Exhibit 99.1

Consolidated Financial Statements and Notes thereto for the year ended December 31, 2010, updated
to disclose condensed consolidating guarantor financial information.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page
Management’s Report on Internal Control over Financial Reporting			1
Report of Independent Registered Public Accounting Firm			2
Consolidated Balance Sheets as at December 31, 2010 and 2009			3
Consolidated Statements of Operations for the three years ended December 31, 2010, 2009 and 2008			5
Consolidated Statements of Comprehensive Income (Loss) for the three years ended December 31, 2010, 2009 and 2008			6
Consolidated Statements of Changes in Stockholders’ Equity for the three years ended December 31, 2010, 2009 and 2008			7
Consolidated Statements of Cash Flows for the three years ended December 31, 2010, 2009 and 2008			8
Notes to Consolidated Financial Statements			10

Management’s Report on Internal Control over Financial Reporting

Management of Oppenheimer Holdings Inc. is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.

As of December 31, 2010, management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the framework established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has concluded that the Company’s internal control over financial reporting as of December 31, 2010 was effective.

The Company’s internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s financial statements.

The Company’s internal control over financial reporting as of December 31, 2010 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report included herein, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2010.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Oppenheimer Holdings Inc.:

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Oppenheimer Holdings Inc. and its subsidiaries at December 31, 2010 and 2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2010 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

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

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

PricewaterhouseCoopers LLP

New York, New York
March 2, 2011, except for the guarantor information in note 21,
as to which the date is June 15, 2011

OPPENHEIMER HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31,

(Expressed in thousands of dollars)		2010				2009
ASSETS
Cash and cash equivalents		$	52,854			$	68,918
Cash and securities segregated for regulatory and other purposes			142,446				78,133
Deposits with clearing organizations			23,228				25,798
Receivable from brokers and clearing organizations			302,844				390,912
Receivable from customers, net of allowance for credit losses of $2,716 ($2,378 in 2009)			924,817				826,658
Income taxes receivable			4,979				5,509
Securities purchased under agreements to resell			347,070				163,825
Securities owned, including amounts pledged of $102,501 ($156,248 in 2009), at fair value			367,019				238,372
Notes receivable, net			59,786				61,396
Office facilities, net			22,875				22,356
Deferred income taxes, net			—				15,359
Intangible assets, net			40,979				45,303
Goodwill			132,472				132,472
Other			198,665				128,372
		$	2,620,034			$	2,203,383

(Continued on next page)

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

OPPENHEIMER HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31,

(Expressed in thousands of dollars, except share amounts)		2010				2009
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Drafts payable		$	61,055			$	48,097
Bank call loans			147,000				—
Payable to brokers and clearing organizations			372,697				436,018
Payable to customers			406,916				488,360
Securities sold under agreements to repurchase			390,456				155,625
Securities sold, but not yet purchased, at fair value			160,052				131,739
Accrued compensation			175,938				202,525
Accounts payable and other liabilities			262,506				150,049
Senior secured credit note			22,503				32,503
Subordinated note			100,000				100,000
Deferred income taxes, net			16,295				—
Excess of fair value of acquired assets over cost			7,020				7,020
			2,122,438				1,751,936
Stockholders’ equity
Share capital
Class A non-voting common stock (2010 — 13,268,522 shares issued and outstanding 2009 — 13,118,001 shares issued and outstanding)			51,768				47,691
Class B voting common stock 99,680 shares issued and outstanding			133				133
			51,901				47,824
Contributed capital			47,808				41,978
Retained earnings			394,648				362,188
Accumulated other comprehensive income (loss)			207				(543	)
Total Oppenheimer Holdings Inc. stockholders’ equity			494,564				451,447
Non-controlling interest			3,032				—
			497,596				451,447
		$	2,620,034			$	2,203,383

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

OPPENHEIMER HOLDINGS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31,

		2010				2009				2008
		(Expressed in thousands of dollars, except per share amounts)
REVENUE:
Commissions		$	537,730			$	555,574			$	532,682
Principal transactions, net			77,183				107,094				20,651
Interest			45,871				35,960				61,793
Investment banking			134,906				90,960				83,541
Advisory fees			187,888				160,705				198,960
Other			51,494				41,140				22,443
			1,035,072				991,433				920,070
EXPENSES:
Compensation and related expenses			672,244				672,325				626,030
Clearing and exchange fees			25,754				26,748				31,007
Communications and technology			64,700				62,724				75,359
Occupancy and equipment costs			74,389				74,372				69,945
Interest			25,914				21,050				38,998
Other			101,305				99,401				114,774
			964,306				956,620				956,113
Profit (loss) before income taxes			70,766				34,813				(36,043	)
Income tax provision (benefit)			30,187				15,326				(15,273	)
Net profit (loss) for the year			40,579				19,487				(20,770	)
Less net profit attributable to non-controlling interest, net of tax			2,248				—				—
Net profit attributable to Oppenheimer Holdings Inc.		$	38,331			$	19,487			$	(20,770	)
Earnings (loss) per share attributable to Oppenheimer Holdings Inc.
Basic		$	2.87			$	1.49			$	(1.57	)
Diluted		$	2.76			$	1.45			$	(1.57	)
Weighted average common shares
Basic			13,340,846				13,110,647				13,199,580
Diluted			13,897,261				13,441,279				13,199,580

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

OPPENHEIMER HOLDINGS INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE YEAR ENDED DECEMBER 31,

		2010				2009				2008
		(Expressed in thousands of dollars)
Net profit (loss) for year		$	40,579			$	19,487			$	(20,770	)
Other Comprehensive income (loss):
Currency translation adjustment			1,597				(99	)			31
Change in cash flow hedges, net of tax			(847	)			884				(388	)
Comprehensive income (loss) for the year		$	41,329			$	20,272			$	(21,127	)

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

OPPENHEIMER HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE YEAR ENDED DECEMBER 31,

		2010				2009				2008
		(Expressed in thousands of dollars)
Share capital
Balance at beginning of year		$	47,824			$	43,653			$	53,054
Issuance of Class A non-voting common stock			4,077				4,730				7,786
Repurchase of Class A non-voting common stock for cancellation			—				(559	)			(17,187	)
Balance at end of year		$	51,901			$	47,824			$	43,653
Contributed capital
Balance at beginning of year		$	41,978			$	34,924			$	16,760
Issuance of warrant to purchase 1 million shares of Class A non-voting common stock			—				—				10,487
Tax (shortfall) benefit from share-based awards			(71	)			230				698
Share-based expense			7,611				7,001				7,334
Vested employee share plan awards			(1,710	)			(177	)			(355	)
Balance at end of year		$	47,808			$	41,978			$	34,924
Retained earnings
Balance at beginning of year		$	362,188			$	348,477			$	375,137
Net profit (loss) for year attributable to Oppenheimer Holdings Inc.			38,331				19,487				(20,770	)
Dividends paid ($0.44 per share)			(5,871	)			(5,776	)			(5,890	)
Balance at end of year		$	394,648			$	362,188			$	348,477
Accumulated other comprehensive income (loss)
Balance at beginning of year		$	(543	)		$	(1,328	)		$	(971	)
Currency translation adjustment			1,597				(99	)			31
Change in cash flow hedges, net of tax			(847	)			884				(388	)
Balance at end of year		$	207			$	(543	)		$	(1,328	)
Stockholders’ Equity of Oppenheimer Holdings Inc.		$	494,564			$	451,447			$	425,726
Non-controlling interest
Grant of non-controlling interest		$	784				—				—
Net profit attributable to non-controlling interest, net of tax			2,248				—				—
Balance at end of year		$	3,032				—				—
Total Stockholders’ Equity		$	497,596			$	451,447			$	425,726

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

OPPENHEIMER HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31,

		2010				2009				2008
		(Expressed in thousands of dollars)
Cash flows from operating activities:
Net profit (loss) for year		$	40,579			$	19,487			$	(20,770	)
Adjustments to reconcile net profit to net cash provided by operating activities:
Non-cash items included in net profit (loss):
Depreciation and amortization of office facilities and leasehold improvements			12,448				12,630				11,474
Deferred income taxes			31,652				(14,271	)			(12,300	)
Amortization of notes receivable			19,657				18,462				16,761
Amortization of debt issuance costs			985				1,188				1,227
Amortization of intangible assets			4,324				4,814				5,058
Provision for credit losses			338				352				1,473
Share-based compensation			4,242				17,246				(112	)
Decrease (increase) in operating assets:
Cash and securities segregated for regulatory and other purposes			(64,313	)			(21,100	)			10,529
Deposits with clearing organizations			2,570				(11,443	)			2,047
Receivable from brokers and clearing organizations			88,068				(112,677	)			394,047
Receivable from customers			(98,497	)			(179,524	)			230,773
Income taxes receivable			4				7,138				(12,647	)
Securities purchased under agreements to resell			(183,245	)			(163,825	)			—
Securities owned			(128,647	)			(110,893	)			81,618
Notes receivable			(18,047	)			(26,412	)			(25,284	)
Other assets			(70,489	)			(51,367	)			43,990
Increase (decrease) in operating liabilities:
Drafts payable			12,958				(4,468	)			(4,360	)
Payable to brokers and clearing organizations			(64,168	)			277,254				(649,734	)
Payable to customers			(81,445	)			80,057				(37,996	)
Securities sold under agreements to repurchase			234,831				155,625
Securities sold, but not yet purchased			28,313				104,285				(14,333	)
Accrued compensation			(23,163	)			14,141				34,334
Accounts payable and other liabilities			113,770				38,018				14,984
Income taxes payable			—				—				(11,020	)
Cash (used in) provided by operating activities			(137,277	)			54,717				59,759

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

(Continued on next page)

OPPENHEIMER HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
FOR THE YEAR ENDED DECEMBER 31,

		2010				2009				2008
		(Expressed in thousands of dollars)
Cash flows from investing activities:
Acquisition, net of cash acquired			—				—				(50,335	)
Purchase of office facilities			(12,157	)			(7,762	)			(15,243	)
Cash used in investing activities			(12,157	)			(7,762	)			(65,578	)
Cash flows from financing activities:
Cash dividends paid on Class A non-voting and Class B voting common stock			(5,871	)			(5,776	)			(5,890	)
Issuance of Class A non-voting common stock			2,312				3,043				5,740
Repurchase of Class A non-voting common stock
for cancellation			—				(559	)			(17,187	)
Tax benefit (shortfall) from share-based awards			(71	)			230				698
Debt issuance costs			—				—				(397	)
Issuance of subordinated note			—				—				100,000
Repayments of senior secured credit note			(10,000	)			(15,160	)			(35,662	)
Increase (decrease) in bank call loans, net			147,000				(6,500	)			(22,500	)
Cash provided by (used in) financing activities			133,370				(24,722	)			24,802
Net increase (decrease) in cash and cash equivalents			(16,064	)			22,233				18,983
Cash and cash equivalents, beginning of year			68,918				46,685				27,702
Cash and cash equivalents, end of year		$	52,854			$	68,918			$	46,685
Schedule of non-cash investing and financing activities:
Warrants issued			—				—			$	10,487
Employee share plan issuance		$	1,765			$	1,687			$	2,046
Supplemental disclosure of cash flow information:
Cash paid during the year for interest		$	15,938			$	16,248			$	32,078
Cash paid during the year for income taxes		$	13,913			$	23,719			$	13,750

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

OPPENHEIMER HOLDINGS INC.
Notes to Consolidated Financial Statements

1. Summary of significant accounting policies

Basis of Presentation

Oppenheimer Holdings Inc. (”OPY”) is incorporated under the laws of the State of Delaware. On May 11, 2009, the jurisdiction of incorporation of OPY was changed from Canada to Delaware. The consolidated financial statements include the accounts of OPY and its subsidiaries (together, the “Company”). The principal subsidiaries of OPY are Oppenheimer & Co. Inc. (“Oppenheimer”), a registered broker dealer in securities, Oppenheimer Asset Management Inc. (“OAM”) and its wholly owned subsidiary, Oppenheimer Investment Management Inc. (“OIM”), both registered investment advisors under the Investment Advisors Act of 1940, Oppenheimer Trust Company, a limited purpose trust company chartered by the State of New Jersey to provide fiduciary services such as trust and estate administration and investment management, Oppenheimer Multifamily Housing and Healthcare Finance, Inc. (formerly Evanston Financial Corporation) (“OMHHF”), which is engaged in mortgage brokerage and servicing, and OPY Credit Corp., which offers syndication as well as trading of issued corporate loans. Oppenheimer E.U. Ltd., based in the United Kingdom, provides institutional equities and fixed income brokerage and corporate financial services and is regulated by the Financial Services Authority. Oppenheimer Investments Asia Limited, based in Hong Kong, China, provides assistance in accessing the U.S. equities markets and limited mergers and acquisitions advisory services to Asia-based companies. Oppenheimer operates as Fahnestock & Co. Inc. in Latin America. Oppenheimer owns Freedom Investments, Inc. (“Freedom”), a registered broker dealer in securities, which also operates as the BUYandHOLD division of Freedom, offering on-line discount brokerage and dollar-based investing services, and Oppenheimer Israel (OPCO) Ltd., which is engaged in offering investment services in the State of Israel as a local broker dealer. Oppenheimer holds a trading permit on the New York Stock Exchange and is a member of several other regional exchanges in the United States.

These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America for purpose of inclusion in the Company’s Annual Report on Form 10-K and in its annual report to stockholders. All material intercompany transactions and balances have been eliminated in the preparation of the consolidated financial statements.

During the first quarter of 2010, the Company issued 32.66 common shares of its OMHHF subsidiary to two founding members of OMHHF. Accounting standards require the Company to present non-controlling interests (previously referred to as minority interests) as a separate component of stockholders’ equity on the Company’s consolidated balance sheet. As of December 31, 2010, the Company owns 67.34% of OMHHF and the non-controlling interest recorded in the consolidated balance sheet was $3.0 million.

The Company identified certain over-accruals in compensation and related expenses relating to prior periods which the Company has adjusted in the year ended December 31, 2010. These out-of-period adjustments, which were not material to any prior period, resulted in a decrease to compensation and related expenses of $3.7 million for the year ended December 31, 2010.

Description of Business

The Company engages in a broad range of activities in the securities industry, including retail securities brokerage, institutional sales and trading, investment banking (both corporate and public finance), research, market-making, trust services, and investment advisory and asset management services.

Use of Estimates

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods.

In presenting the consolidated financial statements, management makes estimates regarding valuations of financial instruments, loans and allowances for credit losses, the outcome of legal and regulatory matters, the carrying amount of goodwill and other intangible assets, valuation of stock-based compensation plans, and income taxes. Estimates, by their nature, are based on judgment and available information. Therefore, actual results could be materially different from these estimates. A discussion of certain areas in which estimates are a significant component of the amounts reported in the consolidated financial statements follows.

Financial Instruments and Fair Value

Financial Instruments

Securities owned and securities sold but not yet purchased, investments and derivative contracts are carried at fair value with changes in fair value recognized in earnings each period. The Company’s other financial instruments are generally short-term in nature or have variable interest rates and as such their carrying values approximate fair value, with the exception of notes receivable from employees which are carried at cost.

Financial Instruments Used for Asset and Liability Management

The Company utilizes interest rate swap agreements to manage interest rate risk of its variable rate Senior Secured Credit Note and an interest rate cap contract, incorporating a series of purchased caplets with fixed maturity dates ending December 31, 2012, to hedge the interest payments associated with its floating rate Subordinated Note. These interest rate swaps and the interest rate cap have been designated as cash flow hedges under the accounting guidance for derivative instruments and hedging activities. Changes in the fair value of the interest rate swaps and interest cap hedges are expected to be highly effective in offsetting changes in the interest payments due to changes in the 3-Month London Interbank Offering Rate (“LIBOR”).

Fair Value Measurements

Effective January 1, 2008, the Company adopted the accounting guidance for the fair value measurement of financial assets, which defines fair value, establishes a framework for measuring fair value, establishes a fair value measurement hierarchy, and expands fair value measurement disclosures. Fair value, as defined by the accounting guidance, is the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy established by this accounting guidance prioritizes the inputs used in valuation techniques into the following three categories (highest to lowest priority):

Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets;

Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly; and

Level 3: Unobservable inputs.

The Company’s financial instruments are recorded at fair value and generally are classified within Level 1 or Level 2 within the fair value hierarchy using quoted market prices or quotes from market makers or broker-dealers. Financial instruments classified within Level 1 are valued based on quoted market prices in active markets and consist of U.S. government, federal agency, and sovereign government obligations, corporate

equities, and certain money market instruments. Level 2 financial instruments primarily consist of investment grade and high-yield corporate debt, convertible bonds, mortgage and asset-backed securities, municipal obligations, and certain money market instruments. Financial instruments classified as Level 2 are valued based on quoted prices for similar assets and liabilities in active markets and quoted prices for identical or similar assets and liabilities in markets that are not active. Some financial instruments are classified within Level 3 within the fair value hierarchy as observable pricing inputs are not available due to limited market activity for the asset or liability. Such financial instruments include investments in hedge funds and private equity funds where the Company, through its subsidiaries, is general partner, less-liquid private label mortgage and asset-backed securities, certain distressed municipal securities, and auction rate securities. A description of the valuation techniques applied and inputs used in measuring the fair value of the Company’s financial instruments is located in note 4.

Fair Value Option

The Company has the option to measure certain financial assets and financial liabilities at fair value with changes in fair value recognized in earnings each period. The Company may make a fair value option election on an instrument-by-instrument basis at initial recognition of an asset or liability or upon an event that gives rise to a new basis of accounting for that instrument. The Company has elected to apply the fair value option to its loan trading portfolio which resides in OPY Credit Corp. and is included in other assets on the consolidated balance sheet. Management has elected this treatment as it is consistent with the manner in which the business is managed as well as the way that financial instruments in other parts of the business are recorded. There were no loan positions held in the secondary loan trading portfolio at December 31, 2010 ($950,000 at December 31, 2009 with a fair value of $940,000 which is categorized in Level 2 of the fair value hierarchy).

The Company also elected the fair value option for those securities sold under agreements to repurchase (“repurchase agreements”) and securities purchased under agreements to resell (“resale agreements”) that do not settle overnight or have an open settlement date or that are not accounted for as purchase and sale agreements (such as repo-to-maturity transactions). The Company has elected the fair value option for these instruments to more accurately reflect market and economic events in its earnings and to mitigate a potential imbalance in earnings caused by using different measurement attributes (i.e. fair value versus carrying value) for certain assets and liabilities. At December 31, 2010, the fair value of the resale agreements and repurchase agreements was $334.7 million and $390.5 million, respectively. During the year ended December 31, 2010, the amount of gains related to resale agreements was $nil. During the year ended December 31, 2010, the amount of losses related to repurchase agreements was $80,600.

Financing Receivables

The Company’s financing receivables include customer margin loans, securities purchased under agreements to resell (“resale agreements”), and securities borrowed transactions. The Company uses financing receivables to extend margin loans to customers, meet trade settlement requirements, and facilitate its matched-book arrangements and inventory requirements.

Allowance for Credit Losses

The Company’s financing receivables are secured by collateral received from clients and counterparties. In many cases, the Company is permitted to sell or repledge securities held as collateral. These securities may be used to collateralize repurchase agreements, to enter into securities lending agreements, to cover short positions or fulfill the obligation of fails to deliver. The Company monitors the market value of the collateral received on a daily basis and may require clients and counterparties to deposit additional collateral or return collateral pledged, when appropriate.

Customer receivables, primarily consisting of customer margin loans collateralized by customer-owned securities, are stated net of allowance for credit losses. The Company reviews large customer accounts that do not comply with the Company’s margin requirements on a case-by-case basis to determine the likelihood of collection and records an allowance for credit loss following that process. For small customer accounts that do not comply with the Company’s margin requirements, the allowance for credit loss is generally recorded as the amount of unsecured or partially secured receivables.

The Company also makes loans or pays advances to financial advisors as part of its hiring process. Reserves are established on these receivables if the financial advisor is no longer associated with the Company and the receivable has not been promptly repaid or if it is determined that it is probable the amount will not be collected.

Legal and Regulatory Reserves

The Company records reserves related to legal and regulatory proceedings in accounts payable and other liabilities. The determination of the amounts of these reserves requires significant judgment on the part of management. In accordance with applicable accounting guidance, the Company establishes reserves for litigation and regulatory matters where available information indicates that it is probable a liability had been incurred at the date of the consolidated financial statements and the Company can reasonably estimate the amount of that loss. When loss contingencies are not probable and cannot be reasonably estimated, the Company does not establish reserves.

When determining whether to record a reserve, management considers many factors including, but not limited to, the amount of the claim; the stage and forum of the proceeding, the sophistication of the claimant, the amount of the loss, if any, in the client’s account and the possibility of wrongdoing, if any, on the part of an employee of the Company; the basis and validity of the claim; previous results in similar cases; and applicable legal precedents and case law. Each legal and regulatory proceeding is reviewed with counsel in each accounting period and the reserve is adjusted as deemed appropriate by management. Any change in the reserve amount is recorded in the results of that period. The assumptions of management in determining the estimates of reserves may be incorrect and the actual disposition of a legal or regulatory proceeding could be greater or less than the reserve amount.

Goodwill

Goodwill arose upon the acquisitions of Oppenheimer, Old Michigan Corp., Josephthal & Co. Inc., Grand Charter Group Incorporated and the Oppenheimer Divisions, as defined below. The Company defines a reporting unit as an operating segment. The Company’s goodwill resides in its Private Client Division (“PCD”). Goodwill of a reporting unit is subject to at least an annual test for impairment to determine if the fair value of goodwill of a reporting unit is less than its estimated carrying amount. The Company derives the estimated carrying amount of its operating segments by estimating the amount of stockholders’ equity required to support the activities of each operating segment.

Accounting standards require goodwill of a reporting unit to be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Goodwill recorded as at December 31, 2010 has been tested for impairment and it has been determined that no impairment has occurred. See note 15 for further discussion.

Excess of fair value of assets acquired over cost arose from the January 2008 acquisition of certain businesses from CIBC World Markets Corp. (see note 18 for further discussion). If the earn-out from this acquisition exceeds $5.0 million in any of the five years from 2008 through 2012, the excess will first reduce the excess of fair value of acquired assets over cost and second will create goodwill.

Intangible Assets

Intangible assets arose upon the acquisition, in January 2003, of the U.S. Private Client and Asset Management Divisions of CIBC World Markets Corp. (the “Oppenheimer Divisions”) and comprise customer relationships and trademarks and trade names. Customer relationships of $4.9 million were amortized on a straight-line basis over 80 months commencing in January 2003 (fully amortized and carried at $nil as at December 31, 2010). Trademarks and trade names, carried at $31.7 million, which are not amortized, are subject to at least an annual test for impairment to determine if the fair value is less than their carrying amount. See note 15 for further discussion.

Share-Based Compensation Plans

The Company estimates the fair value of share-based awards using the Black-Scholes option-pricing model and applies to it a forfeiture rate based on historical experience. Key input assumptions used to estimate the fair value of share-based awards include the expected term and the expected volatility of the Company’s Class A Stock over the term of the award, the risk-free interest rate over the expected term, and the Company’s expected annual dividend yield. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by persons who receive share-based awards. See note 12 for further discussion.

Revenue Recognition

Brokerage

Customers’ securities and commodities transactions are reported on a settlement date basis, which is generally three business days after trade date for securities transactions and one day for commodities transactions. Related commission income and expense is recorded on a trade date basis.

Principal transactions

Transactions in proprietary securities and related revenue and expenses are recorded on a trade date basis. Securities owned and securities sold, but not yet purchased, are reported at fair value generally based upon quoted prices. Realized and unrealized changes in fair value are recognized in principal transactions, net in the period in which the change occurs.

Fees

Underwriting revenues and advisory fees from mergers, acquisitions and restructuring transactions are recorded when services for the transactions are substantially completed and income is reasonably determinable, generally as set forth under the terms of the engagement. Transaction-related expenses, primarily consisting of legal, travel and other costs directly associated with the transaction, are deferred and recognized in the same period as the related investment banking transaction revenue. Underwriting revenues are presented net of related expenses. Non-reimbursed expenses associated with advisory transactions are recorded within other expenses.

Asset Management

Asset management fees are generally recognized over the period the related service is provided based on the account value at the valuation date per the respective asset management agreements. In certain circumstances, OAM is entitled to receive performance fees when the return on assets under management exceeds certain benchmark returns or other performance targets. Performance fees are generally based on investment performance over a 12-month period and are not subject to adjustment once the measurement period ends. Such fees are computed as at the fund’s year-end when the measurement period ends and generally are recorded as earned in the fourth quarter of the Company’s fiscal year. Asset management fees and performance fees are included in advisory fees in the consolidated statements of operations. Assets under management are not included as assets of the Company.

Balance Sheet Items

Cash and Cash Equivalents

The Company defines cash equivalents as highly liquid investments with original maturities of less than 90 days that are not held for sale in the ordinary course of business.

Receivables From / Payables To Brokers and Clearing Organizations

Securities borrowed and securities loaned are carried at the amounts of cash collateral advanced or received. Securities borrowed transactions require the Company to deposit cash or other collateral with the lender. The Company receives cash or collateral in an amount generally in excess of the market value of securities loaned. The Company monitors the market value of securities borrowed and loaned on a daily basis and may require counterparties to deposit additional collateral or return collateral pledged, when appropriate.

Securities failed to deliver and receive represent the contract value of securities which have not been received or delivered by settlement date.

Notes Receivable

The Company had notes receivable, net from employees of approximately $59.8 million at December 31, 2010. The notes are recorded in the consolidated balance sheet at face value of approximately $123.4 million less accumulated amortization and reserves of $55.7 million and $7.9 million, respectively, at December 31, 2010. These amounts represent recruiting and retention payments generally in the form of upfront loans to financial advisors and key revenue producers as part of the Company’s overall growth strategy. These loans are generally forgiven over a service period of 3 to 5 years from the initial date of the loan or based on productivity levels of employees and all such notes are contingent on the employees’ continued employment with the Company. The unforgiven portion of the notes becomes due on demand in the event the employee departs during the service period. Management monitors and compares individual financial advisor production to each loan issued to ensure future recoverability. Amortization of notes receivable is included in the consolidated statements of operations in compensation and related expenses.

Securities purchased under agreements to resell and securities sold under agreements to repurchase

Transactions involving purchases of securities under agreements to resell (“resale agreements”) or sales of securities under agreements to repurchase (“repurchase agreements”) are treated as collateralized financing transactions and are recorded at their contractual amounts plus accrued interest. The resulting interest income and expense for these arrangements are included in interest income and interest expense in the consolidated statements of operations. The Company can present the resale and repurchase transactions on a net-by-counterparty basis when the specific offsetting requirements are satisfied. See note 4 for further discussion.

From time-to-time, the Company enters into securities financing transactions that mature on the same date as the underlying collateral. The Company accounts for these transactions in accordance with the accounting guidance for transfers and servicing. Such transactions are treated as a sale of financial assets and a forward repurchase commitment, or conversely as a purchase of financial assets and a forward resale commitment. The forward repurchase and resale commitments are accounted for as derivatives under the accounting guidance for derivatives and hedging.

Office Facilities

Office facilities are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of furniture, fixtures, and equipment is provided on a straight-line basis generally over 3-7 years. Leasehold improvements are amortized on a straight-line basis over the shorter of the life of the improvement or the

remaining term of the lease. Leases with escalating rents are expensed on a straight-line basis over the life of the lease. Landlord incentives are recorded as deferred rent and amortized, as reductions to lease expense, on a straight-line basis over the life of the applicable lease.

Debt Issuance Costs

Debt issuance costs, included in other assets, from the issuance and amendment of the Senior Secured Credit Note are reported in the consolidated balance sheet as deferred charges and amortized using the interest method. Debt issuance costs include underwriting and legal fees as well as other incremental expenses directly attributable to realizing the proceeds of the Senior Secured Credit Note.

Drafts Payable

Drafts payable represent amounts drawn by the Company against a bank.

Foreign Currency Translations

Foreign currency balances have been translated into U.S. dollars as follows: monetary assets and liabilities at exchange rates prevailing at period end; revenue and expenses at average rates for the period; and non-monetary assets and stockholders’ equity at historical rates. Cumulative translation adjustments of $1.6 million are included in accumulated other comprehensive income on the consolidated balance sheets. The functional currency of the overseas operations is the local currency in each location except for Oppenheimer E.U. Ltd. which has the U.S. dollar as its functional currency.

Income Taxes

Deferred income tax assets and liabilities arise from temporary differences between the tax basis of an asset or liability and its reported amount in the consolidated financial statements. Deferred tax balances are determined by applying the enacted tax rates applicable to the periods in which items will reverse.

The Company permanently reinvests eligible earnings of it foreign subsidiaries and, accordingly, does not accrue any U.S. income taxes that would arise if such earnings were repatriated.

New Accounting Pronouncements

Recently Adopted

In June 2009, the Financial Accounting Standards Board (“FASB”) updated the accounting guidance for transfers of financial assets. The updated guidance eliminates the concept of a qualifying special-purpose entity (“QSPE”) and establishes a new “participating interest” definition that must be met for transfers of portions of financial assets to be eligible for sale accounting. In addition, the updated guidance provides clarification and amendments to the derecognition criteria for a transfer to be accounted for as a sale and changes the amount of recognized gains or losses on transfers accounted for as a sale when beneficial interests are received by the transferor. The updated guidance also provides extensive new disclosure requirements for collateral transferred, servicing assets and liabilities, transfers accounted for as sales in securitization and asset-backed financing arrangements when the transferor has continuing involvement with the transferred assets, and transfers of financial assets accounted for as secured borrowings. The updated guidance is to be applied prospectively to new transfers of financial assets occurring in fiscal years beginning after November 15, 2009. The Company’s adoption of the updated guidance did not have an impact on its financial condition, results of operations or cash flows.

In June 2009, the FASB updated the accounting guidance for consolidation. The updated guidance amends the consolidation framework for variable interest entities (“VIEs”) by requiring enterprises to qualitatively assess the determination of the primary beneficiary of a VIE based on whether the entity (1) has the power to direct matters that most significantly impact the activities of the VIE, and (2) has the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The updated guidance changes the consideration of “kick-out” rights in determining if an entity is a VIE, which may cause certain additional entities to now be considered VIEs. The updated guidance requires an ongoing reconsideration of the primary beneficiary. It also amends the events that trigger a reassessment of whether an entity is a VIE. The updated guidance also expands the disclosures required in respect of VIEs. The transition requirements of the updated guidance stipulate that assets, liabilities, and non-controlling interests of the VIE be measured at their carrying amounts as if the statement had been applied from the inception of the VIE with any difference reflected as a cumulative effect adjustment.

In February 2010, the FASB issued ASU No. 2010-10, “Consolidation – Amendments for Certain Investment Funds”, that will indefinitely defer the effective date of the updated VIE accounting guidance for certain investment funds. To qualify for the deferral, the investment fund needs to meet certain attributes of an investment company, does not have explicit or implicit obligations to fund losses of the entity and is not a securitization entity, an asset-backed financing entity, or an entity formerly considered a QSPE. The Company’s investment funds meet the conditions in ASU No. 2010-10 and qualify for the deferral adoption. Therefore, the Company is not required to consolidate any of its investment funds which are VIEs until further guidance is issued.

In January 2010, the FASB issued ASU No. 2010-06, “Fair Value Measurement”. ASU No. 2010-06 requires new disclosures regarding transfers of assets and liabilities measured at fair value in and out of Level 1 and 2 of the fair value hierarchy. A reporting entity should disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfer. ASU No. 2010-06 also provides additional guidance on the level of disaggregation of fair value measurements and disclosures regarding inputs and valuation techniques. The Company adopted this disclosure requirement in the three months ended March 31, 2010. See note 4 for further details. In addition, ASU No.2010-06 requires the reconciliation of beginning and ending balances for fair value measurements using significant unobservable inputs (i.e., Level 3) to be presented on a gross basis. The Company will adopt this requirement in the reporting period ending March 31, 2011.

In July 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2010-20, Receivables – Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses (“ASU No. 2010-20”). ASU No. 2010-20 requires a company to provide more information about the credit quality of its financing receivables in the disclosures to the financial statements, including aging information and credit quality indicators. Both new and existing disclosures must be disaggregated by portfolio segment or class. The disaggregation of information is based on both how a company develops its allowance for credit losses and manages its credit exposure. ASU No. 2010-20 is effective for interim and annual reporting periods after December 15, 2010. The Company adopted ASU No. 2010-20 in the fourth quarter of 2010. The Company’s financing receivables that meet the definition in this update include customer margin loans, resale agreements, and securities borrowed transactions.

2. Cash and Securities Segregated For Regulatory and Other Purposes

Deposits of $29.8 million were held at year-end in special reserve bank accounts for the exclusive benefit of customers in accordance with regulatory requirements at December 31, 2010 (2009 — $28.5 million). To the extent permitted, these deposits are invested in interest bearing accounts collateralized by qualified securities.

OMHHF had client funds held in escrow totaling $112.5 million at December 31, 2010 (2009 - $49.7 million).

Oppenheimer Trust had a deposit of $100,000 with the State of Ohio at December 31, 2010.

3. Receivable from and Payable to Brokers and Clearing Organizations

Expressed in thousands of dollars.

		As at December 31,
		2010				2009
Receivable from brokers and clearing organizations consist of:
Deposits paid for securities borrowed		$	199,117			$	299,925
Receivable from brokers			20,609				23,019
Securities failed to deliver			23,673				20,532
Clearing organizations			11,038				17,291
Omnibus accounts			19,129				9,192
Other			29,278				20,953
		$	302,844			$	390,912

		As at December 31,
		2010				2009
Payable to brokers and clearing organizations consist of:
Deposits received for securities loaned		$	345,462			$	412,420
Securities failed to receive			24,944				21,728
Clearing organizations and other			2,291				1,870
		$	372,697			$	436,018

4. Financial instruments

Securities owned and securities sold but not yet purchased, investments and derivative contracts are carried at fair value with changes in fair value recognized in earnings each period. The Company’s other financial instruments are generally short-term in nature or have variable interest rates and as such their carrying values approximate fair value, with the exception of notes receivable from employees which are carried at cost.

Securities Owned and Securities Sold, But Not Yet Purchased at Fair Value

Expressed in thousands of dollars.

						As at December 31,
		2010								2009
		Owned				Sold				Owned				Sold
U.S. Treasury, agency and sovereign obligations		$	160,114			$	105,564			$	84,168			$	74,152
Corporate debt and other obligations			32,204				6,788				30,330				7,323
Mortgage and other asset-backed securities			2,895				25				4,035				5
Municipal obligations			55,089				383				34,606				1,707
Convertible bonds			39,015				11,093				35,001				12,121
Corporate equities			39,151				36,164				43,728				36,286
Other			38,551				35				6,504				145
Total		$	367,019			$	160,052			$	238,372			$	131,739

Securities owned and securities sold, but not yet purchased, consist of trading and investment securities at fair values. Included in securities owned at December 31, 2010 are corporate equities with estimated fair values of approximately $14.3 million ($13.1 million at December 31, 2009), which are related to deferred compensation liabilities to certain employees included in accrued compensation on the consolidated balance sheet.

Valuation Techniques

A description of the valuation techniques applied and inputs used in measuring the fair value of the Company’s financial instruments is as follows:

U.S. Treasury Obligations

U.S. Treasury securities are valued using quoted market prices obtained from active market makers and inter-dealer brokers and, accordingly, are categorized in Level 1 in the fair value hierarchy.

U.S. Agency Obligations

U.S. agency securities consist of agency issued debt securities and mortgage pass-through securities. Non-callable agency issued debt securities are generally valued using quoted market prices. Callable agency issued debt securities are valued by benchmarking model-derived prices to quoted market prices and trade data for identical or comparable securities. The fair value of mortgage pass-through securities are model driven with respect to spreads of the comparable To-be-announced (“TBA”) security. Actively traded non-callable agency issued debt securities are categorized in Level 1 of the fair value hierarchy. Callable agency issued debt securities and mortgage pass-through securities are generally categorized in Level 2 of the fair value hierarchy.

Sovereign Obligations

The fair value of sovereign obligations is determined based on quoted market prices when available or a valuation model that generally utilizes interest rate yield curves and credit spreads as inputs. Sovereign obligations are categorized in Level 1 or 2 of the fair value hierarchy.

Corporate Debt & Other Obligations

The fair value of corporate bonds is estimated using recent transactions, broker quotations and bond spread information. Corporate bonds are generally categorized in Level 2 of the fair value hierarchy.

Mortgage and Other Asset-Backed Securities

The Company holds non-agency securities primarily collateralized by home equity and manufactured housing which are valued based on external pricing and spread data provided by independent pricing services and are generally categorized in Level 2 of the fair value hierarchy. When specific external pricing is not observable, the valuation is based on yields and spreads for comparable bonds and, consequently, the positions are categorized in Level 3 of the fair value hierarchy.

Municipal Obligations

The fair value of municipal obligations is estimated using recently executed transactions, broker quotations, and bond spread information. These obligations are generally categorized in Level 2 of the fair value hierarchy; in instances where significant inputs are unobservable, they are categorized in Level 3 of the hierarchy.

Convertible Bonds

The fair value of convertible bonds is estimated using recently executed transactions and dollar-neutral price quotations, where observable. When observable price quotations are not available, fair value is determined based on cash flow models using yield curves and bond spreads as key inputs. Convertible bonds are generally categorized in Level 2 of the fair value hierarchy; in instances where significant inputs are unobservable, they are categorized in Level 3 of the hierarchy.

Corporate Equities

Equity securities and options are generally valued based on quoted prices from the exchange or market where traded and categorized as Level 1 in the fair value hierarchy. To the extent quoted prices are not available, prices are generally derived using bid/ask spreads, and these securities are generally categorized in Level 2 of the fair value hierarchy.

The Company held one exchange membership seat with the Chicago Board Options Exchange (“CBOE”) which was converted to 80,000 common shares when CBOE’s parent company, CBOE Holdings, was publicly listed on June 14, 2010. The Company sold 20,000 shares in the initial public offering at $29 per share, sold a further 25,626 shares in the fourth quarter of 2010 and continues to hold 17,864 shares that are restricted for sale with a twelve month restriction period (“A-2 Shares”). The Company uses the Black-Scholes model to calculate the value of a call option to purchase securities of CBOE Holdings which is used as a proxy for the discount associated with the selling restrictions. The inputs into the Black-Scholes model include the volatility of CBOE Holdings’ common shares and yields associated with six month Treasury bills and twelve month Treasury notes. At December 31, 2010, the Company valued the restricted shares at $368,400 and recorded an unrealized gain of $362,500 for the year ended December 31, 2010. The Company has categorized the restricted shares of CBOE Holdings as Level 2 in the fair value hierarchy.

Other

In February 2010, Oppenheimer finalized settlements with each of the New York Attorney General’s office (“NYAG”) and the Massachusetts Securities Division (“MSD” and, together with the NYAG, the “Regulators”) concluding investigations and administrative proceedings by the Regulators concerning Oppenheimer’s marketing and sale of auction rate securities (“ARS”). Pursuant to those settlements, as at December 31, 2010, the Company had purchased approximately $36.7 million in ARS from its clients and expects to purchase at least an additional $9.6 million of ARS from clients by May 2011. The Company’s purchases of ARS from clients will continue on a periodic basis thereafter pursuant to the settlements with the Regulators. The ultimate amount of ARS to be repurchased by the Company cannot be predicted with any certainty and will be impacted by redemptions by issuers and client actions during the period, which also cannot be predicted.

In addition to the purchases of $36.7 million of ARS from clients referred to above, the Company also held $2.5 million in ARS in its proprietary trading account as of December 31, 2010 as a result of the failed auctions in February 2008. These ARS positions primarily represent Auction Rate Preferred Securities issued by closed-end funds and, to a lesser extent, Municipal Auction Rate Securities which are municipal bonds wrapped by municipal bond insurance and Student Loan Auction Rate Securities which are asset-backed securities backed by student loans (collectively referred to as “ARS”).

Interest rates on ARS typically reset through periodic auctions. Due to the auction mechanism and generally liquid markets, ARS have historically been categorized as Level 1 in the fair value hierarchy. Beginning in February 2008, uncertainties in the credit markets resulted in substantially all of the ARS market experiencing failed auctions. Once the auctions failed, the ARS could no longer be valued using observable prices set in the auctions. The Company has used less observable determinants of the fair value of ARS, including the strength in the underlying credits, announced issuer redemptions, completed issuer redemptions, and announcements from issuers regarding their intentions with respect to their outstanding ARS. The Company has also developed an internal methodology to discount for the lack of liquidity and non-performance risk of the failed auctions. Key inputs include spreads on comparable Treasury yields to derive a discount rate, an estimate of the ARS duration, and yields based on current auctions in comparable securities that have not failed. Due to the less observable nature of these inputs, the Company categorizes ARS in Level 3 of the fair value hierarchy. As of December 31, 2010, the Company had a valuation adjustment (unrealized) of $1.8 million for ARS.

Investments

In its role as general partner in certain hedge funds and private equity funds, the Company, through its subsidiaries, holds direct investments in such funds. The Company uses the net asset value of the underlying fund as a basis for estimating the fair value of its investment. Due to the illiquid nature of these investments and difficulties in obtaining observable inputs, these investments are included in Level 3 of the fair value hierarchy.

The following table provides information about the Company’s investments in Company-sponsored funds at December 31, 2010.

Expressed in thousands of dollars.

		Fair				Unfunded						Redemption
		Value				Commit-ments				Redemption Frequency		Notice Period
Hedge Funds(1)		$	1,472			$	—			Quarterly - Annually		30 - 120 Days
Private Equity Funds(2)			2,301				4,685			N/A		N/A
Distressed Opportunities Fund(3)			12,285				—			Semi-Annually		180 Days
Total		$	16,058			$	4,685

Derivative Contracts

From time to time, the Company transacts in exchange-traded and over-the-counter derivative transactions to manage its interest rate risk. Exchange-traded derivatives, namely U.S. Treasury futures, Federal funds

futures, and Eurodollar futures, are valued based on quoted prices from the exchange and are categorized in Level 1 of the fair value hierarchy. Over-the-counter derivatives, namely interest rate swap and interest rate cap contracts, are valued using a discounted cash flow model and the Black-Scholes model, respectively, using observable interest rate inputs and are categorized in Level 2 of the fair value hierarchy.

As described below in “Credit Concentrations”, the Company participates in loan syndications and operates as underwriting agent in leveraged financing transactions where it utilizes a warehouse facility provided by Canadian Imperial Bank of Commerce (“CIBC”) to extend financing commitments to third-party borrowers identified by the Company. The Company uses broker quotations on loans trading in the secondary market as a proxy to determine the fair value of the underlying loan commitment which is categorized in Level 3 of the fair value hierarchy. The Company also purchases and sells loans in its proprietary trading book where CIBC provides the financing through a loan trading facility. The Company uses broker quotations to determine the fair value of loan positions held which are categorized in Level 2 of the fair value hierarchy.

The Company from time to time enters into securities financing transactions that mature on the same date as the underlying collateral. Such transactions are treated as a sale of financial assets and a forward repurchase commitment, or conversely as a purchase of financial assets and a forward resale commitment. The forward repurchase and resale commitments are valued based on the spread between the market value of the government security and the underlying collateral and are categorized in Level 2 of the fair value hierarchy.

Fair Value Measurements

The Company’s assets and liabilities, recorded at fair value on a recurring basis as of December 31, 2010 and December 31, 2009, have been categorized based upon the above fair value hierarchy as follows:

Expressed in thousands of dollars.

						Fair Value Measurements
		As of December 31, 2010
		Level 1				Level 2				Level 3				Total
Assets:
Cash equivalents		$	14,384			$	—			$	—			$	14,384
Securities segregated for regulatory and other purposes			14,497				—				—				14,497
Deposits with clearing organizations			9,094				—				—				9,094
Securities owned:
U.S. Treasury obligations			115,790				—				—				115,790
U.S. Agency obligations			23,963				20,348				—				44,311
Sovereign obligations			13				—				—				13
Corporate debt and other obligations			—				32,204				—				32,204
Mortgage and other asset-backed securities			—				2,881				14				2,895
Municipal obligations			—				53,302				1,787				55,089
Convertible bonds			—				39,015				—				39,015
Corporate equities			31,798				7,353				—				39,151
Other			2,643				—				35,908				38,551
Securities owned, at fair value			174,207				155,103				37,709				367,019
Investments (1)			12,522				34,563				17,208				64,293
Derivative contracts (2)			—				513,790				—				513,790
Securities purchased under agreement to resell (4)			—				332,179				—				332,179
Total		$	224,704			$	1,035,635			$	54,917			$	1,315,256

Expressed in thousands of dollars.

		Fair Value Measurements
		As of December 31, 2010
		Level 1				Level 2				Level 3				Total
Liabilities:
Securities sold, but not yet purchased:
U.S. Treasury obligations		$	101,060			$	—			$	—			$	101,060
U.S. Agency obligations			4,405				99				—				4,504
Sovereign obligations			—				—				—				—
Corporate debt and other obligations			—				6,788				—				6,788
Mortgage and other asset-backed securities			—				25				—				25
Municipal obligations			—				383				—				383
Convertible bonds			—				11,093				—				11,093
Corporate equities			20,962				15,202				—				36,164
Other			35				—				—				35
Securities sold, but not yet purchased, at fair value			126,462				33,590				—				160,052
Investments			12				—				—				12
Derivative contracts (3)			147				532,510				—				532,657
Securities sold under agreements to repurchase (4)			—				389,305				—				389,305
Total		$	126,621			$	955,405			$	—			$	1,082,026

There were no significant transfers between Level 1 and Level 2 assets and liabilities in the year ended December 31, 2010.

Expressed in thousands of dollars.

		Fair Value Measurements
		As of December 31, 2009
		Level 1				Level 2				Level 3				Total
Assets:
Cash equivalents		$	13,365			$	—			$	—			$	13,365
Securities segregated for regulatory and other purposes			11,499				—				—				11,499
Deposits with clearing organizations			7,995				—				—				7,995
Securities owned:
U.S. Treasury obligations			53,633				—				—				53,633
U.S. Agency obligations			15,928				14,604				—				30,532
Sovereign obligations			3				—				—				3
Corporate debt and other obligations			—				30,330				—				30,330
Mortgage and other asset-backed securities			—				3,718				317				4,035
Municipal obligations			—				33,531				1,075				34,606
Convertible bonds			—				35,001				—				35,001
Corporate equities			35,178				8,550				—				43,728
Other			2,054				—				4,450				6,504
Securities owned, at fair value			106,796				125,734				5,842				238,372
Investments (1)			11,374				28,972				15,981				56,327
Derivative contracts (2)			—				5,854				—				5,854
Total		$	151,029			$	160,560			$	21,823			$	333,412
Liabilities:
Securities sold, but not yet purchased:
U.S. Treasury obligations		$	73,909			$	—			$	—			$	73,909
U.S. Agency obligations			—				90				—				90
Sovereign obligations			153				—				—				153
Corporate debt and other obligations			—				7,323				—				7,323
Mortgage and other asset-backed securities			—				5				—				5
Municipal obligations			—				1,707				—				1,707
Convertible bonds			—				12,121				—				12,121
Corporate equities			22,112				14,174				—				36,286
Other			145				—				—				145
Securities sold, but not yet purchased, at fair value			96,319				35,420				—				131,739
Investments (3)			57				—				—				57
Derivative contracts (4)			178				972				—				1,150
Total		$	96,554			$	36,392			$	—			$	132,946

The following tables present changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the years ended December 31, 2010 and 2009.

Expressed in thousands of dollars.

		Level 3 Assets and Liabilities
						Realized				Unrealized				Purchases,
						Gains				Gains				Sales,
		Opening				(Losses)				(Losses) (5)				Issuances,				Transfers				Ending
		Balance				(5)				(6)				Settlements				In / Out				Balance
For the year ended December 31, 2010
Assets:
Mortgage and other asset-backed securities (1)		$	317			$	2			$	8			$	(11	)		$	(302	)		$	14
Municipal obligations (2)			1,075				(4	)			(836	)			1,990				(438	)			1,787
Other (3)			4,450				—				(1,716	)			32,674				500				35,908
Investments (4)			15,981				(116	)			1,113				10				220				17,208
Total assets		$	21,823			$	(118	)		$	(1,431	)		$	34,663			$	(20	)		$	54,917

Expressed in thousands of dollars.

		Level 3 Assets and Liabilities
						Realized				Unrealized				Purchases,
						Gains				Gains				Sales,
		Opening				(Losses)				(Losses) (5)				Issuances,				Transfers				Ending
		Balance				(5)				(6)				Settlements				In / Out				Balance
For the year ended December 31, 2009
Assets:
Convertible bonds		$	815			$	(124	)		$	—			$	(691	)		$	—			$	—
Mortgage and other asset-backed securities (1)			1,610				323				(160	)			(1,406	)			(50	)			317
Municipal obligations			—				—				—				—				1,075				1,075
Other (2)			5,325				—				—				(875	)			—				4,450
Investments (3)			12,085				(76	)			4,742				—				(770	)			15,981
Total assets		$	19,835			$	123			$	4,582			$	(2,972	)		$	255			$	21,823
Liabilities:
Other (2)		$	(375	)			—				—				375				—			$	—
Derivative contracts (4)			(2,516	)			45				—				2,471				—				—
Total liabilities		$	(2,891	)		$	45				—			$	2,846				—			$	—

Fair Value Option

The Company has the option to measure certain financial assets and financial liabilities at fair value with changes in fair value recognized in earnings each period. The Company may make a fair value option election on an instrument-by-instrument basis at initial recognition of an asset or liability or upon an event that gives rise to a new basis of accounting for that instrument. The Company has elected to apply the fair value option to its loan trading portfolio which resides in OPY Credit Corp. and is included in other assets on the consolidated balance sheet. Management has elected this treatment as it is consistent with the manner in which the business is managed as well as the way that financial instruments in other parts of the business are recorded. There were no loan positions held in the secondary loan trading portfolio at December 31, 2010 ($950,000 in 2009 with a fair value of $940,000 which is categorized in Level 2 of the fair value hierarchy).

The Company also elected the fair value option for those securities sold under agreements to repurchase (“repurchase agreements”) and securities purchased under agreements to resell (“resale agreements”) that do not settle overnight or have an open settlement date or that are not accounted for as purchase and sale agreements (such as repo-to-maturity transactions). The Company has elected the fair value option for these instruments to more accurately reflect market and economic events in its earnings and to mitigate a potential imbalance in earnings caused by using different measurement attributes (i.e. fair value versus carrying value) for certain assets and liabilities. At December 31, 2010, the fair value of the resale repurchase agreements and repurchase agreements was $334.7 and $390.5 million, respectively. During the year ended December 31, 2010, the amount of gains related to resale agreements was $nil. During the year ended December 31, 2010, the amount of losses related to repurchase agreements was $80,600.

Fair Value of Derivative Instruments

The Company transacts, on a limited basis, in exchange traded and over-the-counter derivatives for both asset and liability management as well as for trading and investment purposes. Risks managed using derivative instruments include interest rate risk and, to a lesser extent, foreign exchange risk. Interest rate swaps and interest rate caps are entered into to manage the Company’s interest rate risk associated with floating-rate borrowings. All derivative instruments are measured at fair value and are recognized as either assets or liabilities on the consolidated balance sheet. The Company designates interest rate swaps and interest rate caps as cash flow hedges of floating-rate

borrowings.

Cash flow hedges used for asset and liability management

For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains or losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

On September 29, 2006, the Company entered into interest rate swap transactions to hedge the interest payments associated with its floating rate Senior Secured Credit Note, which is subject to change due to changes in 3-Month LIBOR. See note 7 for further information. These swaps have been designated as cash flow hedges. Changes in the fair value of the swap hedges are expected to be highly effective in offsetting changes in the interest payments due to changes in 3-Month LIBOR. For the year ended December 31, 2010, the effective portion of the net gain on the interest rate swaps, after tax, was approximately $450,900 ($861,000 in 2009) and has been recorded as other comprehensive income on the consolidated statement of comprehensive income (loss). There was no ineffective portion as at December 31, 2010. The interest rate swaps had a weighted-average fixed interest rate of 5.45% (5.45% in 2009) and a weighted-average maturity of 3 months at December 31, 2010.

On January 20, 2009, the Company entered into an interest rate cap contract, incorporating a series of purchased caplets with fixed maturity dates ending December 31, 2012, to hedge the interest payments associated with its floating rate Subordinated Note, which is subject to changes in 3-Month LIBOR. See note 7 for further information. This cap has been designated as a cash flow hedge. Changes in the fair value of the interest rate cap are expected to be highly effective in offsetting changes in the interest payments due to changes in 3-Month LIBOR. For the year ended December 31, 2010, the effective portion of the net loss on the interest rate cap, after tax, was approximately $1.3 million (a gain of $23,000 in 2009) and has been recorded as other comprehensive income (loss) on the consolidated statement of comprehensive income (loss). There was no ineffective portion as at December 31, 2010. The Company paid a premium for the interest rate cap of $2.4 million which has a strike of 2% and matures December 31, 2012. As at December 31, 2010, the cumulative amortization of the premium on the interest rate cap was $366,000 ($24,000 at December 31, 2009).

Foreign exchange hedges

From time to time, the Company also utilizes forward and options contracts to hedge the foreign currency risk associated with compensation obligations to Oppenheimer Israel (OPCO) Ltd. employees denominated in New Israeli Shekels. Such hedges have not been designated as accounting hedges. At December 31, 2010, the Company did not have any such hedges in place.

Derivatives used for trading and investment purposes

Futures contracts represent commitments to purchase or sell securities or other commodities at a future date and at a specified price. Market risk exists with respect to these instruments. Notional or contractual amounts are used to express the volume of these transactions, and do not represent the amounts potentially subject to market risk. The futures contracts the Company used include U.S. Treasury notes, Federal Funds and Eurodollar contracts. At December 31, 2010, the Company had 140 open short contracts for 10-year U.S. Treasury notes with a fair value of $147,000 used primarily as an economic hedge of interest rate risk associated with a portfolio of fixed income investments.

The Company also transacts in pass-through mortgage-backed securities eligible to be sold in the “To-Be-Announced” or TBA market. TBAs provide for the forward or delayed delivery of the underlying instrument with settlement up to 180 days. The contractual or notional amounts related to these financial

instruments reflect the volume of activity and do not reflect the amounts at risk. Unrealized gains and losses on TBAs are recorded in the consolidated balance sheets in receivable from brokers and clearing organizations and payable to brokers and clearing organizations, respectively, and in the consolidated statement of operations as principal transactions revenue. See Fair Value of Derivative Instruments tables below for TBAs outstanding at December 31, 2010.

From time-to-time, the Company enters into securities financing transactions that mature on the same date as the underlying collateral. These transactions are treated as a sale of financial assets and a forward repurchase commitment, or conversely as a purchase of financial assets and a forward resale commitment. At December 31, 2010, the fair value of the forward repurchase commitment was approximately $35,000.

The notional amounts and fair values of the Company’s derivatives at December 31, 2010 and 2009 by product were as follows:

Fair Value of Derivative Instruments
As of December 31, 2010
Expressed in thousands of dollars		Description		Notional				Fair Value
Assets:
Derivatives designated as hedging instruments (1)
Interest rate contracts		Cap		$	100,000			$	178
Derivatives not designated as hedging instruments (1)
Other contracts (4)		TBAs			496,266				513,612
Total Assets				$	596,266			$	513,790

Liabilities:
Derivatives designated as hedging instruments (1)
Interest rate contracts		Swaps		$	9,000			$	116
Derivatives not designated as hedging instruments (1)
Commodity contracts		U.S Treasury Futures			14,000				147
Other contracts		TBAs			518,987				532,359
		Forward Purchase Commitment (2)			3,250,000				35
Sub-total					3,782,987				532,541
Total Liabilities				$	3,791,987			$	532,657

Fair Value of Derivative Instruments
As of December 31, 2009
Expressed in thousands of dollars		Description		Notional				Fair Value
Assets:
Derivatives designated as hedging instruments (1)
Interest rate contracts		Cap		$	100,000			$	2,356
Derivatives not designated as hedging instruments (1)
Other contracts		TBAs		$	329,169			$	3,498
Total Assets				$	429,169			$	5,854
Liabilities:
Derivatives designated as hedging instruments (1)
Interest rate contracts		Swaps		$	36,000			$	875
Derivatives not designated as hedging instruments
Commodity contracts		U.S Treasury Futures		$	10,000			$	178
Other contracts		TBAs			329,169				—
		Forward Purchase
		Commitment (2)			800,000				97
Sub-total				$	1,139,169			$	275
Total Liabilities				$	1,175,169			$	1,150

     The following table presents the location and fair value amounts of the Company’s derivative instruments and their effect on the statement of operations for the year ended December 31, 2010.

										Recognized
										in Other
										Comprehen-
										sive Income				Reclassified from
										on				Accumulated Other
										Derivatives				Comprehensive
				Recognized in Income						-Effective				Income into Income
Expressed in thousands of dollars.				on Derivatives						Portion				-Effective Portion(2)
				(pre-tax)						(after-tax)				(after-tax)
Hedging						Gain/				Gain/						Gain/
Relationship		Description		Location		(Loss)				(Loss)				Location		(Loss)
Cash Flow Hedges used for asset and liability management:
Interest rate contracts		Swaps (3)		N/A		$	—			$	451			Interest expense		$	(813	)
		Caps (3)		N/A			—				(1,298	)		Other revenue			(181	)
Derivatives used for trading and investment (1):
Commodity contracts		U.S Treasury Futures		Principal transaction revenue			(1,454	)			—			None			—
		Federal Funds Futures		Principal transaction revenue			(84	)			—			None			—
		Euro-dollar Futures		Principal transaction revenue			(31	)			—			None			—
Foreign exchange contracts		Options		Other revenue			7				—			None			—
Other contracts		TBAs		Principal transaction revenue			14,044				—			None			—
		Forward purchase commitment (4)		Principal transaction revenue			(776	)			—			None			—
Total						$	11,707			$	(847	)				$	(994	)