PRIVATE CLIENT
Through its Private Client Division, Oppenheimer provides a comprehensive array
of financial services through a network of approximately 1,233 financial advisers
in 85 offices located throughout the United States. Clients include high-net-worth
individuals and families, corporate executives, and small and mid-sized businesses.
Clients may choose a variety of ways to establish a relationship and conduct
business including brokerage accounts with transaction-based pricing and/or
investment advisory accounts with asset-based fee pricing.
Full-Service Brokerage – Oppenheimer offers full-service brokerage covering
a broad array of investment alternatives including exchange-traded and over-the-counter
corporate equity and debt securities, money market instruments, exchange-traded
options and futures contracts, municipal bonds, mutual funds, and unit investment
trusts. A substantial portion of Oppenheimer's revenue is derived from commissions
from private clients through accounts with transaction-based pricing. Brokerage
commissions are charged on investment products in accordance with a schedule
which Oppenheimer has formulated. Discounts are available to and can be negotiated
with customers based on transaction size and volume as well as a number of other
factors.
Wealth Planning – Oppenheimer also offers financial and wealth planning
services which include asset management, individual and corporate retirement
solutions, including insurance and annuity products, IRAs and 401(k) plans,
U.S. stock plan services to corporate executives and businesses, education savings
programs, and trust and fiduciary services to individual and corporate clients.
Margin Lending – Oppenheimer extends credit to its customers, collateralized
by securities and cash in the customer's account, for a portion of the purchase
price, and receives income from interest charged on such extensions of credit.
The customer is charged for such margin financing at interest rates derived
from Oppenheimer's rate.
ASSET MANAGEMENT
Separately Managed Accounts – The Company provides clients with three
fee-based programs: (i) Investment Advisory Services through which clients may
select among those managers reviewed and recommended by the Company; (ii) Strategic
Asset Review dual contract program through which clients may select among those
managers available; and (iii) Unified Managed Account which allows multiple
investment managers, mutual funds and ETFs to be combined in a single custodial
account.
Portfolio Advisory Services – The Company offers a fee-based mutual fund
program, Portfolio Advisory Services, where clients may choose long-term strategic
asset allocation programs among mutual funds approved by the Company.
Oppenheimer Investment Advisory Services – Oppenheimer Investment Advisers
offers internal portfolio managers servicing high-net-worth individuals, retirement
plans, endowments, foundations and trusts using both taxable and non-taxable
fixed income strategies.
Discretionary Portfolio Management – Through its Omega and Fahnestock
Asset Management programs, Oppenheimer offers discretionary fee-based investment
programs managed by Oppenheimer advisers with a client-focused approach to money
management, servicing high-net-worth individuals, families, endowments and foundations,
and institutions. In addition, the Alpha programs offer similar services as
a commission-based program.
Fee-Based Non-Discretionary Accounts – Under Oppenheimer's Preference
Program, Oppenheimer provides non-discretionary investment advisory services
to high-net-worth individuals and families who pay an advisory fee on a quarterly
basis. The program includes features such as initial portfolio consultation,
quarterly performance reporting and periodic consultation.
Institutional Investment Management – Oppenheimer Investment Management,
LLC ("OIM") provides fixed income management and solutions to institutional
investors including Taft-Hartley funds, public pension funds, corporate pension
funds, insurance companies, and foundations and endowments.
Alternative Investments – The Company offers high-net-worth and institutional
investors the opportunity to participate in a wide range of non-traditional
investment strategies. Strategies include single manager hedge funds, fund of
funds and private equity vehicles. For proprietary funds, the Company, through
its subsidiaries, acts as general partner in these investments and typically
earns 1% to 2% per year in management fees and 20% performance (or incentive)
fees. The fees which the Company receives are shared in a pre-determined manner
with the portfolio manager.
CAPITAL MARKETS
Investment Banking
Oppenheimer employs approximately 100 investment banking professionals throughout
the United States and in the United Kingdom, Israel and Asia. Oppenheimer's
investment banking division provides strategic advisory services and capital
markets products to emerging growth and middle market businesses. The investment
banking industry coverage groups focus on certain sectors including consumer
and business services, energy, financial institutions and real estate, healthcare,
industrial growth and services, and technology, media and communications. Oppenheimer's
industry coverage teams partner with Oppenheimer's Mergers and Acquisitions
practice as well as Equities, Leveraged Finance and Fixed Income platforms to
provide its clients with tailored advice and recommendations. In addition, Oppenheimer
has extensive experience working with financial sponsors and maintains a dedicated
Financial Sponsor group.
Mergers and Acquisitions – Oppenheimer advises buyers and sellers on sales,
divestitures, mergers, acquisitions, tender offers, privatizations, restructurings,
spin-offs and joint ventures. Oppenheimer provides dedicated senior banker focus
to clients throughout the financial advisory process, which combines our structuring
and negotiating expertise with our industry knowledge, extensive relationships,
and capital markets capabilities.
Equities – Oppenheimer provides capital raising solutions for corporate
clients through initial public offerings, follow-on offerings, equity-linked
offerings, private investments in public entities, and private placements. Oppenheimer
focuses on emerging companies in growth industries, including consumer and business
services, energy, financial institutions and real estate, healthcare, industrial
growth and services, and technology, media and communications.
Leverage Finance and Fixed Income – Oppenheimer offers a full range of
debt financing for emerging growth and middle market companies and financial
sponsors. Oppenheimer focuses on structuring and distributing public and private
debt in leveraged finance transactions, including leveraged buyouts, acquisitions,
growth capital financings, recapitalizations and Chapter 11 exit financings.
Oppenheimer also participates in high yield debt and fixed and floating-rate
senior and subordinated debt offerings. In addition, Oppenheimer advises on
bond financing alternatives for both sovereign and corporate emerging market
issuers.
Equities Capital Markets
Institutional Equity Sales and Trading – Oppenheimer provides execution
services and access to all major U.S. equity exchanges and alternative execution
venues, in addition to capital markets/origination, various arbitrage strategies,
portfolio and electronic trading. Oppenheimer offers a suite of quantitative
and algorithmic trading solutions to access liquidity in global markets. Oppenheimer's
clients include domestic and international investors such as investment advisers,
banks, mutual funds, insurance companies, hedge funds, and pension and profit
sharing plans, attracted by the insights and market intelligence provided by
sales and trading staff as well as by the quality of execution (measured by
volume, timing and price), and competitive negotiated commission rates.
Equity Research – Oppenheimer employs 40 senior analysts covering over
600 equity securities worldwide, and over 100 dedicated equity research sales
professionals. Oppenheimer provides regular research reports, notes and earnings
updates and also sponsors numerous research conferences where the management
of covered companies can meet with investors in a group format as well as in
one-on-one meetings. Oppenheimer also arranges for company managements to meet
with interested investors through arranged meetings wherein management representatives
travel to various sites to meet with Oppenheimer representatives and with investors.
Oppenheimer's analysts use a variety of quantitative and qualitative tools,
integrating field analysis, proprietary channel checks and ongoing dialogue
with the managements of the companies they cover in order to produce reports
and studies on individual companies and industry developments.
Equity, Debt and Index Options – Oppenheimer offers extensive equity and
index options strategies for investors seeking to manage risk and optimize returns
within the equities market. Oppenheimer's experienced professionals have expertise
in many listed derivative products designed to serve the diverse needs of its
institutional, corporate and private client base.
Convertible Bonds – Oppenheimer commits dedicated personnel to serve the
convertible markets, offering expertise in the sales, trading and analysis of
U.S. domestic convertible bonds, convertible preferred shares and warrants,
with a focus on minimizing transaction costs and maximizing liquidity. In addition
Oppenheimer offers hedged (typically long convertible bonds and short equities)
positions to its clients on an integrated trade basis.
Event Driven Sales and Trading – Oppenheimer has a dedicated team focused
on providing specialized advice and trade execution expertise to institutional
clients with an interest in investment strategies such as: merger arbitrage;
Dutch tender offers; splits and spin-offs; and recapitalizations, corporate
reorganizations, and other event-driven trading strategies.
Debt Capital Markets
Fixed Income – Oppenheimer offers trading and a high degree of sales support
in highly rated ("high grade") corporate bonds, mortgage-backed securities,
government and agency bonds and the sovereign and corporate debt of industrialized
and emerging market countries, which may be denominated in currencies other
than U.S. dollars. Since June 2009, Oppenheimer has participated in auctions
for U.S. government securities conducted by the Federal Reserve Bank of New
York on behalf of the U.S. Treasury. Oppenheimer trades non-investment grade
public and private debt securities, mortgage-backed securities, sovereign and
corporate debt of industrialized and emerging market countries and distressed
securities both for its own account as well as for institutional clients qualified
to sustain the risks associated with such securities. Oppenheimer also publishes
research with respect to a number of such securities. Risk of loss upon default
by the borrower is significantly greater with respect to unrated or less than
investment grade corporate debt securities than with other corporate debt securities.
These securities are generally unsecured and are often subordinated to other
creditors of the issuer. These issuers usually have high levels of indebtedness
and are more sensitive to adverse economic conditions, such as recession or
increasing interest rates, than are investment grade issuers. There is a limited
market for some of these securities and market quotes are available only from
a small number of dealers.
Fixed Income Research – Oppenheimer has a total of seven fixed income
research professionals. There are three dedicated research analysts covering
companies that have issued high yield bonds in the United States. Oppenheimer's
high yield corporate bond research effort is designed to identify debt issues
that provide a combination of high yield plus capital appreciation over the
short to medium term. There is one mortgage backed securities analyst focused
on the detailed analysis of individual agency and non-agency mortgage backed
securities. There are two professionals covering emerging market fixed income
issuers, including a publishing research analyst focused exclusively on sovereign
bonds and a strategist providing commentary on emerging market corporate bond
issuers. The Firm also has a municipal bond research analyst publishing reports
on the tax-exempt municipal bond market.
Public Finance – Oppenheimer's public finance department advises and raises
capital for state and local governments, public agencies, private developers
and other borrowers. The group assists its clients by developing and executing
capital financing plans that meet our clients' objectives and by maintaining
strong national institutional and retail securities distribution capabilities.
Public finance bankers have expertise in specific areas, including local governments
and municipalities, primary and secondary schools, post-secondary and private
schools, state and local transportation entities, health care institutions,
senior-living facilities, public utility providers and project financing. In
addition to underwriting longer-term municipal securities, Oppenheimer also
provides advice to municipal issuers with respect to the timing and issuance
of short-term municipal notes, which Oppenheimer then underwrites and distributes
as well as short-term notes for bridge financing of real estate projects.
Municipal Trading – Oppenheimer has regionally based municipal bond trading
desks serving retail financial advisers within their regions. These desks serve
Oppenheimer's financial advisers in supporting their high-net-worth clients'
needs for taxable and non-taxable municipal securities. The Firm also maintains
a dedicated institutional municipal bond sales and trading effort focused on
serving mid-tier and national institutional accounts. The Institutional desks
assist in underwriting municipal securities originated by its Public Finance
Department. These desks serve Oppenheimer's financial advisers in supporting
their high-net-worth clients' needs for taxable and non-taxable municipal securities.
Proprietary Trading
In the regular course of its business, Oppenheimer takes securities positions
as a market maker and/or principal to facilitate customer transactions and for
investment purposes. In making markets and when trading for its own account,
Oppenheimer exposes its own capital to the risk of fluctuations in market value.
In 2010, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection
Act ("Dodd-Frank") that proposes to prohibit proprietary trading by
certain financial institutions (the "Volcker Rule") except where facilitating
customer trades. The Volcker Rule went into effect in July 2015 and does not
impact the Company's business or operations as it applies to banks and other
subsidiaries of bank holding companies only.
Equities – Oppenheimer acts as both principal and agent in the execution
of its customers' orders. Oppenheimer buys, sells and maintains an inventory
of a security in order to "make a market" in that security. In executing
customer orders for securities in which it does not make a market, Oppenheimer
generally charges a commission and acts as agent, or will act as principal by
marking the security up or down in a riskless transaction. However, when an
order is in a security in which Oppenheimer makes a market, Oppenheimer normally
acts as principal and purchases from or sells to its brokerage customers at
a price which is approximately equal to the current inter-dealer market price
plus or minus a mark-up or mark-down. The stocks in which Oppenheimer makes
a market may also include those of issuers which are followed by Oppenheimer's
research department.
Fixed Income – Oppenheimer trades and holds positions in public and private
debt securities, including non-investment grade and distressed corporate securities
as well as municipal securities. There may be a limited market for some of these
securities and market quotes may be available from only a small number of dealers
or inter-dealer brokers. While Oppenheimer normally holds such securities for
a short period of time in order to facilitate client transactions, there is
a risk of loss upon default by the borrower or from a change in interest rates
affecting the value of the security. These issuers may have high levels of indebtedness
and be sensitive to adverse economic conditions, such as recession or increasing
interest rates.
Through the use of securities sold under agreements to repurchase ("repurchase
agreements") and securities purchased under agreements to resell ("reverse
repurchase agreements"), the Company acts as an intermediary between borrowers
and lenders of short-term funds and provides funding for various inventory positions.
Proprietary Trading and Investment Activities – Oppenheimer holds positions
in its trading accounts in securities in which it does not make a market and
may engage from time to time in other types of principal transactions in securities.
Oppenheimer has several trading departments including a convertible bond department,
a risk arbitrage department, a corporate bond department, a municipal bond department,
a government/mortgage backed securities department, and a department that underwrites
and trades U.S. government agency issues, taxable corporate bonds, preferred
shares, unit investment trusts and short term debt instruments. These departments
continually purchase and sell securities and make markets in order to make a
profit on the inter-dealer spread or to profit from investment. Although Oppenheimer
from time to time holds an inventory of securities, more typically, it seeks
to match customer buy and sell orders. In addition, Oppenheimer and OAM hold
proprietary positions in equity or fixed income securities in which it may not
act as a dealer.
The Company, through its subsidiaries, holds investments as general partner
in a range of investment partnerships (hedge funds, fund of funds, private equity
partnerships and real estate partnerships) which are offered to Oppenheimer
hedge fund-qualified clients and on a limited basis to qualified clients of
other broker-dealers.
Securities Lending
In connection with both its trading and brokerage activities, Oppenheimer borrows
securities to cover short sales and to complete transactions in which customers
have failed to deliver securities by the required settlement date and lends
securities to other brokers and dealers for similar purposes. Oppenheimer earns
interest on its cash collateral provided and pays interest on the cash collateral
received less a rebate earned for lending securities.