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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended June 30, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period from  to
 Commission File Number: 001-33217
 GLG PARTNERS, INC.
  Delaware
    
    20-5009693(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 399 Park Avenue, 38th Floor
New York, New York 10022
 (212) 224-7200
 þ o
 o o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### Table of Contents



FORWARD-LOOKING STATEMENTS
   
    
    the volatility in the financial markets;
    
    our financial performance;
    
    market conditions for the investment funds we manage, which we refer to as the GLG
Funds;
    
    performance of GLG Funds, the related performance fees and the associated impacts on
revenues, net income, cash flows and fund inflows and outflows;
    
    the impact of net inflows on our mix of assets under management and the associated
impacts on revenues;
    
    the cost of retaining our key investment and other personnel or the loss of such key
personnel;
    
    risks associated with the expansion of our business in size and geographically;
    
    operational risk, including counterparty risk;
    
    litigation and regulatory enforcement risks, including the diversion of management time
and attention and the additional costs and demands on our resources; and
    
    risks associated with the use of leverage, investment in derivatives, availability of
credit, interest rates and currency fluctuations,
  i




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##### 



GLG PARTNERS, INC.
INDEX
 PAGEPART I. FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (unaudited):Unaudited Condensed Consolidated Balance Sheets  June 30, 2009
and December 31, 2008
    
    1Unaudited Condensed Consolidated Statements of Operations  Six
Months Ended June 30, 2009 and June 30, 2008
    
    2Unaudited Condensed Consolidated Statements of Changes in
Stockholders Deficit  Six Months Ended June 30, 2009
    
       3Unaudited Condensed Consolidated Statements of Cash Flows  Six
Months Ended June 30, 2009 and June 30, 2008
    
        4Notes to the Unaudited Condensed Consolidated Financial Statements
    
       5Item 2.
    
    Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
       28Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
        58Item 4.
    
    Controls and Procedures
    
       59PART II. OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
       61Item 1A.
    
    Risk Factors
    
       61Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
          86Item 4
    
    Submission of Matters to a Vote of Security Holders
    
       87Item 6.
    
    Exhibits
    
          88Signature
    
       89EX-31.1EX-31.2EX-31.3EX-32.1EX-32.2EX-32.3
  ii




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GLG PARTNERS, INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS  (US Dollars in thousands, except per share amounts)
 June 30,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent AssetsCash and cash equivalents
    
    $
    258,289
    
    
    $
    316,195Restricted cash
    
    
    13,376
    
    
    
    13,315Fees receivable
    
    
    74,896
    
    
    
    42,106Prepaid expenses and other assets
    
    
    59,605
    
    
    
    32,751Total Current Assets
    
    
    406,166
    
    
    
    404,367Non-Current AssetsInvestments at fair value
    
    
    32,773
    
    
    
    65,484Goodwill
    
    
    587
    
    
    
    587Intangible assets (net of amortization of $833 and $0, respectively)
    
    
    32,505
    
    
    
    Property and equipment (net of accumulated depreciation and amortization of $13,607 and
$11,505 respectively)
    
    
    13,232
    
    
    
    14,076Other non-current assets
    
    
    9,466
    
    
    
    3,868Total Non-Current Assets
    
    
    88,563
    
    
    
    84,015Total Assets
    
    $
    494,729
    
    
    $
    488,382LIABILITIES AND STOCKHOLDERS DEFICITCurrent LiabilitiesRebates and sub-administration fees payable
    
    $
    27,215
    
    
    $
    26,234Accrued compensation, benefits and profit share
    
    
    71,309
    
    
    
    148,531Income taxes payable
    
    
    19,027
    
    
    
    15,633Distributions payable
    
    
    6,624
    
    
    
    7,592Accounts payable and other accruals
    
    
    66,229
    
    
    
    47,176Revolving credit facility
    
    
    12,281
    
    
    
    40,000Other liabilities
    
    
    36,920
    
    
    
    50,765Total Current Liabilities
    
    
    239,605
    
    
    
    335,931Non-Current LiabilitiesLoan payable (including unamortized gain on modification of $24,920 and $0, respectively)
    
    
    298,139
    
    
    
    530,000Convertible notes
    
    
    228,500
    
    
    
    Total Non-Current Liabilities
    
    
    526,639
    
    
    
    530,000Total Liabilities
    
    
    766,244
    
    
    
    865,931Stockholders Deficit:Common stock, $.0001 par value per share; 1,000,000,000 authorized, 2009: 250,254,800
issued and outstanding (2008: 245,784,390 issued and outstanding)
    
    
    24
    
    
    
    24Series A voting preferred stock, $.0001 par value per share; 150,000,000 authorized, 2009:
58,904,993 issued and outstanding (2008: 58,904,993 issued and outstanding)
        
    
    6
    
    
    
    6Additional paid in capital
    
    
    1,384,396
    
    
    
    1,176,054Treasury stock, 2009: 21,418,568 shares of common stock (2008: 21,418,568)
    
    
    (293,434
    )
    
    
    (293,434
    )Accumulated other comprehensive income
    
    
    7,285
    
    
    
    (17,141
    )Accumulated deficit
    
    
    (1,387,693
    )
    
    
    (1,243,058
    )Total Controlling Stockholders Deficit
    
    
    (289,416
    )
    
    
    (377,549
    )Non-controlling interest
    
    
    17,901
    
    
    
    Total Stockholders Deficit
    
    $
    (271,515
    )
    
    $
    (377,549
    )Total Liabilities and Stockholders Deficit
    
    $
    494,729
    
    
    $
    488,382
  1




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GLG PARTNERS, INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED  STATEMENTS OF OPERATIONS  (US Dollars in thousands, except per share amounts)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net revenues and other incomeManagement fees, net
    
    $
    36,031
    
    
    $
    90,600
    
    
    $
    70,458
    
    
    $
    189,356Performance fees, net
    
    
    37,942
    
    
    
    78,194
    
    
    
    48,759
    
    
    
    82,929Administration, service, and distribution fees, net
    
    
    5,937
    
    
    
    20,449
    
    
    
    11,410
    
    
    
    42,697Other
    
    
    6,232
    
    
    
    (433
    )
    
    
    7,229
    
    
    
    5,208Total net revenues and other income
    
    
    86,142
    
    
    
    188,810
    
    
    
    137,856
    
    
    
    320,190ExpensesCompensation, benefits and profit share
    
    
    (171,930
    )
    
    
    (236,703
    )
    
    
    (318,586
    )
    
    
    (549,742
    )General, administrative and other
    
    
    (25,426
    )
    
    
    (30,230
    )
    
    
    (47,743
    )
    
    
    (60,533
    )Amortization of intangible assets
    
    
    (833
    )
    
    
    
    
    
    
    (833
    )
    
    
    Third party distribution, administration and service
fees
    
    
    (665
    )
    
    
    
    
    
    
    (665
    )
    
    
    Total expenses
    
    
    (198,854
    )
    
    
    (266,933
    )
    
    
    (367,827
    )
    
    
    (610,275
    )Loss from operations
    
    
    (112,712
    )
    
    
    (78,123
    )
    
    
    (229,971
    )
    
    
    (290,085
    )Realized loss on available-for-sale investments
    
    
    
    
    
    
    
    
    
    
    (21,217
    )
    
    
    Gain on debt extinguishment
    
    
    84,821
    
    
    
    
    
    
    
    84,821
    
    
    
    Gain on business combination  negative goodwill
    
    
    21,122
    
    
    
    
    
    
    
    21,122
    
    
    
    Interest income
    
    
    291
    
    
    
    1,555
    
    
    
    649
    
    
    
    4,641Interest expense
    
    
    (3,619
    )
    
    
    (5,637
    )
    
    
    (6,567
    )
    
    
    (12,766
    )Loss before income taxes
    
    
    (10,097
    )
    
    
    (82,205
    )
    
    
    (151,163
    )
    
    
    (298,210
    )Income taxes
    
    
    (1,934
    )
    
    
    (3,296
    )
    
    
    (2,552
    )
    
    
    (9,496
    )Net loss
    
    
    (12,031
    )
    
    
    (85,501
    )
    
    
    (153,715
    )
    
    
    (307,706
    )Less non-controlling interests:Share of (income)/loss
    
    
    (1,794
    )
    
    
    
    
    
    
    20,227
    
    
    
    Cumulative dividends on exchangeable shares
    
    
    (10,552
    )
    
    
    (5,169
    )
    
    
    (11,147
    )
    
    
    (9,298
    )Exchangeable shares dividend
    
    
    
    
    
    
    (2,945
    )
    
    
    
    
    
    
    (2,945
    )Net loss attributable to common stockholders
    
    
    (24,377
    )
    
    
    (93,615
    )
    
    $
    (144,635
    )
    
    $
    (319,949
    )Net loss per share  basic and diluted
    
    $
    (0.11
    )
    
    $
    (0.44
    )
    
    $
    (0.67
    )
    
    $
    (1.51
    )Weighted average common stock outstanding  basic
and diluted (in thousands)
    
    
    216,814
    
    
    
    211,454
    
    
    
    216,789
    
    
    
    211,327
  2




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GLG PARTNERS, INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED
 STATEMENTS OF CHANGES IN STOCKHOLDERS DEFICIT  (US Dollars in thousands)
 Additional
    
    
    
    
    
    
    Accumulated OtherCommon
    
    
    Paid in
    
    
    Preferred
    
    
    Comprehensive
    
    
    Accumulated
    
    
    Non-controlling
    
    
    Total shareholdersTreasury Stock
    
    
    Stock
    
    
    Capital
    
    
    Stock
    
    
    Income/(Deficit)
    
    
    Income/(Deficit)
    
    
    Interest
    
    
    Equity/(Deficit)Balance as of December 31, 2008
    
    $
    (293,434
    )
    
    $
    24
    
    
    $
    1,176,054
    
    
    $
    6
    
    
    $
    (17,141
    )
    
    $
    (1,241,758
    )
    
    $
    
    
    
    $
    (376,249
    )Effect of adoption of FAS 141R (note 2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,300
    )
    
    
    
    
    
    
    (1,300
    )Balance as of December 31, 2008 restated
    
    $
    (293,434
    )
    
    $
    24
    
    
    $
    1,176,054
    
    
    $
    6
    
    
    $
    (17,141
    )
    
    $
    (1,243,058
    )
    
    $
    
    
    
    $
    (377,549
    )Comprehensive lossNet loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (144,635
    )
    
    
    (20,227
    )
    
    
    (164,862
    )Unrealized gains on cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,928
    
    
    
    
    
    
    
    461
    
    
    
    2,389Unrealized
gain on
available-for-sale investments (nil
tax applicable)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    668
    
    
    
    
    
    
    
    
    
    
    
    668Transfer to realized loss on
available-for-sale investments on
disposal (nil tax applicable)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,345
    
    
    
    
    
    
    
    
    
    
    
    10,345Transfer to realized loss on
available-for-sale investments on
other than temporary impairment
(nil tax applicable)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,872
    
    
    
    
    
    
    
    
    
    
    
    10,872Foreign currency translation (nil
tax applicable)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    613
    
    
    
    
    
    
    
    146
    
    
    
    759Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,426
    
    
    
    (144,635
    )
    
    
    (19,620
    )
    
    
    (139,829
    )Share based compensation
    
    
    
    
    
    
    
    
    
    
    208,802
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,521
    
    
    
    246,323Capital contributions
    
    
    
    
    
    
    
    
    
    
    (136
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (136
    )Issue of new shares
    
    
    
    
    
    
    
    
    
    
    64,220
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,220Shares repurchased
    
    
    
    
    
    
    
    
    
    
    (64,544
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (64,544
    )Balance as of June 30, 2009
    
    $
    (293,434
    )
    
    $
    24
    
    
    $
    1,384,396
    
    
    $
    6
    
    
    $
    7,285
    
    
    $
    (1,387,693
    )
    
    $
    17,901
    
    
    $
    (271,515
    )
  3




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GLG PARTNERS, INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED
 STATEMENTS OF CASH FLOWS
 (US Dollars in thousands)
 Six Months Ended June 30,2009
    
    
    2008Cash Flows From Operating ActivitiesNet loss
    
    $
    (153,715
    )
    
    $
    (307,706
    )Adjustments to reconcile net loss to net cash (used
in)/provided by operating activities:Gain on
business combination  negative goodwill
    
    
    (21,122
    )
    
    
    Gain on debt extinguishment
    
    
    (84,821
    )
    
    
    Depreciation and amortization
    
    
    2,579
    
    
    
    1,215Share based compensation
    
    
    246,323
    
    
    
    389,946Cumulative dividend
    
    
    (11,147
    )
    
    
    (9,298
    )Foreign exchange movements on foreign currency bank accounts
    
    
    (4,362
    )
    
    
    (1,325
    )Realized loss on available-for-sale investments
    
    
    21,217
    
    
    
    Cash flows (net of assets and liabilities acquired in SGAM UK
acquisition) due to changes in:Fees receivable
    
    
    (25,542
    )
    
    
    260,719Prepaid expenses and other assets
    
    
    (19,293
    )
    
    
    (1,981
    )Rebates and sub-administration fees payable
    
    
    (739
    )
    
    
    2,732Accrued compensation, benefits and profit share
    
    
    (16,440
    )
    
    
    (299,254
    )Income taxes payable
    
    
    3,478
    
    
    
    (12,963
    )Distributions payable
    
    
    (968
    )
    
    
    9,344Accounts payable and other accruals
    
    
    (4,468
    )
    
    
    1,798Other liabilities
    
    
    (19,990
    )
    
    
    9,985Net cash (used in)/ provided by operating activities
    
    
    (89,010
    )
    
    
    43,212Cash Flows From Investing ActivitiesRedemption of available-for-sale securities
    
    
    35,748
    
    
    
    Purchase of subsidiary
    
    
    
    
    
    
    (2,500
    )Cash acquired (net of purchase consideration) of subsidiary
    
    
    7,337
    
    
    
    Transfer to restricted cash
    
    
    (61
    )
    
    
    (165
    )Purchase of property and equipment
    
    
    (971
    )
    
    
    (4,009
    )Net cash provided by/(used in) investing activities
    
    
    42,053
    
    
    
    (6,674
    )Cash Flows From Financing ActivitiesIssue of convertible notes
    
    
    228,500
    
    
    
    Loan repayment
    
    
    (170,700
    )
    
    
    (35,000
    )Debt issue costs
    
    
    (11,225
    )
    
    
    Warrant exercises
    
    
    
    
    
    
    2,568Warrant repurchases
    
    
    
    
    
    
    (37,582
    )Share repurchases
    
    
    (64,544
    )
    
    
    (3,987
    )Capital contributions
    
    
    (136
    )
    
    
    93Dividends paid
    
    
    
    
    
    
    (7,532
    )Acquisition-related transaction costs
    
    
    
    
    
    
    (308
    )Distributions to principals and trustees
    
    
    
    
    
    
    (100,000
    )Net cash used in financing activities
    
    
    (18,105
    )
    
    
    (181,748
    )Net decrease in cash and cash equivalents
    
    
    (65,062
    )
    
    
    (145,210
    )Effect of foreign currency translation on cash
    
    
    7,156
    
    
    
    1,237Cash and cash equivalents at beginning of period
    
    
    316,195
    
    
    
    429,422Cash and cash equivalents at end of period
    
    $
    258,289
    
    
    $
    285,449
  4




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GLG PARTNERS, INC. AND SUBSIDIARIES
 
 NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(US Dollars in thousands, except per share amounts)
 1. ORGANIZATION AND BASIS OF PRESENTATION
      5




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(US Dollars in thousands, except per share amounts) (contd)
 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Change in Accounting Policy
 Business
Combinations
  December 31,
    
    
    December 31,2008
    
    
    2008
    
    
    ChangeAdjusted(1)
    
    
    As filedBalance sheetAssets:Prepaid expenses and other assets
    
    $
    32,751
    
    
    $
    34,051
    
    
    $
    (1,300
    )Stockholders Deficit:Accumulated deficit
    
    $
    (1,243,058
    )
    
    $
    (1,241,758
    )
    
    $
    1,300Statement of OperationsConsolidated net loss
    
    $
    (630,997
    )
    
    $
    (629,697
    )
    
    $
    1,300
 
 (1)
    
    The December 31, 2008 amounts were adjusted for comparability purposes to adjust for
acquisition costs related to the acquisition of SGAM UK which was agreed to in December 2008 and
completed in April 2009. Certain acquisition related costs were incurred in 2008. Principles of
Consolidation
  Determining Whether a
General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar
Entity When the Limited Partners Have Certain Rights
 Consolidation of Variable Interest Entities
 6




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(US Dollars in thousands, except per share amounts) (contd)
 Non-controlling Interests in Consolidated Subsidiaries
 FA Sub 2 Limited Exchangeable Shares
    Non-controlling Interests
in Consolidated Financial Statements  an amendment of ARB No. 51
 Use of Estimates
  Revenue Recognition
  Accounting for Management Fees Based on a Formula
  7




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(US Dollars in thousands, except per share amounts) (contd)
     
    
    management fees are charged at the investee fund level, except in the case of (1) an
investment by the GLG Emerging Markets Fund in the GLG Emerging Markets (Special Assets)
Fund where management fees are charged only at the investing fund level, (2) the GLG Multi
Strategy Fund where fees are charged at both the investee and investing fund levels and
(3) The GLG Balanced Managed Fund and the GLG Stockmarket Managed Fund where fees are
charged only at the investor level;
    
    performance fees are charged at the investee fund level, except in the case of (1) an
investment by the GLG Emerging Markets Fund in the GLG Emerging Markets (Special Assets)
Fund where performance fees are charged only at the investing fund level and (2) the GLG
Global Aggressive Fund where fees are charged at both the investee and investing fund
levels, to the extent, if any, that the performance fee charged at the investing fund is
greater than the performance fee charged at the investee fund level; and
    
    administration fees, where applicable, are charged at both the investing and investee
fund levels.
  Third Party Distribution, Administration and Service Fees
  8




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(US Dollars in thousands, except per share amounts) (contd)
 Compensation, Benefits and Profit Share
  a) Employee Compensation and Benefits
  
    
    Base compensation  contractual compensation paid to employees in the form of base
salary, which is expensed as incurred.
    
    Variable compensation  payments that arise from the contractual entitlements of
personnel to a fixed percentage of certain variable fee revenues attributable to such
personnel with respect to GLG Funds and managed accounts. The liability for variable
compensation is a formulaic obligation calculated by reference to and payable following
the crystallization of fee revenues at the end of each fee period, which may be monthly,
quarterly, annually or semi-annually (on June 30 and December 31), depending on the fee
revenue source.
    
    Discretionary compensation  payments that are determined by the Companys management
in its sole discretion and are generally linked to performance. In determining such
payments, the Companys management considers, among other factors, the ratio of total
discretionary compensation to total revenues; however, this ratio may vary between periods
and, in particular, significant discretionary bonuses may still be paid in a period of low
performance for retention and incentivization purposes. This discretionary compensation is
paid to employees in the form of a discretionary bonus. Discretionary compensation is
generally declared and paid following the end of each calendar year. However, the
estimated discretionary compensation liability charge is adjusted as necessary based on
the year-to-date profitability and revenues recognized on a year-to-date basis. As the
majority of funds crystallize their performance fees at June 30 and December 31, the
majority of discretionary compensation expense crystallizes at year end and is typically
paid in January and February following year end
 b) Limited Partner Profit Share
   9




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##### Table of Contents



GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(US Dollars in thousands, except per share amounts) (contd)
  c) Equity-Based Compensation
 Share-Based Payment
  Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or In
Conjunction with Selling, Goods or Services
    
    
    that the individuals do not meet the definition of employee as described in Appendix E
of SFAS 123(R) and, therefore, the awards must be accounted for under the provisions of
EITF 96-18.
    
    that the individuals are treated for UK tax purposes as being self-employed rather than
employees under the applicable UK standard, which is substantially equivalent to IRS
Revenue Ruling 87-41, and consequently the partners have been determined to be
non-employees for the purposes of SFAS 123(R).
 10




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(US Dollars in thousands, except per share amounts) (contd)
  Derivatives and Hedging
 Accounting for Derivative Instruments and Hedging Activities
  
 Investments
 Accounting for Certain Investments in Debt and Equity Securities
   11




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(US Dollars in thousands, except per share amounts) (contd)
     Net Loss per share of Common Stock
 Earnings Per Share
 Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating
Securities , Participating Securities and the Two-Class Method under FASB
Statement No. 128
 12




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
 (US Dollars in thousands, except per share amounts) (contd)
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008Net loss applicable to common stockholders
    
    $
    (24,377
    )
    
    $
    (93,615
    )
    
    $
    (144,635
    )
    
    $
    (319,949
    )Weighted-average common stock outstanding (in
thousands)  basic and diluted
    
    
    216,814
    
    
    
    211,454
    
    
    
    216,789
    
    
    
    211,327Net loss per share applicable to common
stockholders  basic and diluted
    
    $
    (0.11
    )
    
    $
    (0.44
    )
    
    $
    (0.67
    )
    
    $
    (1.51
    )
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008Common stock held in Treasury
    
    
    21,419
    
    
    
    25,382
    
    
    
    21,419
    
    
    
    25,382FA Sub 2 Limited Exchangeable Shares
    
    
    58,905
    
    
    
    58,905
    
    
    
    58,905
    
    
    
    58,905Convertible Notes
    
    
    61,424
    
    
    
    
    
    
    
    61,424
    
    
    
    Common stock awarded in connection
with share-based compensation
arrangements
    
    
    11,993
    
    
    
    8,882
    
    
    
    11,993
    
    
    
    8,882Public warrants
    
    
    32,985
    
    
    
    32,985
    
    
    
    32,985
    
    
    
    32,985Co-investment warrants
    
    
    5,000
    
    
    
    5,000
    
    
    
    5,000
    
    
    
    5,000Sponsors warrants
    
    
    4,500
    
    
    
    4,500
    
    
    
    4,500
    
    
    
    4,500196,226
    
    
    
    135,654
    
    
    
    196,226
    
    
    
    135,654
  Recent Accounting Pronouncements
  13




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GLG
PARTNERS, INC. AND SUBSIDIARIESNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(US Dollars in thousands, except per share amounts) (contd)
  Business Combinations
 Fair Value Measurements Accounting for Leases Determining Fair Value in a Market That Is Not Active Determining Fair Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly
 Disclosures about Derivative Instruments and
Hedging Activities an amendment of FASB Statement No. 133
 14




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(US Dollars in thousands, except per share amounts) (contd)
 Earnings per Share.
 Disclosures by Public
Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest
Entities,
 Determination of the Useful Life of Intangible Assets Goodwill and Other Intangible Assets
 Amendments to the Impairment Guidance of
EITF Issue No. 99-20 Recognition and
Presentation of Other-Than-Temporary Impairments, Accounting for Certain Investments in Debt and Equity Securities.
 Disclosures about Fair Value of Financial Instruments Interim Financial Reporting
 Subsequent Events
 15




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(US Dollars in thousands, except per share amounts) (contd)
 Accounting for Transfers of Financial Assets Accounting for Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities
 Amendments to FASB Interpretation No. 46(R)
 The FASB Accounting Standards Codification and
the Hierarchy of Generally Accepted Accounting Principles
 3. COMMITMENTS AND CONTINGENCIES
  
  16




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(US Dollars in thousands, except per share amounts) (contd)
 Indemnifications
  4. FAIR VALUE OF FINANCIAL INSTRUMENTS
  
    
    Level 1: Inputs to the valuation methodology are quoted prices, unadjusted, for
identical assets or liabilities in active markets. A quoted price in an active market
provides the most reliable evidence of fair value and shall be used to measure fair value
whenever available.
    
    Level 2: Inputs to the valuation methodology include quoted prices for similar assets
or liabilities in active markets; inputs to the valuation methodology include quoted
prices for identical or similar assets or liabilities in markets that are not active; or
inputs to the valuation methodology that are derived principally from or can be
corroborated by observable market data by correlation or other means.
    
    Level 3: Inputs to the valuation methodology are unobservable and significant to the
fair value measurement. Level 3 assets and liabilities include financial instruments whose
value is determined using discounted cash flow methodologies, as well as instruments for
which the determination of fair value requires significant management judgment or
estimation.
 a) Assets and Liabilities measured at fair value on a recurring basis:
 June 30, 2009
    
    
    December 31, 2008Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Foreign exchange derivatives
(presented in other assets)
    
    $
    
    
    
    $
    3,342
    
    
    $
    
    
    
    $
    
    
    
    $
    42
    
    
    $
    Available-for-sale investments
    
    
    
    
    
    
    
    
    
    
    32,773
    
    
    
    
    
    
    
    
    
    
    
    65,484Foreign exchange derivatives
(presented in other liabilities)
    
    
    
    
    
    
    (485
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    2,857
    
    
    $
    32,773
    
    
    $
    
    
    
    $
    42
    
    
    $
    65,484
 Foreign exchange derivatives
 17




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(US Dollars in thousands, except per share amounts) (contd)
 Availablefor-sale investments
   Fair Value MeasurementsQuoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantIdentical Assets
    
    
    Observable Inputs
    
    
    Unobservable Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Movements in Level 3 assets for the six-month
period were as follows:Available-for-sale investmentsOpening Balance January 1, 2009
    
    
    
    
    
    
    
    
    
    $
    65,484Change in fair value recorded in
other income
    
    
    
    
    
    
    
    
    
    
    (6
    )Change in fair value recorded in
other comprehensive income  currency
translation adjustment
    
    
    
    
    
    
    
    
    
    
    359Change in unrealized losses recorded
in other comprehensive income
    
    
    
    
    
    
    
    
    
    
    668Investments acquired in business
combination
    
    
    
    
    
    
    
    
    
    
    2,016Redemption proceeds
    
    
    
    
    
    
    
    
    
    
    (35,748
    )Closing Balance June 30, 2009
    
    
    
    
    
    
    
    
    
    $
    32,773Total
unrealized gains in investments
    
    
    
    
    
    
    
    
    
    $
    668
  18




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(US Dollars in thousands, except per share amounts) (contd)
 b) Fair value measurements of Other financial instruments recorded at other than fair value:
 Loan payable
  Convertible notes
  c) Fair value measurements of Other assets and liabilities recorded at other than fair value:
  5. DERIVATIVES AND HEDGING
 Accounting for Derivative Instruments and Hedging Activities
  19




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(US Dollars in thousands, except per share amounts) (contd)
  Three months ended
    
    
    Six months endedJune 30, 2009
    
    
    June 30, 2009Total Fair Value of Derivative Financial Instruments (included in Other Assets)
    
    $
    3,342
    
    
    $
    3,342Total Fair Value of Derivative Financial Instruments (included in Other Liabilities)
    
    
    (485
    )
    
    
    (485
    )Total Fair Value of Derivative Financial Instruments at June 30, 2009
(all designated in a cash flow hedge)
    
    $
    2,857
    
    
    $
    2,857Less: Fair value of Derivative Financial Instruments at start of period
    
    
    (718
    )
    
    
    (42
    )Movement in Fair Value of Derivative Financial Instruments during the period
    
    $
    2,139
    
    
    $
    2,815Changes in Fair Values are allocated as follows:Statement of Changes in Equity:Gain
recorded in other comprehensive income in period  cash flow hedges
    
    $
    2,978
    
    
    $
    3,885Gain reclassified from other comprehensive income to income
    
    
    (1,071
    )
    
    
    (1,496
    )Total gain in Other Comprehensive Income
    
    $
    1,907
    
    
    $
    2,389Statement of Operations:Decrease in General, Administrative & Other expenses  effective portion of hedge
reclassified from other comprehensive income
    
    $
    661
    
    
    $
    795Decrease in Compensation, benefits and profit share  effective portion of hedge
reclassified from other comprehensive income
    
    
    652
    
    
    
    749Decrease in Management Fees  effective portion of hedge reclassified from other
comprehensive income
    
    
    (242
    )
    
    
    (48
    )Decrease in Other income (ineffective portion of hedge and excluded from
effectiveness assessment)
    
    
    (839
    )
    
    
    (1,070
    )Total impact on Statement of Operations
    
    $
    232
    
    
    $
    426Total impact on Comprehensive Income
    
    $
    2,139
    
    
    $
    2,815
 20




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(US Dollars in thousands, except per share amounts) (contd)
 6. CONCENTRATION OF CREDIT RISK
  7. STOCKHOLDERS DEFICIT
  Number of SharesCommon stock outstanding at December 31, 2008
    
    
    245,784,390Shares issued as compensation
    
    
    28,290,535Shares repurchased
    
    
    (28,386,091
    )Shares issued under share plan awards
    
    
    5,195,216Stock forfeited and cancelled under share-based compensation arrangements
    
    
    (629,250
    )250,254,800Common Stock outstanding at June 30, 2009
  8. INCOME TAXES
   21




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(US Dollars in thousands, except per share amounts) (contd)
 9. COMPREHENSIVE INCOME
 Six months ending June 30,2009
    
    
    2008Attributed to
    
    
    Attributed to
    
    
    
    
    
    
    Attributed tocontrolling
    
    
    non-controlling
    
    
    Total
    
    
    controllingNet Loss
    
    $
    (144,635
    )
    
    $
    (20,227
    )
    
    $
    (164,862
    )
    
    $
    (319,949
    )Gains on cash flow hedges
released to statement of
operations
    
    
    (1,207
    )
    
    
    (289
    )
    
    
    (1,496
    )
    
    
    Unrealized gains on cash
flow hedges
    
    
    3,135
    
    
    
    750
    
    
    
    3,885
    
    
    
    (794
    )Change in unrealized gains
on available-for-sale
investments
    
    
    668
    
    
    
    
    
    
    
    668
    
    
    
    (3,944
    )Release of
unrealized loss on available-for-sale investments
to statement of operations
    
    
    21,217
    
    
    
    
    
    
    
    21,217
    
    
    
    Foreign currency translation
    
    
    613
    
    
    
    146
    
    
    
    759
    
    
    
    (134
    )Total comprehensive loss
    
    $
    (120,209
    )
    
    $
    (19,620
    )
    
    $
    (139,829
    )
    
    $
    (324,821
    )
 Three months ending June 30,2009
    
    
    2008Attributed to
    
    
    Attributed to
    
    
    
    
    
    
    Attributed tocontrolling
    
    
    non-controlling
    
    
    Total
    
    
    controllingNet Loss
    
    $
    (24,377
    )
    
    $
    1,794
    
    
    $
    (22,583
    )
    
    $
    (93,615
    )Gains
on cash flow hedges released to
statement of operations
    
    
    (864
    )
    
    
    (207
    )
    
    
    (1,071
    )
    
    
    Unrealized gains on cash flow
hedges
    
    
    2,403
    
    
    
    575
    
    
    
    2,978
    
    
    
    (794
    )Change in unrealized gains on
available-for-sale investments
    
    
    1,091
    
    
    
    
    
    
    
    1,091
    
    
    
    4Foreign currency translation
    
    
    704
    
    
    
    168
    
    
    
    872
    
    
    
    278Total comprehensive income/(loss)
    
    $
    (21,043
    )
    
    $
    2,330
    
    
    $
    (18,713
    )
    
    $
    (94,127
    )
 22




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(US Dollars in thousands, except per share amounts) (contd)
 10. PROFORMA STATEMENT OF OPERATIONS  IMPACT OF ADOPTION OF SFAS 160
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net revenues and other incomeManagement fees, net
    
    $
    36,031
    
    
    $
    90,600
    
    
    $
    70,458
    
    
    $
    189,356Performance fees, net
    
    
    37,942
    
    
    
    78,194
    
    
    
    48,759
    
    
    
    82,929Administration, service and distribution, net
    
    
    5,937
    
    
    
    20,449
    
    
    
    11,410
    
    
    
    42,697Other
    
    
    6,232
    
    
    
    (433
    )
    
    
    7,229
    
    
    
    5,208Total net revenues and other income
    
    
    86,142
    
    
    
    188,810
    
    
    
    137,856
    
    
    
    320,190ExpensesCompensation, benefits and profit share
    
    
    (171,930
    )
    
    
    (236,703
    )
    
    
    (318,586
    )
    
    
    (549,742
    )General, administrative and other
    
    
    (25,426
    )
    
    
    (30,230
    )
    
    
    (47,743
    )
    
    
    (60,533
    )Amortization of intangible assets
    
    
    (833
    )
    
    
    
    
    
    
    (833
    )
    
    
    Third party distribution, administration and
service fees
    
    
    (665
    )
    
    
    
    
    
    
    (665
    )
    
    
    Total expenses
    
    
    (198,854
    )
    
    
    (266,933
    )
    
    
    (367,827
    )
    
    
    (610,275
    )Loss from operations
    
    
    (112,712
    )
    
    
    (78,123
    )
    
    
    (229,971
    )
    
    
    (290,085
    )Realized loss on available-for-sale investments
    
    
    
    
    
    
    
    
    
    
    (21,217
    )
    
    
    Gain on debt extinguishment
    
    
    84,821
    
    
    
    
    
    
    
    84,821
    
    
    
    Gain on business combination  negative goodwill
    
    
    21,122
    
    
    
    
    
    
    
    21,122
    
    
    
    Interest income
    
    
    291
    
    
    
    1,555
    
    
    
    649
    
    
    
    4,641Interest expense
    
    
    (3,619
    )
    
    
    (5,637
    )
    
    
    (6,567
    )
    
    
    (12,766
    )Loss before income taxes
    
    
    (10,097
    )
    
    
    (82,205
    )
    
    
    (151,163
    )
    
    
    (298,210
    )Income taxes
    
    
    (1,934
    )
    
    
    (3,296
    )
    
    
    (2,552
    )
    
    
    (9,496
    )Consolidated net loss
    
    
    (12,031
    )
    
    
    (85,501
    )
    
    
    (153,715
    )
    
    
    (307,706
    )Less non-controlling interests:Cumulative dividends on exchangeable shares
    
    
    (10,552
    )
    
    
    (5,169
    )
    
    
    (11,147
    )
    
    
    (9,298
    )Exchangeable shares dividend
    
    
    
    
    
    
    (2,945
    )
    
    
    
    
    
    
    (2,945
    )Net loss attributable to common stockholders
    
    $
    (22,583
    )
    
    $
    (93,615
    )
    
    $
    (164,862
    )
    
    $
    (319,949
    )Net loss per share  basic and diluted
    
    $
    (0.10
    )
    
    $
    (0.44
    )
    
    $
    (0.76
    )
    
    $
    (1.51
    )Weighted average common stock outstanding  basic
and diluted (in thousands)
    
    
    216,814
    
    
    
    211,454
    
    
    
    216,789
    
    
    
    211,327
 23




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(US Dollars in thousands, except per share amounts) (contd)
 11. DEBT
 Average interest
    
    
    June 30,
    
    
    December 31,rate
    
    
    2009
    
    
    2008Revolving credit facility
    
    
    2.07
    %
    
    $
    12,281
    
    
    $
    40,000Term loans
    
    
    2.07
    %
    
    
    298,139
    
    
    
    530,000Convertible Note
    
    
    5
    %
    
    
    228,500
    
    
    
    Total Debt
    
    
    
    
    
    $
    538,920
    
    
    $
    570,000
 Restructuring of debt
    Amendment of the credit agreement
  Issuance of Convertible Notes
   24




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(US Dollars in thousands, except per share amounts) (contd)
         25




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(US Dollars in thousands, except per share amounts) (contd)
 12. BUSINESS COMBINATION
  The purchase price allocations were:
 Intangible
asset  customer-related management contracts (10
year life)1
    
    $
    33,338Cash
    
    
    13,787Investments
    
    
    2,016Fixed assets
    
    
    164Deferred tax liability
    
    
    (9,334
    )Other net liabilities
    
    
    (12,399
    )Fair Value of Net Assets acquired
    
    $
    27,572
    
 1
    
    Management consider the management contracts to have an
expected average useful life of 10 years and consequently the contracts will be
amortized on a straight line basis over the remaining average useful life. The expected amortization amount for the year ending December 31, 2009
is $2,499 and $3,334 for each of the years ending December 31, 2010, 2011, 2012
and 2013, respectively. 26




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(US Dollars in thousands, except per share amounts) (contd)
 13. SUBSEQUENT EVENTS
  27




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  General
 Our Business
      
    
    $976,107,300 in cash;
    
    $23,892,700 in promissory notes in lieu of all of the cash consideration payable to
electing GLG Shareowners;
    
    230,000,000 shares of our common stock, par value $0.0001 per share which consists of:
 28




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##### Table of Contents




    
    138,095,007 shares of our common stock, including 10,000,000 shares of our
common stock issued for the benefit of our employees, service providers and certain
key personnel under our 2007 Restricted Stock Plan (the Restricted Stock Plan);
    
    33,000,000 shares of our common stock payable by us upon exercise of certain put
or call rights with respect to 33,000,000 ordinary shares issued by FA Sub 1
Limited to certain GLG Shareowners. Each of the ordinary shares issued by FA Sub 1
Limited to these GLG Shareowners has been put by the holder to us in exchange for
one share of our common stock; and
    
    58,904,993 shares of our common stock to be issued upon the exchange of
58,904,993 Exchangeable Shares (the Exchangeable Shares) issued by FA Sub 2
Limited to certain GLG Shareowners. Each Exchangeable Share is exchangeable at any
time at the election of the holder for one share of our common stock; and
 
    
    58,904,993 shares of our Series A preferred stock, par value $0.0001 per share issued
with the corresponding Exchangeable Shares which carry only voting rights and nominal
economic rights and which will automatically be redeemed on a share-for-share basis as
Exchangeable Shares are exchanged for shares of our common stock.
    Factors Affecting Our Business
  
    
    Assets under management.Our revenues from management and administration fees are
directly linked to AUM. As a result, our future performance will depend on, among other
things, our ability to retain AUM, the mix of our AUM between different products and
associated fee rates and to grow AUM from existing and new products.
    
    Fund and managed account performance.Our revenues from performance fees are linked to
the performance of the GLG Funds and accounts we manage. Performance also affects AUM
because it influences investors decisions to invest assets in, or withdraw assets from,
the GLG Funds and accounts managed by us.
    
    Currency exchange rates.The GLG Funds typically offer share classes denominated in
multiple currencies and as a result, earn fees in those currencies based on the AUM
denominated in those currencies. Consequently, our fee revenues are affected by exchange
rate movements.
 29




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##### Table of Contents




    
    Personnel, systems, controls and infrastructure.We depend on our ability to attract,
retain and motivate leading investment and other professionals. Our business requires
significant investment in our fund management platform, including infrastructure and
back-office personnel. We have in the past paid, and expect to continue in the future to
pay, these professionals significant compensation, even during periods we are not
profitable, as well as a share of our profits.
    
    Fee rates.Our management and administration, service and distribution fee revenues are
linked to the fee rates we charge the GLG Funds and accounts we manage as a percentage of
their AUM. Our performance fees are linked to the rates we charge the GLG Funds and
accounts we manage as a percentage of their performance-driven asset growth, subject to
high water marks, whereby performance fees are earned by us only to the extent that the
net asset value of an investors shares in a GLG Fund or the net asset value of an account
we manage at the end of a measurement period exceeds the highest net asset value on a
preceding measurement period end for which we earned performance fees, and/or subject, in
some cases, to performance hurdles.
   Critical Accounting Policies
   Combination and Consolidation Criteria
  Determining Whether a General Partner, or the
General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited
Partners Have Certain Rights
 Consolidation of Variable Interest Entities
 Assets Under Management
  30




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##### Table of Contents



Product
    
    General Range of Redemption Request Advance Notice Periods*Single-manager alternative strategy funds
    
    5-60 daysLong-only funds
    
    1-5 daysInternal FoF
    
    1-30 daysExternal FoF
    
    45-90 days
 
 *
    
    Days are defined in the prospectus of each GLG Fund and the definition may be business days or
calendar days depending on the GLG Fund Revenue Recognition
 Performance Fees
 Accounting for Management Fees Based on a Formula
  31




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##### Table of Contents



Compensation and Limited Partner Profit Share
   Equity-Based Compensation
 i.e. Share-Based Payment Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services
  32




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##### Table of Contents




    
    The size of the awards to employees, service providers and key personnel under the
equity participation plan and 2007 LTIP was considered to be a substantial retention
incentive;
    
    Incentives for the awards to employees, service providers and key personnel under the
equity participation plan and 2007 LTIP were considered sufficiently large that a zero
percent forfeiture rate was estimated, subject to review as actual forfeitures occur;
    
    Disincentives for forfeiture related to the agreement among principals and trustees
were considered to be so punitive that the probability of forfeiture was estimated as
zero; and
    
    For awards under the Restricted Stock Plan, we used different forfeiture rates for
individual employees, service providers and key personnel.
  33




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##### Table of Contents



Income Tax
   e.g
 Accounting for Income Taxes
 Net Revenues
   Management Fees
  34




---



##### Table of Contents



Product
    
    General Range of Gross Fee Rates (% of AUM) As of June 30, 2009Single-manager alternative strategy funds*
    
    1.50%  2.50%**Long-only funds
    
    0.30%  2.25%Internal FoF
    
    0.25%  1.50%** (at the investing fund level)External FoF ***
    
    1.00%  1.95%
 
 *
    
    Excludes the GLG European Long-Short (Special Assets) Fund, the GLG Emerging Markets (Special
Assets) II Fund and the GLG North American Opportunity (Special Assets) Fund established
during November 2008 into which certain private placements and other not readily realizable
investments were contributed by the GLG European Long-Short Fund, the GLG Emerging Markets
Fund and the GLG North American Opportunity Fund, respectively, for the purpose of liquidating
them, where the management fee is 0.50%.**
    
    When one of the single-manager alternative strategy funds or internal FoFs managed by us
invests in an underlying single-manager alternative strategy fund managed by us, management
fees are charged at the investee fund level, except in the case of the GLG Multi-Strategy Fund
where fees are charged at both the investee and investing fund levels.***
    
    Excludes GLG Global Opportunity (Special Assets) Fund.   Performance Fees
  35




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##### Table of Contents



Product
    
    General Range of Gross Fee Rates (% of Investment Gains) As of June 30, 2009Single-manager alternative strategy funds
    
    10%  30%*Long-only funds
    
    0%  20% (may be subject to performance hurdle)Internal FoF
    
    0%  20%* (at the investing fund level)External FoF
    
    5%  10% (may be subject to performance hurdle)
 
 *
    
    When one of the single-manager alternative strategy funds or internal FoFs managed by us
invests in an underlying single-manager alternative strategy fund managed by us, performance
fees are charged at the investee fund level. In addition, performance fees are charged at both
the investee and investing fund levels on the GLG Global Aggressive Fund, to the extent, if
any, that the performance fee charged at the investing fund level is greater than the
performance fee charged at the investee fund level.**
    
    We have adopted Method 1 for recognizing performance fee revenues and under Method 1 we do
not recognize performance fee revenues until the end of the measurement period when the
amounts are crystallized, which for the majority of the investment funds and accounts managed
by us is on June 30 and December 31.  Administration Fees
   Fees on Managed Accounts
  36




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##### Table of Contents



Expenses
 Compensation, Benefits and Profit Share
       37




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
    
    Base compensation contractual compensation paid to employees in the form of base
salary, which is expensed as incurred.
    
    Variable compensation payments that arise from the contractual entitlements of
personnel to a fixed percentage of certain variable fee revenues attributable to such
personnel with respect to GLG Funds and managed accounts. Variable compensation expense is
recognized at the same time as the underlying fee revenue is crystallized, which may be
monthly, quarterly, annually or semi-annually (on June 30 and December 31), depending on
the fee revenue source.
    
    Discretionary compensation payments that are determined by our management in its
sole discretion and are generally linked to performance. In determining such payments, our
management considers, among other factors, the ratio of total discretionary compensation
to total revenues; however, this ratio may vary between periods and, in particular,
significant discretionary bonuses may still be paid in a period of low performance for
retention and incentivization purposes. This discretionary compensation is paid to
employees in the form of a discretionary cash bonus or share-based compensation.
Discretionary compensation is generally declared and paid following the end of each
calendar year. However, the estimated discretionary compensation charge is adjusted as
appropriate based on the year-to-date profitability and revenues recognized on a
year-to-date basis. As the majority of the GLG Funds crystallize their performance fees at
June 30 and December 31, the majority of discretionary compensation expense crystallizes
at year end and is typically paid in January and February following the year end.
    
    Limited partner profit share distributions of limited partner profit share under the
limited partner profit share arrangement described below.
    
    Post -  Acquisition LTIP post-Acquisition share based compensation awarded to employees
and limited partners under the LTIP and accounted for under SFAS 123(R) and
EITF 96-18, respectively.
 Limited Partner Profit Share
  38




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##### Table of Contents



Allocation of Profit Shares to Individual Members of LLPs
   Acquisition-Related Compensation Expense
  General and Administrative
  Assessing Business Performance
  39




---



##### Table of Contents



Non-controlling Interests in Consolidated
Financial Statements  an amendment of ARB No. 51
 Assets Under Management
  40




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##### Table of Contents



Assets Under Management
 Change in AUM between June 30, 2009, March 31, 2009, December 31, 2008 and June 30, 2008
(U.S. Dollars in millions)
 As of Jun.
    
    
    As of Mar.
    
    
    3-Month
    
    
    As of Dec.
    
    
    6-Month
    
    
    As of Jun.
    
    
    12-Month30, 2009
    
    
    31, 2009
    
    
    Change
    
    
    31, 2008
    
    
    Change
    
    
    30, 2008
    
    
    ChangeAlternative
strategies
(1)
(2)
    
    $
    10,441
    
    
    $
    9,843
    
    
    $
    598
    
    
    $
    12,518
    
    
    $
    (2,077
    )
    
    $
    22,457
    
    
    $
    (12,016
    )Long-only
(1)
(3)
    
    
    11,131
    
    
    
    5,576
    
    
    
    5,555
    
    
    
    4,026
    
    
    
    7,105
    
    
    
    5,438
    
    
    
    5,693Gross AUM
    
    $
    21,572
    
    
    $
    15,419
    
    
    $
    6,153
    
    
    $
    16,544
    
    
    $
    5,028
    
    
    $
    27,895
    
    
    $
    (6,323
    )Less: alternative
strategy
investments in GLG
Funds
    
    
    (1,456
    )
    
    
    (1,388
    )
    
    
    (68
    )
    
    
    (1,503
    )
    
    
    47
    
    
    
    (4,222
    )
    
    
    2,766Less: long only
strategy
investments in
GFLG Funds
    
    
    (1,022
    )
    
    
    
    
    
    
    (1,022
    )
    
    
    (2
    )
    
    
    (1,020
    )
    
    
    (5
    )
    
    
    (1,017
    )Net AUM
    
    $
    19,094
    
    
    $
    14,031
    
    
    $
    5,063
    
    
    $
    15,039
    
    
    $
    4,055
    
    
    $
    23,668
    
    
    $
    (4,574
    )Quarterly average
gross AUM
    
    $
    18,495
    
    
    $
    15,982
    
    
    
    
    
    
    $
    18,848
    
    
    
    
    
    
    $
    28,516Quarterly average net
AUM(4)
    
    
    18,840
    
    
    
    11,519
    
    
    
    
    
    
    
    16,160
    
    
    
    
    
    
    
    24,157Opening net AUM
    
    $
    14,031
    
    
    $
    15,039
    
    
    
    
    
    
    $
    17,280
    
    
    
    
    
    
    $
    24,646Inflows
    
    
    5,634
    
    
    
    2,175
    
    
    
    
    
    
    
    5,970
    
    
    
    
    
    
    
    2,974Outflows
    
    
    (3,408
    )
    
    
    (2,125
    )
    
    
    
    
    
    
    (5,199
    )
    
    
    
    
    
    
    (3,603
    )Inflows (net of
redemptions)
    
    
    2,226
    
    
    
    50
    
    
    
    
    
    
    
    771
    
    
    
    
    
    
    
    (629
    )Performance
(gains net of
losses and fees)
    
    
    1,797
    
    
    
    (807
    )
    
    
    
    
    
    
    (2,649
    
    
    
    
    
    
    
    (269
    )Currency translation
impact
    
    
    1,040
    
    
    
    (251
    )
    
    
    
    
    
    
    (363
    )
    
    
    
    
    
    
    (80
    )Closing net AUM
    
    $
    19,094
    
    
    $
    14,031
    
    
    
    
    
    
    $
    15,039
    
    
    
    
    
    
    $
    23,668
 
 (1)
    
    Includes investments in GLG Funds.(2)
    
    Alternative strategies includes managed accounts based on alternative strategies
and 130/30 funds(3)
    
    Long-only strategies includes managed accounts based on long-only strategies and
all SGAM UK net AUM acquired on April 3, 2009.(4)
    
    Ratios are annualized for quarterly and half year periods and average net AUM for a
given period is calculated as a 2 point (quarter open and close) average for the quarters and 3
point (first quarter open and close and second quarter close) average for the halves; ratios
calculated using Q1 2009 and Q2 2009 average net AUM exclude the approximately $3 billion mandate
with respect to the sub-advisory arrangement with SGAM UK which terminated upon the completion of
its acquisition on April 3, 2009 and ratios calculated using Q2 2009 average net AUM include net
AUM of approximately $7.0 billion acquired from SGAM UK on
April 3, 2009 as if they were acquired at the opening of Q2 2009; first half 2009 average net AUM is calculated as a 4 point average
(first and second quarter open and close) rather than a 3 point average in order to more
appropriately capture the AUM movements associated with SGAM UK between Q1 2009 and Q2 2009 in
connection with the termination of the sub-advisory agreement and the SGAM UK acquisition and
ratios calculated using first half 2009 average net AUM have been adjusted accordingly. 41




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##### Table of Contents




    
    Positive fund and managed account performance during the three months ended June 30,
2009, resulting in performance gains (net of losses and fees) of $1.8 billion,
    
    Inflows (net of redemptions) of $2.2 billion in AUM for the three months ended June 30,
2009, were driven by:
 
    
    Long-only strategy net inflows of $2.5 billion, composed of subscriptions of $5.1
billion offset by redemptions of $2.6 billion. These net inflows were the result of
the acquired AUM from the SGAM UK transaction; and
    
    Alternative strategy net outflows of $0.3 billion, composed of subscriptions of
$0.5 billion offset by redemptions of $0.8 billion.
 
    
    A weakening of the U.S. dollar against other currencies in which a portion of our funds
and managed accounts are denominated, resulting in positive foreign exchange impact on AUM
of $1.0 billion during the three months ended June 30, 2009.
      42




---



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
    
    amounts which LBIE was required to treat as client money under the rules of the U.K.
Financial Services Authority and not use in the course of its business were and are, in
fact, so held, and that any shortfall in recoveries of client monies will not exceed
reserves established to date by the GLG Funds;
    
    even though LBIE or its affiliates may be entitled to withhold assets to satisfy any
net indebtedness owed to them, there will be no material shortfall in the recovery of
assets held on trust by LBIE as a custodian, or by LBI as a sub-custodian for LBIE, or by
any other sub-custodian appointed by LBIE with regard to the assets of a GLG Fund, and, to
the extent there is a shortfall, GLG Funds will be able to effect
setoff against and to the
extent of any amount owing by a GLG Fund to LBIE;
    
    the information we have received to date from the administrators of LBIE in relation to
the re-hypothecation of GLG Fund assets by LBIE is true and accurate;
    
    unsettled transactions between GLG Funds and LBIE at the time LBIE entered into
administration proceedings will be determined on the basis of a cash settlement of those
trades, in accordance with contractual agreements between the affected GLG Fund and LBIE,
or cancelled, in each case, as determined by us;
    
    the cash settlement amounts for terminated over-the-counter derivatives and other
transactions will be as determined by us in accordance with contractual documentation;
    
    the recovery on amounts estimated to be unsecured claims against LBIE will not be
materially greater or lesser than currently estimated by the GLG Funds; and
    
    there are no other facts or factors, which if known to us, would lead us to conclude
that the business of LBIE was conducted otherwise than in accordance with the contractual
documentation or that any of our assumptions is incorrect.
 43




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44




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Results of Operations
 Condensed Consolidated GAAP Statement of Operations Information
(U.S. dollars in thousands)
 Three Months Ended June 30,
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net revenues and other incomeManagement fees, net
    
    $
    36,031
    
    
    $
    90,600
    
    
    $
    70,458
    
    
    $
    189,356Performance fees, net
    
    
    37,942
    
    
    
    78,194
    
    
    
    48,759
    
    
    
    82,929Administration, service and distribution fees, net
    
    
    5,937
    
    
    
    20,449
    
    
    
    11,410
    
    
    
    42,697Other
    
    
    6,232
    
    
    
    (433
    )
    
    
    7,229
    
    
    
    5,208Total net revenues and other income
    
    
    86,142
    
    
    
    188,810
    
    
    
    137,856
    
    
    
    320,190ExpensesCompensation, benefits and profit share
    
    
    (171,930
    )
    
    
    (236,703
    )
    
    
    (318,586
    )
    
    
    (549,742
    )General, administrative and other
    
    
    (25,426
    )
    
    
    (30,230
    )
    
    
    (47,743
    )
    
    
    (60,533
    )Amortization of intangible assets
    
    
    (833
    )
    
    
    
    
    
    
    (833
    )
    
    
    Third party
distribution, administration and service fees
    
    
    (665
    )
    
    
    
    
    
    
    (665
    )
    
    
    Total expenses
    
    
    (198,854
    )
    
    
    (266,933
    )
    
    
    (367,827
    )
    
    
    (610,275
    )Loss from operations
    
    
    (112,712
    )
    
    
    (78,123
    )
    
    
    (229,971
    )
    
    
    (290,085
    )Realized loss on available-for-sale investments
    
    
    
    
    
    
    
    
    
    
    (21,217
    )
    
    
    Gain on debt extinguishment
    
    
    84,821
    
    
    
    
    
    
    
    84,821
    
    
    
    Gain on
business combination  negative goodwill
    
    
    21,122
    
    
    
    
    
    
    
    21,122
    
    
    
    Interest income
    
    
    291
    
    
    
    1,555
    
    
    
    649
    
    
    
    4,641Interest expense
    
    
    (3,619
    )
    
    
    (5,637
    )
    
    
    (6,567
    )
    
    
    (12,766
    )Loss before income taxes
    
    
    (10,097
    )
    
    
    (82,205
    )
    
    
    (151,163
    )
    
    
    (298,210
    )Income taxes
    
    
    (1,934
    )
    
    
    (3,296
    )
    
    
    (2,552
    )
    
    
    (9,496
    )Net loss
    
    
    (12,031
    )
    
    
    (85,501
    )
    
    
    (153,715
    )
    
    
    (307,706
    )Less non-controlling interests:Share of loss
    
    
    (1,794
    )
    
    
    
    
    
    
    20,227
    
    
    
    Cumulative dividends on exchangeable shares
    
    
    (10,552
    )
    
    
    (5,169
    )
    
    
    (11,147
    )
    
    
    (9,298
    )Exchangeable shares dividend
    
    
    
    
    
    
    (2,945
    )
    
    
    
    
    
    
    (2,945
    )Net loss attributable to common stockholders
    
    $
    (24,377
    )
    
    $
    (93,615
    )
    
    $
    (144,635)
    
    
    
    $(319,949
    )
 45




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##### Table of Contents



Net Revenues and Other Income
 Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008
 Change in GAAP Net Revenues and Other Income between
Three Months Ended June 30, 2009 and June 30, 2008
(U.S. dollars in thousands)
 Three Months Ended June 30,2009
    
    
    2008
    
    
    ChangeNet revenues and other incomeManagement fees, net
    
    $
    36,031
    
    
    $
    90,600
    
    
    $
    (54,569
    )Performance fees, net
    
    
    37,942
    
    
    
    78,194
    
    
    
    (40,252
    )Administration, service and distribution fees, net
    
    
    5,937
    
    
    
    20,449
    
    
    
    (14,512
    )Other
    
    
    6,232
    
    
    
    (433
    )
    
    
    6,665Total net revenues and other income
    
    $
    86,142
    
    
    $
    188,810
    
    
    $
    (102,668
    )Key ratiosTotal net revenues and other income/average net AUM,
annualized
    
    
    1.83
    %
    
    
    3.13
    %
    
    
    (1.30
    )%Management fees/average net AUM, annualized
    
    
    0.77
    %
    
    
    1.50
    %
    
    
    (0.73
    )%Administration, service, and distribution
fees/average net AUM, annualized
    
    
    0.13
    %
    
    
    0.34
    %
    
    
    (0.21
    )%
     
    
    The generally lower levels of performance fee eligible AUM compared to June 30, 2008;
and
    
    The impact of fewer GLG Funds able to meet their respective performance hurdle rates or
high water marks since performance fees last crystallized, even if they generated positive
performance during the performance fee crystallization period.
   46




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##### Table of Contents



Six Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2008
 Change in GAAP Net Revenues and Other Income between
Six Months Ended June 30, 2009 and June 30, 2008
(U.S. dollars in thousands)
 Six Months Ended June 30,2009
    
    
    2008
    
    
    ChangeNet revenues and other incomeManagement fees, net
    
    $
    70,458
    
    
    $
    189,356
    
    
    $
    (118,898
    )Performance fees, net
    
    
    48,759
    
    
    
    82,929
    
    
    
    (34,170
    )Administration, service and distribution fees, net
    
    
    11,410
    
    
    
    42,697
    
    
    
    (31,287
    )Other
    
    
    7,229
    
    
    
    5,208
    
    
    
    2,021Total net revenues and other income
    
    $
    137,856
    
    
    $
    320,190
    
    
    $
    (182,334
    )Key ratiosTotal net revenues and other income/average net AUM, annualized
    
    
    1.82
    %
    
    
    2.63
    %
    
    
    (0.81
    )%Management fees/average net AUM, annualized
    
    
    0.93
    %
    
    
    1.56
    %
    
    
    (0.63
    )%Administration, service and distribution fees/average
net AUM, annualized
    
    
    0.15
    %
    
    
    0.35
    %
    
    
    (0.20
    )%
    
    
    The generally lower levels of performance fee eligible AUM compared to June 30, 2008;
and
    
    The impact of fewer GLG Funds able to meet their respective performance hurdle rates or
high water marks since performance fees last crystallized, even if they generated positive
performance during the performance fee crystallization period.
   47




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##### Table of Contents



Expenses
 Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008
 Change in GAAP Expenses between Three Months Ended
June 30, 2009 and June 30, 2008
(U.S. dollars in thousands)
 Three Months Ended June 30,2009
    
    
    2008
    
    
    ChangeExpensesCompensation, benefits and profit share
    
    $
    (171,930
    )
    
    $
    (236,703
    )
    
    $
    64,773General, administrative and other
    
    
    (25,426
    )
    
    
    (30,230
    )
    
    
    4,804Amortization of intangible assets
    
    
    (833
    )
    
    
    
    
    
    
    (833
    )Third party distribution, administration and service fees
    
    
    (665
    )
    
    
    
    
    
    
    (665
    )Total expenses
    
    $
    (198,854
    )
    
    $
    (266,933
    )
    
    $
    68,079Key ratiosCompensation, benefits and profit share / total GAAP net
revenues and other income
    
    
    199.6
    %
    
    
    125.4
    %
    
    
    74.2
    %General, administrative and other / total GAAP net
revenues and other income
    
    
    29.5
    %
    
    
    16.0
    %
    
    
    13.5
    %Total expenses / total GAAP net revenues and other income
    
    
    230.8
    %
    
    
    141.4
    %
    
    
    89.4
    %
  48




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Six Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2008
 Change in GAAP Expenses between Six Months Ended
June 30, 2009 and June 30, 2008
(U.S. dollars in thousands)
 Six Months Ended June 30,2009
    
    
    2008
    
    
    ChangeExpensesCompensation, benefits and profit share
    
    $
    (318,586
    )
    
    $
    (549,742
    )
    
    $
    231,156General, administrative and other
    
    
    (47,743
    )
    
    
    (60,533
    )
    
    
    12,790Amortization of intangible assets
    
    
    (833
    )
    
    
    
    
    
    
    (833
    )Third party distribution, administration and service fees
    
    
    (665
    )
    
    
    
    
    
    
    (665
    )Total expenses
    
    $
    (367,827
    )
    
    $
    (610,275
    )
    
    $
    242,448Key ratiosCompensation, benefits and profit share / total GAAP
net revenues and other income
    
    
    231.1
    %
    
    
    171.7
    %
    
    
    59.4
    %General, administrative and other / total GAAP net
revenues and other income
    
    
    34.6
    %
    
    
    18.9
    %
    
    
    15.7
    %Total expenses / total GAAP net revenues and other income
    
    
    266.8
    %
    
    
    190.6
    %
    
    
    76.2
    %
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Non-GAAP Expense Measures
 Three Months Ended June 30,
2009 Compared to Three Months Ended June 30, 2008
 Change in Non-GAAP Expenses between Three Months Ended
 June 30, 2009 and June 30, 2008  (U.S. dollars in thousands)
 Three Months Ended June 30,2009
    
    
    2008
    
    
    ChangeNon-GAAP expensesGAAP compensation, benefits and profit share
    
    $
    (171,930
    )
    
    $
    (236,703
    )
    
    $
    64,773Add back: Acquisition-related compensation
expense and other compensation costs
    
    
    128,851
    
    
    
    140,348
    
    
    
    (11,497
    )Non-GAAP CBP
    
    
    (43,079
    )
    
    
    (96,355
    )
    
    
    53,276GAAP general, administrative and other
    
    
    (25,426
    )
    
    
    (30,230
    )
    
    
    4,804Third party distribution, service and advisory
    
    
    (665
    )
    
    
    
    
    
    
    (665
    )Non-GAAP total expenses
    
    $
    (69,170
    )
    
    $
    (126,585
    )
    
    $
    57,415Key ratios (based on non-GAAP measures)Non-GAAP CBP / total GAAP net revenues and other
income
    
    
    50.0
    %
    
    
    51.0
    %
    
    
    (1.0
    )%General, administrative and other / total GAAP
net revenues and other income
    
    
    29.5
    %
    
    
    16.0
    %
    
    
    13.5
    %Non-GAAP total expenses / total GAAP net revenues
and other income
    
    
    80.3
    %
    
    
    67.0
    %
    
    
    13.3
    %
  
    
    Lower non-GAAP CBP primarily due to reduced discretionary bonuses and profit share.
These decreases were slightly offset by additional fixed compensation which included costs
related to additional employees from the SGAM UK acquisition, as well as redundancy
charges due to the restructuring of the SGAM UK acquired business;
    
    Lower general, administrative, and other expenses due to the implementation of expense
management initiatives which were partially offset by additional expenses from the
operations acquired with SGAM UK;and
    
    Approximately $0.7 million of third party distribution, service and advisory fees which
reflect fund administration costs as well as cross-selling fees related to the newly
acquired SGAM UK funds.
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Six Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2008
 Change in Non-GAAP Expenses between Six Months Ended
 June 30, 2009 and June 30, 2008  (U.S. dollars in thousands)
 Six Months Ended June 30,2009
    
    
    2008
    
    
    ChangeNon-GAAP expensesGAAP compensation, benefits and profit share
    
    $
    (318,586
    )
    
    $
    (549,742
    )
    
    $
    231,156Add back: Acquisition-related compensation
expense and other compensation costs
    
    
    255,588
    
    
    
    400,503
    
    
    
    (144,915
    )Non-GAAP CBP
    
    
    (62,999
    )
    
    
    (149,239
    )
    
    
    86,240GAAP general, administrative and other
    
    
    (47,743
    )
    
    
    (60,533
    )
    
    
    12,790Third party distribution, service and advisory
    
    
    (665
    )
    
    
    
    
    
    
    (665
    )Non-GAAP total expenses
    
    $
    (111,407
    )
    
    $
    (209,772
    )
    
    $
    98,365Key ratios (based on non-GAAP measures)Non-GAAP CBP / total GAAP net revenues and other
income
    
    
    45.7
    %
    
    
    46.6
    %
    
    
    (0.9
    )%General, administrative and other / total GAAP
net revenues and other income
    
    
    34.6
    %
    
    
    18.9
    %
    
    
    15.7
    %Non-GAAP total expenses / total GAAP net revenues
and other income
    
    
    80.8
    %
    
    
    65.5
    %
    
    
    15.3
    %
  
    
    Lower non-GAAP CBP primarily due to reduced discretionary bonuses and profit share.
These decreases were slightly offset by additional fixed compensation which included costs
related to additional employees from the SGAM UK acquisition, as well as redundancy
charges due to the restructuring of the SGAM UK acquired business;
    
    Lower general, administrative, and other expenses due to the implementation of expense
management initiatives which were partially offset by additional expenses from the
operations acquired with SGAM UK; and
    
    Approximately $0.7 million of third party distribution, service and advisory fees which
reflect fund administration costs as well as cross-selling fees related to the newly
acquired SGAM UK funds.
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Net Interest Expense
 Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008
 Change in Net Interest Income/(Expense) between Three Months Ended
 June 30, 2009 and June 30, 2008  (U.S. dollars in thousands)
 Three Months Ended June 30,2009
    
    
    2008
    
    
    ChangeInterest income
    
    $
    291
    
    
    $
    1,555
    
    
    $
    (1,264
    )Interest expense
    
    
    (3,619
    )
    
    
    (5,637
    )
    
    
    2,018Net interest expense
    
    $
    (3,328
    )
    
    $
    (4,082
    )
    
    $
    754
  Six Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2008
 Change in Net Interest Income/(Expense) between Six Months Ended
 June 30, 2009 and June 30, 2008  (U.S. dollars in thousands)
 Six Months Ended June 30,2009
    
    
    2008
    
    
    ChangeInterest income
    
    $
    649
    
    
    $
    4,641
    
    
    $
    (3,992
    )Interest expense
    
    
    (6,567
    )
    
    
    (12,766
    )
    
    
    6,199Net interest expense
    
    $
    (5,918
    )
    
    $
    (8,125
    )
    
    $
    2,207
  Gain on business combination
  
    
    The recording of the fair value of net assets acquired of $27.6 million,
    
    Offset by the consideration of $6.5 million paid to SGAM UK.
 Gain on extinguishment of debt
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Income Taxes
 Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008
  Six Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2008
  Non-controlling Interests
 Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008
  
    
    $5.4 million in cumulative dividends accruing to holders of FA Sub 2 Exchangeable
shares, and
    
    $1.8 million for the share of income attributable to holders of FA Sub 2 Exchangeable
Shares under SFAS 160,
    
    offset by $2.9 million for dividends accruing to holders of FA Sub 2 Exchangeable
Shares in the prior period.
 Six Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2008
  
    
    $20.2 million for the share of loss attributable to holders of FA Sub 2 Exchangeable
Shares under SFAS 160, and
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
    
    $2.9 million for dividends paid to holders of FA Sub 2 Exchangeable Shares;
    
    offset by $1.8 million for cumulative dividends accruing to holders of FA Sub 2
Exchangeable Shares
 Adjusted Net Income
  Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008
 Change in Non-GAAP Adjusted Net Income between
Three Months Ended June 30, 2009 and June 30, 2008
(U.S. dollars in thousands)
 Three Months Ended June 30,2009
    
    
    2008
    
    
    ChangeDerivation of non-GAAP adjusted net incomeGAAP loss before non-controlling interest
    
    $
    (12,031
    )
    
    $
    (85,501
    )
    
    $
    73,470Add: Acquisition-related compensation expense
    
    
    128,851
    
    
    
    140,348
    
    
    
    (11,497
    )Add: Amortization of intangible assets
    
    
    833
    
    
    
    
    
    
    
    833Deduct: Gain
on business combination  negative goodwill
    
    
    (21,122
    )
    
    
    
    
    
    
    (21,122
    )Deduct: Cumulative dividends
    
    
    (10,552
    )
    
    
    (5,169
    )
    
    
    (5,383
    )Deduct: Tax effect of Acquisition-related compensation
expenses
    
    
    (441
    )
    
    
    (5,457
    )
    
    
    5,016Deduct: Tax effect of amortization of intangible assets
    
    
    (233
    )
    
    
    
    
    
    
    (233
    )Non-GAAP adjusted net income
    
    $
    85,305
    
    
    $
    44,221
    
    
    $
    41,084
  
    
    Lower amount of Acquisition-related compensation attributable to the agreement among
principals and trustees;
    
    A deduction of $21.1 million for the negative goodwill write back (non-cash)
attributable to the business combination related to the SGAM UK acquisition, and
amortization of intangible assets; and
    
    A deduction of $5.4 million related to the cumulative dividends accruing to holders of
FA Sub 2 Exchangeable Shares.
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Six Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2008
 Change in Non-GAAP Adjusted Net Income between
Six Months Ended June 30, 2009 and June 30, 2008
(U.S. dollars in thousands)
 Six Months Ended June 30,2009
    
    
    2008
    
    
    ChangeDerivation of non-GAAP adjusted net incomeGAAP loss before non-controlling interest
    
    $
    (153,715
    )
    
    $
    (307,706
    )
    
    $
    153,990Add: Realized loss on available-for-sale investments
    
    
    21,217
    
    
    
    
    
    
    
    21,217Add: Acquisition-related compensation expense
    
    
    255,588
    
    
    
    400,503
    
    
    
    (144,915
    )Add: Amortization of intangible assets
    
    
    833
    
    
    
    
    
    
    
    833Deduct: Gain
on business combination  negative
goodwill
    
    
    (21,122
    )
    
    
    
    
    
    
    (21,122
    )Deduct: Cumulative dividends
    
    
    (11,147
    )
    
    
    (9,298
    )
    
    
    (1,849
    )Deduct: Tax effect of Acquisition-related compensation
    
    
    (796
    )
    
    
    (5,457
    )
    
    
    4,661Deduct: Tax effect of amortization of intangible assets
    
    
    (233
    )
    
    
    
    
    
    
    (233
    )Non-GAAP adjusted net income
    
    $
    90,624
    
    
    $
    78,042
    
    
    $
    12,582
  
    
    Lower amount of Acquisition-related compensation attributable to the agreement among
principals and trustees;
    
    Approximately $21.2 million due to the realized loss on available-for-sale investments
from the first quarter of 2009, and amortization of intangible assets; and
    
    A deduction of $21.1 million for the negative goodwill write back (non-cash)
attributable to the business combination related to the SGAM UK acquisition.
 Liquidity and Capital Resources
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Operating Activities
   
    
    Performance Fees.Performance fees are generally received every six months in the month
following crystallization (i.e,.2009 operating cash flows will be the result of receipts
of June 2009 and December 2008 performance fees). Lower December 2008 performance fees as
compared to December 2007 performance fees contributed $319.3 million to the decrease in
operating cash flows compared to the same period in 2008.
    
    Compensation, benefits and profit share.The most significant component of
compensation, benefits and profit share is discretionary compensation and discretionary
limited partner profit share paid during the year following the year in which the related
business performance is achieved (i.e,2009 compensation cash flows are largely influenced
by discretionary compensation and discretionary limited partner profit share paid in
respect of 2008 business performance). Operating cash outflows from compensation, benefits
and profit share were $364.4 million lower as a result of a reduction in the level of
accrued compensation.
    
    Management and Administration, Service and Distribution Fees.Management and
administration fees are largely received monthly and are driven by the average net AUM and
fee rates in each fund and managed account. Management and administration, service and
distribution fees contributed a decrease of $160.2 million due to lower average net AUM.
    
    Tax.Tax payments decreased by $28.1 million due to lower income tax expense as a
result of lower estimated profits.
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Investing Activities
   
    
    Redemption of securities.In 2009, the redemption of securities contributed $35.7
million. There were no corresponding redemptions in 2008.
    
    Purchases of subsidiaries.In 2009 and 2008 we purchased the following subsidiaries 
GLG, Inc. in 2008 and SGAM UK in 2009. The purchase of GLG, Inc. in 2008, resulted in a
cash usage of $2.5 million, whereas cash (net of purchase consideration) acquired with
SGAM UK contributed $7.3 million.
    
    Purchase of property and equipment.We reduced our capital expenditure on property and
equipment by $3.0 million.
 Financing Activities
  
    
    Issuance of Convertible Notes.In May and June 2009, we issued $228.5 million
aggregate principal amount of convertible notes.
    
    Loan Repayments.As a result of our outstanding loans, we are required to make
periodic repayments. As part of the loan restructuring in May 2009, we made loan
repayments of $170.7 million versus loan repayments during the first half of 2008 of $35.0
million.
    
    Distributions to principals and trustees.During the first half of 2008, we made
payments of $100.0 million to former GLG Shareowners in connection with the Acquisition.
    
    Share repurchases.During 2009, we repurchased shares of common stock in the amount of
$64.5 million as opposed to repurchases in the first half of 2008 of $4.0 million. This
contributed a net cash usage of $60.5 million.
    
    Warrant repurchases.During the first half of 2008, we repurchased warrants for $37.6
million. There were no corresponding repurchases during 2009.
    
    Debt Issuance Costs.As a result of the transaction in the second quarter of 2009,
$11.2 million of debt issuance costs were incurred.
    
    Dividends paid.Cash outflows of $7.5 million were paid during the first half of 2008
for dividends paid to our shareowners. There have been no dividends paid in 2009.
    
    Warrant exercises.During the first half of 2008, there were warrant exercises which
contributed $2.6 million. There have been no corresponding warrant exercises in 2009.
 Off-Balance Sheet Arrangements
  Contractual Obligations, Commitments and Contingencies
       Future Loan Principal Payments
 Year Ended December 31,2009
    
    2010
    
    2011
    
    2012
    
    2013
    
    Thereafter
    
    Total(Dollars in thousands)$ 
    
    $
    
    
    
    $
    142,750
    
    
    $
    142,750
    
    
    $
    
    
    
    $
    228,500
    
    
    $
    514,000
  Future Loan Interest Payments
 Year Ended December 31,2009
    
    2010
    
    2011
    
    2012
    
    2013
    
    Thereafter
    
    Total(Dollars in thousands)$8,077
    
    $
    17,335
    
    
    $
    16,104
    
    
    $
    13,149
    
    
    $
    11,425
    
    
    $
    4,284
    
    
    $
    70,374
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
     Impact on Management Fees
  Impact on Performance Fees
  Impact on Administration Fees
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Market Risk
  Exchange Rate Risk
    Interest Rate Risk
  
 Item 4. Controls and Procedures
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PART II. OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings.
 
  
 Item 1A.
    
    Risk Factors.
 Our business, financial condition and results of operations can be impacted by a number of
risk factors, any one of which could cause our actual results to vary materially from recent
results or from our anticipated future results. Any of these risks could materially and adversely
affect our business, financial condition and results of operations, which in turn could materially
and adversely affect the price of our common stock or other securities.
 Risks Related to Our Business
 Difficult market conditions, market disruptions and volatility have adversely affected and may in
the future continue to adversely affect our business in many ways, each of which could materially
reduce our revenue and cash flow and adversely affect our business, results of operations or
financial condition.
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
    
    The investment performance of the GLG Funds and managed accounts may be negatively
impacted. Negative fund performance reduces AUM, which decreases the management fees,
administration fees and performance fees we earn. Lower revenues may result in lower
adjusted net income and, therefore, reduced amounts available for dividends on our shares
of common stock or increased risk that we will be unable to comply with financial
covenants in our credit facility.
    
    Performance fees, which historically have comprised a substantial portion of our annual
revenues, are largely contingent on the GLG Funds and managed accounts generating positive
annual investment performance in excess of high water marks or generating investment
performance in excess of certain benchmarks. We may be unable to reach profitability in
the future without substantial growth in performance fees.
 Our revenue, net income and cash flow are dependent upon performance fees, which may make it
difficult for us to achieve steady earnings growth on a semi-annual basis.
   Fluctuations in currency exchange rates could materially affect our business, results of operations
and financial condition.
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In order to retain our investment professionals during periods of poor performance, we may have to
pay our investment professionals a significant amount, even if we earn low or no performance fees,
which could have an adverse impact on our business, results of operations or financial condition.
   Investors in the GLG Funds and investors with managed accounts can generally redeem investments
with only short periods of notice and the rate of redemptions could accelerate if the GLG Funds and
managed accounts underperform, which could make it more difficult to manage the liquidity levels of
the GLG Funds and managed accounts, reduce AUM and adversely affect our revenues.
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We may face further redemptions from the GLG Funds and managed accounts for reasons not
specifically related to investment performance, which may further reduce AUM or adversely impact
our ability to attract new investments, resulting in a material adverse effect on our business,
results of operations or financial condition.
  We are dependent on the continued services of Noam Gottesman, Pierre Lagrange and Emmanuel Roman
(the Principals) and other key personnel. The loss of key personnel could have a material adverse
effect on us.
   The cost of compliance with international employment, labor, benefits and tax regulations may
adversely increase our costs, affect our revenue and impede our ability to expand internationally.
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If we experience rapid growth, whether through attracting new investments, acquiring other asset
management
businesses or otherwise, it may place significant demands on our administrative, operational and
financial resources.
  
    
    in maintaining adequate financial and business controls;
    
    in implementing new or updated information and financial systems and procedures; and
    
    in training, managing and appropriately sizing our work force and other components of
our business on a timely and cost-effective basis.
   There can be no assurance that our expansion into the United States or other markets will be
successful.
  Damage to our reputation, including as a result of personnel misconduct, failure to manage inside
information, fraud, restricting redemptions from certain GLG Funds or side-pocketing certain
illiquid private placement investments, could have a material adverse effect on our business.
  
    
    fraud, misconduct or improper practice by any of our personnel, including failure to
comply with applicable regulations or non-adherence by a portfolio manager to the
investment guidelines applicable to each GLG
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Fund. Such actions can be particularly detrimental in the provision of financial services
and could involve, for example, fraudulent transactions entered into for a clients account,
diversion of funds, the intentional or inadvertent release of confidential information or
failure to follow internal procedures. Such actions could expose us to financial losses
resulting from the need to reimburse customers or other business partners or as a result of
fines or other regulatory sanctions, and may significantly damage our reputation;
 
    
    failure to manage inside information. We frequently trade in multiple securities of the
same issuer. In the course of transactions involving these securities, we may receive
inside information in relation to certain issuers. If we do not sufficiently control the
use of this inside information or any other inside information we receive, we and/or our
employees could be subject to investigation and criminal or civil liability;
    
    failure to manage conflicts of interest. As we have expanded the scope of our business
and client base, we have been increasingly exposed to potential conflicts of interest. If
we fail, or appear to fail, to deal appropriately with conflicts of interest, we could
face significant damage to our reputation, litigation or regulatory proceedings or
penalties;
    
    restricting redemptions from certain GLG Funds. The GLG Funds have the right to
restrict redemptions from the GLG Funds for certain periods in the event of certain
limited circumstances as specified in the prospectuses for the respective GLG Funds. The
exercise of these rights to restrict redemptions may be perceived as a weakness and fund
investors may suffer a reduced ability to withdraw their original investments in the
affected GLG Funds, resulting in significant reputational damage and could lead to a
reduction in investments in the GLG Funds and hinder our ability to attract new
investments. In addition, it may prompt fund investors to redeem their existing
investments in other GLG Funds that have not elected to exercise these rights. As of
December 31, 2008, approximately $1.5 billion of AUM were in GLG Funds for which the
related fund boards of directors had suspended redemptions, which had increased due to the
performance of the funds to approximately $1.9 billion of AUM as of June 30, 2009. The
funds included: The GLG MMI Enhanced II Fund, GLG Global Utilities Fund, GLG Credit Fund,
GLG MMI Enhanced Fund, GLG Multi-Strategy Fund, GLG Market Neutral Fund and GLG Event
Driven Fund. We continue to receive full management and administration fees related to
these funds, except on a portion of the GLG Market Neutral Fund that has been
side-pocketed; and
    
    side-pocketing certain illiquid private placement and other not readily realizable
investments, including claims to recover assets, cash or receivables
from LBIE. Certain GLG Funds have and may in the future side-pocket certain private
placement and other not readily realizable investments into separate special asset
vehicles, providing investors with illiquid interests in the new special asset vehicles in
lieu of returning their invested capital. As fund investors suffer a reduced ability to
withdraw their original investments from the GLG Funds due to this side pocketing, our
reputation may be subject to substantial damage. This reputational harm may hinder our
ability to obtain new investments and may prompt investors to redeem their existing
investments in other GLG Funds or managed accounts.
  Operational risks may disrupt our business, result in losses or limit our growth.
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Our business may suffer as a result of loss of business from key private and institutional
investors.
  We are subject to substantial litigation and regulatory enforcement risks, and we may face
significant liabilities and damage to our professional reputation as a result of litigation
allegations or regulatory investigations and the attendant negative publicity.
  
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We are subject to intense competition and could lose business to our competitors.
    Certain of our investment management and advisory agreements are subject to termination on short
notice.
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The historical returns attributable to the GLG Funds may not be indicative of our future results or
of any returns expected on an investment in our common stock.
  Our insurance arrangements may not be adequate to protect us.
  We use substantial amounts of leverage to finance our business, which exposes us to substantial
risks.
  An increase in our borrowing costs may adversely affect our earnings and liquidity.
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If we were deemed an investment company under the Investment Company Act, applicable restrictions
could make it impractical for us to continue our business as contemplated and could have a material
adverse effect on our business.
  
    
    it is or holds itself out as being engaged primarily, or proposes to engage primarily,
in the business of investing, reinvesting or trading in securities; or
    
    absent an applicable exemption, it owns or proposes to acquire investment securities
having a value exceeding 40% of the value of its total assets (exclusive of U.S.
government securities and cash items) on an unconsolidated basis.
    
    
    registration with the SEC;
    
    maintaining books and records required by the SEC;
    
    cooperation with SEC examination or information requests;
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
    
    filing of annual public information statements which would include, among other things:
 
    
    the names and addresses of beneficial owners, any company with an ownership
interest in the fund and the funds primary accountant and primary broker;
    
    an explanation of the structure of ownership in the fund;
    
    a statement of any minimum required investment;
    
    the total number of limited partners, members or other investors; and
    
    the current value of the funds assets and AUM; and
 
    
    the establishment of certain anti-money laundering programs, policies and procedures
that are reasonably designed to identify non-U.S. investors and their beneficial owners.
  We and the GLG Funds may become subject to additional regulations which could increase the costs
and burdens of compliance or impose additional restrictions which could have a material adverse
effect on our business and the performance of the GLG Funds.
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Risks Related to the GLG Funds
 We currently derive our revenues from management fees and administration fees based on the
value of the assets under management in the GLG Funds and the accounts managed by us, and
performance fees based on the performance of the GLG Funds and the accounts managed by us. Our
stockholders are not investors in the GLG Funds and the accounts managed by us, but rather
stockholders of a U.S.-listed asset manager. Our revenues could be adversely affected by many
factors that could reduce assets under management or negatively impact the performance of the GLG
Funds and accounts managed by us.
 Valuation methodologies for certain assets in the GLG Funds can be subject to significant subjectivity.
  Some of the GLG Funds and managed accounts are subject to emerging markets risks.
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Many of the GLG Funds invest in foreign countries and securities of issuers located outside of the United States and the United Kingdom, which may involve foreign exchange, political, social and economic uncertainties and risks.
   There are risks associated with the GLG Funds investments in high yield and distressed debt.
  Fluctuations in interest rates may significantly affect the returns derived from the GLG Funds investments.
  The GLG Funds are subject to risks due to potential illiquidity of assets.
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There are risks associated with the GLG Funds use of leverage.
  In the current tight credit environment, the GLG Funds and accounts we manage may not be able to obtain credit for leveraging or hedging purposes at the same level or cost as they have in the past, which could have a material adverse effect on the performance of the GLG Funds and managed accounts.
   There are risks associated with the GLG Funds investments in derivatives.
  
    
    limitation of risk assessment methodologies. Decisions to enter into these derivatives
and other securities contracts will be based on estimates of returns and probabilities of
loss derived from our own calculations
and analysis. There can be no assurance that the estimates or the methodologies, or the
assumptions which underlie such estimates and methodologies, will turn out to be valid or
appropriate;
    
    risks underlying the derivative and securities contracts. A general rise in the
frequency, occurrence or severity of certain non-financial risks such as accidents and/or
natural catastrophes will lead to a general decrease in the returns and the possibility of
returns from these derivatives and securities contracts, which will not be reflected in
the methodology or assumption underlying the analysis of any specific derivative or
securities contract; and
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
    
    particular risks. The particular instruments in which we will invest on behalf of the
GLG Funds may produce an unusually and unexpectedly high amount of losses, which will not
be reflected in the methodology or assumptions underlying the analysis of any specific
derivative or securities contract.
 The GLG Funds and accounts we manage are subject to risks in using prime brokers, custodians, administrators and other agents.
  Following the collapse of Lehman Brothers, the GLG Funds and several GLG clients with managed accounts have claims as creditors and/or as trust asset claimants against Lehman Brothers International (Europe) (LBIE) and, in some cases, other Lehman Brothers entities. These claims will likely take an extended period of time to resolve and, in some cases, may remain unsatisfied. There are also a number of open factual and legal issues
surrounding such claims.
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
    
    amounts which LBIE was required to treat as client money under the rules of the U.K.
Financial Services Authority and not use in the course of its business were and are, in
fact, so held, and that any shortfall in recoveries of client monies will not exceed
reserves established to date by the GLG Funds;
    
    even though LBIE or its affiliates may be entitled to withhold assets to satisfy any
net indebtedness owed to them, there will be no material shortfall in the recovery of
assets held on trust by LBIE as a custodian, or by LBI as a sub-custodian for LBIE, or by
any other sub-custodian appointed by LBIE with regard to the assets of a GLG Fund, and, to
the extent there is a shortfall, GLG Funds will be able to effect
setoff against and to the
extent of any amount owing by a GLG Fund to LBIE;
    
    the information we have received to date from the administrators of LBIE in relation to
the re-hypothecation of GLG Fund assets by LBIE is true and accurate;
    
    unsettled transactions between GLG Funds and LBIE at the time LBIE entered into
administration proceedings will be determined on the basis of a cash settlement of those
trades, in accordance with contractual agreements between the affected GLG Fund and LBIE,
or cancelled, in each case, as determined by us;
    
    the cash settlement amounts for terminated over-the-counter derivatives and other
transactions will be as determined by us in accordance with contractual documentation;
    
    the recovery on amounts estimated to be unsecured claims against LBIE will not be
materially greater or lesser than currently estimated by the GLG Funds; and
    
    there are no other facts or factors, which if known to us, would lead us to conclude
that the business of LBIE was conducted otherwise than in accordance with the contractual
documentation or that any of our assumptions is incorrect.
    
    there are no other facts or factors, which if known to us, would lead us to conclude
that the business of LBIE was conducted otherwise than in accordance with the contractual
documentation or that any of our assumptions is incorrect.
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The GLG Funds and accounts we manage are subject to counterparty risk with regard to over-the-counter instruments and other swap or hedging transactions. The actual or perceived weakness of counterparties could increase the exposure of the GLG Funds and managed accounts to these counterparty and credit risks.
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The GLG Funds and managed accounts are subject to systemic risk due to the interconnectedness and recent consolidation of financial institutions as the failure of any one institution may expose the GLG Funds and managed accounts to risk of loss.
  Concerns of counterparties about the financial strength of the GLG Funds and managed accounts may impact their willingness to enter into transactions with the GLG Funds and managed accounts.
  GLG Fund investments are subject to numerous additional risks.
  
    
    certain of the GLG Funds are newly established funds without any operating history or
are managed by management companies or general partners who do not have a significant
track record as an independent manager;
    
    generally, there are few limitations on the execution of the GLG Funds investment
strategies, which are subject to the sole discretion of the management company of such
funds;
    
    the GLG Funds may engage in short-selling, which is subject to the theoretically
unlimited risk of loss because there is no limit on how much the price of a security may
appreciate before the short position is closed out. A GLG Fund may be subject to losses if
a security lender demands return of the lent securities and an alternative lending source
cannot be found or if the GLG Fund is otherwise unable to borrow securities that are
necessary to hedge its positions;
    
    credit risk may arise through a default by one of several large institutions that are
dependent on one another to meet their liquidity or operational needs, so that a default
by one institution causes a series of defaults by the other institutions. This systemic
risk may adversely affect the financial intermediaries (such as clearing agencies,
clearing houses, banks, securities firms and exchanges) with which the GLG Funds interact
on a daily basis;
    
    the efficacy of investment and trading strategies depends largely on the ability to
establish and maintain an overall market position in a combination of financial
instruments. Trading orders may not be executed in a timely and efficient manner due to
various circumstances, including systems failures or human error. In such event, the GLG
Funds might only be able to acquire some but not all of the components of the
position, or if the overall position were to need adjustment, the GLG Funds might not be
able to make such adjustment. As a result, the GLG Funds would not be able to achieve the
market position selected by the management company or general partner of such funds, and
might incur a loss in liquidating their position; and
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
    
    the investments held by the GLG Funds are subject to risks relating to investments in
commodities, equities, bonds, futures, options and other derivatives, the prices of which
are highly volatile and may be subject to the theoretically unlimited risk of loss in
certain circumstances, including if the fund writes a call option. Price movements of
commodities, futures and options contracts and payments pursuant to swap agreements are
influenced by, among other things, interest rates, credit market conditions, changing
supply and demand relationships, trade, fiscal, monetary and exchange control programs and
policies of governments and national and international political and economic events and
policies. The value of futures, options and swap agreements also depends upon the price of
the commodities underlying them. In addition, the assets of the GLG Funds are subject to
the risk of the failure of any of the exchanges on which their positions trade or of their
clearinghouses or counterparties. Most U.S. commodities exchanges limit fluctuations in
certain commodity interest prices during a single day by imposing daily price fluctuation
limits or daily limits, the existence of which may reduce liquidity or effectively
curtail trading in particular markets.
 The due diligence process that we undertake in connection with investments by the GLG Funds may not reveal all facts that may be relevant in connection with an investment.
  The GLG Funds make investments in companies that the GLG Funds do not control.
  Risk management activities may adversely affect the return on the GLG Funds investments.
  The GLG Funds may be subject to U.K. tax if we do not qualify for the U.K. Investment Manager Exemption.
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Risks Related to Our Organization and Structure
 Since our principal operations are located in the United Kingdom, we may encounter risks specific to companies located outside the United States.
  
    
    tariffs and trade barriers;
    
    regulations related to customs and import/export matters;
    
    tax issues, such as tax law changes and variations in tax laws as compared to the
United States;
    
    cultural differences; and
    
    foreign exchange controls.
 We are a controlled company within the meaning of the NYSE Listed Company Manual and, as a result, qualify for, and rely on, exemptions from certain corporate governance standards, which may limit the presence of independent directors on our board of directors or board committees.
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Certain provisions in our organizational documents and Delaware law make it difficult for someone to acquire control of us.
   An active market for our common stock may not develop.
  The value of our common stock and warrants may be adversely affected by market volatility.
  
    
    variations in our quarterly operating results or dividends;
    
    failure to meet analysts earnings estimates or failure to meet, or the lowering of,
our own earnings guidance;
    
    publication of research reports about us or the investment management industry or the
failure of securities analysts to cover our shares;
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
    
    additions or departures of the Principals and other key personnel;
    
    adverse market reaction to any indebtedness we may incur or securities we may issue in
the future;
    
    actions by stockholders;
    
    changes in market valuations of similar companies;
    
    speculation in the press or investment community;
    
    changes or proposed changes in laws or regulations or differing interpretations thereof
affecting our business or enforcement of these laws and regulations, or announcements
relating to these matters;
    
    adverse publicity about the asset management industry generally or individual scandals,
specifically; and
    
    general market and economic conditions, including the substantial volatility
experienced in the financial markets in September 2008 and following months.
  We have announced that we do not intend to pay, and may not be able to pay in the future, dividends on our common stock.
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To complete the Acquisition, we incurred a large amount of debt, which will limit our ability to fund general corporate requirements and obtain additional financing, limit our flexibility in responding to business opportunities and competitive developments and increase our vulnerability to adverse economic and industry conditions.
  
    
    a decrease in revenues will result in a disproportionately greater percentage decrease
in earnings;
    
    we may not have sufficient liquidity to fund all of these fixed costs if our revenues
decline or costs increase;
    
    we may have to use our working capital to fund these fixed costs instead of funding
general corporate requirements, including capital expenditures; and
    
    we may not have sufficient liquidity to respond to business opportunities, competitive
developments and adverse economic conditions.
  As a result of the Acquisition, we incur significant non-cash amortization charges related to equity-based compensation expense associated with the vesting of certain equity-based awards, which reduces our net income and may result in further net losses.
  Fulfilling our obligations as a public company will be expensive and time consuming.
  The failure to address actual or perceived conflicts of interest that may arise as a result of the investment by the Principals and other key personnel of at least 50% of the after-tax cash proceeds they received in the Acquisition in GLG Funds, may damage our reputation and materially adversely affect our business.
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We may choose to redeem our outstanding warrants at a time that is disadvantageous to our warrant holders.
  Our outstanding warrants may be exercised in the future, which would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders. This might have an adverse effect on the market price of our common stock.
  Risks Related to Taxation
 Our effective income tax rate depends on various factors and may increase as our business expands into countries with higher tax rates or as we repatriate more profits to the U.S.
  U.S. persons who own 10% or more of our voting stock may be subject to higher U.S. tax rates on a sale of the stock.
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Our U.K. tax liability will be higher if the interest expense incurred by our subsidiary FA Sub 3 Limited cannot be fully utilized for U.K. tax purposes.
  Recent changes in U.K. tax laws may impact our ability to recruit, maintain and motivate our current and future personnel working in the United Kingdom.
  Our tax position might change as a result of a change in tax laws.
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Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds.
 Share Repurchases
   Total Number ofShares Purchased as
    
    Maximum Approx. Dollar ValuePart of Publicly
    
    of Shares that may yet beTotal Number
    
    Average Price Paid
    
    Announced Plans or
    
    Purchased Under the Plans orPeriod
    
    Shares Repurchased
    
    Per Share
    
    Programs
    
    ProgramsApril 1-30, 2009
    
    
    1,018
    
    
    $
    2.84
    
    
    
    1,018
    
    
    $
    45,030,120.40May 1-31, 2009
    
    
    40,418
    
    
    
    3.58
    
    
    
    40,418
    
    
    
    44,885,242.31June 1-30, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,885,242.31Total
    
    
    41,436
    
    
    
    
    
    
    
    41,436
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Item 4.
    
    Submission of Matters to a Vote of Security Holders
  (1)
    
    To elect seven members of our board of directors with terms expiring at the Annual
Meeting in 2010.
 Votes
    
    VotesFor
    
    WithheldNoam Gottesman
    
    
    228,382,571
    
    
    
    2,596,186Pierre Lagrange
    
    
    228,338,809
    
    
    
    2,639,948Emmanuel Roman
    
    
    228,382,615
    
    
    
    2,596,142Ian G.H. Ashken
    
    
    230,298,165
    
    
    
    680,592Martin E. Franklin
    
    
    230,019,731
    
    
    
    959,026James N. Hauslein
    
    
    230,284,916
    
    
    
    693,841William P. Lauder
    
    
    230,467,616
    
    
    
    511,141
 (2)
    
    To vote on a proposal to approve our 2009 Long-Term Incentive Plan
 For
    
    Against
    
    Abstain
    
    Broker Non-vote205,093,565
    
    15,147,994
    
    117,897
    
    10,619,301
 (3)
    
    To ratify the appointment by the Audit Committee of our board of directors of Ernst &
Young LLP as our independent registered public accounting firm for fiscal year 2009.
 For
    
    Against
    
    Abstain230,437,755
    
    422,914
    
    118,088
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Item 6.
    
    Exhibits
 Exhibit No.
    
    Description4.1
    
    Indenture, dated as of May 15, 2009, between the Company
and the Bank of New York Mellon, as trustee, filed as
Exhibit 4.1 to the Companys Current Report on Form 8-K
dated May 18, 2009, is incorporated herein by reference.10.1
    
    Amendment No. 3 to the Credit Agreement, dated as of May
11, 2009, among the Company, FA Sub 1 Limited, FA Sub 2
Limited, FA Sub 3 Limited, each a subsidiary of the
Company, Citicorp USA, Inc., as administrative agent, and
the other lenders party thereto, filed as Exhibit 10.1 to
the Companys Current Report on Form 8-K dated May 11,
2009, is incorporated herein by reference.31.1
    
    Certification of Periodic Report by the Co-Chief Executive
Officer Pursuant to Rule 13a-15(e) or 15d-15(e) of the
Exchange Act.31.2
    
    Certification of Periodic Report by the Co-Chief Executive
Officer Pursuant to Rule 13a-15(e) or 15d-15(e) of the
Exchange Act.31.3
    
    Certification of Periodic Report by the Chief Financial
Officer Pursuant to Rule 13a-15(e) or 15d-15(e) of the
Exchange Act.32.1
    
    Certification of Periodic Report by the Co-Chief Executive
Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, 18 U.S.C. Section 1350.32.2
    
    Certification of Periodic Report by the Co-Chief Executive
Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, 18 U.S.C. Section 1350.32.3
    
    Certification of Periodic Report by the Chief Financial
Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, 18 U.S.C. Section 1350.
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SIGNATURE
  GLG PARTNERS, INC. 
(Registrant)Date:
August 10, 2009

    
    By
    /s/ Noam GottesmanName:

    Noam GottesmanTitle:

    Chairman of the Board and Co-Chief 
Executive Officer
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EXHIBIT INDEX
 Exhibit No.
    
    Description4.1
    
    Indenture, dated as of May 15, 2009, between the Company
and the Bank of New York Mellon, as trustee, filed as
Exhibit 4.1 to the Companys Current Report on Form 8-K
dated May 18, 2009 is incorporated herein by reference.10.1
    
    Amendment No. 3 to the Credit Agreement, dated as of May
11, 2009, among the Company, FA Sub 1 Limited, FA Sub 2
Limited, FA Sub 3 Limited, each a subsidiary of the
Company, Citicorp USA, Inc., as administrative agent, and
the other lenders party thereto, filed as Exhibit 10.1 to
the Companys Current Report on Form 8-K dated May 11,
2009, is incorporated herein by reference.31.1
    
    Certification of Periodic Report by the Co-Chief Executive
Officer Pursuant to Rule 13a-15(e) or 15d-15(e) of the
Exchange Act.31.2
    
    Certification of Periodic Report by the Co-Chief Executive
Officer Pursuant to Rule 13a-15(e) or 15d-15(e) of the
Exchange Act.31.3
    
    Certification of Periodic Report by the Chief Financial
Officer Pursuant to Rule 13a-15(e) or 15d-15(e) of the
Exchange Act.32.1
    
    Certification of Periodic Report by the Co-Chief Executive
Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, 18 U.S.C. Section 1350.32.2
    
    Certification of Periodic Report by the Co-Chief Executive
Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, 18 U.S.C. Section 1350.32.3
    
    Certification of Periodic Report by the Chief Financial
Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, 18 U.S.C. Section 1350.