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, 2017~~March 31, 2018



¨	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 ýNo ¨

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 20, 2017~~April 19, 2018 was ~~158,107,559.~~158,084,303.

SEI Investments Company TABLE OF CONTENTS



PART I - FINANCIAL INFORMATION
		Page
Item 1.	Financial Statements.	2
	Consolidated Balance Sheets (Unaudited) -- ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017	2
	Consolidated Statements of Operations (Unaudited) -- For the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2018 and 2017 ~~and 2016~~	34
	Consolidated Statements of Comprehensive Income (Unaudited) -- For the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2018 and 2017 ~~and 2016~~	45
	Consolidated Statements of Cash Flows (Unaudited) -- For the ~~Six~~Three Months Ended ~~June 30,~~March 31, 2018 and 2017 ~~and 2016~~	56
	Notes to Consolidated Financial Statements	67
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	3634
Item 4.	Controls and Procedures.	3634

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings.	3736
Item 1A.	Risk Factors.	3837
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	3837
Item 6.	Exhibits.	3837
	Signatures	3938

1 of 3938

PART I.FINANCIAL INFORMATION

Item 1.Consolidated Financial Statements.

SEI Investments Company

Consolidated Balance Sheets

(unaudited)

(In thousands, except par value)

June 30, 2017 December 31, 2016
Assets
Current Assets:
Cash and cash equivalents $ 660,362
$ 695,701
Restricted cash 3,502
3,500
Receivables from investment products 49,048
61,761
Receivables, net of allowance for doubtful accounts of $680 and $523 262,544
227,957
Securities owned 21,412
21,339
Other current assets 31,953
27,575
Total Current Assets 1,028,821
1,037,833
Property and Equipment, net of accumulated depreciation of $298,294 and $285,322 145,537
146,190
Capitalized Software, net of accumulated amortization of $328,026 and $303,540 304,673
295,867
Investments Available for Sale 86,085
84,033
Investments in Affiliated Funds, at fair value 5,350
4,858
Investment in Unconsolidated Affiliate 45,197
50,459
Deferred Income Taxes 1,773
2,127
Other Assets, net 16,653
15,456
Total Assets $ 1,634,089
$ 1,636,823

Liabilities and Equity
Current Liabilities:
Accounts payable $ 5,407
$ 5,966
Accrued liabilities 170,577
240,525
Deferred revenue 2,809
2,880
Total Current Liabilities 178,793
249,371
Deferred Income Taxes 69,419
69,693
Other Long-term Liabilities 14,142
14,645
Total Liabilities 262,354
333,709
Commitments and Contingencies

Shareholders' Equity:
Common stock, $.01 par value, 750,000 shares authorized; 157,986 and 159,031 shares issued and outstanding 1,580
1,590
Capital in excess of par value 988,761
955,461
Retained earnings 409,409
384,018
Accumulated other comprehensive loss, net (28,015 ) (37,955 )
Total Shareholders' Equity 1,371,735
1,303,114
Total Liabilities and Shareholders' Equity $ 1,634,089
$ 1,636,823



	March 31, 2018		December 31, 2017
Assets
Current Assets:
Cash and cash equivalents	$	748,299	$	744,247
Restricted cash	3,507		3,505
Receivables from investment products	54,909		56,666
Receivables, net of allowance for doubtful accounts of $788 and $695	308,270		282,706
Securities owned	21,600		21,526
Other current assets	34,722		31,158
Total Current Assets	1,171,307		1,139,808
Property and Equipment, net of accumulated depreciation of $317,245 and $309,955	145,280		146,428
Capitalized Software, net of accumulated amortization of $361,065 and $350,045	312,272		310,405
Investments Available for Sale	83,089		87,983
Investments in Affiliated Funds, at fair value	5,534		6,034
Investment in Unconsolidated Affiliate	54,482		59,492
Goodwill	52,990		52,990
Intangible Assets, net of accumulated amortization of $2,328 and $1,552	27,802		28,578
Deferred Contract Costs	19,875		—
Deferred Income Taxes	2,740		2,767
Other Assets, net	18,334		18,884
Total Assets	$	1,893,705	$	1,853,369

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

2 of 3938

SEI Investments Company

Consolidated Balance Sheets

(unaudited)

(In thousands, except par value)



	March 31, 2018			December 31, 2017
Liabilities and Equity
Current Liabilities:
Accounts payable	$	8,463		$	5,268
Accrued liabilities	168,618			265,058
Deferred revenue	4,998			4,723
Total Current Liabilities	182,079			275,049
Borrowings Under Revolving Credit Facility	20,000			30,000
Long-term Income Taxes Payable	10,629			10,629
Deferred Income Taxes	54,384			48,472
Other Long-term Liabilities	12,959			12,380
Total Liabilities	280,051			376,530
Commitments and Contingencies
Shareholders' Equity:
Common stock, $.01 par value, 750,000 shares authorized; 157,990 and 157,069 shares issued and outstanding	1,580			1,571
Capital in excess of par value	1,085,312			1,027,709
Retained earnings	544,923			467,467
Accumulated other comprehensive loss, net	(18,161		)	(19,908		)
Total Shareholders' Equity	1,613,654			1,476,839
Total Liabilities and Shareholders' Equity	$	1,893,705		$	1,853,369

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

3 of 38

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,
	2017			2016			2017			2016			2018			2017
Revenues:
Asset management, administration and distribution fees	$	288,490		$	262,275		$	567,055		$	513,712		$	316,209		$	279,461
Information processing and software servicing fees	77,816			74,992			152,579			148,391			89,389			80,523
Transaction-based and trade execution fees	6,025			6,564			12,681			15,991
Total revenues	372,331			343,831			732,315			678,094			405,598			359,984
Expenses:
Subadvisory, distribution and other asset management costs	43,288			40,870			85,790			80,065			45,205			43,152
Software royalties and other information processing costs	7,712			7,677			15,374			15,425			8,718			11,971
Brokerage commissions	4,226			5,093			9,185			12,201
Compensation, benefits and other personnel	109,555			102,282			218,498			204,213			124,277			108,943
Stock-based compensation	6,259			4,189			12,439			7,978			5,195			6,180
Consulting, outsourcing and professional fees	48,335			39,575			91,484			78,081			48,707			43,149
Data processing and computer related	17,883			15,782			34,655			31,500			20,591			18,325
Facilities, supplies and other costs	18,682			17,122			36,160			33,119			17,613			15,925
Amortization	12,565			11,284			24,587			22,296			11,854			12,022
Depreciation	6,599			6,434			13,399			12,881			7,122			6,800
Total expenses	275,104			250,308			541,571			497,759			289,282			266,467
Income from operations	97,227			93,523			190,744			180,335			116,316			93,517
Net gain from investments	44			250			391			124
Net (loss) gain from investments													(410		)	347
Interest and dividend income	1,686			1,033			3,029			2,116			2,502			1,343
Interest expense	(114		)	(187		)	(226		)	(301		)	(257		)	(112		)
Equity in earnings of unconsolidated affiliate	36,315			30,285			69,880			59,477			40,607			33,565
Gain on sale of subsidiary	—			—			—			2,791
Income before income taxes	135,158			124,904			263,818			244,542			158,758			128,660
Income taxes	43,389			43,899			83,312			86,040			18,920			39,923
Net income	$	91,769		$	81,005		$	180,506		$	158,502		$	139,838		$	88,737
Basic earnings per common share	$	0.58		$	0.50		$	1.14		$	0.98		$	0.89		$	0.56
Shares used to compute basic earnings per share	158,325			161,795			158,708			162,404			157,434			159,091
Diluted earnings per common share	$	0.57		$	0.49		$	1.11		$	0.96		$	0.86		$	0.55
Shares used to compute diluted earnings per share	161,709			165,088			162,226			165,616			163,424			162,742
Dividends declared per common share	$	0.28		$	0.26		$	0.28		$	0.26

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

34 of 3938

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,
	2017			2016					2017			2016				2018					2017
Net income		$	91,769			$	81,005			$	180,506		$	158,502				$	139,838				$	88,737
Other comprehensive gain (loss), net of tax:
Foreign currency translation adjustments		7,222				(5,080		)		9,710			(2,651		)			3,377					2,488
Unrealized gain (loss) on investments:
Unrealized gains during the period, net of income taxes of $(51), $(49), $(32) and $(240)	165			20					141			350
Less: reclassification adjustment for losses (gains) realized in net income, net of income taxes of $(53), $12, $(43) and $(91)	111	276		(23	)	(3		)	89	230		164	514
Total other comprehensive gain (loss), net of tax		7,498				(5,083		)		9,940			(2,137		)
Unrealized loss on investments:
Unrealized losses during the period, net of income taxes of $424 and $19																(1,357	)				(24	)
Less: reclassification adjustment for gains realized in net income, net of income taxes of $(15) and $10																(273	)	(1,630		)	(22	)	(46		)
Total other comprehensive gain, net of tax																		1,747					2,442
Comprehensive income		$	99,267			$	75,922			$	190,446		$	156,365				$	141,585				$	91,179

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

45 of 3938

SEI Investments Company

Consolidated Condensed Statements of Cash Flows

(unaudited)

(In thousands)


	Six Months Ended June 30,						Three Months Ended March 31,
	2017			2016			2018			2017
Cash flows from operating activities:
Net income	$	180,506		$	158,502		$	139,838		$	88,737
Adjustments to reconcile net income to net cash provided by operating activities (See Note 1)	4,349			4,952			(35,664		)	(15,725		)
Net cash provided by operating activities	184,855			163,454			104,174			73,012
Cash flows from investing activities:
Additions to property and equipment	(10,247		)	(9,049		)	(5,611		)	(3,205		)
Additions to capitalized software	(33,292		)	(19,597		)	(12,887		)	(16,861		)
Purchases of marketable securities	(28,703		)	(32,648		)	(15,466		)	(20,445		)
Prepayments and maturities of marketable securities	26,811			26,148			18,588			15,166
Sales of marketable securities	—			185
Receipt of contingent payment from sale of SEI AK	—			2,791
Other investing activities	(1,450		)	200
Net cash used in investing activities	(46,881		)	(31,970		)	(15,376		)	(25,345		)
Cash flows from financing activities:
Repayments under revolving credit facility							(10,000		)	—
Purchase and retirement of common stock	(122,066		)	(155,730		)	(87,995		)	(56,553		)
Proceeds from issuance of common stock	29,127			26,336			57,889			16,847
Payment of dividends	(88,862		)	(84,626		)	(47,179		)	(44,597		)
Net cash used in financing activities	(181,801		)	(214,020		)	(87,285		)	(84,303		)
Effect of exchange rate changes on cash and cash equivalents	8,488			(2,358		)
Net decrease in cash and cash equivalents	(35,339		)	(84,894		)
Cash and cash equivalents, beginning of period	695,701			679,661
Cash and cash equivalents, end of period	$	660,362		$	594,767
Effect of exchange rate changes on cash, cash equivalents and restricted cash							2,541			2,307
Net increase (decrease) in cash, cash equivalents and restricted cash							4,054			(34,329		)
Cash, cash equivalents and restricted cash, beginning of period							747,752			699,201
Cash, cash equivalents and restricted cash, end of period							$	751,806		$	664,872

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

56 of 3938

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~~platforms 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~~platforms consist of application and business process outsourcing services, professional services and transaction-based services. Revenues from investment processing ~~solutions~~platforms 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.~~Operations.

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~~platforms 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~~platforms 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~~platforms 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, 2017~~March 31, 2018, the results of operations for the three ~~and six~~ months ended ~~June 30, 2017~~March 31, 2018 and ~~2016~~2017, and cash flows for the ~~six~~three-month periods ended ~~June 30, 2017~~March 31, 2018 and ~~2016~~2017. 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, ~~2016~~2017.

~~There have been no significant changes in significant accounting policies during~~The Company adopted the ~~six~~ months ended June 30, 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, 2016 with the exception of the adoptionrequirements of Accounting Standards Update (ASU) ~~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~~No. 2014-09, Revenue from Contracts with Customers (Topic 606) (Accounting Standards Codification (ASC) 606 (ASC 606)) using the ~~accompanying Consolidated Statements of Operations as a component of~~modified retrospective method during 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 date of adoption.three months ended March 31, 2018. As a result of the adoption of ASC 606, the Company recorded a cumulative effect adjustment of $14,402 to retained earnings as of January 1, 2018. Prior period information has not been restated (see following caption "Revenue Recognition"). The Company also adopted ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (see Note 6) and ASU No. 2016-18, Statement of Cash Flows, Restricted Cash (Topic 230) (see following caption "Statements of Cash Flows"). All amounts and disclosures set forth in this Form 10-Q have been updated to comply with the new standards.

Revenue Recognition

Revenue is recognized when the transfer of control of promised goods or services under the terms of a contract with customers are satisfied in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those promised goods or services. Certain portions of the Company’s revenues involve a third party in providing goods or services to its customers. In such circumstances, the Company must determine whether the nature of its promise to the customer is to provide the underlying goods or services (the Company is the principal in the transaction and reports the transaction gross) or to arrange for a third party to provide the underlying goods or services (the entity is the agent in the transaction and reports the transaction net).

ASC 606 did not change the accounting for the ~~six months ended June 30, 2016, net cash provided by operating activities increased by $4,004 with~~majority of the Company’s revenue arrangements and did not have 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 adjustmentsmaterial impact to the ~~Company's prior period reported diluted earnings per share amounts were permitted by ASU 2016-09.~~

Company’s consolidated financial statements. The ~~net cumulative effect to~~following is a summary of the ~~Company~~impact from the adoption of ~~ASU 2016-09~~ASC 606:

7 of 38

•The majority of the Company’s services are bundled together, and provided and completed for the client on a monthly basis. For these revenue arrangements, the Company will continue to recognize revenue on a monthly basis as the client consumes the benefits continuously over time. The timing and recognition of revenues from these arrangements did not change.

•Contracts with new clients or with existing clients for new services generally include implementation fees. These fees are recognized in Information processing and software servicing fees when in connection with investment processing platforms and are recognized in Asset management, administration and distribution fees when in connection with investment operations platforms. The Company concluded that most of the current arrangements for implementation services are a distinct and separate performance obligation from the monthly recurring services. The timing and recognition of fees for most of these arrangements have not changed. However, each new revenue arrangement for implementation fees is analyzed to determine whether or not it is a distinct performance obligation. Implementation fees determined not to be a distinct performance obligation would be required to be recognized over the expected life of the client relationship along with the costs relating directly to satisfying such performance obligation. The Company will evaluate each contract in accordance with the requirements of ASC 606.

•Research services provided by SIDCO, the Company’s broker-dealer subsidiary, to customers in soft-dollar arrangements were determined to be a separate performance obligation. Research services provided by a broker-dealer may be internally generated or provided by a third party and paid directly by the broker-dealer on the customer’s behalf. It was determined that SIDCO is considered an ~~increase~~agent since it does not control the research services before they are transferred to ~~paid-in capital~~the customer. Therefore, fees received for research services should be recorded in revenues net of ~~$2,582,~~amounts paid for the soft dollar arrangement. These amounts paid by the Company were previously recorded gross as an expense and, beginning January 1, 2018, are recorded net of any revenue recognized. The amounts related to soft dollar arrangements during the three months ended March 31, 2018 and 2017 were $3,730 and $4,073, respectively.

•Incremental contract acquisition costs related to information processing contracts in the Private Banks segment and investment operations contracts in the Investment Managers segment will be deferred and recognized over the expected client life. These costs primarily consist of sales compensation payments to the Company's sales personnel. As a ~~reduction~~result, incremental contract acquisition costs are capitalized and subsequently amortized. The Company recorded a cumulative effect adjustment to retained earnings associated with the capitalization of ~~$1,669 and an increase~~contract costs. For the Company's other sales compensation payments, the Company either applies the practical expedient permitting the expensing of costs to obtain a contract when the expected amortization period is one year or less or there are no contract acquisition costs required to be deferred ~~tax assets~~under the requirements of ~~$913 as of January 1, 2017.~~

~~6 of 39~~

ASC 606.

Cash and Cash Equivalents

Cash and cash equivalents includes ~~$230,721~~$341,413 and ~~$374,760~~$401,292 at ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~,2017, 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 ~~$3,000~~$3,000 at ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 segregated for regulatory purposes related to trade-execution services conducted by SEI Investments (Europe) Limited. Restricted cash also includes ~~$502~~$507 and ~~$500~~$505 at ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~,2017, 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 (SEC) for broker-dealers.

Capitalized Software

The Company capitalized ~~$33,292~~$12,887 and ~~$19,597~~$16,861 of software development costs during the ~~six~~three months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively. The Company's software development costs primarily relate to the continued development of the SEI Wealth Platform^SM(the Platform). The Company capitalized ~~$27,994~~$12,042 and ~~$16,120~~$15,178 of software development costs for significant enhancements to the Platform during the ~~six~~three months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively. As of ~~June 30, 2017,~~March 31, 2018, the net book value of the Platform was ~~$283,867.~~$287,530. The net book value includes $33,237 of capitalized software development costs in-progress associated with future releases. The Platform has ~~an estimated useful life of 15 years and~~ a weighted average remaining life of ~~5.0~~8.4 years. Amortization expense for the Platform was ~~$24,486~~$9,719 and ~~$22,049~~$11,972 during the ~~six~~three months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively.

The Company also capitalized ~~$5,298~~$845 and ~~$3,477~~$1,683 of software development costs during the ~~six~~three months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively, related to an application for the Investment Managers segment. ~~Capitalized software development costs in-progress at June 30, 2017 associated~~The application was placed into service during the first quarter 2018 with an estimated useful life of 5 years. The net book value of the application ~~were $20,806. The~~at March 31, 2018 was $24,742. Amortization expense for the application ~~is not yet ready for use.~~was $1,301 during the three months ended March 31, 2018.

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Earnings per Share

The calculations of basic and diluted earnings per share for the three ~~and six~~ months ended ~~June 30, 2017~~March 31, 2018 and ~~2016~~2017 are:



	Three Months Ended March 31,
	2018		2017
Net income	$	139,838	$	88,737
Shares used to compute basic earnings per common share	157,434,000		159,091,000
Dilutive effect of stock options	5,990,000		3,651,000
Shares used to compute diluted earnings per common share	163,424,000		162,742,000
Basic earnings per common share	$	0.89	$	0.56
Diluted earnings per common share	$	0.86	$	0.55

Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
Net income $ 91,769
$ 81,005
$ 180,506
$ 158,502
Shares used to compute basic earnings per common share 158,325,000
161,795,000
158,708,000
162,404,000
Dilutive effect of stock options 3,384,000
3,293,000
3,518,000
3,212,000
Shares used to compute diluted earnings per common share 161,709,000
165,088,000
162,226,000
165,616,000
Basic earnings per common share $ 0.58
$ 0.50
$ 1.14
$ 0.98
Diluted earnings per common share $ 0.57
$ 0.49
$ 1.11
$ 0.96

During the three months ended ~~June 30~~March 31, ~~2017~~2018 and ~~2016~~2017, employee stock options to purchase ~~11,255,000~~6,054,000 and ~~10,388,000~~11,279,000 shares of common stock with an average exercise price of ~~$37.68~~$52.73 and ~~$34.06~~, respectively, were outstanding but not included in the computation of diluted earnings per common share. During the six months ended June 30, 2017 and 2016, employee stock options to purchase 11,267,000 and 10,447,000 shares of common stock with an average exercise price of $37.69 and $34.05,$37.70, respectively, were outstanding but not included in the computation of diluted earnings per common share. These options for the three ~~and six~~ 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.

Reclassifications

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

~~7 of 39~~

~~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 months ended June 30:~~

2017 2016
Net income $ 180,506
$ 158,502
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 13,399
12,881
Amortization 24,587
22,296
Equity in earnings of unconsolidated affiliate (69,880 ) (59,477 )
Distributions received from unconsolidated affiliate 75,142
67,061
Stock-based compensation 12,439
7,978
Provision for losses on receivables 157
297
Deferred income tax expense 918
(311 )
Gain from sale of SEI AK —
(2,791 )
Net gain from investments (391 ) (124 )
Tax benefit on stock options exercised (1) —
4,004
Change in other long-term liabilities (503 ) 865
Change in other assets 122
1,084
Other 492
1,030
Change in current assets and liabilities
Decrease (increase) in
Receivables from investment products 12,713
1,032
Receivables (34,744 ) (19,357 )
Other current assets (4,378 ) (4,006 )
Increase (decrease) in
Accounts payable (2,329 ) (970 )
Accrued liabilities (23,324 ) (27,634 )
Deferred revenue (71 ) 1,094
Total adjustments 4,349
4,952
Net cash provided by operating activities $ 184,855
$ 163,454

~~(1) The tax benefit on stock options exercised for the six months ended June 30, 2016 was reclassified to operating activities from financing activities upon the adoption of ASU 2016-09.~~

New Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (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 issued several amendments to the standard, including principal versus agent guidance and identifying performance obligations. ASU 2014-09 will become effective for the Company during the first quarter 2018.

The Company continues to assess the impact of ASU 2014-09 on its revenue arrangements. The Company expects the adoption of ASU 2014-09 to have an impact to its business processes, financial reporting disclosures and internal controls over financial reporting (ICFR).

As part of its project plan’s preliminary assessment and design implementation phases for the adoption of ASU 2014-09, the Company has adopted implementation controls that allows it to properly and timely adopt ASU 2014-09 on the effective date. The Company will make continuous updates to the quarterly and year-end disclosures, with a focus on both status and

~~8 of 39~~

internal controls over financial reporting. The new standard will have a significant impact to the Company's financial statement disclosures, including identifying information that the Company will have to develop under the new standard.

~~The Company’s implementation plan includes the following:~~

~~Developed a phased implementation project plan with a specific timeline and milestones;~~

~~Developed an understanding of the new standard and its requirements;~~

~~Analyzed the Company’s revenue streams;~~

~~Gathering and evaluating the required and relevant information for ASU 2014-09; and~~

~~Continue to monitor the impact of ASU 2014-09 and the various interpretations and supplemental guidance that become available.~~

~~Upon its initial assessment, the Company has made the following observations:~~

~~Revenue:~~

The Company offers many services which are bundled together, and provided and completed for the client on a monthly basis. In assessing these contracts, the Company expects to continue to recognize revenue for these types of services on a monthly basis as the client consumes the benefits continuously over time. Similarly, the Company expects that transaction-based and trade execution fees based on current period activity will not be affected by the adoption of ASU 2014-09.

The Company continues to assess the effect of the adoption of the new standard on the timing of the recognition of implementation fees, which are 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. While the Company has not made a final determination, the timing of the recognition for these revenues may change.

~~The new standard also modified some of the 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.~~

~~Contract costs:~~

The Company is in the process of evaluating the costs of obtaining these contracts, especially for the information processing and software servicing fees revenue stream, which are affected by the standard. Sales commissions and contract costs related to fund conversions are also being evaluated. Under current guidance, contract costs are expensed at inception of an agreement but under the new standard, the costs will generally be capitalized and amortized over the period of customer life as defined in the new standard, unless a practical expedient is applied to fully expense contract costs for contracts with an amortization period of one year or less.

~~Transition method:~~

The new standard provides companies with alternative methods of adoption. The Company is in the process of determining the method of adoption, which depends in part upon the completion of the evaluation of the remaining revenue arrangements. The Company expects to select the transition method by the third quarter of 2017.

Upon completion of the Company’s implementation plan and evaluation of the remaining revenue contracts, the Company plans to adopt additional controls around internal controls over financial reporting and its business processes for any new revenue arrangements that the Company enters. The Company is on target to complete its assessment of ASU 2014-09 and the impact on the Company’s consolidated financial statements and related disclosures as of January 1, 2018.

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. While the Company is not yet in a position to assess the full impact of the adoption of ASU 2016-02 on its consolidated financial statements and related disclosures, the Company is currently in the process of cataloging existing lease agreements and evaluating the transition method to be elected.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13) which requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. ASU 2016-13 limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. ASU 2016-13 becomes effective for the Company during the first quarter of 2020. 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 January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (ASU 2017-04). The objective of ASU 2017-04 is to simplify the subsequent measurement of goodwill by entities performing their annual goodwill impairment tests by comparing the fair value of a reporting unit, including income tax effects from any tax-deductible goodwill, with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount exceeds fair value. ASU 2017-04 is effective for the Company beginning in the first quarter of 2020. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2017-04 on its consolidated financial statements and related disclosures.

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 Company adopted ASU No. 2016-18, Statement of Cash Flows, Restricted Cash (Topic 230) (ASU 2016-18) on January 1, 2018 which requires that a statement of cash flows explain the change during the period for the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The prior period was retrospectively adjusted to conform to the current period’s presentation. There was no impact to net cash flows for the three months ended March 31, 2017 as a result of including restricted cash with cash and cash equivalents when reconciling the

9 of 3938

beginning-of-period and end-of-period total amounts presented on the accompanying Consolidated Condensed Statement of Cash Flows in accordance with ASU 2016-18.

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



	2018			2017
Net income	$	139,838		$	88,737
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	7,122			6,800
Amortization	11,854			12,022
Equity in earnings of unconsolidated affiliate	(40,607		)	(33,565		)
Distributions received from unconsolidated affiliate	45,617			35,265
Stock-based compensation	5,195			6,180
Provision for losses on receivables	93			(5		)
Deferred income tax expense	2,083			877
Net gain from investments	410			(347		)
Change in other long-term liabilities	579			965
Change in other assets	290			(849		)
Other	(784		)	56
Change in current assets and liabilities
Decrease (increase) in
Receivables from investment products	1,757			10,308
Receivables	(25,657		)	(24,243		)
Other current assets	(3,564		)	(2,298		)
Increase (decrease) in
Accounts payable	3,195			1,406
Accrued liabilities	(43,522		)	(27,754		)
Deferred revenue	275			(543		)
Total adjustments	(35,664		)	(15,725		)
Net cash provided by operating activities	$	104,174		$	73,012


Note 2.	Investment in Unconsolidated 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.~~investment products. 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 affiliate on the accompanying Consolidated Balance Sheets and its interest in the earnings of LSV is reflected in Equity in earnings of unconsolidated affiliate on the accompanying Consolidated Statements of Operations.

At ~~June 30, 2017~~March 31, 2018, the Company’s total investment in LSV was $~~45,197~~54,482. The Company receives partnership distributions from LSV on a quarterly basis. The Company received partnership distributions from LSV of $~~75,142~~45,617 and $~~67,061~~35,265 in the ~~six~~three months ended ~~June 30~~March 31, ~~2017~~2018 and ~~2016~~2017, respectively. As such, the Company considers these distribution payments as returns on investment rather than returns of the Company's original investment in LSV and has therefore classified the associated cash inflows as an operating activity on the Consolidated Statements of Cash Flows.

The Company’s proportionate share in the earnings of LSV was $~~36,315~~40,607 and $~~30,285~~33,565 during the three months ended ~~June 30~~March 31, ~~2017~~2018 and ~~2016~~2017, respectively. ~~During the six months ended June 30, 2017 and 2016, the Company's proportionate share in the earnings~~

10 of ~~LSV was $69,880 and $59,477, respectively.~~38

These tables contain condensed financial information of LSV:



Condensed Statement of Operations	Three Months Ended March 31,
	2018		2017
Revenues	$	131,718	$	109,953
Net income	104,406		86,215

Condensed Statement of Operations Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
Revenues $ 119,320
$ 95,825
$ 229,273
$ 188,478
Net income 93,372
77,790
179,587
152,247



Condensed Balance Sheets	March 31, 2018		December 31, 2017
Current assets	$	143,922	$	155,239
Non-current assets	1,444		1,407
Total assets	$	145,366	$	156,646

Current liabilities	$	47,641	$	46,486
Partners’ capital	97,725		110,160
Total liabilities and partners’ capital	$	145,366	$	156,646

Condensed Balance Sheets

June 30, 2017 December 31, 2016
Current assets $ 128,808
$ 125,872
Non-current assets 1,683
1,927
Total assets $ 130,491
$ 127,799

Current liabilities $ 55,427
$ 39,303
Partners’ capital 75,064
88,496
Total liabilities and partners’ capital $ 130,491
$ 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 had the right to seek payment from the Company in the event of a default by LSV Employee Group III. LSV provided 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 determined that LSV Employee Group III was a variable interest entity (VIE); however, the Company was not considered the primary beneficiary because it did 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 and June 2017, LSV Employee Group III made the final principal payments related to the term loans guaranteed by LSV and the Company, respectively, and has no further obligation regarding the agreement. The Company has no other interests in LSV Employee Group III and, therefore, no longer considers LSV Employee Group III to be a VIE.

~~10 of 39~~

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 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~~voting interest entity (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 ~~$6,606~~$6,654 and ~~$9,891~~$7,072 in fees during the three months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively. ~~During the six months ended June 30, 2017 and 2016, the Company waived $13,678 and $22,368, respectively, in fees.~~


Note 4.	Composition of Certain Financial Statement Captions

Receivables

Receivables on the accompanying Consolidated Balance Sheets consist of:



	March 31, 2018			December 31, 2017
Trade receivables	$	72,764		$	76,760
Fees earned, not billed	220,414			194,331
Other receivables	15,880			12,310
	309,058			283,401
Less: Allowance for doubtful accounts	(788		)	(695		)
	$	308,270		$	282,706

June 30, 2017 December 31, 2016
Trade receivables $ 56,262
$ 48,683
Fees earned, not billed 193,943
168,971
Other receivables 13,019
10,826
263,224
228,480
Less: Allowance for doubtful accounts (680 ) (523 )
$ 262,544
$ 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.

11 of 38

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.

~~11 of 39~~

Property and Equipment

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



	March 31, 2018			December 31, 2017
Buildings	$	154,007		$	153,961
Equipment	118,823			115,546
Land	10,557			10,030
Purchased software	136,226			134,610
Furniture and fixtures	18,320			18,114
Leasehold improvements	18,851			18,017
Construction in progress	5,741			6,105
	462,525			456,383
Less: Accumulated depreciation	(317,245		)	(309,955		)
Property and Equipment, net	$	145,280		$	146,428

June 30, 2017 December 31, 2016
Buildings $ 154,007
$ 152,171
Equipment 111,363
106,759
Land 10,030
10,030
Purchased software 131,494
128,008
Furniture and fixtures 17,607
17,292
Leasehold improvements 16,700
15,175
Construction in progress 2,630
2,077
443,831
431,512
Less: Accumulated depreciation (298,294 ) (285,322 )
Property and Equipment, net $ 145,537
$ 146,190

The Company recognized $~~13,399~~7,122 and $~~12,881~~6,800 in depreciation expense related to property and equipment for the ~~six~~three months ended ~~June 30~~March 31, ~~2017~~2018 and ~~2016~~2017, respectively.

Accrued Liabilities

Accrued liabilities on the accompanying Consolidated Balance Sheets consist of:



	March 31, 2018		December 31, 2017
Accrued employee compensation	$	28,714	$	88,960
Accrued consulting, outsourcing and professional fees	35,682		29,658
Accrued sub-advisory, distribution and other asset management fees	39,680		42,365
Accrued dividend payable	—		47,179
Accrued income taxes	19,282		5,583
Other accrued liabilities	45,260		51,313
Total accrued liabilities	$	168,618	$	265,058

June 30, 2017 December 31, 2016
Accrued employee compensation $ 48,510
$ 79,735
Accrued consulting, outsourcing and professional fees 34,822
24,428
Accrued sub-advisory, distribution and other asset management fees 36,935
41,666
Accrued dividend payable —
44,596
Other accrued liabilities 50,310
50,100
Total accrued liabilities $ 170,577
$ 240,525

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 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~~2021 to 2041.

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. This investment has not been classified in the fair value hierarchy but is presented in the tables below to permit reconciliation to the amounts presented on the accompanying Consolidated Balance Sheets.

12 of 38

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 for our Level 1 and Level 2 financial assets during the ~~six~~three months ended ~~June 30~~March 31, ~~2017~~2018 were consistent with those as described in our Annual Report on Form 10-K at December 31, ~~2016~~2017. The Company had no Level 3 financial assets or liabilities at ~~June 30, 2017~~March 31, 2018 or December 31, ~~2016~~.2017 that were required to be measured at fair value on a recurring basis. There were no transfers of financial assets between levels within the fair value hierarchy during the ~~six~~three months ended ~~June 30~~March 31, ~~2017~~2018.

~~12 of 39~~

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, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		March 31, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Equity available-for-sale securities	$	10,172	$	10,172	$	—	$	11,316	$	11,316	$	—
Fixed-income available-for-sale securities	75,913		—		75,913		71,773		—		71,773
Fixed-income securities owned	21,412		—		21,412		21,600		—		21,600
Investment funds sponsored by LSV (1)	5,350						5,534
	$	112,847	$	10,172	$	97,325	$	110,223	$	11,316	$	93,373



			Fair Value Measurements at the End of the Reporting Period Using
Assets	December 31, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Equity available-for-sale securities	$	11,250	$	11,250	$	—
Fixed-income available-for-sale securities	76,733		—		76,733
Fixed-income securities owned	21,526		—		21,526
Investment funds sponsored by LSV (1)	6,034
	$	115,543	$	11,250	$	98,259

Fair Value Measurements at the End of the Reporting Period Using
Assets December 31, 2016
Quoted Prices
in
Active Markets
for Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)
Equity available-for-sale securities $ 9,581
$ 9,581
$ —
Fixed-income available-for-sale securities 74,452
—
74,452
Fixed-income securities owned 21,339
—
21,339
Investment funds sponsored by LSV (1) 4,858

$ 110,230
$ 9,581
$ 95,791

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

Note 6. Marketable Securities

Investments Available for Sale

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


	At June 30, 2017									At March 31, 2018
	Cost Amount		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value		Cost Amount		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
SEI-sponsored mutual funds	$	7,330	$	82	$	(574	)	$	6,838	$	7,382	$	96	$	(50	)	$	7,428
Equities and other mutual funds	3,213		121		—			3,334		3,483		405		—			3,888
Debt securities	76,372		—		(459		)	75,913		74,431		—		(2,658		)	71,773
	$	86,915	$	203	$	(1,033	)	$	86,085	$	85,296	$	501	$	(2,708	)	$	83,089

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At December 31, 2016

Cost
Amount

Gross
Unrealized
Gains

Gross
Unrealized
(Losses)

Fair
Value
SEI-sponsored mutual funds $ 7,357
$ 24
$ (996 ) $ 6,385
Equities and other mutual funds 2,968
228
—
3,196
Debt securities 74,843
—
(391 ) 74,452
$ 85,168
$ 252
$ (1,387 ) $ 84,033



	At December 31, 2017
	Cost Amount		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
SEI-sponsored mutual funds	$	7,369	$	110	$	(143	)	$	7,336
Equities and other mutual funds	3,456		458		—			3,914
Debt securities	77,745		—		(1,012		)	76,733
	$	88,570	$	568	$	(1,155	)	$	87,983

The Company adopted ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01) on January 1, 2018 which requires the Company to recognize all changes in fair value of available-for-sale equity securities in current period earnings. Previously, these changes in fair value were recognized as a separate component of comprehensive income. The adoption of ASU 2016-01 did not have a material impact to the Company's consolidated financial statements.

Net unrealized losses at ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 of the Company's available-for-sale debt securities were $~~606~~2,016 (net of income tax benefit of $~~224~~642) and $~~836~~779 (net of income tax benefit of $~~299~~233), respectively. These net unrealized losses are reported as a separate component of Accumulated other comprehensive loss on the accompanying Consolidated Balance Sheets.

~~13 of 39~~

There were ~~gross~~no material realized gains of ~~$264~~ ~~and gross realized~~or losses of ~~$396~~ from available-for-sale securities during the ~~six~~three months ended ~~June 30~~March 31, ~~2017. There were gross realized gains of~~ ~~$237~~2018 and ~~gross realized losses of $492 from available-for-sale securities during the~~ ~~six months ended June 30~~, ~~2016~~2017. Gains and losses from available-for-sale securities, including amounts reclassified from accumulated comprehensive ~~income,~~loss, are reflected in Net (loss) gain 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 (loss) gain 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 $~~5,350~~5,534 and $~~4,858~~6,034 at ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017, respectively. The Company recognized losses of $500 and gains of ~~$194 and $492~~$298 during the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and 2017, respectively, from the change in fair value of the funds. ~~The Company recognized gains of $237 and $381 during the three and six months ended June 30, 2016, respectively, from the change in fair value of the funds.~~

Securities Owned

The Company’s broker-dealer subsidiary, SIDCO, has investments in U.S. government agency 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 $~~21,412~~21,600 and $~~21,339~~21,526 at ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017, respectively. There were no material net gains or losses ~~from the change in fair value of~~related to the securities during the three ~~and six~~ months ended ~~June 30, 2017~~March 31, 2018 and ~~2016~~2017.

Note 7. Line of Credit

The Company has a five-year $300,000 Credit Agreement (the Credit Facility) with Wells Fargo Bank, National Association, and a syndicate of other lenders. 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 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 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.

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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~~

In July 2017, the Company ~~had no borrowings~~borrowed $40,000 under the Credit Facility at ~~June 30, 2017~~.for the funding of an acquisition. As of March 31, 2018, the outstanding balance of the Credit Facility was $20,000 and is included in Borrowings Under Revolving Credit Facility on the accompanying Consolidated Balance Sheet. The Company was in compliance with all covenants of the Credit Facility during the ~~six~~three months ended ~~June 30, 2017.~~March 31, 2018.

~~During July 2017,~~In April 2018, the Company ~~elected~~made a principal payment of $20,000 to ~~borrow $40,000 under~~fully repay the outstanding balance of the Credit ~~Facility for cash management purposes subsequent to the funding of an acquisition (See Note 14).~~Facility. As of ~~July 20, 2017,~~April 19, 2018, the amount of the Credit Facility that is available for general corporate purposes was ~~$260,000.~~$300,000.

~~14 of 39~~

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. Options granted in December 2017 include a service condition which requires a minimum two or four year waiting period from the grant date along with the attainment of the applicable financial vesting target. Earnings per share targets exclude the impact of stock-based compensation and are established at time of grant. The targets are measured annually on December 31. The amount of stock-based compensation expense recognized in the period is based upon management’s estimate of when the earnings per share targets may be achieved. Any change in management’s estimate could result in the remaining amount of stock-based compensation expense to be accelerated, spread out over a longer period, or reversed. This may cause volatility in the recognition of stock-based compensation expense in future periods and could materially affect the Company’s earnings.

The Company recognized stock-based compensation expense in its Consolidated Financial Statements in the three ~~and six~~ months ended ~~June 30, 2017~~March 31, 2018 and ~~2016~~2017, respectively, as follows:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2018			2017
Stock-based compensation expense	$	6,259		$	4,189		$	12,439		$	7,978		$	5,195		$	6,180
Less: Deferred tax benefit	(2,189		)	(1,469		)	(4,342		)	(2,768		)	(1,103		)	(2,153		)
Stock-based compensation expense, net of tax	$	4,070		$	2,720		$	8,097		$	5,210		$	4,092		$	4,027

As of ~~June 30, 2017,~~March 31, 2018, there was approximately ~~$64,208~~$56,579 of unrecognized compensation cost remaining 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, ~~2017~~2018 was $~~37,976~~93,668. The total options exercisable as of ~~June 30, 2017~~March 31, 2018 had an intrinsic value of $~~176,559~~393,003. 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, 2017~~March 31, 2018 and the weighted average exercise price of the shares. The market value of the Company’s common stock as of ~~June 30, 2017~~March 31, 2018 was $~~53.78~~74.91 as reported by the Nasdaq Stock Market, LLC. The weighted average exercise price of the options exercisable as of ~~June 30, 2017~~March 31, 2018 was $~~21.21~~29.20. Total options that were outstanding as of ~~June 30, 2017~~March 31, 2018 were ~~16,676,000~~14,652,000. Total options that were exercisable as of ~~June 30, 2017~~March 31, 2018 were ~~5,421,000.~~8,598,000.

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 ~~2,357,000~~1,122,000 shares at a total cost of $~~120,041~~82,257 during the ~~six~~three months ended ~~June 30~~March 31, ~~2017~~2018, 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, 2017,~~March 31, 2018, the Company had approximately ~~$98,710~~$88,380 of authorization remaining for the purchase of common stock under the program.

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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 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 24, 2017, the Board of Directors declared a cash dividend of~~ ~~$0.28~~ ~~per share on the Company's common stock, which was paid on~~ ~~June 16, 2017, to shareholders of record on~~ ~~June 7, 2017. Cash dividends declared during the six months ended June 30,~~ ~~2017~~ ~~and~~ ~~2016~~ ~~were~~ ~~$44,264~~ ~~and~~ ~~$42,001, respectively.~~

~~15 of 39~~

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, 2018	$	(19,522	)	$	(386	)	$	(19,908	)

Other comprehensive gain before reclassifications	3,377			(1,357		)	2,020
Amounts reclassified from accumulated other comprehensive loss	—			(273		)	(273		)
Net current-period other comprehensive gain	3,377			(1,630		)	1,747

Balance, March 31, 2018	$	(16,145	)	$	(2,016	)	$	(18,161	)

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 9,710
141
9,851
Amounts reclassified from accumulated other comprehensive loss —
89
89
Net current-period other comprehensive gain 9,710
230
9,940

Balance, June 30, 2017 $ (27,409 ) $ (606 ) $ (28,015 )

Note 10. Business Segment Information

The Company’s reportable business segments are:

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

Investment Advisors – provides investment management ~~programs~~and investment processing platforms 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 platforms to retirement plan sponsors, healthcare systems and not-for-profit organizations worldwide;

Investment Managers – provides investment operations outsourcing ~~solutions~~platforms 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;~~platforms; 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, 2017~~March 31, 2018 and ~~2016~~2017. 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, ~~2016~~.2017.

The following tables highlight certain financial information about each of the Company’s business segments for the three months ended ~~June 30, 2017~~March 31, 2018 and ~~2016~~2017.


	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, 2017													For the Three Months Ended March 31, 2018
Revenues	$	116,184	$	92,746	$	78,068	$	83,616	$	1,717		$	372,331	$	122,164	$	99,192	$	85,491	$	96,855	$	1,896		$	405,598
Expenses	112,353		49,380		38,668		53,847		5,124			259,372		112,202		52,453		41,249		63,338		5,098			274,340
Operating profit (loss)	$	3,831	$	43,366	$	39,400	$	29,769	$	(3,407	)	$	112,959	$	9,962	$	46,739	$	44,242	$	33,517	$	(3,202	)	$	131,258

Private
Banks

Investment
Advisors

Institutional
Investors

Investment
Managers

Investments
In New
Businesses
Total
For the Three Months Ended June 30, 2016
Revenues $ 114,836
$ 81,883
$ 74,674
$ 70,938
$ 1,500
$ 343,831
Expenses 102,862
44,721
36,550
46,968
5,355
236,456
Operating profit (loss) $ 11,974
$ 37,162
$ 38,124
$ 23,970
$ (3,855 ) $ 107,375

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	Private Banks		Investment Advisors		Institutional Investors		Investment Managers		Investments In New Businesses			Total
	For the Three Months Ended March 31, 2017
Revenues	$	112,634	$	88,238	$	77,004	$	80,487	$	1,621		$	359,984
Expenses	108,550		47,539		38,828		52,065		4,880			251,862
Operating profit (loss)	$	4,084	$	40,699	$	38,176	$	28,422	$	(3,259	)	$	108,122

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, ~~2017~~2018 and ~~2016~~2017 is as follows:



	2018			2017
Total operating profit from segments	$	131,258		$	108,122
Corporate overhead expenses	(14,942		)	(14,605		)
Income from operations	$	116,316		$	93,517

2017 2016
Total operating profit from segments $ 112,959
$ 107,375
Corporate overhead expenses (15,732 ) (13,852 )
Income from operations $ 97,227
$ 93,523

The following tables provide additional information for the three months ended ~~June 30~~March 31, ~~2017~~2018 and ~~2016~~2017 pertaining to our business segments:


	Capital Expenditures (1)				Depreciation				Capital Expenditures (1)				Depreciation
	2017		2016		2017		2016		2018		2017		2018		2017
Private Banks	$	9,479	$	8,454	$	4,172	$	3,199	$	10,239	$	12,850	$	3,319	$	4,410
Investment Advisors	3,698		3,267		802		964		4,260		4,532		1,105		733
Institutional Investors	1,086		696		244		339		967		811		448		227
Investment Managers	8,665		1,743		1,028		1,172		2,520		1,615		1,809		916
Investments in New Businesses	153		121		171		547		204		106		150		368
Total from business segments	$	23,081	$	14,281	$	6,417	$	6,221	$	18,190	$	19,914	$	6,831	$	6,654
Corporate overhead	392		279		182		213		308		152		291		146
	$	23,473	$	14,560	$	6,599	$	6,434	$	18,498	$	20,066	$	7,122	$	6,800

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



	Amortization
	2018		2017
Private Banks	$	6,627	$	8,464
Investment Advisors	2,357		2,850
Institutional Investors	427		323
Investment Managers	2,345		216
Investments in New Businesses	40		119
Total from business segments	$	11,796	$	11,972
Corporate overhead	58		50
	$	11,854	$	12,022

Amortization
2017 2016
Private Banks $ 8,876
$ 7,769
Investment Advisors 2,897
2,585
Institutional Investors 426
425
Investment Managers 275
275
Investments in New Businesses 41
40
Total from business segments $ 12,515
$ 11,094
Corporate overhead 50
190
$ 12,565
$ 11,284

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

Private
Banks

Investment
Advisors

Institutional
Investors

Investment
Managers

Investments
In New
Businesses
Total
For the Six Months Ended June 30, 2017
Revenues $ 228,818
$ 180,984
$ 155,072
$ 164,103
$ 3,338
$ 732,315
Expenses 220,903
96,919
77,496
105,912
10,004
511,234
Operating profit (loss) $ 7,915
$ 84,065
$ 77,576
$ 58,191
$ (6,666 ) $ 221,081

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

~~17 of 39~~

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, 2017 and 2016 is as follows:

2017 2016
Total operating profit from segments $ 221,081
$ 207,234
Corporate overhead expenses (30,337 ) (26,899 )
Income from operations $ 190,744
$ 180,335

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

Capital Expenditures (1) Depreciation
2017 2016 2017 2016
Private Banks $ 22,329
$ 17,166
$ 8,582
$ 6,380
Investment Advisors 8,230
6,119
1,535
1,940
Institutional Investors 1,897
1,492
471
673
Investment Managers 10,280
3,065
1,944
2,362
Investments in New Businesses 259
215
539
1,095
Total from business segments $ 42,995
$ 28,057
$ 13,071
$ 12,450
Corporate Overhead 544
589
328
431
$ 43,539
$ 28,646
$ 13,399
$ 12,881

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

Amortization
2017 2016
Private Banks $ 17,339
$ 15,480
Investment Advisors 5,747
5,138
Institutional Investors 749
824
Investment Managers 491
541
Investments in New Businesses 160
66
Total from business segments $ 24,486
$ 22,049
Corporate Overhead 101
247
$ 24,587
$ 22,296

Note 11. Income Taxes

The gross liability for unrecognized tax benefits at ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 was $~~18,856~~14,685 and $~~17,287~~14,480, respectively, exclusive of interest and penalties, of which $~~16,392~~13,986 and $~~14,868~~13,737 would affect the effective tax rate if the Company were to recognize the tax benefit.

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The Company classifies interest and penalties on unrecognized tax benefits as income tax expense. As of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017, the combined amount of accrued interest and penalties related to tax positions taken on tax returns was $~~1,579~~1,218 and $~~1,224~~1,175, respectively.



	March 31, 2018		December 31, 2017
Gross liability for unrecognized tax benefits, exclusive of interest and penalties	$	14,685	$	14,480
Interest and penalties on unrecognized benefits	1,218		1,175
Total gross uncertain tax positions	$	15,903	$	15,655
Amount included in Current liabilities	$	2,944	$	3,275
Amount included in Other long-term liabilities	12,959		12,380
	$	15,903	$	15,655

June 30, 2017 December 31, 2016
Gross liability for unrecognized tax benefits, exclusive of interest and penalties $ 18,856
$ 17,287
Interest and penalties on unrecognized benefits 1,579
1,224
Total gross uncertain tax positions $ 20,435
$ 18,511
Amount included in Current liabilities $ 6,293
$ 3,866
Amount included in Other long-term liabilities 14,142
14,645
$ 20,435
$ 18,511

~~18 of 39~~

The Company's effective income tax rate for the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and 2017 ~~and 2016~~ differs from the federal income tax statutory rate due to the following:



	Three Months Ended March 31,
	2018		2017
Statutory rate	21.0	%	35.0	%
State taxes, net of federal tax benefit	2.2		1.5
Foreign tax expense and tax rate differential	(0.2	)	(0.8	)
Tax benefit from stock option exercises	(10.8	)	(4.2	)
Other, net	(0.3	)	(0.5	)
	11.9	%	31.0	%

Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
Statutory rate 35.0 % 35.0 % 35.0 % 35.0 %
State taxes, net of federal tax benefit 1.7
1.4
1.7
1.4
Foreign tax expense and tax rate differential (1.0 ) (0.7 ) (1.0 ) (0.7 )
Tax benefit from stock option exercises (3.0 ) —
(3.6 ) —
Other, net (0.6 ) (0.5 ) (0.5 ) (0.5 )
32.1 % 35.2 % 31.6 % 35.2 %

The decrease in the tax ~~rates~~rate for the three ~~and six~~ months ended ~~June 30, 2017~~March 31, 2018 was primarily due to the ~~adoption of ASU 2016-09. Under this standard,~~tax changes enacted in the 2017 Tax Cut and Jobs Act (The Tax Act). The Tax Act was enacted on December 22, 2017 and included a permanent reduction in the corporate tax ~~effects~~rate from 35.0 percent to 21.0 percent. In addition, the rate was favorably impacted by an increase in the excess tax benefits recognized on stock-based compensation expense due to a higher volume of stock option ~~exercises are treated as discrete items in~~exercise activity.

The Tax Act also imposed a territorial rather than worldwide system which requires a one-time transition tax on the ~~reporting period in which they occur. Therefore, the tax effect~~repatriation of ~~stock option exercises is not spread over the entire year through the use~~previously deferred foreign earnings. The Company's estimate of the ~~annual effective~~one-time transition tax ~~rate, but instead~~as of March 31, 2018 was $11,544, of which $915 is ~~recorded entirely~~expected to be paid within one year and $10,629 is included in Long-term income taxes payable on 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 and six months ended June 30, 2017. The Company's effective tax rate could fluctuate significantly on a quarterly basis due to the tax effects of stock-based compensation.accompanying Consolidated Balance Sheet.

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 ~~2013~~2014 and is no longer subject to state, local or foreign income tax examinations by authorities for years before ~~2010.~~2013.

The Company estimates it will recognize ~~$6,293~~$2,944 of gross unrecognized tax ~~benefits which~~benefits. This amount is expected to be paid within one year ~~due~~or to be removed at 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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Trust Company. Two of the actions also include claims for violations of the Louisiana Racketeering Act and possibly conspiracy, and a 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 Racketeering Act, and conspiracy.

The procedural status of the seven cases varies. The Lillie case, filed originally in the 19th Judicial District Court for the Parish of East Baton Rouge, 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 claims under the Louisiana Unfair Trade Practices Act and permitting the claims under the Louisiana Securities Law to go forward. On March 11, 2013, newly-added insurance carrier defendants removed the case to the United States District Court for the Middle District of Louisiana. On August 7, 2013, the Judicial Panel on Multidistrict Litigation transferred the matter to the Northern District of Texas where MDL 2099, In re: Stanford Entities Securities Litigation (“the Stanford MDL”), is pending. On September 22, 2015, the District Court on the motion of SEI and SPTC dismissed plaintiffs’ claims for primary liability under Section 714(A) of the Louisiana Securities Law, but declined to dismiss plaintiffs’ claims for secondary liability under Section 714(B) of the Louisiana Securities 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

~~19 of 39~~

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". Notice of the pendency of the class action was mailed to potential class members on October 4, 2016.

On December 1, 2016, a group of plaintiffs who opted out of the Lillie class filed a complaint against SEI and SPTC in the 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.

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 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 respond to the petitions.

In the two additional cases, filed in East Baton Rouge and brought by the same counsel who filed the 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 remains uncertain, SEI and SPTC believe that they have valid defenses to plaintiffs' claims and intend to defend the lawsuits vigorously. Because of uncertainty in the make-up of the 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.

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 - Depositary & Custodial Services (Ireland) Limited (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 D&C, damages of approximately $84 million. GFSL and D&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 D&C, each of GFSL and D&C believe that they have valid defenses to plaintiffs’ claims and intend to defend the lawsuit vigorously, and GFSL and D&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~~Goodwill and Intangible Assets

OnIn 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 gain of $2,791, or $0.01 diluted earnings per share, during the six months ended June 30, 2016 representing the final annual payment under the terms of the agreement. The Company's gain from the sale of SEI AK are included in Gain on sale of subsidiary on the accompanying Consolidated Statement of Operations.

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~~Note 14. Subsequent Events~~

~~On July 3,~~ 2017, the Company acquired all ownership interests of Archway Technology Partners, LLC, Archway Finance & Operations, Inc. and Keystone Capital Holdings, LLC (collectively, Archway), a provider of operating technologies and services to the family office ~~industry, from Keystone International Holdings, Inc.~~industry. The total purchase price ~~paid~~was allocated to Archway’s net tangible and intangible assets based upon their estimated fair values at the date of purchase. The excess purchase price over the value of the net tangible and identifiable intangible assets was recorded as goodwill. The total amount of goodwill from this transaction amounted to $52,990 and is included on the accompanying Consolidated Balance Sheets.

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The Company identified intangible assets related to Archway that met the contractual-legal criterion for recognition apart from goodwill. The identifiable intangible assets included on the accompanying Consolidated Balance Sheets consist of:



	March 31, 2018			December 31, 2017
Acquired technology	$	13,510		$	13,510
Client relationships	10,760			10,760
Non-competition agreements	3,470			3,470
Trade name	2,390			2,390
	30,130			30,130
Less: Accumulated amortization	(2,328		)	(1,552		)
Intangible assets, net	$	27,802		$	28,578

The Company recognized $776 of amortization expense related to the intangible assets during the three months ended March 31, 2018. Goodwill and the identifiable intangible assets related to Archway have been allocated to the Investment Managers segment.

Note 14. Revenues from Contracts with Customers

The Company’s principal sources of revenues are: (1) asset management, administration and distribution fees primarily earned based upon a contractual percentage of net assets under management or administration; and (2) information processing and software servicing fees that are either recurring and primarily earned based upon the number of trust accounts being serviced or a percentage of the total average daily market value of the clients' assets processed on the Company's platforms, or non-recurring and based upon project-oriented contractual agreements related to client implementations.

Disaggregation of Revenue

The following tables provide additional information pertaining to our revenues disaggregated by major product line and primary geographic market based on the location of the use of the products or services for each of the Company’s business segments for the three months ended March 31, 2018:



	Private Banks		Investment Advisors		Institutional Investors		Investment Managers		Investments In New Businesses		Total
Major Product Lines:	For the Three Months Ended March 31, 2018
Investment management fees from pooled investment products	$	35,190	$	72,418	$	15,858	$	—	$	225	$	123,691
Investment management fees from investment management agreements	198		22,764		69,276		83		1,634		93,955
Investment operations fees	382		—		—		87,455		—		87,837
Investment processing fees - PaaS	44,585		—		—		483		—		45,068
Investment processing fees - SaaS	34,602		—		—		2,365		—		36,967
Professional services fees	5,419		—		—		1,887		—		7,306
Account fees and other	1,788		4,010		357		4,582		37		10,774
Total revenues	$	122,164	$	99,192	$	85,491	$	96,855	$	1,896	$	405,598

Primary Geographic Markets:
United States	$	78,133	$	99,192	$	64,768	$	91,759	$	1,896	$	335,748
United Kingdom	27,525		—		14,787		—		—		42,312
Canada	11,601		—		2,671		—		—		14,272
Ireland	4,905		—		2,427		5,096		—		12,428
Other	—		—		838		—		—		838
Total revenues	$	122,164	$	99,192	$	85,491	$	96,855	$	1,896	$	405,598

Investment management fees from pooled investment products - Revenues associated with clients' assets invested in Company-sponsored pooled investment products. Contractual fees are stated as a percentage of the average market value of assets under management and collected on a monthly basis. Revenues are recognized in Asset management, administration and distribution fees on the accompanying Consolidated Statements of Operations.

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Investment management fees from Investment Management agreements - Revenues based on assets of clients of the Institutional Investors segment primarily invested in Company-sponsored products. Each client is charged an investment management fee that is stated as a percentage of the average market value of all assets under management. The client is billed directly on a quarterly basis. Revenues are recognized in Asset management, administration and distribution fees on the accompanying Consolidated Statements of Operations.

Revenues associated with the separately managed account program offered through registered investment advisors located throughout the United States. The contractual fee is stated as a percentage of the average market value of all assets invested in the separately managed account and collected on a quarterly basis. Revenues are recognized in Asset management, administration and distribution fees on the accompanying Consolidated Statements of Operations.

Investment operations fees - Revenues earned from accounting and administrative services, distribution support services and regulatory and compliance services to investment management firms that offer traditional and alternative products. The Company contracts directly with the investment management firm. The contractual fees are stated as a percentage of net assets under administration and billed when asset valuations are finalized. Revenues are recognized in Asset management, administration and distribution fees on the accompanying Consolidated Statements of Operations.

Investment Processing fees - Software as a Service - Revenues associated with clients that outsource investment processing technology software and computer processing by accessing our proprietary software and data center remotely but retain responsibility for all investment operations, client administration and other back-office trust operations. The contractual fee is based on a monthly fee plus additional fees determined on a per-account or per-transaction basis. The client is billed directly on a monthly basis. Revenues are recognized in Information processing and software servicing fees on the accompanying Consolidated Statements of Operations.

Investment Processing fees - Platform as a Service - Revenues associated with clients that outsource their entire investment operation and back-office processing functions. Through the use of the Company's proprietary platforms, the Company assumes all back-office investment processing services including investment processing, custody and safekeeping of assets, income collections, securities settlement and other related trust activities. The contractual fee is based on a monthly fee plus additional fees determined on a per-account or per-transaction basis. Contractual fees can also be stated as a percentage of the value of assets processed on the Company's platforms each month as long as the fee is in excess of a monthly contractual minimum. The client is billed directly on a monthly basis. Revenues are recognized in Information processing and software servicing fees on the accompanying Consolidated Statements of Operations.

Professional Services - Revenues associated with the business services migration for investment processing clients of the Private Banks segment and investment operations clients of the Investment Managers segment. In addition, Professional services include other services such as business transformation consulting. Typically, fees are stated as a contractual fixed fee. The client is billed directly and fees are collected according to the terms of the agreement.

Other - Revenues associated with custody account servicing, account terminations, reimbursements received for out-of-pocket expenses, and other fees for the provision of ancillary services.

Revenue is recognized by the Company ~~included approximately $81,532 in cash consideration, subject to adjustment~~when the performance obligations are satisfied and ~~including transaction costs, with up to an additional $8,000 payable~~transfer of control to the ~~seller as a contingent purchase price with respect to two one-year periods ending December 31, 2017~~client is completed. The majority of the Company’s performance obligations are satisfied and ~~2018 depending upon whether Archway achieves specified financial measures during such periods. Archway will be integrated into the Company's Investment Managers business segment.~~

~~The initial purchase accounting for this transaction has not yet been completed given the short period of time between the acquisition date and the issuance of these financial statements.~~

~~Subsequent~~control is transferred to the ~~funding~~client continuously. Therefore, revenue is recognized on a monthly basis. The amount of revenue recognized reflects the ~~cash~~amount of consideration ~~for the acquisition of Archway,~~expected to be received by the Company ~~elected~~in exchange for satisfied performance obligations.

Deferred Contract Costs

Deferred contract costs, which primarily consist of deferred sales commissions, were $19,875 as of March 31, 2018. The expense related to ~~borrow $40,000 under~~ the ~~Credit Facility for other cash management purposes (See Note 7).~~deferred contract costs during the three months ended March 31, 2018 was immaterial. There was no impairment loss in relation to the costs capitalized during the three months ended March 31, 2018.

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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, the consolidated results of operations 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, ~~2016~~2017.

Overview

Consolidated Summary

We are a leading global provider of investment processing, investment management and investment operations ~~solutions.~~platforms. 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.~~platforms. 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 advised assets. As of ~~June 30, 2017~~,March 31, 2018, through our subsidiaries and partnerships in which we have a significant interest, we manage, advise or administer ~~$809.2~~$869.0 billion in hedge, private equity, mutual fund and pooled or separately managed assets, including ~~$307.4~~$334.7 billion in assets under management and ~~$497.5~~$530.1 billion in client assets under administration. Our affiliate, LSV Asset Management (LSV), manages ~~$94.8~~$108.2 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,~~March 31, 2018 and 2017 ~~and~~ ~~2016~~ were:


	Three Months Ended June 30,				Percent Change*			Six Months Ended June 30,								Percent Change*		Three Months Ended March 31,							Percent Change*
	2017		2016				2017				2016				2018				2017						Percent Change*
Revenues	$	372,331	$	343,831	Percent Change*	8	%		$	732,315			$	678,094		Percent Change*			8	%	$	405,598		$	359,984	13%
Expenses	275,104		250,308		10	%		541,571				497,759				9	%	289,282				266,467			9%
Income from operations	97,227		93,523		4	%		190,744				180,335				6	%	116,316				93,517			24%
Net gain from investments	44		250		NM			391				124				NM
Net (loss) gain from investments																		(410		)		347			NM
Interest income, net of interest expense	1,572		846		86	%		2,803				1,815				54	%	2,245				1,231			82%
Equity in earnings from unconsolidated affiliate	36,315		30,285		20	%		69,880				59,477				17	%	40,607				33,565			21%
Gain on sale of subsidiary	—		—		NM			—				2,791				NM
Income before income taxes	135,158		124,904		8	%		263,818				244,542				8	%	158,758				128,660			23%
Income taxes	43,389		43,899		(1	)%		83,312				86,040				(3	)%	18,920				39,923			(53)%
Net income	91,769		81,005		13	%		180,506				158,502				14	%	139,838				88,737			58%
Diluted earnings per common share	$	0.57	$	0.49	16	%		$	1.11			$	0.96			16	%	$	0.86			$	0.55		56%

* 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, 2017~~March 31, 2018 and ~~2016~~2017:

•

Revenue growth was primarily driven by higher Asset management, administration and distribution fees from market appreciation and positive cash flows from new and existing clients. Our average assets under management, excluding LSV, increased $32.2 billion, or 16 percent, to $233.6 billion in the first three months of 2018 as compared to $201.4 billion during the first three months of 2017. Our average assets under administration increased $56.4 billion, or 12 percent, to $530.3 billion in the first three months of 2018 as compared to $474.0 billion during the first three months of 2017.

Information processing and software servicing fees in our Private Banks segment increased $6.4 million during the first three months of 2018 primarily due to increased assets from new and existing ~~clients. Our average assets under management, excluding LSV, increased $20.4 billion, or 11 percent, to $205.3 billion in~~clients processed on the ~~first six months~~SEI Wealth Platform.

Revenues from our acquisition of ~~2017~~ ~~as compared to $184.9 billion~~SEI Archway were $5.5 million during the first ~~six~~three months of ~~2016. Our average assets under administration increased $63.7 billion, or 15 percent, to $482.9 billion in the first six months of~~ ~~2017~~ ~~as compared to $419.2 billion~~2018. SEI Archway was acquired during the ~~first six months of~~ ~~2016~~.

third quarter 2017 and is reported in our Investment Managers segment.

Our proportionate share in the earnings of LSV increased to ~~$69.9~~$40.6 million in the first ~~six~~three months of ~~2017~~2018 as compared to ~~$59.5~~$33.6 million in the first ~~six~~three months of ~~2016~~2017 primarily due to increased assets under management from LSV's existing clients due to market appreciation.

Our operating expenses, primarily personnel costs, in our Investment Advisors and Investment Managers segments increased. These expenses primarily consist of operational, technology and marketing costs and are mainly related to servicing existing clients and acquiring new clients. In addition, our Investment Managers segment includes personnel

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costs related to SEI Archway. These operating expenses are included in Compensation, benefits and other personnel costs on the accompanying Consolidated Statements of Operations.

The direct costs associated with our investment management programs increased in our Private Banks, Investment Advisors and Institutional Investors segments. These costs primarily relate to fees charged by investment advisory firms for day-to-day portfolio management of SEI-sponsored investment products. These costs are included in Sub-advisory, distribution and other asset management costs on the accompanying Consolidated Statements of Operations.

We capitalized ~~$28.0~~$12.0 million in the first ~~six~~three months of ~~2017~~2018 for the SEI Wealth Platform as compared to ~~$16.1~~$15.2 million in the first ~~six~~three months of ~~2016.~~2017. Amortization expense related to the Platform ~~increased~~decreased to ~~$24.5~~$9.7 million during the first

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~~six~~ three months of ~~2017~~2018 as compared to ~~$22.0~~$12.0 million during the first ~~six months of 2016 due to continued enhancements to the Platform.~~

~~We also capitalized $5.3 million in the first six~~three months of 2017 ~~as compared~~due to ~~$3.5 million~~the adjustment to the estimated useful life of the Platform effective in the first six months of 2016 for 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 is expected to be placed into service in latefourth quarter 2017.


•	During the first three months of 2018, we placed into service an application 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. Amortization expense related to the application was $1.3 million during the first three months of 2018.

As we continue the development of new elements of the Platform, our expenses related to maintenance and support have increased. These costs are primarily recognized in personnel and consulting costs and are not eligible for capitalization. These increased costs primarily impacted the Private Banks and Investment Advisors business segments.

•

Our effective tax rate was 11.9 percent during the first three months of 2018 as compared to 31.0 percent during the first three months of 2017. The decline in our effective tax rate was primarily due to the tax changes enacted in the 2017 Tax Cut and Jobs Act (The Tax Act). In addition, the rate was favorably impacted by increased tax benefits due to a higher volume of stock option exercise activity (See the caption "Income Taxes" later in this discussion for more information).


•	We continued our stock repurchase program during 2018 and purchased 1.1 million shares for $82.3 million in the three month period.

~~Our operating expenses, primarily personnel costs, in our Investment Advisors and Investment Managers segments increased. These expenses primarily consist~~Impact of operational, technology and marketing costs and are mainly related to servicing existing clients and acquiring new clients. These operating expenses are included in Compensation, benefits and other personnel costsAdopting Revenue Recognition Guidance

On January 1, 2018, we adopted Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (Accounting Standards Codification 606 (ASC 606), which provides accounting guidance on the ~~accompanying~~recognition of revenues from contracts with customers and impacts the presentation of certain revenues and expenses in our Consolidated Statements of Operations. ASC 606 is applied prospectively from January 1, 2018 and reported financial results from the prior comparable period have not been revised.

~~Stock-based compensation costs increased~~ASC 606 did not change the accounting for the majority of our revenue arrangements and did not have a material impact to ~~$12.4 million~~ ~~in the first six months of 2017 as compared to $8.0 million in the first six months 2016.~~our consolidated financial statements. The ~~increase was primarily due to stock option awards granted in late 2016.~~

~~Our effective tax rate during the second quarter of 2017 was 32.1 percent as compared to 35.2 percent during the second quarter of 2016. During the first six months of~~ ~~2017, our effective tax rate was 31.6 percent as compared to 35.2 percent during the first six months of~~ ~~2016. The decline in our effective tax rates during the second quarter and the six month period was primarily due to~~impact from the adoption of aASC 606 to our financial results during the three months ended March 31, 2018 is primarily related to research services provided to customers in soft-dollar arrangements by SIDCO, our broker-dealer subsidiary. Under the new ~~accounting~~revenue standard, ~~which requires all excess tax benefits or deficiencies to be~~fees received for research services by SIDCO are recorded net of amounts paid for the soft dollar arrangement. The amounts we paid under these arrangements were previously recorded as an expense. The impact of this change in presentation was a decline in both revenues and expenses of $3.7 million during the three months ended March 31, 2018. There was no impact to our net income ~~tax benefit or expense in the income statement. Our quarterly effective tax rate could fluctuate significantly due to the tax effects~~as a result of ~~stock-based compensation~~this change (See Note ~~11 to the Consolidated Financial Statements for more information).~~

We recorded our final pre-tax gain of $2.8 million, or $.01 diluted earnings per share, from the sale of SEI Asset Korea (SEI AK) in the first six months of 2016. The gain from the sale 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).

~~We continued our stock repurchase program during~~ ~~2017~~ ~~and purchased~~ ~~2.4 million~~ ~~shares for $120.0 million in the~~ ~~six~~ ~~month period.~~

On July 3, 2017, we acquired Archway Technology Partners, LLC (Archway), a provider of operating technologies and services to the family office industry, for approximately $81.5 million in cash consideration with up to an additional $8.0 million payable to the seller as a contingent purchase price with respect to two one-year periods ending December 31, 2017 and 2018 depending upon whether Archway achieves specified financial measures during such periods. Archway will be integrated into our Investment Managers business segment (See Note 141 to the Notes to Consolidated Financial Statements).

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Ending Asset Balances

(In millions)


	As of June 30,				Percent Change		As of March 31,				Percent Change
	2017		2016		Percent Change		2018		2017		Percent Change
Private Banks:
Equity and fixed-income programs	$	20,185	$	18,328	10	%	$	22,917	$	19,034	20%
Collective trust fund programs	4		3		33	%	4		5		(20)%
Liquidity funds	3,589		4,848		(26	)%	3,537		3,903		(9)%
Total assets under management	$	23,778	$	23,179	3	%	$	26,458	$	22,942	15%
Client assets under administration	20,951		18,537		13	%	22,411		20,760		8%
Total assets	$	44,729	$	41,716	7	%	$	48,869	$	43,702	12%
Investment Advisors:
Equity and fixed-income programs	57,358		50,016		15	%	62,176		55,311		12%
Collective trust fund programs	5		5		—	%	5		5		—%
Liquidity funds	2,451		3,661		(33	)%	2,399		2,645		(9)%
Total assets under management	$	59,814	$	53,682	11	%	$	64,580	$	57,961	11%
Institutional Investors:
Equity and fixed-income programs	81,723		75,944		8	%	85,607		78,954		8%
Collective trust fund programs	80		88		(9	)%	72		89		(19)%
Liquidity funds	2,468		2,526		(2	)%	2,727		2,759		(1)%
Total assets under management	$	84,271	$	78,558	7	%	$	88,406	$	81,802	8%
Advised assets	4,255		—		NM		4,185		3,228		30%
Total assets	88,526		78,558		13	%	92,591		85,030		9%
Investment Managers:
Equity and fixed-income programs	92		73		26	%	97		84		15%
Collective trust fund programs	42,662		33,841		26	%	45,062		40,646		11%
Liquidity funds	999		750		33	%	732		911		(20)%
Total assets under management	$	43,753	$	34,664	26	%	$	45,891	$	41,641	10%
Client assets under administration (A)	476,543		419,139		14	%	507,694		457,356		11%
Total assets	$	520,296	$	453,803	15	%	$	553,585	$	498,997	11%
Investments in New Businesses:
Equity and fixed-income programs	997		820		22	%	1,114		931		20%
Liquidity funds	46		37		24	%	72		79		(9)%
Total assets under management	$	1,043	$	857	22	%	$	1,186	$	1,010	17%
Advised assets	69		—		NM		49		85		NM
Total assets	1,112		857		30	%	1,235		1,095		13%
LSV:
Equity and fixed-income programs	$	94,774	$	78,352	21	%
Equity and fixed-income programs (B)							$	108,186	$	91,514	18%
Total:
Equity and fixed-income programs ~~(B)~~(C)	255,129		223,533		14	%	280,097		245,828		14%
Collective trust fund programs	42,751		33,937		26	%	45,143		40,745		11%
Liquidity funds	9,553		11,822		(19	)%	9,467		10,297		(8)%
Total assets under management	$	307,433	$	269,292	14	%	$	334,707	$	296,870	13%
Advised assets ~~(C)~~	4,324		—		NM		4,234		3,313		28%
Client assets under administration (D)	497,494		437,676		14	%	530,105		478,116		11%
Total assets under management, advisement and administration	$	809,251	$	706,968	14	%	$	869,046	$	778,299	12%

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(A)	Client assets under administration in the Investment Managers segment include ~~$48.3~~$42.4 billion of assets that require limited services and therefore are at fee levels below our normal full service assets (as of ~~June 30, 2017)~~March 31, 2018).


(B)	The ending asset balance for LSV as of March 31, 2017 was revised from $90.6 billion to $91.5 billion to include managed assets in which fees are based on performance only. The ending value of these assets as of March 31, 2018 and 2017 was $2.4 billion and $1.8 billion, respectively.


(C)	Equity and fixed-income programs include ~~$4.7~~$5.7 billion of assets invested in asset allocation funds at ~~June 30, 2017.~~


~~(C)~~	~~Assets for which SEI acts as an advisor to the accounts. These assets were excluded in previous periods.~~ March 31, 2018.


(D)	In addition to the numbers presented, SEI also administers an additional ~~$9.8~~$9.7 billion in Funds of Funds assets (as of March 31, 2018) on which SEI does not earn an administration fee.

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

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Average Asset Balances

(In millions)


	Three Months Ended June 30,				Percent Change			Six Months Ended June 30,						Percent Change		Three Months Ended March 31,				Percent Change
	2017		2016				2017			2016			2018				2017			Percent Change
Private Banks:					Percent Change									Percent Change
Equity and fixed-income programs	$	19,610	$	18,504	6	%		$	19,054		$	18,074		5	%	$	23,412	$	18,498	27%
Collective trust fund programs	5		3		67	%		5			3			67	%	4		4		—%
Liquidity funds	3,677		5,118		(28	)%		3,864			5,390			(28	)%	3,720		4,051		(8)%
Total assets under management	$	23,292	$	23,625	(1	)%		$	22,923		$	23,467		(2	)%	$	27,136	$	22,553	20%
Client assets under administration	21,166		18,436		15	%		20,695			17,842			16	%	23,398		20,223		16%
Total assets	$	44,458	$	42,061	6	%		$	43,618		$	41,309		6	%	$	50,534	$	42,776	18%
Investment Advisors:
Equity and fixed-income programs	56,319		48,783		15	%		55,383			46,979			18	%	62,650		54,446		15%
Collective trust fund programs	5		6		(17	)%		5			7			(29	)%	5		5		—%
Liquidity funds	2,390		4,061		(41	)%		2,475			4,535			(45	)%	2,290		2,559		(11)%
Total assets under management	$	58,714	$	52,850	11	%		$	57,863		$	51,521		12	%	$	64,945	$	57,010	14%
Institutional Investors:
Equity and fixed-income programs	80,561		74,984		7	%		79,207			73,382			8	%	87,207		77,852		12%
Collective trust fund programs	85		96		(11	)%		88			97			(9	)%	77		90		(14)%
Liquidity funds	2,861		2,868		—	%		2,876			2,851			1	%	2,905		2,891		—%
Total assets under management	$	83,507	$	77,948	7	%		$	82,171		$	76,330		8	%	$	90,189	$	80,833	12%
Advised assets	3,687		—		NM			3,406			—			NM		4,383		3,125		40%
Total assets	87,194		77,948		12	%		85,577			76,330			12	%	94,572		83,958		13%
Investment Managers:
Equity and fixed-income programs	84		72		17	%		80			69			16	%	96		75		28%
Collective trust fund programs	41,615		33,021		26	%		40,348			31,903			26	%	49,243		39,081		26%
Liquidity funds	937		701		34	%		899			767			17	%	834		860		(3)%
Total assets under management	$	42,636	$	33,794	26	%		$	41,327		$	32,739		26	%	$	50,173	$	40,016	25%
Client assets under administration	470,701		415,237		13	%		462,234			401,329			15	%	506,951		453,766		12%
Total assets	$	513,337	$	449,031	14	%		$	503,561		$	434,068		16	%	$	557,124	$	493,782	13%
Investments in New Businesses:
Equity and fixed-income programs	954		811		18	%		932			784			19	%	1,105		909		22%
Liquidity funds	64		39		64	%		64			44			45	%	70		63		11%
Total assets under management	$	1,018	$	850	20	%		$	996		$	828		20	%	$	1,175	$	972	21%
Advised assets	73		—		NM			78			—			NM		50		82		(39)%
Total assets	1,091		850		28	%		1,074			828			30	%	1,225		1,054		16%
LSV:
Equity and fixed-income programs	$	93,094	$	79,733	17	%		$	91,684		$	77,216		19	%
Equity and fixed-income programs (A)																$	109,904	$	91,150	21%
Total:
Equity and fixed-income programs	250,622		222,887		12	%		246,340			216,504			14	%	284,374		242,930		17%
Collective trust fund programs	41,710		33,126		26	%		40,446			32,010			26	%	49,329		39,180		26%
Liquidity funds	9,929		12,787		(22	)%		10,178			13,587			(25	)%	9,819		10,424		(6)%
Total assets under management	$	302,261	$	268,800	12	%		$	296,964		$	262,101		13	%	$	343,522	$	292,534	17%
Advised assets	3,760		—		NM			3,484			—			NM		4,433		3,207		38%
Client assets under administration	491,867		433,673		13	%		482,929			419,171			15	%	530,349		473,989		12%
Total assets under management, advisement and administration	$	797,888	$	702,473	14	%		$	783,377		$	681,272		15	%	$	878,304	$	769,730	14%

26 of 3938

(A) The average asset balance for LSV for the three months ended March 31, 2017 was revised from $90.3 billion to $91.2 billion to include managed assets in which fees are based on performance only. The average value of these assets for the three months ended March 31, 2018 and 2017 was $2.3 billion and $1.7 billion, respectively.

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 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 administration include total assets of our clients or their customers for which we provide administrative services, including client fund balances for which we provide administration and/or distribution 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, 2017~~March 31, 2018 compared to the three ~~and six~~ months ended ~~June 30, 2016~~March 31, 2017 were as follows:

Three Months Ended June 30,
Percent
Change
Six Months Ended June 30,
Percent
Change
2017 2016 2017 2016
Private Banks:
Revenues $ 116,184
$ 114,836
1 % $ 228,818
$ 228,197
— %
Expenses 112,353
102,862
9 % 220,903
206,603
7 %
Operating Profit $ 3,831
$ 11,974
(68 )% $ 7,915
$ 21,594
(63 )%
Gain on sale of subsidiary —
—
— % —
2,791
NM
Segment Profit $ 3,831
$ 11,974
(68 )% $ 7,915
$ 24,385
NM
Operating Margin (A) 3 % 10 % 3 % 9 %
Investment Advisors:
Revenues $ 92,746
$ 81,883
13 % $ 180,984
$ 158,562
14 %
Expenses 49,380
44,721
10 % 96,919
89,495
8 %
Operating Profit $ 43,366
$ 37,162
17 % $ 84,065
$ 69,067
22 %
Operating Margin 47 % 45 % 46 % 44 %
Institutional Investors:
Revenues $ 78,068
$ 74,674
5 % $ 155,072
$ 147,571
5 %
Expenses 38,668
36,550
6 % 77,496
71,932
8 %
Operating Profit $ 39,400
$ 38,124
3 % $ 77,576
$ 75,639
3 %
Operating Margin 50 % 51 % 50 % 51 %
Investment Managers:
Revenues $ 83,616
$ 70,938
18 % $ 164,103
$ 140,856
17 %
Expenses 53,847
46,968
15 % 105,912
92,243
15 %
Operating Profit $ 29,769
$ 23,970
24 % $ 58,191
$ 48,613
20 %
Operating Margin 36 % 34 % 35 % 35 %
Investments in New Businesses:
Revenues $ 1,717
$ 1,500
14 % $ 3,338
$ 2,908
15 %
Expenses 5,124
5,355
(4 )% 10,004
10,587
(6 )%
Operating Loss $ (3,407 ) $ (3,855 ) NM $ (6,666 ) $ (7,679 ) NM

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



	Three Months Ended March 31,						Percent Change
	2018			2017			Percent Change
Private Banks:
Revenues	$	122,164		$	112,634		8%
Expenses	112,202			108,550			3%
Operating Profit	$	9,962		$	4,084		144%
Operating Margin	8		%	4		%
Investment Advisors:
Revenues	$	99,192		$	88,238		12%
Expenses	52,453			47,539			10%
Operating Profit	$	46,739		$	40,699		15%
Operating Margin	47		%	46		%
Institutional Investors:
Revenues	$	85,491		$	77,004		11%
Expenses	41,249			38,828			6%
Operating Profit	$	44,242		$	38,176		16%
Operating Margin	52		%	50		%
Investment Managers:
Revenues	$	96,855		$	80,487		20%
Expenses	63,338			52,065			22%
Operating Profit	$	33,517		$	28,422		18%
Operating Margin	35		%	35		%
Investments in New Businesses:
Revenues	$	1,896		$	1,621		17%
Expenses	5,098			4,880			4%
Operating Loss	$	(3,202	)	$	(3,259	)	NM

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

27 of 3938

Private Banks


	Three Months Ended June 30,				Percent Change			Six Months Ended June 30,						Percent Change		Three Months Ended March 31,				Percent Change
	2017		2016				2017			2016			2018				2017			Percent Change
Revenues:					Percent Change									Percent Change
Information processing and software servicing fees	$	77,315	$	74,506	4	%		$	151,587		$	147,429		3	%	$	86,445	$	80,032	8%
Asset management, administration & distribution fees	34,036		34,443		(1	)%		66,626			66,645			—	%	35,719		32,602		10%
Transaction-based and trade execution fees	4,833		5,887		(18	)%		10,605			14,123			(25	)%
Total revenues	$	116,184	$	114,836	1	%		$	228,818		$	228,197		—	%	$	122,164	$	112,634	8%

Revenues increased ~~$1.3~~ $9.5 million, or ~~one~~eight percent, in the three month period ~~and increased slightly in the six month period~~ ended ~~June 30, 2017~~March 31, 2018 and were primarily affected by:

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

~~Increased non-recurring professional services fees from existing clients as well as clients scheduled for implementation on the SEI Wealth Platform; and~~

Increased investment management fees from existing international clients due to increased net cash flows and higher average assets under management due to market appreciation; ~~partially offset by~~

~~Decreased trade execution fees due to lower trading volumes;~~

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

~~Decreased~~Increased investment ~~management~~processing fees ~~from liquidity products~~earned on our mutual fund trading solution; partially offset by

The reclassification of direct expenses related to trade execution fees due to ~~changes in product mix.~~the adoption of ASC 606.

Operating margins ~~decreased~~increased to ~~three~~eight percent compared to ~~ten~~four percent in the three month period. Operating income increased by $5.9 million, or 144 percent, in the three month period and ~~decreased to three percent compared to nine percent in the six month period. Operating income~~ ~~decreased~~ by ~~$8.1 million, or 68 percent, in the three month period and decreased $13.7 million, or 63 percent in the six month period and~~ was primarily affected by:

An increase in revenues;

Decreased amortization expense related to the SEI Wealth Platform due to the adjustment to the estimated useful life effective in the fourth quarter 2017; and

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

Increased direct expenses associated with increased investment management fees from existing international clients;

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

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

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

Increased salary and incentive compensation ~~and stock-based compensation costs; and~~costs.

~~Increased direct expenses associated with increased investment management fees from existing international clients; partially offset by~~

~~Decreased sales compensation expense in the six month period; and~~

~~Decreased direct expenses associated with the decreased 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
	2017		2016				2017			2016			2018				2017			Percent Change
Revenues:					Percent Change									Percent Change
Investment management fees-SEI fund programs	$	68,969	$	62,614	10	%		$	134,969		$	121,358		11	%	$	73,335	$	66,000	11%
Separately managed account fees	19,650		15,629		26	%		37,908			30,075			26	%	21,848		18,258		20%
Other fees	4,127		3,640		13	%		8,107			7,129			14	%	4,009		3,980		1%
Total revenues ~~(a)~~	$	92,746	$	81,883	13	%		$	180,984		$	158,562		14	%	$	99,192	$	88,238	12%

(a) All amounts are reflected in Asset management, administration and distribution fees except for $164 and $187 in the three months ended June 30, 2017 and 2016, respectively, and $727 and $541 in the six months ended June 30, 2017 and 2016, respectively, which are reflected in Transaction-based and trade execution fees.

~~28 of 39~~

Revenues increased$~~10.9~~11.0 million, or 1312 percent, in the three month period ~~and increased $22.4 million, or 14 percent, in the six month period~~ ended ~~June 30, 2017~~March 31, 2018 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 positive cash flows from new and existing ~~advisors; and~~advisors.

~~Changes in the product mix~~

28 of ~~our SEI fund and separately managed account programs.~~38

Operating margin increased to 47 ~~percent~~ ~~compared to~~ ~~45 percent~~ ~~in the three month period and increased to 46~~ percent compared to 4446 percent in the ~~six~~three month period. Operating income increased ~~$6.2~~$6.0 million, or 1715 percent, in the three month period and ~~increased $15.0 million, or 22 percent, in the six month period and~~ was primarily affected by:

An increase in revenues; and

Decreased ~~sales compensation expense;~~amortization expense related to the SEI Wealth Platform due to the adjustment to the estimated useful life effective in the fourth quarter 2017; partially offset by

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

Increased personnel costs for marketing to and servicing new advisors; and

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

~~Increased stock-based compensation costs; and~~

~~Increased amortization expense related to the SEI Wealth~~ Platform.

Institutional Investors

Revenues increased ~~$3.4~~ $8.5 million, or ~~five~~11 percent, in the three month period ~~and increased $7.5 million, or five percent, in the six month period~~ ended ~~June 30, 2017~~March 31, 2018 and were primarily affected by:

Asset funding from new sales of our investment management platforms;

Increased investment management fees from existing clients due to higher assets under management caused by market appreciation; and

~~Asset funding from new sales of our investment management solutions; partially offset by~~

~~Client losses;~~

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

~~A decrease in the average basis points earned on client assets.~~

~~Operating margins decreased to~~ ~~50 percent~~ compared to 51 percent in the three and six month periods. Operating income increased $1.3 million, or three percent, in the three month period and increased $1.9 million, or three percent, in the six month period and was primarily affected by:

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

Client losses.

Operating margins increased to 52 percent compared to 50 percent in the three month period. Operating income increased $6.1 million, or 16 percent, in the three month period and was primarily affected by:

An increase in revenues; and

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

Increased direct expenses associated with investment management fees; and

Increased personnel compensation costs.

Investment Managers

Revenues increased$~~12.7~~16.4 million, or 1820 percent, in the three month period ~~and increased $23.2 million, or 17 percent, in the six month period~~ ended ~~June 30, 2017~~March 31, 2018 and were primarily affected by:

Higher valuations of existing client assets from improved capital markets:

Positive cash flows into alternative, traditional and separately managed account offerings from new and existing ~~clients as well as higher valuations~~clients; and

Added revenues of $5.5 million from ~~improved capital markets;~~the acquisition of Archway during the third quarter 2017; partially offset by

Client losses and fund closures.

~~29 of 39~~

Operating margin remained at 35 percent in the three month period. Operating income increased to ~~36 percent~~ ~~compared to 34~~$5.1 million, or 18 percent, in the three month period and ~~remained at 35 percent in the six month period. Operating income increased $5.8 million, or 24 percent, in the three month period and increased $9.6 million, or 20 percent, in the six month period and~~ was primarily affected by:

An increase in revenues; ~~and~~

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

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

Increased incentive compensation costs;

Increased personnel and ~~stock-based compensation costs;~~amortization expense related to the Archway acquisition; and

Increased non-capitalized investment spending, mainly consulting 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 $~~15.7~~14.9 million and $~~13.9~~14.6 million in the three months ended ~~June 30, 2017~~March 31, 2018 and ~~2016~~2017, ~~respectively, and $30.3 million and $26.9 million in the six months ended June 30, 2017 and 2016,~~ respectively. The increase in corporate overhead expenses is primarily due to increased personnel compensation expense, mainly salary, incentive compensation and stock-based compensation costs, and increased fees for professional services.

29 of 38

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,
	2017			2016			2017			2016			2018			2017
Net gain from investments	$	44		$	250		$	391		$	124
Net (loss) gain from investments													$	(410	)	$	347
Interest and dividend income	1,686			1,033			3,029			2,116			2,502			1,343
Interest expense	(114		)	(187		)	(226		)	(301		)	(257		)	(112		)
Equity in earnings of unconsolidated affiliate	36,315			30,285			69,880			59,477			40,607			33,565
Gain on sale of subsidiary	—			—			—			2,791
Total other income and expense items, net	$	37,931		$	31,381		$	73,074		$	64,207		$	42,442		$	35,143

Equity in earnings of unconsolidated affiliate

Equity in earnings of unconsolidated affiliate reflects our less than 50 percent ownership in LSV. As of March 31, 2018, our total partnership interest in LSV was 38.9 percent. The table below presents the revenues and net income of LSV and our proportionate share in LSV's earnings.


	Three Months Ended June 30,				Percent Change		Six Months Ended June 30,				Percent Change		Three Months Ended March 31,				Percent Change
	2017		2016		Percent Change		2017		2016		Percent Change		2018		2017		Percent Change
Revenues of LSV	$	119,320	$	95,825	25	%	$	229,273	$	188,478	22	%	$	131,718	$	109,953	20%
Net income of LSV	93,372		77,790		20	%	179,587		152,247		18	%	104,406		86,215		21%

SEI's proportionate share in earnings of LSV	$	36,315	$	30,285	20	%	$	69,880	$	59,477	17	%	$	40,607	$	33,565	21%

The increase in our earnings from LSV was primarily due to increased assets under management from LSV's existing clients due to market appreciation; however, our earnings were negatively impacted by increased personnel expenses of LSV. Average assets under management by LSV increased ~~$14.5~~$18.8 billion to ~~$91.7~~$109.9 billion during the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 as compared to ~~$77.2~~$91.2 billion during the ~~six~~three months ended ~~June 30, 2016,~~March 31, 2017, an increase of 1921 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 a gain of $2.8 million during the six months ended June 30, 2016 from the sale of our ownership interests in SEI AK. 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).

~~30 of 39~~

Income Taxes

Our effective income tax rates for the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and 2017 ~~and 2016~~ differs from the federal income tax statutory rate due to the following:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
	2017		2016		2017		2016		2018		2017
Statutory rate	35.0	%	35.0	%	35.0	%	35.0	%	21.0	%	35.0	%
State taxes, net of federal tax benefit	1.7		1.4		1.7		1.4		2.2		1.5
Foreign tax expense and tax rate differential	(1.0	)	(0.7	)	(1.0	)	(0.7	)	(0.2	)	(0.8	)
Tax benefit from stock option exercises	(3.0	)	—		(3.6	)	—		(10.8	)	(4.2	)
Other, net	(0.6	)	(0.5	)	(0.5	)	(0.5	)	(0.3	)	(0.5	)
	32.1	%	35.2	%	31.6	%	35.2	%	11.9	%	31.0	%

The decrease in our effective tax ~~rates~~rate for the three months ~~and six months~~ ended ~~June 30, 2017~~March 31, 2018 was primarily due to the ~~adoption of ASU 2016-09. Under this standard, we no longer record excess~~tax changes enacted in The Tax Act. The Tax Act was enacted in December 2017 and included a permanent reduction in the corporate tax rate from 35.0 percent to 21.0 percent. In addition, our rate was favorably impacted by increased tax benefits ~~from stock option exercises as an increase~~due to ~~additional paid in capital, but record such excess tax benefits as~~ a ~~reduction~~higher volume 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~~during the first quarter of 2018 as compared to the ~~effect from excess tax benefits on our quarterly tax rate. Consequently, our effective tax rate could fluctuate significantly on a quarterly basis due to the tax effects~~first quarter of ~~stock-based compensation.~~2017.

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~~ March 31, 2018 or

30 ~~2017 or~~ of 38

December 31, ~~2016~~2017 that were required to be measured at fair value on a recurring basis (See Note 5 to the Notes to Consolidated Financial Statements).

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~~platforms 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, Inc., the Financial Conduct Authority of the United Kingdom, 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.

~~31 of 39~~

~~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 nine percent of our total consolidated revenues for the six months ended June 30, 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 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 months ended June 30, 2017 transacted in British pound, Canadian dollar and Euro currencies were as follows:



	~~Six Months Ended~~
	~~June 30, 2017~~
~~British pound~~
~~Total revenues~~	5%
~~Total expenses~~	5%

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

~~Euro~~
~~Total revenues~~	1%
~~Total expenses~~	2%

~~Acquisition of Archway Technology Partners, LLC~~

On July 3, 2017, we acquired Archway Technology Partners, LLC (Archway), a provider of operating technologies and services to the family office industry, for approximately $81.5 million in cash consideration with up to an additional $8.0 million payable to the seller as a contingent purchase price with respect to two one-year periods ending December 31, 2017 and 2018 depending upon whether Archway achieves specified financial measures during such periods. Archway will be integrated into our Investment Managers business segment (See Note 14 to the Notes to Consolidated Financial Statements).

Liquidity and Capital Resources

Six Months Ended June 30,
2017 2016
Net cash provided by operating activities $ 184,855
$ 163,454
Net cash used in investing activities (46,881 ) (31,970 )
Net cash used in financing activities (181,801 ) (214,020 )
Effect of exchange rate changes on cash and cash equivalents 8,488
(2,358 )
Net decrease in cash and cash equivalents (35,339 ) (84,894 )
Cash and cash equivalents, beginning of period 695,701
679,661
Cash and cash equivalents, end of period $ 660,362
$ 594,767



	Three Months Ended March 31,
	2018			2017
Net cash provided by operating activities	$	104,174		$	73,012
Net cash used in investing activities	(15,376		)	(25,345		)
Net cash used in financing activities	(87,285		)	(84,303		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	2,541			2,307
Net increase (decrease) in cash, cash equivalents and restricted cash	4,054			(34,329		)
Cash, cash equivalents and restricted cash, beginning of period	747,752			699,201
Cash, cash equivalents and restricted cash, end of period	$	751,806		$	664,872

Cash requirements and liquidity needs are primarily funded through our cash flow from operations and our capacity for additional borrowing. At ~~June 30, 2017~~March 31, 2018, our unused sources of liquidity consisted of cash and cash equivalents and the amount available under our credit facility. We adopted ASU No. 2016-18, Statement of Cash Flows, Restricted Cash (Topic 230) (ASU 2016-18) on January 1, 2018 which requires the statement of cash flows to explain the change during the period for the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The prior period was retrospectively adjusted to conform to the current period’s presentation. There was no impact to net cash flows for the three months ended March 31, 2017 as a result of including restricted cash with cash and cash equivalents.

Our credit facility provides for borrowings of up to $300.0 million and is scheduled to expire in June 2021 (See Note 7 to the Consolidated Financial Statements). 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,

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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. OnIn July 7, 2017, we ~~elected to borrow $40,000~~borrowed $40.0 million under the ~~Credit Facility~~credit facility for ~~cash management purposes subsequent to~~ the funding of an ~~acquisition (See Note 14~~acquisition. We made a principal payment of $20.0 million during April 2018 to fully repay the ~~Consolidated Financial Statements).~~outstanding balance of the facility. As of ~~July 20, 2017,~~April 19, 2018, the full amount of $300.0 million of the credit facility was available for corporate ~~purposes was $260.0 million.~~purposes.

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

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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 20, 2017,~~April 19, 2018, the amount of cash and cash equivalents considered free and immediately accessible for other general corporate purposes was ~~$256.2~~$315.9 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 therefore do not include accounts of our foreign subsidiaries in our calculation of free and immediately accessible cash for other general corporate purposes. With the enactment of the Tax Act, a portion of the undistributed earnings of our foreign subsidiaries are deemed repatriated. Any subsequent transfer of available cash related to the repatriated earnings of our foreign subsidiaries could significantly increase our free and immediately accessible cash.

Cash flows from operations increased ~~$21.4~~$31.2 million in the first ~~six~~three months of ~~2017~~2018 compared to the first ~~six~~three months of ~~2016~~2017 primarily from the increase in our net income and higher distribution payments received from our unconsolidated affiliate, LSV. The increase was partially offset by the negative impact from the ~~timing of collections of receivables.~~change in our working capital accounts.

~~Cash flows used in investing activities increased $14.9 million in the first~~ ~~six~~ ~~months of 2017 compared to the first~~ ~~six~~ ~~months of 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 ~~2017~~2018 and ~~2016~~2017 were as follows:


	Six Months Ended June 30,						Three Months Ended March 31,
	2017			2016			2018			2017
Purchases	$	(28,703	)	$	(32,648	)	$	(15,466	)	$	(20,445	)
Sales and maturities	26,811			26,333			18,588			15,166
Net investing activities from marketable securities	$	(1,892	)	$	(6,315	)	$	3,122		$	(5,279	)

~~The capitalization of costs incurred in developing computer software.~~ We capitalized $28.0 million of software development costs in the first six months of 2017 as compared to $16.1 million in the first six months of 2016 for significant enhancements for the expanded functionality of the SEI Wealth Platform. We continually reassess the useful life of the SEI Wealth Platform. The continued progress of the development of the Software as a Service (SaaS) solution and the business processing solution, combined with the long-term contracts entered into with clients, may result in a change in the remaining useful life of the Platform and the remaining period of amortization. Additionally, we also capitalized $5.3 million and $3.5 million of software development costs in the first six months of 2017 and 2016, respectively, for a new application for the Investment Managers segment. The application is expected to be placed into service in late 2017 and have an estimated useful life of five years.

~~Capital expenditures.~~ ~~Our capital expenditures in the first~~ ~~six~~ ~~months of 2017 were $10.2 million as compared to $9.0 million in the first~~ ~~six~~ ~~months of~~ ~~2016. Our expenditures in~~ ~~2017~~ ~~and 2016 primarily include purchased software and equipment for our data center operations.~~

~~Cash flows used in financing activities decreased~~ ~~$32.2 million~~ ~~in the first~~ ~~six~~ ~~months of~~ ~~2017~~ ~~compared to the first~~ ~~six~~ ~~months of~~ ~~2016~~


•	The capitalization of costs incurred in developing computer software. We capitalized $12.9 million of software development costs in the first three months of 2018 as compared to $16.9 million in the first three months of 2017. The majority of our software development costs are related to significant enhancements for the expanded functionality of the SEI Wealth Platform.


•	Capital expenditures. Our capital expenditures in the first three months of 2018 were $5.6 million as compared to $3.2 million in the first three months of 2017. Our expenditures in 2018 and 2017 primarily include purchased software, equipment for our data center operations and the expansion of our corporate headquarters.

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 ~~$122.1 million~~ ~~during the first~~ ~~six~~ ~~months of~~ ~~2017~~ ~~and~~ ~~$155.7 million~~ ~~during the first~~ ~~six~~ ~~months of~~ ~~2016~~ ~~for the repurchase of our common stock.~~

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~~Proceeds from the issuance of our common stock.~~ ~~We received~~ ~~$29.1 million~~ ~~in proceeds from the issuance of our common stock during the first~~ ~~six~~ ~~months of~~ ~~2017~~ ~~as compared to~~ ~~$26.3 million~~ ~~during the first~~ ~~six~~ ~~months of~~ ~~2016. The increase in proceeds is primarily attributable to a higher level of stock option exercise activity.~~

~~Dividend payments.~~ ~~Cash dividends paid were~~ ~~$88.9 million~~ ~~in the first~~ ~~six~~ ~~months of~~ ~~2017~~ ~~as compared to $84.6 million in the first~~ ~~six~~ ~~months of~~ ~~2016~~.


•	Principal repayments on revolving credit facility. In July 2017, we borrowed $40.0 million for the funding of an acquisition. We made principal payments of $10.0 million each during October 2017 and January 2018 and a final payment of $20.0 million during April 2018 to repay the entire outstanding balance (See Note 7 to the Consolidated Financial Statements).

•

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 $88.0 million during the first three months of 2018 and $56.6 million during the first three months of 2017 for the repurchase of our common stock.


•	Proceeds from the issuance of our common stock. We received $57.9 million in proceeds from the issuance of our common stock during the first three months of 2018 as compared to $16.8 million during the first three months of 2017. The increase in proceeds is primarily attributable to a higher level of stock option exercise activity.


•	Dividend payments. Cash dividends paid were $47.2 million in the first three months of 2018 as compared to $44.6 million in the first three months of 2017.

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. In June 2017, LSV Employee Group III made the final principal payment and, therefore, the Company has no further obligation regarding the agreement. 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.

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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;

operational risks associated with the processing of investment transactions;

systems and technology risks;

pricing pressure from increased competition, disruptive technology and poor investment 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;

increased costs and regulatory risks from the growth of our business;

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~~include 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.~~SIEL, SEI Investments Canada Company, or SEI Canada, SEI Investments Global, Limited, or SIGL, SEI Investments - Global Fund Services, Ltd., or GFSL, and SEI Investments - Depositary and Custodial Services (Ireland) Limited, or D&C. 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

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~~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. SEI Canada is regulated by the Ontario Securities Commission and various provincial authorities as an investment fund manager and in various other capacities. SIGL is primarily regulated by the Central Bank of Ireland (CBI) as a management company for Undertakings for Collective Investment in Transferable Securities, or UCITS, and for Alternative Investment Funds, or AIFs. GFSL is regulated by the CBI and authorized to provide administration services for Irish and non-Irish collective investment schemes. D&C is regulated by the CBI and authorized to provide depositary and custodial services. 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.

The Company, its regulated subsidiaries, their regulated services and ~~solutions~~platforms 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~~effect 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

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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,~~platforms, 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. We continue to be subject to inquiries from examinations and investigations by supervisory and enforcement divisions of regulatory authorities and expect this to continue in the future. We believe this is also the case with many of our regulated clients. Governmental scrutiny and legal and enforcement proceedings can also have a negative impact on our reputation, our relationship with clients and prospective clients, 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~~platforms that also are subject to 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~~platforms could lead to a reduction in sales of these ~~solutions~~platforms or require modifications of these ~~solutions.~~platforms.

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 and continuing 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 and the United ~~Kingdom and the Republic of Ireland)~~Kingdom) have made and continue to make extensive changes to the laws regulating financial services firms. Recent changes include the effectiveness of the Markets in Financial Instruments Directive (MiFID II) and pending effectiveness of the General Data Protection Regulation in the European Union and the U.S. Department of Labor's Fiduciary Rule. 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~~platform 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, state and ~~state~~foreign banking and financial services 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.

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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, ~~2016~~2017. There have been no material changes to this information as it is disclosed in our Annual Report on Form 10-K for ~~2016~~2017.

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

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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, 2017~~March 31, 2018 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 seven lawsuits filed in Louisiana courts; four of the cases also name SPTC as a defendant. The underlying allegations in all actions relate to the purported role of SPTC in providing back-office services to Stanford Trust Company. The complaints allege that SEI and SPTC participated in some manner in the sale of “certificates of deposit” issued by Stanford International Bank so as to be a “seller” of the certificates of deposit for purposes of primary liability under the Louisiana Securities 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 actions also include claims for violations of the Louisiana Racketeering Act and possibly conspiracy, and a 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 Racketeering Act, and conspiracy.

The plaintiffs in two of the cases remaining in the Parish of East Baton Rouge have granted SEI and SPTC indefinite extensions to 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 D&C, damages of approximately $84 million. GFSL and D&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.

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, ~~2016~~2017. There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for ~~2016.~~2017.

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


(e)	Our Board of Directors has authorized the repurchase of up to $~~3.278~~3.478 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, 2017~~March 31, 2018 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 2017 225,000
$ 50.80
225,000
$ 151,881,000
May 2017 666,000
50.63
666,000
118,138,000
June 2017 366,000
53.12
366,000
98,710,000
Total 1,257,000
51.38
1,257,000



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 2018	—	$	—	—	$	170,638,000
February 2018	602,000	72.20		602,000	127,172,000
March 2018	520,000	74.60		520,000	88,380,000
Total	1,122,000	$	73.31	1,122,000

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 26, 2017~~April 25, 2018 of SEI Investments Company related to the Company's financial and operating results for the ~~second~~first quarter ended ~~June 30, 2017.~~March 31, 2018.

101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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, 2017~~April 26, 2018	By:	/s/ Dennis J. McGonigle
			Dennis J. McGonigle
			Chief Financial Officer

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	June 30, 2017		December 31, 2016
Assets
Current Assets:
Cash and cash equivalents	$	660,362	$	695,701
Restricted cash	3,502		3,500
Receivables from investment products	49,048		61,761
Receivables, net of allowance for doubtful accounts of $680 and $523	262,544		227,957
Securities owned	21,412		21,339
Other current assets	31,953		27,575
Total Current Assets	1,028,821		1,037,833
Property and Equipment, net of accumulated depreciation of $298,294 and $285,322	145,537		146,190
Capitalized Software, net of accumulated amortization of $328,026 and $303,540	304,673		295,867
Investments Available for Sale	86,085		84,033
Investments in Affiliated Funds, at fair value	5,350		4,858
Investment in Unconsolidated Affiliate	45,197		50,459
Deferred Income Taxes	1,773		2,127
Other Assets, net	16,653		15,456
Total Assets	$	1,634,089	$	1,636,823



	At December 31, 2016
	Cost Amount		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
SEI-sponsored mutual funds	$	7,357	$	24	$	(996	)	$	6,385
Equities and other mutual funds	2,968		228		—			3,196
Debt securities	74,843		—		(391		)	74,452
	$	85,168	$	252	$	(1,387	)	$	84,033