UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2020~~2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_________to ________

Commission File Number: 0-10200

________________________________________

SEI INVESTMENTS COMPANY

(Exact Name of Registrant as Specified in its Charter)

________________________________________


Pennsylvania						23-1707341
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)

1 Freedom Valley Drive, Oaks, Pennsylvania 19456-1100

(Address of Principal Executive Offices) (Zip Code)

(610) 676-1000

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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 x No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes x No ☐

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

Large accelerated filer

Accelerated filer

☐

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 Act). Yes ☐ No x

The number of shares outstanding of the registrant’s common stock, as of the close of business on ~~October 21, 2020:~~July 22, 2021:


Common Stock, $0.01 par value						~~144,569,885~~141,076,628

SEI INVESTMENTS COMPANY

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Page

Item 1.

Financial Statements.

Consolidated Balance Sheets (Unaudited) -- ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020

Consolidated Statements of Operations (Unaudited) -- For the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020

Consolidated Statements of Comprehensive Income (Unaudited) -- For the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020

Consolidated Statements of Changes in Equity (Unaudited) -- For the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020

Consolidated Condensed Statements of Cash Flows (Unaudited) -- For the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020

Notes to Consolidated Financial Statements

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations.

2928

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

4442

Item 4.

Controls and Procedures.

4442

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings.

4544

Item 1A.

Risk Factors.

4644

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

4744

Item 6.

Exhibits.

4744

Signatures

4845

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements.

SEI Investments Company

Consolidated Balance Sheets

(unaudited)

(In thousands, except par value)


		September 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
Assets	Assets					Assets
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	767,698	$	841,446	Cash and cash equivalents	$	780,928	$	784,626
Restricted cash	Restricted cash	3,101		3,101		Restricted cash	351		3,101
Receivables from investment products	Receivables from investment products	51,644		54,165		Receivables from investment products	56,177		55,271
Receivables, net of allowance for doubtful accounts of $1,310 and $1,201		378,170		340,358
Receivables, net of allowance for doubtful accounts of $3,188 and $1,100						Receivables, net of allowance for doubtful accounts of $3,188 and $1,100	409,568		385,219
Securities owned	Securities owned	35,820		33,486		Securities owned	26,174		34,064
Other current assets	Other current assets	38,475		32,289		Other current assets	38,158		38,696
Total Current Assets	Total Current Assets	1,274,908		1,304,845		Total Current Assets	1,311,356		1,300,977
Property and Equipment, net of accumulated depreciation of $370,072 and $353,453		180,531		160,859
Property and Equipment, net of accumulated depreciation of $394,743 and $378,639						Property and Equipment, net of accumulated depreciation of $394,743 and $378,639	184,042		189,052
Operating Lease Right-of-Use Assets	Operating Lease Right-of-Use Assets	38,945		42,789		Operating Lease Right-of-Use Assets	36,871		38,397
Capitalized Software, net of accumulated amortization of $479,159 and $442,677		278,226		296,068
Capitalized Software, net of accumulated amortization of $518,514 and $491,739						Capitalized Software, net of accumulated amortization of $518,514 and $491,739	256,473		270,977
Available for Sale and Equity Securities	Available for Sale and Equity Securities	116,564		116,917		Available for Sale and Equity Securities	130,039		105,419
Investments in Affiliated Funds, at fair value	Investments in Affiliated Funds, at fair value	5,207		5,988		Investments in Affiliated Funds, at fair value	6,932		6,166
Investment in Unconsolidated Affiliate	Investment in Unconsolidated Affiliate	33,117		67,413		Investment in Unconsolidated Affiliate	47,420		98,433
Goodwill	Goodwill	64,489		64,489		Goodwill	64,489		64,489
Intangible Assets, net of accumulated amortization of $11,536 and $8,773		25,225		27,987
Intangible Assets, net of accumulated amortization of $14,573 and $12,456						Intangible Assets, net of accumulated amortization of $14,573 and $12,456	33,187		24,304
Deferred Contract Costs	Deferred Contract Costs	33,833		30,991		Deferred Contract Costs	33,352		33,781
Deferred Income Taxes	Deferred Income Taxes	2,065		2,822		Deferred Income Taxes	2,447		2,972
Other Assets, net	Other Assets, net	32,507		30,202		Other Assets, net	33,082		32,289
Total Assets	Total Assets	$	2,085,617	$	2,151,370	Total Assets	$	2,139,690	$	2,167,256

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

SEI Investments Company

Consolidated Balance Sheets

(unaudited)

(In thousands, except par value)


		September 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Current Liabilities:	Current Liabilities:					Current Liabilities:
Accounts payable	Accounts payable	$	13,038	$	4,423	Accounts payable	$	9,291	$	7,766
Accrued liabilities	Accrued liabilities	223,217		272,801		Accrued liabilities	211,984		299,845
Current portion of long-term operating lease liabilities	Current portion of long-term operating lease liabilities	8,445		9,156		Current portion of long-term operating lease liabilities	10,344		8,579
Deferred revenue	Deferred revenue	5,815		7,185		Deferred revenue	1,280		1,085
Total Current Liabilities	Total Current Liabilities	250,515		293,565		Total Current Liabilities	232,899		317,275
Long-term Income Taxes Payable	Long-term Income Taxes Payable	803		803		Long-term Income Taxes Payable	803		803
Deferred Income Taxes	Deferred Income Taxes	47,578		55,722		Deferred Income Taxes	47,644		55,159
Long-term Operating Lease Liabilities	Long-term Operating Lease Liabilities	34,768		38,450		Long-term Operating Lease Liabilities	31,697		34,058
Other Long-term Liabilities	Other Long-term Liabilities	22,520		24,052		Other Long-term Liabilities	21,041		20,054
Total Liabilities	Total Liabilities	356,184		412,592		Total Liabilities	334,084		427,349
Commitments and Contingencies	Commitments and Contingencies					Commitments and Contingencies	0		0
Shareholders' Equity:	Shareholders' Equity:					Shareholders' Equity:
Common stock, $0.01 par value, 750,000 shares authorized; 144,491 and 149,745 shares issued and outstanding		1,445		1,497
Common stock, $0.01 par value, 750,000 shares authorized; 141,027 and 143,396 shares issued and outstanding						Common stock, $0.01 par value, 750,000 shares authorized; 141,027 and 143,396 shares issued and outstanding	1,410		1,434
Capital in excess of par value	Capital in excess of par value	1,174,142		1,158,900		Capital in excess of par value	1,219,487		1,190,001
Retained earnings	Retained earnings	581,244		601,885		Retained earnings	599,231		565,270
Accumulated other comprehensive loss, net	Accumulated other comprehensive loss, net	(27,398)		(23,504)		Accumulated other comprehensive loss, net	(14,522)		(16,798)
Total Shareholders' Equity	Total Shareholders' Equity	1,729,433		1,738,778		Total Shareholders' Equity	1,805,606		1,739,907
Total Liabilities and Shareholders' Equity	Total Liabilities and Shareholders' Equity	$	2,085,617	$	2,151,370	Total Liabilities and Shareholders' Equity	$	2,139,690	$	2,167,256

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

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 June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Revenues:	Revenues:									Revenues:
Asset management, administration and distribution fees	Asset management, administration and distribution fees	$	339,609	$	330,943	$	992,039	$	969,812	Asset management, administration and distribution fees	$	382,509	$	320,577	$	750,155	$	652,430
Information processing and software servicing fees	Information processing and software servicing fees	85,318		85,311		248,296		256,848		Information processing and software servicing fees	93,142		80,069		181,182		162,978
Total revenues	Total revenues	424,927		416,254		1,240,335		1,226,660		Total revenues	475,651		400,646		931,337		815,408
Expenses:	Expenses:									Expenses:
Subadvisory, distribution and other asset management costs	Subadvisory, distribution and other asset management costs	45,126		44,978		134,645		134,960		Subadvisory, distribution and other asset management costs	55,827		44,182		105,991		89,519
Software royalties and other information processing costs	Software royalties and other information processing costs	6,992		7,198		21,828		22,719		Software royalties and other information processing costs	7,471		7,389		13,213		14,836
Compensation, benefits and other personnel	Compensation, benefits and other personnel	134,795		130,579		391,607		386,913		Compensation, benefits and other personnel	141,779		125,331		279,000		256,812
Stock-based compensation	Stock-based compensation	6,467		5,453		20,458		15,555		Stock-based compensation	10,103		7,062		19,855		13,991
Consulting, outsourcing and professional fees	Consulting, outsourcing and professional fees	57,949		48,789		168,350		144,325		Consulting, outsourcing and professional fees	55,449		57,111		109,789		110,401
Data processing and computer related	Data processing and computer related	24,437		22,338		71,647		65,514		Data processing and computer related	27,375		24,506		53,096		47,210
Facilities, supplies and other costs	Facilities, supplies and other costs	16,679		15,926		47,448		51,771		Facilities, supplies and other costs	18,479		13,973		35,727		30,769
Amortization	Amortization	13,200		12,947		39,417		38,407		Amortization	14,723		13,140		29,075		26,217
Depreciation	Depreciation	7,945		7,409		23,058		22,162		Depreciation	8,424		7,640		16,733		15,113
Total expenses	Total expenses	313,590		295,617		918,458		882,326		Total expenses	339,630		300,334		662,479		604,868
Income from operations	Income from operations	111,337		120,637		321,877		344,334		Income from operations	136,021		100,312		268,858		210,540
Net gain (loss) from investments	Net gain (loss) from investments	776		611		(1,310)		2,121		Net gain (loss) from investments	377		1,903		709		(2,086)
Interest and dividend income	Interest and dividend income	1,009		4,167		5,582		12,737		Interest and dividend income	878		1,370		1,823		4,573
Interest expense	Interest expense	(153)		(154)		(456)		(477)		Interest expense	(130)		(151)		(253)		(303)
Equity in earnings of unconsolidated affiliate	Equity in earnings of unconsolidated affiliate	28,305		37,609		86,488		112,758		Equity in earnings of unconsolidated affiliate	35,065		28,276		68,415		58,183
Income before income taxes	Income before income taxes	141,274		162,870		412,181		471,473		Income before income taxes	172,211		131,710		339,552		270,907
Income taxes	Income taxes	30,178		30,702		90,777		98,784		Income taxes	38,433		30,644		76,304		60,599
Net income	Net income	$	111,096	$	132,168	$	321,404	$	372,689	Net income	$	133,778	$	101,066	$	263,248	$	210,308
Basic earnings per common share	Basic earnings per common share	$	0.76	$	0.88	$	2.18	$	2.45	Basic earnings per common share	$	0.94	$	0.69	$	1.85	$	1.42
Shares used to compute basic earnings per share	Shares used to compute basic earnings per share	145,812		150,855		147,586		152,009		Shares used to compute basic earnings per share	142,074		147,478		142,638		148,473
Diluted earnings per common share	Diluted earnings per common share	$	0.75	$	0.86	$	2.14	$	2.40	Diluted earnings per common share	$	0.93	$	0.68	$	1.82	$	1.39
Shares used to compute diluted earnings per share	Shares used to compute diluted earnings per share	147,907		154,227		149,958		155,311		Shares used to compute diluted earnings per share	144,212		149,598		144,759		150,983
Dividends declared per common share	Dividends declared per common share	$	0	$	0	$	0.35	$	0.33	Dividends declared per common share	$	0.37	$	0.35	$	0.37	$	0.35

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

SEI Investments Company

Consolidated Statements of Comprehensive Income

(unaudited)

(In thousands)


		Three Months Ended September 30,										Nine Months Ended September 30,														Three Months Ended June 30,		Six Months Ended June 30,
		2020				2019					2020						2019							2021	2020	2021	2020
Net income	Net income		$	111,096		$	132,168		$	321,404		$	372,689	Net income	$	133,778		$	101,066	$	263,248	$	210,308
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:													Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	Foreign currency translation adjustments		7,085			(5,207)			(5,051)			(4,687)		Foreign currency translation adjustments	994			940		2,679		(12,136)
Unrealized (loss) gain on investments:	Unrealized (loss) gain on investments:													Unrealized (loss) gain on investments:
Unrealized (losses) gains during the period, net of income taxes of $154, $(27), $(218) and $(497)		(542)			71			702			1,633
Reclassification adjustment for losses realized in net income, net of income taxes of $(63), $(23), $(126) and $(73)		238	(304)		96	167		455	1,157		274	1,907
Unrealized (losses) gains during the period, net of income taxes of $85, $(33), $245 and $(372)														Unrealized (losses) gains during the period, net of income taxes of $85, $(33), $245 and $(372)	(292)			113		(835)		1,244
Reclassification adjustment for losses realized in net income, net of income taxes of $(49), $(35), $(123) and $(63)														Reclassification adjustment for losses realized in net income, net of income taxes of $(49), $(35), $(123) and $(63)	179			116		432		217
Total other comprehensive income (loss), net of tax	Total other comprehensive income (loss), net of tax		6,781			(5,040)			(3,894)			(2,780)		Total other comprehensive income (loss), net of tax	881			1,169		2,276		(10,675)
Comprehensive income	Comprehensive income		$	117,877		$	127,128		$	317,510		$	369,909	Comprehensive income	$	134,659		$	102,235	$	265,524	$	199,633

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

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			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, 2020																					For the Three Months Ended June 30, 2021
Balance, July 1, 2020		146,445	$	1,464	$	1,174,411	$	566,929	$	(34,179)	$	1,708,625
Balance, April 1, 2021													Balance, April 1, 2021	142,701	$	1,427	$	1,208,433	$	634,651	$	(15,403)	$	1,829,108
Net income	Net income	—	—		—		111,096		—		111,096		Net income	—	—		—		133,778		—		133,778
Other comprehensive income	Other comprehensive income	—	—		—		—		6,781		6,781		Other comprehensive income	—	—		—		—		881		881
Purchase and retirement of common stock	Purchase and retirement of common stock	(2,110)	(22)		(11,939)		(96,781)		—		(108,742)		Purchase and retirement of common stock	(2,086)	(21)		(12,389)		(116,809)		—		(129,219)
Issuance of common stock under employee stock purchase plan	Issuance of common stock under employee stock purchase plan	26	1		1,152		—		—		1,153		Issuance of common stock under employee stock purchase plan	18	—		966		—		—		966
Issuance of common stock upon exercise of stock options	Issuance of common stock upon exercise of stock options	130	2		4,051		—		—		4,053		Issuance of common stock upon exercise of stock options	394	4		12,374		—		—		12,378
Stock-based compensation	Stock-based compensation	—	—		6,467		—		—		6,467		Stock-based compensation	—	—		10,103		—		—		10,103

Balance, September 30, 2020		144,491	$	1,445	$	1,174,142	$	581,244	$	(27,398)	$	1,729,433
Dividends declared ($0.37 per share)													Dividends declared ($0.37 per share)	—	—		—		(52,389)		—		(52,389)
Balance, June 30, 2021													Balance, June 30, 2021	141,027	$	1,410	$	1,219,487	$	599,231	$	(14,522)	$	1,805,606


		Shares of Common Stock	Common Stock		Capital In Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Total Equity			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																					For the Three Months Ended June 30, 2020
Balance, July 1, 2019		150,955	$	1,509	$	1,122,068	$	541,664	$	(30,740)	$	1,634,501
Balance, April 1, 2020													Balance, April 1, 2020	147,903	$	1,479	$	1,170,649	$	597,486	$	(35,348)	$	1,734,266
Net income	Net income	—	—		—		132,168		—		132,168		Net income	—	—		—		101,066		—		101,066
Other comprehensive loss	Other comprehensive loss	—	—		—		—		(5,040)		(5,040)		Other comprehensive loss	—	—		—		—		1,169		1,169
Purchase and retirement of common stock	Purchase and retirement of common stock	(1,400)	(15)		(7,469)		(73,883)		—		(81,367)		Purchase and retirement of common stock	(1,642)	(16)		(9,293)		(80,161)		—		(89,470)
Issuance of common stock under employee stock purchase plan	Issuance of common stock under employee stock purchase plan	21	1		998		—		—		999		Issuance of common stock under employee stock purchase plan	26	—		1,142		—		—		1,142
Issuance of common stock upon exercise of stock options	Issuance of common stock upon exercise of stock options	646	7		16,586		—		—		16,593		Issuance of common stock upon exercise of stock options	158	1		4,851		—		—		4,852
Stock-based compensation	Stock-based compensation	—	—		5,453		—		—		5,453		Stock-based compensation	—	—		7,062		—		—		7,062

Balance, September 30, 2019		150,222	$	1,502	$	1,137,636	$	599,949	$	(35,780)	$	1,703,307
Dividends declared ($0.35 per share)													Dividends declared ($0.35 per share)	—	—		—		(51,462)		—		(51,462)
Balance, June 30, 2020													Balance, June 30, 2020	146,445	$	1,464	$	1,174,411	$	566,929	$	(34,179)	$	1,708,625

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

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, 2020																					Shares of Common Stock		Common Stock	Capital In Excess of Par Value	Retained Earnings	Accumulated Other Comprehensive Loss	Total Equity
Balance, January 1, 2020		149,745	$	1,497	$	1,158,900	$	601,885	$	(23,504)	$	1,738,778
														For the Six Months Ended June 30, 2021
Balance, January 1, 2021													Balance, January 1, 2021	143,396	$	1,434	$	1,190,001	$	565,270	$	(16,798)	$	1,739,907
Net income	Net income	—	—		—		321,404		—		321,404		Net income	—	—		—		263,248		—		263,248
Other comprehensive loss	Other comprehensive loss	—	—		—		—		(3,894)		(3,894)		Other comprehensive loss	—	—		—		—		2,276		2,276
Purchase and retirement of common stock	Purchase and retirement of common stock	(6,185)	(62)		(34,999)		(290,583)		—		(325,644)		Purchase and retirement of common stock	(3,238)	(32)		(19,228)		(176,898)		—		(196,158)
Issuance of common stock under employee stock purchase plan	Issuance of common stock under employee stock purchase plan	73	1		3,400		—		—		3,401		Issuance of common stock under employee stock purchase plan	42	0		2,105		—		—		2,105
Issuance of common stock upon exercise of stock options	Issuance of common stock upon exercise of stock options	858	9		26,383		—		—		26,392		Issuance of common stock upon exercise of stock options	827	8		26,754		—		—		26,762
Stock-based compensation	Stock-based compensation	—	—		20,458		—		—		20,458		Stock-based compensation	—	—		19,855		—		—		19,855
Dividends declared ($0.35 per share)		—	—		—		(51,462)		—		(51,462)
Balance, September 30, 2020		144,491	$	1,445	$	1,174,142	$	581,244	$	(27,398)	$	1,729,433
Dividends declared ($0.37 per share)													Dividends declared ($0.37 per share)	—	—		—		(52,389)		—		(52,389)
Balance, June 30, 2021													Balance, June 30, 2021	141,027	$	1,410	$	1,219,487	$	599,231	$	(14,522)	$	1,805,606


		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																					Shares of Common Stock		Common Stock	Capital In Excess of Par Value	Retained Earnings	Accumulated Other Comprehensive Loss	Total Equity
Balance, January 1, 2019		153,634	$	1,536	$	1,106,641	$	517,970	$	(33,000)	$	1,593,147
														For the Six Months Ended June 30, 2020
Balance, January 1, 2020													Balance, January 1, 2020	149,745	$	1,497	$	1,158,900	$	601,885	$	(23,504)	$	1,738,778
Net income	Net income	—	—		—		372,689		—		372,689		Net income	—	—		—		210,308		—		210,308
Other comprehensive loss	Other comprehensive loss	—	—		—		—		(2,780)		(2,780)		Other comprehensive loss	—	—		—		—		(10,675)		(10,675)
Purchase and retirement of common stock	Purchase and retirement of common stock	(4,950)	(50)		(26,408)		(240,726)		—		(267,184)		Purchase and retirement of common stock	(4,075)	(40)		(23,060)		(193,802)		—		(216,902)
Issuance of common stock under employee stock purchase plan	Issuance of common stock under employee stock purchase plan	77	1		3,391		—		—		3,392		Issuance of common stock under employee stock purchase plan	47	0		2,248		—		—		2,248
Issuance of common stock upon exercise of stock options	Issuance of common stock upon exercise of stock options	1,461	15		38,457		—		—		38,472		Issuance of common stock upon exercise of stock options	728	7		22,332		—		—		22,339
Stock-based compensation	Stock-based compensation	—	—		15,555		—		—		15,555		Stock-based compensation	—	—		13,991		—		—		13,991
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
Dividends declared ($0.35 per share)													Dividends declared ($0.35 per share)	—	—		—		(51,462)		—		(51,462)
Balance, June 30, 2020													Balance, June 30, 2020	146,445	$	1,464	$	1,174,411	$	566,929	$	(34,179)	$	1,708,625

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

SEI Investments Company

Consolidated Condensed Statements of Cash Flows

(unaudited)

(In thousands)


		Nine Months Ended September 30,							Six Months Ended June 30,
		2020		2019			2021		2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	321,404	$	372,689	Net income	$	263,248	$	210,308
Adjustments to reconcile net income to net cash provided by operating activities (See Note 1)	Adjustments to reconcile net income to net cash provided by operating activities (See Note 1)	75,120		8,846		Adjustments to reconcile net income to net cash provided by operating activities (See Note 1)	61,749		53,824
Net cash provided by operating activities	Net cash provided by operating activities	396,524		381,535		Net cash provided by operating activities	324,997		264,132
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Additions to property and equipment	Additions to property and equipment	(43,113)		(30,515)		Additions to property and equipment	(15,469)		(34,442)
Additions to capitalized software	Additions to capitalized software	(18,640)		(26,821)		Additions to capitalized software	(12,271)		(12,533)
Purchases of marketable securities	Purchases of marketable securities	(114,407)		(126,030)		Purchases of marketable securities	(81,541)		(60,764)
Prepayments and maturities of marketable securities	Prepayments and maturities of marketable securities	112,575		137,783		Prepayments and maturities of marketable securities	64,194		71,782
Sales of marketable securities	Sales of marketable securities	842		0		Sales of marketable securities	0		64
Other investing activities	Other investing activities	(1,500)		2,538		Other investing activities	(11,000)		(1,500)
Net cash used in investing activities	Net cash used in investing activities	(64,243)		(43,045)		Net cash used in investing activities	(56,087)		(37,393)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Payment of contingent consideration	Payment of contingent consideration	(633)		0		Payment of contingent consideration	(3,965)		(633)
Purchase and retirement of common stock	Purchase and retirement of common stock	(327,079)		(262,861)		Purchase and retirement of common stock	(197,322)		(219,404)
Proceeds from issuance of common stock	Proceeds from issuance of common stock	29,793		41,864		Proceeds from issuance of common stock	28,867		24,587
Payment of dividends	Payment of dividends	(103,914)		(100,745)		Payment of dividends	(105,516)		(103,914)
Net cash used in financing activities	Net cash used in financing activities	(401,833)		(321,742)		Net cash used in financing activities	(277,936)		(299,364)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(4,196)		(3,878)		Effect of exchange rate changes on cash, cash equivalents and restricted cash	2,578		(10,545)
Net (decrease) increase in cash, cash equivalents and restricted cash		(73,748)		12,870
Net decrease in cash, cash equivalents and restricted cash						Net decrease in cash, cash equivalents and restricted cash	(6,448)		(83,170)
Cash, cash equivalents and restricted cash, beginning of period	Cash, cash equivalents and restricted cash, beginning of period	844,547		758,039		Cash, cash equivalents and restricted cash, beginning of period	787,727		844,547
Cash, cash equivalents and restricted cash, end of period	Cash, cash equivalents and restricted cash, end of period	$	770,799	$	770,909	Cash, cash equivalents and restricted cash, end of period	$	781,279	$	761,377

Non-cash operating activities:
Operating lease right-of-use assets and net lease liabilities recorded upon adoption of ASC 842		$	0	$	44,169

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

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 comprehensive platforms, ~~for investment processing, investment operations~~services and infrastructure—encompassing technology, operational, and investment management services—to help wealth managers, ~~financial institutions,~~ financial advisors, investment managers, family offices, institutional and private investors create and ~~ultra-high-net-worth families in the United States, Canada, the United Kingdom, continental Europe and various other locations throughout the world.~~manage wealth.

Investment processing platforms ~~consist of application~~provide technologies and business process outsourcing services ~~professional~~for wealth managers and investment advisors. These solutions include investment advisory, client relationship, and other technology-enabled capabilities for the front office; administrative and investment services for the middle office; and ~~transaction-based services.~~accounting and processing services for the back office. Revenues from investment processing platforms are recognized in Information processing and software servicing fees on the accompanying Consolidated Statements of Operations.

Investment operations platforms ~~consist of~~provide business process outsourcing services ~~including fund~~for investment managers and asset owners. These platforms support a broad range of traditional and alternative investments and provide technology-enabled information analytics and investor capabilities for the front office; administrative and investment services for the middle office; and fund administration and accounting ~~administration, reconciliation, investor servicing and client reporting.~~services for the back office. Revenues from investment operations platforms are recognized in Asset management, administration and distribution fees on the accompanying Consolidated Statements of Operations.

Investment management platforms ~~consists of~~provide comprehensive solutions for managing personal and institutional wealth. These platforms include goals-based investment strategies; SEI-sponsored investment products, including mutual funds, collective investment products, alternative investment portfolios and separately managed ~~accounts. The~~accounts (SMA); and other market-specific advice, technology and operational components. These platforms are offered to wealth managers as part of a complete goals-based investment program for their end-investors. For institutional investors, the Company ~~serves~~provides Outsourced Chief Investment Officer (OCIO) solutions that include investment management programs, as ~~the administrator~~well as advisory and ~~investment advisor for many of these products.~~administrative services. Revenues from investment management 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~~June 30, ~~2020,~~2021, the results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, and cash flows for the ~~nine-months~~six-months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020. 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, ~~2019.~~2020.

The Company adopted the requirements of Accounting Standards Update (ASU) 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (Accounting Standards Codification (ASC) 326)) (ASU 2016-13) and subsequent amendments 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) and ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments-Credit Losses (ASU 2019-11) on January 1, 2020. ASU 2016-13 and the related amendments are hereafter referred to as ASC 326. ASC 326 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. The Company owns mortgage-backed securities issued by the Government National Mortgage Association (GNMA), a federal agency of the U.S. government classified as Available-for-sale debt securities which qualify for the zero credit risk allowance. The Company's U.S. Treasury and other U.S. government agency securities classified as Securities owned are outside the scope of ASC 326. There ~~was no impact to the Company's disclosures related to its marketable securities from the implementation of ASC 326.~~

In accordance with ASC 326, the Company evaluated its receivable balances for credit risk based upon the source of revenue, its ability to collect fees directly from investment products or directly from assets in the client's account, a review of actual historical credit losses, and the potential for expected credit loss from its current client base. The Company has no meaningful historical credit loss data and a very limited amount of losses pertaining directly to a client's inability to satisfy its receivable balance even during periods of economic distress. The credit loss reserve recognized by the Company through the implementation of ASC 326 during the nine months ended September 30, 2020 was immaterial.

The Company also adopted the requirements of ASU 2017-04, Simplifying the Test for Goodwill Impairment (ASU 2017-04) on January 1, 2020. The adoption of ASU 2017-04 did not have a material impact on the Company's consolidated financial statements and related disclosures.

~~With the exception of the adoption of ASC 326 and ASU 2017-04, there~~ have been no ~~other~~ significant changes in significant accounting policies during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 as compared to the significant accounting policies described in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2019.~~

2020.

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 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 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 ~~$8,575~~$11,256 and ~~$6,390~~$9,714 in fees during the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. During the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, the Company waived ~~$24,930~~$21,489 and ~~$21,091,~~$16,355, 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). See Note 13 for related disclosures regarding revenue recognition.

Cash and Cash Equivalents

Cash and cash equivalents includes ~~$305,382~~$313,481 and ~~$414,581~~$347,082 at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, primarily invested in SEI-sponsored open-ended money market mutual funds.

Restricted Cash

Restricted cash includes $250 and $3,000 at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020, respectively, segregated for regulatory purposes related to trade-execution services conducted by SEI Investments (Europe) Limited. Restricted cash also includes $101 at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 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 ~~$18,640~~$12,271 and ~~$26,821~~$12,533 of software development costs during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The Company's software development costs primarily relate to significant enhancements to the SEI Wealth Platform^SM(SWP). The Company capitalized ~~$17,208~~$12,172 and ~~$26,029~~$11,785 of software development costs for significant enhancements to SWP during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. As of ~~September~~June 30, ~~2020,~~2021, the net book value of SWP was ~~$264,085~~$246,005. The net book value includes ~~$63,066~~$20,897 of capitalized software development costs in-progress associated with future releases of SWP. Capitalized software development costs in-progress associated with future releases of SWP were ~~$55,332~~$13,409 as of December 31, ~~2019.~~2020. SWP has a weighted average remaining life of ~~8.5~~10.0 years. Amortization expense for SWP was ~~$32,576~~$23,876 and ~~$31,567~~$21,656 during the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, ~~and 2019,~~ respectively.

Earnings per Share

The calculations of basic and diluted earnings per share for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 are:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Net income	Net income	$	111,096	$	132,168	$	321,404	$	372,689	Net income	$	133,778	$	101,066	$	263,248	$	210,308
Shares used to compute basic earnings per common share	Shares used to compute basic earnings per common share	145,812,000		150,855,000		147,586,000		152,009,000		Shares used to compute basic earnings per common share	142,074,000		147,478,000		142,638,000		148,473,000
Dilutive effect of stock options	Dilutive effect of stock options	2,095,000		3,372,000		2,372,000		3,302,000		Dilutive effect of stock options	2,138,000		2,120,000		2,121,000		2,510,000
Shares used to compute diluted earnings per common share	Shares used to compute diluted earnings per common share	147,907,000		154,227,000		149,958,000		155,311,000		Shares used to compute diluted earnings per common share	144,212,000		149,598,000		144,759,000		150,983,000
Basic earnings per common share	Basic earnings per common share	$	0.76	$	0.88	$	2.18	$	2.45	Basic earnings per common share	$	0.94	$	0.69	$	1.85	$	1.42
Diluted earnings per common share	Diluted earnings per common share	$	0.75	$	0.86	$	2.14	$	2.40	Diluted earnings per common share	$	0.93	$	0.68	$	1.82	$	1.39

During the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, employee stock options to purchase ~~8,813,000~~11,530,000 and ~~6,239,000~~8,154,000 shares of common stock with an average exercise price of ~~$57.98~~$57.77 and ~~$54.91,~~$58.26, respectively, were outstanding but not included in the computation of diluted earnings per common share. During the ~~nine~~six months ended ~~September 30,~~June 30,2021 and 2020, ~~and 2019,~~ employee stock options to purchase ~~8,342,000~~11,623,000 and ~~6,269,000~~7,781,000 shares of common stock with an average exercise price of ~~$58.18~~$57.77 and ~~$54.84,~~$58.50, respectively, were outstanding but not included in the computation of diluted earnings per common share. These options for the three and ~~nine~~six month periods were not included in the computation of diluted earnings per common share because either the performance conditions have not been satisfied or would not have been satisfied if the reporting date was the end of the contingency period or the 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.

~~New Accounting Pronouncements~~

In December 2019, the Financial Accounting Standards Board (FASB) issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12). The standard removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for the Company beginning in the first quarter of 2021. The Company does not believe the adoption of ASU 2019-12 will have a material impact on its consolidated financial statements and related disclosures.

Reclassifications

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

Statements of Cash Flows

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

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


		2020		2019			2021		2020
Net income	Net income	$	321,404	$	372,689	Net income	$	263,248	$	210,308
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	Depreciation	23,058		22,162		Depreciation	16,733		15,113
Amortization	Amortization	39,417		38,407		Amortization	29,075		26,217
Equity in earnings of unconsolidated affiliate	Equity in earnings of unconsolidated affiliate	(86,488)		(112,758)		Equity in earnings of unconsolidated affiliate	(68,415)		(58,183)
Distributions received from unconsolidated affiliate	Distributions received from unconsolidated affiliate	119,821		123,663		Distributions received from unconsolidated affiliate	68,064		73,241
Stock-based compensation	Stock-based compensation	20,458		15,555		Stock-based compensation	19,855		13,991
Provision for losses on receivables	Provision for losses on receivables	109		593		Provision for losses on receivables	2,088		(122)
Deferred income tax expense	Deferred income tax expense	(7,731)		(1,405)		Deferred income tax expense	(6,869)		(5,459)
Net loss (gain) from investments		1,310		(2,121)
Net (gain) loss from investments						Net (gain) loss from investments	(709)		2,086

Change in other long-term liabilities	Change in other long-term liabilities	(4,442)		2,077		Change in other long-term liabilities	987		(1,448)
Change in other assets	Change in other assets	(965)		(56)		Change in other assets	(976)		(6,135)
Contract costs capitalized, net of amortization	Contract costs capitalized, net of amortization	(2,842)		(4,499)		Contract costs capitalized, net of amortization	429		(2,117)
Other	Other	(1,053)		(721)		Other	929		(1,217)
Change in current assets and liabilities	Change in current assets and liabilities					Change in current assets and liabilities
(Increase) decrease in	(Increase) decrease in					(Increase) decrease in
Receivables from investment products	Receivables from investment products	2,521		(2,271)		Receivables from investment products	(906)		4,292
Receivables	Receivables	(37,921)		(34,589)		Receivables	(26,437)		(11,134)
Other current assets	Other current assets	(6,186)		729		Other current assets	538		(2,716)
Advances due from unconsolidated affiliate						Advances due from unconsolidated affiliate	51,364		11,261
(Decrease) increase in	(Decrease) increase in					(Decrease) increase in
Accounts payable	Accounts payable	8,615		(2,208)		Accounts payable	1,525		6,357
Accrued liabilities	Accrued liabilities	8,809		(34,087)		Accrued liabilities	(25,721)		(9,367)
Deferred revenue	Deferred revenue	(1,370)		375		Deferred revenue	195		(836)
Total adjustments	Total adjustments	75,120		8,846		Total adjustments	61,749		53,824
Net cash provided by operating activities	Net cash provided by operating activities	$	396,524	$	381,535	Net cash provided by operating activities	$	324,997	$	264,132

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~~June 30, ~~2020~~2021 was ~~38.8%~~38.7%%. The Company accounts for its interest in LSV using the equity method because of its less than 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~~June 30, ~~2020,~~2021, the Company’s total investment in LSV was ~~$33,117.~~$47,420. The Company receives partnership distributions from LSV on a quarterly basis. The Company received partnership distributions from LSV of ~~$119,821~~$68,064 and ~~$123,663~~$73,241 in the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, 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 ~~$28,305~~$35,065 and ~~$37,609~~$28,276 during the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. During the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, the Company's proportionate share in the earnings of LSV was ~~$86,488~~$68,415 and ~~$112,758,~~$58,183, respectively.

These tables contain condensed financial information of LSV:


Condensed Statement of Operations	Condensed Statement of Operations	Three Months Ended September 30,						Nine Months Ended September 30,						Condensed Statement of Operations	Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Revenues	Revenues	$	94,902	$	121,232	$	289,546	$	365,164	Revenues	$	116,392	$	94,648	$	227,229	$	194,644
Net income	Net income	70,440		96,699		220,184		289,918		Net income	90,520		72,847		176,440		149,744


Condensed Balance Sheets	Condensed Balance Sheets	September 30, 2020		December 31, 2019		Condensed Balance Sheets	June 30, 2021		December 31, 2020
Current assets	Current assets	$	105,712	$	144,547	Current assets	$	129,529	$	151,515
Non-current assets	Non-current assets	4,484		5,048		Non-current assets	4,023		4,296
Total assets	Total assets	$	110,196	$	149,595	Total assets	$	133,552	$	155,811

Current liabilities	Current liabilities	$	65,197	$	46,828	Current liabilities	$	55,625	$	77,077
Non-current liabilities	Non-current liabilities	4,802		5,326		Non-current liabilities	4,249		4,620
Partners’ capital	Partners’ capital	40,197		97,441		Partners’ capital	73,678		74,114
Total liabilities and partners’ capital	Total liabilities and partners’ capital	$	110,196	$	149,595	Total liabilities and partners’ capital	$	133,552	$	155,811

On April 1, ~~2020,~~2021, LSV provided an interest in the partnership to select key employees which reduced the ownership percentage of each existing partner on a pro-rata basis. As a result, the Company's total partnership interest in LSV was reduced slightly to approximately ~~38.8%~~38.7% from approximately ~~38.9%~~38.8%.

Note 3. Composition of Certain Financial Statement Captions

Receivables

Receivables on the accompanying Consolidated Balance Sheets consist of:


		September 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
Trade receivables	Trade receivables	$	106,316	$	86,043	Trade receivables	$	99,140	$	99,106
Fees earned, not billed	Fees earned, not billed	259,942		240,239		Fees earned, not billed	300,834		262,167
Other receivables	Other receivables	13,222		15,277		Other receivables	12,782		25,046
		379,480		341,559			412,756		386,319
Less: Allowance for doubtful accounts	Less: Allowance for doubtful accounts	(1,310)		(1,201)		Less: Allowance for doubtful accounts	(3,188)		(1,100)
		$	378,170	$	340,358		$	409,568	$	385,219

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 an extended valuation process. Billings to 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.

1312

Property and Equipment

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


		September 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
Buildings	Buildings	$	162,999	$	162,882	Buildings	$	210,053	$	206,151
Equipment	Equipment	134,827		123,945		Equipment	147,224		141,820
Land	Land	10,830		10,830		Land	24,344		24,179
Purchased software	Purchased software	145,110		143,705		Purchased software	152,259		147,838
Furniture and fixtures	Furniture and fixtures	20,726		18,835		Furniture and fixtures	21,535		21,439
Leasehold improvements	Leasehold improvements	20,712		20,700		Leasehold improvements	22,246		21,604
Construction in progress	Construction in progress	55,399		33,415		Construction in progress	1,124		4,660
		550,603		514,312			578,785		567,691
Less: Accumulated depreciation	Less: Accumulated depreciation	(370,072)		(353,453)		Less: Accumulated depreciation	(394,743)		(378,639)
Property and Equipment, net	Property and Equipment, net	$	180,531	$	160,859	Property and Equipment, net	$	184,042	$	189,052

The Company recognized ~~$23,058~~$16,733 and ~~$22,162~~$15,113 in depreciation expense related to property and equipment for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively.

Deferred Contract Costs

Deferred contract costs, which primarily consist of deferred sales commissions, were ~~$33,833~~$33,352 and ~~$30,991~~$33,781 as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. The Company deferred expenses related to contract costs of ~~$2,521~~$1,674 and ~~$4,575~~$1,752 during the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. During the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, the Company deferred expenses related to contract costs of ~~$7,270~~$4,046 and ~~$7,673,~~$4,749, respectively. Amortization expense related to deferred contract costs were ~~$4,428~~$4,475 and ~~$3,174~~$2,632 during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, 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~~six months ended ~~September~~June 30, ~~2020.~~2021.

Accrued Liabilities

Accrued liabilities on the accompanying Consolidated Balance Sheets consist of:


		September 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
Accrued employee compensation	Accrued employee compensation	$	75,745	$	96,991	Accrued employee compensation	$	65,355	$	95,656
Accrued employee benefits and other personnel	Accrued employee benefits and other personnel	13,870		9,222		Accrued employee benefits and other personnel	15,073		18,770
Accrued consulting, outsourcing and professional fees	Accrued consulting, outsourcing and professional fees	31,167		28,610		Accrued consulting, outsourcing and professional fees	36,147		31,907
Accrued sub-advisory, distribution and other asset management fees	Accrued sub-advisory, distribution and other asset management fees	54,157		46,245		Accrued sub-advisory, distribution and other asset management fees	59,944		49,924

Accrued dividend payable	Accrued dividend payable	0		52,452		Accrued dividend payable	0		53,127

Other accrued liabilities	Other accrued liabilities	48,278		39,281		Other accrued liabilities	35,465		50,461
Total accrued liabilities	Total accrued liabilities	$	223,217	$	272,801	Total accrued liabilities	$	211,984	$	299,845

Note 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 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 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

1413

from the fair values of the underlying investments as of the reporting date. The funds allow for investor redemptions at the end of each calendar month. This investment has not been classified in the fair value hierarchy but is presented in the tables below to permit reconciliation to the amounts presented on the accompanying Consolidated Balance Sheets.

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~~six months ended ~~September~~June 30, ~~2020~~2021 were consistent with those as described in ~~our~~the Company's Annual Report on Form 10-K at December 31, ~~2019.~~2020. The Company had no Level 3 financial assets at ~~September~~June 30, ~~2020~~2021 or December 31, ~~2019~~2020 that were required to be measured at fair value on a recurring basis. ~~The Company's~~ Level 3 financial liabilities at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 consist entirely of the estimated contingent consideration resulting from an acquisition (See Note 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 other factors. There were no transfers of financial assets between levels within the fair value hierarchy during the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021.

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	Assets	September 30, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Assets	June 30, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Equity securities	Equity securities	$	11,093	$	11,093	$	0	Equity securities	$	12,731	$	12,731	$	0
Available-for-sale debt securities	Available-for-sale debt securities	105,471		0		105,471		Available-for-sale debt securities	117,308		0		117,308
Fixed-income securities owned	Fixed-income securities owned	35,820		0		35,820		Fixed-income securities owned	26,174		0		26,174
Investment funds sponsored by LSV (1)	Investment funds sponsored by LSV (1)	5,207						Investment funds sponsored by LSV (1)	6,932
		$	157,591	$	11,093	$	141,291		$	163,145	$	12,731	$	143,482


				Fair Value Measurements at the End of the Reporting Period Using									Fair Value Measurements at the End of the Reporting Period Using
Assets	Assets	December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Assets	December 31, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Equity securities	Equity securities	$	12,119	$	12,119	$	0	Equity securities	$	12,142	$	12,142	$	0
Available-for-sale debt securities	Available-for-sale debt securities	104,798		0		104,798		Available-for-sale debt securities	93,277		0		93,277
Fixed-income securities owned	Fixed-income securities owned	33,486		0		33,486		Fixed-income securities owned	34,064		0		34,064
Investment funds sponsored by LSV (1)	Investment funds sponsored by LSV (1)	5,988						Investment funds sponsored by LSV (1)	6,166
		$	156,391	$	12,119	$	138,284		$	145,649	$	12,142	$	127,341

(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 5).

1514

Note 5. Marketable Securities

~~The Company's marketable~~Marketable securities include investments in money market funds and commercial paper classified as cash equivalents, available-for-sale debt securities, investments in SEI-sponsored and non-SEI-sponsored mutual funds, equities, investments in funds sponsored by LSV and securities owned by SIDCO.

Cash Equivalents

~~The Company's investments~~Investments in money market funds and commercial paper classified as cash equivalents had a fair value of ~~$412,663~~$452,428 and ~~$543,765~~$462,624 at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. There were 0no material unrealized or realized gains or losses from these investments during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019. The Company's investments~~2020. Investments in money market funds and commercial paper are Level 1 assets.

Available for Sale and Equity Securities

Available For Sale and Equity Securities on the accompanying Consolidated Balance Sheets consist of:


		At September 30, 2020															At June 30, 2021
		Cost Amount		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value			Cost Amount		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value
Available-for-sale debt securities	Available-for-sale debt securities	$	103,365	$	2,106	$	0	$	105,471	Available-for-sale debt securities	$	115,818	$	1,490	$	0	$	117,308
SEI-sponsored mutual funds	SEI-sponsored mutual funds	6,793		63		(277)		6,579		SEI-sponsored mutual funds	6,896		666		0		7,562
Equities and other mutual funds	Equities and other mutual funds	3,605		909		0		4,514		Equities and other mutual funds	4,933		236		0		5,169
		$	113,763	$	3,078	$	(277)	$	116,564		$	127,647	$	2,392	$	0	$	130,039


		At December 31, 2019															At December 31, 2020
		Cost Amount		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value			Cost Amount		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value
Available-for-sale debt securities	Available-for-sale debt securities	$	104,193	$	605	$	0	$	104,798	Available-for-sale debt securities	$	91,262	$	2,015	$	0	$	93,277
SEI-sponsored mutual funds	SEI-sponsored mutual funds	7,564		125		(39)		7,650		SEI-sponsored mutual funds	6,866		382		0		7,248
Equities and other mutual funds	Equities and other mutual funds	3,637		832		0		4,469		Equities and other mutual funds	4,421		473		0		4,894
		$	115,394	$	1,562	$	(39)	$	116,917		$	102,549	$	2,870	$	0	$	105,419

Net unrealized gains at ~~September~~June 30, ~~2020~~2021 of ~~the Company's~~ available-for-sale debt securities were ~~$1,622~~$1,148 (net of income tax expense of ~~$484)~~$342). Net unrealized gains at December 31, ~~2019~~2020 of ~~the Company's~~ available-for-sale debt securities were ~~$465~~$1,551 (net of income tax expense of ~~$140)~~$464). These net unrealized gains are reported as a separate component of Accumulated other comprehensive loss on the accompanying Consolidated Balance Sheets.

There were gross realized losses of ~~$582~~$556 and ~~$347~~$280 from available-for-sale debt securities during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. There were 0 gross realized gains from available-for-sale debt securities during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020. Realized losses from available-for-sale debt securities, including amounts reclassified from accumulated comprehensive loss, are reflected in Net gain (loss) from investments on the accompanying Consolidated Statements of Operations.

There were gross realized gains of ~~$254~~$613 and gross realized losses of ~~$250~~$59 from mutual funds and equities during the ~~nine~~six months ended ~~September~~June 30, ~~2020. Gains~~2021. There were gross realized gains of $196 and gross realized losses of $240 from mutual funds and equities during the ~~nine~~six months ended ~~September~~June 30, ~~2019 were immaterial.~~2020. Gains and losses from mutual funds and equities are reflected in Net gain (loss) from investments on the accompanying Consolidated Statements of Operations.

Investments in Affiliated Funds

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

The investment primarily consists of U.S. dollar denominated funds that invest primarily in securities of Canadian, Australian and Japanese companies as well as various other global securities. The underlying securities held by the funds are translated into U.S. dollars within the funds. The funds had a fair value of ~~$5,207~~$6,932 and ~~$5,988~~$6,166 at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. The Company recognized unrealized gains of ~~$458~~$309 and ~~$99~~$996 during the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, from the change in fair value of the funds. The Company recognized unrealized gains of $766 and unrealized losses of ~~$781 and unrealized gains of $646~~$1,239 during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, from the change in fair value of the funds.

Securities Owned

The Company’s broker-dealer subsidiary, SIDCO, has investments in U.S. government agency securities with maturity dates less than one year. These investments are reflected as Securities owned on the accompanying Consolidated

Balance Sheets. Due to specialized accounting practices applicable to investments by broker-dealers, the securities are reported at fair value and changes in fair value are recorded in current period earnings. The securities had a fair value of ~~$35,820~~$26,174 and ~~$33,486~~$34,064 at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. There were 0no material net gains or losses related to the securities during the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020.

Note 6. Line of Credit

~~The~~On April 23, 2021 (the Closing Date), the Company ~~has~~entered into a new five-year ~~$300,000~~$325,000 Credit Agreement (the Credit Facility) with Wells Fargo Bank, ~~National Association,~~N.A., and a syndicate of other lenders. The Credit Facility became available on the Closing Date and replaced the former credit facility agreement (the 2016 Credit Facility). The Credit Facility is scheduled to expire in ~~June 2021,~~April 2026, at which time any aggregate principal amount of loans outstanding becomes payable in full. Any borrowings made under the Credit Facility will accrue interest at rates that, at the Company's option, are based on a base rate (the Base Rate) plus a premium that can range from 0.25% to 1.00% or the London InterBank Offered Rate (LIBOR) plus a premium that can range from 1.25% to 2.00% depending on the Company’s Leverage Ratio (a ratio of consolidated indebtedness to consolidated EBITDA for the 4 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%, b) the prime commercial lending rate of Wells Fargo, c) the applicable LIBOR plus 1.00%, or d) 0%. The Credit Facility includes fallback language clearly defining an alternative reference rate which provides for specified replacement rates upon a LIBOR cessation event. At the time of a LIBOR cessation event, the replacement rate, the Secured Overnight Financing Rate (SOFR), self-executes without the need for negotiations or a formal amendment process.

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% of the amount of the unused portion to 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 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~~an issuance fee of ~~0.175%~~0.200% of the aggregate face amount of the outstanding letters of credit issued under the Credit Facility.

The Credit Facility contains covenants ~~that restrict~~with restrictions on the ability of the Company to ~~engage in mergers, consolidations, asset sales, investments,~~do transactions with affiliates other than wholly-owned subsidiaries or to incur liens or ~~other~~certain types of 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. 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.

As of ~~September~~June 30, ~~2020,~~2021, the Company had outstanding letters of credit of ~~$11,553~~$5,808 under the Credit Facility. These letters of credit were issued primarily for the expansion of the Company's headquarters and are scheduled to expire during ~~the remainder of 2020.~~2021. The amount of the Credit Facility that is available for general corporate purposes as of ~~September~~June 30, ~~2020~~2021 was ~~$288,447.~~$319,192.

The Company was in compliance with all covenants of the ~~Credit Facility~~credit facilities during the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021.

Note 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% when a specified financial vesting target is achieved, and the remaining 50% when a second, higher specified financial vesting 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. 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 financial vesting 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.

1716

The Company recognized stock-based compensation expense in its Consolidated Financial Statements in the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, as follows:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Stock-based compensation expense	Stock-based compensation expense	$	6,467	$	5,453	$	20,458	$	15,555	Stock-based compensation expense	$	10,103	$	7,062	$	19,855	$	13,991
Less: Deferred tax benefit	Less: Deferred tax benefit	(1,229)		(1,042)		(3,932)		(2,959)		Less: Deferred tax benefit	(1,904)		(1,318)		(3,758)		(2,703)
Stock-based compensation expense, net of tax	Stock-based compensation expense, net of tax	$	5,238	$	4,411	$	16,526	$	12,596	Stock-based compensation expense, net of tax	$	8,199	$	5,744	$	16,097	$	11,288

~~In September 2020, the~~The Company revised its estimate of when some vesting targets are expected to be ~~achieved which resulted in the amount of stock-based compensation expense to be spread out over a longer period than its initial estimate made at December 31, 2019.~~achieved. This change in management's estimate ~~did not result~~resulted in ~~a material change to the Company's~~an increase of $759 in stock-based compensation expense ~~recognized~~ during the ~~three or nine month periods~~six months ended ~~September~~June 30, ~~2020.~~2021.

As of ~~September~~June 30, ~~2020,~~2021, there was approximately ~~$59,056~~$86,667 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~~six months ended ~~September~~June 30, ~~2020~~2021 was ~~$25,788.~~$23,814. The total options exercisable as of ~~September~~June 30, ~~2020~~2021 had an intrinsic value of ~~$96,715.~~$125,738. The total intrinsic value for options exercisable is calculated as the difference between the market value of the Company’s common stock as of ~~September~~June 30, ~~2020~~2021 and the weighted average exercise price of the options. The market value of the Company’s common stock as of ~~September~~June 30, ~~2020~~2021 was ~~$50.72~~$61.97 as reported by the Nasdaq Stock Market, LLC. The weighted average exercise price of the options exercisable as of ~~September~~June 30, ~~2020~~2021 was ~~$38.11.~~$40.35. Total options that were outstanding as of ~~September~~June 30, ~~2020~~2021 were ~~14,767,000~~17,345,000. Total options that were exercisable as of ~~September~~June 30, ~~2020~~2021 were ~~7,352,000~~5,814,000.

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 ~~6,185,000~~3,238,000 shares at a total cost of ~~$325,644~~$196,158 during the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, 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 September 30, 2020, the Company had approximately $41,885 of authorization remaining for the purchase of common stock under the program.~~ On ~~October 20, 2020~~June 2, 2021, the Company's Board of Directors approved an increase in the stock repurchase program by an additional ~~$250,000, increasing~~$250,000. As of June 30, 2021, the ~~available~~Company had approximately $246,669 of authorization ~~to approximately $291,885.~~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 June ~~3, 2020,~~2, 2021, the Board of Directors declared a cash dividend of ~~$0.35~~$0.37 per share on the Company's common stock, which was paid on June ~~23, 2020,~~22, 2021, to shareholders of record on June ~~15, 2020.~~14, 2021. Cash dividends declared during the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020 were $52,389 and ~~2019 were~~ $51,462, ~~and $49,984,~~ respectively.

Note 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
Balance, January 1, 2020 $ (23,969) $ 465 $ (23,504)
Other comprehensive loss before reclassifications (5,051) 702 (4,349)
Amounts reclassified from accumulated other comprehensive loss 0 455 455
Net current-period other comprehensive loss (5,051) 1,157 (3,894)
Balance, September 30, 2020 $ (29,020) $ 1,622 $ (27,398)


	Foreign Currency Translation Adjustments		Unrealized Gains (Losses) on Investments		Accumulated Other Comprehensive Loss
Balance, January 1, 2021	$	(18,349)	$	1,551	$	(16,798)

Other comprehensive income before reclassifications	2,679		(835)		1,844
Amounts reclassified from accumulated other comprehensive loss	0		432		432
Net current-period other comprehensive income	2,679		(403)		2,276

Balance, June 30, 2021	$	(15,670)	$	1,148	$	(14,522)

Note 9. Business Segment Information

The Company’s reportable business segments are:

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

Investment Advisors – ~~provides~~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~~Provides OCIO solutions, including investment management and administrative outsourcing platforms to retirement plan sponsors, healthcare systems, higher education and other not-for-profit organizations worldwide;

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

Investments in New Businesses – ~~focuses~~Focuses on providing investment management solutions to ultra-high-net-worth families residing in the United States; ~~developing internet-based investment services;~~ developing network and data protection services; modularizing larger technology platforms into stand-alone components; entering new markets; and conducting other research and development activities.

The information in the following tables is derived from ~~the Company’s~~ internal financial reporting used for corporate management purposes. There are no0 inter-segment revenues for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020. 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, ~~2019.~~2020.

The following tables highlight certain financial information about each of the ~~Company’s~~ business segments for the three months ended ~~September~~June 30, 2021 and 2020:


	Private Banks		Investment Advisors		Institutional Investors		Investment Managers		Investments In New Businesses		Total
	For the Three Months Ended June 30, 2021
Revenues	$	123,676	$	119,396	$	85,699	$	142,808	$	4,072	$	475,651
Expenses	117,654		59,133		41,895		84,995		13,631		317,308
Operating profit (loss)	$	6,022	$	60,263	$	43,804	$	57,813	$	(9,559)	$	158,343


	Private Banks		Investment Advisors		Institutional Investors		Investment Managers		Investments In New Businesses		Total
	For the Three Months Ended June 30, 2020
Revenues	$	107,726	$	93,708	$	76,523	$	119,340	$	3,349	$	400,646
Expenses	107,723		50,149		36,937		74,668		13,466		282,943
Operating profit (loss)	$	3	$	43,559	$	39,586	$	44,672	$	(10,117)	$	117,703

A reconciliation of the total operating profit reported for the business segments to income from operations in the Consolidated Statements of Operations for the three months ended June 30, 2021 and 2020 is as follows:


	2021		2020
Total operating profit from segments	$	158,343	$	117,703
Corporate overhead expenses	(22,322)		(17,391)
Income from operations	$	136,021	$	100,312

The following tables provide additional information for the three months ended June 30, 2021 and ~~2019:~~2020 pertaining to the business segments:

Private
Banks
Investment
Advisors Institutional
Investors Investment
Managers Investments
In New
Businesses Total
For the Three Months Ended September 30, 2020
Revenues $ 114,792 $ 103,189 $ 79,583 $ 123,846 $ 3,517 $ 424,927
Expenses 113,066 51,519 37,812 79,838 13,315 295,550
Operating profit (loss) $ 1,726 $ 51,670 $ 41,771 $ 44,008 $ (9,798) $ 129,377


	Capital Expenditures (1)				Depreciation
	2021		2020		2021		2020
Private Banks	$	8,594	$	6,634	$	4,178	$	3,965
Investment Advisors	3,580		3,803		1,417		1,172
Institutional Investors	884		1,029		353		301
Investment Managers	3,373		7,259		2,027		1,869
Investments in New Businesses	313		332		100		76
Total from business segments	$	16,744	$	19,057	$	8,075	$	7,383
Corporate overhead	418		798		349		257
	$	17,162	$	19,855	$	8,424	$	7,640

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


	Amortization
	2021		2020
Private Banks	$	8,633	$	7,464
Investment Advisors	2,909		2,664
Institutional Investors	427		427
Investment Managers	2,444		2,342
Investments in New Businesses	185		185
Total from business segments	$	14,598	$	13,082
Corporate overhead	125		58
	$	14,723	$	13,140

The following tables highlight certain financial information about each of business segment for the six months ended June 30, 2021 and 2020:


	Private Banks		Investment Advisors		Institutional Investors		Investment Managers		Investments In New Businesses		Total
	For the Six Months Ended June 30, 2021
Revenues	$	241,284	$	232,690	$	170,198	$	279,227	$	7,938	$	931,337
Expenses	228,378		114,160		81,053		168,015		27,035		618,641
Operating profit (loss)	$	12,906	$	118,530	$	89,145	$	111,212	$	(19,097)	$	312,696


	Private Banks		Investment Advisors		Institutional Investors		Investment Managers		Investments In New Businesses		Total
	For the Six Months Ended June 30, 2020
Revenues	$	220,947	$	196,029	$	155,726	$	235,969	$	6,737	$	815,408
Expenses	218,376		102,581		75,204		148,957		24,376		569,494
Operating profit (loss)	$	2,571	$	93,448	$	80,522	$	87,012	$	(17,639)	$	245,914

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~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019 is as follows:~~2020:


		2020		2019			2021		2020
Total operating profit from segments	Total operating profit from segments	$	129,377	$	136,874	Total operating profit from segments	$	312,696	$	245,914
Corporate overhead expenses	Corporate overhead expenses	(18,040)		(16,237)		Corporate overhead expenses	(43,838)		(35,374)
Income from operations	Income from operations	$	111,337	$	120,637	Income from operations	$	268,858	$	210,540

The following tables provide additional information for the ~~three~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019 pertaining to our business segments:~~2020:


		Capital Expenditures (1)						Depreciation							Capital Expenditures (1)				Depreciation
		2020		2019		2020		2019			2021		2020		2021		2020
Private Banks	Private Banks	$	7,652	$	8,018	$	4,222	$	3,640	Private Banks	$	14,423	$	16,559	$	8,310	$	7,847
Investment Advisors	Investment Advisors	3,234		4,468		1,255		1,162		Investment Advisors	5,888		9,193		2,706		2,323
Institutional Investors	Institutional Investors	698		1,070		298		393		Institutional Investors	1,395		2,387		711		603
Investment Managers	Investment Managers	2,776		5,311		1,818		1,793		Investment Managers	5,004		16,291		4,080		3,681
Investments in New Businesses	Investments in New Businesses	144		379		97		101		Investments in New Businesses	452		750		246		146
Total from business segments	Total from business segments	$	14,504	$	19,246	$	7,690	$	7,089	Total from business segments	$	27,162	$	45,180	$	16,053	$	14,600
Corporate overhead		274		663		255		320
Corporate Overhead										Corporate Overhead	578		1,795		680		513
		$	14,778	$	19,909	$	7,945	$	7,409		$	27,740	$	46,975	$	16,733	$	15,113

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

Amortization
2020 2019
Private Banks $ 7,505 $ 7,322
Investment Advisors 2,683 2,609
Institutional Investors 426 440
Investment Managers 2,343 2,334
Investments in New Businesses 186 185
Total from business segments $ 13,143 $ 12,890
Corporate overhead 57 57
$ 13,200 $ 12,947

~~The following tables highlight certain financial information about each of the Company’s business segments for the nine months ended September 30, 2020 and 2019:~~

Private
Banks Investment
Advisors Institutional
Investors Investment
Managers Investments
In New
Businesses Total
For the Nine Months Ended September 30, 2020
Revenues $ 335,739 $ 299,218 $ 235,309 $ 359,815 $ 10,254 $ 1,240,335
Expenses 331,442 154,100 113,016 228,795 37,691 865,044
Operating profit (loss) $ 4,297 $ 145,118 $ 122,293 $ 131,020 $ (27,437) $ 375,291

Private
Banks Investment
Advisors Institutional
Investors Investment
Managers Investments
In New
Businesses Total
For the Nine Months Ended September 30, 2019
Revenues $ 351,601 $ 297,916 $ 241,559 $ 326,037 $ 9,547 $ 1,226,660
Expenses 329,540 154,569 115,383 209,326 20,663 829,481
Operating profit (loss) $ 22,061 $ 143,347 $ 126,176 $ 116,711 $ (11,116) $ 397,179

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, 2020 and 2019 is as follows:

2020 2019
Total operating profit from segments $ 375,291 $ 397,179
Corporate overhead expenses (53,414) (52,845)
Income from operations $ 321,877 $ 344,334

~~The following tables provide additional information for the nine months ended September 30, 2020 and 2019 pertaining to our business segments:~~

Capital Expenditures (1) Depreciation
2020 2019 2020 2019
Private Banks $ 24,211 $ 25,240 $ 12,069 $ 10,774
Investment Advisors 12,427 12,973 3,578 3,506
Institutional Investors 3,085 2,990 901 1,212
Investment Managers 19,067 13,535 5,499 5,384
Investments in New Businesses 894 964 243 302
Total from business segments $ 59,684 $ 55,702 $ 22,290 $ 21,178
Corporate Overhead 2,069 1,634 768 984
$ 61,753 $ 57,336 $ 23,058 $ 22,162

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


		Amortization							Amortization
		2020		2019			2021		2020
Private Banks	Private Banks	$	22,390	$	21,680	Private Banks	$	17,209	$	14,885
Investment Advisors	Investment Advisors	7,999		7,682		Investment Advisors	5,536		5,316
Institutional Investors	Institutional Investors	1,280		1,300		Institutional Investors	853		854
Investment Managers	Investment Managers	7,020		7,019		Investment Managers	4,924		4,677
Investments in New Businesses	Investments in New Businesses	556		555		Investments in New Businesses	370		370
Total from business segments	Total from business segments	$	39,245	$	38,236	Total from business segments	$	28,892	$	26,102
Corporate Overhead	Corporate Overhead	172		171		Corporate Overhead	183		115
		$	39,417	$	38,407		$	29,075	$	26,217

Note 10. Income Taxes

The gross liability for unrecognized tax benefits at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 was ~~$16,348~~$16,850 and ~~$15,356,~~$15,911, respectively, exclusive of interest and penalties, of which ~~$16,104~~$16,799 and ~~$15,194~~$15,761 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~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the combined amount of accrued interest and penalties related to tax positions taken on tax returns was ~~$2,212~~$2,250 and ~~$1,962,~~$2,105, respectively.


		September 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
Gross liability for unrecognized tax benefits, exclusive of interest and penalties	Gross liability for unrecognized tax benefits, exclusive of interest and penalties	$	16,348	$	15,356	Gross liability for unrecognized tax benefits, exclusive of interest and penalties	$	16,850	$	15,911
Interest and penalties on unrecognized benefits	Interest and penalties on unrecognized benefits	2,212		1,962		Interest and penalties on unrecognized benefits	2,250		2,105
Total gross uncertain tax positions	Total gross uncertain tax positions	$	18,560	$	17,318	Total gross uncertain tax positions	$	19,100	$	18,016
Amount included in Current liabilities	Amount included in Current liabilities	$	3,986	$	4,896	Amount included in Current liabilities	$	6,053	$	6,546
Amount included in Other long-term liabilities	Amount included in Other long-term liabilities	14,574		12,422		Amount included in Other long-term liabilities	13,047		11,470
		$	18,560	$	17,318		$	19,100	$	18,016

2120

The ~~Company's~~ effective income tax rate for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 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 June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Statutory rate	Statutory rate	21.0	%	21.0	%	21.0	%	21.0	%	Statutory rate	21.0	%	21.0	%	21.0	%	21.0	%
State taxes, net of federal tax benefit	State taxes, net of federal tax benefit	3.3		2.6		3.2		2.6		State taxes, net of federal tax benefit	3.2		3.3		3.2		3.2
Foreign tax expense and tax rate differential	Foreign tax expense and tax rate differential	(0.2)		(0.3)		(0.1)		(0.2)		Foreign tax expense and tax rate differential	(0.1)		(0.2)		(0.1)		(0.1)
Tax benefit from stock option exercises	Tax benefit from stock option exercises	(0.4)		(2.2)		(1.0)		(1.5)		Tax benefit from stock option exercises	(1.2)		(0.4)		(1.2)		(1.3)
Expiration of the statute of limitations		(1.3)		(1.2)		(0.5)		(0.4)
Provision-to-return adjustment		(0.4)		(0.6)		(0.1)		(0.2)

Other, net	Other, net	(0.6)		(0.4)		(0.5)		(0.3)		Other, net	(0.6)		(0.4)		(0.4)		(0.4)
		21.4	%	18.9	%	22.0	%	21.0	%		22.3	%	23.3	%	22.5	%	22.4	%

The ~~increase~~decrease in the ~~Company's~~ effective tax rate for the three ~~and nine~~ months ended ~~September~~June 30, ~~2020~~2021 was primarily due to ~~decreased~~increased tax benefits related to the ~~lower~~higher volume of stock option exercises in ~~2020~~2021 compared to the prior year ~~periods as well as an increase in the state effective tax rate.~~period.

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 2017 and is no longer subject to state, local or foreign income tax examinations by authorities for years before 2015.

The Company estimates it will recognize ~~$3,986~~$6,053 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 federal, state, and foreign tax returns. However, the timing of the resolution of income tax examinations is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year. While it is reasonably possible that some issues under examination could be resolved in the next twelve months, based upon the current facts and circumstances, the Company cannot reasonably estimate the timing of such resolution or the total range of potential changes as it relates to the current unrecognized tax benefits that are recorded as part of the Company’s financial statements.

Note 11. Commitments and Contingencies

In the ordinary course of business, the Company from 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 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~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 related to these indemnifications.

Stanford Trust Company Litigation

SEI has been named in 7 lawsuits filed in Louisiana courts; 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. 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 7 cases varies. The Lillie case, filed originally in the 19th Judicial District Court for the Parish of East Baton Rouge, was brought as a class ~~action and is procedurally the most advanced of the cases. SEI and SPTC filed exceptions, which the Court granted in part, dismissing claims under the Louisiana Unfair Trade Practices Act~~

and permitting the claims under the Louisiana Securities Law to go forward. On March 11, 2013, newly-added insurance carrier defendants removed the case to the United States District Court for the Middle District of Louisiana. On August 7, 2013, the Judicial Panel on Multidistrict Litigation transferred the matter to the Northern District of Texas where MDL 2099, In re: Stanford Entities Securities Litigation (“the Stanford MDL”), is pending. On September 22, 2015, the District Court on the motion of SEI and SPTC dismissed plaintiffs’ claims for primary liability under Section 714(A) of the Louisiana Securities Law, but declined to dismiss plaintiffs’ claims for secondary liability under Section 714(B) of the Louisiana Securities Law based on the allegations pled by plaintiffs. On November 4, 2015, the District Court granted SEI and SPTC's motion to dismiss plaintiffs' claims under Section 712(D) of the Louisiana Securities Law. Consequently, the only claims of plaintiffs 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~~action. A group of plaintiffs who opted out of the Lillie class filed a complaint against SEI and SPTC in the United States District Court in the Middle District of Louisiana, ~~(“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 and SPTC filed their 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 predicated on Section 712(D) or Section 714(A) of the Louisiana Securities Law. In both cases, as a result of 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.

With respect to the Lillie proceeding, on July 9, 2019, the District Court issued an order granting SEI’s Summary Judgment Motion to dismiss the remaining Section 714(B) claim and denying Plaintiffs’ Motion for Continuance of SEI and SPTC’s Motion for Summary Judgment pursuant to Rule 56(d). On July 17, 2019, Plaintiffs filed a Motion for Reconsideration and/or New Trial. The Court denied Plaintiffs’ Motion for Reconsideration and/or New Trial and entered a Final Judgment in favor of SEI and SPTC on August 15, 2019. On August 27, 2019, Plaintiffs-Appellants filed a Notice of Appeal to the United States Court of Appeals for the Fifth Circuit of the District Court's dismissal of the Lillie matter. On ~~November 20, 2019, Plaintiffs-Appellants filed a Motion~~May 14, 2021, the United States Court of Appeals for the Fifth Circuit unanimously affirmed the District Court’s order granting summary judgment in ~~Support of the Notice of Appeal. On January 17, 2020,~~favor SEI and ~~SPTC timely filed their brief~~the Insurer Defendants in ~~opposition to~~ the ~~Plaintiffs-Appellants' motion for appeal. On February 7, 2020, Plaintiffs- Appellants filed their reply brief.The parties are currently waiting for oral argument to be scheduled.~~Lillie matter.

With respect to the Ahders proceeding, on ~~July 16, 2019, SEI and SPTC filed a Motion for Summary Judgment pursuant to Rule 56(d) to have the remaining Section 714(B) claim dismissed. On~~ January 24, 2020, the District Court issued an order granting SEI’s Summary Judgment Motion to dismiss the remaining Section 714(B) claim. On March 17, 2020, Plaintiffs-Appellants filed a Notice of Appeal to the United States Court of Appeals for the Fifth Circuit of the District Court's dismissal of the Ahders matter. ~~Similar to~~On December 3, 2020, the ~~Lillie matter, all motions and briefs~~United States Court of Appeals for the Fifth Circuit unanimously affirmed the District Court’s order granting summary judgment in ~~support~~favor of ~~the parties’ positions have been filed~~SEI and the ~~parties are currently waiting for oral argument to be scheduled.~~Insurer Defendants in the Adhers matter.

Another 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.~~Multidistrict Litigation (MDL). The schedule for responding to that Complaint has not yet been established.

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

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

SS&C Advent Matter

On February 28, 2020, SEI Global Services, Inc. ~~("SGSI")~~(SGSI), a wholly-owned subsidiary of the Company, filed a complaint under seal in the United States District Court for the Eastern District of Pennsylvania against SS&C Advent ~~("Advent")~~(Advent) and SS&C Technologies Holdings, Inc. ~~("SS&C")~~(SS&C) alleging that SS&C and Advent breached the terms of the contract between the parties and asking the Court to hold SS&C and Advent to their bargained-for obligations (the ~~"Advent Matter")~~Advent Matter). In addition to Breach of Contract, the complaint also includes counts for Declaratory Judgment, Tortious Interference with Existing and Prospective Contractual Relations, Violation of the New York General Business Law Section 349, Violations of Section 2 of the Sherman Antitrust Act, Promissory Estoppel and Breach of the Covenant of Good Faith and Fair Dealing. SGSI seeks various forms of relief, including declaratory judgment, specific performance under the contract, and monetary damages, including treble damages and attorney’s fees.

Following various procedural actions, including an amendment of ~~the Company’s~~SGSI’s complaint to include additional breach of contract claims, ~~SS&C and~~ Advent filed a motion to dismiss SGSI’s compliant.

On October 23, 2020, the ~~Company’s compliant.The oral argument regarding~~United States District Court for the ~~motion~~Eastern District of Pennsylvania dismissed SEI’s federal antitrust claims and declined to ~~dismiss has occurred. The Court has not yet issued its judgment~~rule on the state law claims on the basis that in the ~~matter.~~absence of the anti-trust claim, the court had no jurisdiction over the state law claims. SGSI has appealed the dismissal of the federal anti-trust claims to the Third Circuit Court of Appeals, which is currently pending.

Since October 23, 2020, Advent and SGSI have been litigating the remaining breach of contract and tortious interference with contract claims in New York State Court. Additionally, SGSI made motions for injunctive relief to insure that Advent provided SGSI with access to the Geneva, Moxy and APX software modules as SGSI believes is required pursuant to the terms of a valid contract.

On January 13, 2021, Judge Borrok of the Supreme Court of the State of New York, granted SGSI’s motion for injunctive relief and issued an Order in which he characterized the basis for Advent’s claim for breach of contract as appearing to be “pre-textual” and found that SGSI’s claims for breach of contract would likely succeed on the merits. Judge Borrok granted SGSI’s motion for injunctive relief, on a preliminary basis, and precluded SS&C Advent from:

•Dishonoring their contractual obligations and commitments under the SLSA, including, denying SEI’s licenses, rights, and privileges under the SLSA;

•Failing to provide new license keys for the license keys due to Geneva, Moxy, and APX, and other software products licensed by SEI pursuant to the SLSA (such new license keys to be provided no later than January 15, 2021 at 10 A.M.);

•Denying to SEI any and all access to the Geneva, Moxy, and APX software and related modules as are reasonably necessary to provide access to such software to SEI’s clients; and

•Denying to SEI any and all support, maintenance and technical support services for Geneva, Moxy, and APX.

SS&C Advent provided SEI with the necessary access to the Geneva, Moxy and APX software modules on January 14, 2021. These have been tested, verified and are now running in the SEI production environment.

On January 15, 2021, SS&C Advent appealed Judge Borrok’s order granting SEI’s motion for preliminary injunctive relief to the Appellate Division of the Supreme Court of the State of New York, First Department. The Appellate Division affirmed the injunction order on June 15, 2021.

The parties are beginning discovery and participating in a voluntary mediation moderated by Judge Borrok, pursuant to which the parties are actively negotiating the terms of a settlement agreement.

SEI does not believe that it will have to change providers under the current terms of its contract with SS&C or Advent and that the process of litigating its rights under this contract may be a multi-year process. Consequently, SEI does not believe that the Advent Matter will create any consequence to the services itSGSI provides to its clients in the near term. SEI believes that it has alternatives available to it that will enable it to continue to provide currently provided services to its clients in all material respects in the unlikely event that there ultimately is a negative outcome in the Advent Matter.

SEI believes itSGSI has a strong basis for proving the actions it alleges in the Advent Matter and looks forward to the opportunity to continue to assert its rights under contract. SEI expects the financial impact of litigating the Advent Matter 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 does not believe that the 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 period(s) during which the underlying matters are resolved.

Note 12. Goodwill and Intangible Assets

On April 2, 2018, the Company acquired all ownership interests of Huntington Steele, LLC (Huntington Steele). 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 recorded as goodwill. The total amount of goodwill from this transaction amounted to $11,499 and is included on the accompanying Consolidated Balance Sheets. The total purchase price for Huntington Steele included a contingent purchase price payable to the sellers upon the attainment of specified financial measures determined at various intervals occurring between 2019 and 2023. The Company made payments of ~~$433~~$3,965 and $633 during ~~2019 and~~ the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, respectively, to the ~~sellers and recorded a fair value adjustment related to the contingent consideration.~~sellers. As of ~~September~~June 30, ~~2020,~~2021, the current portion of the contingent consideration of ~~$3,577~~$765 is included in Accrued liabilities on the accompanying Balance Sheet. The long-term portion of the contingent consideration of ~~$8,045~~$7,994 is included in Other long-term liabilities on the accompanying Balance Sheet.

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.

There were 0 changes to ~~the Company's~~ goodwill during the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021.

The Company recognized ~~$2,763~~$1,842 of amortization expense related to the intangible assets acquired through ~~the~~ acquisitions of Huntington Steele and Archway during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020.

2423

Note 13. Revenues from Contracts with Customers

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

Disaggregation of Revenue

The following tables provide additional information pertaining to our revenues disaggregated by major product line and primary geographic market based on the location of the use of the products or services for each of the ~~Company’s~~ business segments for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019:~~2020:


		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
Major Product Lines:	Major Product Lines:	For the Three Months Ended September 30, 2020																							Major Product Lines:	For the Three Months Ended June 30, 2021
Investment management fees from pooled investment products	Investment management fees from pooled investment products	$	32,256	$	68,287	$	13,417	$	180	$	356	$	114,496	Investment management fees from pooled investment products	$	33,708	$	75,039	$	13,638	$	14	$	326		$	122,725
Investment management fees from investment management agreements	Investment management fees from investment management agreements	421		29,761		65,811		0		3,041		99,034		Investment management fees from investment management agreements	603		38,345		71,342		0		3,561			113,851
Investment operations fees	Investment operations fees	446		0		0		113,037		0		113,483		Investment operations fees	402		0		0		132,262		0			132,664
Investment processing fees - PaaS	Investment processing fees - PaaS	47,393		0		0		0		0		47,393		Investment processing fees - PaaS	55,746		0		0		0		0			55,746
Investment processing fees - SaaS	Investment processing fees - SaaS	27,567		0		0		3,479		0		31,046		Investment processing fees - SaaS	28,442		0		0		3,855		0			32,297
Professional services fees	Professional services fees	5,663		0		0		2,016		0		7,679		Professional services fees	3,928		0		0		867		0			4,795
Account fees and other	Account fees and other	1,046		5,141		355		5,134		120		11,796		Account fees and other	847		6,012		719		5,810		185			13,573
Total revenues	Total revenues	$	114,792	$	103,189	$	79,583	$	123,846	$	3,517	$	424,927	Total revenues	$	123,676	$	119,396	$	85,699	$	142,808	$	4,072		$	475,651

Primary Geographic Markets:	Primary Geographic Markets:													Primary Geographic Markets:
United States	United States	$	74,633	$	103,189	$	62,699	$	116,196	$	3,517	$	360,234	United States	$	78,848	$	119,396	$	67,792	$	132,648	$	4,072		$	402,756
United Kingdom	United Kingdom	25,234		0		12,930		0		0		38,164		United Kingdom	28,082		0		14,035		0		0			42,117
Canada	Canada	10,596		0		1,298		0		0		11,894		Canada	12,152		0		1,198		0		0			13,350
Ireland	Ireland	4,329		0		2,526		7,650		0		14,505		Ireland	4,594		0		2,546		10,160		0			17,300
Other	Other	0		0		130		0		0		130		Other	0		0		128		0		0			128
Total revenues	Total revenues	$	114,792	$	103,189	$	79,583	$	123,846	$	3,517	$	424,927	Total revenues	$	123,676	$	119,396	$	85,699	$	142,808	$	4,072		$	475,651

2524


		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
Major Product Lines:	Major Product Lines:	For the Three Months Ended September 30, 2019																							Major Product Lines:	For the Three Months Ended June 30, 2020
Investment management fees from pooled investment products	Investment management fees from pooled investment products	$	34,074	$	72,150	$	13,602	$	161	$	323	$	120,310	Investment management fees from pooled investment products	$	30,307	$	62,251	$	12,894	$	163	$	348		$	105,963
Investment management fees from investment management agreements	Investment management fees from investment management agreements	314		26,240		66,373		0		3,099		96,026		Investment management fees from investment management agreements	292		26,545		62,924		0		2,908			92,669
Investment operations fees	Investment operations fees	434		0		0		102,543		0		102,977		Investment operations fees	438		0		0		109,078		0			109,516
Investment processing fees - PaaS	Investment processing fees - PaaS	43,462		0		0		0		0		43,462		Investment processing fees - PaaS	44,191		0		0		0		0			44,191
Investment processing fees - SaaS	Investment processing fees - SaaS	34,018		0		0		2,789		0		36,807		Investment processing fees - SaaS	28,047		0		0		3,392		0			31,439
Professional services fees	Professional services fees	3,533		0		0		1,398		0		4,931		Professional services fees	3,157		0		0		1,384		0			4,541
Account fees and other	Account fees and other	1,415		4,643		362		5,295		26		11,741		Account fees and other	1,294		4,912		705		5,323		93			12,327
Total revenues	Total revenues	$	117,250	$	103,033	$	80,337	$	112,186	$	3,448	$	416,254	Total revenues	$	107,726	$	93,708	$	76,523	$	119,340	$	3,349		$	400,646

Primary Geographic Markets:	Primary Geographic Markets:													Primary Geographic Markets:
United States	United States	$	76,864	$	103,033	$	63,405	$	104,859	$	3,448	$	351,609	United States	$	71,607	$	93,708	$	60,414	$	111,137	$	3,349		$	340,215
United Kingdom	United Kingdom	24,604		0		12,717		0		0		37,321		United Kingdom	22,345		0		12,280		0		0			34,625
Canada	Canada	10,985		0		1,743		0		0		12,728		Canada	9,726		0		1,431		0		0			11,157
Ireland	Ireland	4,797		0		2,310		7,327		0		14,434		Ireland	4,048		0		2,265		8,203		0			14,516
Other	Other	0		0		162		0		0		162		Other	0		0		133		0		0			133
Total revenues	Total revenues	$	117,250	$	103,033	$	80,337	$	112,186	$	3,448	$	416,254	Total revenues	$	107,726	$	93,708	$	76,523	$	119,340	$	3,349		$	400,646

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 ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019:~~2020:


		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
Major Product Lines:	Major Product Lines:	For the Nine Months Ended September 30, 2020																							Major Product Lines:	For the Six Months Ended June 30, 2021
Investment management fees from pooled investment products	Investment management fees from pooled investment products	$	95,407	$	200,718	$	39,628	$	536	$	1,063	$	337,352	Investment management fees from pooled investment products	$	66,272	$	147,693	$	27,726	$	73	$	655		$	242,419
Investment management fees from investment management agreements	Investment management fees from investment management agreements	1,060		83,726		194,445		0		8,912		288,143		Investment management fees from investment management agreements	1,076		73,059		141,285		0		6,947			222,367
Investment operations fees	Investment operations fees	1,359		0		0		328,316		0		329,675		Investment operations fees	771		0		0		257,423		0			258,194
Investment processing fees - PaaS	Investment processing fees - PaaS	137,737		0		0		0		0		137,737		Investment processing fees - PaaS	106,622		0		0		0		0			106,622
Investment processing fees - SaaS	Investment processing fees - SaaS	84,783		0		0		10,122		0		94,905		Investment processing fees - SaaS	56,252		0		0		7,561		0			63,813
Professional services fees	Professional services fees	11,535		—		0		4,674		0		16,209		Professional services fees	8,335		0		0		2,014		0			10,349
Account fees and other	Account fees and other	3,858		14,774		1,236		16,167		279		36,314		Account fees and other	1,956		11,938		1,187		12,156		336			27,573
Total revenues	Total revenues	$	335,739	$	299,218	$	235,309	$	359,815	$	10,254	$	1,240,335	Total revenues	$	241,284	$	232,690	$	170,198	$	279,227	$	7,938		$	931,337

Primary Geographic Markets:	Primary Geographic Markets:													Primary Geographic Markets:
United States	United States	$	220,254	$	299,218	$	185,202	$	335,776	$	10,254	$	1,050,704	United States	$	153,943	$	232,690	$	134,512	$	259,664	$	7,938		$	788,747
United Kingdom	United Kingdom	71,938		0		38,034		0		0		109,972		United Kingdom	54,747		0		27,764		0		0			82,511
Canada	Canada	30,723		0		4,327		0		0		35,050		Canada	23,634		0		2,500		0		0			26,134
Ireland	Ireland	12,824		0		7,321		24,039		0		44,184		Ireland	8,960		0		5,165		19,563		0			33,688
Other	Other	0		0		425		0		0		425		Other	0		0		257		0		0			257
Total revenues	Total revenues	$	335,739	$	299,218	$	235,309	$	359,815	$	10,254	$	1,240,335	Total revenues	$	241,284	$	232,690	$	170,198	$	279,227	$	7,938		$	931,337

2625


		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
Major Product Lines:	Major Product Lines:	For the Nine Months Ended September 30, 2019																							Major Product Lines:	For the Six Months Ended June 30, 2020
Investment management fees from pooled investment products	Investment management fees from pooled investment products	$	100,498	$	208,860	$	41,062	$	550	$	957	$	351,927	Investment management fees from pooled investment products	$	63,151	$	132,431	$	26,211	$	356	$	707		$	222,856
Investment management fees from investment management agreements	Investment management fees from investment management agreements	1,299		75,526		199,620		0		8,510		284,955		Investment management fees from investment management agreements	639		53,965		128,634		0		5,871			189,109
Investment operations fees	Investment operations fees	1,172		0		0		297,342		0		298,514		Investment operations fees	913		0		0		215,279		0			216,192
Investment processing fees - PaaS	Investment processing fees - PaaS	130,529		0		0		0		0		130,529		Investment processing fees - PaaS	90,344		0		0		0		0			90,344
Investment processing fees - SaaS	Investment processing fees - SaaS	103,502		0		0		7,931		0		111,433		Investment processing fees - SaaS	57,216		0		0		6,643		0			63,859
Professional services fees	Professional services fees	9,896		0		0		4,363		0		14,259		Professional services fees	5,872		0		0		2,658		0			8,530
Account fees and other	Account fees and other	4,705		13,530		877		15,851		80		35,043		Account fees and other	2,812		9,633		881		11,033		159			24,518
Total revenues	Total revenues	$	351,601	$	297,916	$	241,559	$	326,037	$	9,547	$	1,226,660	Total revenues	$	220,947	$	196,029	$	155,726	$	235,969	$	6,737		$	815,408

Primary Geographic Markets:	Primary Geographic Markets:													Primary Geographic Markets:
United States	United States	$	229,207	$	297,916	$	189,383	$	304,711	$	9,547	$	1,030,764	United States	$	145,621	$	196,029	$	122,503	$	219,580	$	6,737		$	690,470
United Kingdom	United Kingdom	75,649		0		39,323		0		0		114,972		United Kingdom	46,704		0		25,104		0		0			71,808
Canada	Canada	32,527		0		5,178		0		0		37,705		Canada	20,127		0		3,029		0		0			23,156
Ireland	Ireland	14,218		0		6,977		21,326		0		42,521		Ireland	8,495		0		4,795		16,389		0			29,679
Other	Other	0		0		698		0		0		698		Other	0		0		295		0		0			295
Total revenues	Total revenues	$	351,601	$	297,916	$	241,559	$	326,037	$	9,547	$	1,226,660	Total revenues	$	220,947	$	196,029	$	155,726	$	235,969	$	6,737		$	815,408

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.

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 ~~to clients of the Investment Advisors segment~~ 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 - 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

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.

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.

The Company 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 the value of assets under management or administration.

2827

Item 2. ~~Management��s~~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, ~~2019.~~2020.

Overview

Consolidated Summary

SEI is a leading global provider of technology-driven wealth and investment management solutions. We deliver comprehensive platforms, services and ~~infrastructure –~~ infrastructure—encompassing ~~investment processing, investment operations~~technology, operational, and investment management – services—to help wealth managers, financial advisors, investment managers, family offices, institutional and private investors create and manage wealth. Investment processing fees are earned as either monthly fees for contracted services or as a percentage of the market value of our clients' assets processed on our platforms. Investment operations and investment management fees are earned as a percentage of assets under management, administration or advised assets (See Note 13 to the Consolidated Financial Statements for more information pertaining to our revenues). As of ~~September~~June 30, ~~2020,~~2021, through our subsidiaries and partnerships in which we have a significant interest, we manage, advise or administer ~~$1.1~~$1.3 trillion in hedge, private equity, mutual fund and pooled or separately managed assets, including ~~$330.2~~$399.1 billion in assets under management and ~~$754.5~~$880.4 billion in client assets under administration. Our affiliate, LSV Asset Management (LSV), manages ~~$82.1~~$102.4 billion of assets which are included as assets under management.

~~Our~~ Condensed Consolidated Statements of Operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 were:


		Three Months Ended September 30,					Percent Change*			Nine Months Ended September 30,								Percent Change*	Three Months Ended June 30,					Percent Change*			Six Months Ended June 30,			Percent Change*
		2020		2019					2020			2019				Percent Change*	2021		2020	Percent Change*							2020		Percent Change*
Revenues	Revenues	$	424,927	$	416,254	2%	$	1,240,335		$	1,226,660		1%	Revenues	$		$	400,646	19%			$	815,408			14%
Expenses	Expenses	313,590		295,617		6%	918,458			882,326			4%	Expenses	339,630		300,334		13%			662,479				604,868		10%
Income from operations	Income from operations	111,337		120,637		(8)%	321,877			344,334			(7)%	Income from operations	136,021		100,312		36%	268,858				210,540			28%
Net gain (loss) from investments	Net gain (loss) from investments	776		611		27%	(1,310)			2,121			NM	Net gain (loss) from investments	377		1,903		(80)%	709				(2,086)			NM
Interest income, net of interest expense	Interest income, net of interest expense	856		4,013		(79)%	5,126			12,260			(58)%	Interest income, net of interest expense	748		1,219		(39)%	1,570				4,270			(63)%
Equity in earnings from unconsolidated affiliate	Equity in earnings from unconsolidated affiliate	28,305		37,609		(25)%	86,488			112,758			(23)%	Equity in earnings from unconsolidated affiliate	35,065		28,276		24%	68,415				58,183			18%
Income before income taxes	Income before income taxes	141,274		162,870		(13)%	412,181			471,473			(13)%	Income before income taxes	172,211		131,710		31%	339,552				270,907			25%
Income taxes	Income taxes	30,178		30,702		(2)%	90,777			98,784			(8)%	Income taxes	38,433		30,644		25%	76,304				60,599			26%
Net income	Net income	111,096		132,168		(16)%	321,404			372,689			(14)%	Net income	133,778		101,066		32%	263,248				210,308			25%
Diluted earnings per common share	Diluted earnings per common share	$	0.75	$	0.86	(13)%	$	2.14		$	2.40		(11)%	Diluted earnings per common share	$	0.93	$	0.68	37%	$	1.82			$	1.39		31%

* 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~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019:~~2020:

•Revenue from Asset management, administration and distribution fees increased primarily from higher average assets under administration from market appreciation and positive cash flows from new and existing clients in the Investment Managers segment. ~~Our average~~Average assets under administration increased ~~$73.1~~$185.4 billion, or ~~12%~~24%, to ~~$697.0~~$839.9 billion in the first ~~nine~~six months of ~~2020~~2021 as compared to ~~$623.9~~$676.0 billion during the first ~~nine~~six months of ~~2019.~~2020.

•~~Our average~~Average assets under management, excluding LSV, increased ~~$8.4~~$54.9 billion to ~~$236.7~~$286.9 billion in the first ~~nine~~six months of ~~2020~~2021 as compared to ~~$228.3~~$232.0 billion during the first ~~nine~~six months of ~~2019.~~2020. The increase was primarily due to market appreciation from the strong recovery of capital markets during the later half of 2020 and first half of 2021. Recent defined benefit plan client losses in the Institutional Investors segment partially offset the increase. These client losses will also negatively impact revenues during the third quarter ~~2020 from the downturn caused by the emergence of the COVID-19 pandemic.~~2021.

•Information processing and software servicing fees in ~~our~~the Private Banks segment ~~decreased by $10.8~~increased $17.3 million during the first ~~nine~~six months of 2021 due to higher asset balances processed on SWP.

•Earnings from LSV increased to $68.4 million in the first six months of 2021 as compared to $58.2 million in the first six months of 2020 due to ~~previously announced client losses.~~

•~~Our proportionate share in the earnings of LSV decreased to $86.5 million in the first nine months of 2020 as compared to $112.8 million in the first nine months of 2019 due to lower~~higher assets under management from ~~negative~~market appreciation and new clients. Negative cash flows from existing clients ~~market volatility caused by the COVID-19 pandemic~~ and client ~~losses.~~losses partially offset the increase in earnings from LSV.

2928

•We continue to invest in new business opportunities such as our One SEI strategy and IT Services offering. The majority of these costs are recorded in the Investments in New Businesses segment and are included in Consulting, outsourcing and professional fees on the accompanying Consolidated Statements of Operations.

•~~Our operating~~Operating expenses ~~in our Investment Managers segment~~ increased primarily ~~due~~from direct costs related to increased revenues and higher personnel costs to service new ~~clients.~~

•~~Travel and promotional-related expenses declined by $11.9 million during~~clients in the ~~first nine months of 2020 as our sales and client relationship personnel adapted to COVID-19 restrictions.~~Investment Managers segment.

•We capitalized ~~$17.2~~$12.2 million in the first ~~nine~~six months of ~~2020~~2021 for the SEI Wealth Platform as compared to ~~$26.0~~$11.8 million in the first ~~nine~~six months of ~~2019.~~2020. Amortization expense related to SWP increased to ~~$32.6~~$23.9 million during the first ~~nine~~six months of ~~2020~~2021 as compared to ~~$31.6~~$21.7 million during the first ~~nine~~six months of ~~2019.~~2020 due to additional enhancements placed in service.

•~~Our~~The effective tax rate during the ~~third~~second quarter of ~~2020~~2021 was ~~21.4%~~22.3% as compared to ~~18.9%~~23.3% during the ~~third~~second quarter of ~~2019. Our~~2020. The decrease in the tax rate ~~was 22.0% during the first nine months of 2020 as compared to 21.0% during the first nine months of 2019. The increase in our tax rate for both periods~~ was primarily due to ~~an increase in our state effective tax rate. Our third quarter 2020 tax rate was also impacted by decreased~~increased tax benefits associated with stock option exercises. The effective tax rate was 22.5% during the first six months of 2021 as compared to 22.4% during the first six months of 2020.

•We continued ~~our~~the stock repurchase program during ~~2020~~2021 and purchased ~~6.2~~3.2 million shares for ~~$325.6~~$196.2 million in the ~~nine~~six month period.

Impact of COVID-19 and Other Events

The occurrence of unforeseen or catastrophic events, including the emergence of a pandemic or other widespread health emergency or concerns over the possibility of such an emergency, could create economic and financial disruptions, and could lead to operational difficulties that could impair our ability to manage our business. In December 2019, a novel strain of coronavirus (COVID-19) was identified in Wuhan, China. COVID-19 quickly spread globally, leading the World Health Organization to declare the COVID-19 virus outbreak a global pandemic in March 2020. Since that time, governmental authorities have implemented numerous and varying measures to stall the spread and ameliorate the impact of COVID-19, including travel bans and restrictions, quarantines, curfews, shelter in place and safer-at-home orders, business shutdowns and closures, and have also implemented multi-step policies with the goal of re-opening domestic and global markets. Certain jurisdictions have begun re-opening only to return to restrictions in the face of increases in new COVID-19 cases. Recent developments include the phased re-opening of domestic and global markets to varying degrees.

In March 2020, we executed upon our business resiliency and contingency plans. To date, our remote capabilities have proven to be effective during the disruption caused by the COVID-19 pandemic with almost the entire workforce working remotely, with only a very limited number of on-site activities in our operational offices continuing to be performed.

We continue to closely monitor the domestic and international landscape for changes in governmental measures both in the United States and in the locations where we rely on critical outsourced services. We continue to be in regular contact with regulators, clients and vendors to confirm the measures taken to continue operating during this crisis, taking into consideration the latest announcements from state and federal authorities. We are also in continuous communication with our workforce to provide for the health and welfare of our employees working remotely and have implemented a return plan that is available for review on our website for those employees working in our operational offices. ~~Currently, we have approximately 250 employees that routinely work out of our offices world-wide.~~ We will monitor the ability of these individuals to work as safely as possible at our offices and make adjustments to the number of on-site personnel (either increases or decreases) accordingly. We expect that the individual circumstances of our employees regarding school, childcare, care-giving and underlying health concerns will significantly impact our ability to return staff to their primary office locations.

The majority of our revenues are based on the value of assets invested in investment products that we manage or administer which are affected by changes in the capital markets and the portfolio strategy of our clients or their customers. The ~~market volatility~~strong recovery of the capital markets after the widespread economic shutdowns in response to ~~measures taken to contain~~ the ~~spread~~emergence of ~~COVID-19 negatively impacted~~the pandemic has had a positive impact on our asset-based ~~fee~~fees thereby increasing our base revenues. Any prolonged future downturns in general capital market conditions or long-term client portfolio strategies directing significant assets into lower margin products could have adverse effects on our revenues and partially offset our revenue growth. Additionally, changes in the portfolio strategy of our clients or their customers in response to market volatility resulted in asset flows into our lower margin liquidity productsearnings derived from assets under management and ~~negatively impacted our earnings.~~administration.

While we have developed and implemented and continue to develop and implement health and safety protocols, business continuity plans and crisis management protocols designed to mitigate the potentially negative impact of COVID-19 to our employees and our business, the extent of the impact of the pandemic on our business and financial results will continue to depend on numerous evolving factors that we are not able to accurately predict and which will vary by market, including the duration and scope of the pandemic, the effectiveness of vaccinations, the implications arising out of the emerging and potentially yet to be identified variants of COVID-19, global economic conditions during and after the pandemic, governmental actions

that have been taken, or may be taken in the future, in response to the pandemic, the extent that critical public and private infrastructure functions upon which we rely are suspended and changes in investor and consumer behavior in response to the pandemic. The resulting market conditions may adversely affect our revenues and earnings derived from assets under management and administration.

On May 17, 2020, M.J. Brunner, ~~(Brunner),~~ one of our third-party developers/vendors that provides development services and application management for two of our client applications experienced a ransomware attack. We are aware that certain client data was illegally accessed and revealed by cybercriminal(s). The applications themselves were not compromised by this attack. We take our clients’ security very seriously, and we continue to work with Brunner, the FBI and our impacted clients to understand the extent to which SEI’s or our clients’ data has been exposed. ~~We are also working with the appropriate parties with respect to notification and remediation protocols.~~ The root cause of the attack was not predicated on vulnerability within SEI’s network, and neither SEI’s network nor operations were compromised, attacked or otherwise affected as part of this incident. While there were direct and indirect expenses associated with the incident in each fiscal quarter since the ~~second and third quarters of 2020,~~incident, and we expect there will continue to be costs associated with the incident going-forward, ~~it is~~we do not ~~expected~~expect these will be material. We note that several regulatory bodies who routinely review our operations, including the ~~Securities and Exchange Commission (SEC)~~SEC and the United States Federal Financial Institutions Examination Council (FFIEC), have requested information with respect to, and are investigating the facts and circumstances surrounding, the ransomware attack on Brunner. We ~~have begun~~are producing documents and information to these bodies regarding this ~~matter. We expect~~matter as and when requested.

One SEISM Strategy

In 2020, we invested in our One SEI strategy. The One SEI strategy is a company-wide initiative to ~~continue~~open business opportunities across the entire company by leveraging existing and new SEI platforms and making them accessible to ~~engage~~all types of clients, adjacent markets and other non-SEI platforms. As we execute on our strategy, we have incurred significant costs during 2020 to integrate, modularize and leverage these technologies in ~~discussions with~~our service offerings for the front, middle and back-office. The majority of these ~~bodies and that~~costs have been recognized in the Investments in New Businesses segment. To date, we ~~may be contacted by, engage with and provide information to additional governmental or regulatory bodies or authorities.~~

~~On July 1, 2020, one of our storage arrays supported by our third party vendor, Dell-EMC, failed due~~have not capitalized any software development costs related to the operation of an application deployed by the vendor as part of our production infrastructure. As a consequence of the hardware failure, transactional activities on our platforms were extremely limited on July 1st and 2nd. All systems are currently on-line and 100% functional. This event was not caused by a third-party actor. While there were direct and indirect expenses in the quarter, and we expect there will continue to be costs associated with the outage going-forward, it is not expected these will be material. In response to the outage, we have launched a project internally, that will be supported by third-party experts, to identify tactical and strategic improvements that we should make across our enterprise technology footprint, including a review and improvement of our technical and operational resiliency plans and capabilities. We expect that this work will lead to recommendations that will result in additional investments of capital in hardware, software and personnel.One SEI strategy. We expect these ~~costs~~investments will ~~include both new investments~~continue throughout 2021 as ~~well as a reprioritization of current spend. Currently,~~ we ~~are not able~~continue to ~~fully-estimate the total amount of additional expense as this will be part of an ongoing strategy around recovery and resiliency.~~deliver on our One SEI strategy.

3130

Ending Asset Balances

(In millions)


		As of September 30,							Percent Change		As of June 30,					Percent Change
		2020		2019			Percent Change			2021			2020		Percent Change
Private Banks:	Private Banks:
Equity and fixed-income programs	Equity and fixed-income programs	$	23,499	$	22,580	4%	Equity and fixed-income programs	$	26,264		$	22,974		14%
Collective trust fund programs	Collective trust fund programs	6		4		50%	Collective trust fund programs	7			5			40%
Liquidity funds	Liquidity funds	3,718		3,695		1%	Liquidity funds	3,654			4,291			(15)%
Total assets under management	Total assets under management	$	27,223	$	26,279	4%	Total assets under management	$	29,925		$	27,270		10%
Client assets under administration	Client assets under administration	24,174		23,985		1%	Client assets under administration	4,412			23,903			(82)%
Total assets	Total assets	$	51,397	$	50,264	2%	Total assets	$	34,337		$	51,173		(33)%
Investment Advisors:	Investment Advisors:						Investment Advisors:
Equity and fixed-income programs	Equity and fixed-income programs	$	65,581	$	65,059	1%	Equity and fixed-income programs	$	78,052		$	59,958		30%
Collective trust fund programs	Collective trust fund programs	3		4		(25)%	Collective trust fund programs	1			3			(67)%
Liquidity funds	Liquidity funds	3,866		2,673		45%	Liquidity funds	3,550			6,648			(47)%
Total assets under management	Total assets under management	$	69,450	$	67,736	3%	Total assets under management	$	81,603		$	66,609		23%
Institutional Investors:	Institutional Investors:						Institutional Investors:
Equity and fixed-income programs	Equity and fixed-income programs	$	83,846	$	82,659	1%	Equity and fixed-income programs	$	93,010		$	80,257		16%
Collective trust fund programs	Collective trust fund programs	101		81		25%	Collective trust fund programs	5			103			(95)%
Liquidity funds	Liquidity funds	2,096		2,290		(8)%	Liquidity funds	2,516			1,924			31%
Total assets under management	Total assets under management	$	86,043	$	85,030	1%	Total assets under management	$	95,531		$	82,284		16%
Client assets under advisement	Client assets under advisement	3,618		4,467		(19)%	Client assets under advisement	4,566			3,326			37%
Total assets	Total assets	$	89,661	$	89,497	—%	Total assets	$	100,097		$	85,610		17%
Investment Managers:	Investment Managers:						Investment Managers:
Collective trust fund programs	Collective trust fund programs	$	63,277	$	53,169	19%	Collective trust fund programs	$	87,012		$	58,178		50%
Liquidity funds	Liquidity funds	389		477		(18)%	Liquidity funds	473			664			(29)%
Total assets under management	Total assets under management	$	63,666	$	53,646	19%	Total assets under management	$	87,485		$	58,842		49%
Client assets under administration (A)	Client assets under administration (A)	730,369		637,986		14%	Client assets under administration (A)	875,942			668,611			31%
Total assets	Total assets	$	794,035	$	691,632	15%	Total assets	$	963,427		$	727,453		32%
Investments in New Businesses:	Investments in New Businesses:						Investments in New Businesses:
Equity and fixed-income programs	Equity and fixed-income programs	$	1,572	$	1,621	(3)%	Equity and fixed-income programs	$	1,924		$	1,498		28%
Liquidity funds	Liquidity funds	169		132		28%	Liquidity funds	191			194			(2)%
Total assets under management	Total assets under management	$	1,741	$	1,753	(1)%	Total assets under management	$	2,115		$	1,692		25%
Client assets under advisement	Client assets under advisement	1,179		825		43%	Client assets under advisement	1,422			1,193			19%
Total assets	Total assets	$	2,920	$	2,578	13%	Total assets	$	3,537		$	2,885		23%
LSV:	LSV:						LSV:
Equity and fixed-income programs (B)	Equity and fixed-income programs (B)	$	82,051	$	100,295	(18)%	Equity and fixed-income programs (B)	$	102,404		$	81,134		26%
Total:	Total:						Total:
Equity and fixed-income programs (C)	Equity and fixed-income programs (C)	$	256,549	$	272,214	(6)%	Equity and fixed-income programs (C)	$	301,654		$	245,821		23%
Collective trust fund programs	Collective trust fund programs	63,387		53,258		19%	Collective trust fund programs	87,025			58,289			49%
Liquidity funds	Liquidity funds	10,238		9,267		10%	Liquidity funds	10,384			13,721			(24)%
Total assets under management	Total assets under management	$	330,174	$	334,739	(1)%	Total assets under management	$	399,063		$	317,831		26%
Client assets under advisement	Client assets under advisement	4,797		5,292		(9)%	Client assets under advisement	5,988			4,519			33%
Client assets under administration (D)	Client assets under administration (D)	754,543		661,971		14%	Client assets under administration (D)	880,354			692,514			27%
Total assets under management, advisement and administration	Total assets under management, advisement and administration	$	1,089,514	$	1,002,002	9%	Total assets under management, advisement and administration	$	1,285,405		$	1,014,864		27%

3231

(A)Client assets under administration in the Investment Managers segment include ~~$51.1~~$49.6 billion of assets that are at fee levels below our normal full service assets (as of ~~September~~June 30, ~~2020)~~2021).

(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~~June 30, ~~2020~~2021 was ~~$1.6~~$2.4 billion.

(C) Equity and fixed-income programs include ~~$7.5~~$8.0 billion of assets invested in various asset allocation funds at ~~September~~June 30, ~~2020.~~2021.

(D) In addition to the numbers presented, SEI also administers an additional ~~$11.5~~$13.5 billion in Funds of Funds assets (as of ~~September~~June 30, ~~2020)~~2021) on which SEI does not earn an administration fee.

Average Asset Balances

(In millions)


	Three Months Ended June 30,				Percent Change	Six Months Ended June 30,				Percent Change
	2021		2020			2021		2020
Private Banks:
Equity and fixed-income programs	$	26,056	$	22,229	17%	$	25,598	$	23,443	9%
Collective trust fund programs	7		5		40%	7		5		40%
Liquidity funds	3,833		4,366		(12)%	3,855		3,974		(3)%
Total assets under management	$	29,896	$	26,600	12%	$	29,460	$	27,422	7%
Client assets under administration	4,405		23,819		(82)%	4,361		24,330		(82)%
Total assets	$	34,301	$	50,419	(32)%	$	33,821	$	51,752	(35)%
Investment Advisors:
Equity and fixed-income programs	$	76,839	$	57,429	34%	$	75,039	$	61,181	23%
Collective trust fund programs	1		3		(67)%	1		3		(67)%
Liquidity funds	3,370		6,923		(51)%	3,495		5,104		(32)%
Total assets under management	$	80,210	$	64,355	25%	$	78,535	$	66,288	18%
Institutional Investors:
Equity and fixed-income programs	$	93,458	$	77,037	21%	$	92,404	$	78,482	18%
Collective trust fund programs	68		100		(32)%	82		93		(12)%
Liquidity funds	2,681		2,476		8%	2,651		2,409		10%
Total assets under management	$	96,207	$	79,613	21%	$	95,137	$	80,984	17%
Client assets under advisement	4,516		3,362		34%	4,331		3,561		22%
Total assets	$	100,723	$	82,975	21%	$	99,468	$	84,545	18%
Investment Managers:
Collective trust fund programs	$	84,553	$	54,061	56%	$	81,294	$	55,007	48%
Liquidity funds	469		482		(3)%	480		550		(13)%
Total assets under management	$	85,022	$	54,543	56%	$	81,774	$	55,557	47%
Client assets under administration (A)	853,810		649,012		32%	835,570		651,699		28%
Total assets	$	938,832	$	703,555	33%	$	917,344	$	707,256	30%
Investments in New Businesses:
Equity and fixed-income programs	$	1,870	$	1,468	27%	$	1,807	$	1,566	15%
Liquidity funds	236		182		30%	203		175		16%
Total assets under management	$	2,106	$	1,650	28%	$	2,010	$	1,741	15%
Client assets under advisement	1,406		1,148		22%	1,367		1,185		15%
Total assets	$	3,512	$	2,798	26%	$	3,377	$	2,926	15%
LSV:
Equity and fixed-income programs (B)	$	103,583	$	80,395	29%	$	100,530	$	84,227	19%
Total:
Equity and fixed-income programs (C)	$	301,806	$	238,558	27%	$	295,378	$	248,899	19%
Collective trust fund programs	84,629		54,169		56%	81,384		55,108		48%
Liquidity funds	10,589		14,429		(27)%	10,684		12,212		(13)%
Total assets under management	$	397,024	$	307,156	29%	$	387,446	$	316,219	23%
Client assets under advisement	5,922		4,510		31%	5,698		4,746		20%
Client assets under administration (D)	858,215		672,831		28%	839,931		676,029		24%
Total assets under management, advisement and administration	$	1,261,161	$	984,497	28%	$	1,233,075	$	996,994	24%

~~Average Asset Balances~~

~~(In millions)~~

Three Months Ended September 30, Percent Change Nine Months Ended September 30, Percent Change
2020 2019 2020 2019
Private Banks:
Equity and fixed-income programs $ 23,740 $ 22,432 6% $ 23,542 $ 22,117 6%
Collective trust fund programs 7 4 75% 5 4 25%
Liquidity funds 3,948 3,625 9% 3,965 3,573 11%
Total assets under management $ 27,695 $ 26,061 6% $ 27,512 $ 25,694 7%
Client assets under administration 25,295 23,717 7% 24,651 22,980 7%
Total assets $ 52,990 $ 49,778 6% $ 52,163 $ 48,674 7%
Investment Advisors:
Equity and fixed-income programs $ 64,479 $ 64,761 —% $ 62,280 $ 61,971 —%
Collective trust fund programs 3 5 (40)% 3 5 (40)%
Liquidity funds 4,569 2,580 77% 4,925 3,781 30%
Total assets under management $ 69,051 $ 67,346 3% $ 67,208 $ 65,757 2%
Institutional Investors:
Equity and fixed-income programs $ 82,830 $ 82,398 1% $ 79,931 $ 82,240 (3)%
Collective trust fund programs 102 80 28% 96 79 22%
Liquidity funds 2,120 2,287 (7)% 2,313 2,335 (1)%
Total assets under management $ 85,052 $ 84,765 —% $ 82,340 $ 84,654 (3)%
Client assets under advisement 3,565 3,797 (6)% 3,562 3,644 (2)%
Total assets $ 88,617 $ 88,562 —% $ 85,902 $ 88,298 (3)%
Investment Managers:
Collective trust fund programs $ 62,028 $ 52,587 18% $ 57,347 $ 50,006 15%
Liquidity funds 565 460 23% 555 505 10%
Total assets under management $ 62,593 $ 53,047 18% $ 57,902 $ 50,511 15%
Client assets under administration (A) 713,528 630,328 13% 672,309 600,967 12%
Total assets $ 776,121 $ 683,375 14% $ 730,211 $ 651,478 12%
Investments in New Businesses:
Equity and fixed-income programs $ 1,560 $ 1,609 (3)% $ 1,564 $ 1,480 6%
Liquidity funds 180 142 27% 177 174 2%
Total assets under management $ 1,740 $ 1,751 (1)% $ 1,741 $ 1,654 5%
Client assets under advisement 1,206 842 43% 1,192 822 45%
Total assets $ 2,946 $ 2,593 14% $ 2,933 $ 2,476 18%
LSV:
Equity and fixed-income programs (B) $ 83,536 $ 100,094 (17)% $ 83,997 $ 102,510 (18)%
Total:
Equity and fixed-income programs (C) $ 256,145 $ 271,294 (6)% $ 251,314 $ 270,318 (7)%
Collective trust fund programs 62,140 52,676 18% 57,451 50,094 15%
Liquidity funds 11,382 9,094 25% 11,935 10,368 15%
Total assets under management $ 329,667 $ 333,064 (1)% $ 320,700 $ 330,780 (3)%
Client assets under advisement 4,771 4,639 3% 4,754 4,466 6%
Client assets under administration (D) 738,823 654,045 13% 696,960 623,947 12%
Total assets under management, advisement and administration $ 1,073,261 $ 991,748 8% $ 1,022,414 $ 959,193 7%

(A) Average client assets under administration in the Investment Managers segment for the three months ended ~~September~~June 30, ~~2020~~2021 include ~~$50.4~~$51.6 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~~June 30, ~~2020~~2021 was ~~$1.6~~$2.4 billion.

(C) Equity and fixed-income programs include ~~$7.5~~$8.0 billion of average assets invested in various asset allocation funds for the three months ended ~~September~~June 30, ~~2020.~~2021.

(D) In addition to the numbers presented, SEI also administers an additional ~~$11.4~~$13.5 billion of average assets in Funds of Funds assets for the three months ended ~~September~~June 30, ~~2020~~2021 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. 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 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~~six months ended ~~September~~June 30, ~~2020~~2021 compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 were as follows:


		Three Months Ended September 30,							Percent Change				Nine Months Ended September 30,										Percent Change		Three Months Ended June 30,						Percent Change					Six Months Ended June 30,			Percent Change
		2020			2019							2020				2019				Percent Change		2021			2020	Percent Change										2020		Percent Change
Private Banks:	Private Banks:																	Private Banks:
Revenues	Revenues	$	114,792		$	117,250		(2)%	$	335,739			$	351,601			(5)%	Revenues	$	123,676		$	107,726		15%				$	241,284				$	220,947		9%
Expenses	Expenses	113,066			110,788			2%	331,442				329,540				1%	Expenses	117,654			107,723			9%	228,378					218,376					5%
Operating Profit	Operating Profit	$	1,726		$	6,462		(73)%	$	4,297			$	22,061			(81)%	Operating Profit	$	6,022		$	3		NM	$	12,906				$	2,571				402%
Operating Margin	Operating Margin	2		%	6		%		1		%		6		%			Operating Margin	5		%	—		%		5		%			1		%
Investment Advisors:	Investment Advisors:																	Investment Advisors:
Revenues	Revenues	$	103,189		$	103,033		—%	$	299,218			$	297,916			—%	Revenues	$	119,396		$	93,708		27%	$	232,690				$	196,029				19%
Expenses	Expenses	51,519			51,509			—%	154,100				154,569				—%	Expenses	59,133			50,149			18%	114,160					102,581					11%
Operating Profit	Operating Profit	$	51,670		$	51,524		—%	$	145,118			$	143,347			1%	Operating Profit	$	60,263		$	43,559		38%	$	118,530				$	93,448				27%
Operating Margin	Operating Margin	50		%	50		%		48		%		48		%			Operating Margin	50		%	46		%		51		%			48		%
Institutional Investors:	Institutional Investors:																	Institutional Investors:
Revenues	Revenues	$	79,583		$	80,337		(1)%	$	235,309			$	241,559			(3)%	Revenues	$	85,699		$	76,523		12%	$	170,198				$	155,726				9%
Expenses	Expenses	37,812			37,268			1%	113,016				115,383				(2)%	Expenses	41,895			36,937			13%	81,053					75,204					8%
Operating Profit	Operating Profit	$	41,771		$	43,069		(3)%	$	122,293			$	126,176			(3)%	Operating Profit	$	43,804		$	39,586		11%	$	89,145				$	80,522				11%
Operating Margin	Operating Margin	52		%	54		%		52		%		52		%			Operating Margin	51		%	52		%		52		%			52		%
Investment Managers:	Investment Managers:																	Investment Managers:
Revenues	Revenues	$	123,846		$	112,186		10%	$	359,815			$	326,037			10%	Revenues	$	142,808		$	119,340		20%	$	279,227				$	235,969				18%
Expenses	Expenses	79,838			71,889			11%	228,795				209,326				9%	Expenses	84,995			74,668			14%	168,015					148,957					13%
Operating Profit	Operating Profit	$	44,008		$	40,297		9%	$	131,020			$	116,711			12%	Operating Profit	$	57,813		$	44,672		29%	$	111,212				$	87,012				28%
Operating Margin	Operating Margin	36		%	36		%		36		%		36		%			Operating Margin	40		%	37		%		40		%			37		%
Investments in New Businesses:	Investments in New Businesses:																	Investments in New Businesses:
Revenues	Revenues	$	3,517		$	3,448		2%	$	10,254			$	9,547			7%	Revenues	$	4,072		$	3,349		22%	$	7,938				$	6,737				18%
Expenses	Expenses	13,315			7,926			68%	37,691				20,663				82%	Expenses	13,631			13,466			1%	27,035					24,376					11%
Operating Loss	Operating Loss	$	(9,798)		$	(4,478)		NM	$	(27,437)			$	(11,116)			NM	Operating Loss	$	(9,559)		$	(10,117)		NM	$	(19,097)				$	(17,639)				NM

For additional information pertaining to our business segments, see Note 9 to the Consolidated Financial Statements.

3534

Private Banks


		Three Months Ended September 30,					Percent Change			Nine Months Ended September 30,								Percent Change	Three Months Ended June 30,					Percent Change				Six Months Ended June 30,			Percent Change
		2020		2019					2020			2019				Percent Change	2021		2020	Percent Change								2020		Percent Change
Revenues:	Revenues:													Revenues:
Information processing and software servicing fees	Information processing and software servicing fees	$	81,811	$	82,503	(1)%	$	238,099		$	248,850		(4)%	Information processing and software servicing fees	$	89,264	$	76,655	16%			$	173,567			$	156,288		11%
Asset management, administration & distribution fees	Asset management, administration & distribution fees	32,981		34,747		(5)%	97,640			102,751			(5)%	Asset management, administration & distribution fees	34,412		31,071		11%	67,717				64,659				5%
Total revenues	Total revenues	$	114,792	$	117,250	(2)%	$	335,739		$	351,601		(5)%	Total revenues	$	123,676	$	107,726	15%	$	241,284			$	220,947			9%

Revenues ~~decreased $2.5~~increased $16.0 million, or 2%15%, in the three month period and ~~decreased $15.9~~increased $20.3 million, or 5%9%, in the ~~nine~~six month period ended ~~September~~June 30, ~~2020~~2021 and were primarily affected by:

•~~Decreased investment processing fees from the loss of clients;~~

•~~Decreased investment management fees from existing international clients due to negative cash flows and the significant market volatility during 2020; and~~

•~~Lower recurring investment processing fees earned on our mutual fund trading solution; partially offset by~~

•Increased investment processing fees from new SWP client conversions and growth from existing SWP ~~clients.~~clients, partially due to market appreciation;

•Increased investment management fees from existing international clients due to market appreciation;

•Increased non-recurring professional service fees from existing clients and one-time early termination fees from an existing TRUST 3000® client; 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

•Decreased investment processing fees from the loss of clients; and

•Decreased investment management fees from liquidity products.

Operating margins ~~decreased~~increased to ~~2% compared to 6%~~5% in the three month and six month periods. Operating margins in the prior year comparable periods were essentially flat. Operating income increased by $6.0 million in the three month period and ~~decreased to 1% compared to 6%~~increased by $10.3 million in the ~~nine month period. Operating income decreased by $4.7 million, or 73%, in the three month period and decreased $17.8 million, or 81%, in the nine~~six month period and was primarily affected by:

•~~A decrease~~An increase in revenues; ~~and~~

•~~Increased~~Decreased non-capitalized costs, mainly personnel and consulting costs, related to maintenance, support and client migrations to SWP; and

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

•~~Decreased~~Increased direct expenses associated with ~~decreased~~increased investment management fees from existing international clients;

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

•~~Decreased promotion~~Increased personnel and ~~travel costs due to COVID-19 restrictions.~~

stock-based compensation costs.

Investment Advisors


		Three Months Ended September 30,					Percent Change			Nine Months Ended September 30,								Percent Change	Three Months Ended June 30,					Percent Change				Six Months Ended June 30,			Percent Change
		2020		2019					2020			2019				Percent Change	2021		2020	Percent Change								2020		Percent Change
Revenues:	Revenues:													Revenues:
Investment management fees-SEI fund programs	Investment management fees-SEI fund programs	$	68,287	$	72,150	(5)%	$	200,718		$	208,860		(4)%	Investment management fees-SEI fund programs	$	75,039	$	62,251	21%			$	147,693			$	132,431		12%
Separately managed account fees	Separately managed account fees	29,761		26,240		13%	83,726			75,526			11%	Separately managed account fees	38,345		26,545		44%	73,059				53,965				35%
Other fees	Other fees	5,141		4,643		11%	14,774			13,530			9%	Other fees	6,012		4,912		22%	11,938				9,633				24%
Total revenues	Total revenues	$	103,189	$	103,033	—%	$	299,218		$	297,916		—%	Total revenues	$	119,396	$	93,708	27%	$	232,690			$	196,029			19%

Revenues increased ~~slightly~~$25.7 million, or 27%, in the three month period and ~~nine~~increased $36.7 million, or 19%, in the six month ~~periods~~period ended ~~September~~June 30, ~~2020~~2021 and were primarily affected by:

•Increased separately managed account program fees from positive cash flows into new and existing SEI-sponsored programs; ~~partially offset by~~and

•The ~~negative~~positive impact to investment management fees from ~~the significant~~ market ~~volatility during 2020; and~~appreciation; partially offset by

•Negative cash flows from SEI-sponsored mutual ~~funds and a decrease in average basis points earned on assets.~~funds.

3635

Operating margin ~~remained at~~increased to 50% compared to 46% in the three month period and increased to 51% compared to 48% in the ~~nine~~six month period. Operating income increased ~~slightly~~$16.7 million, or 38%, in the three month period and ~~nine~~increased $25.1 million, or 27%, in the six month ~~periods~~period and was primarily affected by:

•An increase in ~~revenues in the nine month period;~~

•~~Decreased costs associated with accounts formerly processed on TRUST 3000~~^® ~~due to client migrations to SWP;~~revenues; and

•Decreased ~~promotion~~non-capitalized costs, mainly personnel and ~~travel~~consulting costs, ~~due~~related to ~~COVID-19 restrictions;~~maintenance, support and client migrations to SWP; partially offset by

•Increased direct expenses associated with increased assets into our ~~investment products.~~separately managed account program; and

•Increased promotion costs as well as increased personnel and stock-based compensation costs.

Institutional Investors

Revenues ~~decreased slightly~~increased $9.2 million, or 12%, in the three month period and ~~decreased $6.3~~increased $14.5 million, or 3%9%, in the ~~nine~~six month period ended ~~September~~June 30, ~~2020~~2021 and were primarily affected by:

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

•~~The negative impact to~~Increased investment management fees from ~~the significant~~ market ~~volatility during 2020; partially offset by~~appreciation;

•Asset funding from new sales of our ~~investment management platforms.~~OCIO platform; 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

•Defined benefit client losses.

Operating margin decreased to ~~52%~~51% compared to ~~54%~~52% in the three month period and remained at 52% in the ~~nine~~six month period. Operating income ~~decreased $1.3~~increased $4.2 million, or 3%11%, in the three month period and ~~decreased $3.9~~increased $8.6 million, or 3%11%, in the ~~nine~~six month period and was primarily affected by:

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

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

•~~Decreased travel costs due to COVID-19 restrictions.~~

Increased personnel and stock-based compensation costs.

Investment Managers

Revenues increased ~~$11.7~~$23.5 million, or ~~10%~~20%, in the three month period and increased ~~$33.8~~$43.3 million, or ~~10%~~18%, in the ~~nine~~six month period ended ~~September~~June 30, ~~2020~~2021 and were primarily affected by:

•Higher valuations of existing client assets from market appreciation; and

•Positive cash flows into alternative, traditional and separately managed account offerings from new and existing clients; partially offset by

•~~The negative impact to assets under administration from the significant market volatility during 2020; and~~

•Client losses and fund closures.

Operating margin ~~remained at 36%~~increased to 40% compared to 37% in the three month period and ~~nine~~increased to 40% compared to 37% in the six month ~~periods.~~period. Operating income increased ~~$3.7~~$13.1 million, or 9%29%, in the three month period and increased ~~$14.3~~$24.2 million, or ~~12%~~28%, in the ~~nine~~six month period and was primarily affected by:

•An increase in revenues; ~~and~~

•~~Decreased promotion and travel costs due to COVID-19 restrictions;~~ partially offset by

•Increased costs associated with new business, primarily personnel expenses and third-party vendor costs; ~~and~~

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

•Increased stock-based compensation costs

Other

Corporate overhead expenses

Corporate overhead expenses primarily consist of general and administrative expenses and other costs not directly attributable to a reportable business segment. Corporate overhead expenses were ~~$18.0~~$22.3 million and ~~$16.2~~$17.4 million in the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$53.4~~$43.8 million and ~~$52.8~~$35.4 million in the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, respectively. The increase in corporate overhead expenses ~~during the three and nine month periods~~ is primarily due to an increase in personnel costs, stock-based compensation, consulting and ~~increased~~ professional ~~fees related to our initiative to identify tactical and strategic improvements to our operational resiliency plans and capabilities.~~fees.

3736

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 June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Net gain (loss) from investments	Net gain (loss) from investments	$	776	$	611	$	(1,310)	$	2,121	Net gain (loss) from investments	$	377	$	1,903	$	709	$	(2,086)
Interest and dividend income	Interest and dividend income	1,009		4,167		5,582		12,737		Interest and dividend income	878		1,370		1,823		4,573
Interest expense	Interest expense	(153)		(154)		(456)		(477)		Interest expense	(130)		(151)		(253)		(303)
Equity in earnings of unconsolidated affiliate	Equity in earnings of unconsolidated affiliate	28,305		37,609		86,488		112,758		Equity in earnings of unconsolidated affiliate	35,065		28,276		68,415		58,183
Total other income and expense items, net	Total other income and expense items, net	$	29,937	$	42,233	$	90,304	$	127,139	Total other income and expense items, net	$	36,190	$	31,398	$	70,694	$	60,367

Net gain (loss) from investments

Net gains from investments in the three and six months ended ~~September~~June 30, ~~2020~~2021 were primarily due to unrealized gains recorded in current earnings related to LSV-sponsored investment funds and Company-sponsored mutual funds from market appreciation. Net loss from investments in the ~~nine~~six months ended ~~September~~June 30, 2020 were primarily due to unrealized losses ~~recorded in current earnings~~ related to LSV-sponsored investment funds and Company-sponsored mutual funds from the market ~~volatility~~downturn caused by the COVID-19 pandemic (See Note 5).

Interest and dividend income

Interest and dividend income is earned based upon the amount of cash that is invested daily. The decrease in interest and dividend income in the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 was due to an overall decline in interest rates.

Equity in earnings of unconsolidated affiliate

Equity in earnings of unconsolidated affiliate reflects our ~~less than 50%~~ ownership interest in LSV. As of ~~September~~June 30, ~~2020,~~2021, our total partnership interest in LSV was ~~38.8%~~38.7%. The table below presents the revenues and net income of LSV and ~~our~~the proportionate share in LSV's earnings.


		Three Months Ended September 30,					Percent Change			Nine Months Ended September 30,								Percent Change	Three Months Ended June 30,					Percent Change			Six Months Ended June 30,			Percent Change
		2020		2019					2020			2019				Percent Change	2021		2020	Percent Change							2020		Percent Change
Revenues of LSV	Revenues of LSV	$	94,902	$	121,232	(22)%	$	289,546		$	365,164		(21)%	Revenues of LSV	$		$	94,648	23%			$	194,644			17%
Net income of LSV	Net income of LSV	70,440		96,699		(27)%	220,184			289,918			(24)%	Net income of LSV	90,520		72,847		24%			176,440				149,744		18%

SEI's proportionate share in earnings of LSV	SEI's proportionate share in earnings of LSV	$	28,305	$	37,609	(25)%	$	86,488		$	112,758		(23)%	SEI's proportionate share in earnings of LSV	$	35,065	$	28,276	24%	$	68,415			$	58,183		18%

The ~~decline~~increase in ~~our~~ earnings from LSV in the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 was due to ~~lower~~higher assets under management from ~~negative~~market appreciation. Negative cash flows from existing clients ~~market volatility~~ and client ~~losses.~~losses partially offset the increase in earnings from LSV. Average assets under management by LSV ~~decreased $18.5~~increased $16.3 billion to ~~$84.0~~$100.5 billion during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 as compared to ~~$102.5~~$84.2 billion during the ~~nine~~six months ended ~~September~~June 30, ~~2019, a decrease~~2020, an increase of ~~18%~~19%.

Income Taxes

~~Our~~The effective income tax rates for the three and ~~nine~~six months ended ~~September~~June 30, 2021 and 2020 ~~and 2019 differs~~differ from the federal income tax statutory rate due to the following:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Statutory rate	Statutory rate	21.0	%	21.0	%	21.0	%	21.0	%	Statutory rate	21.0	%	21.0	%	21.0	%	21.0	%
State taxes, net of federal tax benefit	State taxes, net of federal tax benefit	3.3		2.6		3.2		2.6		State taxes, net of federal tax benefit	3.2		3.3		3.2		3.2
Foreign tax expense and tax rate differential	Foreign tax expense and tax rate differential	(0.2)		(0.3)		(0.1)		(0.2)		Foreign tax expense and tax rate differential	(0.1)		(0.2)		(0.1)		(0.1)
Tax benefit from stock option exercises	Tax benefit from stock option exercises	(0.4)		(2.2)		(1.0)		(1.5)		Tax benefit from stock option exercises	(1.2)		(0.4)		(1.2)		(1.3)
Expiration of the statute of limitations		(1.3)		(1.2)		(0.5)		(0.4)
Provision-to-return adjustment		(0.4)		(0.6)		(0.1)		(0.2)

Other, net	Other, net	(0.6)		(0.4)		(0.5)		(0.3)		Other, net	(0.6)		(0.4)		(0.4)		(0.4)
		21.4	%	18.9	%	22.0	%	21.0	%		22.3	%	23.3	%	22.5	%	22.4	%

The decrease in the tax rate during the three months ended June 30, 2021 was primarily due to increased tax benefits related to the higher volume of stock option exercises in 2021 compared to the prior year period.

3837

The increase in our tax rate for both periods was primarily due to an increase in our state effective tax rate. Our third quarter 2020 tax rate was also impacted by decreased tax benefits associated with stock option exercises. We expect our state effective tax rate for the full year 2020 to be at the approximate level as our third quarter 2020 rate.

Stock-Based Compensation

We recognized ~~$20.5~~$19.9 million and ~~$15.6~~$14.0 million in stock-based compensation expense during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The amount of stock-based compensation expense we recognize is based upon ~~our~~management's estimate of when financial vesting targets may be achieved. Any change in ~~our~~the estimate could result in the 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 ~~our~~ earnings. ~~In September 2020, we~~

We revised our estimate of when some vesting targets are expected to be ~~achieved which~~achieved. This change in estimate resulted in ~~the amount~~an increase of $759 thousand in stock-based compensation expense during the six months ended June 30, 2021. We expect to ~~be spread out over a longer period than our initial estimate made at December 31, 2019. This change~~recognize $25.7 million in ~~management's estimate did not result in a material change to our~~ stock-based compensation expense ~~recognized~~ during the ~~three or nine month periods ended September 30, 2020; however, we do expect the impact to be reflected during the fourth quarter~~remainder of ~~2020 and into~~ 2021.

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~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 consist entirely of the estimated contingent consideration resulting from an acquisition (See Note 12 to the Consolidated Financial Statements). We did not have any other financial liabilities at September 30, 2020 or December 31, 2019 that were required to be measured at fair value on a recurring basis (See Note 4 to the Consolidated Financial Statements).

Regulatory Matters

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

SEI and some of our regulated subsidiaries have undergone or been scheduled to undergo a range of periodic or thematic reviews, examinations or investigations by numerous regulatory authorities around the world, including the Office of the Comptroller of the Currency, the ~~SEC,~~Securities and Exchange Commission, the Financial Industry Regulatory Authority, ~~Inc.,~~ the Financial Conduct Authority of the United Kingdom (FCA), the Central Bank of Ireland and others. These regulatory activities typically result in the identification of matters or practices to be addressed by us or our subsidiaries and, in certain circumstances, the regulatory authorities require remediation activities or pursue enforcement proceedings against us or our subsidiaries. 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, ~~or guidance,~~ as well as the potential financial costs and potential reputational impact against us of any enforcement proceedings ~~or findings~~ that might result, is uncertain but could have a material adverse impact on our operating results or financial position.

Liquidity and Capital Resources


	Six Months Ended June 30,
	2021		2020
Net cash provided by operating activities	$	324,997	$	264,132
Net cash used in investing activities	(56,087)		(37,393)
Net cash used in financing activities	(277,936)		(299,364)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	2,578		(10,545)
Net decrease in cash, cash equivalents and restricted cash	(6,448)		(83,170)
Cash, cash equivalents and restricted cash, beginning of period	787,727		844,547
Cash, cash equivalents and restricted cash, end of period	$	781,279	$	761,377

3938

~~Liquidity and Capital Resources~~

Nine Months Ended September 30,
2020 2019
Net cash provided by operating activities $ 396,524 $ 381,535
Net cash used in investing activities (64,243) (43,045)
Net cash used in financing activities (401,833) (321,742)
Effect of exchange rate changes on cash, cash equivalents and restricted cash (4,196) (3,878)
Net (decrease) increase in cash, cash equivalents and restricted cash (73,748) 12,870
Cash, cash equivalents and restricted cash, beginning of period 844,547 758,039
Cash, cash equivalents and restricted cash, end of period $ 770,799 $ 770,909

Cash requirements and liquidity needs are primarily funded through our cash flow from operations and our capacity for additional borrowing. At ~~September~~June 30, ~~2020,~~2021, our unused sources of liquidity consisted of cash and cash equivalents and the amount available under our credit facility.

~~Our~~On April 23, 2021, we replaced our credit facility with a new five-year credit facility agreement which provides for borrowings of up to ~~$300.0~~$325.0 million ~~and is scheduled to expire in June 2021~~ (See Note 6 to the Consolidated Financial Statements). ~~As of October 21, 2020, we had outstanding letters~~The new credit facility is a revolving line of credit with Wells Fargo Bank, N.A., and a syndicate 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~~other lenders and ~~are due~~is scheduled to expire in ~~late 2020.~~

April 2026. 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~~certain types of 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. Our credit facility is provided through Wells Fargo Bank, National Association, and a syndicate of other well-established financial institutions. As of October 21, 2020, we are not aware of any issues relatedagreement (See Note 6 to the ~~ability of the lenders to honor the borrowing terms in our credit facility agreement.~~Consolidated Financial Statements).

~~Our~~The credit facility contains terms that utilize the London InterBank Offered Rate (LIBOR) as a potential component of the interest rate to be applied to ~~the borrowings we may undertake~~any borrowings; however, an alternative reference rate is included under the agreement ~~(See Note 6 to~~which provides for a specified replacement rate upon a LIBOR cessation event. At the ~~Consolidated Financial Statements).~~ time of a LIBOR cessation event, the replacement rate, the Secured Overnight Financing Rate (SOFR), self-executes without the need for negotiations or a formal amendment process.

We ~~are currently monitoring~~had outstanding letters of credit of $5.8 million as of July 22, 2021 which reduced our amount available under 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 to $319.2 million. These letters of credit were primarily issued for the expansion of our corporate headquarters completed in 2020 and ~~negotiations for subsequent borrowing agreements.~~are due to expire in 2021.

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 21, 2020,~~July 22, 2021, the amount of cash and cash equivalents considered free and immediately accessible for other general corporate purposes was ~~$392.1~~$352.8 million.

~~Our cash~~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~~the calculation of free and immediately accessible cash for other general corporate purposes. 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 ~~$15.0~~$60.9 million in the first ~~nine~~six months of ~~2020~~2021 compared to the first ~~nine~~six months of ~~2019~~2020 primarily from the ~~positive~~increase in net income and increased repayments from LSV related to their working capital accounts. The negative impact from the change in ~~our~~the Company's working capital accounts ~~due to the timing of expense payments~~ and ~~higher~~lower distribution payments received from ~~our unconsolidated affiliate, LSV. The increase was~~LSV partially offset by the ~~decline in our net income.~~

increase.

Net cash used in investing activities includes:

•Purchases, sales and maturities of marketable securities. ~~Our purchases,~~Purchases, sales and maturities of marketable securities in the first ~~nine~~six months of ~~2020~~2021 and ~~2019~~2020 were as follows:


		Nine Months Ended September 30,							Six Months Ended June 30,
		2020		2019			2021		2020
Purchases	Purchases	$	(114,407)	$	(126,030)	Purchases	$	(81,541)	$	(60,764)
Sales and maturities	Sales and maturities	113,417		137,783		Sales and maturities	64,194		71,846
Net investing activities from marketable securities	Net investing activities from marketable securities	$	(990)	$	11,753	Net investing activities from marketable securities	$	(17,347)	$	11,082

•The capitalization of costs incurred in developing computer software. We capitalized ~~$18.6~~$12.3 million of software development costs in the first ~~nine~~six months of ~~2020~~2021 as compared to ~~$26.8~~$12.5 million in the first ~~nine~~six months of ~~2019.~~2020. 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~~Capital expenditures in the first ~~nine~~six months of ~~2020~~2021 were ~~$43.1~~$15.5 million as compared to ~~$30.5~~$34.4 million in the first ~~nine~~six months of ~~2019. Our expenditures~~2020. Expenditures in 2021 include capital outlays for purchased software and equipment for data center operations. Expenditures in 2020 ~~and 2019 primarily~~ include ~~purchased software, equipment for our data center operations and~~ the expansion of our corporate headquarters ~~which is scheduled to be~~

completed in the fourth quarter ~~2020. Total expenditures related~~2020 as well as purchased software and equipment. We continue to ~~the expansion during the fourth quarter are expected to be approximately $5.0 million. We are currently evaluating~~evaluate improvements to our information technology infrastructure which, if implemented, will result in additional ~~capital outlays~~expenditures for purchased software and equipment for ~~our~~ data center operations.

•Other investing activities. We made a payment of $11.0 million in the first six months of 2021 to purchase a technology platform providing digital collaboration tools for financial advisors.

Net cash used in financing activities includes:

•The repurchase of ~~our~~ common stock. Our Board of Directors has authorized the repurchase of ~~our~~ common stock through multiple authorizations. Currently, there is no expiration date for ~~our~~the common stock repurchase program. We had total capital outlays of ~~$327.1~~$197.3 million during the first ~~nine~~six months of ~~2020~~2021 and ~~$262.9~~$219.4 million during the first ~~nine~~six months of ~~2019~~2020 for the repurchase of ~~our~~ common stock.

•Proceeds from the issuance of ~~our~~ common stock. We received ~~$29.8~~$28.9 million in proceeds from the issuance of ~~our~~ common stock during the first ~~nine~~six months of ~~2020~~2021 as compared to ~~$41.9~~$24.6 million during the first ~~nine~~six months of ~~2019.~~2020. The ~~decline~~increase in proceeds is primarily attributable to a ~~lower~~higher level of stock option exercise activity.

•Dividend payments. Cash dividends paid were $105.5 million in the first six months of 2021 as compared to $103.9 million in the first ~~nine~~six months of ~~2020 as compared to $100.7 million in the first nine months of 2019.~~2020.

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~~the common stock repurchase program 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;

•systems and technology risks;

•intellectual property 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;

•fiduciary or other legal liability for client losses from our investment management operations;

•consolidation within our target markets;

•our ability to receive dividends or other 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 business, 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;

•the competence and integrity of our employees and third-parties;

•stockholder activism efforts;

•retention of executive officers and senior management personnel; and

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

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

•SEI Investments Distribution Co., or SIDCO, a broker-dealer registered with the SEC under the Securities Exchange Act of 1934 and a member of the Financial Industry Regulatory Authority, Inc., or FINRA;

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

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

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

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

•SEI Investments Global, Limited, or SIGL, a management company for Undertakings for Collective Investment in Transferable Securities, or UCITS, and for Alternative Investment Funds, or AIFs, that is regulated primarily by the Central Bank of Ireland, or CBI;

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

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

In addition to the regulatory authorities listed above, our subsidiaries are subject to the jurisdiction of regulatory authorities in other foreign countries. In addition to our wholly-owned subsidiaries, we also own a minority interest of approximately ~~38.8~~38.7 percent in LSV, which is also an investment advisor registered with the SEC.

The Company, its regulated subsidiaries, their regulated services and solutions and their customers are all subject to extensive legislation, regulation and supervision that recently has been subject to, and continues to experience, significant change and increased regulatory activity. These changes and regulatory activities could have a material adverse 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 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 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 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 solutions could lead to a reduction in sales of these solutions or require modifications of these solutions.

Compliance with existing and future regulations and responding to and complying with recent increased regulatory activity affecting broker-dealers, investment advisors, investment companies, financial institutions and their service providers could have a significant impact on us. We periodically undergo regulatory examinations and respond to regulatory inquiries 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. 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, solution and service offerings, and business operations, and make changes as we deem 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 benefit regulations. Investment advisor and broker-dealer clients are regulated by the SEC, state securities authorities, or FINRA. Existing or future regulations applicable to our clients may affect our clients’ purchase of our products and services.

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Information required by this item is set forth under the captions "Our revenues and earnings are affected by changes in capital ~~markets"~~markets and significant changes in the value of financial instruments" 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~~"Impact of ~~our revenues~~COVID-19 and ~~earnings to capital market fluctuations and client portfolio strategy"~~Other Events" 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, ~~2019.~~2020. There have been no material changes to this information as it is disclosed in our Annual Report on Form 10-K for ~~2019.~~2020.

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~~June 30, ~~2020~~2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

~~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 Lillie case, filed originally in the 19th Judicial District Court for the Parish of East Baton Rouge, was brought as a class action and is procedurally the most advanced of the cases. SEI and SPTC filed exceptions, which the Court granted in part, dismissing claims under the Louisiana Unfair Trade Practices Act and permitting the claims under the Louisiana Securities Law to go forward. On March 11, 2013, newly-added insurance carrier defendants removed the case to the United States District Court for the Middle District of Louisiana. On August 7, 2013, the Judicial Panel on Multidistrict Litigation transferred the matter to the Northern District of Texas where MDL 2099, In re: Stanford Entities Securities Litigation (“the Stanford MDL”), is pending. On September 22, 2015, the District Court on the motion of SEI and SPTC dismissed plaintiffs’ claims for primary liability under Section 714(A) of the Louisiana Securities Law, but declined to dismiss plaintiffs’ claims for secondary liability under Section 714(B) of the Louisiana Securities Law based on the allegations pled by plaintiffs. On November 4, 2015, the District Court granted SEI and SPTC's motion to dismiss plaintiffs' claims under Section 712(D) of the Louisiana Securities Law. Consequently, the only claims of plaintiffs remaining in LillieWe 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 Lillie class 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 and SPTC filed their 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 predicated on Section 712(D) or Section 714(A) of the Louisiana Securities Law. In both cases, as a result of 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.

With respect to the Lillie proceeding, on July 9, 2019, the District Court issued an order granting SEI’s Summary Judgment Motion to dismiss the remaining Section 714(B) claim and denying Plaintiffs’ Motion for Continuance of SEI and SPTC’s Motion for Summary Judgment pursuant to Rule 56(d). On July 17, 2019, Plaintiffs filed a Motion for Reconsideration and/or New Trial. The Court denied Plaintiffs’ Motion for Reconsideration and/or New Trial and entered a Final Judgment in favor of SEI and SPTC on August 15, 2019. On August 27, 2019, Plaintiffs-Appellants filed a Notice of Appeal to the United States Court of Appeals for the Fifth Circuit of the District Court's dismissal of the Lillie matter. On November 20, 2019, Plaintiffs-Appellants filed a Motion in Support of the Notice of Appeal. On January 17, 2020, SEI and SPTC timely filed their brief in opposition to the Plaintiffs-Appellants' motion for appeal. On February 7, 2020, Plaintiffs- Appellants filed their reply brief.~~The parties are currently waiting for oral argument to be scheduled.~~

With respect to the Ahders proceeding, on July 16, 2019, SEI and SPTC filed a Motion for Summary Judgment pursuant to Rule 56(d) to have the remaining Section 714(B) claim dismissed. On January 24, 2020, the District Court issued an order granting SEI’s Summary Judgment Motion to dismiss the remaining Section 714(B) claim. On March 17, 2020, Plaintiffs-Appellants filed a Notice of Appeal to the United States Court of Appeals for the Fifth Circuit of the District Court's dismissal of the Ahders matter. Similar to the Lillie matter, all motions and briefs in support of the parties’ positions have been filed and the parties are currently waiting for oral argument to be scheduled.

Another 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.

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

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

~~SS&C Advent Matter~~

On February 28, 2020, SEI Global Services, Inc. ("SGSI"), a wholly-owned subsidiary of the Company, filed a complaint under seal in the United States District Court for the Eastern District of Pennsylvania against SS&C Advent ("Advent") and SS&C Technologies Holdings, Inc. ("SS&C") alleging that SS&C and Advent breached the terms of the contract between the parties and asking the Court to hold SS&C and Advent to their bargained-for obligations (the "Advent Matter"). In addition to Breach of Contract, the complaint also includes counts for Declaratory Judgment, Tortious Interference with Existing and Prospective Contractual Relations, Violation of the New York General Business Law Section 349, Violations of Section 2 of the Sherman Antitrust Act, Promissory Estoppel and Breach of the Covenant of Good Faith and Fair Dealing. SGSI seeks various forms of relief, including declaratory judgment, specific performance under the contract, and monetary damages, including treble damages and attorney’s fees.

Following various procedural actions, including an amendment of the Company’s complaint to include additional breach of contract claims, SS&C and Advent filed a motion to dismiss the Company’s compliant.~~The oral argument regarding the motion to dismiss has occurred. The Court has not yet issued its judgment in the matter.~~

SEI does not believe that it will have to change providers under the current terms of its contract with SS&C or Advent and that the process of litigating its rights under this contract may be a multi-year process. Consequently, SEI does not believe that the Advent Matter will create any consequence to the services it provides to its clients in the near term. SEI believes that it has alternatives available to it that will enable it to continue to provide currently provided services to its clients in all material respects in the unlikely event that there ultimately is a negative outcome in the Advent Matter.

SEI believes it has a strong basis for proving the actions it alleges in the Advent Matter and looks forward to the opportunity to assert its rights under contract. SEI expects the financial impact of litigating the Advent Matter to be immaterial.

~~Other Matters~~

~~The Company is also~~ a party to ~~various~~or have property subject to litigation and other ~~actions and claims arising~~proceedings that arise in the ~~normal~~ordinary course of our business that ~~the Company does~~we do not believe are material. ~~The Company believes~~These types of matters could result in fines, penalties, cost reimbursements or contributions, compensatory or treble damages or non-monetary sanctions or relief. We believe the probability is remote that the ~~ultimate resolution~~outcome of any 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 does not believeSEI as a whole, notwithstanding that the ~~amount~~unfavorable resolution of ~~such losses will, when liquidated or estimable, be material to its financial position, the assumptions~~any matter may ~~be incorrect and any such loss could~~ have a material ~~adverse~~ effect on our net earnings in any particular interim reporting period. We cannot predict the ~~Company's results~~outcome of ~~operations~~legal or other proceedings with certainty. These matters include the ~~manner~~proceedings summarized in ~~which the Company conducts its business~~“Note 11. Commitments and Contingencies” included in ~~the period(s) during which the underlying matters are resolved.~~our Notes to Consolidated Financial Statements.

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, ~~2019.~~2020. There have been no material changes in ~~our~~the risk factors from those disclosed in ~~our~~the Annual Report on Form 10-K for ~~2019.~~2020.

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

(e) Our Board of Directors has authorized the repurchase of up to ~~$4.428~~$4.682 billion worth of our common stock through multiple authorizations. Currently, there is no expiration date for ~~our~~the common stock repurchase program. On ~~October 20, 2020,~~June 2, 2021, our Board of Directors approved an increase in the stock repurchase program by an additional $250.0 ~~million, increasing the available authorization to approximately $291.9~~ million.

Information regarding the repurchase of common stock during the three months ended ~~September~~June 30, ~~2020~~2021 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 2020 250,000 $ 51.65 250,000 $ 240,097,000
August 2020 775,000 52.89 775,000 208,710,000
September 2020 1,085,000 50.54 1,085,000 150,627,000
Total 2,110,000 $ 51.54 2,110,000


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
April 2021	540,000	$	60.04	540,000	$	93,463,000
May 2021	650,000	62.74		650,000	52,683,000
June 2021	896,000	62.48		896,000	246,669,000
Total	2,086,000	$	61.95	2,086,000

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 21, 2020 of SEI Investments Company related to the Company's financial and operating results for the third quarter ended September 30, 2020.~~

101.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH			XBRL Taxonomy Extension Schema Document

101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF			XBRL Taxonomy Extension Definition Linkbase Document

101.LAB			XBRL Taxonomy Extension Label Linkbase Document

101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

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

SEI INVESTMENTS COMPANY

Date:

~~October~~July 26, ~~2020~~2021

By:

/s/ Dennis J. McGonigle

Dennis J. McGonigle

Chief Financial Officer

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