BACKGROUND


The condensed consolidated financial statements include the accounts of
Oppenheimer Holdings Inc. and its consolidated subsidiaries (together, the
"Company", "we", "our" or "us"). The Company's condensed consolidated financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States of America. The following discussion should be
read in conjunction with the condensed consolidated financial statements and
notes thereto which appear elsewhere in this quarterly report.
The Company engages in a broad range of activities in the securities industry,
including retail securities brokerage, institutional sales and trading,
market-making, research, investment banking (both corporate and public finance),
investment advisory and asset management services and trust services. Its
principal subsidiaries are Oppenheimer & Co. Inc. ("Oppenheimer") and
Oppenheimer Asset Management Inc. ("OAM"). As of June 30, 2020, we provided our
services from 93 offices in 25 states located throughout the United States, with
offices in Tel Aviv, Israel, Hong Kong, China, London, England, St. Helier, Isle
of Jersey, Frankfurt, Germany and Geneva, Switzerland. Client assets under
administration ("CAUA") as of June 30, 2020 totaled $89.7 billion. The Company
provides investment advisory services through OAM and Oppenheimer Investment
Management LLC ("OIM") and Oppenheimer's financial adviser direct programs. At
June 30, 2020, client assets under management ("AUM") totaled $32.7 billion. We
also provide trust services and products through Oppenheimer Trust Company of
Delaware and discount brokerage services through Freedom Investments, Inc.
("Freedom"). Through OPY Credit Corp., we offer syndication as well as trading
of issued syndicated corporate loans. At June 30, 2020, the Company employed
2,921 employees (2,871 full-time and 50 part-time), of whom 1,029 were financial
advisers.

Outlook


We are focused on growing our private client and asset management businesses
through strategic additions of experienced financial advisers in our existing
branch system and employment of experienced money management personnel in our
asset management business as well as deploying our capital for expansion through
targeted acquisitions. We are also focused on opportunities in our capital
market businesses where we can acquire experienced personnel and/or business
units that will improve our ability to attract institutional clients in both
equities and fixed income without significantly raising our risk profile. In
investment banking we are committed to grow our footprint by adding experienced
bankers within our existing industry practices.
We continuously invest in and improve our technology platform to support client
service and to remain competitive while continuously managing expenses. The
Company's long-term growth plan is to continue to expand existing offices by
hiring experienced professionals as well as expand through the purchase of
operating branch offices from other broker-dealers or the opening of new branch
offices in attractive locations, and to continue to grow and develop the
existing trading, investment banking, investment advisory and other divisions.
We are committed to continuing to improve our technology capabilities to ensure
compliance with industry regulations, support client service and expand our
wealth management and capital markets capabilities. We recognize the importance
of compliance with applicable regulatory requirements and are committed to
performing rigorous and ongoing assessments of our compliance and risk
management effort, and investing in people and programs, while providing a
platform with first class investment programs and services.
The Company is also reviewing its full service business model to determine the
opportunities available to build or acquire closely related businesses in areas
where competitors have shown some success. Equally important is the search for
viable acquisition candidates. Our long-term intention is to pursue growth by
acquisition where we can find a comfortable match in terms of corporate goals
and personnel at a price that would provide our shareholders with incremental
value. We review potential acquisition opportunities from time to time on the
basis of fulfilling the Company's strategic goals, while evaluating and managing
our existing businesses.
Impact of Interest Rates
The Federal Reserve Bank implemented a series of increases in its benchmark
short-term interest rate between December 2015 and December 2018. These
increases in short-term interest rates had a significant positive impact on our
overall financial performance, as we offered programs to our clients (for the
investment of short-term funds as well as margin loans) which are sensitive to
changes in interest rates. Given the relationship of our interest-sensitive
assets to liabilities, increases in short-term interest rates generally result
in an overall increase in our net earnings. While clients' domestic cash sweep
balances had decreased over the past several years as clients increased their
allocations to other investments, that trend reversed in the most recent quarter
as market volatility drove client assets into our short-term cash sweep program
and other "safe haven" assets.

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While the Federal Reserve increased short-term interest rates over the last few
years, market deposit rates paid on client cash balances were not impacted to as
great a degree, resulting in an increase in fees the Company earned from FDIC
insured deposits of clients through a program offered by the Company. Decreases
in short-term interest rates, increases in deposit rates paid to clients, and/or
a significant decline in our clients' cash balances have a negative impact on
our earnings. Over the past twelve months, the Federal Reserve has reduced its
benchmark rate a number of times including during two separate unscheduled
meetings in March 2020, when the Federal Reserve lowered short-term interest
rates by a total of 1.50%. Accordingly, the Company's earnings during the first
and second quarters of 2020 were negatively impacted by such decreases. The
impact will continue to be significant in future periods as these indicative
rates flow through the system.

CORONAVIRUS DISEASE 2019 ("COVID-19 PANDEMIC")



On January 30, 2020, the spread of the novel coronavirus was declared a Public
Health Emergency of International Concern by the World Health Organization
("WHO"). Subsequently, on March 11, 2020, the WHO characterized the COVID-19
outbreak as a pandemic. The United States now has the world's most reported
COVID-19 cases, and all 50 states and the District of Columbia have reported
cases of infected individuals. Several states, including the State of New York,
where we are headquartered, declared states of emergency. Our management is
continuously monitoring the situation and providing frequent communications to
both clients and our employee partners. We have adopted enhanced cleaning
practices and other health protocols in most of our offices, taken measures to
significantly restrict non-essential business travel and have practices in place
to mandate that employees who may have been exposed to COVID-19, or show any
relevant symptoms, self-quarantine. Since early March 2020, the Company executed
on its Business Continuity Plan whereby we have requested that the vast majority
of our employees work remotely with only a few "essential" employees reporting
to our offices. We accomplished this by significantly expanding the use of
technology infrastructure that facilitates remote operations. Our ability to
avoid significant business disruptions is predicated on the continued
facilitation of remote operations. To date, there have been no significant
disruptions to our business or control processes as a result of this dispersion
of employees. Recent outbreaks in various states indicate that the COVID-19
Pandemic will continue to impact the economy, and by extension our business,
well into 2021. We currently anticipate that a large number of our employees
will continue to work remotely for the indefinite future.

EXECUTIVE SUMMARY



The operating results of the Company demonstrated the resiliency of the
franchise and our balance sheet, capital, and liquidity remain strong during
these unprecedented times. While our employees navigate new working
arrangements, whether remotely or in a less populated office environment, the
Company's associates were able to work productively and contribute to what
turned out to be a very solid quarter, both in terms of revenue and profit,
given the headwinds created by a very low interest rate environment. Continued
volatility in the equity markets and huge demand for capital raising led to
stronger than expected operating results for the period.

Investment banking led the way with a significant increase in the number of
equity underwriting transactions in May and June. We also saw substantially
increased activity in fixed income, both taxable and municipal finance,
including higher public finance issuances. This helped offset lower M&A activity
during the quarter. The broader equities markets saw the largest quarterly
increase in two decades contributing to higher retail and institutional
commission revenue as investors reacted to very high levels of volatility. The
recovery in asset values also contributed to record assets under management at
June 30, 2020, which will drive advisory fee revenue for the third quarter of
2020. A continuation of market volatility and robust capital markets activity
would drive positive operating results for the last half of the year.



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RESULTS OF OPERATIONS
The Company reported net income of $17.6 million or $1.40 basic earnings per
share for the three months ended June 30, 2020 compared with net income of $12.4
million or $0.95 basic earnings per share for the three months ended June 30,
2019. Pre-tax income was $23.3 million for the three months ended June 30, 2020
compared with pre-tax income of $17.4 million for the three months ended
June 30, 2019. Revenue for the three months ended June 30, 2020 was $264.7
million compared with revenue of $250.9 million for the three months ended
June 30, 2019, an increase of 5.5%.
(Expressed in thousands, except Per Share Amounts or otherwise
indicated)
                                     2Q-2020            2Q-2019          Change       % Change
Revenue                         $       264,730     $     250,935     $   13,795           5.5
Compensation expense            $       179,594     $     155,783     $   23,811          15.3
Non-compensation expense        $        61,872     $      77,761     $  (15,889 )       (20.4 )
Pre-Tax Income                  $        23,264     $      17,391     $    5,873          33.8
Income Taxes                    $         5,615     $       5,016     $      599          11.9
Net Income                      $        17,649     $      12,375     $    5,274          42.6

Earnings per share (basic) $ 1.40 $ 0.95 $ 0.45 47.4 Earnings per share (diluted) $ 1.34 $ 0.89 $ 0.45 50.6



Book Value Per Share            $         47.92     $       43.84     $     4.08           9.3
Tangible Book Value Per Share   $         34.37     $       30.62     $     3.75          12.2

CAUA ($ billions)               $          89.7     $        87.3     $      2.4           2.7
AUM ($ billions)                $          32.7     $        30.2     $      2.5           8.3


Highlights

• Revenue increased 5.5% during the period driven by robust underwriting


          revenue, increased institutional equities and fixed income sales and
          trading activity, and higher retail investor participation.


•         Compensation expense increased 15.3% due to higher production,
          incentive, and deferred compensation costs resulting from higher
          incentive compensation tied to commissionable revenue and asset values
          underlying deferred compensation programs.


•         Compensation expense as a percentage of revenue was higher at 67.8%

during the current period versus 62.1% last year due to substantially

lower bank deposit sweep income which has no associated compensation

costs.

• Book value and tangible book value per share reached record levels at

June 30, 2020.

• Private Client pre-tax profit margins were 17.2% reflecting strong

underlying business fundamentals.

• AUM reached a record level at June 30, 2020.

• Investment banking had its best quarter since the fourth quarter of


          2010 with revenue of $46.2 million.









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BUSINESS SEGMENTS
The table below presents information about the reported revenue and pre-tax
income (loss) of the Company's reportable business segments for the three months
and six months ended June 30, 2020 and 2019:
(Expressed in thousands)
                             For the Three Months Ended June 30,

For the Six Months Ended June 30,


                              2020               2019        % Change        2020              2019       % Change
Revenue
Private Client           $    141,825       $    161,928      (12.4)    $    283,243       $  325,455      (13.0)
Asset Management               17,515             18,622      (5.9)           36,791           35,208       4.5
Capital Markets               105,270             71,819       46.6          180,812          142,780       26.6
Corporate/Other                   120             (1,434 )      *             (1,346 )           (738 )     82.4
Total                    $    264,730       $    250,935       5.5      $    499,500       $  502,705      (0.6)

Pre-Tax Income (Loss)
Private Client           $     24,349       $     43,416      (43.9)    $     57,718       $   86,250      (33.1)
Asset Management                3,983              5,318      (25.1)           8,288            7,560       9.6
Capital Markets                22,322             (1,801 )      *             22,179           (4,448 )      *
Corporate/Other               (27,390 )          (29,542 )     7.3           (54,698 )        (55,919 )    (2.2)
Total                    $     23,264       $     17,391       33.8     $     33,487       $   33,443       0.1


* Percentage not meaningful

Private Client
Private Client reported revenue of $141.8 million for the second quarter of
2020, 12.4% lower than the second quarter of 2019 primarily due to lower bank
deposit sweep income. Pre-tax income was $24.3 million for the second quarter of
2020, a decrease of 43.9% compared with the second quarter of 2019.
('000s, except Financial advisor headcount or otherwise indicated)
                                           2Q-2020        2Q-2019        Change       % Change
Revenue                                 $   141,825     $  161,928     $ (20,103 )      (12.4 )
Retail commissions                      $    50,295     $   47,150     $   3,145          6.7
Advisory fee revenue                    $    58,465     $   62,080     $  (3,615 )       (5.8 )
Bank deposit sweep income               $     7,122     $   31,830     $ (24,708 )      (77.6 )
Interest                                $     5,134     $    9,639     $  (4,505 )      (46.7 )
Other                                   $    20,809     $   11,229     $   9,580         85.3

Total Expenses                          $   117,476     $  118,513     $  (1,037 )       (0.9 )
Compensation                            $    90,512     $   85,540     $   4,972          5.8
Non-compensation                        $    26,964     $   32,973     $  (6,009 )      (18.2 )

Client Asset Under Administration
(billions)                              $      89.7     $     87.3     $     2.4          2.7
Cash Sweep Balances (billions)          $       6.3     $      5.0     $     1.3         26.0
Financial Advisor Headcount                   1,029          1,036            (7 )       (0.7 )

• Retail commissions were $50.3 million for the second quarter of 2020, an


       increase of 6.7% from the second quarter of 2019 due to increased
       volatility and client participation.

• Advisory fee revenue on traditional and alternative managed products was

$58.5 million for the second quarter of 2020, a decrease of 5.8% from the


       second quarter of 2019 (see Asset Management below for further
       information).

• Bank deposit sweep income decreased $24.7 million or 77.6% from a year ago


       due to lower short-term interest rates partially offset by higher average
       cash sweep balances.




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• Interest revenue declined 46.7% from a year ago due to lower short-term


       interest rates partially offset by higher average margin balances.


•      Other revenue increased 85.3% primarily due to increases in the cash
       surrender value of company-owned life insurance policies.

• Compensation expenses increased 5.8% primarily due to increased deferred


       compensation costs tied to the performance of the overall equities
       markets.

• Non-compensation expenses decreased 18.2% primarily due to lower interest


       costs associated with the bank deposit sweep program.


•      Client assets under administration were $89.7 billion at June 30, 2020
       compared with $90.1 billion at December 31, 2019.

• Financial adviser headcount was 1,029 at the end of the second quarter of

2020, down from 1,036 at the end of the second quarter of 2019.




Asset Management
Asset Management reported revenue of $17.5 million for the second quarter of
2020, 5.9% lower than the second quarter of 2019 due to lower AUM at March 31,
2020. Pre-tax income was $4.0 million for the second quarter of 2020, a decrease
of 25.1% compared with the second quarter of 2019.
('000s unless otherwise indicated)  2Q-2020     2Q-2019      Change     % Change
Revenue                            $ 17,515    $ 18,622    $ (1,107 )      (5.9 )
Advisory fee revenue               $ 17,507    $ 18,617    $ (1,110 )      (6.0 )
Other                              $      8    $      5    $      3        60.0

Total Expenses                     $ 13,532    $ 13,304    $    228         1.7
Compensation                       $  5,676    $  5,316    $    360         6.8
Non-compensation                   $  7,856    $  7,988    $   (132 )      (1.7 )

AUM (billions)                     $   32.7    $   30.2    $    2.5         8.3

• Advisory fee revenue on traditional and alternative managed products was

$17.5 million for the second quarter of 2020, a decrease of 5.9% from the

second quarter of 2019 primarily due to lower AUM at March 31, 2020.




•            Advisory fees are calculated based on the value of client AUM at the
             end of the prior quarter which totaled $28.0 billion at March 31,
             2020 ($32.1 billion at December 31, 2019) and are allocated between
             the Private Client and Asset Management business segments.


•      AUM increased to $32.7 billion at June 30, 2020 compared with $30.2

billion at June 30, 2019, which is the basis for advisory fee billings for

the third quarter of 2020. The increase in AUM was comprised of higher

asset values of $1.3 billion on existing client holdings and a positive


       net contribution of assets of $1.2 billion.


•      Compensation expenses were up 6.8% which was primarily related to
       increases in incentive compensation.

• Non-compensation expenses were roughly flat when compared to the prior period.













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The following table provides a breakdown of the change in assets under
management for the three months ended June 30, 2020:
(Expressed in millions)
                                                     For the Three Months Ended June 30, 2020
                                Beginning                                             Appreciation         Ending
Fund Type                        Balance        Contributions      Redemptions       (Depreciation)       Balance
Traditional (1)               $    23,350     $         1,236     $     (1,071 )   $          3,395     $   26,910
Institutional Fixed Income
(2)                                   743                   8              (33 )                 37            755
Alternative Investments:
Hedge funds (3)                     3,168                 190              (11 )                855          4,202
Private Equity Funds (4)              309                  14              (10 )                 48            361
Portfolio Enhancement
Program (5)                           422                   6                -                    -            428
                              $    27,992     $         1,454     $     (1,125 )   $          4,335     $   32,656



(1)          Traditional investments include third party advisory programs,
             Oppenheimer financial adviser


managed and advisory programs and Oppenheimer Asset Management taxable and
tax-exempt
portfolio management strategies.
(2)          Institutional fixed income provides solutions to institutional
             investors including: Taft-Hartley Funds,


Public Pension Funds, Corporate Pension Funds, and Foundations and Endowments.
Hedge funds represent single manager hedge fund strategies in areas including
hedged equity,
technology and financial services, and multi-manager and multi-strategy fund of
funds.
(3)          Private equity funds represent private equity fund of funds
             including portfolios focused on natural

resources and related assets. (4) The portfolio enhancement program sells uncovered, far out-of-money


             puts and calls on the S&P


500 Index. The program is market neutral and uncorrelated to the index.
Valuation is based on
collateral requirements for a series of contracts representing the investment
strategy.
Capital Markets
Capital Markets reported revenue of $105.3 million for the second quarter of
2020, 46.6% higher than the second quarter of 2019 primarily due to higher
equity underwriting fees and trading income from equity and fixed income
trading, offset by lower advisory fees. Pre-tax income was $22.3 million for the
second quarter of 2020 compared with pre-tax loss of $1.8 million for the second
quarter of 2019.
('000s)                    2Q-2020      2Q-2019      Change     % Change
Revenues                  $ 105,270    $ 71,819    $ 33,451        46.6

Investment Banking        $  42,716    $ 27,742    $ 14,974        54.0
Advisory fees             $   7,244    $ 13,045    $ (5,801 )     (44.5 )

Equities underwriting $ 27,787 $ 13,020 $ 14,767 113.4 Fixed income underwriting $ 7,685 $ 1,677 $ 6,008 358.3



Sales and Trading         $  61,878    $ 43,508    $ 18,370        42.2
Equities                  $  30,858    $ 23,391    $  7,467        31.9
Fixed Income              $  31,020    $ 20,117    $ 10,903        54.2

Other                     $     676    $    569    $    107        18.8

Total Expenses            $  82,949    $ 73,620    $  9,329        12.7
Compensation              $  62,295    $ 45,848    $ 16,447        35.9
Non-compensation          $  20,654    $ 27,772    $ (7,118 )     (25.6 )






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• Advisory fees earned from investment banking activities decreased 44.5% to

$7.2 million for the second quarter of 2020 compared with $13.0 million for

the second quarter of 2019 due to lower M&A activity amidst the COVID-19

Pandemic.

• Equities underwriting fees increased 113.4% to $27.8 million for the second

quarter of 2020 compared with $13.0 million for the second quarter of 2019

due to higher levels of capital issuances in the equity markets.

• Fixed income underwriting fees increased 358.3% to $7.7 million for the

second quarter of 2020 compared with $1.7 million for the second quarter of

2019 due to increased fees earned in emerging markets and pubic finance

offerings.

• Fixed income sales and trading increased to $31.0 million for the second

quarter of 2020, 54.2% higher compared to $20.1 million during the second

quarter of 2019 due to increased client activity in investment grade,

emerging market, high yield and mortgage-backed securities.

• Equities sales and trading increased to $30.9 million for the second quarter

of 2020, 31.9% higher compared to $23.4 million during the second quarter of

2019 due to increased equities agency and convertible bond transactions.

• Compensation expenses increased 35.9% primarily due to increased incentive

compensation tied to increases in revenue.

• Non-compensation expenses were 25.6% lower due to decreased interest costs

and reduced costs associated with travel and entertainment and conferences.





CRITICAL ACCOUNTING POLICIES
The Company's condensed consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America. Reference is also made to the Company's consolidated financial
statements and notes thereto found in its Annual Report on Form 10-K for the
year ended December 31, 2019.
The Company's accounting policies are essential to understanding and
interpreting the financial results reported on the condensed consolidated
financial statements. The significant accounting policies used in the
preparation of the Company's condensed consolidated financial statements are
summarized in note 2 to those statements and notes thereto found in the
Company's Annual Report on Form 10-K for the year ended December 31, 2019.
Certain of those policies are considered to be particularly important to the
presentation of the Company's financial results because they require management
to make difficult, complex or subjective judgments, often as a result of matters
that are inherently uncertain.

During the three months ended June 30, 2020, there were no material changes to
matters discussed under the heading "Critical Accounting Polices" in Part II,
Item 7 of the Company's Annual Report on Form 10-K for the year ended December
31, 2019.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2020, total assets decreased by 4.1% from December 31, 2019 as the
Company reacted to significantly increased volatility since the outbreak of the
coronavirus and reduced its exposure to risk in it inventories and clients
reduced their borrowing. These reductions will likely be eased over the longer
term as conditions begin to normalize. The Company satisfies its need for
short-term financing from internally generated funds and collateralized and
uncollateralized borrowings, consisting primarily of bank call loans, stock
loans, and uncommitted lines of credit. We finance our trading in government
securities through the use of securities sold under agreements to repurchase
("repurchase agreements"). We met our longer-term capital needs through the
issuance of the 6.75% Senior Secured Notes due 2022 (the "Notes") (see "Senior
Secured Notes" below). Oppenheimer has arrangements with banks for borrowings on
a fully-collateralized basis. The amount of Oppenheimer's bank borrowings
fluctuates in response to changes in the level of the Company's securities
inventories and customer margin debt, changes in notes receivable from
employees, investment in furniture, equipment and leasehold improvements, and
changes in stock loan balances and financing through repurchase agreements. At
June 30, 2020, the Company had $13.0 million of such borrowings outstanding
compared to outstanding borrowings of $nil at December 31, 2019. The Company
also has some availability of short-term bank financing on an unsecured basis.

The Company's overseas subsidiaries, Oppenheimer Europe Ltd. and Oppenheimer
Investments Asia Limited, are subject to local regulatory capital requirements
that restrict our ability to utilize their capital for other purposes. The
regulatory capital requirements for Oppenheimer Europe Ltd. and Oppenheimer
Investments Asia Limited were $4.4 million and $387,000, respectively, at
June 30, 2020. The liquid assets at Oppenheimer Europe Ltd. are primarily
comprised of cash deposits in bank accounts.




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The liquid assets at Oppenheimer Investments Asia Limited are primarily
comprised of investments in U.S. Treasuries and cash deposits in bank accounts.
Any restrictions on transfer of these liquid assets from Oppenheimer Europe Ltd.
and Oppenheimer Investments Asia Limited to the Company or its other
subsidiaries would be limited by regulatory capital requirements.

The Company permanently reinvests eligible earnings of its foreign subsidiaries
and, accordingly, does not accrue any U.S. income taxes that would arise if
these earnings were repatriated. The unrecognized deferred tax liability
associated with the outside basis difference of its foreign subsidiaries is
estimated at $3.2 million for those subsidiaries. We have continued to reinvest
permanently the excess earnings of Oppenheimer Israel (OPCO) Ltd. in its own
business and in the businesses in Europe and Asia to support business
initiatives in those regions. In accordance with the Tax Cuts and Jobs Act
("TCJA"), we will continue to review our historical treatment of these earnings
to determine whether our historical practice will continue or whether a change
is warranted.
Senior Secured Notes
On June 23, 2017, in a private offering, we issued $200.0 million aggregate
principal amount of 6.75% Senior Secured Notes due 2022 (the "Unregistered
Notes") under an indenture at an issue price of 100% of the principal amount. On
September 19, 2017, we completed an exchange offer in which we exchanged 99.8%
of our Unregistered Notes for a like principal amount of notes with identical
terms except that such new notes had been registered under the Securities Act of
1933 (the "Notes"). We did not receive any proceeds in the exchange offer.
Interest on the Notes is payable semi-annually on January 1st and July 1st. We
used a portion of the net proceeds from the offering of the Unregistered Notes
to redeem in full our 8.75% Senior Secured Notes due April 15, 2018 in the
principal amount of $120.0 million, and pay all related fees and expenses
related thereto. See note 11 to the condensed consolidated financial statements
appearing in Item 1 for further discussion.
On August 25, 2019, the Company redeemed a total of $50.0 million (25%)
aggregate principal amount of the outstanding Notes at a redemption price equal
to 103.375% ("Call Premium") of the principal amount redeemed, plus accrued and
unpaid interest thereon to the redemption date. During the second quarter of
2020, the Company repurchased $1.4 million of the Notes and paid $22,807 of
accrued and unpaid interest. The Company recorded a gain of $85,560 on the
repurchase during the first quarter of 2020.
On June 16, 2020, S&P affirmed the Company's 'B+' Corporate Family rating and
'B+' rating on the Notes and affirmed its stable outlook. On April 20, 2020,
Moody's Corporation upgraded the Company's Corporate Family to a 'B1' rating and
affirmed its 'B1' rating on the Notes and changed its outlook to stable.
As of June 30, 2020, $148.6 million aggregate principal amount of the Notes
remains outstanding. See note 11 to the condensed consolidated financial
statements appearing in Item 1 for further discussion.
Liquidity
For the most part, the Company's assets consist of cash and cash equivalents and
assets that it can readily convert into cash. The receivable from brokers,
dealers and clearing organizations represents deposits for securities borrowed
transactions, margin deposits or current transactions awaiting settlement. The
receivable from customers represents margin balances and amounts due on
transactions awaiting settlement. Our receivables are, for the most part,
collateralized by marketable securities. Our collateral maintenance policies and
procedures are designed to limit our exposure to credit risk. Securities owned,
with the exception of ARS, are mainly comprised of actively trading readily
marketable securities. We advanced $2.0 million in forgivable notes (which are
inherently illiquid) to employees for the three months ended June 30, 2020 ($2.7
million for the three months ended June 30, 2019) as upfront or backend
inducements to commence or continue employment as the case may be. The amount of
funds allocated to such inducements will vary with hiring activity.
We satisfy our need for short-term liquidity from internally generated funds,
collateralized and uncollateralized bank borrowings, stock loans and repurchase
agreements and warehouse facilities. Bank borrowings are, in most cases,
collateralized by firm and customer securities.









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We obtain short-term borrowings primarily through bank call loans. Bank call
loans are generally payable on demand and bear interest at various rates. At
June 30, 2020, the Company had $13.0 million of bank call loans ($nil at
December 31, 2019). The average daily bank loan outstanding for the three and
six months ended June 30, 2020 was $60.7 million and $61.3 million respectively,
($21.6 million and $18.7 million for the three and six months ended June 30,
2019). The largest daily bank loan outstanding for the three and six months
ended June 30, 2020 was $233.9 million and $324.3 million, respectively ($100.9
million for both the three and six months ended June 30, 2019).

At June 30, 2020, securities loan balances totaled $204.3 million ($234.3
million at December 31, 2019 and $247.7 million at June 30, 2019). The average
daily securities loan balance outstanding for the three and six months ended
June 30, 2020 was $221.4 million and $220.6 million, respectively ($253.7
million and $236.3 million for the three and six months ended June 30, 2019).
The largest daily stock loan balance for the three and six months ended June 30,
2020 was $253.1 million and $291.9 million, respectively ($285.5 million for
both the three and six months ended June 30, 2019).
We finance our government trading operations through the use of securities
purchased under agreements to resell ("reverse repurchase agreements") and
repurchase agreements. Except as described below, repurchase and reverse
repurchase agreements, principally involving government and agency securities,
are carried at amounts at which securities subsequently will be resold or
reacquired as specified in the respective agreements and include accrued
interest. Repurchase and reverse repurchase agreements are presented on a
net-by-counterparty basis, when the repurchase and reverse repurchase agreements
are executed with the same counterparty, have the same explicit settlement date,
are executed in accordance with a master netting arrangement, the securities
underlying the repurchase and reverse repurchase agreements exist in "book
entry" form and certain other requirements are met.
Certain of our repurchase agreements and reverse repurchase agreements are
carried at fair value as a result of the Company's fair value option election.
We elected the fair value option for those repurchase agreements and reverse
repurchase agreements that do not settle overnight or have an open settlement
date. We have elected the fair value option for these instruments to more
accurately reflect market and economic events in our 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
June 30, 2020, we did not have any repurchase agreements and reverse repurchase
agreements that do not settle overnight or have an open settlement date.

At June 30, 2020, the gross balances of reverse repurchase agreements and
repurchase agreements were $227.9 million and $382.0 million, respectively. The
average daily balance of reverse repurchase agreements and repurchase agreements
on a gross basis for the three months ended June 30, 2020 was $95.1 million and
$205.0 million, respectively ($151.6 million and $559.7 million, respectively,
for the three months ended June 30, 2019). The largest amount of reverse
repurchase agreements and repurchase agreements outstanding on a gross basis
during the three months ended June 30, 2020 was $474.4 million and $479.1
million, respectively ($246.6 million and $814.4 million, respectively, for the
three months ended June 30, 2019).
At June 30, 2020, the gross leverage ratio was 3.9.
Liquidity Management
We manage our need for liquidity on a daily basis to ensure compliance with
regulatory requirements. Our liquidity needs may be affected by market
conditions, increased inventory positions, business expansion and other
unanticipated occurrences. In the event that existing financial resources do not
satisfy our liquidity needs, we may have to seek additional external financing.
The availability of such additional external financing may depend on market
factors outside our control.

We have Company-owned life insurance policies which are utilized to fund certain
non-qualified deferred compensation plans. Certain policies which could provide
additional liquidity if needed had cash surrender value of $68.2 million as of
June 30, 2020.
We regularly review our sources of liquidity and financing and conduct internal
stress analysis to determine the impact on the Company of events that could
remove sources of liquidity or source of financing and to plan actions the
Company could take in the case of such an eventuality. Our reviews have resulted
in plans that we believe would result in a reduction of assets through
liquidation that would significantly reduce the Company's need for external
financing.

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Funding Risk
(Expressed in thousands)
                                                        For the Six Months Ended June 30,
                                                           2020                   2019
Cash used in operating activities                   $        (15,913 )     $        (37,991 )
Cash used in investing activities                             (3,161 )               (6,246 )
Cash used in (provided by) financing activities               (9,239 )

24,869


Net decrease in cash and cash equivalents           $        (28,313 )

$ (19,368 )





Management believes that funds from operations, combined with our capital base
and available credit facilities, are sufficient for our liquidity needs in the
foreseeable future. Under some circumstances, banks including those on whom we
rely may back away from providing funding to the securities industry. Such a
development might impact our ability to finance our day-to-day activities or
increase the costs to acquire funding. We may or may not be able to pass such
increased funding costs on to our clients.
During the recent period of high volatility, we have seen increased calls for
deposits of collateral to offset perceived risk between the Company's settlement
liability to industry utilities such as the Options Clearing Corporation ("OCC")
and National Securities Clearing Corp. ("NSCC") as well as more stringent
collateral arrangements with our bank lenders. All such requirements have been
met in the ordinary course with available collateral.
OFF-BALANCE SHEET ARRANGEMENTS
Information concerning our off-balance sheet arrangements is included in note 8
to the condensed consolidated financial statements appearing in Item 1. Such
information is hereby incorporated by reference. Also, see "Risk Factors - The
Company may continue to be significantly affected by the failure of the Auction
Rate Securities Market" in Part I, Item 1A of the Company's Annual Report on
Form 10-K for the year ended December 31, 2019 as well as Part II, Item 1A "Risk
Factors" elsewhere herein for additional details.

CONTRACTUAL OBLIGATIONS
The following table sets forth the Company's contractual obligations as of
June 30, 2020:
(Expressed in thousands)
                                             Less than 1                                       More than 5
                               Total            Year           1-3 Years       3-5 Years          Years
Operating Lease Obligations
(1)(2)                      $  274,865     $      41,642     $    72,349     $    56,506     $     104,368
Committed Capital (3)            1,238             1,238               -               -                 -
Senior Secured Notes (4)(5)    168,659            10,029         158,630               -                 -
ARS Purchase Commitments
(3)                              2,376             1,962             414               -                 -
Total                       $  447,138     $      54,871     $   231,393     $    56,506     $     104,368



(1)          See note 4 to the condensed consolidated financial statements for
             additional information.

(2) Includes interest liability of $70.7 million.




(3)          See note 13 to the condensed consolidated financial statements for
             additional information.


(4)          See note 11 to the condensed consolidated financial statements for
             additional information.

(5) Includes interest payable of $20.1 million through maturity.









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CYBERSECURITY


For many years, we have sought to maintain the security of our clients' data,
limit access to our data processing environment, and protect our data processing
facilities. See "Risk Factors - The Company may be exposed to damage to its
business or its reputation by cybersecurity incidents" as further described in
Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended
December 31, 2019. Recent examples of vulnerabilities by other companies and the
government that have resulted in loss of client data and fraudulent activities
by both domestic and foreign actors have caused us to continuously review our
security policies and procedures and to take additional actions to protect our
network and our information.

Given the importance of the protection of client data, regulators have developed
increased oversight of cybersecurity planning and protections that
broker-dealers and other financial service providers have implemented. Such
planning and protection are subject to the SEC's and FINRA's oversight and
examination on a periodic or targeted basis. We expect that regulatory oversight
will intensify, as a result of publicly announced data breaches by other
organizations involving tens of millions of items of personally identifiable
information. We continue to implement protections and adopt procedures to
address the risks posed by the current information technology environment. The
Company has significantly increased the resources dedicated to this effort and
believes that further increases may be required in the future, in anticipation
of increases in the sophistication and persistency of such attacks. As more of
our employees have begun working remotely, we have increased our surveillance
practices and adapted more stringent programs to protect client data as well as
to protect our infrastructure. There can be no guarantee that our cybersecurity
efforts will be successful in discovering or preventing a security breach.

REGULATORY MATTERS AND DEVELOPMENTS



Regulation Best Interest (U.S.)
On April 18, 2018, the SEC announced its proposed "Regulation Best Interest," a
package of rulemakings and interpretations that address customers' relationships
with investment advisers and broker-dealers.
On June 5, 2019, the SEC adopted a final version of this rulemaking package that
included the adoption of Regulation Best Interest ("Reg BI") as Rule 15l-1 under
the Securities Exchange Act of 1934. Reg BI imposes a new federal standard of
conduct on registered broker-dealers and their associated persons when dealing
with retail clients and requires that a broker-dealer and its representatives
act in the best interest of such client and not place its own interests ahead of
the customer's interests. Reg BI does not define the term "best interest" but
instead sets forth four distinct obligations, disclosure, care, conflict of
interest and compliance that a broker-dealer must satisfy in each transaction.
Compliance with Reg BI became effective on June 30, 2020. In addition to passing
Reg BI the SEC also adopted rules (i) requiring broker-dealers and investment
advisers to provide a written relationship summary to each client, and (ii)
clarifying certain interpretations under the Investment Advisers Act of 1940
including but not limited to when a broker-dealer's activity is considered
"solely incidental" to its broker-dealer business and is, therefore, not
considered investment advisory activity (collectively, the "Reg BI Rules").
It is too early to predict what all the effects of the Reg BI Rules will have on
the Company. However, there is a need for enhanced documentation for
recommendations of securities transactions to broker-dealer retail clients as
well as the cessation of certain practices as well as limitations on certain
kinds of transactions previously conducted in the normal course of business. The
new rules and processes related thereto will likely limit revenue and most
likely involve increased costs, including, but not limited to, compliance costs
associated with new or enhanced technology as well as increased litigation
costs.
The Company has reviewed its business practices and operating models in light of
the Reg BI Rules and has made significant structural, technological and
operational changes to our business leading up to the effective date of June 30,
2020 for compliance with the Reg BI Rules. As a result, the Company conducted
significant training of all its employees with respect to the requirements of
Reg BI and made each of the required mailings (both electronic and conventional)
prior to the effective date. The Company believes that the changes made to its
business processes will result in compliance with these new requirements. As
business is conducted under the Reg BI Rules, it is likely that additional
changes may be necessary.

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Regulatory Environment
See the discussion of the regulatory environment in which we operate and the
impact on our operations of certain rules and regulations in Item 1 "Business -
Regulation" in the Company's Annual Report on Form 10-K for the year ended
December 31, 2019 for additional information.
Oppenheimer and many of its affiliates are each subject to various regulatory
capital requirements. As of June 30, 2020, all of our active regulated domestic
and international subsidiaries had net capital in excess of minimum
requirements. See note 14 of the Notes to Condensed Consolidated Financial
Statements in Item 1 for further information on regulatory capital requirements.
FACTORS AFFECTING "FORWARD-LOOKING STATEMENTS"
From time to time, the Company may publish or make oral statements that
constitute "forward-looking statements" under the Private Securities Litigation
Reform Act of 1995 which provides a safe harbor for forward-looking statements.
These forward-looking statements may relate to such matters as anticipated
financial performance, future revenues, earnings, liabilities or expenses,
business prospects, projected ventures, new products, anticipated market
performance, and similar matters. The Company cautions readers that a variety of
factors could cause the Company's actual results to differ materially from the
anticipated results or other expectations expressed in the Company's
forward-looking statements. These risks and uncertainties, many of which are
beyond the Company's control, include, but are not limited to: (i) transaction
volume in the securities markets, (ii) the volatility of the securities markets,
(iii) fluctuations in interest rates, (iv) changes in regulatory requirements
that could affect the cost and method of doing business, (v) general economic
conditions, both domestic and international, (vi) competition from existing
financial institutions, new entrants and other participants in the securities
markets and financial services industry, (vii) potential cybersecurity threats,
(viii) legal developments affecting the litigation experience of the securities
industry and the Company, (ix) changes in foreign, federal and state tax laws
that could affect the popularity of products sold by the Company or impose taxes
on securities transactions, (x) the adoption and implementation of the SEC's
"Regulation Best Interest" and other regulations adopted in recent years, (xi)
war, terrorist acts and nuclear confrontation as well as political unrest, (xii)
the Company's ability to achieve its business plan, (xiii) the effects of the
economy on the Company's ability to find and maintain financing options and
liquidity, (xiv) credit, operational, legal and regulatory risks, (xv) risks
related to foreign operations, including those in the United Kingdom which may
be affected by Britain's January 2020 exit from the EU("Brexit"), (xvi) the
effect of technological innovation on the financial services industry and
securities business, (xvii) risks related to election results, Congressional
gridlock, political and social unrest, government shutdowns and investigations,
trade wars, changes in or uncertainty surrounding regulation and threats of
default by the Federal government, (xviii) risks related to changes in capital
requirements under international standards that may cause banks to back away
from providing funding to the securities industry, and (xviv) risks related to
the severity and duration of the COVID-19 Pandemic; the pandemic's impact on the
U.S. and global economies; and Federal, state and local governmental responses
to the pandemic. There can be no assurance that the Company has correctly or
completely identified and assessed all of the factors affecting the Company's
business. See "Risk Factors" in Part I, Item 1A of the Company's Annual Report
on Form 10-K for the year ended December 31, 2019 as well as "Risk Factors" in
Part II, Item 1A below.



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