UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________

FORM 10-Q

(Mark One)*



ý☒	~~Quarterly report pursuant to Section~~QUARTERLY REPORT PURSUANT TO SECTION 13 orOR 15(d) ~~of the Securities Exchange Act of~~OF THE SECURITIES EXCHANGE ACT OF 1934

~~for~~For the quarterly period ended September 30, ~~2018~~2019



¨☐	~~Transition report pursuant to Section~~TRANSITION REPORT PURSUANT TO SECTION 13 orOF 15(d) ~~of the Securities Exchange Act of~~OF THE SECURITIES EXCHANGE ACT OF 1934

~~for~~For the transition period from_________to ________

~~0-10200~~

(Commission File ~~Number)~~Number: 0-10200

________________________________________

SEI INVESTMENTS COMPANY

(Exact ~~name~~Name of ~~registrant~~Registrant as ~~specified~~Specified in its ~~charter)~~Charter)

________________________________________



Pennsylvania		23-1707341
(State or ~~other jurisdiction~~Other Jurisdiction of ~~incorporation~~Incorporation or ~~organization)~~Organization)		(~~IRS~~I.R.S. Employer Identification ~~Number)~~ No.)

1 Freedom Valley Drive, Oaks, Pennsylvania ~~19456-1100~~19456-1100

(Address of ~~principal executive offices)~~

~~(Zip~~Principal Executive Offices) (Zip Code)

~~(610)~~ (610) 676-1000

(Registrant’s ~~telephone number, including area code)~~Telephone Number, Including Area Code)

N/A

(Former ~~name, former address~~Name, Former Address and ~~former fiscal year,~~Former Fiscal Year, if ~~changed since last report)~~Changed Since Last Report)

~~________________________________________~~Securities registered pursuant to Section 12(b) of the Act:




Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.01 per share	SEIC	The NASDAQ Stock Market LLC

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~~ ýYesx No ¨☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). ~~Yes~~ ýYesx 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, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	x	ý	Accelerated filer	¨

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

Non-accelerated filer	☐		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 ýx

The number of shares outstanding of the registrant’s common stock, as of the close of business on October ~~18, 2018 was 155,540,268.~~17, 2019:



Common Stock, $0.01 par value		150,256,238

SEI ~~Investments Company~~INVESTMENTS COMPANY TABLE OF CONTENTS



PART I - FINANCIAL INFORMATION
		Page
Item 1.	Financial Statements.	2
	Consolidated Balance Sheets (Unaudited) -- September 30, ~~2018~~2019 and December 31, ~~2017~~2018	2
	Consolidated Statements of Operations (Unaudited) -- For the Three and Nine Months Ended September 30, ~~2018~~2019 and ~~2017~~2018	4
	Consolidated Statements of Comprehensive Income (Unaudited) -- For the Three and Nine Months Ended September 30, ~~2018~~2019 and ~~2017~~2018	5
	Consolidated Statements of Changes in Equity (Unaudited) -- For the Three and Nine Months Ended September 30, 2019 and 2018	6
	Consolidated Condensed Statements of Cash Flows (Unaudited) -- For the Nine Months Ended September 30, ~~2018~~2019 and ~~2017~~2018	68
	Notes to Consolidated Financial Statements	79
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	2630
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	4044
Item 4.	Controls and Procedures.	4044

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings.	4145
Item 1A.	Risk Factors.	4246
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	4247
Item 6.	Exhibits.	4247
	Signatures	4348

Page 1 of 4348

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements.

SEI Investments Company

Consolidated Balance Sheets

(unaudited)

(In thousands, except par value)


	September 30, 2018		December 31, 2017		September 30, 2019		December 31, 2018
Assets
Current Assets:
Cash and cash equivalents	$	741,965	$	744,247	$	767,809	$	754,525
Restricted cash	3,511		3,505		3,100		3,514
Receivables from investment products	54,403		56,666		52,140		49,869
Receivables, net of allowance for doubtful accounts of $666 and $695	327,614		282,706
Receivables, net of allowance for doubtful accounts of $1,311 and $718					349,332		315,336
Securities owned	28,945		21,526		32,862		30,892
Other current assets	37,113		31,158		34,894		36,676
Total Current Assets	1,193,551		1,139,808		1,240,137		1,190,812
Property and Equipment, net of accumulated depreciation of $331,138 and $309,955	145,865		146,428
Capitalized Software, net of accumulated amortization of $383,675 and $350,045	310,146		310,405
Property and Equipment, net of accumulated depreciation of $346,377 and $338,206					154,584		145,863
Operating Lease Right-of-Use Assets					41,054		—
Capitalized Software, net of accumulated amortization of $430,644 and $395,171					300,848		309,500
Investments Available for Sale	84,298		87,983		101,580		111,901
Investments in Affiliated Funds, at fair value	5,736		6,034		5,533		4,887
Investment in Unconsolidated Affiliate	44,682		59,492		41,437		52,342
Goodwill	64,489		52,990		64,489		64,489
Intangible Assets, net of accumulated amortization of $4,169 and $1,552	32,591		28,578
Intangible Assets, net of accumulated amortization of $7,853 and $5,090					28,907		31,670
Deferred Contract Costs	22,104		—		28,506		24,007
Deferred Income Taxes	2,224		2,767		1,421		2,042
Other Assets, net	33,642		18,884		32,109		34,155
Total Assets	$	1,939,328	$	1,853,369	$	2,040,605	$	1,971,668

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

Page 2 of 4348

SEI Investments Company

Consolidated Balance Sheets

(unaudited)

(In thousands, except par value)


	September 30, 2018			December 31, 2017			September 30, 2019			December 31, 2018
Liabilities and Equity
Current Liabilities:
Accounts payable	$	9,161		$	5,268		$	8,712		$	10,920
Accrued liabilities	207,675			265,058			193,919			279,634
Current portion of long-term operating lease liabilities							7,888			—
Deferred revenue	5,054			4,723			5,529			5,154
Total Current Liabilities	221,890			275,049			216,048			295,708
Borrowings Under Revolving Credit Facility	—			30,000
Long-term Income Taxes Payable	770			10,629			803			803
Deferred Income Taxes	60,158			48,472			56,339			57,795
Long-term Operating Lease Liabilities							37,816			—
Other Long-term Liabilities	26,000			12,380			26,292			24,215
Total Liabilities	308,818			376,530			337,298			378,521
Commitments and Contingencies
Shareholders' Equity:
Common stock, $.01 par value, 750,000 shares authorized; 155,475 and 157,069 shares issued and outstanding	1,555			1,571
Common stock, $0.01 par value, 750,000 shares authorized; 150,222 and 153,634 shares issued and outstanding							1,502			1,536
Capital in excess of par value	1,101,237			1,027,709			1,137,636			1,106,641
Retained earnings	556,581			467,467			599,949			517,970
Accumulated other comprehensive loss, net	(28,863		)	(19,908		)	(35,780		)	(33,000		)
Total Shareholders' Equity	1,630,510			1,476,839			1,703,307			1,593,147
Total Liabilities and Shareholders' Equity	$	1,939,328		$	1,853,369		$	2,040,605		$	1,971,668

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

Page 3 of 4348

SEI Investments Company

Consolidated Statements of Operations

(unaudited)

(In thousands, except per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017			2019			2018			2019			2018
Revenues:
Asset management, administration and distribution fees	$	322,778		$	300,417		$	955,495		$	869,560		$	330,943		$	322,778		$	969,812		$	955,495
Information processing and software servicing fees	85,904			85,601			263,615			248,773			85,311			85,904			256,848			263,615
Total revenues	408,682			386,018			1,219,110			1,118,333			416,254			408,682			1,226,660			1,219,110
Expenses:
Subadvisory, distribution and other asset management costs	45,276			46,014			135,690			133,073			44,978			45,276			134,960			135,690
Software royalties and other information processing costs	7,767			11,005			24,462			34,295			7,198			7,767			22,719			24,462
Compensation, benefits and other personnel	127,480			118,421			379,132			336,919			130,579			127,480			386,913			379,132
Stock-based compensation	5,878			7,088			16,396			19,527			5,453			5,878			15,555			16,396
Consulting, outsourcing and professional fees	51,758			46,507			150,906			137,991			48,789			51,758			144,325			150,906
Data processing and computer related	21,754			19,792			63,478			57,107			22,338			21,754			65,514			63,478
Facilities, supplies and other costs	16,689			17,261			52,085			50,761			15,926			16,689			51,771			52,085
Amortization	12,405			13,745			36,420			38,332			12,947			12,405			38,407			36,420
Depreciation	7,255			6,948			21,515			20,347			7,409			7,255			22,162			21,515
Total expenses	296,262			286,781			880,084			828,352			295,617			296,262			882,326			880,084
Income from operations	112,420			99,237			339,026			289,981			120,637			112,420			344,334			339,026
Net gain (loss) from investments	89			645			(460		)	1,036			611			89			2,121			(460		)
Interest and dividend income	3,482			1,899			9,146			4,928			4,167			3,482			12,737			9,146
Interest expense	(122		)	(345		)	(511		)	(571		)	(154		)	(122		)	(477		)	(511		)
Equity in earnings of unconsolidated affiliate	41,726			39,333			123,406			109,213			37,609			41,726			112,758			123,406
Income before income taxes	157,595			140,769			470,607			404,587			162,870			157,595			471,473			470,607
Income taxes	29,276			39,030			80,773			122,342			30,702			29,276			98,784			80,773
Net income	$	128,319		$	101,739		$	389,834		$	282,245		$	132,168		$	128,319		$	372,689		$	389,834
Basic earnings per common share	$	0.82		$	0.64		$	2.48		$	1.78		$	0.88		$	0.82		$	2.45		$	2.48
Shares used to compute basic earnings per share	156,283			157,902			157,086			158,439			150,855			156,283			152,009			157,086
Diluted earnings per common share	$	0.80		$	0.63		$	2.41		$	1.74		$	0.86		$	0.80		$	2.40		$	2.41
Shares used to compute diluted earnings per share	160,511			161,148			162,053			161,866			154,227			160,511			155,311			162,053
Dividends declared per common share	$	—		$	—		$	0.30		$	0.28		$	—		$	—		$	0.33		$	0.30

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

Page 4 of 4348

SEI Investments Company

Consolidated Statements of Comprehensive Income

(unaudited)

(In thousands)

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Net income $ 128,319
$ 101,739
$ 389,834
$ 282,245
Other comprehensive (loss) gain, net of tax:
Foreign currency translation adjustments (435 ) 7,318
(7,261 ) 17,028
Unrealized (loss) gain on investments:
Unrealized (losses) gains during the period, net of income taxes of $91, $(116), $463 and $(148) (337 ) 294
(1,662 ) 435

Less: reclassification adjustment for losses (gains) realized in net income, net of income taxes of $(29), $(41), $(75) and $(84) 130
(207 ) 105
399
(32 ) (1,694 ) 194
629
Total other comprehensive (loss) gain, net of tax (642 ) 7,717
(8,955 ) 17,657
Comprehensive income $ 127,677
$ 109,456
$ 380,879
$ 299,902



	Three Months Ended September 30,									Nine Months Ended September 30,
	2019				2018					2019				2018
Net income		$	132,168				$	128,319			$	372,689				$	389,834
Other comprehensive loss, net of tax:
Foreign currency translation adjustments		(5,207		)			(435		)		(4,687		)			(7,261		)
Unrealized gain (loss) on investments:
Unrealized gains (losses) during the period, net of income taxes of $(27), $91, $(497) and $463	71				(337	)				1,633				(1,662	)
Less: reclassification adjustment for losses (gains) realized in net income, net of income taxes of $(23), $(29), $(73) and $(75)	96	167			130		(207		)	274	1,907			(32	)	(1,694		)
Total other comprehensive loss, net of tax		(5,040		)			(642		)		(2,780		)			(8,955		)
Comprehensive income		$	127,128				$	127,677			$	369,909				$	380,879

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

Page 5 of 4348

SEI Investments Company

Consolidated Statements of Changes in Equity

(unaudited)

(In thousands)



	Shares of Common Stock		Common Stock			Capital In Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Total Equity
	For the Three Months Ended September 30, 2019
Balance, July 1, 2019	150,955		$	1,509		$	1,122,068		$	541,664		$	(30,740	)	$	1,634,501
Net income	—		—			—			132,168			—			132,168
Other comprehensive loss	—		—			—			—			(5,040		)	(5,040		)
Purchase and retirement of common stock	(1,400	)	(15		)	(7,469		)	(73,883		)	—			(81,367		)
Issuance of common stock under employee stock purchase plan	21		1			998			—			—			999
Issuance of common stock upon exercise of stock options	646		7			16,586			—			—			16,593
Stock-based compensation	—		—			5,453			—			—			5,453
Balance, September 30, 2019	150,222		$	1,502		$	1,137,636		$	599,949		$	(35,780	)	$	1,703,307



	Shares of Common Stock		Common Stock			Capital In Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Total Equity
	For the Three Months Ended September 30, 2018
Balance, July 1, 2018	156,800		$	1,568		$	1,094,771		$	522,764		$	(28,221	)	$	1,590,882
Net income	—		—			—			128,319			—			128,319
Other comprehensive loss	—		—			—			—			(642		)	(642		)
Purchase and retirement of common stock	(1,668	)	(17		)	(8,117		)	(94,502		)	—			(102,636		)
Issuance of common stock under employee stock purchase plan	21		1			1,106			—			—			1,107
Issuance of common stock upon exercise of stock options	322		3			7,599			—			—			7,602
Stock-based compensation	—		—			5,878			—			—			5,878
Balance, September 30, 2018	155,475		$	1,555		$	1,101,237		$	556,581		$	(28,863	)	$	1,630,510

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

Page 6 of 48

SEI Investments Company

Consolidated Statements of Changes in Equity

(unaudited)

(In thousands)



	Shares of Common Stock		Common Stock			Capital In Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Total Equity
	For the Nine Months Ended September 30, 2019
Balance, January 1, 2019	153,634		$	1,536		$	1,106,641		$	517,970		$	(33,000	)	$	1,593,147
Net income	—		—			—			372,689			—			372,689
Other comprehensive loss	—		—			—			—			(2,780		)	(2,780		)
Purchase and retirement of common stock	(4,950	)	(50		)	(26,408		)	(240,726		)	—			(267,184		)
Issuance of common stock under employee stock purchase plan	77		1			3,391			—			—			3,392
Issuance of common stock upon exercise of stock options	1,461		15			38,457			—			—			38,472
Stock-based compensation	—		—			15,555			—			—			15,555
Dividends declared ($0.33 per share)	—		—			—			(49,984		)	—			(49,984		)
Balance, September 30, 2019	150,222		$	1,502		$	1,137,636		$	599,949		$	(35,780	)	$	1,703,307



	Shares of Common Stock		Common Stock			Capital In Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Total Equity
	For the Nine Months Ended September 30, 2018
Balance, January 1, 2018	157,069		$	1,571		$	1,027,709		$	467,467		$	(19,908	)	$	1,476,839
Cumulative effect upon adoption of ASC 606	—		—			—			14,402			—			14,402
Net income	—		—			—			389,834			—			389,834
Other comprehensive loss	—		—			—			—			(8,955		)	(8,955		)
Purchase and retirement of common stock	(4,419	)	(44		)	(21,507		)	(267,983		)	—			(289,534		)
Issuance of common stock under employee stock purchase plan	57		1			3,257			—			—			3,258
Issuance of common stock upon exercise of stock options	2,768		27			75,382			—			—			75,409
Stock-based compensation	—		—			16,396			—			—			16,396
Dividends declared ($0.30 per share)	—		—			—			(47,139		)	—			(47,139		)
Balance, September 30, 2018	155,475		$	1,555		$	1,101,237		$	556,581		$	(28,863	)	$	1,630,510

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

Page 7 of 48

SEI Investments Company

Consolidated Condensed Statements of Cash Flows

(unaudited)

(In thousands)


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2019			2018
Cash flows from operating activities:
Net income	$	389,834		$	282,245		$	372,689		$	389,834
Adjustments to reconcile net income to net cash provided by operating activities (See Note 1)	28,064			34,142			8,846			28,064
Net cash provided by operating activities	417,898			316,387			381,535			417,898
Cash flows from investing activities:
Additions to property and equipment	(21,652		)	(20,318		)	(30,515		)	(21,652		)
Additions to capitalized software	(33,371		)	(48,573		)	(26,821		)	(33,371		)
Purchases of marketable securities	(122,259		)	(50,235		)	(126,030		)	(122,259		)
Prepayments and maturities of marketable securities	116,568			52,644			137,783			116,568
Cash paid for acquisition, net of cash acquired	(5,794		)	(80,131		)	—			(5,794		)
Other investing activities	(10,900		)	(1,450		)	2,538			(10,900		)
Net cash used in investing activities	(77,408		)	(148,063		)	(43,045		)	(77,408		)
Cash flows from financing activities:
Borrowings under revolving credit facility	—			40,000
Repayments under revolving credit facility	(30,000		)	—			—			(30,000		)
Purchase and retirement of common stock	(290,563		)	(186,494		)	(262,861		)	(290,563		)
Proceeds from issuance of common stock	78,667			41,626			41,864			78,667
Payment of dividends	(94,318		)	(88,862		)	(100,745		)	(94,318		)
Net cash used in financing activities	(336,214		)	(193,730		)	(321,742		)	(336,214		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(6,552		)	14,679			(3,878		)	(6,552		)
Net decrease in cash, cash equivalents and restricted cash	(2,276		)	(10,727		)
Net increase (decrease) in cash, cash equivalents and restricted cash							12,870			(2,276		)
Cash, cash equivalents and restricted cash, beginning of period	747,752			699,201			758,039			747,752
Cash, cash equivalents and restricted cash, end of period	$	745,476		$	688,474		$	770,909		$	745,476

Non-cash operating activities:
Operating lease right-of-use assets and lease liabilities recorded upon adoption of ASC 842							$	44,169		$	—

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

Page 68 of 4348

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 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 platforms consist of application and business process outsourcing services, professional services and transaction-based services. Revenues from investment processing platforms are recognized in Information processing and software servicing fees on the accompanying Consolidated Statements of 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 platforms consist of outsourcing services including fund and investment accounting, administration, reconciliation, investor servicing and client reporting. Revenues from investment operations 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 September 30, ~~2018~~,2019, the results of operations for the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~,2018, and cash flows for the ~~nine-month~~nine-month periods ended September 30, ~~2018~~2019 and ~~2017~~.2018. 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, ~~2017~~.2018.

The Company adopted the requirements of the Accounting Standards Update (ASU) No. ~~2014-09, Revenue from Contracts with Customers~~2016-2 Leases (Topic ~~606)~~842) (Accounting Standards ~~Codification~~Codifications (ASC) ~~606~~842 (ASC ~~606)~~842)) using the modified retrospective method during the nine months ended September 30, ~~2018.~~2019. As a result of the adoption of ASC ~~606,~~842, the Company recorded ~~a cumulative effect adjustment~~additional lease assets and net lease liabilities of ~~$14,402 to retained earnings~~$44,169 as of January 1, ~~2018. Prior period information has~~2019. Upon implementation, the Company elected the package of practical expedients permitted under the transition guidance within the new standard which allowed the Company to carryforward the historical lease identification, classification and initial direct cost. ASC 842 did not ~~been restated~~materially impact the Company’s consolidated net income or consolidated cash flows (see following caption ~~"Revenue Recognition"~~"Leases"). With the exception of the adoption of ASC 842, there have been no significant changes in significant accounting policies during the nine months ended September 30, 2019 as compared to the significant accounting policies described in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.

Variable Interest Entities

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 ~~adopted ASU No. 2016-01, Recognition~~serve as the Trustee for some of the investment products. The Company receives asset management, distribution, administration and ~~Measurement~~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 ~~Financial Assets~~the products, and, ~~Financial Liabilities (see Note 6)~~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, ~~ASU No. 2016-18, Statement~~therefore, is not required to consolidate any of ~~Cash Flows, Restricted Cash (Topic 230) (see following caption "Statements~~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 ~~Cash Flows"). All amounts~~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 ~~disclosures set forth in this Form 10-Q have been updated to comply~~custodial fees are commensurate with the ~~new standards.~~services

Page 9 of 48

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 voting interest entity 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 $6,390 and $6,525 in fees during the three months ended September 30, 2019 and 2018, respectively. During the nine months ended September 30, 2019 and 2018, the Company waived $21,091 and $19,551, respectively, in fees.

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 majority of the Company’s revenue arrangements and did not have a material impact to the Company’s consolidated financial statements. The following is a summary of the impact from the adoption of ASC 606:

•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 continues 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.

~~Page 7 of 43~~

•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 agent since it does not control the research services before they are transferred to the customer. Therefore, fees received for research services should be recorded in revenues net of 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 September 30, 2018 and 2017 were $3,265 and $3,297, respectively. The amounts related to soft-dollar arrangements during the nine months ended September 30, 2018 and 2017 were $10,497 and $10,799, 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 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 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 under the requirements of ASC 606. The Company amortizes deferred contract acquisition costs using the straight-line method.

Cash and Cash Equivalents

Cash and cash equivalents includes ~~$286,824~~$319,977 and ~~$401,292~~$315,840 at September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, 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 at September 30, ~~2018~~2019 and December 31, ~~2017~~2018 segregated for regulatory purposes related to trade-execution services conducted by SEI Investments (Europe) Limited. Restricted cash also includes ~~$511~~$100 and ~~$505~~$514 at September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, 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 ~~$33,371~~$26,821 and ~~$48,573~~$33,371 of software development costs during the nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, respectively. The Company's software development costs primarily relate to ~~the continued development of~~significant enhancements to the SEI Wealth Platform^SM~~(the Platform)~~(SWP). The Company capitalized ~~$32,526~~$26,029 and ~~$40,604~~$32,526 of software development costs for significant enhancements to ~~the Platform~~SWP during the nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, respectively. As of September 30, ~~2018,~~2019, the net book value of ~~the Platform~~SWP was ~~$288,010~~$283,128. The net book value includes ~~$38,552~~$51,781 of capitalized software development costs in-progress associated with future releases. ~~The Platform~~Capitalized software development costs in-progress associated with future releases of SWP were $42,238 as of December 31, 2018. SWP has a weighted average remaining life of 8.4 years. Amortization expense for ~~the Platform~~SWP was ~~$29,723~~$31,567 and ~~$37,324~~$29,723 during the nine months ended September 30, 2019 and 2018, ~~and 2017,~~ respectively.

The Company also capitalized $845 and $7,969 of software development costs during the nine months ended September 30, 2018 and 2017, respectively, related to an application for the Investment Managers segment. 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 at September 30, 2018 was $22,136. Amortization expense for the application was $3,907 during the nine months ended September 30, 2018.

~~Page 8 of 43~~

Earnings per Share

The calculations of basic and diluted earnings per share for the three and nine months ended September 30, 2019 and 2018 ~~and~~ ~~2017~~are:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017		2019		2018		2019		2018
Net income	$	128,319	$	101,739	$	389,834	$	282,245	$	132,168	$	128,319	$	372,689	$	389,834
Shares used to compute basic earnings per common share	156,283,000		157,902,000		157,086,000		158,439,000		150,855,000		156,283,000		152,009,000		157,086,000
Dilutive effect of stock options	4,228,000		3,246,000		4,967,000		3,427,000		3,372,000		4,228,000		3,302,000		4,967,000
Shares used to compute diluted earnings per common share	160,511,000		161,148,000		162,053,000		161,866,000		154,227,000		160,511,000		155,311,000		162,053,000
Basic earnings per common share	$	0.82	$	0.64	$	2.48	$	1.78	$	0.88	$	0.82	$	2.45	$	2.48
Diluted earnings per common share	$	0.80	$	0.63	$	2.41	$	1.74	$	0.86	$	0.80	$	2.40	$	2.41

Page 10 of 48

During the three months ended September 30,, ~~2018~~ 2019 and ~~2017~~,2018, employee stock options to purchase ~~6,183,000~~6,239,000 and ~~11,324,000~~6,183,000 shares of common stock with an average exercise price of ~~$53.38~~$54.91 and ~~$37.81,~~$53.38, respectively, were outstanding but not included in the computation of diluted earnings per common share. During the nine months ended September 30, ~~2018~~2019 and ~~2017~~,2018, employee stock options to purchase ~~6,153,000~~6,269,000 and ~~11,286,000~~6,153,000 shares of common stock with an average exercise price of ~~$53.15~~$54.84 and ~~$37.73,~~$53.15, respectively, were outstanding but not included in the computation of diluted earnings per common share. These options for the three and nine 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 not have been satisfied if the reporting date was the end of the contingency period or the ~~option’s~~options' 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~~Leases

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

~~New Accounting Pronouncements~~

~~In February 2016, the FASB issued ASU No. 2016-02, Leases (ASU 2016-02), as amended, requiring lessees to recognize a right-of-use asset and~~The Company determines if an arrangement is a lease liability on the balance sheet for all leases with the exception of short-term leases. For lessees, leases will be classified as either operating or finance leases, with the classification affecting the pattern and classification of expense recognition in the income statement. The updated standard is effective for the Company beginning in the first quarter of 2019. Early adoption is permitted. A modified retrospective transition approach is required, applying the new standard to all leases existing at the ~~date of initial application. An entity may choose to use either (i) its effective date or (ii) the beginning~~inception of the ~~earliest comparative period presented~~contract. The Company's operating leases are included in ~~the financial statements as its date~~Operating lease right-of-use (ROU) assets, Current portion of ~~initial application. The Company expects to adopt the new standard on January 1, 2019~~long-term operating lease liabilities, and use the effective date as the date of initial application. As a result, financial information will not be updated and the disclosures required under the new standard will not be provided for periods prior to January 1, 2019.

The new standard provides a number of optional practical expedients in transition. The Company expects to elect the package of practical expedients which permits the Company to not reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs.

As part of its project plan’s preliminary assessment and design implementation phases for the adoption of ASU 2016-02, the Company has adopted implementation controls that allow it to properly and timely adopt ASU 2016-02 on the effective date. While the Company continues to assess all of the effects of adoption, the Company believes the most significant effects relate to the recognition of right-of-use assets andLong-term operating lease liabilities on the ~~balance sheet~~accompanying Consolidated Balance Sheet.

The operating lease ROU assets and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. As most of the Company’s leases do not provide an implicit interest rate, the Company utilizes an estimated incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. In determining the discount rate used in the present value calculation, the Company has elected to apply the portfolio approach for ~~office space and certain office~~leases of equipment ~~and providing significant new disclosures about leasing arrangements. The~~provided the leases commenced at or around the same time. This election allows the Company ~~owns its corporate headquarters and~~to account for leases ~~office space in other locations.~~ at a portfolio level provided that the resulting accounting at this level would not differ materially from the accounting at the individual lease level. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

The Company has ~~completed~~elected to account for lease and non-lease components separately. Operating lease ROU assets include all contractual lease payments and initial direct costs incurred, less any lease incentives. Facility leases generally only contain lease expense and non-component items such as taxes and pass through charges. Only the ~~process~~lease components are included in the ROU assets and lease liabilities. Additionally, the Company has elected not to apply the recognition requirements of ~~cataloging existing~~ASC 842 to leases which have a lease term of less than one year at the commencement date.

The majority of the Company's leases for corporate facilities and equipment contain terms for renewal and extension of the lease agreement. The exercise of lease renewal options is generally at the Company’s sole discretion. The Company includes the lease extensions when it is reasonably certain the Company will exercise the extension. The Company’s lease agreements ~~and is currently calculating the right-of-use asset and~~do not contain any material variable lease ~~liability.~~payments, material residual value guarantees or any material restrictive covenants. The Company ~~will make updates to the year-end~~does not currently have any finance leases.

See Note 15 for information on related disclosures ~~with a focus on both status and internal controls over financial reporting.~~regarding leases.

New Accounting Pronouncements

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~~and a subsequent amendment ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments (ASU 2019-04) in April 2019. ASU 2016-13 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 2019-04 provides certain improvements to ASU 2016-13. ASU 2016-13 ~~becomes~~and ASU 2019-04 become effective for the Company during the first quarter of 2020. Early adoption is permitted. The Company is currently ~~evaluating~~finalizing its evaluation of ASU 2016-13 and ASU 2019-04 and does not believe the ~~effect that~~adoption of the updated ~~standard~~standards will have a material impact on its consolidated financial statements and related disclosures.

~~Page 9 of 43~~

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.~~

In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting (ASU 2018-07) which simplifies the accounting for nonemployee share-based payment transactions. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. ASU 2018-07 is effective for the Company beginning in the first quarter of 2019. The Company does not believe the adoption of ASU ~~2018-07~~2017-04 will have a material impact on its consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13) which modifies the disclosure requirements

Page 11 of 48

on fair value measurements. ASU 2018-13 is effective for the Company beginning in the first quarter of 2020. The Company is currently ~~evaluating~~finalizing its evaluation of ASU 2018-13 and does not believe the adoption of the updated standard will have a material impact on its consolidated financial statements and related disclosures.

In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities (ASU 2018-17). The new standard changes how entities evaluate decision-making fees under the variable interest entity guidance. ASU 2018-17 is effective for the Company beginning in the first quarter of ~~adopting~~2020. The Company does not believe the adoption of ASU ~~2018-13~~2018-17 will have a material impact 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 material impact to net cash flows for the nine months ended September 30, 2017 as a result of including restricted cash with cash and cash equivalents when reconciling the 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.

~~Page 10 of 43~~

~~The~~ following table provides the details of the adjustments to reconcile net income to net cash provided by operating activities for the nine months ended September 30:


	2018			2017			2019			2018
Net income	$	389,834		$	282,245		$	372,689		$	389,834
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	21,515			20,347			22,162			21,515
Amortization	36,420			38,332			38,407			36,420
Equity in earnings of unconsolidated affiliate	(123,406		)	(109,213		)	(112,758		)	(123,406		)
Distributions received from unconsolidated affiliate	138,216			117,447			123,663			138,216
Stock-based compensation	16,396			19,527			15,555			16,396
Provision for losses on receivables	(29		)	176			593			(29		)
Deferred income tax expense	8,378			1,143			(1,405		)	8,378
Net loss (gain) from investments	460			(1,036		)
Net (gain) loss from investments							(2,121		)	460
Change in long-term income taxes payable	(9,859		)	—			—			(9,859		)
Change in other long-term liabilities	1,930			106			2,077			1,930
Change in other assets	(4,214		)	79			(56		)	(4,214		)
Contract costs capitalized, net of amortization	(3,463		)	—			(4,499		)	(3,463		)
Other	(99		)	1,070			(721		)	(99		)
Change in current assets and liabilities
Decrease (increase) in
(Increase) decrease in
Receivables from investment products	2,263			10,800			(2,271		)	2,263
Receivables	(44,878		)	(43,661		)	(34,589		)	(44,878		)
Other current assets	(5,955		)	(2,962		)	729			(5,955		)
Increase (decrease) in
(Decrease) increase in
Accounts payable	3,893			(1,748		)	(2,208		)	3,893
Accrued liabilities	(9,717		)	(15,856		)	(34,087		)	(9,717		)
Deferred revenue	213			(409		)	375			213
Total adjustments	28,064			34,142			8,846			28,064
Net cash provided by operating activities	$	417,898		$	316,387		$	381,535		$	417,898


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 investment products. The Company's partnership interest in LSV as of September 30, ~~2018~~2019 was ~~38.9 percent.~~38.9%. The Company accounts for its interest in LSV using the equity

Page 12 of 48

method because of its less than 50 ~~percent~~50% 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 September 30, ~~2018~~,2019, the Company’s total investment in LSV was ~~$44,682~~.$41,437. The Company receives partnership distributions from LSV on a quarterly basis. The Company received partnership distributions from LSV of ~~$138,216~~$123,663 and ~~$117,447~~$138,216 in the nine months ended September 30,, ~~2018~~ 2019 and ~~2017~~,2018, 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 ~~$41,726~~$37,609 and ~~$39,333~~$41,726 during the three months ended September 30,, ~~2018~~ 2019 and ~~2017~~,2018, respectively. During the nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, the Company’s proportionate share in the earnings of LSV was $112,758 and $123,406, ~~and $109,213,~~ respectively.

~~Page 11 of 43~~

These tables contain condensed financial information of LSV:


Condensed Statement of Operations	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017		2019		2018		2019		2018
Revenues	$	133,921	$	126,723	$	397,750	$	355,996	$	121,232	$	133,921	$	365,164	$	397,750
Net income	107,284		101,130		317,295		280,717		96,699		107,284		289,918		317,295


Condensed Balance Sheets	September 30, 2018		December 31, 2017		September 30, 2019		December 31, 2018
Current assets	$	150,183	$	155,239	$	138,320	$	138,083
Non-current assets	1,383		1,407		4,721		1,165
Total assets	$	151,566	$	156,646	$	143,041	$	139,248

Current liabilities	$	79,052	$	46,486	$	75,192	$	47,874
Non-current liabilities					4,738		—
Partners’ capital	72,514		110,160		63,111		91,374
Total liabilities and partners’ capital	$	151,566	$	156,646	$	143,041	$	139,248

~~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 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 $6,525 and $6,942 in fees during the three months ended September 30, 2018 and 2017, respectively. During the nine months ended September 30, 2018 and 2017, the Company waived $19,551 and $20,620, respectively, in fees.


Note 4.3.	Composition of Certain Financial Statement Captions

Receivables

Receivables on the accompanying Consolidated Balance Sheets consist of:


	September 30, 2018			December 31, 2017			September 30, 2019			December 31, 2018
Trade receivables	$	77,239		$	76,760		$	91,372		$	76,362
Fees earned, not billed	240,538			194,331			241,340			226,001
Other receivables	10,503			12,310			17,931			13,691
	328,280			283,401			350,643			316,054
Less: Allowance for doubtful accounts	(666		)	(695		)	(1,311		)	(718		)
	$	327,614		$	282,706		$	349,332		$	315,336

~~Page 12 of 43~~

Fees earned, not billed represents receivables from contracts with customers earned but unbilled and results from timing differences between services provided and contractual billing schedules. These billing schedules generally provide for fees to be billed on a quarterly basis. In addition, certain fees earned from investment operations services are calculated based on assets under administration that have ~~a prolonged~~an extended valuation ~~process which delays billings~~process. Billings to ~~clients.~~these clients occur once the asset valuation processes are completed.

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.

Page 13 of 48

Property and Equipment

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


	September 30, 2018			December 31, 2017			September 30, 2019			December 31, 2018
Buildings	$	154,723		$	153,961		$	162,677		$	160,796
Equipment	125,867			115,546			119,585			126,954
Land	10,557			10,030			10,830			10,772
Purchased software	138,565			134,610			142,693			139,245
Furniture and fixtures	17,971			18,114			18,478			18,103
Leasehold improvements	18,816			18,017			19,656			18,959
Construction in progress	10,504			6,105			27,042			9,240
	477,003			456,383			500,961			484,069
Less: Accumulated depreciation	(331,138		)	(309,955		)	(346,377		)	(338,206		)
Property and Equipment, net	$	145,865		$	146,428		$	154,584		$	145,863

The Company recognized ~~$21,515~~$22,162 and ~~$20,347~~$21,515 in depreciation expense related to property and equipment for the nine months ended September 30,, ~~2018~~ 2019 and ~~2017~~,2018, respectively.

Deferred Contract Costs

Deferred contract costs, which primarily consist of deferred sales commissions, were $28,506 and $24,007 as of September 30, 2019 and December 31, 2018, respectively. The Company deferred expenses related to contract costs of $4,575 and $1,400 during the three months ended September 30, 2019 and 2018, respectively. During the nine months ended September 30, 2019 and 2018, the Company deferred expenses related to contract costs of $7,673 and $5,483, respectively. Amortization expense related to deferred contract costs were $3,174 and $2,020 during the nine months ended September 30, 2019 and 2018, respectively, and are included in Compensation, benefits and other personnel on the accompanying Consolidated Statements of Operations. There was 0 impairment loss in relation to deferred contract costs during the nine months ended September 30, 2019.

Accrued Liabilities

Accrued liabilities on the accompanying Consolidated Balance Sheets consist of:


	September 30, 2018		December 31, 2017		September 30, 2019		December 31, 2018
Accrued employee compensation	$	68,371	$	88,960	$	73,997	$	97,603
Accrued consulting, outsourcing and professional fees	28,322		29,658		27,491		31,000
Accrued sub-advisory, distribution and other asset management fees	49,452		42,365		45,495		42,583
Accrued dividend payable	—		47,179		—		50,761
Accrued income taxes	11,164		5,583
Other accrued liabilities	50,366		51,313		46,936		57,687
Total accrued liabilities	$	207,675	$	265,058	$	193,919	$	279,634

Note 5.4. 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 ~~2021~~2023 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

Page 14 of 48

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.

~~Page 13 of 43~~

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 nine months ended September 30,, ~~2018~~ 2019 were consistent with those as described in our Annual Report on Form 10-K at December 31, ~~2017~~.2018. The Company had no Level 3 financial assets at September 30, ~~2018~~2019 or December 31, ~~2017~~2018 that were required to be measured at fair value on a recurring basis. The Company's Level 3 financial liabilities at September 30, 2019 and December 31, 2018 consist entirely of the estimated contingent consideration ~~of $12,120~~ resulting from an acquisition (See Note ~~13)~~12). The fair value of the contingent consideration was determined using a Monte-Carlo simulation model. Key assumptions for the Monte-Carlo simulation model include expected revenues, expected volatility, risk-free rate and correlation coefficient. ~~The Company had no Level 3 financial liabilities as of December 31, 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 nine months ended September 30,, ~~2018~~. 2019.

The fair value of certain financial assets 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	September 30, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		September 30, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Equity available-for-sale securities	$	11,326	$	11,326	$	—	$	11,313	$	11,313	$	—
Fixed-income available-for-sale securities	72,972		—		72,972		90,267		—		90,267
Fixed-income securities owned	28,945		—		28,945		32,862		—		32,862
Investment funds sponsored by LSV (1)	5,736						5,533
	$	118,979	$	11,326	$	101,917	$	139,975	$	11,313	$	123,129


			Fair Value Measurements at the End of the Reporting Period Using						Fair Value Measurements at the End of the Reporting Period Using
Assets	December 31, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		December 31, 2018		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	$	—	$	10,218	$	10,218	$	—
Fixed-income available-for-sale securities	76,733		—		76,733		101,683		—		101,683
Fixed-income securities owned	21,526		—		21,526		30,892		—		30,892
Investment funds sponsored by LSV (1)	6,034						4,887
	$	115,543	$	11,250	$	98,259	$	147,680	$	10,218	$	132,575

(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)5).

Page 15 of 48

Note 6.5. Marketable Securities

Investments Available for Sale

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

At September 30, 2018

Cost
Amount

Gross
Unrealized
Gains

Gross
Unrealized
(Losses)

Fair
Value
SEI-sponsored mutual funds $ 7,392
$ 107
$ (304 ) $ 7,195
Equities and other mutual funds 3,479
652
—
4,131
Debt securities 75,673
—
(2,701 ) 72,972
$ 86,544
$ 759
$ (3,005 ) $ 84,298



	At September 30, 2019
	Cost Amount		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
SEI-sponsored mutual funds	$	7,477	$	105	$	(411	)	$	7,171
Equities and other mutual funds	3,476		666		—			4,142
Debt securities	89,625		642		—			90,267
	$	100,578	$	1,413	$	(411	)	$	101,580

~~Page 14 of 43~~


	At December 31, 2017									At December 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	$	7,369	$	110	$	(143	)	$	7,336	$	7,446	$	—	$	(788	)	$	6,658
Equities and other mutual funds	3,456		458		—			3,914		3,434		126		—			3,560
Debt securities	77,745		—		(1,012		)	76,733		103,518		—		(1,835		)	101,683
	$	88,570	$	568	$	(1,155	)	$	87,983	$	114,398	$	126	$	(2,623	)	$	111,901

The Company prospectively 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~~gains at September 30, ~~2018 and December 31, 2017~~2019 of the Company's available-for-sale debt securities were ~~$2,080~~$494 (net of income tax expense of $148). Net unrealized losses at December 31, 2018 of the Company's available-for-sale debt securities were $1,413 (net of income tax benefit of ~~$621) and $779 (net of income tax benefit of $233), respectively.~~$422). These net unrealized gains and losses are reported as a separate component of Accumulated other comprehensive loss on the accompanying Consolidated Balance Sheets.

There were gross realized gains of $1,031 and gross realized losses of $1,520 during the nine months ended September 30, 2018. Gross realized gains and losses from available-for-sale securities during the nine months ended September 30,, ~~2018. There~~ 2019 were ~~gross realized gains of $428 and gross realized losses of $706 during the~~ ~~nine months ended September 30~~, ~~2017~~.immaterial. Gains and losses from available-for-sale securities, including amounts reclassified from accumulated comprehensive loss, are reflected in Net gain (loss) from investments on the accompanying Consolidated Statements of Operations.

Investments in Affiliated Funds

The Company has an investment in funds sponsored by LSV. The Company records this investment on the accompanying Consolidated Balance Sheets at fair value. Unrealized gains and losses from the change in fair value of these funds are recognized in Net gain (loss) ~~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 ~~$5,736~~$5,533 and ~~$6,034~~$4,887 at September 30, ~~2018~~2019 and December 31, ~~2017~~,2018, respectively. The Company recognized gains of $646 and losses of $298 ~~and gains of $880~~ during the nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, respectively, from the change in fair value of the funds. There were no material gains or losses during the three months ended September 30, ~~2018~~2019 and ~~2017~~2018 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 ~~$28,945~~$32,862 and ~~$21,526~~$30,892 at September 30, ~~2018~~2019 and December 31, ~~2017~~,2018, respectively. There were no material net gains or losses related to the securities during the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~.2018.

Note 7.6. 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

Page 16 of 48

can range from ~~0.25 percent~~0.25% to ~~1.00 percent~~1.00% or the London InterBank Offered Rate (LIBOR) plus a premium that can range from ~~1.25 percent~~1.25% to ~~2.00 percent~~2.00% 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,~~0.50%, b) the prime commercial lending rate of Wells Fargo, c) the applicable LIBOR plus ~~1.00 percent,~~1.00%, or d) ~~0 percent.~~0%. 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~~0.15% of the amount of the unused portion to ~~0.30 percent,~~0.30%, 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

~~Page 15 of 43~~

aggregate amount of the Credit Facility may be increased by an additional $100,000 under certain conditions set forth in the agreement. The Company may issue up to $15,000 in letters of credit under the terms of the Credit Facility. The Company pays a periodic commission fee of 1.25% plus a fronting fee of 0.175% of the aggregate face amount of the outstanding letters of credit issued under the Credit Facility.

The Credit Facility contains covenants that restrict the ability of the Company to engage in mergers, consolidations, asset sales, investments, transactions with affiliates other than wholly-owned subsidiaries, or to incur liens or other indebtedness including contingent obligations or guarantees, 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.

~~In July 2017,~~As of September 30, 2019, the Company ~~borrowed $40,000~~had outstanding letters of credit of $11,553 under the Credit ~~Facility~~Facility. These letters of credit were issued primarily for the ~~funding~~expansion of ~~an acquisition. In October 2017,~~ the ~~Company made a principal payment~~Company's headquarters and are scheduled to expire during the remainder of ~~$10,000. During the nine months ended September 30, 2018, the Company made additional principal payments of $30,000 to fully repay the remaining outstanding balance~~2019. The amount of the Credit ~~Facility.~~ Facility that is available for general corporate purposes as of September 30, 2019 was $288,447.

The Company was in compliance with all covenants of the Credit Facility during the nine months ended September 30, ~~2018. As of October 18, 2018, the amount of the Credit Facility that is available for general corporate purposes was $300,000.~~2019.

Note 8.7. 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~~50% when a specified diluted earnings per share target is achieved, and the remaining 50 ~~percent~~50% 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 and thereafter 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 ~~are established at time of grant and~~ exclude the impact of stock-based compensation and ~~for earnings per share targets for the options granted in December 2017, also exclude income tax expense.~~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 nine months ended September 30, ~~2018~~2019 and ~~2017~~,2018, respectively, as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017			2019			2018			2019			2018
Stock-based compensation expense	$	5,878		$	7,088		$	16,396		$	19,527		$	5,453		$	5,878		$	15,555		$	16,396
Less: Deferred tax benefit	(1,311		)	(2,517		)	(3,556		)	(6,859		)	(1,042		)	(1,311		)	(2,959		)	(3,556		)
Stock-based compensation expense, net of tax	$	4,567		$	4,571		$	12,840		$	12,668		$	4,411		$	4,567		$	12,596		$	12,840

As of September 30, ~~2018,~~2019, there was approximately ~~$47,131~~$50,330 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 nine months ended September 30,, ~~2018~~ 2019 was ~~$123,365~~.$43,246. The total options exercisable as of September 30, ~~2018~~2019 had an intrinsic value of ~~$247,517~~.$197,860. The total intrinsic value for options exercisable is calculated as

Page 17 of 48

the difference between the market value of the Company’s common stock as of September 30, ~~2018~~2019 and the weighted average exercise price of the options. The market value of the Company’s common stock as of September 30, ~~2018~~2019 was ~~$61.10~~$59.26 as reported by the Nasdaq Stock Market, LLC. The weighted average exercise price of the options exercisable as of September 30, ~~2018~~2019 was ~~$29.60~~.$25.08. Total options that were outstanding as of September 30, ~~2018~~2019 were ~~14,040,000~~.14,132,000. Total options that were exercisable as of September 30, ~~2018~~2019 were ~~7,857,000.~~7,890,000.

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 ~~4,419,000~~4,950,000 shares at a total cost of ~~$289,536~~$267,184 during the nine months ended September 30,, ~~2018~~, 2019, 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

~~Page 16 of 43~~

September 30, ~~2018,~~2019, the Company had approximately ~~$81,102~~$198,695 of authorization remaining for the purchase of common stock under the program.

The Company immediately retires its common stock when purchased. Upon retirement, the Company reduces Capital in excess of par value for the average capital per share outstanding and the remainder is charged against Retained earnings. If the 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 ~~30, 2018,~~29, 2019, the Board of Directors declared a cash dividend of ~~$0.30~~$0.33 per share on the Company's common stock, which was paid on June ~~22, 2018,~~20, 2019, to shareholders of record on June ~~14, 2018.~~12, 2019. Cash dividends declared during the nine months ended September 30, 2019 and 2018 were $49,984 and ~~2017 were~~ $47,139, ~~and $44,264,~~ respectively.

Note 9.8. 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			Foreign Currency Translation Adjustments			Unrealized Gains (Losses) on Investments			Accumulated Other Comprehensive Loss
Balance, January 1, 2018	$	(19,522	)	$	(386	)	$	(19,908	)
Balance, January 1, 2019										$	(31,587	)	$	(1,413	)	$	(33,000	)

Other comprehensive loss before reclassifications	(7,261		)	(1,662		)	(8,923		)	(4,687		)	1,633			(3,054		)
Amounts reclassified from accumulated other comprehensive loss	—			(32		)	(32		)	—			274			274
Net current-period other comprehensive loss	(7,261		)	(1,694		)	(8,955		)	(4,687		)	1,907			(2,780		)

Balance, September 30, 2018	$	(26,783	)	$	(2,080	)	$	(28,863	)
Balance, September 30, 2019										$	(36,274	)	$	494		$	(35,780	)

Note ~~10.~~9. Business Segment Information

The Company’s reportable business segments are:

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

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

Investment Managers – provides investment operations outsourcing platforms to fund companies, banking institutions, ~~and both~~ traditional and non-traditional investment managers ~~worldwide;~~worldwide and family offices in the United States; and

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

Page 18 of 48

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 nine months ended September 30, ~~2018~~2019 and ~~2017~~.2018. 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, ~~2017.~~2018.

~~Page 17 of 43~~

The following tables highlight certain financial information about each of the Company’s business segments for the three months ended September 30, ~~2018~~2019 and ~~2017~~.2018:

Private
Banks

Investment
Advisors

Institutional
Investors

Investment
Managers

Investments
In New
Businesses
Total
For the Three Months Ended September 30, 2018
Revenues $ 118,449
$ 102,550
$ 83,466
$ 101,275
$ 2,942
$ 408,682
Expenses 116,471
53,287
40,497
65,296
5,769
281,320
Operating profit (loss) $ 1,978
$ 49,263
$ 42,969
$ 35,979
$ (2,827 ) $ 127,362



	Private Banks		Investment Advisors		Institutional Investors		Investment Managers		Investments In New Businesses			Total
	For the Three Months Ended September 30, 2019
Revenues	$	117,250	$	103,033	$	80,337	$	112,186	$	3,448		$	416,254
Expenses	110,788		51,509		37,268		71,889		7,926			279,380
Operating profit (loss)	$	6,462	$	51,524	$	43,069	$	40,297	$	(4,478	)	$	136,874


	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 September 30, 2017													For the Three Months Ended September 30, 2018
Revenues	$	118,499	$	94,318	$	80,411	$	91,020	$	1,770		$	386,018	$	118,449	$	102,550	$	83,466	$	101,275	$	2,942		$	408,682
Expenses	115,806		50,585		40,003		59,831		5,063			271,288		116,471		53,287		40,497		65,296		5,769			281,320
Operating profit (loss)	$	2,693	$	43,733	$	40,408	$	31,189	$	(3,293	)	$	114,730	$	1,978	$	49,263	$	42,969	$	35,979	$	(2,827	)	$	127,362

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 September 30,, ~~2018~~ 2019 and ~~2017~~2018 is as follows:


	2018			2017			2019			2018
Total operating profit from segments	$	127,362		$	114,730		$	136,874		$	127,362
Corporate overhead expenses	(14,942		)	(15,493		)	(16,237		)	(14,942		)
Income from operations	$	112,420		$	99,237		$	120,637		$	112,420

The following tables provide additional information for the three months ended September 30,, ~~2018~~ 2019 and ~~2017~~2018 pertaining to our business segments:


	Capital Expenditures (1)				Depreciation				Capital Expenditures (1)				Depreciation
	2018		2017		2018		2017		2019		2018		2019		2018
Private Banks	$	7,999	$	14,671	$	3,427	$	4,374	$	8,018	$	7,999	$	3,640	$	3,427
Investment Advisors	3,927		5,421		1,168		759		4,468		3,927		1,162		1,168
Institutional Investors	962		1,260		410		248		1,070		962		393		410
Investment Managers	4,104		3,450		1,796		1,197		5,311		4,104		1,793		1,796
Investments in New Businesses	287		173		137		162		379		287		101		137
Total from business segments	$	17,279	$	24,975	$	6,938	$	6,740	$	19,246	$	17,279	$	7,089	$	6,938
Corporate overhead	460		377		317		208		663		460		320		317
	$	17,739	$	25,352	$	7,255	$	6,948	$	19,909	$	17,739	$	7,409	$	7,255

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

Amortization
2018 2017
Private Banks $ 6,943
$ 9,125
Investment Advisors 2,445
2,973
Institutional Investors 427
425
Investment Managers 2,346
1,132
Investments in New Businesses 186
40
Total from business segments $ 12,347
$ 13,695
Corporate overhead 58
50
$ 12,405
$ 13,745

Page 1819 of 4348



	Amortization
	2019		2018
Private Banks	$	7,322	$	6,943
Investment Advisors	2,609		2,445
Institutional Investors	440		427
Investment Managers	2,334		2,346
Investments in New Businesses	185		186
Total from business segments	$	12,890	$	12,347
Corporate overhead	57		58
	$	12,947	$	12,405

The following tables highlight certain financial information about each of the Company’s business segments for the nine months ended September 30, ~~2018~~2019 and ~~2017~~.2018:


	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 Nine Months Ended September 30, 2018													For the Nine Months Ended September 30, 2019
Revenues	$	361,739	$	301,632	$	252,391	$	295,696	$	7,652		$	1,219,110	$	351,601	$	297,916	$	241,559	$	326,037	$	9,547		$	1,226,660
Expenses	343,515		158,792		122,617		191,955		16,807			833,686		329,540		154,569		115,383		209,326		20,663			829,481
Operating profit (loss)	$	18,224	$	142,840	$	129,774	$	103,741	$	(9,155	)	$	385,424	$	22,061	$	143,347	$	126,176	$	116,711	$	(11,116	)	$	397,179


	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 Nine Months Ended September 30, 2017													For the Nine Months Ended September 30, 2018
Revenues	$	347,317	$	275,302	$	235,483	$	255,123	$	5,108		$	1,118,333	$	361,739	$	301,632	$	252,391	$	295,696	$	7,652		$	1,219,110
Expenses	336,709		147,504		117,499		165,743		15,067			782,522		343,515		158,792		122,617		191,955		16,807			833,686
Operating profit (loss)	$	10,608	$	127,798	$	117,984	$	89,380	$	(9,959	)	$	335,811	$	18,224	$	142,840	$	129,774	$	103,741	$	(9,155	)	$	385,424

A reconciliation of the total operating profit reported for the business segments to income from operations in the Consolidated Statements of Operations for the nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 is as follows:


	2018			2017			2019			2018
Total operating profit from segments	$	385,424		$	335,811		$	397,179		$	385,424
Corporate overhead expenses	(46,398		)	(45,830		)	(52,845		)	(46,398		)
Income from operations	$	339,026		$	289,981		$	344,334		$	339,026

The following tables provide additional information for the nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 pertaining to our business segments:


	Capital Expenditures (1)				Depreciation				Capital Expenditures (1)				Depreciation
	2018		2017		2018		2017		2019		2018		2019		2018
Private Banks	$	27,767	$	37,000	$	10,069	$	12,956	$	25,240	$	27,767	$	10,774	$	10,069
Investment Advisors	12,471		13,651		3,378		2,294		12,973		12,471		3,506		3,378
Institutional Investors	2,926		3,157		1,310		719		2,990		2,926		1,212		1,310
Investment Managers	9,994		13,730		5,411		3,141		13,535		9,994		5,384		5,411
Investments in New Businesses	731		432		442		701		964		731		302		442
Total from business segments	$	53,889	$	67,970	$	20,610	$	19,811	$	55,702	$	53,889	$	21,178	$	20,610
Corporate Overhead	1,134		921		905		536		1,634		1,134		984		905
	$	55,023	$	68,891	$	21,515	$	20,347	$	57,336	$	55,023	$	22,162	$	21,515

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

Amortization
2018 2017
Private Banks $ 20,317
$ 26,464
Investment Advisors 7,203
8,720
Institutional Investors 1,281
1,174
Investment Managers 7,036
1,623
Investments in New Businesses 410
200
Total from business segments $ 36,247
$ 38,181
Corporate Overhead 173
151
$ 36,420
$ 38,332

Page 1920 of 4348



	Amortization
	2019		2018
Private Banks	$	21,680	$	20,317
Investment Advisors	7,682		7,203
Institutional Investors	1,300		1,281
Investment Managers	7,019		7,036
Investments in New Businesses	555		410
Total from business segments	$	38,236	$	36,247
Corporate Overhead	171		173
	$	38,407	$	36,420

Note ~~11.~~10. Income Taxes

The gross liability for unrecognized tax benefits at September 30, ~~2018~~2019 and December 31, ~~2017~~2018 was ~~$14,342~~$14,627 and ~~$14,480~~,$14,367, respectively, exclusive of interest and penalties, of which ~~$13,670~~$14,183 and ~~$13,737~~$13,774 would affect the effective tax rate if the Company were to recognize the tax benefit.

The Company classifies interest and penalties on unrecognized tax benefits as income tax expense. As of September 30, ~~2018~~2019 and December 31, ~~2017~~,2018, the combined amount of accrued interest and penalties related to tax positions taken on tax returns was ~~$1,366~~$1,520 and ~~$1,175~~,$1,289, respectively.


	September 30, 2018		December 31, 2017		September 30, 2019		December 31, 2018
Gross liability for unrecognized tax benefits, exclusive of interest and penalties	$	14,342	$	14,480	$	14,627	$	14,367
Interest and penalties on unrecognized benefits	1,366		1,175		1,520		1,289
Total gross uncertain tax positions	$	15,708	$	15,655	$	16,147	$	15,656
Amount included in Current liabilities	$	1,398	$	3,275	$	1,008	$	3,131
Amount included in Other long-term liabilities	14,310		12,380		15,139		12,525
	$	15,708	$	15,655	$	16,147	$	15,656

The Company's effective income tax rate for the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 differs from the federal income tax statutory rate due to the following:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017		2019		2018		2019		2018
Statutory rate	21.0	%	35.0	%	21.0	%	35.0	%	21.0	%	21.0	%	21.0	%	21.0	%
State taxes, net of federal tax benefit	2.3		1.7		2.3		1.7		2.6		2.3		2.6		2.3
Foreign tax expense and tax rate differential	(0.2	)	(1.0	)	(0.2	)	(1.0	)	(0.3	)	(0.2	)	(0.2	)	(0.2	)
Tax benefit from stock option exercises	(1.4	)	(4.5	)	(4.8	)	(3.9	)	(2.2	)	(1.4	)	(1.5	)	(4.8	)
Expiration of the statute of limitations	(1.0	)	(2.6	)	(0.3	)	(0.9	)	(1.2	)	(1.0	)	(0.4	)	(0.3	)
Provision-to-return adjustment	(2.3	)	—		(0.8	)	—		(0.6	)	(2.3	)	(0.2	)	(0.8	)
Other, net	0.2		(0.9	)	—		(0.7	)	(0.4	)	0.2		(0.3	)	—
	18.6	%	27.7	%	17.2	%	30.2	%	18.9	%	18.6	%	21.0	%	17.2	%

The ~~decrease~~increase in the effective tax rates for the three and nine months ended September 30, 2018 was primarily due to the 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 rate from 35.0 percent to 21.0 percent.

~~The~~ Company's effective tax ~~rates~~rate for the three and nine months ended September 30, 2018 were favorably impacted by the reduction of the estimated one-time transition tax enacted by The Tax Act and a provision-to-return adjustment on the Company's 2017 federal income tax return. These adjustments to the one-time transition tax and the Company's deferred taxes represent what the Company believes are its final liabilities under the changes enacted in The Tax Act.

The Tax Act also imposed a territorial rather than worldwide system which requires a one-time transition tax on the repatriation of previously deferred foreign earnings. The Company's one-time transition tax as of the filing of the Company's 2017 Federal Tax Return was $10,711. After the Company made a payment of $1,000 and its estimated tax payments relating to its 2017 tax liability, the IRS issued guidance informing taxpayers that they may not receive a refund or credit of any portion of properly applied 2017 tax payments unless and until the amount of payments exceeds the entire unpaid 2017 repatriation tax liability, including all amounts to be paid in installments in subsequent years. In accordance with this guidance, the Company was required to apply $8,941 from an overpayment of federal taxes against the transition tax payable during the nine months ended September 30, ~~2018. The remaining amount payable~~2019 was primarily due to reduced tax benefits related to the ~~transition tax~~lower volume of ~~$770 is included in Long-term income taxes payable on~~stock option exercises as compared to the ~~accompanying Consolidated Balance Sheet.~~nine months ended September 30, 2018.

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 2015 and is no longer subject to state, local or foreign income tax examinations by authorities for years before ~~2013.~~2014.

The Company estimates it will recognize ~~$1,398~~$1,008 of gross unrecognized tax benefits. This amount is expected to be paid within one year 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

Page 21 of 48

federal, state, and foreign tax returns. However, the timing of the resolution of income tax examinations is highly uncertain, and the amounts

~~Page 20 of 43~~

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.~~11. Commitments and Contingencies

In the ~~normal~~ordinary course of business, the Company isfrom time to time enters into contracts containing indemnification obligations of the Company. These obligations may require the Company to make payments to another party upon the occurrence of certain events including the failure by the Company to ~~various claims~~meet its performance obligations under the contract. These contractual indemnification provisions are often standard contractual terms of the nature customarily found in the type of contracts entered into by the Company. In many cases, there are no stated or notional amounts included in the indemnification provisions. There are no amounts reflected on the Consolidated Balance Sheets as of September 30, 2019 and ~~legal proceedings.~~December 31, 2018 related to these indemnifications.

Stanford Trust Company Litigation

SEI has been named in ~~seven~~7 lawsuits filed in Louisiana courts; ~~four~~4 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~~NaN 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~~7 cases varies. The Lilliecase, 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~~remaining in Lillie are plaintiffs' claims for secondary liability against SEI and SPTC under Section 714(B) of the Louisiana Securities Law. On May 2, 2016, the District Court certified the class as being "all persons for whom Stanford Trust Company purchased or renewed Stanford Investment Bank Limited certificates of deposit in Louisiana between January 1, 2007 and February 13, 2009". 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 Lillieclass filed a complaint against SEI and SPTC in the United States District Court in the Middle District of Louisiana (“Ahders Complaint”), alleging claims essentially the same as those in Lillie. In January 2017, the Judicial Panel on Multidistrict Litigation transferred the Ahders proceeding to the Northern District of Texas and the Stanford MDL. During February 2017, SEI filed its response to the Ahders Complaint, and in March 2017 the District Court for the Northern District of Texas approved the stipulated dismissal of all claims in this ~~complaint~~Complaint predicated on Section 712(D) or Section 714(A) of the Louisiana Securities Law. In both cases, as a resultof the proceedings in the Northern District of Texas, only the plaintiffs’ secondary liability claims under Section 714(B) of the Louisiana Securities Law remain. Limited discovery and motions practice have occurred, including SEI and SPTC’s filing of a dispositive summary judgment motion in the Lillie proceeding. On January 31, 2019, the Judicial Panel on Multidistrict Litigation remanded the Lillie and Ahders proceedings to the Middle District of Louisiana.

On July 9, 2019, the District Court issued an order granting SEI’s Summary Judgment Motion to dismiss the remaining Section 714(B) claim in the Lillie proceeding and denying Plaintiffs’ Motion for Continuance of SEI and SPTC’s Motion for Summary Judgment pursuant to Rule 56(d).

Page 22 of 48

On July 16, 2019, SEI and SPTC filed a Motion for Summary Judgment pursuant to Rule 56(d) in the Ahders proceeding to have the remaining Section 714(B) claim dismissed.

On July 17, 2019, Plaintiffs filed a Motion for Reconsideration and/or New Trial as to the July 9, 2019 Ruling and Order (ECF 146) by the Honorable Brian A. Jackson denying a continuance of SEI’s Motion for Summary Judgment pursuant to Rule 56(d). The Court denied Plaintiffs’ Motion and entered a Final Judgment in favor of SEI on August 15, 2019.

On August 27, 2019, Plaintiffs filed a Notice of Appeal to the United States Court of Appeal for the Fifth Circuit of the District Court's dismissal of the matter. Plaintiffs’ Motion in Support of the Notice of Appeal must be filed with the Court by November 20, 2019. If Plaintiffs’ Motion in Support of Appeal is filed, SEI intends to contest the Plaintiffs' appeal.

Another ~~one of the cases,~~case, 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~~NaN additional cases ~~remaining~~remain in the Parish of East Baton ~~Rouge~~Rouge. Plaintiffs filed petitions in 2010 and have granted SEI and SPTC indefinite extensions to ~~respond to the petitions.~~respond. No material activity has taken place since.

In ~~the two~~2 additional cases, filed in East Baton Rouge and brought by the same counsel who filed the Lillieaction, virtually all of the litigation to date has involved motions practice and appellate litigation regarding the existence of federal ~~subjection~~subject matter jurisdiction under the federal Securities Litigation Uniform Standards Act (SLUSA). ~~After the matter was~~The matters were removed to the United States District Court for the Northern District of Texas ~~that~~and consolidated. The court then 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~~matters were 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.

SEI Capital Accumulation Plan Litigation

~~Page 21~~On September 28, 2018, a class action complaint was filed in the United States District Court for the Eastern District of 43

~~In October 2018,~~Pennsylvania by Gordon Stevens, individually and as the representative of similarly situated persons, and on behalf of the SEI Capital Accumulation Plan (the “Plan”) naming the Company and its affiliated and/or related entities SEI Investments Management Corporation, SEI Capital Accumulation Plan Design Committee, SEI Capital Accumulation Plan Investment Committee, SEI Capital Accumulation Plan Administration Committee, and John Does 1-30 ~~have been named~~ as defendants ~~in a class action complaint in the United States District Court for the Eastern District of Pennsylvania filed by Gordon~~(the “Stevens Complaint”). The Stevens ~~individually and as the representative of similarly situated persons, and on behalf of the SEI Capital Accumulation Plan (the “Plan”) seeking~~Compliant seeks unspecified damages for defendants’ breach of fiduciary duties under ERISA with respect to selecting and monitoring the Plan’s investment options and by retaining affiliated investment products in the ~~Plan (the “Stevens Complaint”).~~Plan.

Although SEI believes its defenses against the plaintiff’s allegations were valid, the Company agreed to settle this matter in the very early stages of the litigation in order to avoid the high cost of protracted class-action litigation and internal distractions such cases bring. The written settlement agreement was submitted to the Court on July 26, 2019, and is a matter of public record. A Preliminary Approval Order approving the settlement agreement was issued by the Court and the Court has scheduled a fairness hearing for December 18, 2019. The settlement agreement will not be finalized until the Court has issued a final approval after the December 18, 2019. The Company expects final Court approval of the settlement by year-end. The Company expects the financial impact of the settlement agreement to be immaterial.

Other Matters

The Company is also a party to various other actions and claims arising in the normal course of business that the Company does not believe are material. The Company believes that the ultimate resolution of these matters will not have a material adverse effect on the Company's financial position or the manner in which the Company conducts its business. Currently, the Company does not believe the amount of losses associated with these matters can be estimated. While the Company ~~believes~~does not believe that the ~~allegations~~amount of such losses will, when liquidated or estimable, be material to its financial position, the assumptions may be incorrect and any such loss could have a material adverse effect on the Company's results of operations or the manner in which the Company conducts its business in the ~~Stevens Complaint~~period(s) during which the underlying matters are without merit, the outcome of this litigation remains uncertain. The defendants intend to answer the Stevens Complaint, believe that they have valid defenses to plaintiffs’ claims and intend to defend the allegations contained in the Stevens Complaint vigorously. Because of uncertainty in the make-up of the purported class named in the Stevens Complaint, the specific theories of liability that may survive a motion for summary judgment or other dispositive motion, the lack of specificity or 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 matters set forth in the Stevens Complaint.resolved.

Page 23 of 48

Note ~~13.~~12. Business Acquisition

On April 2, 2018, the Company acquired all ownership interests of Huntington Steele, LLC (Huntington Steele), a registered investment advisor based in Seattle, Washington servicing the ultra-high-net-worth market, to enhance the Company's business development and research efforts in an additional geographic region. Under the acquisition method of accounting, the total purchase price was allocated to Huntington Steele's net tangible and intangible assets based upon their estimated fair values as of April 2, 2018 based on management’s best estimates and assumptions as of the reporting date and are considered preliminary pending finalization of valuation analyses pertaining to the intangible assets acquired and the contingent consideration.market. The total purchase price for Huntington Steele was $17,914, which includes $5,794 in cash consideration, net of $125 in cash acquired, and a contingent purchase price of $12,120. The contingent purchase price consists of amounts payable to the sellers upon the attainment of specified financial measures determined at various intervals ~~over~~occurring between 2019 and 2023. The Company made a payment of $433 to the ~~next five years. The~~sellers during the nine months ended September 30, 2019. As of September 30, 2019, the current portion of the contingent purchase price of ~~$430~~$535 is included in Accrued liabilities on the accompanying Balance Sheet. The long-term portion of the contingent consideration of ~~$11,690~~$11,152 is included in Other long-term liabilities on the accompanying Balance Sheet.

~~The purchase price allocation is as follows:~~

Estimated Fair Value Estimated Useful Life
Cash $ 125

Goodwill 11,499

Identifiable intangible assets
Client relationships 6,180
12.0 years
Trade names 450
7.0 years
Other assets 15

Current liabilities (230 )
Contingent consideration (12,120 )
Net cash consideration $ 5,794

The results of operations of Huntington Steele, as well as all tangible and intangible assets resulting from the transaction, are included in the Investments in New Businesses segment. Any goodwill generated from the acquisition is fully deductible for income tax purposes.

~~Pro forma information has not been presented because the effect of the Huntington Steele acquisition is not material to the Company's consolidated financial results.~~

~~Page 22 of 43~~

Note ~~14.~~13. Goodwill and Intangible Assets

~~The changes in the carrying amount of the Company's goodwill by segment are as follows:~~

Investment
Managers

Investments
In New
Businesses
Total
Balance, January 1, 2018 $ 52,990
$ —
$ 52,990
Business acquisition —
11,499
11,499
Balance, September 30, 2018 $ 52,990
$ 11,499
$ 64,489

On April 2, 2018, the Company acquired all ownership interests of Huntington Steele (See Note ~~13)~~12). The total purchase price was allocated to Huntington Steele’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 identifiable intangible assets was ~~preliminarily allocated~~recorded as goodwill. The total amount of goodwill from this transaction amounted to ~~goodwill~~$11,499 and is included on the accompanying Consolidated Balance ~~Sheet.~~Sheets.

In July 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. The total purchase price 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.

~~The~~There were 0 changes to the Company's ~~intangible assets consist of:~~

September 30, 2018 Weighted Average Estimated Useful Life December 31, 2017 Weighted Average Estimated Useful Life
Acquired technology $ 13,510
10.0 years $ 13,510
10.0 years
Client relationships 16,940
13.9 years 10,760
15.0 years
Non-competition agreements 3,470
5.0 years 3,470
5.0 years
Trade name 2,840
7.0 years 2,390
7.0 years
36,760
30,130

Less: Accumulated amortization (4,169 ) (1,552 )
Intangible assets, net $ 32,591
$ 28,578

~~The Company recognized $2,617 and $857 of amortization expense related to intangible assets~~goodwill during the nine months ended September 30, ~~2018~~2019.

The Company recognized $2,763 and ~~2017,~~$2,617 of amortization expense related to the intangible assets acquired through the acquisitions of Huntington Steele and Archway during the nine months ended September 30, 2019 and 2018, respectively.

Note ~~15.~~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 ~~and nine~~ months ended September 30, 2019 and 2018:

Page 2324 of 4348



	Private Banks		Investment Advisors		Institutional Investors		Investment Managers		Investments In New Businesses		Total
Major Product Lines:	For the Three Months Ended September 30, 2019
Investment management fees from pooled investment products	$	34,074	$	72,150	$	13,602	$	161	$	323	$	120,310
Investment management fees from investment management agreements	314		26,240		66,373		—		3,099		96,026
Investment operations fees	434		—		—		102,543		—		102,977
Investment processing fees - PaaS	43,462		—		—		—		—		43,462
Investment processing fees - SaaS	34,018		—		—		2,789		—		36,807
Professional services fees	3,533		—		—		1,398		—		4,931
Account fees and other	1,415		4,643		362		5,295		26		11,741
Total revenues	$	117,250	$	103,033	$	80,337	$	112,186	$	3,448	$	416,254

Primary Geographic Markets:
United States	$	76,864	$	103,033	$	63,405	$	104,859	$	3,448	$	351,609
United Kingdom	24,604		—		12,717		—		—		37,321
Canada	10,985		—		1,743		—		—		12,728
Ireland	4,797		—		2,310		7,327		—		14,434
Other	—		—		162		—		—		162
Total revenues	$	117,250	$	103,033	$	80,337	$	112,186	$	3,448	$	416,254



	Private Banks		Investment Advisors		Institutional Investors		Investment Managers		Investments In New Businesses		Total
Major Product Lines:	For the Three Months Ended September 30, 2018
Investment management fees from pooled investment products	$	34,897	$	73,663	$	14,614	$	206	$	267	$	123,647
Investment management fees from investment management agreements	197		24,525		68,318		79		2,641		95,760
Investment operations fees	381		—		—		92,185		—		92,566
Investment processing fees - PaaS	44,836		—		—		624		—		45,460
Investment processing fees - SaaS	32,925		—		—		2,417		—		35,342
Professional services fees	3,408		—		—		1,792		—		5,200
Account fees and other	1,805		4,362		534		3,972		34		10,707
Total revenues	$	118,449	$	102,550	$	83,466	$	101,275	$	2,942	$	408,682

Primary Geographic Markets:
United States	$	73,188	$	102,550	$	64,601	$	95,132	$	2,942	$	338,413
United Kingdom	28,647		—		13,817		—		—		42,464
Canada	11,730		—		1,895		—		—		13,625
Ireland	4,884		—		2,828		6,143		—		13,855
Other	—		—		325		—		—		325
Total revenues	$	118,449	$	102,550	$	83,466	$	101,275	$	2,942	$	408,682

Page 25 of 48



	Private Banks		Investment Advisors		Institutional Investors		Investment Managers		Investments In New Businesses		Total
Major Product Lines:	For the Nine Months Ended September 30, 2019
Investment management fees from pooled investment products	$	100,498	$	208,860	$	41,062	$	550	$	957	$	351,927
Investment management fees from investment management agreements	1,299		75,526		199,620		—		8,510		284,955
Investment operations fees	1,172		—		—		297,342		—		298,514
Investment processing fees - PaaS	130,529		—		—		—		—		130,529
Investment processing fees - SaaS	103,502		—		—		7,931		—		111,433
Professional services fees	9,896		—		—		4,363		—		14,259
Account fees and other	4,705		13,530		877		15,851		80		35,043
Total revenues	$	351,601	$	297,916	$	241,559	$	326,037	$	9,547	$	1,226,660

Primary Geographic Markets:	��
United States	$	229,207	$	297,916	$	189,383	$	304,711	$	9,547	$	1,030,764
United Kingdom	75,649		—		39,323		—		—		114,972
Canada	32,527		—		5,178		—		—		37,705
Ireland	14,218		—		6,977		21,326		—		42,521
Other	—		—		698		—		—		698
Total revenues	$	351,601	$	297,916	$	241,559	$	326,037	$	9,547	$	1,226,660

Page 26 of 48



	Private Banks		Investment Advisors		Institutional Investors		Investment Managers		Investments In New Businesses		Total
Major Product Lines:	For the Nine Months Ended September 30, 2018
Investment management fees from pooled investment products	$	105,251	$	218,562	$	45,819	$	445	$	729	$	370,806
Investment management fees from investment management agreements	609		70,678		205,202		242		6,824		283,555
Investment operations fees	1,138		—		—		267,951		—		269,089
Investment processing fees - PaaS	133,336		—		—		1,749		—		135,085
Investment processing fees - SaaS	102,980		—		—		7,152		—		110,132
Professional services fees	13,022		—		—		5,660		—		18,682
Account fees and other	5,403		12,392		1,370		12,497		99		31,761
Total revenues	$	361,739	$	301,632	$	252,391	$	295,696	$	7,652	$	1,219,110

Primary Geographic Markets:
United States	$	226,990	$	301,632	$	193,417	$	279,736	$	7,652	$	1,009,427
United Kingdom	85,177		—		42,498		—		—		127,675
Canada	34,847		—		6,700		—		—		41,547
Ireland	14,725		—		8,282		15,960		—		38,967
Other	—		—		1,494		—		—		1,494
Total revenues	$	361,739	$	301,632	$	252,391	$	295,696	$	7,652	$	1,219,110

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.

~~Page 24 of 43~~

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 and family offices. The Company contracts directly with the investment management firm or family office. 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.

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

Page 27 of 48

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.

Professional services fees - 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~~Account fees and 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 when the performance obligations are satisfied and transfer of control to the client is completed. The majority of the Company’s performance obligations are satisfied and control is transferred to the client continuously. Therefore, revenue is recognized on a monthly basis. The amount of revenue recognized reflects the amount of consideration expected to be received by the Company in exchange for satisfied performance obligations.

~~Deferred Contract Costs~~

~~Deferred contract costs, which primarily consist of deferred sales commissions, were $22,104 as of September 30, 2018.~~ The Company ~~recorded a cumulative effect adjustment~~does not disclose the value of unsatisfied performance obligations as the majority of its contracts relate to: 1) contracts with an original term of one year or less; 2) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed; and 3) contracts that are based on ~~January 1, 2018~~the value of ~~$18,641 associated with the capitalization of contract costs upon the adoption of ASC 606 (See~~ assets under management or administration.

Note ~~1).~~ 15. Leases

The Company ~~deferred expenses~~has operating leases for corporate facilities and equipment. The Company's expense related to ~~contract costs of $1,400 and $5,483~~leases during the three and nine months ended September 30, ~~2018, respectively. Amortization expense~~2019 was $2,502 and $7,599, respectively, and is included in Facilities, supplies and other costs on the accompanying Consolidated Statement of Operations.

The Company's future minimum lease payments under non-cancelable leases as of September 30, 2019 are as follows:



2019 (excluding the nine months ended September 30, 2019)	$	2,515
2020	8,955
2021	7,657
2022	7,369
2023	7,374
Thereafter	16,726
Total future minimum lease payments	50,596
Less: Imputed interest	(4,892		)
Total	$	45,704

The following table provides supplemental Consolidated Balance Sheet information related to ~~deferred contract costs were $819 and $2,020 during~~ the ~~three and nine months ended September 30, 2018, respectively. There was no impairment loss in relation~~Company's leases:



	September 30, 2019
Current portion of long-term operating lease liabilities	$	7,888
Long-term operating lease liabilities	37,816
Total operating lease liabilities	$	45,704

Weighted average remaining lease term	6.5 years

Weighted average discount rate	2.66		%

Page 28 of 48

The following table provides supplemental cash flow information related to ~~deferred contract costs during~~ the ~~nine months ended September 30, 2018.~~Company's leases:



	For the Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities	$	8,053

Right-of-use assets obtained in exchange for lease obligations	4,178

Page 2529 of 4348

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, ~~2017~~.2018.

Overview

Consolidated Summary

We are a leading global provider of investment processing, investment management and investment operations 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 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 processing fees can be stated as a percentage of the value of assets processed on the our platforms. Investment operations and investment management fees are earned as a percentage of average assets under management, administration or advised assets. As of September 30, ~~2018,~~2019, through our subsidiaries and partnerships in which we have a significant interest, we manage, advise or administer ~~$919.9 billion~~$1.0 trillion in hedge, private equity, mutual fund and pooled or separately managed assets, including ~~$339.2~~$334.7 billion in assets under management and ~~$575.8~~$662.0 billion in client assets under administration. Our affiliate, LSV Asset Management (LSV), manages ~~$109.4~~$100.3 billion of assets which are included as assets under management.

Our Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019 and 2018 ~~and 2017~~ were:


	Three Months Ended September 30,				Percent Change*		Nine Months Ended September 30,								Percent Change*	Three Months Ended September 30,								Percent Change*	Nine Months Ended September 30,							Percent Change*
	2018		2017			2018				2017				2019				2018					2019			2018						Percent Change*
Revenues	$	408,682	$	386,018	Percent Change*	6%		$	1,219,110			$	1,118,333		Percent Change*		9%	$	416,254			$	408,682	Percent Change*		2%	$	1,226,660			$	1,219,110	1%
Expenses	296,262		286,781		3%		880,084				828,352				6%	295,617				296,262				—%	882,326			880,084				—%
Income from operations	112,420		99,237		13%		339,026				289,981				17%	120,637				112,420				7%	344,334			339,026				2%
Net gain (loss) from investments	89		645		NM		(460		)		1,036				NM	611				89				NM	2,121			(460		)		NM
Interest income, net of interest expense	3,360		1,554		116%		8,635				4,357				98%	4,013				3,360				19%	12,260			8,635				42%
Equity in earnings from unconsolidated affiliate	41,726		39,333		6%		123,406				109,213				13%	37,609				41,726				(10)%	112,758			123,406				(9)%
Income before income taxes	157,595		140,769		12%		470,607				404,587				16%	162,870				157,595				3%	471,473			470,607				—%
Income taxes	29,276		39,030		(25)%		80,773				122,342				(34)%	30,702				29,276				5%	98,784			80,773				22%
Net income	128,319		101,739		26%		389,834				282,245				38%	132,168				128,319				3%	372,689			389,834				(4)%
Diluted earnings per common share	$	0.80	$	0.63	27%		$	2.41			$	1.74			39%	$	0.86			$	0.80			8%	$	2.40		$	2.41			—%

* 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 nine months ended September 30, ~~2018~~2019 and ~~2017~~:2018:

•

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 $19.3 billion, or 9 percent, to $229.4 billion in the first nine months of ~~2018~~ ~~as compared to $210.1 billion during the first nine months of~~ ~~2017. Our average assets under administration increased $55.4 billion, or 11 percent, to $546.6 billion in the first nine months of~~ ~~2018~~ ~~as compared to $491.2 billion during the first nine months of~~ ~~2017~~.

Revenue from Asset management, administration and distribution fees increased primarily from higher assets under administration in our Investment Managers segment. Our average assets under administration increased $77.3 billion, or 14%, to $623.9 billion in the first nine months of 2019 as compared to $546.6 billion during the first nine months of 2018. Our average assets under management, excluding LSV, decreased $1.1 billion to $228.3 billion in the first nine months of 2019 as compared to $229.4 billion during the first nine months of 2018.

Information processing and software servicing fees in our Private Banks segment ~~increased $9.8~~decreased by $5.9 million during the first nine months of ~~2018 primarily~~2019 due to ~~increased assets from new~~decreased non-recurring fees and ~~existing clients processed on the SEI Wealth Platform.~~

~~Asset administration fees in our Investment Managers segment increased $12.0 million during the first nine months of 2018 from our acquisition of SEI Archway during the third quarter 2017.~~previously announced client losses.

Our proportionate share in the earnings of LSV ~~increased~~decreased to $112.8 million in the first nine months of 2019 as compared to $123.4 million in the first nine months of 2018 ~~as compared to $109.2 million in the first nine months of 2017 primarily~~ due to ~~increased~~negative cash flows, lost clients, lower performance fees and lower assets under management from LSV's existing clients ~~due to~~from the significant market depreciation in late 2018. Market appreciation and ~~cash inflows from~~ new ~~clients.~~client activity during 2019 partially offset the decline in LSV's assets under management.

Page 2630 of 4348

Our operating expenses, primarily personnel costs, increased ~~across all~~in the first nine months of ~~our business segments.~~2019. These expenses ~~primarily consist of operational, technology and marketing costs and~~ are ~~mainly~~primarily related to servicing existing clients and acquiring new clients. ~~In addition, our Investment Managers segment includes personnel costs related to SEI Archway.~~The increase was partially offset by cost containment measures implemented in late 2018 and early 2019. 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~~We capitalized $26.0 million in ~~our Private Banks, Investment Advisors and Institutional Investors segments. These costs primarily relate~~the first nine months of 2019 for the SEI Wealth Platform as compared 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~~ $32.5 million in the first nine months of ~~2018 for the SEI Wealth Platform as compared~~2018. Amortization expense related to ~~$40.6~~SWP increased to $31.6 million induring the first nine months of ~~2017. Amortization expense related to the Platform decreased~~2019 as compared to $29.7 million during the first nine months of ~~2018~~2018.

Our effective tax rate during the third quarter of 2019 was 18.9% as compared to ~~$37.3 million~~18.6% during the third quarter of 2018. Our tax rate was 21.0% during the first nine months of ~~2017~~2019 as compared to 17.2% during the first nine months of 2018. The increase in our effective tax rate in the nine month period was primarily due to reduced tax benefits from a lower volume of stock option exercise activity (See the ~~adjustment to the estimated useful life of the Platform effective~~caption "Income Taxes" later in this discussion for more information).

We continued our stock repurchase program during 2019 and purchased 5.0 million shares for $267.2 million in the ~~fourth quarter 2017.~~

•

~~During the first~~ nine ~~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 $3.9 million during the first nine 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 during the third quarter of 2018 was 18.6 percent as compared to 27.7 percent during the third quarter of 2017. Our effective tax rate was 17.2 percent during the first nine months of ~~2018~~ ~~as compared to 30.2 percent during the first nine 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 for both periods were favorably impacted by tax benefits from 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~~ ~~4.4 million~~ ~~shares for $289.5 million in the~~ ~~nine~~ month period.

~~Impact of Adopting 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 recognition of revenues from contracts with customers and impacts the presentation of certain revenues and expenses in our consolidated financial statements. ASC 606 is applied prospectively from January 1, 2018 and reported financial results from the prior comparable period have not been revised.

ASC 606 did not change the accounting for the majority of our revenue arrangements and did not have a material impact to our consolidated financial statements. The impact from the adoption of ASC 606 to our financial results during the three and nine months ended September 30, 2018 is primarily related to research services provided to customers in soft-dollar arrangements by SIDCO, our broker-dealer subsidiary, and the deferral of incremental contract acquisition costs. Under the new revenue standard, 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 $3.3 million and $10.5 million during the three and nine months ended September 30, 2018, respectively. There was no impact to our net income as a result of this change. Also under the new revenue standard, costs incurred to acquire client contracts are deferred and recognized over the expected client life. During the three and nine months ended September 30, 2018, we deferred $1.4 million and $5.5 million, respectively, in expenses related to contract acquisition costs (See Note 1 to the Notes to Consolidated Financial Statements).

Page 2731 of 4348

Ending Asset Balances

(In millions)


	As of September 30,				Percent Change	As of September 30,				Percent Change
	2018		2017		Percent Change	2019		2018		Percent Change
Private Banks:
Equity and fixed-income programs	$	22,739	$	21,196	7%	$	22,580	$	22,739	(1)%
Collective trust fund programs	4		4		—%	4		4		—%
Liquidity funds	3,142		3,345		(6)%	3,695		3,142		18%
Total assets under management	$	25,885	$	24,545	5%	$	26,279	$	25,885	2%
Client assets under administration	23,394		22,107		6%	23,985		23,394		3%
Total assets	$	49,279	$	46,652	6%	$	50,264	$	49,279	2%
Investment Advisors:
Equity and fixed-income programs	63,958		59,455		8%	$	65,059	$	63,958	2%
Collective trust fund programs	5		5		—%	4		5		(20)%
Liquidity funds	3,182		2,327		37%	2,673		3,182		(16)%
Total assets under management	$	67,145	$	61,787	9%	$	67,736	$	67,145	1%
Institutional Investors:
Equity and fixed-income programs	85,248		85,763		(1)%	$	82,659	$	85,248	(3)%
Collective trust fund programs	74		82		(10)%	81		74		9%
Liquidity funds	2,544		3,699		(31)%	2,290		2,544		(10)%
Total assets under management	$	87,866	$	89,544	(2)%	$	85,030	$	87,866	(3)%
Advised assets	4,131		3,626		14%
Client assets under advisement						4,467		4,131		8%
Total assets	91,997		93,170		(1)%	$	89,497	$	91,997	(3)%
Investment Managers:
Equity and fixed-income programs	99		93		6%	$	—	$	99	NM
Collective trust fund programs	46,934		46,087		2%	53,169		46,934		13%
Liquidity funds	580		799		(27)%	477		580		(18)%
Total assets under management	$	47,613	$	46,979	1%	$	53,646	$	47,613	13%
Client assets under administration (A)	552,411		493,538		12%	637,986		552,411		15%
Total assets	$	600,024	$	540,517	11%	$	691,632	$	600,024	15%
Investments in New Businesses:
Equity and fixed-income programs	1,179		1,052		12%	$	1,621	$	1,179	37%
Liquidity funds	162		71		128%	132		162		(19)%
Total assets under management	$	1,341	$	1,123	19%	$	1,753	$	1,341	31%
Advised assets	730		54		NM
Client assets under advisement						825		730		13%
Total assets	2,071		1,177		76%	$	2,578	$	2,071	24%
LSV:
Equity and fixed-income programs (B)	$	109,363	$	102,901	6%	$	100,295	$	109,363	(8)%
Total:
Equity and fixed-income programs (C)	282,586		270,460		4%	$	272,214	$	282,586	(4)%
Collective trust fund programs	47,017		46,178		2%	53,258		47,017		13%
Liquidity funds	9,610		10,241		(6)%	9,267		9,610		(4)%
Total assets under management	$	339,213	$	326,879	4%	$	334,739	$	339,213	(1)%
Advised assets	4,861		3,680		32%
Client assets under advisement						5,292		4,861		9%
Client assets under administration (D)	575,805		515,645		12%	661,971		575,805		15%
Total assets under management, advisement and administration	$	919,879	$	846,204	9%	$	1,002,002	$	919,879	9%

Page 2832 of 4348


(A)	Client assets under administration in the Investment Managers segment include ~~$61.4~~$52.6 billion of assets that are at fee levels below our normal full service assets (as of September 30, ~~2018)~~2019).


(B)	Equity and fixed-income programs include assets managed by LSV in which fees are based on performance only. The ending value of these assets as of September 30, ~~2018~~2019 was $2.4 billion.


(C)	Equity and fixed-income programs include $5.7 billion of assets invested in various asset allocation funds at September 30, ~~2018.~~2019.


(D)	In addition to the numbers presented, SEI also administers an additional ~~$10.1~~$12.4 billion in Funds of Funds assets (as of September 30, ~~2018)~~2019) on which SEI does not earn an administration fee.

Page 2933 of 4348

Average Asset Balances

(In millions)


	Three Months Ended September 30,				Percent Change		Nine Months Ended September 30,								Percent Change	Three Months Ended September 30,								Percent Change	Nine Months Ended September 30,						Percent Change
	2018		2017			2018				2017				2019				2018					2019			2018					Percent Change
Private Banks:
Equity and fixed-income programs	$	22,516	$	20,699	Percent Change	9%		$	22,933			$	19,602		Percent Change		17%	$	22,432			$	22,516	Percent Change		—%	$	22,117		$	22,933	(4)%
Collective trust fund programs	4		4		—%		4				4				—%	4				4				—%	4			4			—%
Liquidity funds	3,376		3,555		(5)%		3,537				3,761				(6)%	3,625				3,376				7%	3,573			3,537			1%
Total assets under management	$	25,896	$	24,258	7%		$	26,474			$	23,367			13%	$	26,061			$	25,896			1%	$	25,694		$	26,474		(3)%
Client assets under administration	23,175		21,441		8%		23,059				20,943				10%	23,717				23,175				2%	22,980			23,059			—%
Total assets	$	49,071	$	45,699	7%		$	49,533			$	44,310			12%	$	49,778			$	49,071			1%	$	48,674		$	49,533		(2)%
Investment Advisors:
Equity and fixed-income programs	63,399		58,406		9%		62,980				56,390				12%	$	64,761			$	63,399			2%	$	61,971		$	62,980		(2)%
Collective trust fund programs	5		5		—%		5				5				—%	5				5				—%	5			5			—%
Liquidity funds	2,958		2,335		27%		2,559				2,428				5%	2,580				2,958				(13)%	3,781			2,559			48%
Total assets under management	$	66,362	$	60,746	9%		$	65,544			$	58,823			11%	$	67,346			$	66,362			1%	$	65,757		$	65,544		—%
Institutional Investors:
Equity and fixed-income programs	84,885		84,520		—%		85,712				80,978				6%	$	82,398			$	84,885			(3)%	$	82,240		$	85,712		(4)%
Collective trust fund programs	74		80		(8)%		74				85				(13)%	80				74				8%	79			74			7%
Liquidity funds	2,469		3,177		(22)%		2,665				2,976				(10)%	2,287				2,469				(7)%	2,335			2,665			(12)%
Total assets under management	$	87,428	$	87,777	—%		$	88,451			$	84,039			5%	$	84,765			$	87,428			(3)%	$	84,654		$	88,451		(4)%
Advised assets	4,263		3,552		20%		4,316				3,455				25%
Client assets under advisement																3,797				4,263				(11)%	3,644			4,316			(16)%
Total assets	91,691		91,329		—%		92,767				87,494				6%	$	88,562			$	91,691			(3)%	$	88,298		$	92,767		(5)%
Investment Managers:
Equity and fixed-income programs	95		92		3%		100				84				19%	$	—			$	95			NM	$	—		$	100		NM
Collective trust fund programs	45,856		44,824		2%		46,915				41,840				12%	52,587				45,856				15%	50,006			46,915			7%
Liquidity funds	555		952		(42)%		679				916				(26)%	460				555				(17)%	505			679			(26)%
Total assets under management	$	46,506	$	45,868	1%		$	47,694			$	42,840			11%	$	53,047			$	46,506			14%	$	50,511		$	47,694		6%
Client assets under administration (A)	541,063		486,158		11%		523,564				470,208				11%	630,328				541,063				16%	600,967			523,564			15%
Total assets	$	587,569	$	532,026	10%		$	571,258			$	513,048			11%	$	683,375			$	587,569			16%	$	651,478		$	571,258		14%
Investments in New Businesses:
Equity and fixed-income programs	1,148		1,016		13%		1,114				960				16%	$	1,609			$	1,148			40%	$	1,480		$	1,114		33%
Liquidity funds	146		55		165%		104				61				70%	142				146				(3)%	174			104			67%
Total assets under management	$	1,294	$	1,071	21%		$	1,218			$	1,021			19%	$	1,751			$	1,294			35%	$	1,654		$	1,218		36%
Advised assets	777		73		NM		547				76				NM
Client assets under advisement																842				777				8%	822			547			50%
Total assets	2,071		1,144		81%		1,765				1,097				61%	$	2,593			$	2,071			25%	$	2,476		$	1,765		40%
LSV:
Equity and fixed-income programs (B)	$	109,527	$	100,244	9%		$	109,270			$	95,135			15%	$	100,094			$	109,527			(9)%	$	102,510		$	109,270		(6)%
Total:
Equity and fixed-income programs (C)	281,570		264,977		6%		282,109				253,149				11%	$	271,294			$	281,570			(4)%	$	270,318		$	282,109		(4)%
Collective trust fund programs	45,939		44,913		2%		46,998				41,934				12%	52,676				45,939				15%	50,094			46,998			7%
Liquidity funds	9,504		10,074		(6)%		9,544				10,142				(6)%	9,094				9,504				(4)%	10,368			9,544			9%
Total assets under management	$	337,013	$	319,964	5%		$	338,651			$	305,225			11%	$	333,064			$	337,013			(1)%	$	330,780		$	338,651		(2)%
Advised assets	5,040		3,625		39%		4,863				3,531				38%
Client assets under advisement																4,639				5,040				(8)%	4,466			4,863			(8)%
Client assets under administration (D)	564,238		507,599		11%		546,623				491,151				11%	654,045				564,238				16%	623,947			546,623			14%
Total assets under management, advisement and administration	$	906,291	$	831,188	9%		$	890,137			$	799,907			11%	$	991,748			$	906,291			9%	$	959,193		$	890,137		8%

Page 3034 of 4348

(A) Average client assets under administration in the Investment Managers segment for the three and nine months ended September 30, 2018 include $59.6 billion and $48.2 billion, respectively, that are at fee levels below our normal full service assets.

(B) Equity and fixed-income programs include assets managed by LSV in which fees are based on performance only. The average value of these assets for the three and nine months ended September 30, 2018 was $2.4 billion and $2.3 billion, respectively.


(A)	Average client assets under administration in the Investment Managers segment for the three months ended September 30, 2019 include $52.6 billion that are at fee levels below our normal full service assets.


(B)	Equity and fixed-income programs include assets managed by LSV in which fees are based on performance only. The average value of these assets for the three months ended September 30, 2019 was $2.7 billion.


(C)	Equity and fixed-income programs include ~~$5.6 billion and~~ $5.7 billion of average assets invested in various asset allocation funds for the three ~~and nine~~ months ended September 30, ~~2018, respectively.~~2019.


(D)	In addition to the numbers presented, SEI also administers an additional ~~$10.1 billion and $10.5~~$12.4 billion of average assets in Funds of Funds assets for the three ~~and nine~~ months ended September 30, ~~2018, respectively,~~2019 on which SEI does not earn an administration fee.

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~~Assets under advisement 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~~SWP 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 nine months ended September 30, ~~2018~~2019 compared to the three and nine months ended September 30, ~~2017~~2018 were as follows:

Three Months Ended September 30,
Percent
Change
Nine Months Ended September 30,
Percent
Change
2018 2017 2018 2017
Private Banks:
Revenues $ 118,449
$ 118,499
—% $ 361,739
$ 347,317
4%
Expenses 116,471
115,806
1% 343,515
336,709
2%
Operating Profit $ 1,978
$ 2,693
(27)% $ 18,224
$ 10,608
72%
Operating Margin 2 % 2 % 5 % 3 %
Investment Advisors:
Revenues $ 102,550
$ 94,318
9% $ 301,632
$ 275,302
10%
Expenses 53,287
50,585
5% 158,792
147,504
8%
Operating Profit $ 49,263
$ 43,733
13% $ 142,840
$ 127,798
12%
Operating Margin 48 % 46 % 47 % 46 %
Institutional Investors:
Revenues $ 83,466
$ 80,411
4% $ 252,391
$ 235,483
7%
Expenses 40,497
40,003
1% 122,617
117,499
4%
Operating Profit $ 42,969
$ 40,408
6% $ 129,774
$ 117,984
10%
Operating Margin 51 % 50 % 51 % 50 %
Investment Managers:
Revenues $ 101,275
$ 91,020
11% $ 295,696
$ 255,123
16%
Expenses 65,296
59,831
9% 191,955
165,743
16%
Operating Profit $ 35,979
$ 31,189
15% $ 103,741
$ 89,380
16%
Operating Margin 36 % 34 % 35 % 35 %
Investments in New Businesses:
Revenues $ 2,942
$ 1,770
66% $ 7,652
$ 5,108
50%
Expenses 5,769
5,063
14% 16,807
15,067
12%
Operating Loss $ (2,827 ) $ (3,293 ) NM $ (9,155 ) $ (9,959 ) NM

~~Page 31 of 43~~



	Three Months Ended September 30,						Percent Change	Nine Months Ended September 30,						Percent Change
	2019			2018			Percent Change	2019			2018			Percent Change
Private Banks:
Revenues	$	117,250		$	118,449		(1)%	$	351,601		$	361,739		(3)%
Expenses	110,788			116,471			(5)%	329,540			343,515			(4)%
Operating Profit	$	6,462		$	1,978		227%	$	22,061		$	18,224		21%
Operating Margin	6		%	2		%		6		%	5		%
Investment Advisors:
Revenues	$	103,033		$	102,550		—%	$	297,916		$	301,632		(1)%
Expenses	51,509			53,287			(3)%	154,569			158,792			(3)%
Operating Profit	$	51,524		$	49,263		5%	$	143,347		$	142,840		—%
Operating Margin	50		%	48		%		48		%	47		%
Institutional Investors:
Revenues	$	80,337		$	83,466		(4)%	$	241,559		$	252,391		(4)%
Expenses	37,268			40,497			(8)%	115,383			122,617			(6)%
Operating Profit	$	43,069		$	42,969		—%	$	126,176		$	129,774		(3)%
Operating Margin	54		%	51		%		52		%	51		%
Investment Managers:
Revenues	$	112,186		$	101,275		11%	$	326,037		$	295,696		10%
Expenses	71,889			65,296			10%	209,326			191,955			9%
Operating Profit	$	40,297		$	35,979		12%	$	116,711		$	103,741		13%
Operating Margin	36		%	36		%		36		%	35		%
Investments in New Businesses:
Revenues	$	3,448		$	2,942		17%	$	9,547		$	7,652		25%
Expenses	7,926			5,769			37%	20,663			16,807			23%
Operating Loss	$	(4,478	)	$	(2,827	)	NM	$	(11,116	)	$	(9,155	)	NM

For additional information pertaining to our business segments, see Note 109 to the Consolidated Financial Statements.

Page 3235 of 4348

Private Banks


	Three Months Ended September 30,				Percent Change		Nine Months Ended September 30,								Percent Change	Three Months Ended September 30,								Percent Change	Nine Months Ended September 30,						Percent Change
	2018		2017			2018				2017				2019				2018					2019			2018					Percent Change
Revenues:
Information processing and software servicing fees	$	82,921	$	82,768	Percent Change	—%		$	254,764			$	244,948		Percent Change		4%	$	82,503			$	82,921	Percent Change		(1)%	$	248,850		$	254,764	(2)%
Asset management, administration & distribution fees	35,528		35,731		(1)%		106,975				102,369				4%	34,747				35,528				(2)%	102,751			106,975			(4)%
Total revenues	$	118,449	$	118,499	—%		$	361,739			$	347,317			4%	$	117,250			$	118,449			(1)%	$	351,601		$	361,739		(3)%

Revenues decreased $1.2 million, or 1%, in the three month period and decreased $10.1 million, or 3%, in the nine month period ended September 30, 2019 and were primarily affected by:

Decreased investment processing fees from the loss of clients offset by new client conversions and growth from existing clients;

Decreased non-recurring professional services fees from existing clients as well as clients scheduled for implementation;

Decreased investment management fees from existing international clients due to negative cash flows; and

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

Operating margins increased to 6% compared to 2% in the three month period and increased to 6% compared to 5% in the nine month period. Operating income increased by $4.5 million, or 227%, in the three month period and increased $3.8 million, or 21%, in the nine month period and was primarily affected by:

Decreased costs, mainly personnel and consulting costs, related to maintenance, support and client migrations to SWP;

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

Decreased direct expenses associated with client losses; partially offset by

A decrease in revenues;

Increased amortization expense related to SWP due to continued enhancements; and

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

Investment Advisors



	Three Months Ended September 30,				Percent Change	Nine Months Ended September 30,				Percent Change
	2019		2018		Percent Change	2019		2018		Percent Change
Revenues:
Investment management fees-SEI fund programs	$	72,150	$	73,663	(2)%	$	208,860	$	218,562	(4)%
Separately managed account fees	26,240		24,525		7%	75,526		70,678		7%
Other fees	4,643		4,362		6%	13,530		12,392		9%
Total revenues	$	103,033	$	102,550	—%	$	297,916	$	301,632	(1)%

Revenues increased slightly in the three month period and ~~increased $14.4~~decreased $3.7 million, or ~~four percent,~~1%, in the nine month period ended September 30, ~~2018~~2019 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~~Decreased investment management fees ~~from existing U.S. and international clients due to increased net~~as favorable market conditions were more than offset by negative cash flows and ~~higher~~a decrease in average basis points earned on assets ~~under management~~ due to ~~market appreciation;~~client-directed shifts into lower fee investment products including SEI's ETF program; partially offset by

Increased separately managed account program fees from positive cash flows into SEI’s ETF programs.

Page 36 of 48

Operating margin increased to 50% compared to 48% in the three month period and increased to 48% compared to 47% in the nine month period. Operating income increased $2.3 million, or 5%, in the three month period and increased slightly in the nine month period and was primarily affected by:

Decreased costs, mainly personnel and consulting costs, related to maintenance, support and client migrations to SWP;

Decreased sales compensation expense; and


•	Decreased costs associated with accounts formerly processed on TRUST 3000^® due to client migrations to SWP; partially offset by

A decrease in revenues;

Increased personnel costs for marketing to and servicing new advisors;

Increased direct expenses associated with increased assets into our investment products; and

Increased amortization expense related to SWP due to continued enhancements.

Institutional Investors

Revenues decreased $3.1 million, or 4%, in the three month period and decreased $10.8 million, or 4%, in the nine month period ended September 30, 2019 and were primarily affected by:

Defined benefit client losses, mainly resulting from acquisitions and plan curtailments; and

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

~~The reclassification~~Asset funding from new sales of ~~direct expenses related to trade execution fees of $3.3 million and $10.5 million during the third quarter and nine month period ended September 30, 2018, respectively, due to the adoption of ASC 606;~~our investment management platforms; and

~~Decreased~~Increased investment ~~processing~~management fees from ~~the loss of TRUST 3000® clients.~~market appreciation.

Operating ~~margins remained at two percent~~margin increased to 54% compared to 51% in the three month period and increased to ~~five percent~~52% compared to ~~three percent~~51% in the nine month period. Operating income ~~decreased~~ by ~~$0.7 million, or 27 percent,~~increased slightly in the three month period and ~~increased $7.6~~decreased $3.6 million, or ~~72 percent,~~3%, in the nine month period and was primarily affected by:

~~An increase~~A decrease 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;~~

~~Decreased sales compensation expense from the deferral of sales commissions costs due to the adoption of ASC 606;~~ and

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

~~Increased~~Decreased direct expenses associated with ~~increased~~ investment management ~~fees from existing U.S. and international clients; and~~

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

Investment ~~Advisors~~Managers

Three Months Ended September 30,
Percent
Change
Nine Months Ended September 30,
Percent
Change
2018 2017 2018 2017
Revenues:
Investment management fees-SEI fund programs $ 74,624
$ 70,640
6% $ 221,410
$ 205,609
8%
Separately managed account fees 23,564
19,789
19% 67,831
57,697
18%
Other fees 4,362
3,889
12% 12,391
11,996
3%
Total revenues $ 102,550
$ 94,318
9% $ 301,632
$ 275,302
10%

Revenues increased ~~$8.2~~$10.9 million, or ~~nine percent,~~11%, in the three month period and increased ~~$26.3~~$30.3 million, or ~~ten percent,~~10%, in the nine month period ended September 30, ~~2018~~2019 and were primarily affected by:

~~Increased investment management fees~~Positive cash flows into alternative, traditional and separately managed account ~~program fees due to higher assets under management caused by market appreciation and positive cash flows~~offerings from new and existing ~~advisors.~~clients; partially offset by

~~Page 33 of 43~~

Client losses and fund closures.

Operating margin ~~increased to 48 percent compared to 46 percent~~remained at 36% in the three month period and increased to ~~47 percent~~36% compared to ~~46 percent~~35% in the nine month period. Operating income increased ~~$5.5~~$4.3 million, or ~~13 percent,~~12%, in the three month period and increased ~~$15.0~~$13.0 million, or ~~12 percent, in the nine month period and was primarily affected by:~~

~~An increase in revenues; and~~

~~Decreased 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.~~

~~Institutional Investors~~

~~Revenues~~ ~~increased~~ ~~$3.1 million, or four percent, in the three month period and increased $16.9 million, or seven percent, in the nine month period ended~~ ~~September 30, 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~~

~~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~~

~~Client losses.~~

Operating margins increased to 51 percent compared to 50 percent in each of the three and nine month periods. Operating income increased $2.6 million, or six percent, in the three month period and increased $11.8 million, or ten percent,13%, in the nine month period and was primarily affected by:

An increase in revenues; and

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

~~Increased direct expenses associated with investment management fees; and~~

~~Increased personnel compensation costs, mainly salary.~~

~~Investment Managers~~

~~Revenues increased $10.3 million, or 11 percent, in the three month period and increased $40.6 million, or 16 percent, in the nine month period ended~~ ~~September 30, 2018~~ ~~and were primarily affected by:~~

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

~~Higher valuations of existing client assets from improved capital markets; and~~

~~Added revenues from the acquisition of Archway during the third quarter 2017; partially offset by~~

~~Client losses and fund closures.~~

Operating margin increased to 36 percent compared to 34 percent in the three month period and remained at 35 percent in the nine month period. Operating income increased $4.8 million, or 15 percent, in the three month period and increased $14.4 million, or 16 percent, in the nine month period and was primarily affected by:

~~An increase in revenues;~~

~~Decreased sales compensation expense from the deferral of sales commissions costs due to the adoption of ASC 606;~~ partially offset by

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

~~Increased personnel~~ and ~~amortization expense related to the Archway acquisition;~~

Increased non-capitalized investment spending, mainly consulting ~~costs; and~~

~~Increased amortization expense related to the Investment Manager platform placed into service during the first quarter 2018.~~costs.

~~Page 34 of 43~~

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 ~~$14.9~~$16.2 million and ~~$15.5~~$14.9 million in the

Page 37 of 48

three months ended September 30, ~~2018~~2019 and ~~2017~~,2018, respectively, and ~~$46.4~~$52.8 million and ~~$45.8~~$46.4 million in the nine months ended September 30, 2019 and 2018, ~~and 2017,~~ respectively. The increase in corporate overhead expenses is primarily due to increased non-recurring personnel-related costs, primarily severance costs.

Other income and expense

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


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017			2019			2018			2019			2018
Net gain (loss) from investments	$	89		$	645		$	(460	)	$	1,036		$	611		$	89		$	2,121		$	(460	)
Interest and dividend income	3,482			1,899			9,146			4,928			4,167			3,482			12,737			9,146
Interest expense	(122		)	(345		)	(511		)	(571		)	(154		)	(122		)	(477		)	(511		)
Equity in earnings of unconsolidated affiliate	41,726			39,333			123,406			109,213			37,609			41,726			112,758			123,406
Total other income and expense items, net	$	45,175		$	41,532		$	131,581		$	114,606		$	42,233		$	45,175		$	127,139		$	131,581

Interest and dividend income

Interest and dividend income is earned based upon the amount of cash that is invested daily. The increase in interest and dividend income in the three and nine months ended September 30, ~~2018~~2019 was due to ~~higher cash balances and~~ an overall increase in interest rates.

Equity in earnings of unconsolidated affiliate

Equity in earnings of unconsolidated affiliate reflects our less than ~~50 percent~~50% ownership in LSV. As of September 30, ~~2018,~~2019, our total partnership interest in LSV was ~~38.9 percent.~~38.9%. The table below presents the revenues and net income of LSV and our proportionate share in LSV's earnings.


	Three Months Ended September 30,				Percent Change		Nine Months Ended September 30,								Percent Change	Three Months Ended September 30,								Percent Change	Nine Months Ended September 30,						Percent Change
	2018		2017			2018				2017				2019				2018					2019			2018					Percent Change
Revenues of LSV	$	133,921	$	126,723	Percent Change	6%		$	397,750			$	355,996		Percent Change		12%	$	121,232			$	133,921	Percent Change		(9)%	$	365,164		$	397,750	(8)%
Net income of LSV	107,284		101,130		6%		317,295				280,717				13%	96,699				107,284				(10)%	289,918			317,295			(9)%

SEI's proportionate share in earnings of LSV	$	41,726	$	39,333	6%		$	123,406			$	109,213			13%	$	37,609			$	41,726			(10)%	$	112,758		$	123,406		(9)%

The ~~increase~~decline in our earnings from LSV in the three and nine months ended September 30, ~~2018~~2019 was ~~primarily~~ due to ~~increased~~negative cash flows, lost clients, lower performance fees and decreased assets under management from LSV's existing clients due to the significant market depreciation in late 2018. Market appreciation and ~~cash inflows from~~ new ~~clients.~~client activity during the first nine months of 2019 partially offset the decline in LSV's assets under management. Average assets under management by LSV ~~increased $14.1~~decreased $6.8 billion to $102.5 billion during the nine months ended September 30, 2019 as compared to $109.3 billion during the nine months ended September 30, 2018, ~~as compared to $95.1 billion during the nine months ended September 30, 2017, an increase~~a decrease of ~~15 percent.~~6%.

Income Taxes

Our effective income tax rates for the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 differs from the federal income tax statutory rate due to the following:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017		2019		2018		2019		2018
Statutory rate	21.0	%	35.0	%	21.0	%	35.0	%	21.0	%	21.0	%	21.0	%	21.0	%
State taxes, net of federal tax benefit	2.3		1.7		2.3		1.7		2.6		2.3		2.6		2.3
Foreign tax expense and tax rate differential	(0.2	)	(1.0	)	(0.2	)	(1.0	)	(0.3	)	(0.2	)	(0.2	)	(0.2	)
Tax benefit from stock option exercises	(1.4	)	(4.5	)	(4.8	)	(3.9	)	(2.2	)	(1.4	)	(1.5	)	(4.8	)
Expiration of the statute of limitations	(1.0	)	(2.6	)	(0.3	)	(0.9	)	(1.2	)	(1.0	)	(0.4	)	(0.3	)
Provision-to-return adjustment	(2.3	)	—		(0.8	)	—		(0.6	)	(2.3	)	(0.2	)	(0.8	)
Other, net	0.2		(0.9	)	—		(0.7	)	(0.4	)	0.2		(0.3	)	—
	18.6	%	27.7	%	17.2	%	30.2	%	18.9	%	18.6	%	21.0	%	17.2	%

Page 3538 of 4348

The ~~decrease~~increase in our effective tax ~~rates~~rate for the ~~three and~~ nine months ended September 30, ~~2018~~2019 was primarily due to reduced tax benefits due to a lower volume of stock option exercise activity as compared to the ~~tax changes enacted~~prior year period.

Stock-Based Compensation

We recognized $15.6 million and $16.4 million in ~~The Tax Act. The Tax Act was enacted in December 2017 and included a permanent reduction in~~stock-based compensation expense during the ~~corporate tax rate from 35.0 percent to 21.0 percent. Our tax rates for the three and~~ nine months ended September 30, 2019 and 2018, ~~were also favorably impacted by~~respectively. The amount of stock-based compensation expense we recognize is based upon our estimate of when earnings per share targets may be achieved. Any change in our estimate could result in the ~~reduction~~amount of stock-based compensation expense to be accelerated, spread out over a longer period, or reversed. This may cause volatility in the ~~estimated one-time transition tax enacted by The Tax Act~~recognition of stock-based compensation expense in future periods and ~~a provision-to-return adjustment on~~could materially affect our 2017 federal income tax return. These adjustments to the one time transition tax and our deferred taxes represent what we believe are the final liabilities under the changes enacted in The Tax Act. Our effective tax rates in both periods of 2018 and 2017 were favorably impacted by tax benefits due to stock option exercise activity.earnings.

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. The Company's Level 3 financial liabilities at September 30, 2019 and December 31, 2018 consist entirely of the estimated contingent consideration ~~of $12,120~~ resulting from an acquisition (See Note 1312 to the ~~Notes to~~ Consolidated Financial Statements). We did not have any other financial liabilities at September 30, 2019 or December 31, ~~2017~~2018 that were required to be measured at fair value on a recurring basis (See Note 54 to the ~~Notes to~~ Consolidated Financial Statements).

Regulatory Matters

Like many firms operating within the financial services industry, we are experiencing a difficult and increasingly complex regulatory environment across our markets. Our current scale and reach as a provider to the financial services industry, the introduction and implementation of new 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 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. From time to time, the regulators in different jurisdictions will elevate their level of scrutiny of our operations as our business expands or is deemed critical to the operations of the relevant financial markets. 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, implementation of any remediation actions, 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.

Page 39 of 48

Liquidity and Capital Resources


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2019			2018
Net cash provided by operating activities	$	417,898		$	316,387		$	381,535		$	417,898
Net cash used in investing activities	(77,408		)	(148,063		)	(43,045		)	(77,408		)
Net cash used in financing activities	(336,214		)	(193,730		)	(321,742		)	(336,214		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(6,552		)	14,679			(3,878		)	(6,552		)
Net decrease in cash, cash equivalents and restricted cash	(2,276		)	(10,727		)
Net increase (decrease) in cash, cash equivalents and restricted cash							12,870			(2,276		)
Cash, cash equivalents and restricted cash, beginning of period	747,752			699,201			758,039			747,752
Cash, cash equivalents and restricted cash, end of period	$	745,476		$	688,474		$	770,909		$	745,476

~~Page 36 of 43~~

Cash requirements and liquidity needs are primarily funded through our cash flow from operations and our capacity for additional borrowing. At September 30, ~~2018~~,2019, 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 material impact to net cash flows for the nine months ended September 30, 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 76 to the Consolidated Financial Statements). As of October 17, 2019, we had outstanding letters of credit of $11.6 million which reduced our amount available under the credit facility to $288.4 million. These letters of credit were primarily issued for the expansion of our corporate headquarters and are due to expire during the fourth quarter of 2019.

The availability of the credit facility is subject to compliance with certain covenants set forth in the agreement. The credit facility contains covenants which restrict our ability to engage in mergers, consolidations, asset sales, investments, transactions with affiliates other than wholly-owned subsidiaries, or to incur liens or other indebtedness including contingent obligations or guarantees, 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. ~~As of October 18, 2018,~~

Our credit facility contains terms that utilize the ~~full amount of $300.0 million~~London InterBank Offered Rate (LIBOR) as a potential component of the interest rate to be applied to the borrowings we may undertake under the agreement (See Note 6 to the Consolidated Financial Statements). We are currently monitoring the actions of LIBOR’s regulator and the implementation of alternative reference rates in advance of the expected discontinuation of LIBOR after 2021 to determine any potential impact to our current credit facility ~~was available~~and negotiations for ~~corporate purposes.~~subsequent borrowing agreements.

The majority of our excess cash reserves are primarily placed in accounts located in the United States that invest entirely in SEI-sponsored money market mutual funds denominated in the U.S. dollar. We also utilize demand deposit accounts or money market accounts at several well-established financial institutions located in the United States. Accounts used to manage these excess cash reserves do not impose any restrictions or limitations that would prevent us from being able to access such cash amounts immediately. As of October ~~18, 2018,~~17, 2019, the amount of cash and cash equivalents considered free and immediately accessible for other general corporate purposes was ~~$385.1~~$397.0 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. 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 $101.5~~decreased $36.4 million in the first nine months of ~~2018~~2019 compared to the first nine months of ~~2017~~2018 primarily from the ~~increase~~decrease in our net income, ~~and higher~~lower distribution payments received from our unconsolidated affiliate, ~~LSV.~~LSV, and the negative impact from the change in our working capital accounts.

Page 40 of 48

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 nine months of ~~2018~~2019 and ~~2017~~2018 were as follows:


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2019			2018
Purchases	$	(122,259	)	$	(50,235	)	$	(126,030	)	$	(122,259	)
Sales and maturities	116,568			52,644			137,783			116,568
Net investing activities from marketable securities	$	(5,691	)	$	2,409		$	11,753		$	(5,691	)

•

The capitalization of costs incurred in developing computer software. We capitalized ~~$33.4~~$26.8 million of software development costs in the first nine months of ~~2018~~2019 as compared to ~~$48.6~~$33.4 million in the first nine months of ~~2017.~~2018. 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 nine months of ~~2018~~2019 were ~~$21.7~~$30.5 million as compared to ~~$20.3~~$21.7 million in the first nine months of ~~2017~~.2018. Our expenditures in ~~2018~~2019 and ~~2017~~2018 primarily include purchased software, equipment for our data center operations and the expansion of our corporate ~~headquarters.~~

•

~~Cash paid for acquisition, net of cash received. We~~headquarters, which is scheduled to be completed ~~the acquisition of Huntington Steele on April 2, 2018. The purchase price paid included $5.9 million~~ in ~~cash consideration; however, we acquired $125 thousand~~mid 2020. Total expenditures in ~~cash during the transaction for a net cash payment of $5.8 million (See Note 13~~2020 related to the ~~Consolidated Financial Statements).~~expansion are expected to be approximately $20.0 million.

Net cash used in financing activities includes:


•	~~Principal repayments on revolving credit facility.~~ In July 2017, we borrowed $40.0 million for the funding of an acquisition. We made a principal payment of $10.0 million in October 2017 and additional payments of $30.0 million during 2018 to repay the entire outstanding balance (See Note 7 to the Consolidated Financial Statements).

~~Page 37 of 43~~

•

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 ~~$290.6~~$262.9 million during the first nine months of ~~2018~~2019 and ~~$186.5~~$290.6 million during the first nine months of ~~2017~~2018 for the repurchase of our common stock.


•	Proceeds from the issuance of our common stock. We received ~~$78.7~~$41.9 million in proceeds from the issuance of our common stock during the first nine months of ~~2018~~2019 as compared to ~~$41.6~~$78.7 million during the first nine months of ~~2017~~.2018. The ~~increase~~decrease in proceeds is primarily attributable to a ~~higher~~lower level of stock option exercise activity.


•	Dividend payments. Cash dividends paid were ~~$94.3 million~~ ~~in the first~~ ~~nine~~ ~~months of~~ ~~2018~~ ~~as compared to $88.9~~$100.7 million in the first nine months of 2019 as compared to $94.3 million in the first nine months of 2018.


•	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 March 2018 and a final payment of $20.0 million in April 2018 to repay the entire outstanding balance.

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, expansion of our corporate headquarters and future dividend payments.

Forward-Looking Information and Risk Factors

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

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

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

product development risk;

risk of failure by a third-party service provider;

data and cyber security risks;

operational risks associated with the processing of investment transactions;

Page 41 of 48

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;

external factors affecting the fiduciary management market;

the affect of extensive governmental regulation;

litigation and regulatory examinations and investigations;

our ability to capture the expected value from acquisitions, divestitures, joint ventures, minority stakes or strategic alliances;

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

consolidation within our target ~~markets, including consolidations between banks and~~markets;

our ability to receive dividends or other ~~financial institutions;~~payments in needed amounts from our subsidiaries;

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;

the effectiveness of our risk management and business continuity strategies, models and processes;

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;

our ability to hire and retain qualified employees;

stockholder activism efforts;

retention of executive officers and senior management ~~personnel.~~personnel; and

~~Our~~unforeseen or catastrophic events, including the emergence of pandemic, terrorist attacks, extreme weather events or other natural disasters.

We conduct our operations through several regulated wholly-owned subsidiaries. These subsidiaries ~~include~~ are:

SEI Investments Distribution Co., or SIDCO, SEI Investments Management Corporation, or SIMC, SEI Private Trust Company, or SPTC, SEI Trust Company, or STC, SEI Investments (Europe) Limited, or 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 Exchange Act of 1934 and is a member of the Financial Industry Regulatory Authority, Inc. ~~(FINRA).~~, or FINRA;

SEI Investments Management Corporation, or SIMC, is an investment advisor registered with the SEC under the Investment Advisers Act of 1940 and with the Commodity Futures Trading Commission, ~~(CFTC)~~or CFTC, under the Commodity Exchange ~~Act.~~Act;

~~Page 38 of 43~~

SEI Private Trust Company, or SPTC, is a limited purpose federal thrift chartered and regulated by the Office of the Comptroller of the ~~Currency.~~Currency;

SEI Trust Company, or STC, is a Pennsylvania trust company, regulated by the Pennsylvania Department of Banking and ~~Securities.~~Securities;

SEI Investments (Europe) Limited, or SIEL, is an investment manager and financial institution subject to regulation by the Financial Conduct Authority of the United ~~Kingdom.~~Kingdom;

SEI Investments Canada Company, or SEI Canada, an investment fund manager that has various other capacities that is regulated by the Ontario Securities Commission and various provincial ~~authorities as an investment fund manager and in various other capacities.~~authorities;

SEI Investments Global, Limited, or 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~~AIFs, that is regulated primarily by the ~~CBI and~~Central Bank of Ireland, or CBI;

SEI Investments - Global Fund Services, Ltd., or GFSL, an authorized ~~to provide~~provider of administration services for Irish and non-Irish collective investment ~~schemes. D&C~~schemes that is regulated by the ~~CBI~~CBI; and

SEI Investments - Depositary and Custodial Services (Ireland) Limited, or D&C, an authorized ~~to provide~~provider of depositary and custodial ~~services.~~ services that is regulated by the CBI.

In addition ~~various SEI~~to the regulatory authorities listed above, our subsidiaries are subject to the jurisdiction of regulatory authorities in other foreign countries. ~~The Company has~~In addition to our wholly-owned subsidiaries, we also own a minority ~~ownership~~ interest of approximately 38.9 percent in LSV, which is also an investment advisor registered with the SEC.

Page 42 of 48

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

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

Governmental scrutiny from regulators, legislative bodies and law enforcement agencies with respect to matters relating to our regulated subsidiaries and their activities, services and ~~platforms,~~solutions, our business practices, our past actions and other matters has increased dramatically in the past several years. Responding to these examinations, investigations, actions and lawsuits, regardless of the ultimate outcome of the proceeding, is time consuming and expensive and can divert the time and effort of our senior management from our business. Penalties, fines and ~~fines~~changes to business processes 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 ~~platforms~~solutions 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 ~~platforms~~solutions could lead to a reduction in sales of these ~~platforms~~solutions or require modifications of these ~~platforms.~~solutions.

Compliance with existing and future regulations and responding to and complying with recent increased regulatory activity affecting broker-dealers, investment advisors, investment companies, financial institutions and their service providers could have a significant impact on us. We periodically undergo regulatory examinations and respond to regulatory inquiries and document requests. In addition, recent and continuing legislative activity in the United States and in other jurisdictions (including the European Union and the United 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 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 and other subject matter experts, review our compliance procedures, ~~platform~~solution and service offerings, and business operations, and make changes as we deem ~~necessary.~~necessary or as may be required by the applicable authority. 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 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

~~Page 39 of 43~~

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.

Page 43 of 48

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"~~fluctuations and client portfolio strategy" 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, ~~2017~~.2018. There have been no material changes to this information as it is disclosed in our Annual Report on Form 10-K for ~~2017~~.2018.

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

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

(b) Change in Internal Control over Financial Reporting

No change in our internal control over financial reporting occurred during the quarter ended September 30, ~~2018~~2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We implemented internal controls to ensure we adequately evaluated our leases and properly assessed the impact of the new accounting standard related to leases on our consolidated financial statements to facilitate the adoption of this standard on January 1, 2019 as well as the ongoing accounting under the new standard. There were no significant changes to our internal control over financial reporting during 2019 as a result of the ongoing accounting under the new accounting standard.

Page 4044 of 4348

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

Stanford Trust Company Litigation

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 procedural status of the seven cases varies. The Lilliecase, 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~~remaining in Lillie are plaintiffs' claims for secondary liability against SEI and SPTC under Section 714(B) of the Louisiana Securities Law. On May 2, 2016, the District Court certified the class as being "all persons for whom Stanford Trust Company purchased or renewed Stanford Investment Bank Limited certificates of deposit in Louisiana between January 1, 2007 and February 13, 2009". Notice of the pendency of the class action was mailed to potential class members on October 4, 2016.

On July 16, 2019, SEI and SPTC filed a Motion for Summary Judgment pursuant to Rule 56(d) in the Ahders proceeding to have the remaining Section 714(B) claim dismissed.

~~The plaintiffs in two~~

Page 45 of ~~the~~48

Two additional cases ~~remaining~~remain in the Parish of East Baton ~~Rouge~~Rouge. Plaintiffs filed petitions in 2010 and have granted SEI and SPTC indefinite extensions to ~~respond to the petitions.~~respond. No material activity has taken place since.

In ~~the~~ two additional cases, filed in East Baton Rouge and brought by the same counsel who filed the Lillieaction, virtually all of the litigation to date has involved motions practice and appellate litigation regarding the existence of federal ~~subjection~~subject matter jurisdiction under the federal Securities Litigation Uniform Standards Act (SLUSA). ~~After the matter was~~The matters were removed to the United States District Court for the Northern District of Texas ~~that~~and consolidated. The court then 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~~matters were remanded to state court and no material activity has taken place since that date.

~~In October~~SEI Capital Accumulation Plan Litigation

On September 28, 2018, a class action complaint was filed in the United States District Court for the Eastern District of Pennsylvania by Gordon Stevens, individually and as the representative of similarly situated persons, and on behalf of the SEI Capital Accumulation Plan (the “Plan”) naming the Company and its affiliated and/or related entities SEI Investments Management Corporation, SEI Capital Accumulation Plan Design Committee, SEI Capital Accumulation Plan Investment Committee, SEI Capital Accumulation Plan Administration Committee, and John Does 1-30 ~~have been named~~ as defendants ~~in a class action complaint in the United States District Court for the Eastern District of Pennsylvania filed by Gordon~~(the “Stevens Complaint”). The Stevens ~~individually and as the representative of similarly situated persons, and on behalf of the SEI Capital Accumulation Plan (the “Plan”) seeking~~

~~Page 41 of 43~~

Compliant seeks unspecified damages for defendants’ breach of fiduciary duties under ERISA with respect to selecting and monitoring the Plan’s investment options and by retaining affiliated investment products in the ~~Plan (the “Stevens Complaint”).~~Plan.

Other Matters

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, ~~2017~~.2018. There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for ~~2017.~~2018.

Page 46 of 48

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


(e)	Our Board of Directors has authorized the repurchase of up to ~~$3.678~~$4.178 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 September 30, ~~2018~~2019 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
July 2018 330,000
$ 60.95
330,000
$ 163,625,000
August 2018 587,000
60.73
587,000
127,951,000
September 2018 750,000
62.44
750,000
81,102,000
Total 1,667,000
$ 61.54
1,667,000



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
July 2019	—	$	—	—	$	280,061,000
August 2019	725,000	56.85		725,000	238,847,000
September 2019	675,000	59.49		675,000	198,695,000
Total	1,400,000	$	58.12	1,400,000

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 October 23, ~~2018~~2019 of SEI Investments Company related to the Company's financial and operating results for the third quarter ended September 30, ~~2018.~~2019.

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

Page 4247 of 4348

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:	October ~~25, 2018~~24, 2019	By:	/s/ Dennis J. McGonigle
			Dennis J. McGonigle
			Chief Financial Officer

Page 4348 of 4348



	At September 30, 2018
	Cost Amount		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
SEI-sponsored mutual funds	$	7,392	$	107	$	(304	)	$	7,195
Equities and other mutual funds	3,479		652		—			4,131
Debt securities	75,673		—		(2,701		)	72,972
	$	86,544	$	759	$	(3,005	)	$	84,298



	Estimated Fair Value			Estimated Useful Life
Cash	$	125
Goodwill	11,499
Identifiable intangible assets
Client relationships	6,180			12.0 years
Trade names	450			7.0 years
Other assets	15
Current liabilities	(230		)
Contingent consideration	(12,120		)
Net cash consideration	$	5,794



	September 30, 2018			Weighted Average Estimated Useful Life	December 31, 2017			Weighted Average Estimated Useful Life
Acquired technology	$	13,510		10.0 years	$	13,510		10.0 years
Client relationships	16,940			13.9 years	10,760			15.0 years
Non-competition agreements	3,470			5.0 years	3,470			5.0 years
Trade name	2,840			7.0 years	2,390			7.0 years
	36,760				30,130
Less: Accumulated amortization	(4,169		)		(1,552		)
Intangible assets, net	$	32,591			$	28,578