UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________

FORM 10-Q

(Mark One)*



ý	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended ~~June 30, 2016~~March 31, 2017



¨	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from to

0-10200

(Commission File Number)

________________________________________

SEI INVESTMENTS COMPANY

(Exact name of registrant as specified in its charter)

________________________________________



Pennsylvania		23-1707341
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

1 Freedom Valley Drive, Oaks, Pennsylvania 19456-1100

(Address of principal executive offices)

(Zip Code)

(610) 676-1000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	ý	Accelerated filer	¨

Non-accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	¨

		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

The number of shares outstanding of the registrant’s common stock as of ~~July 21, 2016~~April 13, 2017 was ~~161,326,155.~~158,709,804.

SEI Investments Company TABLE OF CONTENTS



PART I - FINANCIAL INFORMATION
		Page
Item 1.	Financial Statements.	2
	Consolidated Balance Sheets (Unaudited) -- ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016	2
	Consolidated Statements of Operations (Unaudited) -- For the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2017 and 2016 ~~and 2015~~	3
	Consolidated Statements of Comprehensive Income (Unaudited) -- For the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2017 and 2016 ~~and 2015~~	4
	Consolidated ~~Condensed~~ Statements of Cash Flows (Unaudited) -- For the ~~Six~~Three Months Ended ~~June 30,~~March 31, 2017 and 2016 ~~and 2015~~	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	2120
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	33
Item 4.	Controls and Procedures.	3433

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings.	3534
Item 1A.	Risk Factors.	3635
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	3735
Item 6.	Exhibits.	3735
	Signatures	3836

1 of 3836

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements.

SEI Investments Company

Consolidated Balance Sheets

(unaudited)

(In thousands, except par value)


	June 30, 2016		December 31, 2015		March 31, 2017		December 31, 2016
Assets
Current Assets:
Cash and cash equivalents	$	594,767	$	679,661	$	661,372	$	695,701
Restricted cash	5,500		5,500		3,500		3,500
Receivables from investment products	47,066		48,098		51,453		61,761
Receivables, net of allowance for doubtful accounts of $946 and $649	242,084		223,023
Receivables, net of allowance for doubtful accounts of $518 and $523					252,205		227,957
Securities owned	21,290		21,235		21,372		21,339
Other current assets	30,213		26,207		29,873		27,575
Total Current Assets	940,920		1,003,724		1,019,775		1,037,833
Property and Equipment, net of accumulated depreciation of $272,292 and $259,501	138,696		143,977
Capitalized Software, net of accumulated amortization of $281,407 and $259,358	288,070		290,522
Property and Equipment, net of accumulated depreciation of $291,500 and $285,322					142,726		146,190
Capitalized Software, net of accumulated amortization of $315,512 and $303,540					300,756		295,867
Investments Available for Sale	88,372		81,294		89,262		84,033
Investments in Affiliated Funds, at fair value	4,420		4,039		5,156		4,858
Investment in Unconsolidated Affiliates	41,996		49,580
Investment in Unconsolidated Affiliate					48,759		50,459
Deferred Income Taxes	4,041		—		1,878		2,127
Other Assets, net	13,856		15,492		16,240		15,456
Total Assets	$	1,520,371	$	1,588,628	$	1,624,552	$	1,636,823


Liabilities and Equity
Current Liabilities:
Accounts payable	$	3,541		$	4,511		$	7,372		$	5,966
Accrued liabilities	145,717			217,587			167,061			240,525
Deferred revenue	3,479			2,385			2,337			2,880
Total Current Liabilities	152,737			224,483			176,770			249,371
Deferred Income Taxes	67,089			63,028			69,379			69,693
Other Long-term Liabilities	12,262			11,397			15,610			14,645
Total Liabilities	232,088			298,908			261,759			333,709
Commitments and Contingencies
Shareholders' Equity:
Common stock, $.01 par value, 750,000 shares authorized; 161,191 and 163,733 shares issued and outstanding	1,612			1,637
Common stock, $.01 par value, 750,000 shares authorized; 158,687 and 159,031 shares issued and outstanding							1,587			1,590
Capital in excess of par value	933,434			910,513			976,007			955,461
Retained earnings	380,664			402,860			420,712			384,018
Accumulated other comprehensive loss, net	(27,427		)	(25,290		)	(35,513		)	(37,955		)
Total Shareholders' Equity	1,288,283			1,289,720			1,362,793			1,303,114
Total Liabilities and Shareholders' Equity	$	1,520,371		$	1,588,628		$	1,624,552		$	1,636,823

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

2 of 3836

SEI Investments Company

Consolidated Statements of Operations

(unaudited)

(In thousands, except per share data)


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2016			2015			2016			2015			2017			2016
Revenues:
Asset management, administration and distribution fees	$	262,275		$	256,748		$	513,712		$	503,516		$	278,565		$	251,437
Information processing and software servicing fees	74,992			73,699			148,391			144,352			74,763			73,399
Transaction-based and trade execution fees	6,564			7,298			15,991			15,321			6,656			9,427
Total revenues	343,831			337,745			678,094			663,189			359,984			334,263
Expenses:
Subadvisory, distribution and other asset management costs	40,870			40,872			80,065			79,389			42,502			39,195
Software royalties and other information processing costs	7,677			8,057			15,425			15,566			7,662			7,748
Brokerage commissions	5,093			5,431			12,201			11,403			4,959			7,108
Compensation, benefits and other personnel	102,282			98,999			204,213			193,185			108,943			101,931
Stock-based compensation	4,189			3,859			7,978			7,609			6,180			3,789
Consulting, outsourcing and professional fees	39,575			36,969			78,081			72,597			43,149			38,506
Data processing and computer related	15,782			14,527			31,500			27,927			16,772			15,718
Facilities, supplies and other costs	17,122			16,659			33,119			33,718			17,478			15,997
Amortization	11,284			10,611			22,296			20,969			12,022			11,012
Depreciation	6,434			5,843			12,881			11,838			6,800			6,447
Total expenses	250,308			241,827			497,759			474,201			266,467			247,451
Income from operations	93,523			95,918			180,335			188,988			93,517			86,812
Net gain (loss) from investments	250			(38		)	124			212			347			(126		)
Interest and dividend income	1,033			755			2,116			1,724			1,343			1,083
Interest expense	(187		)	(114		)	(301		)	(227		)	(112		)	(114		)
Equity in earnings of unconsolidated affiliates	30,285			37,289			59,477			71,322
Equity in earnings of unconsolidated affiliate													33,565			29,192
Gain on sale of subsidiary	—			—			2,791			2,791			—			2,791
Income before income taxes	124,904			133,810			244,542			264,810			128,660			119,638
Income taxes	43,899			47,570			86,040			93,959			39,923			42,141
Net income	81,005			86,240			158,502			170,851			88,737			77,497
Basic earnings per common share	$	0.50		$	0.52		$	0.98		$	1.03		$	0.56		$	0.48
Shares used to compute basic earnings per share	161,795			166,152			162,404			166,423			159,091			163,013
Diluted earnings per common share	$	0.49		$	0.51		$	0.96		$	1.00		$	0.55		$	0.47
Shares used to compute diluted earnings per share	165,088			169,973			165,616			170,338			162,742			166,145
Dividends declared per common share	$	0.26		$	0.24		$	0.26		$	0.24

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

3 of 3836

SEI Investments Company

Consolidated Statements of Comprehensive Income

(unaudited)

(In thousands)


	Three Months Ended June 30,										Six Months Ended June 30,									Three Months Ended March 31,
	2016					2015					2016				2015					2017					2016
Net income			$	81,005				$	86,240			$	158,502				$	170,851				$	88,737			$	77,497
Other comprehensive (loss) gain, net of tax:
Other comprehensive gain, net of tax:
Foreign currency translation adjustments			(5,080		)			4,530				(2,651		)			(4,253		)			2,488				2,429
Unrealized (loss) gain on investments:
Unrealized gains (losses) during the period, net of income taxes of $(49), $326, $(240) and $301	20					(527	)				350				(520	)
Less: reclassification adjustment for (gains) losses realized in net income, net of income taxes of $12, $(39), $(91) and $13	(23	)	(3		)	70		(457		)	164	514			(24	)	(544		)
Total other comprehensive (loss) gain, net of tax			(5,083		)			4,073				(2,137		)			(4,797		)
Unrealized (losses) gains during the period, net of income taxes of $19 and $(191)																				(24	)				330
Less: reclassification adjustment for (gains) losses realized in net income, net of income taxes of $10 and $(103)																				(22	)	(46		)	187	517
Total other comprehensive gain, net of tax																						2,442				2,946
Comprehensive income			$	75,922				$	90,313			$	156,365				$	166,054				$	91,179			$	80,443

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

4 of 3836

SEI Investments Company

Consolidated Condensed Statements of Cash Flows

(unaudited)

(In thousands)


	Six Months Ended June 30,						Three Months Ended March 31,
	2016			2015			2017			2016
Cash flows from operating activities:
Net income	$	158,502		$	170,851		$	88,737		$	77,497
Adjustments to reconcile net income to net cash provided by operating activities (See Note 1)	948			(14,067		)	(15,725		)	1,148
Net cash provided by operating activities	159,450			156,784			73,012			78,645
Cash flows from investing activities:
Additions to restricted cash	—			(834		)
Additions to property and equipment	(9,049		)	(15,727		)	(3,205		)	(4,609		)
Additions to capitalized software	(19,597		)	(16,069		)	(16,861		)	(9,477		)
Purchases of marketable securities	(32,648		)	(26,854		)	(20,445		)	(8,652		)
Prepayments and maturities of marketable securities	26,148			16,772			15,166			12,090
Sales of marketable securities	185			6,862			—			185
Receipt of contingent payment from sale of SEI AK	2,791			2,791			—			2,791
Other investing activities	200			(1,000		)	—			200
Net cash used in investing activities	(31,970		)	(34,059		)	(25,345		)	(7,472		)
Cash flows from financing activities:
Purchase and retirement of common stock	(155,730		)	(133,429		)	(56,553		)	(78,372		)
Proceeds from issuance of common stock	26,336			42,661			16,847			6,476
Tax benefit on stock options exercised	4,004			8,233
Payment of dividends	(84,626		)	(80,030		)	(44,597		)	(42,677		)
Net cash used in financing activities	(210,016		)	(162,565		)	(84,303		)	(114,573		)
Effect of exchange rate changes on cash and cash equivalents	(2,358		)	(2,765		)	2,307			1,992
Net decrease in cash and cash equivalents	(84,894		)	(42,605		)	(34,329		)	(41,408		)
Cash and cash equivalents, beginning of period	679,661			667,446			695,701			679,661
Cash and cash equivalents, end of period	$	594,767		$	624,841		$	661,372		$	638,253

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

5 of 3836

Notes to Consolidated Financial Statements

(all figures are in thousands except share and per share data)

Note 1. Summary of Significant Accounting Policies

Nature of Operations

SEI Investments Company (the Company), a Pennsylvania corporation, provides investment processing, investment management, and investment operations solutions to financial institutions, financial advisors, institutional investors, investment managers and ultra-high-net-worth families in the United States, Canada, the United Kingdom, continental Europe and various other locations throughout the world. Investment processing solutions consist of application and business process outsourcing services, professional services and transaction-based services. Revenues from investment processing solutions are recognized in Information processing and software servicing fees on the accompanying Consolidated Statements of Operations, except for fees earned associated with trade execution services which are recognized in Transaction-based and trade execution fees.

Investment management programs consist of mutual funds, alternative investments and separate accounts. These include a series of money market, equity, fixed-income and alternative investment portfolios, primarily in the form of registered investment companies. The Company serves as the administrator and investment advisor for many of these products. Revenues from investment management programs are recognized in Asset management, administration and distribution fees on the accompanying Consolidated Statements of Operations.

Investment operations solutions offer investment managers support for traditional investment products such as mutual funds, collective investment trusts, exchange-traded funds, and institutional and separate accounts, by providing outsourcing services including fund and investment accounting, administration, reconciliation, investor servicing and client reporting. These solutions also provide support to managers focused on alternative investments who manage hedge funds, funds of hedge funds, private equity funds and real estate funds, across registered, partnership and separate account structures domiciled in the United States and overseas. Revenues from investment operations solutions are recognized in Asset management, administration and distribution fees on the accompanying Consolidated Statements of Operations.

Basis of Presentation

The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Certain financial information and accompanying note disclosure normally included in the Company’s Annual Report on Form 10-K have been condensed or omitted. The interim financial information is unaudited but reflects all adjustments (consisting of only normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of financial position of the Company as of ~~June 30, 2016~~March 31, 2017, the results of operations for the three ~~and six~~ months ended ~~June 30, 2016~~March 31, 2017 and ~~2015~~2016, and cash flows for the ~~six~~three-month periods ended ~~June 30, 2016~~March 31, 2017 and ~~2015~~2016. These interim Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016.

There have been no significant changes in significant accounting policies during the ~~six~~three months ended ~~June 30, 2016~~March 31, 2017 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016 with the exception of the adoption of Accounting Standards Update (ASU) ~~No. 2015-02, Consolidation (Topic 810) - Amendments~~2016-09, Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). As required by ASU 2016-09, excess tax benefits recognized on stock-based compensation expense are reflected in the accompanying Consolidated Statements of Operations as a component of the provision for income taxes on a prospective basis (See Note 11). Additionally, excess tax benefits or deficiencies recognized on stock-based compensation expense are classified as an operating activity in the accompanying Consolidated Statements of Cash Flows. The Company has applied this provision retrospectively for the periods prior to the ~~Consolidation Analysis (See Note 3)~~date of adoption. As a result, for the three months ended March 31, 2016, net cash provided by operating activities increased by $624 with a corresponding offset to net cash used for financing activities.

ASU 2016-09 also allows for the option to account for forfeitures as they occur when determining the amount of compensation cost to be recognized, rather than estimating expected forfeitures over the course of a vesting period. The Company elected to account for forfeitures as they occur. In addition, ASU 2016-09 eliminates anticipated windfalls and shortfalls that were included in the calculation of assumed proceeds for computing the dilutive effect of share-based payment awards in the calculation of diluted earnings per share. No adjustments to the Company's prior period reported diluted earnings per share amounts were permitted by ASU ~~No. 2015-07, Fair Value Measurement (Topic 820) - Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (See Note 5).~~2016-09.

The net cumulative effect to the Company from the adoption of ASU 2016-09 was an increase to paid-in capital of $2,582, a reduction to retained earnings of $1,669 and an increase to deferred tax assets of $913 as of January 1, 2017.

6 of 36

Cash and Cash Equivalents

Cash and cash equivalents includes ~~$311,152~~$313,762 and $~~448,957~~374,760 at ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016, respectively, primarily invested in SEI-sponsored open-ended money market mutual funds. The SEI-sponsored mutual funds are Level 1 assets.

Restricted Cash

Restricted cash includes $~~5,000~~3,000 at ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016 segregated for regulatory purposes related to trade-execution services conducted by SEI Investments (Europe) Limited. Restricted cash also includes $500 at ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016, respectively, segregated in special reserve accounts for the benefit of customers of the Company’s broker-dealer subsidiary, SEI Investments Distribution Co. (SIDCO), in accordance with certain rules established by the Securities and Exchange Commission for broker-dealers.

Capitalized Software

The Company capitalized ~~$19,597~~$16,861 and ~~$16,069~~$9,477 of software development costs during the ~~six~~three months ended ~~June 30,~~March 31, 2017 and 2016, ~~and 2015,~~ respectively. The Company's software development costs primarily relate to the continued development of the SEI Wealth Platform^SM(the Platform). The Company capitalized ~~$16,120~~$15,178 and ~~$13,649~~$7,645 of software development costs for

~~6 of 38~~

significant enhancements to the Platform during the ~~six~~three months ended ~~June 30,~~March 31, 2017 and 2016, ~~and 2015,~~ respectively. As of ~~June 30, 2016,~~March 31, 2017, the net book value of the Platform was ~~$279,692.~~$283,565. The Platform has an estimated useful life of 15 years and a weighted average remaining life of ~~6.0~~5.2 years. Amortization expense for the Platform was ~~$22,049~~$11,972 and ~~$20,855~~$10,955 during the ~~six~~three months ended ~~June 30,~~March 31, 2017 and 2016, ~~and 2015,~~ respectively.

The Company also capitalized ~~$3,477~~$1,683 and ~~$2,420~~$1,832 of software development costs during the ~~six~~three months ended ~~June 30,~~March 31, 2017 and 2016, ~~and 2015,~~ respectively, related to ~~a new~~an application for the Investment Managers segment. Capitalized software development costs in-progress at March 31, 2017 associated with the application were $17,191. The application is not yet ready for use.

Earnings per Share

The calculations of basic and diluted earnings per share for the three months ended ~~June 30~~,March 31, 2017 and 2016 ~~and~~ ~~2015~~ are:

For the Three Months Ended June 30, 2016

Income
(Numerator)

Shares
(Denominator)

Per Share
Amount
Basic earnings per common share $ 81,005
161,795,000
$ 0.50
Dilutive effect of stock options —
3,293,000

Diluted earnings per common share $ 81,005
165,088,000
$ 0.49


	For the Three Months Ended June 30, 2015					Three Months Ended March 31,
	Income (Numerator)		Shares (Denominator)	Per Share Amount		2017		2016
Net income						$	88,737	$	77,497
Shares used to compute basic earnings per common share						159,091,000		163,013,000
Dilutive effect of stock options						3,651,000		3,132,000
Shares used to compute diluted earnings per common share						162,742,000		166,145,000
Basic earnings per common share	$	86,240	166,152,000	$	0.52	$	0.56	$	0.48
Dilutive effect of stock options	—		3,821,000
Diluted earnings per common share	$	86,240	169,973,000	$	0.51	$	0.55	$	0.47

~~Employee~~During the three months ended March 31, 2017 and 2016, employee stock options to purchase ~~10,388,000~~11,279,000 and ~~10,007,000~~10,506,000 shares of common stock with an average exercise price of ~~$34.06~~$37.70 and $~~30.02, were outstanding during the~~ ~~three months ended June 30~~, ~~2016~~ ~~and~~ ~~2015~~34.05, respectively, were outstanding but not included in the computation of diluted earnings per common share. These options for the three month periods were not included in the computation of diluted earnings per common share because either the performance conditions have not been satisfied or would have been satisfied if the reporting date was the end of the contingency period or the option’s exercise price was greater than the average market price of the Company’s common stock and the effect on diluted earnings per common share would have been anti-dilutive.

~~The calculations of basic and diluted earnings per share for the six months ended June 30, 2016 and 2015 are:~~Reclassifications

For the Six Months Ended June 30, 2016

Income
(Numerator)

Shares
(Denominator)

Per Share
Amount
Basic earnings per common share $ 158,502
162,404,000
$ 0.98
Dilutive effect of stock options —
3,212,000

Diluted earnings per common share $ 158,502
165,616,000
$ 0.96

For the Six Months Ended June 30, 2015

Income
(Numerator)

Shares
(Denominator)

Per Share
Amount
Basic earnings per common share $ 170,851
166,423,000
$ 1.03
Dilutive effect of stock options —
3,915,000

Diluted earnings per common share $ 170,851
170,338,000
$ 1.00

~~Employee stock options to purchase 10,447,000 and 10,029,000 shares of common stock, with an average exercise price of $34.05 and $30.02, were outstanding during the six months ended~~ ~~June 30, 2016~~ ~~and 2015, respectively, but not included in the computation of diluted earnings per common share because either the performance conditions have not been satisfied or would~~Certain prior year amounts have been satisfied if the reporting date was the end of the contingency period or the option’s exercise price was greater than the average market price of the Company’s common stock and the effect on diluted earnings per common share would have been anti-dilutive.

reclassified to conform to current year presentation.

7 of 3836

Statements of Cash Flows

For purposes of the Consolidated Statements of Cash Flows, the Company considers investment instruments purchased with an original maturity of three months or less to be cash equivalents.

The following table provides the details of the adjustments to reconcile net income to net cash provided by operating activities for the ~~six~~three months ended ~~June 30~~:March 31:


	2016			2015			2017			2016
Net income	$	158,502		$	170,851		$	88,737		$	77,497
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	12,881			11,838			6,800			6,447
Amortization	22,296			20,969			12,022			11,012
Equity in earnings of unconsolidated affiliates	(59,477		)	(71,322		)
Equity in earnings of unconsolidated affiliate							(33,565		)	(29,192		)
Distributions received from unconsolidated affiliate	67,061			74,847			35,265			34,525
Stock-based compensation	7,978			7,609			6,180			3,789
Provision for losses on receivables	297			(128		)	(5		)	51
Deferred income tax expense	(311		)	482			877			(1,029		)
Gain from sale of SEI AK	(2,791		)	(2,791		)	—			(2,791		)
Net gain from investments	(124		)	(212		)
Net (gain) loss from investments							(347		)	126
Tax benefit on stock options exercised (1)							—			624
Change in other long-term liabilities	865			914			965			279
Change in other assets	1,084			(643		)	(849		)	1,099
Other	1,030			(1,269		)	56			676
Change in current asset and liabilities
Decrease (increase) in
Receivables from investment products	1,032			1,473			10,308			(3,535		)
Receivables	(19,357		)	(21,502		)	(24,243		)	(6,585		)
Other current assets	(4,006		)	(6,745		)	(2,298		)	(2,622		)
Increase (decrease) in
Accounts payable	(970		)	(3,813		)	1,406			(157		)
Accrued liabilities	(27,634		)	(27,412		)	(27,754		)	(12,120		)
Deferred revenue	1,094			3,638			(543		)	551
Total adjustments	948			(14,067		)	(15,725		)	1,148
Net cash provided by operating activities	$	159,450		$	156,784		$	73,012		$	78,645

(1) The tax benefit on stock options exercised for the three months ended March 31, 2016 was reclassified to operating activities from financing activities upon the adoption of ASU 2016-09.

New Accounting Pronouncements

On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The updated standard permits the use of either the retrospective or cumulative effect transition method. The FASB has recently issued several amendments to the standard, including principal versus agent guidance and identifying performance obligations. ASU 2014-09 currently becomes effective for the Company during the first quarter 2018.

The Company ~~is currently evaluating~~continues to assess the ~~transition method that will be elected and the effect that the updated standard~~impact ASU 2014-09 will have on its ~~consolidated financial statements and related disclosures.~~

~~In March 2016,~~revenue arrangements with completion, including selecting a transition method, expected by the FASB issued ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (ASU 2016-08), that amends the principal versus agent guidance in ASU 2014-09. ASU 2016-08 clarifies that the analysis must focus on whether the entity has controlthird quarter of 2017. The majority of the ~~goods or~~Company’s services ~~before they~~ are ~~transferred~~bundled together and provided and completed for the client on a monthly basis. The Company expects revenue for these services to continue to be recognized monthly because of the continuous transfer of control to the ~~customer.~~client. Therefore, the adoption of this ASU ~~2016-08 also provides additional guidance about how~~is not expected to ~~apply~~have a material impact on the ~~control principle when services are provided and when goods or services are combined with other goods or services. The effective date~~recognition of revenue for the majority of the ~~standard~~fees recognized for the services provided. However, the Company ~~will coincide with ASU 2014-09 during~~believes the ~~first quarter 2018. The Company is currently evaluating~~adoption of the ~~effect that~~new standard may affect the ~~updated standard will have on its consolidated financial statements and related disclosures.~~

In April 2016, the FASB issued ASU No. 2016-10, Identifying Performance Obligations and Licensing (ASU 2016-10) that amends the revenue guidance in ASU 2014-09 on identifying performance obligations and accounting for licenses oftiming

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~~intellectual property. ASU 2016-10 changed the FASB's previous proposals on renewals of right-to-use licenses and contractual restrictions. The effective date~~ of the recognition of implementation fees recognized in Information processing and software servicing fees as well as fund conversion fees and other ancillary fees recognized in Asset management, administration and distribution fees. Transaction-based and trade execution fees are based on current period activity and is not expected to be affected by the adoption of ASU 2014-09. Due to the complexity of some of our agreements, the actual revenue recognition treatment required under the standard ~~for~~will be dependent on contract-specific terms, and certain aspects may vary in some instances from recognition ratably over the ~~Company will coincide with ASU 2014-09 during~~contract term.

The new standard also modified some of the ~~first quarter 2018.~~principal and agent considerations which may result in changes to gross or net treatment of revenue and expenses but would not affect final net income. The Company is ~~currently~~also evaluating its sales commission programs affected by the ~~effect that~~standard. Previously, sales commission costs were expensed at inception of a sales agreement but under the ~~updated~~new standard will ~~have on its consolidated financial statements~~generally need to be capitalized and ~~related disclosures.~~amortized over the period of contract performance.

~~In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement~~The new standard provides companies with alternative methods of ~~Financial Assets and Financial Liabilities (ASU 2016-01) that will significantly change the income statement impact of equity investments held by an entity,~~adoption and the ~~recognition of changes in fair value of financial liabilities when the fair value option is elected. ASU 2016-01 becomes effective for the Company during the first quarter 2018. The~~ Company is ~~currently evaluating~~in the ~~effect that~~process of determining the ~~updated standard will have on its consolidated financial statements and related disclosures.~~method of adoption, which depends in part upon completion of the evaluation of the remaining revenue arrangements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (ASU 2016-02) requiring lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases with the exception of short-term leases. For lessees, leases will continue to be classified as either operating or finance leases in the income statement. Lessor accounting is similar to the current model but updated to align with certain changes to the lessee model. Lessors will continue to classify leases as operating, direct financing or sales-type leases. The new standard must be adopted using a modified retrospective transition and requires application of the new guidance at the beginning of the earliest comparative period presented. The updated standard is effective for the Company beginning in the first quarter of 2019. Early adoption is permitted. The Company is currently evaluating the transition method that will be elected and the effect that the updated standard will have on its consolidated financial statements and related disclosures.

In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting (ASU 2016-09) requiring an entity to record all excess tax benefits and tax deficiencies as an income tax benefit or expense in the income statement. ASU 2016-09 will also require an entity to elect an accounting policy to either estimate the number of forfeitures or account for forfeitures when they occur. ASU 2016-09 becomes effective for the Company during the first quarter 2017. The Company is currently evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures.

~~Reclassifications~~

~~Certain prior year amounts have been reclassified to conform to current year presentation.~~


Note 2.	Investment in Unconsolidated ~~Affiliates~~Affiliate

LSV Asset Management

The Company has an investment in LSV Asset Management (LSV), a registered investment advisor that provides investment advisory services primarily to institutions, including pension plans and investment companies. LSV is currently an investment sub-advisor for a limited number of SEI-sponsored mutual funds. The Company accounts for its interest in LSV using the equity method because of its less than 50 percent ownership. The Company’s interest in the net assets of LSV is reflected in Investment in unconsolidated ~~affiliates~~affiliate on the accompanying Consolidated Balance Sheets and its interest in the earnings of LSV is reflected in Equity in earnings of unconsolidated ~~affiliates~~affiliate on the accompanying Consolidated Statements of Operations.

At ~~June 30, 2016~~March 31, 2017, the Company’s total investment in LSV was $~~41,996~~48,759. The Company receives partnership distributions from LSV on a quarterly basis. The Company received partnership distributions from LSV of $~~67,061~~35,265 and $~~74,847~~34,525 in the ~~six~~three months ended ~~June 30~~March 31, ~~2016~~2017 and ~~2015~~2016, respectively.

The Company’s proportionate share in the earnings of LSV was $~~30,285~~33,565 and $~~38,327~~29,192 during the three months ended ~~June 30~~March 31, ~~2016~~2017 and ~~2015~~2016, respectively. ~~During the six months ended June 30, 2016 and 2015, the Company’s proportionate share in the earnings of LSV was $59,477 and $72,672, respectively.~~

~~The following table contains the~~These tables contain condensed financial ~~operations~~information of ~~LSV for the~~ LSV:~~three and six~~ ~~months ended~~ ~~June 30, 2016~~ ~~and~~ ~~2015~~:


	Three Months Ended June 30,				Six Months Ended June 30,
Condensed Statement of Operations									Three Months Ended March 31,
	2016		2015		2016		2015		2017		2016
Revenues	$	95,825	$	117,543	$	188,478	$	223,438	$	109,953	$	92,653
Net income	77,790		97,757		152,247		185,182		86,215		74,457

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Condensed Balance Sheets	March 31, 2017		December 31, 2016
Current assets	$	121,189	$	125,872
Non-current assets	1,782		1,927
Total assets	$	122,971	$	127,799

Current liabilities	$	40,506	$	39,303
Partners’ capital	82,465		88,496
Total liabilities and partners’ capital	$	122,971	$	127,799

In April 2016, LSV provided an interest in the partnership to select key employees which reduced the ownership percentage of each existing partner on a pro-rata basis. As a result, the Company's total partnership interest in LSV was reduced from approximately 39.2 percent to approximately 38.9 percent.

Guaranty Agreement with LSV Employee Group III

In October 2012, LSV Employee Group III purchased a portion of the partnership interest of three existing LSV employees for $77,700, of which $69,930 was financed through two syndicated term loan facilities contained in a credit agreement with The PrivateBank and Trust Company. The Company provided an unsecured guaranty for $45,000 of the obligations of LSV Employee Group III to the lenders through a guaranty agreement. The lenders have the right to seek payment from the Company in the event of a default by LSV Employee Group III. LSV agreed to provide an unsecured guaranty for $24,930 of the obligations of LSV Employee Group III to the lenders through a separate guaranty agreement.

The Company’s direct interest in LSV was unchanged as a result of this transaction. The Company has determined that LSV Employee Group III is a ~~VIE;~~variable interest entity (VIE); however, the Company is not considered the primary beneficiary because it does not have the power to direct the activities that most significantly impact the economic performance of LSV Employee Group III either directly or through any financial responsibility from the guaranty.

In September 2014, LSV Employee Group III made the final principal payment related to the term loan guaranteed by LSV. As of ~~July 21, 2016~~April 13, 2017, the remaining unpaid principal balance of the term loan guaranteed by the Company was ~~$12,700.~~$1,065. LSV Employee Group III has met all financial obligations to date regarding the scheduled repayment of the term loans since origination. The Company, in its capacity as guarantor, currently has no obligation of payment relating to the term loan of LSV Employee Group III and, furthermore, fully expects that LSV Employee Group III will meet all of their future obligations regarding the term loan.

Note 3. Variable Interest Entities – Investment Products

The Company or its affiliates have created numerous investment products for its clients in various types of legal entity structures. The Company serves as the Manager, Administrator and Distributor for these investment products and may also serve as the Trustee for some of the investment products. The Company receives asset management, distribution, administration and custodial fees for these services. Clients are the equity investors and participate in proportion to their ownership percentage in the net income or loss and net capital gains or losses of the products, and, on liquidation, will participate in proportion to their ownership percentage in the remaining net assets of the products after satisfaction of outstanding liabilities.

The Company has adopted the amendments contained in ASU No. 2015-02, Consolidation (Topic 810) - Amendments to the Consolidation Analysis (ASU 2015-02) during the first quarter 2016. ASU 2015-02 amends the current guidance for both the VIE and the voting interest entity (VOE) consolidation models. This guidance rescinds the indefinite deferral of the VIE guidance for investment companies that permitted application of the risks and rewards based approach.

The Company has concluded that it is not the primary beneficiary of the entities and; therefore, is not required to consolidate any of the pooled investment vehicles for which it receives asset management, distribution, administration and custodial fees under the VIE model. The entities either do not meet the definition of a VIE or the Company does not hold a variable interest in the entities. The entities either qualify for the money market scope exception, or are entities in which the Company’s asset management, distribution, administration and custodial fees are commensurate with the services provided and include fair terms and conditions, or are entities that are limited partnerships which have substantive kick-out rights. The Company acts as a fiduciary and does not hold any other interests other than insignificant seed money investments in the pooled investment vehicles. For this reason, the Company also concluded that it is not required to consolidate the pooled investment vehicles under the VOE model.

The Company is a party to expense limitation agreements with certain SEI-sponsored money market funds subject to Rule 2a-7 of the Investment Company Act of 1940 which establish a maximum level of ordinary operating expenses incurred by the fund in any fiscal year including, but not limited to, fees of the administrator or its affiliates. Under the terms of these agreements, the Company waived ~~$9,891~~$7,072 and ~~$12,467~~$12,477 in fees during the three months ended ~~June 30,~~March 31, 2017 and 2016, ~~and 2015,~~ respectively. ~~During the six months ended June 30, 2016 and 2015, the Company waived $22,368 and $23,186, respectively, in fees.~~

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Note 4.	Composition of Certain Financial Statement Captions

Receivables

Receivables on the accompanying Consolidated Balance Sheets consist of:


	June 30, 2016			December 31, 2015			March 31, 2017			December 31, 2016
Trade receivables	$	58,291		$	47,179		$	54,973		$	48,683
Fees earned, not billed	166,338			154,919			186,894			168,971
Other receivables	18,401			21,574			10,856			10,826
	243,030			223,672			252,723			228,480
Less: Allowance for doubtful accounts	(946		)	(649		)	(518		)	(523		)
	$	242,084		$	223,023		$	252,205		$	227,957

Fees earned, not billed represents receivables earned but unbilled and results from timing differences between services provided and contractual billing schedules. These billing schedules generally provide for fees to be billed on a quarterly basis. In addition, certain fees earned from investment operations services are calculated based on assets under administration that have a prolonged valuation process which delays billings to clients.

Receivables from investment products on the accompanying Consolidated Balance Sheets primarily represent fees receivable for distribution, investment advisory, and administration services to various regulated investment companies and other investment products sponsored by SEI.

Property and Equipment

Property and Equipment on the accompanying Consolidated Balance Sheets consists of:


	June 30, 2016			December 31, 2015			March 31, 2017			December 31, 2016
Buildings	$	151,642		$	151,604		$	152,171		$	152,171
Equipment	92,608			86,941			108,010			106,759
Land	10,030			10,003			10,030			10,030
Purchased software	123,876			122,433			128,377			128,008
Furniture and fixtures	17,147			16,143			17,407			17,292
Leasehold improvements	14,910			15,393			15,433			15,175
Construction in progress	775			961			2,798			2,077
	410,988			403,478			434,226			431,512
Less: Accumulated depreciation	(272,292		)	(259,501		)	(291,500		)	(285,322		)
Property and Equipment, net	$	138,696		$	143,977		$	142,726		$	146,190

The Company recognized $~~12,881~~6,800 and $~~11,838~~6,447 in depreciation expense related to property and equipment for the ~~six~~three months ended ~~June 30~~March 31, ~~2016~~2017 and ~~2015~~2016, respectively.

Accrued Liabilities

Accrued liabilities on the accompanying Consolidated Balance Sheets consist of:


	June 30, 2016		December 31, 2015		March 31, 2017		December 31, 2016
Accrued employee compensation	$	43,460	$	74,687	$	25,949	$	79,735
Accrued consulting, outsourcing and professional fees	23,108		21,575		29,199		24,428
Accrued sub-advisory, distribution and other asset management fees	33,919		32,674		34,936		41,666
Accrued brokerage fees	9,135		9,058
Accrued dividend payable	—		42,625		—		44,596
Accrued income taxes					36,524		3,721
Other accrued liabilities	36,095		36,968		40,453		46,379
Total accrued liabilities	$	145,717	$	217,587	$	167,061	$	240,525

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Note 5. Fair Value Measurements

The fair value of the Company’s financial assets and liabilities, except for the Company's investment funds sponsored by LSV, is determined in accordance with the fair value hierarchy. The fair value of the Company’s Level 1 financial assets consist mainly of investments in open-ended mutual funds that are quoted daily. Level 2 financial assets consist of Government National Mortgage Association (GNMA) mortgage-backed securities held by the Company's wholly-owned limited purpose federal thrift subsidiary, SEI Private Trust Company (SPTC), Federal Home Loan Bank (FHLB) and other U.S. government agency short-term notes ~~and investment grade commercial paper~~ held by SIDCO. The financial assets held by SIDCO were purchased as part of a cash management program requiring only short term, top-tier investment grade government and corporate securities. The financial assets held by SPTC are debt securities issued by GNMA and are backed by the full faith and credit of the U.S. government. These securities were purchased for the sole purpose of satisfying applicable regulatory requirements and have maturity dates which range from 2020 to 2041.

The Company has retrospectively adopted ASU No. 2015-07, Fair Value Measurement (Topic 820) - Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (ASU 2015-07) during the first quarter 2016 for all periods presented. The fair value of the Company's investment funds sponsored by LSV is measured using the net asset value per share (NAV) as a practical expedient. The NAVs of the funds are calculated by the funds' independent custodian and are derived from the fair values of the underlying investments as of the reporting date. The funds allow for investor redemptions at the end of each calendar month. ~~In accordance with ASU 2015-07, this~~This investment has not been classified in the fair value ~~hierarchy.~~hierarchy but is presented in the tables below to permit reconciliation to the amounts presented on the accompanying Consolidated Balance Sheets.

The valuation of the Company's Level 2 financial assets held by SIDCO and SPTC are based upon securities pricing policies and procedures utilized by third-party pricing vendors.

The pricing policies and procedures applied during the ~~six~~three months ended ~~June 30~~March 31, ~~2016~~2017 were consistent with those as described in our Annual Report on Form 10-K at December 31, ~~2015~~2016. The Company had no Level 3 financial assets or liabilities at ~~June 30, 2016~~March 31, 2017 or December 31, ~~2015~~2016. There were no transfers of financial assets between levels within the fair value hierarchy during the ~~six~~three months ended ~~June 30~~March 31, ~~2016~~2017.

The fair value of certain financial assets and liabilities of the Company was determined using the following inputs:


			Fair Value Measurements at the End of the Reporting Period Using						Fair Value Measurements at the End of the Reporting Period Using
Assets	June 30, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		March 31, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Equity available-for-sale securities	$	24,411	$	24,411	$	—	$	9,900	$	9,900	$	—
Fixed-income available-for-sale securities	63,961		—		63,961		79,362		—		79,362
Fixed-income securities owned	21,290		—		21,290		21,372		—		21,372
Investment funds sponsored by LSV (1)	4,420						5,156
	$	114,082	$	24,411	$	85,251	$	115,790	$	9,900	$	100,734


			Fair Value Measurements at the End of the Reporting Period Using						Fair Value Measurements at the End of the Reporting Period Using
Assets	December 31, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		December 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Equity available-for-sale securities	$	10,657	$	10,657	$	—	$	9,581	$	9,581	$	—
Fixed-income available-for-sale securities	70,637		—		70,637		74,452		—		74,452
Fixed-income securities owned	21,235		—		21,235		21,339		—		21,339
Investment funds sponsored by LSV (1)	4,039						4,858
	$	106,568	$	10,657	$	91,872	$	110,230	$	9,581	$	95,791

(1) The fair value ~~amount~~amounts presented in ~~this table is~~the tables above are intended to permit reconciliation of the fair value hierarchy to the amounts presented on the accompanying Consolidated Balance ~~Sheets.~~Sheets (See Note 6).

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Note 6. Marketable Securities

Investments Available for Sale

Investments available for sale classified as non-current assets consist of:


	At June 30, 2016									At March 31, 2017
	Cost Amount		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value		Cost Amount		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
SEI-sponsored mutual funds	$	22,263	$	55	$	(923	)	$	21,395	$	7,325	$	61	$	(817	)	$	6,569
Equities and other mutual funds	2,964		52		—			3,016		3,224		107		—			3,331
Debt securities	62,645		1,316		—			63,961		79,923		—		(561		)	79,362
	$	87,872	$	1,423	$	(923	)	$	88,372	$	90,472	$	168	$	(1,378	)	$	89,262


	At December 31, 2015									At December 31, 2016
	Cost Amount		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value		Cost Amount		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
SEI-sponsored mutual funds	$	8,474	$	—	$	(742	)	$	7,732	$	7,357	$	24	$	(996	)	$	6,385
Equities and other mutual funds	2,857		68		—			2,925		2,968		228		—			3,196
Debt securities	70,308		329		—			70,637		74,843		—		(391		)	74,452
	$	81,639	$	397	$	(742	)	$	81,294	$	85,168	$	252	$	(1,387	)	$	84,033

Net unrealized ~~gains (losses)~~losses at ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016 were $~~212~~ ~~(net of income tax expense of~~ ~~$288) and~~ ~~$(302)~~882 (net of income tax benefit of $43328) and $836 (net of income tax benefit of $299), respectively. These net unrealized ~~gains and~~ losses are reported as a separate component of Accumulated other comprehensive loss on the accompanying Consolidated Balance Sheets.

There were gross realized gains of $~~237~~261 and gross realized losses of $~~492~~229 from available-for-sale securities during the ~~six~~three months ended ~~June 30~~March 31, ~~2016~~2017. There were gross realized gains of $~~357~~13 and gross realized losses of ~~$320~~$303 from available-for-sale securities during the ~~six~~three months ended ~~June 30~~March 31, ~~2015~~2016. Gains and losses from available-for-sale securities, including amounts reclassified from accumulated comprehensive income, are reflected in Net gain (loss) from investments on the accompanying Consolidated Statements of Operations.

Investments in Affiliated Funds

The Company has an investment in funds sponsored by LSV. The Company records this investment on the accompanying Consolidated Balance Sheets at fair value. Unrealized gains and losses from the change in fair value of these funds are recognized in Net gain (loss) from investments on the accompanying Consolidated Statements of Operations.

The investment primarily consists of U.S. dollar denominated funds that invest primarily in securities of Canadian, Australian and Japanese companies as well as various other global securities. The underlying securities held by the funds are translated into U.S. dollars within the funds. The funds had a fair value of $~~4,420~~5,156 and $~~4,039~~4,858 at ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016, respectively. The Company recognized ~~gross realized~~ gains of ~~$237~~$298 and ~~$381~~$144 during the three ~~and six~~ months ended ~~June 30,~~March 31, 2017 and 2016, respectively, from the change in fair value of the funds. ~~There were no material net gains or losses from the change in fair value of the securities during the three and six months ended June 30, 2015.~~

Securities Owned

The Company’s broker-dealer subsidiary, SIDCO, has investments in U.S. government agency ~~and commercial paper~~ securities with maturity dates less than one year. These investments are reflected as Securities owned on the accompanying Consolidated Balance Sheets. Due to specialized accounting practices applicable to investments by broker-dealers, the securities are reported at fair value and changes in fair value are recorded in current period earnings. The securities had a fair value of $~~21,290~~21,372 and $~~21,235~~21,339 at ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016, respectively. There were no material net gains or losses from the change in fair value of the securities during the three ~~and six~~ months ended ~~June 30, 2016~~March 31, 2017 and ~~2015~~2016.

Note 7. Line of Credit

~~On June 13, 2016 (the Closing Date), the~~The Company ~~entered into~~has a ~~new~~ five-year $300,000 Credit Agreement (the Credit Facility) with Wells Fargo Bank, National Association, ~~(Wells Fargo)~~ and a syndicate of other lenders. The Credit Facility became available on the Closing Date and replaced the former credit facility agreement (the 2012 Credit Facility), also with Wells Fargo, that was scheduled to expire in February 2017. The Credit Facility is scheduled to expire in June 2021,, at which time any aggregate principal amount of loans outstanding becomes payable in full. Any borrowings made under the Credit

~~13 of 38~~

Facility will accrue interest at rates that, at the Company's option, are based on a base rate (the Base Rate) plus a premium that can range from 0.25 percent to 1.00 percent or the London InterBank Offered Rate (LIBOR) plus a premium that can range from 1.25 percent to 2.00 percent depending on the Company’s Leverage Ratio (a ratio of consolidated indebtedness to consolidated

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EBITDA for the four preceding fiscal quarters, all as defined in the related agreement). The Base Rate is defined as the highest of a) the Federal Funds Rate, as published by the Federal Reserve Bank of New York, plus 0.50 percent, b) the prime commercial lending rate of Wells Fargo, c) the applicable LIBOR plus 1.00 percent, or d) 0 percent. The Company also pays quarterly commitment fees based on the unused portion of the Credit Facility. The quarterly fees for the Credit Facility can range from 0.15 percent of the amount of the unused portion to 0.30 percent, depending on the Company’s Leverage Ratio. Certain wholly-owned subsidiaries of the Company have guaranteed the obligations of the Company under the agreement.

The aggregate amount of the Credit Facility may be increased by an additional $100,000 under certain conditions set forth in the agreement.

The Credit Facility contains covenants that restrict the ability of the Company to engage in mergers, consolidations, asset sales, investments, transactions with affiliates, or to incur liens, as defined in the agreement. In the event of a default under the Credit Facility, the Company would also be restricted from paying dividends on, or repurchasing, its common stock without the approval of the lenders. None of the covenants of the Credit Facility negatively affect the Company’s liquidity or capital resources. Upon the occurrence of certain financial or economic events, significant corporate events, or certain other events of default constituting an event of default under the Credit Facility, all loans outstanding may be declared immediately due and payable and all commitments under the agreement may be terminated. The Company had no borrowings under the Credit Facility at ~~June 30, 2016~~March 31, 2017. The Company was in compliance with all covenants of the Credit Facility ~~and 2012 Credit Facility~~ during the ~~six~~three months ended ~~June 30, 2016.~~March 31, 2017.

Note 8. Shareholders’ Equity

Stock-Based Compensation

The Company has only non-qualified stock options outstanding under its equity compensation plans. All outstanding stock options have performance-based vesting provisions specific to each option grant that tie the vesting of the applicable stock options to the Company’s financial performance. The Company’s stock options vest at a rate of 50 percent when a specified diluted earnings per share target is achieved, and the remaining 50 percent when a second, higher specified diluted earnings per share target is achieved. Options do not vest due to the passage of time but solely as a result of achievement of the financial vesting targets. The amount of stock-based compensation expense is based upon management’s estimate of when the earnings per share targets may be achieved.

The Company recognized stock-based compensation expense in its Consolidated Financial Statements in the three ~~and six~~ months ended ~~June 30, 2016~~March 31, 2017 and ~~2015~~2016, respectively, as follows:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2016			2015			2016			2015			2017			2016
Stock-based compensation expense	$	4,189		$	3,859		$	7,978		$	7,609		$	6,180		$	3,789
Less: Deferred tax benefit	(1,469		)	(1,352		)	(2,768		)	(2,659		)	(2,153		)	(1,299		)
Stock-based compensation expense, net of tax	$	2,720		$	2,507		$	5,210		$	4,950		$	4,027		$	2,490

As of ~~June 30, 2016~~March 31, 2017, there was approximately ~~$49,100~~$70,634 of unrecognized compensation cost remaining ~~adjusted for estimated forfeitures,~~ related to unvested employee stock options that management expects will vest and is being amortized.

The Company issues new common shares associated with the exercise of stock options. The total intrinsic value of options exercised during the ~~six~~three months ended ~~June 30~~March 31, ~~2016~~2017 was $~~22,592~~21,407. The total options exercisable as of ~~June 30, 2016~~March 31, 2017 had an intrinsic value of $~~198,296~~174,085. The total intrinsic value for options exercisable is calculated as the difference between the market value of the Company’s common stock as of ~~June 30, 2016~~March 31, 2017 and the weighted average exercise price of the shares. The market value of the Company’s common stock as of ~~June 30, 2016~~March 31, 2017 was $~~48.11~~50.44 as reported by the Nasdaq Stock Market, LLC. The weighted average exercise price of the options exercisable as of ~~June 30, 2016~~March 31, 2017 was $~~21.70~~21.22. Total options that were outstanding and exercisable as of ~~June 30, 2016~~March 31, 2017 were ~~17,897,000~~17,237,000 and ~~7,509,000~~5,958,000, respectively.

Common Stock Buyback

The Company’s Board of Directors, under multiple authorizations, has authorized the repurchase of the Company’s common stock on the open market or through private transactions. The Company purchased ~~3,587,000~~1,099,000 shares at a total cost of $~~154,118~~55,441 during the ~~six~~three months ended ~~June 30~~March 31, ~~2016~~2017., which reduced the total shares outstanding of common stock. The cost of stock purchases during the period includes the cost of certain transactions that settled in the following quarter. As of ~~June 30, 2016,~~March 31, 2017, the Company had approximately ~~$159,008~~$163,311 of authorization remaining for the purchase of common stock under the program.

The Company immediately retires its common stock when purchased. Upon retirement, the Company reduces Capital in excess of par value for the average capital per share outstanding and the remainder is charged against Retained earnings. If the

14 of 3836

Company reduces its Retained earnings to zero, any subsequent purchases of common stock will be charged entirely to Capital in excess of par value.

~~Cash Dividend~~

On May 25, 2016, the Board of Directors declared a cash dividend of $0.26 per share on the Company's common stock, which was paid on June 22, 2016, to shareholders of record on June 14, 2016. Cash dividends declared during the six months ended June 30, 2016 and 2015 were $42,001 and $39,852, respectively.

Note 9. Accumulated Other Comprehensive Loss

The components of Accumulated other comprehensive loss, net of tax, are as follows:

Foreign
Currency
Translation
Adjustments

Unrealized
Gains (Losses)
on Investments
Accumulated Other Comprehensive Loss
Balance, January 1, 2016 $ (24,988 ) $ (302 ) $ (25,290 )

Other comprehensive loss (gain) before reclassifications (2,651 ) 350
(2,301 )
Amounts reclassified from accumulated other comprehensive income —
164
164
Net current-period other comprehensive (loss) gain (2,651 ) 514
(2,137 )

Balance, June 30, 2016 $ (27,639 ) $ 212
$ (27,427 )



	Foreign Currency Translation Adjustments			Unrealized Gains (Losses) on Investments			Accumulated Other Comprehensive Loss
Balance, January 1, 2017	$	(37,119	)	$	(836	)	$	(37,955	)

Other comprehensive gain before reclassifications	2,488			(24		)	2,464
Amounts reclassified from accumulated other comprehensive loss	—			(22		)	(22		)
Net current-period other comprehensive gain	2,488			(46		)	2,442

Balance, March 31, 2017	$	(34,631	)	$	(882	)	$	(35,513	)

Note 10. Business Segment Information

The Company’s reportable business segments are:

Private Banks – provides investment processing and investment management programs to banks and trust institutions, independent wealth advisers and financial advisors worldwide;

Investment Advisors – provides investment management programs to affluent investors through a network of independent registered investment advisors, financial planners and other investment professionals in the United States;

Institutional Investors – provides investment management programs and administrative outsourcing solutions to retirement plan sponsors, hospitals and not-for-profit organizations worldwide;

Investment Managers – provides investment operations outsourcing solutions to fund companies, banking institutions and both traditional and non-traditional investment managers worldwide; and

Investments in New Businesses – focuses on providing investment management programs to ultra-high-net-worth families residing in the United States; developing internet-based investment services and advice solutions; entering new markets; and conducting other research and development activities.

The information in the following tables is derived from the Company’s internal financial reporting used for corporate management purposes. There are no inter-segment revenues for the three ~~and six~~ months ended ~~June 30, 2016~~March 31, 2017 and ~~2015~~2016. Management evaluates Company assets on a consolidated basis during interim periods. The accounting policies of the reportable business segments are the same as those described in Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016.

The following tables highlight certain financial information about each of the Company’s business segments for the three months ended ~~June 30, 2016~~March 31, 2017 and ~~2015~~2016.


	Private Banks		Investment Advisors		Institutional Investors		Investment Managers		Investments In New Businesses			Total		Private Banks		Investment Advisors		Institutional Investors		Investment Managers		Investments In New Businesses			Total
	For the Three Months Ended June 30, 2016													For the Three Months Ended March 31, 2017
Revenues	$	114,836	$	81,883	$	74,674	$	70,938	$	1,500		$	343,831	$	112,634	$	88,238	$	77,004	$	80,487	$	1,621		$	359,984
Expenses	102,862		44,721		36,550		46,968		5,355			236,456		108,550		47,539		38,828		52,065		4,880			251,862
Operating profit (loss)	$	11,974	$	37,162	$	38,124	$	23,970	$	(3,855	)	$	107,375	$	4,084	$	40,699	$	38,176	$	28,422	$	(3,259	)	$	108,122

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	Private Banks		Investment Advisors		Institutional Investors		Investment Managers		Investments In New Businesses			Total		Private Banks		Investment Advisors		Institutional Investors		Investment Managers		Investments In New Businesses			Total
	For the Three Months Ended June 30, 2015													For the Three Months Ended March 31, 2016
Revenues	$	115,333	$	77,753	$	75,980	$	67,280	$	1,399		$	337,745	$	113,361	$	76,679	$	72,897	$	69,918	$	1,408		$	334,263
Expenses	104,727		40,857		36,528		42,141		4,803			229,056		103,741		44,774		35,382		45,275		5,232			234,404
Operating profit (loss)	$	10,606	$	36,896	$	39,452	$	25,139	$	(3,404	)	$	108,689	$	9,620	$	31,905	$	37,515	$	24,643	$	(3,824	)	$	99,859
Gain on sale of subsidiary														2,791		—		—		—		—			2,791
Segment profit (loss)														$	12,411	$	31,905	$	37,515	$	24,643	$	(3,824	)	$	102,650

A reconciliation of the total operating profit reported for the business segments to income from operations in the Consolidated Statements of Operations for the three months ended ~~June 30~~March 31, ~~2016~~2017 and ~~2015~~2016 is as follows:


	2016			2015			2017			2016
Total operating profit from segments	$	107,375		$	108,689		$	108,122		$	99,859
Corporate overhead expenses	(13,852		)	(12,771		)	(14,605		)	(13,047		)
Income from operations	$	93,523		$	95,918		$	93,517		$	86,812

The following tables provide additional information for the three months ended ~~June 30~~March 31, ~~2016~~2017 and ~~2015~~2016 pertaining to our business segments:


	Capital Expenditures (1)				Depreciation				Capital Expenditures (1)				Depreciation
	2016		2015		2016		2015		2017		2016		2017		2016
Private Banks	$	8,454	$	10,108	$	3,199	$	2,976	$	12,850	$	8,712	$	4,410	$	3,181
Investment Advisors	3,267		2,843		964		825		4,532		2,852		733		976
Institutional Investors	696		1,068		339		298		811		796		227		334
Investment Managers	1,743		1,794		1,172		991		1,615		1,322		916		1,190
Investments in New Businesses	121		132		547		571		106		94		368		548
Total from business segments	$	14,281	$	15,945	$	6,221	$	5,661	$	19,914	$	13,776	$	6,654	$	6,229
Corporate overhead	279		476		213		182		152		310		146		218
	$	14,560	$	16,421	$	6,434	$	5,843	$	20,066	$	14,086	$	6,800	$	6,447

(1) Capital expenditures include additions to property and equipment and capitalized software.


	Amortization				Amortization
	2016		2015		2017		2016
Private Banks	$	7,769	$	7,445	$	8,464	$	7,711
Investment Advisors	2,585		2,459		2,850		2,553
Institutional Investors	425		375		323		399
Investment Managers	275		250		216		266
Investments in New Businesses	40		25		119		26
Total from business segments	$	11,094	$	10,554	$	11,972	$	10,955
Corporate overhead	190		57		50		57
	$	11,284	$	10,611	$	12,022	$	11,012

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~~The following tables highlight certain financial information about each of the Company’s business segments for the six months ended June 30, 2016 and 2015.~~

Private
Banks

Investment
Advisors

Institutional
Investors

Investment
Managers

Investments
In New
Businesses
Total
For the Six Months Ended June 30, 2016
Revenues $ 228,197
$ 158,562
$ 147,571
$ 140,856
$ 2,908
$ 678,094
Expenses 206,603
89,495
71,932
92,243
10,587
470,860
Operating profit (loss) $ 21,594
$ 69,067
$ 75,639
$ 48,613
$ (7,679 ) $ 207,234
Gain on sale of subsidiary 2,791
—
—
—
—
2,791
Segment profit (loss) $ 24,385
$ 69,067
$ 75,639
$ 48,613
$ (7,679 ) $ 210,025

Private
Banks

Investment
Advisors

Institutional
Investors

Investment
Managers

Investments
In New
Businesses
Total
For the Six Months Ended June 30, 2015
Revenues $ 226,546
$ 151,768
$ 149,528
$ 132,647
$ 2,700
$ 663,189
Expenses 203,983
79,916
71,739
82,764
9,669
448,071
Operating profit (loss) $ 22,563
$ 71,852
$ 77,789
$ 49,883
$ (6,969 ) $ 215,118
Gain on sale of subsidiary 2,791
—
—
—
—
2,791
Segment profit (loss) $ 25,354
$ 71,852
$ 77,789
$ 49,883
$ (6,969 ) $ 217,909

~~A reconciliation of the total operating profit reported for the business segments to income from operations in the Consolidated Statements of Operations for the six months ended~~ ~~June 30, 2016~~ ~~and 2015 is as follows:~~

2016 2015
Total operating profit from segments $ 207,234
$ 215,118
Corporate overhead expenses (26,899 ) (26,130 )
Income from operations $ 180,335
$ 188,988

~~The following tables provide additional information for the six months ended~~ ~~June 30, 2016~~ ~~and 2015 pertaining to our business segments:~~

Capital Expenditures Depreciation
2016 2015 2016 2015
Private Banks $ 17,166
$ 18,610
$ 6,380
$ 6,073
Investment Advisors 6,119
6,161
1,940
1,663
Institutional Investors 1,492
2,015
673
601
Investment Managers 3,065
3,842
2,362
1,990
Investments in New Businesses 215
283
1,095
1,134
Total from business segments $ 28,057
$ 30,911
$ 12,450
$ 11,461
Corporate Overhead 589
885
431
377
$ 28,646
$ 31,796
$ 12,881
$ 11,838

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Amortization
2016 2015
Private Banks $ 15,480
$ 14,696
Investment Advisors 5,138
4,859
Institutional Investors 824
750
Investment Managers 541
500
Investments in New Businesses 66
50
Total from business segments $ 22,049
$ 20,855
Corporate Overhead 247
114
$ 22,296
$ 20,969

Note 11. Income Taxes

The gross liability for unrecognized tax benefits at ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016 was $~~15,328~~18,077 and $~~14,517~~17,287, respectively, exclusive of interest and penalties, of which $~~13,674~~15,633 and $~~12,898~~14,868 would affect the effective tax rate if the Company were to recognize the tax benefit.

The Company classifies interest and penalties on unrecognized tax benefits as income tax expense. As of ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016, the combined amount of accrued interest and penalties related to tax positions taken on tax returns was $~~1,437~~1,382 and $~~1,391~~1,224, respectively.


	June 30, 2016		December 31, 2015		March 31, 2017		December 31, 2016
Gross liability for unrecognized tax benefits, exclusive of interest and penalties	$	15,328	$	14,517	$	18,077	$	17,287
Interest and penalties on unrecognized benefits	1,437		1,391		1,382		1,224
Total gross uncertain tax positions	$	16,765	$	15,908	$	19,459	$	18,511
Amount included in Current liabilities	$	4,503	$	4,511	$	3,849	$	3,866
Amount included in Other long-term liabilities	12,262		11,397		15,610		14,645
	$	16,765	$	15,908	$	19,459	$	18,511

The ~~Company’s~~Company's effective income tax rate for the three months ended March 31, 2017 and 2016 differs from the federal income tax statutory rate due to the following:



	2017		2016
Statutory rate	35.0	%	35.0	%
State taxes, net of federal tax benefit	1.5		1.4
Foreign tax expense and tax rate differential	(0.8	)	(0.7	)
Tax benefit from stock option exercises	(4.2	)	—
Other, net	(0.5	)	(0.5	)
	31.0	%	35.2	%

The decrease in the tax rate for the three months ended March 31, 2017 was primarily due to the adoption of ASU 2016-09. Under this standard, the tax effects of stock option exercises are treated as discrete items in the reporting period in which they occur. Therefore, the tax effect of stock option exercises is not spread over the entire year through the use of the annual effective tax rate, ~~was~~ ~~35.2 percent~~ ~~and~~ ~~35.6 percent~~but instead is recorded entirely in the period in which the tax deduction arose. Accordingly, the Company recorded the income tax benefit as a discrete item in income for the three months ended ~~June 30~~, ~~2016~~ ~~and~~ ~~2015, respectively. For the six months ended June 30, 2016 and 2015, the~~March 31, 2017. The Company's effective tax rate ~~was 35.2 percent and 35.5 percent, respectively.~~could fluctuate significantly on a quarterly basis due to the tax effects of stock-based compensation.

The Company files income tax returns in the United States on a consolidated basis and in many U.S. state and foreign jurisdictions. The Company is subject to examination of income tax returns by the Internal Revenue Service (IRS) and other domestic and foreign tax authorities. The Company is no longer subject to U.S. federal income tax examination for years before ~~2012~~2013 and is no longer subject to state, local or foreign income tax examinations by authorities for years before ~~2008.~~2010.

The Company estimates it will recognize ~~$4,503~~$3,849 of gross unrecognized tax benefits which is expected to be paid within one year due to the expiration of the statute of limitations and resolution of income tax audits and is netted against the current payable account. These unrecognized tax benefits are related to tax positions taken on certain federal, state, and foreign tax returns. However, the timing of the resolution of income tax examinations is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year. While it is reasonably possible that some issues under examination could be resolved in the next twelve months, based upon the current facts and circumstances, the Company cannot reasonably estimate the timing of such resolution or the total range of potential changes as it relates to the current unrecognized tax benefits that are recorded as part of the Company’s financial statements.

Note 12. Commitments and Contingencies

In the normal course of business, the Company is party to various claims and legal proceedings.

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Louisiana Securities ~~Act.~~Law or so as to be secondarily liable under that statute for sales of certificates of deposit made by Stanford Trust Company. Two of the ~~five~~ actions also include claims for violations of the Louisiana Racketeering Act and possibly ~~conspiracy. In addition, another group of plaintiffs filed~~conspiracy, and a ~~lawsuit in the 23rd Judicial District Court for the Parish of Ascension against SEI~~

~~18 of 38~~

~~and SPTC and other defendants, asserting~~third also asserts claims of negligence, breach of contract, breach of fiduciary duty, violations of the uniform fiduciaries law, negligent misrepresentation, detrimental reliance, violations of the Louisiana ~~Securities Act and Louisiana~~ Racketeering Act, and conspiracy.

The ~~underlying allegations in all actions relate to~~procedural status of the ~~purported role of SPTC in providing back-office services to Stanford Trust Company.~~seven cases varies. The ~~petitions allege that SEI and SPTC aided and abetted or otherwise participated~~Lillie case, filed originally in the ~~sale of “certificates of deposit” issued by Stanford International Bank.~~

~~The case filed in Ascension Parish was removed to federal court and transferred by the~~19th Judicial ~~Panel on Multidistrict Litigation to the United States~~ District Court for the ~~Northern District~~Parish of ~~Texas. The schedule for responding to that petition has not yet been established.~~

~~The plaintiffs in two of the cases filed in~~ East Baton Rouge, ~~have granted SEI and SPTC an indefinite extension to respond to the petitions.~~

~~In a third East Baton Rouge action,~~was brought as a class action and is procedurally the most advanced of the cases. SEI and SPTC filed exceptions, which the Court granted in part, dismissing ~~the~~ claims under the Louisiana Unfair Trade Practices ~~Act. Plaintiffs then filed a motion for class certification,~~Act and ~~SEI and SPTC also filed a motion for summary judgment. The Court deferred~~permitting the ~~motion for summary judgment, stating that~~claims under the motion would not be set for hearing until after the hearing on class certification. After the Court held a hearing on class certification, it certified a class composed of persons who purchased or renewed any Stanford International Bank certificates of deposit (SIB CDs) in Louisiana between January 1, 2007 and February 13, 2009 or any person for whom the Stanford Trust Company purchased SIB CDs in Louisiana between January 1, 2007 and February 13, 2009. SEI and SPTC filed motions for appeal from the class certification judgments. On February 1, 2013, plaintiffs filed a motion for LeaveSecurities Law to File a First Amended and Restated Class Action Petition in which they asked the Court to allow them to amend the petition and add claims against certain of SEI's insurance carriers. On February 5, 2013, the Court granted two of the motions for appeal and the motion for leave to amend. On February 28, 2013, SEI responded to the First Amended and Restated Class Action Petition by seeking dismissal of the action.go forward. On March 11, 2013, ~~the~~ newly-added insurance carrier defendants removed the case to the United States District Court for the Middle District of Louisiana. ~~SEI notified~~On August 7, 2013, the Judicial Panel on Multidistrict Litigation (MDL) of this case as a potential tag-along action. Plaintiffs filed a motion to remand the action to state court. On March 25, 2013, SEI filed a motion requesting that the federal court decline to adopt the state court's order regarding class certification, which the court dismissed without prejudice to renew upon a determination of the jurisdictional issue. On August 7, 2013, the MDL Panel transferred the matter ~~against SEI~~ to the Northern District of ~~Texas. On October 1, 2014, SEI filed a renewed motion to dismiss in~~ Texas where MDL 2099, In re: Stanford Entities Securities Litigation (“the Northern District of Texas, and on October 6, 2014, the District Court denied plaintiffs’ motion to remand. On June 17, 2015, the Court denied the motion to dismiss, and on June 24, 2015 set a briefing schedule for SEI and SPTC’s motion challenging the Louisiana court’s decision to certify a class, which motion was filed on July 15, 2015. SEI and SPTC filed their answer on July 1, 2015, and this caseStanford MDL”), is now pending in the Northern District of Texas. On July 15, 2015, SEI and SPTC also filed motions seeking reconsideration of the District Court’s June 17 denial of the motion to dismiss or, in the alternative, seeking leave to pursue an interlocutory appeal of certain elements of the denial, as well as a motion seeking partial judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) with respect to claims brought under Section 712(D) of the Louisiana Securities Law.pending. On September 22, 2015, the District Court ~~granted~~on the motion of SEI and ~~SPTC’s motion for reconsideration of the June 17 denial of the motion to dismiss and~~SPTC dismissed plaintiffs’ claims for primary liability under Section 714(A) of the Louisiana Securities Law, but declined to dismiss ~~or certify~~plaintiffs’ claims for ~~interlocutory appeal, plaintiffs’ claims~~secondary liability under Section 714(B) of the Louisiana Securities ~~Law.~~Law based on the allegations pled by plaintiffs. On November 4, 2015, the District Court granted SEI and SPTC's motion to dismiss plaintiffs' claims under Section 712(D) of the Louisiana Securities Law. Consequently, the only claims of plaintiffs still pending before the District Court in Lillie are plaintiffs' claims for secondary liability against SEI and SPTC under Section 714(B) of the Louisiana Securities Law. On May 2, 2016, the District Court certified the class as being "all persons for whom Stanford Trust Company purchased or renewed Stanford Investment Bank Limited certificates of deposit in Louisiana between January 1, 2007 and February 13, 2009". ~~SEI has asked~~Notice of the ~~Court to clarify~~pendency of the class ~~definition because~~action was mailed to potential class members on October 4, 2016.

On December 1, 2016, a group of plaintiffs who opted out of the ~~one remaining claim~~Lillie class filed a complaint against SEI and SPTC in the ~~action - secondary liability under~~United States District Court in the Middle District of Louisiana, alleging claims essentially the same as those in Lillie. In January 2017, the Judicial Panel on Multidistrict Litigation transferred the proceeding to the Northern District of Texas and the Stanford MDL. During February 2017, SEI filed its response to the Complaint and in March 2017 the District Court for the Northern District of Texas approved the stipulated dismissal of all claims in this complaint predicated on Section 712(D) or Section 714(A) of the Louisiana Securities ~~Law -requires proof~~Law.

Another one of the cases, filed in the 23rd Judicial District Court for the Parish of Ascension, also was removed to federal court and transferred by the Judicial Panel on Multidistrict Litigation to the Northern District of Texas and the Stanford MDL. The schedule for responding to that ~~Stanford Trust Company sold or offered~~Complaint has not yet been established.

The plaintiffs in two of the cases remaining in the Parish of East Baton Rouge have granted SEI and SPTC indefinite extensions to ~~sell securities.~~respond to the petitions.

In the two ~~other~~additional cases, filed in East Baton Rouge and brought by the same counsel who filed the ~~class~~Lillie action, virtually all of the litigation to date has involved motions practice and appellate litigation regarding the existence of federal subjection matter jurisdiction under the federal Securities Litigation Uniform Standards Act (SLUSA). After the matter was removed to the United States District Court for the Northern District of Texas, that court dismissed the action under SLUSA. The Court of Appeals for the Fifth Circuit reversed that order, and the Supreme Court of the United States affirmed the Court of Appeals judgment on February 26, 2014. The matter was remanded to state court and no material activity has taken place since that date.

While the outcome of this litigation isremains uncertain, ~~given its early phase,~~ SEI and SPTC believe that they have valid defenses to plaintiffs' claims and intend to defend the lawsuits vigorously. Because of ~~the~~ uncertainty ofin the make-up of the ~~classes,~~Lillie class, the specific theories of liability that may survive a motion for summary judgment or other dispositive motion, the relative lack of discovery regarding damages, causation, mitigation and other aspects that may ultimately bear upon loss, the Company is not reasonably able to provide an estimate of loss, if any, with respect to the foregoing lawsuits.

~~19 of 38~~

A lawsuit entitled Steven Curd and Rebel Curd v. SEI Investments Management Corporation was filed against SIMC in the United States District Court for the Eastern District of Pennsylvania on December 11, 2013. On August 28, 2014, the Court granted SIMC’s motion to dismiss the initial complaint in the lawsuit, but also granted plaintiffs leave to amend the complaint.

On October 2, 2014, plaintiffs filed an amended complaint. In the amended complaint, SEI Investments Global Funds Services (SGFS) was added as a defendant. The plaintiffs bring the case as a shareholder derivative action against SIMC and SGFS on behalf of certain SEI funds. The claims are based on Section 36(b) of the Investment Company Act of 1940, as amended, which allows shareholders of a mutual fund to sue the investment adviser of the fund or its affiliates for an alleged breach of fiduciary duty with respect to compensation received by the adviser or its affiliates. The plaintiffs have brought the suit against SIMC and SGFS with respect to five specific SEI Funds: the High Yield Bond, Tax-Managed Large Cap, and Tax-Managed Small/Mid Cap Funds, each of which is a series of the SEI Institutional Managed Trust, the Intermediate Term Municipal Fund, which is a series of the SEI Tax Exempt Trust, and the International Equity Fund, which is a series of the SEI Institutional International Trust (the SEI Funds). The plaintiffs seek: (1) damages for the SEI Funds in the amount of the alleged “excessive” fees earned by SIMC and SGFS beginning from the one year period prior to the filing of the lawsuit, plus interest, costs, and fees; (2) orders declaring that SIMC and SGFS allegedly violated Section 36(b) and enjoining SIMC and SGFS from further alleged violations; and (3) rescission of SIMC’s and SGFS’s contracts with the funds, and restitution of all allegedly excessive fees paid beginning from the one year period prior to the filing of the lawsuit, plus interest, costs, and fees. On November 24, 2014, SIMC and SGFS filed a motion to dismiss the amended complaint. On July 13, 2015, the Court denied the motion to dismiss with respect to SIMC, and granted the motion to dismiss with respect to SGFS. On September 18, 2015, plaintiffs filed a second amended complaint reinstating SGFS as a defendant in the case. The parties are currently engaged in discovery, which is expected to be completed in early 2017. While the outcome of this litigation is uncertain given its early phase, SIMC and SGFS believe that they have valid defenses to plaintiffs' claims and intend to defend the lawsuit vigorously, and SIMC and SGFS are not reasonably able to provide an estimate of the ultimate loss, if any, with respect to this lawsuit.

On November 26, 2014, a Writ of Summons was issued to two of our subsidiaries, SEI Investments - Global Fund Services Limited (GFSL) and SEI Investments - ~~Trustee~~Depositary & Custodial Services (Ireland) Limited (T(D&C), to appear before the Court of First Instance Antwerp, Belgium. The plaintiffs in this case allege that through their initial investments in collective investment funds domiciled in Netherlands and subsequent transfer of claim rights to a Belgium domiciled partnership, they are beneficial owners of a portfolio of life settlement policies (the Portfolio) which lapsed due to a failure to make premium payments. The plaintiffs seek to recover jointly and severally from nine defendants including GFSL and TD&C, damages of approximately $84 million. GFSL and TD&C’s involvement in the litigation appears to arise out of their historical provision of administration and custody services, respectively, to the Strategic Life Settlement Fund PLC, who, together with its managers, appear to be the principal defendants in this claim. On December 4, 2015, the Belgium Court dismissed plaintiff's claims for a lack of jurisdiction. On December 22, 2015, the plaintiffs appealed the dismissal. The appeal is still pending.

18 of 36

the lawsuit vigorously, and GFSL and TD&C are not reasonably able to provide an estimate of the ultimate loss, if any, with respect to this lawsuit.

Note 13. Sale of SEI Asset Korea

On July 31, 2012, the Company, MetLife International Holdings, Inc. (MetLife) and International Finance Corporation (IFC) entered into a definitive agreement with Baring Asset Management Limited (Barings) to sell all ownership interest in SEI Asset Korea (SEI AK). SEI AK was located in South Korea and provided domestic equity and fixed-income investment management services to financial institutions and pension funds.

On March 28, 2013, all conditions subject to closing the transaction were satisfied and all ownership interests in SEI AK were transferred to Barings. Under the terms of the agreement, a portion of the purchase price was paid upon closing with up to an additional $11,220 payable to the Company as a contingent purchase price with respect to three one-year periods ending on December 31, 2013, 2014, and 2015 depending upon whether SEI AK achieves specified revenue measures during such periods. The Company recognized a pre-tax ~~gains~~gain of $2,791, or $0.01 diluted earnings per share, during the ~~six~~three months ended ~~June 30,~~March 31, 2016 ~~and 2015~~ representing the final annual ~~payments~~payment under the terms of the agreement. The Company's ~~gains~~gain from the sale of SEI AK are included in Gain on sale of subsidiary on the accompanying Consolidated Statement of Operations.

2019 of 3836

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(In thousands, except asset balances and per share data)

This discussion reviews and analyzes the consolidated financial condition, at ~~June 30, 2016~~ ~~and~~ ~~2015~~, the consolidated results of operations ~~for the~~ ~~three and six~~ ~~months ended~~ ~~June 30, 2016~~ ~~and~~ ~~2015~~ and other key factors that may affect future performance. This discussion should be read in conjunction with the Consolidated Financial Statements, the Notes to the Consolidated Financial Statements and the Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016.

Overview

Consolidated Summary

We are a leading global provider of investment processing, investment management and investment operations solutions. We help corporations, financial institutions, financial advisors and ultra-high-net-worth families create and manage wealth by providing comprehensive, innovative, investment and investment-business solutions. Investment processing fees are earned as monthly fees for contracted services, including computer processing services, software licenses and investment operations services, as well as transaction-based fees for providing securities valuation and trade-execution. Investment operations and investment management fees are earned as a percentage of average assets under management, administration or ~~administration.~~advised assets. As of ~~June 30, 2016~~March 31, 2017, through our subsidiaries and partnerships in which we have a significant interest, we manage, advise or administer $~~707.0~~778.6 billion in hedge, private equity, mutual fund and pooled or separately managed assets, including ~~$269.3~~$297.1 billion in assets under management and ~~$437.7~~$478.1 billion in client assets under administration. Our affiliate, LSV Asset Management (LSV), manages $~~78.4~~90.6 billion of assets which are included as assets under management.

Our Condensed Consolidated Statements of Operations for the three ~~and six~~ months ended ~~June 30, 2016~~March 31, 2017 and ~~2015~~2016 were:


	Three Months Ended June 30,					Percent Change			Six Months Ended June 30,								Percent Change		Three Months Ended March 31,								Percent Change*
	2016		2015					2016				2015				2017				2016							Percent Change*
Revenues	$	343,831	$	337,745		Percent Change	2	%		$	678,094			$	663,189		Percent Change			2	%	$	359,984			$	334,263		8	%
Expenses	250,308		241,827			4	%		497,759				474,201				5	%	266,467				247,451				8	%
Income from operations	93,523		95,918			(2	)%		180,335				188,988				(5	)%	93,517				86,812				8	%
Net gain (loss) from investments	250		(38		)	NM			124				212				NM		347				(126		)		NM
Interest income, net of interest expense	846		641			32	%		1,815				1,497				21	%	1,231				969				27	%
Equity in earnings from unconsolidated affiliates	30,285		37,289			(19	)%		59,477				71,322				(17	)%
Equity in earnings from unconsolidated affiliate																			33,565				29,192				15	%
Gain on sale of subsidiary	—		—			—	%		2,791				2,791				—	%	—				2,791				NM
Income before income taxes	124,904		133,810			(7	)%		244,542				264,810				(8	)%	128,660				119,638				8	%
Income taxes	43,899		47,570			(8	)%		86,040				93,959				(8	)%	39,923				42,141				(5	)%
Net income	81,005		86,240			(6	)%		158,502				170,851				(7	)%	88,737				77,497				15	%
Diluted earnings per common share	$	0.49	$	0.51		(4	)%		$	0.96			$	1.00			(4	)%	$	0.55			$	0.47			17	%

* Variances noted "NM" indicate the percent change is not meaningful.

The following items had a significant impact on our financial results for the three ~~and six~~ months ended ~~June 30, 2016~~March 31, 2017 and ~~2015~~2016:

Revenue growth was primarily driven by higher Asset management, administration and distribution fees from improved cash flows from new and existing ~~clients. The~~clients and market ~~volatility occurring during the course of the preceding 12 months negatively impacted our asset-based fee revenues and partially offset our revenue growth. Despite the volatile market conditions, our~~appreciation. Our average assets under management, excluding LSV, increased ~~$10.1~~$20.7 billion, or ~~six~~11 percent, to ~~$184.9~~$201.4 billion in the first ~~six~~three months of ~~2016~~2017 as compared to ~~$174.8~~$180.7 billion during the first ~~six~~three months of ~~2015~~2016. Our average assets under administration increased ~~$28.7~~$69.3 billion, or ~~seven~~17 percent, to ~~$419.2~~$474.0 billion in the first ~~six~~three months of 2017 as compared to $404.7 billion during the first three months of 2016 ~~as compared to $390.4 billion during the first six months of~~ ~~2015~~.

Information processing and software servicing fees in our Private Banks segment increased $4.0 million in the first six months of 2016 compared to the prior year period primarily due to increased assets from new and existing clients processed on the SEI Wealth Platform.

Our proportionate share in the earnings of LSV ~~decreased~~increased to ~~$59.5~~$33.6 million in the first ~~six~~three months of ~~2016~~2017 as compared to ~~$72.7~~$29.2 million in the first ~~six~~three months of ~~2015~~2016 primarily due to ~~the decrease in~~increased assets under management from LSV's existing clients ~~from volatile~~due to market ~~conditions and a reduction in performance fees.~~appreciation; however, our earnings were negatively impacted by increased personnel expenses of LSV.

We capitalized ~~$16.1~~$15.2 million in the first ~~six~~three months of ~~2016~~2017 for the SEI Wealth Platform as compared to ~~$13.6~~$7.6 million in the first ~~six~~three months of ~~2015.~~2016. Amortization expense related to the Platform increased to ~~$22.0~~$12.0 million during the first

~~21 of 38~~

~~six~~ three months of ~~2016~~2017 as compared to ~~$20.9~~$11.0 million during the first ~~six~~three months of ~~2015~~2016 due to continued enhancements to the Platform.

As we continue the development of new elements of the Platform, our expenses related to maintenance, ~~improvements~~enhancements and support have increased. These costs are primarily recognized in personnel and consulting costs and are not eligible

20 of 36

for capitalization. These increased costs primarily impacted the Private Banks and Investment Advisors business segments. ~~We expect these costs to continue to increase through the remainder of 2016 and into 2017.~~

We also capitalized $~~3.5~~1.7 million in the first ~~six~~three months of 2017 as compared to $1.8 million in the first three months of 2016 for ~~a new~~an application being developed for the Investment Managers segment. This new offering includes components that leverage upon the current infrastructure and add significant enhancements designed to aggregate, transact and process data. The application has not yet been placed into service.

Our operating expenses, primarily personnel costs, in our Investment Advisors and Investment Managers segments increased. These expenses primarily consist of operational and marketing costs and are mainly related to servicing existing clients and acquiring new clients. ~~Additionally, sales compensation expense in our Private Banks and Investment Managers segments increased due to new business activity.~~ These operating expenses are included in Compensation, benefits and other personnel costs on the accompanying Consolidated Statements of Operations.

Stock-based compensation increased to $6.2 million in the first three months of 2017 as compared to $3.8 million in the first three months 2016. The ~~strengthening~~increase was primarily due to stock option awards granted in late 2016.

Our effective tax rate was 31.0 percent during the first three months of 2017 as compared to 35.2 percent during the ~~U.S. dollar against~~first three months of 2016. The decline in our effective tax rate was primarily due to the ~~British pound and Canadian dollar during 2016 negatively impacted our revenues and operating income of our Private Banks and Institutional Investors segments. A prolonged period~~adoption of a ~~strengthening U.S. dollar against these currencies~~new accounting standard which requires all excess tax benefits or deficiencies to be recorded as an income tax benefit or expense in the income statement. Our quarterly effective tax rate could ~~have a further negative impact~~fluctuate significantly due to ~~our revenues and operating profits~~the tax effects of ~~these segments.~~stock-based compensation (See Note 11 to the Consolidated Financial Statements for more information).

We recorded our final pre-tax ~~gains~~gain of $2.8 million, or $.01 diluted earnings per share, from the sale of SEI Asset Korea (SEI AK) in the first ~~six~~three months of ~~2016 and 2015.~~2016. The ~~gains~~gain from the sale ~~are~~is included in Gain on sale of subsidiary on the accompanying Consolidated Statement of Operations (See Note 13 to the Consolidated Financial Statements for more information).

~~Our effective tax rate was 35.2 percent during the first six months of~~ ~~2016~~ ~~as compared to 35.5 percent during the first six months of~~ ~~2015~~.

We continued our stock repurchase program during ~~2016~~2017 and purchased ~~3.6~~1.1 million shares for ~~$154.1~~$55.4 million in the ~~six~~three month period.

2221 of 3836

Ending Asset Balances

(In millions)

This table presents ending assets of our clients, or of our clients’ customers, for which we provide management or administrative services through our subsidiaries and partnerships in which we have a significant interest.


	As of June 30,				Percent Change		As of March 31,				Percent Change
	2016		2015		Percent Change		2017		2016		Percent Change
Private Banks:
Equity and fixed-income programs	$	18,328	$	19,686	(7	)%	$	19,034	$	18,370	4	%
Collective trust fund programs	3		13		(77	)%	5		4		25	%
Liquidity funds	4,848		5,280		(8	)%	3,903		5,521		(29	)%
Total assets under management	$	23,179	$	24,979	(7	)%	$	22,942	$	23,895	(4	)%
Client proprietary assets under administration	18,537		17,485		6	%
Client assets under administration							20,760		18,324		13	%
Total assets	$	41,716	$	42,464	(2	)%	$	43,702	$	42,219	4	%
Investment Advisors:
Equity and fixed-income programs	50,016		46,951		7	%	55,311		47,357		17	%
Collective trust fund programs	5		8		(38	)%	5		7		(29	)%
Liquidity funds	3,661		2,817		30	%	2,645		5,051		(48	)%
Total assets under management	$	53,682	$	49,776	8	%	$	57,961	$	52,415	11	%
Institutional Investors:
Equity and fixed-income programs	75,944		75,341		1	%	80,136		73,468		9	%
Collective trust fund programs	88		93		(5	)%	89		97		(8	)%
Liquidity funds	2,526		2,960		(15	)%	2,759		2,390		15	%
Total assets under management	$	78,558	$	78,394	—	%	$	82,984	$	75,955	9	%
Advised assets							3,228		—		NM
Total assets							86,212		75,955		14	%
Investment Managers:
Equity and fixed-income programs	73		24		NM		84		72		17	%
Collective trust fund programs	33,841		20,632		64	%	40,646		32,385		26	%
Liquidity funds	750		1,007		(26	)%	911		733		24	%
Total assets under management	$	34,664	$	21,663	60	%	$	41,641	$	33,190	25	%
Client proprietary assets under administration (A)	419,139		381,963		10	%
Client assets under administration (A)							457,356		400,579		14	%
Total assets	$	453,803	$	403,626	12	%	$	498,997	$	433,769	15	%
Investments in New Businesses:
Equity and fixed-income programs	820		779		5	%	931		803		16	%
Liquidity funds	37		57		(35	)%	79		41		93	%
Total assets under management	$	857	$	836	3	%	$	1,010	$	844	20	%
Advised assets							85		—		NM
Total assets							1,095		844		30	%
LSV:
Equity and fixed-income programs	$	78,352	$	86,334	(9	)%	$	90,611	$	78,390	16	%
Total:
Equity and fixed-income programs (B)	223,533		229,115		(2	)%	246,107		218,460		13	%
Collective trust fund programs	33,937		20,746		64	%	40,745		32,493		25	%
Liquidity funds	11,822		12,121		(2	)%	10,297		13,736		(25	)%
Total assets under management	$	269,292	$	261,982	3	%	$	297,149	$	264,689	12	%
Client proprietary assets under administration (C)	437,676		399,448		10	%
Total assets under management and administration	$	706,968	$	661,430	7	%
Advised assets (C)							3,313		—		NM
Client assets under administration (D)							478,116		418,903		14	%
Total assets under management, advisement and administration							$	778,578	$	683,592	14	%

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(A)	Client assets under administration in the Investment Managers segment include ~~$50.0~~$47.4 billion of assets that require limited services and therefore are at fee levels below our normal full service assets (as of ~~June 30, 2016)~~March 31, 2017).


(B)	Equity and fixed-income programs include ~~$4.6~~$5.0 billion of assets invested in ~~various~~ asset allocation funds at ~~June 30, 2016.~~March 31, 2017.


(C)	Assets for which SEI acts as an advisor to the accounts. These assets were excluded in previous periods.


(D)	In addition to the numbers presented, SEI also administers an additional ~~$12.0~~$10.1 billion in Funds of Funds assets (as of

~~June 30, 2016)~~March 31, 2017) on which SEI does not earn an administration fee.

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Average Asset Balances

(In millions)

This table presents average asset balances of our clients, or of clients’ customers, for which we provide management or administrative services through our subsidiaries and partnerships in which we have a significant interest.


	Three Months Ended June 30,				Percent Change			Six Months Ended June 30,						Percent Change		Three Months Ended March 31,				Percent Change
	2016		2015				2016			2015			2017				2016			Percent Change
Private Banks:					Percent Change									Percent Change
Equity and fixed-income programs	$	18,504	$	19,872	(7	)%		$	18,074		$	19,371		(7	)%	$	18,498	$	17,644	5	%
Collective trust fund programs	3		12		(75	)%		3			10			(70	)%	4		3		33	%
Liquidity funds	5,118		5,256		(3	)%		5,390			5,506			(2	)%	4,051		5,661		(28	)%
Total assets under management	$	23,625	$	25,140	(6	)%		$	23,467		$	24,887		(6	)%	$	22,553	$	23,308	(3	)%
Client proprietary assets under administration	18,436		17,823		3	%		17,842			17,664			1	%
Client assets under administration																20,223		17,248		17	%
Total assets	$	42,061	$	42,963	(2	)%		$	41,309		$	42,551		(3	)%	$	42,776	$	40,556	5	%
Investment Advisors:
Equity and fixed-income programs	48,783		47,027		4	%		46,979			45,918			2	%	54,446		45,175		21	%
Collective trust fund programs	6		8		(25	)%		7			9			(22	)%	5		7		(29	)%
Liquidity funds	4,061		2,819		44	%		4,535			2,946			54	%	2,559		5,009		(49	)%
Total assets under management	$	52,850	$	49,854	6	%		$	51,521		$	48,873		5	%	$	57,010	$	50,191	14	%
Institutional Investors:
Equity and fixed-income programs	74,984		75,426		(1	)%		73,382			74,593			(2	)%	77,852		71,779		8	%
Collective trust fund programs	96		94		2	%		97			95			2	%	90		98		(8	)%
Liquidity funds	2,868		3,354		(14	)%		2,851			3,188			(11	)%	2,891		2,834		2	%
Total assets under management	$	77,948	$	78,874	(1	)%		$	76,330		$	77,876		(2	)%	$	80,833	$	74,711	8	%
Advised assets																3,125		—		NM
Total assets																83,958		74,711		12	%
Investment Managers:
Equity and fixed-income programs	72		25		NM			69			26			NM		75		66		NM
Collective trust fund programs	33,021		21,387		54	%		31,903			21,248			50	%	39,081		30,784		27	%
Liquidity funds	701		1,010		(31	)%		767			1,038			(26	)%	860		832		3	%
Total assets under management	$	33,794	$	22,422	51	%		$	32,739		$	22,312		47	%	$	40,016	$	31,682	26	%
Client proprietary assets under administration	415,237		378,347		10	%		401,329			372,777			8	%
Client assets under administration																453,766		387,421		17	%
Total assets	$	449,031	$	400,769	12	%		$	434,068		$	395,089		10	%	$	493,782	$	419,103	18	%
Investments in New Businesses:
Equity and fixed-income programs	811		784		3	%		784			770			2	%	909		757		20	%
Liquidity funds	39		75		(48	)%		44			88			NM		63		48		31	%
Total assets under management	$	850	$	859	(1	)%		$	828		$	858		(3	)%	$	972	$	805	21	%
Advised assets																82		—		NM
Total assets																1,054		805		31	%
LSV:
Equity and fixed-income programs	$	79,733	$	87,409	(9	)%		$	77,216		$	85,424		(10	)%	$	90,274	$	74,699	21	%
Total:
Equity and fixed-income programs	222,887		230,543		(3	)%		216,504			226,102			(4	)%	242,054		210,120		15	%
Collective trust fund programs	33,126		21,501		54	%		32,010			21,362			50	%	39,180		30,892		27	%
Liquidity funds	12,787		12,514		2	%		13,587			12,766			6	%	10,424		14,384		(28	)%
Total assets under management	$	268,800	$	264,558	2	%		$	262,101		$	260,230		1	%	$	291,658	$	255,396	14	%
Client proprietary assets under administration	433,673		396,170		9	%		419,171			390,441			7	%
Total assets under management and administration	$	702,473	$	660,728	6	%		$	681,272		$	650,671		5	%
Advised assets																3,207		—		NM
Client assets under administration																473,989		404,669		17	%
Total assets under management, advisement and administration																$	768,854	$	660,065	16	%

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In the preceding tables, assets under management are total assets of our clients or their customers invested in our equity and fixed-income investment programs, collective trust fund programs, and liquidity funds for which we provide asset management ~~services.~~services through our subsidiaries and partnerships in which we have a significant interest. Advised assets include assets for which we provide advisory services through a subsidiary to the accounts but do not manage the underlying assets. Assets under ~~management and~~ administration ~~also~~ include total assets of our clients or their customers for which we provide administrative services, including client ~~proprietary~~ fund balances for which we provide administration and/or distribution ~~services.~~services through our subsidiaries and partnerships in which we have a significant interest. The assets presented in the preceding tables do not include assets processed on the SEI Wealth Platform and are not included in the accompanying Consolidated Balance Sheets because we do not own them.

Business Segments

Revenues, Expenses and Operating Profit (Loss) for our business segments for the three ~~and six~~ months ended ~~June 30, 2016~~March 31, 2017 compared to the three ~~and six~~ months ended ~~June 30, 2015~~March 31, 2016 were as follows:


	Three Months Ended June 30,						Percent Change			Six Months Ended June 30,								Percent Change		Three Months Ended March 31,						Percent Change
	2016			2015					2016				2015				2017				2016					Percent Change
Private Banks:							Percent Change											Percent Change
Revenues	$	114,836		$	115,333		—	%		$	228,197			$	226,546			1	%	$	112,634		$	113,361		(1	)%
Expenses	102,862			104,727			(2	)%		206,603				203,983				1	%	108,550			103,741			5	%
Operating Profit	$	11,974		$	10,606		13	%		$	21,594			$	22,563			(4	)%	$	4,084		$	9,620		(58	)%
Gain on sale of subsidiary	—			—			—	%		2,791				2,791				—	%	—			2,791			NM
Segment Profit	$	11,974		$	10,606		13	%		$	24,385			$	25,354			(4	)%	$	4,084		$	12,411		(67	)%
Operating Margin (A)	10		%	9		%				9		%		10		%				4		%	8		%
Investment Advisors:
Revenues	$	81,883		$	77,753		5	%		$	158,562			$	151,768			4	%	$	88,238		$	76,679		15	%
Expenses	44,721			40,857			9	%		89,495				79,916				12	%	47,539			44,774			6	%
Operating Profit	$	37,162		$	36,896		1	%		$	69,067			$	71,852			(4	)%	$	40,699		$	31,905		28	%
Operating Margin	45		%	47		%				44		%		47		%				46		%	42		%
Institutional Investors:
Revenues	$	74,674		$	75,980		(2	)%		$	147,571			$	149,528			(1	)%	$	77,004		$	72,897		6	%
Expenses	36,550			36,528			—	%		71,932				71,739				—	%	38,828			35,382			10	%
Operating Profit	$	38,124		$	39,452		(3	)%		$	75,639			$	77,789			(3	)%	$	38,176		$	37,515		2	%
Operating Margin	51		%	52		%				51		%		52		%				50		%	51		%
Investment Managers:
Revenues	$	70,938		$	67,280		5	%		$	140,856			$	132,647			6	%	$	80,487		$	69,918		15	%
Expenses	46,968			42,141			11	%		92,243				82,764				11	%	52,065			45,275			15	%
Operating Profit	$	23,970		$	25,139		(5	)%		$	48,613			$	49,883			(3	)%	$	28,422		$	24,643		15	%
Operating Margin	34		%	37		%				35		%		38		%				35		%	35		%
Investments in New Businesses:
Revenues	$	1,500		$	1,399		7	%		$	2,908			$	2,700			8	%	$	1,621		$	1,408		15	%
Expenses	5,355			4,803			11	%		10,587				9,669				9	%	4,880			5,232			(7	)%
Operating Loss	$	(3,855	)	$	(3,404	)	NM			$	(7,679	)		$	(6,969	)		NM		$	(3,259	)	$	(3,824	)	NM

(A) Percentages determined exclusive of gain from sale of subsidiary.

For additional information pertaining to our business segments, see Note 10 to the Consolidated Financial Statements.

25 of 3836

Private Banks


	Three Months Ended June 30,				Percent Change			Six Months Ended June 30,						Percent Change		Three Months Ended March 31,				Percent Change
	2016		2015				2016			2015			2017				2016			Percent Change
Revenues:					Percent Change									Percent Change
Information processing and software servicing fees	$	74,506	$	73,224	2	%		$	147,429		$	143,442		3	%	$	74,272	$	72,923	2	%
Asset management, administration & distribution fees	34,443		35,961		(4	)%		66,645			69,800			(5	)%	32,590		32,202		1	%
Transaction-based and trade execution fees	5,887		6,148		(4	)%		14,123			13,304			6	%	5,772		8,236		(30	)%
Total revenues	$	114,836	$	115,333	—	%		$	228,197		$	226,546		1	%	$	112,634	$	113,361	(1	)%

Revenues decreased slightly in the three month period ~~and increased $1.7 million, or one percent, in the six month period~~ ended ~~June 30, 2016~~March 31, 2017 and were primarily affected by:

Decreased trade execution fees due to lower trading volumes; and

The negative impact from foreign currency exchange rate fluctuations between the U.S. dollar and the British pound; partially offset by

Increased recurring investment processing fees from the growth in new and existing client assets processed on the SEI Wealth ~~Platform;~~

~~Increased fees from liquidity products due to higher yields; partially offset by~~

~~Decreased investment management fees from existing international clients due to lower average assets under management from market volatility;~~

~~Lower recurring investment processing fees earned on our mutual fund trading solution due to price reductions; and~~

~~The negative impact from foreign currency exchange rate fluctuations between the U.S. dollar and the British pound and Canadian dollar.~~Platform.

Operating margins ~~increased~~decreased to ~~ten~~four percent compared to ~~nine~~eight percent in the three month ~~period.~~periods. Operating income ~~increased~~decreased by $~~1.4~~5.5 million, or 1358 percent, in the three month period and was primarily affected by:

~~Decreased direct expenses associated with decreased investment management fees from existing international clients; and~~

~~Decreased sales compensation expense; partially offset by~~

Increased non-capitalized costs, mainly personnel and consulting costs, related to maintenance and enhancements to the SEI Wealth Platform;

Increased amortization expense related to the SEI Wealth Platform; ~~and~~

The net negative impact from foreign currency exchange rate fluctuations between the U.S. dollar and the British pound ~~and Canadian dollar on our foreign operations.~~

Operating margins decreased to nine percent compared to ten percent in the six month period. Operating income decreased by $1.0 million, or four percent, in the six month period and was primarily affected by:

~~Increased non-capitalized costs, mainly personnel and consulting costs, related to maintenance and enhancements to the SEI Wealth Platform;~~

~~Increased amortization expense related to the SEI Wealth Platform; and~~

~~The net negative impact from foreign currency exchange rate fluctuations between the U.S. dollar and the British pound and Canadian dollar~~ on our foreign operations; and

Increased incentive compensation and stock-based compensation costs; partially offset by

~~An increase in revenues;~~Decreased sales compensation expense; and

Decreased direct expenses associated with the decreased ~~investment management fees from existing international clients.~~

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trade execution fees.

Investment Advisors


	Three Months Ended June 30,				Percent Change			Six Months Ended June 30,						Percent Change		Three Months Ended March 31,				Percent Change
	2016		2015				2016			2015			2017				2016			Percent Change
Revenues:					Percent Change									Percent Change
Investment management fees-SEI fund programs	$	62,614	$	60,754	3	%		$	121,358		$	118,601		2	%	$	66,000	$	58,744	12	%
Separately managed account fees	15,629		13,650		14	%		30,075			26,392			14	%	18,258		14,446		26	%
Other fees	3,640		3,349		9	%		7,129			6,775			5	%	3,980		3,489		14	%
Total revenues (a)	$	81,883	$	77,753	5	%		$	158,562		$	151,768		4	%	$	88,238	$	76,679	15	%

(a) All amounts are reflected in Asset management, administration and distribution fees except for ~~$187~~$164 and ~~$203~~$354 in the three months ended ~~June 30,~~March 31, 2017 and 2016, ~~and 2015, respectively, and $541 and $415 in the six months ended June 30, 2016 and 2015,~~ respectively, which are reflected in Transaction-based and trade execution fees.

Revenues increased $~~4.1~~11.6 million, or ~~five~~15 percent, in the three month period ~~and increased $6.8 million, or four percent, in the six month period~~ ended ~~June 30, 2016~~March 31, 2017 and were primarily affected by:

Increased investment management fees and separately managed account program fees due to higher assets under management caused by market appreciation and an increase in net cash flows from new and existing advisors; and

~~Increased fees from liquidity products due to higher yields; partially offset by~~

~~A decrease~~Changes in the ~~average basis points earned on assets due to client-directed shifts into lower fee investment products.~~product mix of our SEI fund and separately managed account programs.

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Operating margin ~~decreased~~increased to 4546 percent compared to 4742 percent in the three month ~~period and decreased to 44 percent compared to 47 percent in the six month~~ period. Operating income increased ~~slightly~~$8.8 million, or 28 percent, in the three ~~month period and decreased $2.8 million, or four percent, in the six~~ month period and was primarily affected by:

An increase in revenues; partially offset by

Increased direct expenses associated with ~~the~~ increased assets in our investment management programs;

Increased personnel costs for marketing to and servicing new advisors;

Increased non-capitalized costs, mainly personnel and consulting costs, related to ~~support~~ maintenance, enhancements and client migrations to the SEI Wealth Platform;

Increased incentive compensation and stock-based compensation costs; and

Increased amortization expense related to the SEI Wealth ~~Platform; partially offset by~~

~~An increase in revenues.~~Platform.

Institutional Investors

Revenues ~~decreased~~increased ~~$1.3~~$4.1 million, or ~~two~~six percent, in the three month period ~~and decreased $2.0 million, or one percent, in the six month period~~ ended ~~June 30, 2016~~March 31, 2017 and were primarily affected by:

~~Decreased~~Increased investment management fees from existing clients due to ~~lower average~~higher assets under management caused by market ~~volatility;~~appreciation; and

Asset funding from new sales of our retirement and not-for-profit solutions; partially offset by

Client ~~losses and the~~losses;

The negative impact from foreign currency exchange rate fluctuations between the U.S. dollar and the British ~~pound~~pound; and ~~Canadian dollar; partially offset by~~

~~Asset funding from new sales of our retirement and not-for-profit solutions.~~A decrease in the average basis points earned on client assets.

Operating margins decreased to 5150 percent compared to ~~52 percent in the three and six month periods. Operating income decreased $1.3 million, or three~~51 percent in the three month ~~period and decreased $2.2 million, or three percent,~~period. Operating income increased slightly in the ~~six~~three month period and was primarily affected by:

~~A decrease~~An increase in revenues; partially offset by

Increased direct expenses associated with investment management fees;

Increased incentive compensation and stock-based compensation costs; and

The net negative impact from foreign currency exchange rate fluctuations between the U.S. dollar and the British pound ~~and Canadian dollar~~ on our foreign ~~operations; partially offset by~~

~~Decreased personnel compensation expenses.~~

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operations.

Investment Managers

Revenues increased $~~3.7~~10.6 million, or ~~five~~15 percent, in the three month period ~~and increased $8.2 million, or six percent, in the six month period~~ ended ~~June 30, 2016~~March 31, 2017 and were primarily affected by:

Positive cash flows from new ~~clients;~~and existing clients as well as higher valuations from improved capital markets; partially offset by

Client losses and fund ~~closures; and~~

~~Lower valuations from market volatility impacting existing client assets in traditional investment products and separately managed accounts.~~closures.

Operating margin ~~decreased to~~remained at 3435 percent ~~compared to 37~~in the three month period. Operating income increased $3.8 million, or 15 percent, in the three month period and decreased to 35 percent compared to 38 percent in the six month period. Operating income decreased $1.2 million, or five percent, in the three month period and decreased $1.3 million, or three percent, in the six month period and was primarily affected by:

An increase in revenues; partially offset by

Increased personnel expenses, technology and other operational costs to service new and existing clients;

Increased incentive compensation and stock-based compensation costs; and

Increased non-capitalized investment spending, mainly consulting ~~costs; partially offset by~~

~~An increase in revenues.~~costs.

Other

Corporate overhead expenses

Corporate overhead expenses primarily consist of general and administrative expenses and other costs not directly attributable to a reportable business segment. Corporate overhead expenses were $~~13.9~~14.6 million and $~~12.8~~13.0 million in the three months ended ~~June 30, 2016~~March 31, 2017 and ~~2015~~2016, ~~respectively,~~respectively. The increase in corporate overhead expenses is primarily due to increased personnel compensation expense, mainly incentive compensation and ~~$26.9 million and $26.1 million in the six months ended June 30, 2016 and 2015, respectively.~~stock-based compensation costs.

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Other income and expense

Other income and expense items on the accompanying Consolidated Statements of Operations consists of:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2016			2015			2016			2015			2017			2016
Net gain (loss) from investments	$	250		$	(38	)	$	124		$	212		$	347		$	(126	)
Interest and dividend income	1,033			755			2,116			1,724			1,343			1,083
Interest expense	(187		)	(114		)	(301		)	(227		)	(112		)	(114		)
Equity in earnings of unconsolidated affiliates	30,285			37,289			59,477			71,322
Equity in earnings of unconsolidated affiliate													33,565			29,192
Gain on sale of subsidiary	—			—			2,791			2,791			—			2,791
Total other income and expense items, net	$	31,381		$	37,892		$	64,207		$	75,822		$	35,143		$	32,826

Equity in earnings of unconsolidated ~~affiliates~~affiliate

Equity in earnings of unconsolidated ~~affiliates primarily includes~~affiliate reflects our less than 50 percent ownership in LSV. Our proportionate share in the earnings of LSV was $~~30.3~~33.6 million in ~~second~~first quarter ~~2016~~2017 as compared to $~~38.3~~29.2 million in ~~second~~first quarter ~~2015~~2016, a ~~decrease~~an increase of ~~21 percent. In the six months ended June 30, 2016, our proportionate share in the earnings of LSV was $59.5 million as compared to $72.7 million in the six months ended June 30, 2015, a decrease of 18~~15 percent. The ~~decrease~~increase in earnings was primarily due to ~~the decline in~~increased assets under management from LSV's existing clients ~~from~~due to market ~~volatility during early 2016 and a reduction in performance fees earned~~appreciation; however, our earnings were negatively impacted by increased personnel expenses of LSV. LSV's average assets under management ~~decreased $8.2~~increased $15.6 billion to ~~$77.2~~$90.3 billion during the ~~six~~three months ended ~~June 30, 2016~~March 31, 2017 as compared to ~~$85.4~~$74.7 billion during the ~~six~~three months ended ~~June 30, 2015, a decline~~March 31, 2016, an increase of ~~ten~~21 percent.

In April 2016, LSV provided an interest in the partnership to select key employees which reduced the ownership percentage of each existing partner on a pro-rata basis. As a result, our total partnership interest in LSV was reduced from approximately 39.2 percent to approximately 38.9 percent.

Gain on sale of subsidiary

We recorded ~~gains~~a gain of $2.8 million during the ~~six~~three months ended ~~June 30,~~March 31, 2016 ~~and 2015~~ from ~~the~~ the sale of our ownership interests in SEI AK. ~~These gains are~~This gain is included in Gain on sale of subsidiary on the accompanying Consolidated Statement of Operations (See Note 13 to the Consolidated Financial Statements for more information).

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Income Taxes

Our effective income tax rate ~~was~~ ~~35.2 percent~~ ~~and~~ ~~35.6 percent~~ for the three months ended ~~June 30, 2016~~March 31, 2017 and ~~2015, respectively. For~~2016 differs from the ~~six~~federal income tax statutory rate due to the following:



	2017		2016
Statutory rate	35.0	%	35.0	%
State taxes, net of federal tax benefit	1.5		1.4
Foreign tax expense and tax rate differential	(0.8	)	(0.7	)
Tax benefit from stock option exercises	(4.2	)	—
Other, net	(0.5	)	(0.5	)
	31.0	%	35.2	%

The decrease in our tax rate for the three months ended ~~June 30, 2016 and 2015,~~March 31, 2017 was primarily due to the adoption of ASU 2016-09. Under this standard, we no longer record excess tax benefits from stock option exercises as an increase to additional paid in capital, but record such excess tax benefits as a reduction of income tax expense in the reporting period in which the exercises occur. At each interim reporting period, the cumulative stock option exercise activity is remeasured against year to date net income, resulting in an adjustment to the effect from excess tax benefits on our quarterly tax rate. Consequently, our effective tax rate ~~was 35.2 percent and 35.5 percent, respectively.~~could fluctuate significantly on a quarterly basis due to the tax effects of stock-based compensation.

Fair Value Measurements

The fair value of our financial assets and liabilities, except for the investment funds sponsored by LSV, is determined in accordance with the fair value hierarchy. The fair value of the investment funds sponsored by LSV is measured using the net asset value per share (NAV) as a practical expedient. The fair value of all other financial assets are determined using Level 1 or Level 2 inputs and consist mainly of investments in equity or fixed-income mutual funds that are quoted daily and Government National Mortgage Association (GNMA) and other U.S. government agency securities that are single issuer pools that are valued based on current market data of similar assets. We did not have any financial liabilities at ~~June 30, 2016~~March 31, 2017 or December 31, ~~2015~~2016 (See Note 5 to the Notes to Consolidated Financial Statements).

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Regulatory Matters

Like many firms operating within the financial services industry, we are experiencing a difficult regulatory environment across our markets. Our current scale and reach as a provider to the financial services industry, the introduction and implementation of new solutions for our financial services industry clients, the increased regulatory oversight of the financial services industry generally, new laws and regulations affecting the financial services industry and ever-changing regulatory interpretations of existing laws and regulations, and a greater propensity of regulators to pursue enforcement actions and other sanctions against regulated entities, have made this an increasingly challenging and costly regulatory environment in which to operate.

SEI and some of our regulated subsidiaries have undergone or been scheduled to undergo a range of periodic or thematic reviews, examinations or investigations by numerous regulatory authorities around the world, including the Office of the Comptroller of the Currency, the Securities and Exchange Commission, the Financial Industry Regulatory Authority, the Financial Conduct Authority of the United Kingdom (FCA), the Central Bank of Ireland and others. These regulatory activities typically result in the identification of matters or practices to be addressed by us or our subsidiaries and, in certain circumstances, the regulatory authorities require remediation activities or pursue enforcement proceedings against us or our subsidiaries. As described under the caption “Regulatory Considerations” in our Annual Report on Form 10-K, the range of possible sanctions that are available to regulatory authorities include limitations on our ability to engage in business for specified periods of time, the revocation of registration, censures and fines. The direct and indirect costs of responding to these regulatory activities and of complying with new or modified regulations, as well as the potential financial costs and potential reputational impact against us of any enforcement proceedings that might result, is uncertain but could have a material adverse impact on our operating results or financial position.

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Foreign Currency Exchange Rates

We transact business in the local currencies of various foreign countries, principally the United Kingdom, Canada and Ireland. The total of all of our foreign operations in these countries accounted for approximately 13nine percent of our total consolidated revenues for the ~~six~~three months ended ~~June 30, 2016.~~March 31, 2017. Also, most of our foreign operations match local currency revenues with local currency costs. We translate sales and other results denominated in foreign currency into U.S. dollars for our consolidated financial statements. During periods of a strengthening dollar, our reported international sales and earnings could be reduced because foreign currencies may translate into fewer U.S. dollars. A fluctuation of currency ~~exchanges~~exchange rates may expose us to gains and losses on non-U.S. currency transactions and a potential devaluation of the local currencies relative to the U.S. dollar which may impair our revenue growth and operating profits and also prolong sales cycles with potential customers. We currently do not engage in any foreign currency hedging strategies. The percentages of our total consolidated revenues and expenses during the ~~six~~three months ended ~~June 30, 2016~~March 31, 2017 transacted in British pound, Canadian dollar and Euro currencies were as follows:



	~~Six~~Three Months Ended
	~~June 30, 2016~~March 31, 2017
British pound
Total revenues	7%5%
Total expenses	6%5%

Canadian dollar
Total revenues	5%3%
Total expenses	5%

Euro
Total revenues	1%
Total expenses	2%

~~United Kingdom European Union Membership Referendum~~

~~The results~~

29 of the United Kingdom’s referendum regarding their membership in the European Union (E.U.) (referred to as Brexit) announced in late June 2016 caused significant volatility in global stock markets and currency exchange rate fluctuations that resulted in the strengthening of the U.S. dollar against foreign currencies in which we conduct business. Our foreign subsidiary located in the United Kingdom, SEI Investments (Europe) Limited (SIEL), accounted for approximately seven percent of our total consolidated revenues for the six months ended June 30, 2016. The majority of our operations in the United Kingdom match local currency revenues with local currency costs.36

Liquidity and Capital Resources


	Six Months Ended June 30,						Three Months Ended March 31,
	2016			2015			2017			2016
Net cash provided by operating activities	$	159,450		$	156,784		$	73,012		$	78,645
Net cash used in investing activities	(31,970		)	(34,059		)	(25,345		)	(7,472		)
Net cash used in financing activities	(210,016		)	(162,565		)	(84,303		)	(114,573		)
Effect of exchange rate changes on cash and cash equivalents	(2,358		)	(2,765		)	2,307			1,992
Net decrease in cash and cash equivalents	(84,894		)	(42,605		)	(34,329		)	(41,408		)
Cash and cash equivalents, beginning of period	679,661			667,446			695,701			679,661
Cash and cash equivalents, end of period	$	594,767		$	624,841		$	661,372		$	638,253

Cash requirements and liquidity needs are primarily funded through our cash flow from operations and our capacity for additional borrowing. At ~~June 30, 2016~~March 31, 2017, our unused sources of liquidity consisted of cash and cash equivalents and the amount available under our credit facility.

~~In June 2016, we replaced our~~Our credit facility ~~with a new five-year credit facility agreement which~~ provides for borrowings of up to $300 million and is scheduled to expire in June 2021 (See Note 7 to the Consolidated Financial Statements). ~~The new credit facility is a senior unsecured revolving line of credit with Wells Fargo Bank, National Association, and a syndicate of other lenders and is scheduled to expire in June~~

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~~2021.~~ The availability of the credit facility is subject to compliance with certain covenants set forth in the agreement. The credit facility contains covenants which restrict our ability to engage in mergers, consolidations, asset sales, investments, transactions with affiliates, or to incur liens, as defined in the agreement. In the event of a default under the credit facility, we would also be restricted from paying dividends on, or repurchasing, our common stock. Currently, our ability to borrow from the credit facility is not limited by any covenant of the agreement. We currently have no borrowings under our credit facility.

The majority of our excess cash reserves are primarily placed in accounts located in the United States that invest entirely in SEI-sponsored money market mutual funds denominated in the U.S. dollar. We also utilize demand deposit accounts or money market accounts at several well-established financial institutions located in the United States. Accounts used to manage these excess cash reserves do not impose any restrictions or limitations that would prevent us from being able to access such cash amounts immediately. As of ~~July 21, 2016,~~April 13, 2017, the amount of cash and cash equivalents considered free and immediately accessible for other general corporate purposes was ~~$290.3~~$287.8 million.

Our cash and cash equivalents include accounts managed by our subsidiaries that are used in their operations or to cover specific business and regulatory requirements. The availability of this cash for other purposes beyond the operations of these subsidiaries may be limited. Also, some of our foreign subsidiaries may have excess cash reserves which are considered to be undistributed earnings and indefinitely reinvested. Upon distribution of these earnings, in the form of dividends or otherwise, we would be immediately subject to both U.S. and foreign withholding taxes which would reduce the amount we would ultimately realize. In addition to the foreign withholding taxes, the negative impact resulting from unfavorable exchange rate fluctuations on the cash balances held by our foreign subsidiaries would also reduce the amount realized. We do not include accounts of our foreign subsidiaries in our calculation of free and immediately accessible cash for other general corporate purposes.

Cash flows from operations ~~increased $2.7~~decreased $5.6 million in the first ~~six~~three months of ~~2016~~2017 compared to the first ~~six~~three months of ~~2015. Our cash flows~~2016 primarily from ~~operations was negatively impacted due to~~ the ~~decrease in our net income and the~~negative impact from ~~our unconsolidated affiliate, LSV. The~~the net change in our working capital ~~accounts favorably impacted~~accounts. The decrease was partially offset by the increase in our ~~cash flows from operations.~~net income.

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Cash flows used in investing activities ~~decreased $2.1~~increased $17.9 million in the first ~~six~~three months of ~~2016~~2017 compared to the first ~~six~~three months of ~~2015.~~2016. Net cash used in investing activities includes:

•Purchases, sales and maturities of marketable securities. Our purchases, sales and maturities of marketable securities in the first ~~six~~three months of ~~2016~~2017 and ~~2015~~2016 were as follows:


	Six Months Ended June 30,						Three Months Ended March 31,
	2016			2015			2017			2016
Purchases	$	(32,648	)	$	(26,854	)	$	(20,445	)	$	(8,652	)
Sales and maturities	26,333			23,634			15,166			12,275
Net investing activities from marketable securities	$	(6,315	)	$	(3,220	)	$	(5,279	)	$	3,623

The capitalization of costs incurred in developing computer software. We capitalized ~~$16.1~~$15.2 million of software development costs in the first ~~six~~three months of ~~2016~~2017 as compared to ~~$13.6~~$7.6 million in the first ~~six~~three months of ~~2015~~2016 for significant enhancements for the expanded functionality of the SEI Wealth Platform. Additionally, we also capitalized ~~$3.5~~$1.7 million and ~~$2.4~~$1.8 million of software development costs in the first ~~six~~three months of ~~2016~~2017 and ~~2015,~~2016, respectively, for a new application for the Investment Managers segment.

Capital expenditures. Our capital expenditures in the first ~~six~~three months of ~~2016~~2017 were ~~$9.0~~$3.2 million as compared to ~~$15.7~~$4.6 million in the first ~~six~~three months of ~~2015~~2016. Our expenditures in ~~2016~~2017 and ~~2015~~2016 primarily include purchased software and equipment for our data center operations. ~~Our expenditures in 2015 also include approximately $3.2 million to relocate our London operations to a new facility.~~

Cash flows used in financing activities ~~increased~~decreased $~~47.5~~30.3 million in the first ~~six~~three months of ~~2016~~2017 compared to the first ~~six~~three months of ~~2015~~2016. Net cash used in financing activities includes:

The repurchase of our common stock. Our Board of Directors has authorized the repurchase of our common stock through multiple authorizations. Currently, there is no expiration date for our common stock repurchase program. We had total capital outlays of $~~155.7~~56.6 million during the first ~~six~~three months of ~~2016~~2017 and $~~133.4~~78.4 million during the first ~~six~~three months of ~~2015~~2016 for the repurchase of our common stock.

Proceeds from the issuance of our common stock. We received $~~26.3~~16.8 million in proceeds from the issuance of our common stock during the first ~~six~~three months of 2017 as compared to $6.5 million during the first three months of 2016 ~~as compared to~~ ~~$42.7 million~~ ~~during the first~~ ~~six~~ ~~months of~~ ~~2015~~. The ~~decrease~~increase in proceeds is primarily attributable to a ~~lower~~higher level of stock option exercise activity.

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Dividend payments. Cash dividends paid were $~~84.6~~44.6 million in the first ~~six~~three months of 2017 as compared to $42.7 million in the first three months of 2016 ~~as compared to $80.0 million in the first~~ ~~six~~ ~~months of~~ ~~2015~~.

We believe our operating cash flow, available borrowing capacity, and existing cash and cash equivalents should provide adequate funds for ongoing operations; continued investment in new products and equipment; our common stock repurchase program and future dividend payments.

Off Balance Sheet Arrangement

On October 1, 2012, we provided an unsecured guaranty of the obligations of LSV Employee Group III to The PrivateBank and Trust Company and certain other lenders. We entered into this agreement in order to facilitate the acquisition of certain partnership interests of LSV by LSV Employee Group III. Additional information pertaining to the agreement is presented in Note 2 to the Consolidated Financial Statements.

Forward-Looking Information and Risk Factors

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain information contained in this discussion is or may be considered forward-looking. Forward-looking statements relate to future operations, strategies, financial results or other developments. Forward-looking statements are based upon estimates and assumptions that involve certain risks and uncertainties, many of which are beyond our control or are subject to change. Although we believe our assumptions are reasonable, they could be inaccurate. Our actual future revenues and income could differ materially from our expected results. We have no obligation to publicly update or revise any forward-looking statements.

Among the risks and uncertainties which may affect our future operations, strategies, financial results or other developments are those risks described in our latest Annual Report on Form 10-K in Part I, Item 1A. These risks include the following:

changes in capital markets that may affect our revenues and earnings;

product development risk;

risk of failure by a third-party service provider;

data and cyber security risks;

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operational risks associated with the processing of investment transactions;

systems and technology risks;

pricing pressure from increased competition and poor investment ~~performance of our mutual funds and other investment products;~~performance;

the affect on our earnings and cashflows from the performance of LSV Asset Management;

third party pricing services for the valuation of securities invested in our investment products;

the affect of extensive governmental regulation;

litigation and regulatory examinations and investigations;

consolidation within our target markets, including consolidations between banks and other financial institutions;

the exit by the United Kingdom from the European Union;

third party approval of our investment products with advisors affiliated with independent broker-dealers or other networks;

financial and non-financial covenants which may restrict our ability to manage liquidity needs;

changes in, or interpretation of, accounting principles or tax rules and regulations;

fluctuations in foreign currency exchange rates;

fluctuations in interest rates affecting the value of our fixed-income investment securities; and

retention of executive officers and senior management personnel.

Our principal, regulated wholly-owned subsidiaries are SEI Investments Distribution Co., or SIDCO, SEI Investments Management Corporation, or SIMC, SEI Private Trust Company, or SPTC, SEI Trust Company, or STC, and SEI Investments (Europe) Limited, or SIEL. SIDCO is a broker-dealer registered with the SEC under the Securities and Exchange Act of 1934 and is a member of the Financial Industry Regulatory Authority, Inc. (FINRA). SIMC is an investment advisor registered with the SEC under the Investment Advisers Act of 1940 and with the Commodity Futures Trading Commission (CFTC) under the Commodity Futures Exchange Act. SPTC is a limited purpose federal thrift chartered and regulated by the Office of the Comptroller of the Currency. STC is a Pennsylvania trust company, regulated by the Pennsylvania Department of Banking and Securities. SIEL is an investment manager and financial institution subject to regulation by the Financial Conduct Authority of the United Kingdom. In addition, various SEI subsidiaries are subject to the jurisdiction of regulatory authorities in Canada, the Republic of Ireland and other foreign countries. The Company has a minority ownership interest in LSV, which is also an investment advisor registered with the SEC.

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The Company, its regulated subsidiaries, their regulated services and solutions and their customers are all subject to extensive legislation, regulation and supervision that recently has been subject to, and continues to experience, significant change and increased regulatory activity. These changes and regulatory activities could have a material adverse affect on us and our clients.

The various governmental agencies and self-regulatory authorities that regulate or supervise the Company and various of its subsidiaries have broad administrative powers. In the event of a failure to comply with laws, regulations and requirements of these agencies and authorities, the possible sanctions that may be imposed include the suspension of individual employees, limitations on our ability to engage in business for specified periods of time, the revocation of applicable registration as a broker-dealer, investment advisor or other regulated entity, and, as the case may be, censures and fines. Additionally, certain securities and banking laws applicable to us and our subsidiaries provide for certain private rights of action that could give rise to civil litigation. Any litigation could have significant financial and non-financial consequences including monetary judgments and the requirement to take action or limit activities that could ultimately affect our business.

Governmental scrutiny from regulators, legislative bodies and law enforcement agencies with respect to matters relating to our regulated subsidiaries and their activities, services and solutions, our business practices, our past actions and other matters has increased dramatically in the past several years. Responding to these examinations, investigations, actions and lawsuits, regardless of the ultimate outcome of the proceeding, is time consuming and expensive and can divert the time and effort of our senior management from our business. Penalties and fines sought by regulatory authorities have increased substantially over the last several years, and certain regulators have been more likely in recent years to commence enforcement actions or to advance or support legislation targeted at the financial services industry. Governmental scrutiny and legal and enforcement proceedings can also have a negative impact on our reputation and on the morale and performance of our employees, which could adversely affect our businesses and results of operations.

We are subject to the USA PATRIOT Act of 2001, which contains anti-money laundering and financial transparency laws and requires implementation of regulations applicable to financial services companies, including standards for verifying client identification and monitoring client transactions and detecting and reporting suspicious activities. Anti-money laundering laws outside the United States contain similar requirements. We offer investment and banking solutions that also are subject to

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regulation by the federal and state securities and banking authorities, as well as foreign regulatory authorities, where applicable. Existing or future regulations that affect these solutions could lead to a reduction in sales of these solutions or require modifications of these solutions.

Compliance with existing and future regulations and responding to and complying with recent increased regulatory activity affecting broker-dealers, investment advisors, investment companies, financial institutions and their service providers could have a significant impact on us. We periodically undergo regulatory examinations and respond to regulatory inquiries, challenges, and document requests. In addition, recent legislative activity in the United States (including the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and attendant rule making activities) and in other jurisdictions (including the European Union, the United Kingdom and the Republic of Ireland) have made and continue to make, extensive changes to the laws regulating financial services firms. As a result of these examinations, inquiries and requests, as a result of increased civil litigation activity, and as a result of these new laws and regulations, we engage legal counsel, review our compliance procedures, solution and service offerings, and business operations, and make changes as we deem necessary. These additional activities and required changes may result in increased expense or may reduce revenues.

Our bank clients are subject to supervision by federal and state banking authorities concerning the manner in which such clients purchase and receive our products and services. Our plan sponsor clients and our subsidiaries providing services to those clients are subject to supervision by the Department of Labor and compliance with employee benefit regulations. Investment advisor and broker-dealer clients are regulated by the SEC, state securities authorities, or FINRA. Existing or future regulations applicable to our clients may affect our clients’ purchase of our products and services.

In addition, see the discussion of governmental regulations in Item 1A “Risk Factors” in our latest Annual Report on Form 10-K for a description of the risks that proposed regulatory changes may present for our business.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Information required by this item is set forth under the captions "Our revenues and earnings are affected by changes in capital markets" and "Changes in interest rates may affect the value of our fixed-income investment securities" in Item 1A "Risk Factors" and under the caption "Sensitivity of our revenues and earnings to capital market fluctuations" in Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016. There have been no material changes to this information as it is disclosed in our Annual Report on Form 10-K for ~~2015~~2016.

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Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report are effective in ensuring that information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. A controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls systems are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

(b) Change in Internal Control over Financial Reporting

No change in our internal control over financial reporting occurred during the quarter ended ~~June 30, 2016~~March 31, 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

SEI has been named in ~~six~~seven lawsuits filed in ~~Louisiana. Five lawsuits were filed in the 19th Judicial District Court for the Parish of East Baton Rouge. One~~Louisiana courts; four of the ~~five actions purports to set forth claims on behalf of a class and also names SPTC as a defendant. Two of the other actions~~cases also name SPTC as a defendant. ~~All five~~The underlying allegations in all actions ~~name various defendants~~relate to the purported role of SPTC in ~~addition~~providing back-office services to Stanford Trust Company. The complaints allege that SEI and SPTC participated in ~~all five actions,~~some manner in the ~~plaintiffs purport~~sale of “certificates of deposit” issued by Stanford International Bank so as to ~~bring~~be a ~~cause~~“seller” of ~~action against SEI and/or SPTC~~the certificates of deposit for purposes of primary liability under the Louisiana Securities ~~Act.~~Law or so as to be secondarily liable under that statute for sales of certificates of deposit made by Stanford Trust Company. Two of the ~~five~~ actions also include claims for violations of the Louisiana Racketeering Act and possibly ~~conspiracy. In addition, another group of plaintiffs filed~~conspiracy, and a ~~lawsuit in the 23rd Judicial District Court for the Parish of Ascension against SEI and SPTC and other defendants, asserting~~third also asserts claims of negligence, breach of contract, breach of fiduciary duty, violations of the uniform fiduciaries law, negligent misrepresentation, detrimental reliance, violations of the Louisiana ~~Securities Act and Louisiana~~ Racketeering Act, and conspiracy.

~~The plaintiffs in two of the cases filed in~~ East Baton Rouge, ~~have granted SEI and SPTC an indefinite extension to respond to the petitions.~~

The plaintiffs in two of the cases remaining in the Parish of East Baton Rouge have granted SEI and SPTC indefinite extensions to ~~sell securities.~~respond to the petitions.

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make premium payments. The plaintiffs seek to recover jointly and severally from nine defendants including GFSL and TD&C, damages of approximately $84 million. GFSL and TD&C’s involvement in the litigation appears to arise out of their historical provision of administration and custody services, respectively, to the Strategic Life Settlement Fund PLC, who, together with its managers, appear to be the principal defendants in this claim. On December 4, 2015, the Belgium Court dismissed plaintiff's claims for a lack of jurisdiction. On December 22, 2015, the plaintiffs appealed the dismissal. The appeal is still pending.

While the outcome of this action is uncertain given its early phase and the lack of specific theories of liability asserted against GFSL and TD&C, each of GFSL and TD&C believe that they have valid defenses to plaintiffs’ claims and intend to defend the lawsuit vigorously, and GFSL and TD&C are not reasonably able to provide an estimate of the ultimate loss, if any, with respect to this lawsuit.

Item 1A. Risk Factors.

Information regarding risk factors appears in Part I – Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016. There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for ~~2015.~~2016.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.


(e)	Our Board of Directors has authorized the repurchase of up to $~~3.078~~3.278 billion worth of our common stock through multiple authorizations. Currently, there is no expiration date for our common stock repurchase program.

Information regarding the repurchase of common stock during the three months ended ~~June 30, 2016~~March 31, 2017 is as follows:

Period
Total Number
of Shares
Purchased

Average
Price Paid
per Share

Total Number of
Shares Purchased as
Part of Publicly
Announced Program

Approximate Dollar
Value of Shares that
May Yet Be
Purchased
Under the Program
April 2016 100,000
$ 48.19
100,000
$ 227,721,000
May 2016 429,000
48.88
429,000
206,768,000
June 2016 985,000
48.48
985,000
159,008,000
Total 1,514,000
38.87
1,514,000



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
January 2017	175,000	$	48.89	175,000	$	210,196,000
February 2017	254,000	49.82		254,000	197,526,000
March 2017	670,000	51.05		670,000	163,311,000
Total	1,099,000	50.42		1,099,000

Item 6. Exhibits.

The following is a list of exhibits filed as part of the Form 10-Q.



31.1		Rule 13a-15(e)/15d-15(e) Certification of Chief Executive Officer.

31.2		Rule 13a-15(e)/15d-15(e) Certification of Chief Financial Officer.

32		Section 1350 Certifications.

99.1		Press release dated ~~July 27, 2016~~April 19, 2017 of SEI Investments Company related to the Company's financial and operating results for the ~~second~~first quarter ended ~~June 30, 2016.~~March 31, 2017.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		SEI INVESTMENTS COMPANY

Date:	~~July 27, 2016~~April 20, 2017	By:	/s/ Dennis J. McGonigle
			Dennis J. McGonigle
			Chief Financial Officer

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	For the Six Months Ended June 30, 2016
	Income (Numerator)		Shares (Denominator)	Per Share Amount
Basic earnings per common share	$	158,502	162,404,000	$	0.98
Dilutive effect of stock options	—		3,212,000
Diluted earnings per common share	$	158,502	165,616,000	$	0.96



	For the Six Months Ended June 30, 2015
	Income (Numerator)		Shares (Denominator)	Per Share Amount
Basic earnings per common share	$	170,851	166,423,000	$	1.03
Dilutive effect of stock options	—		3,915,000
Diluted earnings per common share	$	170,851	170,338,000	$	1.00



	Capital Expenditures				Depreciation
	2016		2015		2016		2015
Private Banks	$	17,166	$	18,610	$	6,380	$	6,073
Investment Advisors	6,119		6,161		1,940		1,663
Institutional Investors	1,492		2,015		673		601
Investment Managers	3,065		3,842		2,362		1,990
Investments in New Businesses	215		283		1,095		1,134
Total from business segments	$	28,057	$	30,911	$	12,450	$	11,461
Corporate Overhead	589		885		431		377
	$	28,646	$	31,796	$	12,881	$	11,838