarily consist of legal fees, offering expenses, and travel costs. For the year ended December 31, 2023, deal-related expenses were $28.2 million, compared with $31.9 million for the year ended December 31, 2022. The amount of deal-related expenses is principally dependent on the level and mix of deal activity and may vary from period to period as the recognition of deal-related costs typically coincides with the closing of a transaction.

Trade Execution and Clearance
For the year ended December 31, 2023, trade execution and clearance expenses decreased slightly to $20.0 million, compared with $20.2 million for the year ended December 31, 2022.

Restructuring and Integration Costs
For the year ended December 31, 2023, we incurred restructuring and integration costs of $7.7 million. The expenses primarily consisted of $6.7 million of severance benefits related to headcount reductions and $0.9 million for vacated leased office space associated with our acquisitions of Cornerstone Macro and The Valence Group ("Valence").

For the year ended December 31, 2022, we incurred acquisition-related restructuring and integration costs of $11.4 million. The expenses consisted of $5.2 million of transaction costs primarily related to our 2022 acquisitions, $5.6 million for vacated leased office space associated with our acquisitions of Valence and Cornerstone Macro and $0.6 million of severance benefits.

Intangible Asset Amortization
Intangible asset amortization includes the amortization of definite-lived intangible assets. For the year ended December 31, 2023, intangible asset amortization was $19.4 million, compared with $15.4 million in 2022. The increase was primarily due to higher intangible asset amortization expense associated with our acquisition of DBO Partners.

The following table summarizes the future aggregate amortization expense of our intangible assets with determinable lives:
(Amounts in thousands)
2024$9,445 
20257,887 
20267,253 
20273,480 
20282,191 
Thereafter541 
Total$30,797 

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Other Operating Expenses
Other operating expenses primarily include insurance costs, license and registration fees, expenses related to our charitable giving program and litigation-related expenses, which consist of the amounts we accrue for and/or pay out related to legal and regulatory matters. Other operating expenses were $46.4 million in 2023, compared with $18.0 million in 2022. The increase was primarily due to the $20.0 million we accrued for estimated civil penalties related to our potential regulatory settlements with the SEC and CFTC regarding recordkeeping requirements for business-related communications, as well as the write-off of a $7.5 million uncollectible receivable in our municipal finance business.

Income Taxes
For the year ended December 31, 2023, our provision for income taxes was $23.6 million, which included $16.6 million of tax benefits related to stock-based compensation awards vesting at values greater than the grant price and accrued forfeitable dividends paid on vested restricted stock related to acquisitions. Excluding the impact of these benefits and noncontrolling interests, our effective tax rate was 36.8 percent. The effective tax rate was impacted by non-deductible expenses, including estimated civil penalties related to our potential regulatory settlements with the SEC and the CFTC regarding recordkeeping requirements for business-related communications, as well as non-deductible covered employee compensation expense.

For the year ended December 31, 2022, our provision for income taxes was $33.2 million, which included a $5.6 million tax benefit related to stock-based compensation awards vesting at values greater than the grant price and a one-time tax benefit of $4.6 million related to the full reversal of our U.K. subsidiary's deferred tax valuation allowance, as a result of improved operating results in the U.K. Excluding the impact of these benefits and noncontrolling interests, our effective tax rate was 30.2 percent.

Piper Sandler Companies | 38

Financial Performance
Our activities as an investment bank and institutional securities firm constitute a single business segment.

Throughout this section, we have presented results on both a U.S. GAAP and non-GAAP basis. Management believes that presenting results and measures on an adjusted, non-GAAP basis in conjunction with the corresponding U.S. GAAP measures provides a more meaningful basis for comparison of its operating results and underlying trends between periods, and enhances the overall understanding of our current financial performance by excluding certain items that may not be indicative of our core operating results. The non-GAAP results should be considered in addition to, not as a substitute for, the results prepared in accordance with U.S. GAAP.

The adjusted financial results exclude (1) investment (income)/loss and non-compensation expenses related to noncontrolling interests, (2) interest expense on long-term financing from net revenues, (3) amortization of intangible assets related to acquisitions, (4) compensation and non-compensation expenses from acquisition-related agreements, (5) restructuring and integration costs related to acquisitions and/or headcount reductions and (6) non-compensation expenses from potential regulatory settlements. For U.S. GAAP purposes, these items are included in each of their respective line items on the consolidated statements of operations.

Adjusted operating income and adjusted operating margin present the results of operations excluding the impact resulting from the consolidation of noncontrolling interests in alternative asset management funds. Consolidation of these funds results in the inclusion of the proportionate share of the income or loss attributable to the equity interests in consolidated funds that are not attributable, either directly or indirectly, to us (i.e., noncontrolling interests). This proportionate share is reflected in net income/(loss) attributable to noncontrolling interests in the accompanying consolidated statements of operations, and has no effect on our overall financial performance, as ultimately, this income or loss is not income or loss for us. Included in adjusted operating income and adjusted operating margin is the actual proportionate share of the income or loss attributable to us as an investor in such funds.

The adjusted, non-GAAP financial results also exclude amortization of intangible assets and compensation and non-compensation expenses from acquisition-related agreements. These amounts are excluded on a non-GAAP basis as they represent expenses specifically related to acquisitions and therefore are not part of our ongoing operations. The restructuring and integration costs excluded from the adjusted financial results represent charges that resulted from severance benefits related to acquisitions or headcount reductions, as well as acquisition-related costs associated with contract termination, vacating redundant leased office space and professional fees related to the respective transaction. Excluding these restructuring and integration costs from our non-GAAP financial measures provides a better understanding of our core non-compensation expenses. The non-compensation expenses from potential regulatory settlements represent amounts accrued for estimated civil penalties with the SEC and CFTC regarding compliance with recordkeeping requirements for business-related communications, and the related outside services expenses. Excluding these non-compensation expenses from potential regulatory settlements from our non-GAAP financial measures provides a better understanding of our core non-compensation expenses. Interest expense on long-term financing includes interest on our Class B unsecured fixed rate senior notes ("Class B Notes"), and is an adjustment from net revenues as this arrangement was used to fund the acquisition of SOP Holdings, LLC and its subsidiaries, including Sandler O'Neill & Partners, L.P. (collectively, "Sandler O'Neill"). Management believes that presenting adjusted financial results excluding the acquisition-related amounts provides clarity on the financial results generated by the core operating components of our business.
Piper Sandler Companies | 39

The following table sets forth the adjusted, non-GAAP financial results and adjustments necessary to reconcile to our consolidated U.S. GAAP financial results for the periods presented:
Year Ended December 31,
20232022
Adjustments (1)Adjustments (1)
TotalNoncontrollingOtherU.S.TotalNoncontrollingOtherU.S.
(Amounts in thousands)AdjustedInterestsAdjustmentsGAAPAdjustedInterestsAdjustmentsGAAP
Revenues
Investment banking:
Advisory services$709,316 $— $— $709,316 $776,428 $— $— $776,428 
Corporate financing131,077 — — 131,077 125,342 — — 125,342 
Municipal financing83,419 — — 83,419 107,739 — — 107,739 
Total investment banking923,812 — — 923,812 1,009,509 — — 1,009,509 
Institutional brokerage:
Equity brokerage209,512 — — 209,512 210,314 — — 210,314 
Fixed income services168,027 — — 168,027 194,953 — — 194,953 
Total institutional brokerage377,539 — — 377,539 405,267 — — 405,267 
Interest income26,723 — — 26,723 20,365 — — 20,365 
Investment income/(loss)7,123 22,916 — 30,039 1,552 (1,575)— (23)
Total revenues1,335,197 22,916 — 1,358,113 1,436,693 (1,575)— 1,435,118 
Interest expense5,000 — 5,146 10,146 2,980 — 6,500 9,480 
Net revenues1,330,197 22,916 (5,146)1,347,967 1,433,713 (1,575)(6,500)1,425,638 
Total non-interest expenses1,117,254 9,434 98,693 1,225,381 1,164,560 7,919 118,790 1,291,269 
Pre-tax income$212,943 $13,482 $(103,839)$122,586 $269,153 $(9,494)$(125,290)$134,369 
Pre-tax margin16.0 %9.1 %18.8 %9.4 %
(1)     The following is a summary of the adjustments needed to reconcile our consolidated U.S. GAAP financial results to the adjusted, non-GAAP financial results:
Noncontrolling interests – The impacts of consolidating noncontrolling interests in our alternative asset management funds are not included in our adjusted financial results.
Other adjustments – The following items are not included in our adjusted financial results:
Year Ended December 31,
(Amounts in thousands)20232022
Other adjustments
Interest expense on long-term financing$5,146 $6,500 
Other adjustments to total non-interest expenses:
Compensation from acquisition-related agreements51,058 87,525 
Restructuring and integration costs
7,749 11,440 
Amortization of intangible assets related to acquisitions19,440 15,375 
Non-compensation expenses from acquisition-related agreements(1,102)4,450 
Non-compensation expenses from potential regulatory settlements
21,548 — 
Total other adjustments to total non-interest expenses
98,693 118,790 
Total other adjustments$103,839 $125,290 


Piper Sandler Companies | 40

Net revenues on a U.S. GAAP basis were $1.35 billion for the year ended December 31, 2023, compared with $1.43 billion in the prior-year period. For the year ended December 31, 2023, adjusted net revenues were $1.33 billion, compared with $1.43 billion for the year ended December 31, 2022. The variance explanations for net revenues and adjusted net revenues are consistent on both a U.S. GAAP and non-GAAP basis unless stated otherwise.

The following table provides supplemental business information:
Year Ended December 31,
20232022
Advisory services
Completed M&A and restructuring transactions213 218 
Completed capital advisory transactions56 84 
Total completed advisory transactions269 302 
Corporate financings
Total equity transactions priced73 55 
Book run equity transactions priced65 45 
Total debt and preferred transactions priced15 30 
Book run debt and preferred transactions priced7 19 
Municipal negotiated issues
Aggregate par value of issues priced (in billions)$12.4 $14.6 
Total issues priced413 570 
Equity brokerage
Number of shares traded (in billions)10.7 11.0 

Investment banking revenues comprise all of the revenues generated through advisory services activities, which include M&A, equity and debt private placements, debt and restructuring advisory, and municipal financial advisory transactions. Collectively, debt advisory transactions and equity and debt private placements are referred to as capital advisory transactions. Investment banking revenues also include equity and debt corporate financing activities and municipal financings.

In 2023, investment banking revenues were $923.8 million, down 8.5 percent compared to $1.01 billion in the prior-year period. For the year ended December 31, 2023, advisory services revenues were $709.3 million, down 8.6 percent compared with $776.4 million in 2022, due to fewer completed transactions, offset in part by a higher average fee. Our advisory services activity during the year was relatively diverse across our sectors led by our financial services and healthcare sectors with strong contributions from the energy & power and restructuring groups. The diversification of our sectors and products provided some resiliency to our results despite the challenging M&A and debt markets we experienced during most of the year driven by macroeconomic uncertainty. For the year ended December 31, 2023, corporate financing revenues were $131.1 million, up 4.6 percent compared to $125.3 million in the prior-year period, driven by an increase in completed equity financings, which more than offset the decline in financial services debt and preferred transactions. Although our equity financings increased from the prior year driven by lower volatility levels and increased investor demand, overall market activity remains below historic levels. Activity for us during the year was principally in the healthcare sector, and we served as book runner on 45 of 46 completed healthcare equity deals. Municipal financing revenues for the year ended December 31, 2023 were $83.4 million, down 22.6 percent compared to $107.7 million in the year-ago period, driven by a decline in municipal negotiated issuances. Market conditions remained challenging during most of the year due to increased interest rates and volatility, combined with weakened investor demand, which has reduced market issuances, particularly refinancing activity and high-yield issuances.

Institutional brokerage revenues comprise all of the revenues generated through trading activities, which principally consist of facilitating customer trades, as well as fees received for our research services and corporate access offerings. Our results may vary from quarter to quarter as a result of changes in trading margins, trading gains and losses, net interest spreads, trading volumes and the timing of fees received for research services.

Piper Sandler Companies | 41

For the year ended December 31, 2023, institutional brokerage revenues decreased to $377.5 million, compared with $405.3 million in the prior-year period. In 2023, equity brokerage revenues were $209.5 million, essentially flat compared with $210.3 million in 2022 as market share gains offset the decline in market volumes resulting from reduced market volatility. For the year ended December 31, 2023, fixed income services revenues were $168.0 million, down 13.8 percent compared with $195.0 million in the prior-year period, due to a decline in activity among our depository clients. The market conditions for fixed income remained challenging during most of the year driven by interest rate uncertainty and an increased focus to maintain higher levels of liquidity for depository institutions.

Interest income represents amounts earned from holding long inventory positions and cash balances. For the year ended December 31, 2023, interest income increased to $26.7 million, compared with $20.4 million in 2022, reflecting higher interest rates on our long inventory and cash balances.

Investment income/(loss) includes realized and unrealized gains and losses on investments, including amounts attributable to noncontrolling interests, in our alternative asset management funds, as well as management and performance fees generated from those funds. For the year ended December 31, 2023, we recorded investment income of $30.0 million, compared to an investment loss of $23 thousand in 2022. In 2023, we recorded gains on our investments and the noncontrolling interests in the alternative asset management funds that we manage. Excluding the impact of noncontrolling interests, adjusted investment income was $7.1 million in 2023, compared with $1.6 million in 2022.

Interest expense represents amounts associated with financing, economically hedging and holding short inventory positions, including interest paid on our short- and long-term financing arrangements, as well as commitment fees on our committed line and revolving credit facility. For the year ended December 31, 2023, interest expense increased to $10.1 million, compared with $9.5 million in 2022. The increase was primarily due to higher interest rates on our short inventory balances, partially offset by lower interest paid on long-term financings. We repaid our $125 million of Class B Notes upon maturity on October 15, 2023. As a result, we do not currently incur interest expense on long-term financing arrangements.

Pre-tax margin for 2023 decreased to 9.1 percent, compared with 9.4 percent for 2022 due to lower net revenues and higher non-compensation expenses related to potential regulatory settlements with the SEC and the CFTC regarding recordkeeping requirements for business-related communications, offset in part by a lower compensation ratio. Adjusted pre-tax margin decreased to 16.0 percent in 2023, compared with 18.8 percent in 2022 resulting from lower adjusted net revenue and a higher adjusted compensation ratio.

Piper Sandler Companies | 42

The following table sets forth the adjusted, non-GAAP financial results and adjustments necessary to reconcile to our consolidated U.S. GAAP financial results for the periods presented:
Year Ended December 31,
20222021
Adjustments (1)Adjustments (1)
TotalNoncontrollingOtherU.S.TotalNoncontrollingOtherU.S.
(Amounts in thousands)AdjustedInterestsAdjustmentsGAAPAdjustedInterestsAdjustmentsGAAP
Revenues
Investment banking:
Advisory services$776,428 $— $— $776,428 $1,026,138 $— $— $1,026,138 
Corporate financing125,342 — — 125,342 362,797 — — 362,797 
Municipal financing107,739 — — 107,739 164,284 — — 164,284 
Total investment banking1,009,509 — — 1,009,509 1,553,219 — — 1,553,219 
Institutional brokerage:
Equity brokerage210,314 — — 210,314 154,067 — — 154,067 
Fixed income services194,953 — — 194,953 233,510 — — 233,510 
Total institutional brokerage405,267 — — 405,267 387,577 — — 387,577 
Interest income20,365 — — 20,365 6,967 — — 6,967 
Investment income/(loss)
1,552 (1,575)— (23)34,982 59,050 — 94,032 
Total revenues1,436,693 (1,575)— 1,435,118