#1OPPENHEIMER "The New U.S. Financial Industry" presentation for Jamaica Stock Exchange Oct 3, 2012 Albert G. Lowenthal Chairman & CEO Oppenheimer & Co. Inc.#2Effects of the Financial Crisis ☐ Erosion of Confidence Restrictive Lending New Capital Requirements Concentration of Assets Recognition of Sovereign Risk Ratings May not Matter Lower Returns Financial Services in Disrepute Opportunities for Non Traditional Players OPPENHEIMER 2#3OPPENHEIMER Regulatory Changes Wall Street Reform and Consumer Protection Act ("Dodd-Frank") - - - - Ends "Too Big To Fail" Advance Warning Transparency on Derivatives Executive Compensation Securitization Reform Ratings Agency Oversight Investor Protection (SEC Rule 206(4) - New Custody requirements - Disclosures 3#4OPPENHEIMER Regulatory Changes (cont'd) International Regulatory Framework for Banks ("Basel III") - Increased Capital Requirements (4.5%+) - Increased Regulation & Oversight ■ Prohibition on Proprietary Trading & Permitted Investments ("Volcker Rule") - - Limits Activities of Commercial Banks Depository Institutions separated from "Risk" 4#5Who will be impacted? Directly - - - - Banks Credit Providers Broker-Dealers Insurance Companies Exchanges (Old & New) Others • American Express • Visa, Master Card • Mortgage Brokers, • Non Bank Lenders & Servicers OPPENHEIMER 5#6Who will be impacted? (continued) Indirectly - - Issuers Financial Market Participants Consumers Tax Collectors - Taxpayers - Financial Service Professionals OPPENHEIMER 6#7Market Issues European Sovereign Debt Overhang ☐ Economic Slowdown - Europe - Asia - U.S. - not yet Excess Liquidity created by Central Banks Interest Rates & Market Risk Risk Transparency Inflation- when? OPPENHEIMER 7#8Emerging Market Fallout (Jamaica) Bifurcated Risk Tolerance - Reduced Demand for Higher Risk Issues - Excess Demand for Higher ratings Difficulty in finding risk capital for new projects Infrastructure - Growth Impact on Tourism - European Uncertainty U.S. Consumers OPPENHEIMER 8#9U.S. Markets & Market Players Volcker Rule will drain liquidity Risk Tolerance will be less - JP Morgan $5.7 bn loss - Barclays & LIBOR Issues OPPENHEIMER - European Banks may depart due to capital constraints Talent will leave more regulated players and migrate to less regulated (inability & unwillingness to pay) - Major Banks will be less impactful - Hedge Funds, Financial Sponsors, Private Equity will benefit 9#10Temporary or Permanent Changes Higher Capital requirements are permanent OPPENHEIMER Volcker Rule will permanently eliminate certain risks from Commercial Banks (alternative investment sponsors, trading of high risk investments) Centralization of Derivatives will reduce profitability and thus liquidity of more exotic forms Inability or unwillingness to pay employees competitively will see migration of talent Lack of profitability will raise Cost of Capital AML will continue to impact less developed markets and citizens 10#11OPPENHEIMER Temporary or Permanent Changes (continued) Risk to Euro is temporary New market players will emerge and gravitate to less traveled markets Markets are likely to remain fragmented and uncertain for another 36 months Higher interest rates (when?) will actually return normality to markets and more normal allocation of risk U.S. will continue to overreact to issues that brought on the Financial Crisis Consumers will continue to see higher cost of credit and lower availability Spending will be limited to those with jobs, savings, ability to re-pay debt 11#12OPPENHEIMER Regulation & Trading Markets Volcker Rule & Basel III will: - Reduce willingness to carry inventory Issuers will have shorter windows • Risk-On/Risk-Off will continue to affect markets and receptivity to new issue Agency markets are likely to be permanent . "Leave your order with me" • "I'll get back to you" Smaller players are likely to have better information and markets • More dedicated • Fewer distractions • Better relationships 12#13Oppenheimer & Co. Inc. Independent & Broker-Dealer (non-bank) Not impacted by Volcker Rule or Dodd Frank Has always been an agency player Depends on local knowledge & local relationships Invested in the Caribbean Broad Capabilities in: - Money Management ($21 billion) Capital Markets . Equities -160 professionals • OPPENHEIMER Fixed Income -140 professionals (emerging markets experienced professionals) 13#14OPPENHEIMER How do we address the market as we see it? Hold on to talent Take advantage of market opportunities as they emerge due to "Too big to Fail" abandonment Attract available experienced personnel with relationships & knowledge Be a reliable partner to our clients and play for the long term Data is in over supply, information is not Pick areas of expertise where we can be relevant 14#15OPPENHEIMER Oppenheimer Appendix#16OPPENHEIMER Oppenheimer Highlights Top 10 Private Client Business Conservative Risk Philosophy and Balance Sheet Strong Cash Flows Liquid Balance Sheet Experienced Management Team 1,435 registered representatives ■ National footprint with 94 offices in 26 states and 5 foreign jurisdictions ☐ Entrepreneurial culture that continues to attract experienced new financial advisors ■ Conservative risk position ■ Limited risk in proprietary positions (primarily a transaction flow business) ■ Level III assets (illiquid and/or hard to price) of $88MM ■ 5.7x gross leverage (assets/capital) ■ Generated strong cash flows even in difficult environment ■ $510MM in shareholders' equity ■ Committed bank lines ■ No significant write-downs during financial crisis Regulatory net capital of $142.3MM at June 30, 2012 ☐ ■ Extensive securities industry experience and significant tenure at the Company ■ Top 12 senior managers have an average 14+ years at Oppenheimer and 25+ years of overall industry experience 16#17OPPENHEIMER "The New U.S. Financial Industry" Jamaica Stock Exchange Oct 3, 2012