29. RELATED PARTY TRANSACTIONS

The Company has identified the following related party transactions for the years ended December 31, 2012, 2011, and 2010. The transactions are listed by related party and, unless otherwise noted in the text of the description, the amounts are disclosed in tables at the end of this section.

A. RAIT

RAIT Financial Trust (“RAIT”) is a publicly traded REIT. It has been identified as a related party for periods prior to 2011 because (1) the chairman and chief executive officer of the Company was a trustee of RAIT until his resignation from that position on February 26, 2010 (and was formerly the chief executive officer of RAIT from December 2006 to February 2009); and (2) the chairman of RAIT until her resignation from that position effective December 31, 2010, is the mother of the Chairman and Chief Executive Officer of the Company.

Prior to 2011, the Company identified the following as related party transactions with RAIT:

1. Shared Services Agreement

The Company had a shared services agreement with RAIT whereby RAIT reimbursed the Company, or in some cases the Company reimbursed RAIT, for shared costs incurred for administrative and occupancy costs. The Company received payments under this agreement, which were disclosed as shared services in the table at the end of this section. The payments were recorded as a reduction in the related expense.

2. RAIT Shares

During the first quarter of 2010, the Company sold all of the shares it held in RAIT. The Company had held 510,434 shares of RAIT with a carrying value of $669 and a cumulative life to date unrealized loss of $8,950. Gains or losses recognized on these shares are disclosed as part of gain / (loss) in the table at the end of this section.

3. Securities sold to and purchased from RAIT

As part of the Company’s broker-dealer operations, the Company from time to time purchases securities from third parties and sells those securities to RAIT. Or, the Company may purchase securities from RAIT and ultimately sell those securities to a third party. In either case, the Company includes the trading revenue earned (i.e. the gain or loss realized) by the Company for the entire transaction in the amounts disclosed as part of net trading in the table at the end of this section.

B. Cohen Brothers Financial, LLC (“CBF”)

CBF has been identified as a related party because (i) CBF is a non-controlling interest of the Company; and (ii) CBF is wholly owned by the Chairman and Chief Executive Officer of the Company.

Beginning in October 2008, the Company began receiving a monthly advisory fee for consulting services provided by the Company to CBF. The Company stopped providing these services and stopped receiving this fee as of March 31, 2012. The fee was recognized as a component of asset management revenue in the consolidated statements of operations. This fee is disclosed as management fee revenue in the tables at the end of this section.

C. The Bancorp, Inc.

The Bancorp, Inc. (“TBBK”) is identified as a related party because TBBK’s chairman is the Company’s Chairman and Chief Executive Officer.

TBBK maintained deposits for the Company in the amount of $36 and $91 as of December 31, 2012 and 2011, respectively. These amounts are not disclosed in the tables at the end of this section.

As part of the Company’s broker-dealer operations, the Company from time to time purchases securities from third parties and sells those securities to TBBK. The Company may purchase securities from TBBK and ultimately sell those securities to a third party. In either of the cases listed above, the Company includes the trading revenue earned (i.e. the gain or loss realized, or commission earned) by the Company for the entire transaction in the amounts disclosed as part of net trading in the table at the end of this section.

In December 2012, the Company purchased 2,400 shares of TBBK common stock in the open market for $26. As of December 31, 2012, the fair market value of the TBBK common stock was $26 and was included as a component of investments-trading on the Company’s consolidated balance sheets.

D. Investment Vehicles and Other

The following are identified as related parties. Amounts with respect to the transactions identified below are summarized in a table at the end of this section.

1. Brigadier (as a group) has been identified as a related party because in the absence of the fair value option of FASB ASC 825, the Brigadier onshore feeder fund would be treated as an equity method affiliate of the Company. The Company had a management contract with and an investment in Brigadier. Amounts earned from its management contract are disclosed as part of management fee revenue in the tables at the end of this section. Gains or losses recognized from its investment are disclosed as part of gain / (loss) in the tables at the end of this section.

2. Star Asia has been identified as a related party because in the absence of the fair value option of FASB ASC 825, Star Asia would be treated as an equity method affiliate and the Chairman and Chief Executive officer of the Company is a member of Star Asia’s board of directors. The Company has an investment in Star Asia. Dividends received from that investment are disclosed as part of dividend income in the tables at the end of this section. Gains or losses recognized from its investment are disclosed as part of gain / (loss) in the tables at the end of this section.

3. EuroDekania has been identified as a related party because the Chairman and Chief Executive Officer of the Company is a member of EuroDekania’s board of directors. The Company has a management contract with and an investment in EuroDekania. Dividends received from that investment are disclosed as part of dividend income in the tables at the end of this section. Gains or losses recognized from its investment are disclosed as part of gain / (loss) in the tables at the end of this section. Amounts earned from its management contract are disclosed as part of management fee revenue in the tables at the end of this section.

As part of the Company’s broker-dealer operations, the Company from time to time purchases securities from third parties and sells those securities to EuroDekania. Or, the Company may purchase securities from EuroDekania and ultimately sell those securities to third parties. In either case, the Company includes the trading revenue earned (i.e. the gain or loss realized) by the Company for the entire transaction in the amounts disclosed as part of net trading in the table at the end of this section.

4. Star Asia Manager has been identified as a related party because it is an equity method investee of the Company. The Company recognizes its share of the income or loss of Star Asia Manager as income or loss from equity method affiliates in the consolidated statements of operations. Income or loss recognized under the equity method is disclosed in the table at the end of this section.

5. Prior to MFCA’s merger with Tiptree in June 2011 (see note 3-F), MFCA had been identified as a related party because: (i) in the absence of the fair value option of FASB ASC 825, MFCA would be treated as an equity method affiliate of the Company; (ii) the Chairman and Chief Executive Officer of the Company was the former chairman of MFCA’s board and served as a member of the board until June 22, 2011; and (iii) the former president of the Company served as vice chairman of MFCA’s board until March 18, 2009. In March 2009, the board of directors of MFCA assigned the management contract to an unrelated third party. The Company had a management contract with MFCA. The Company had an investment in MFCA and had a shared services arrangement with MFCA. Dividends received from that investment are disclosed as part of dividend income in the tables at the end of this section. Gains or losses recognized from its investment are disclosed as part of gain / (loss) in the tables at the end of this section. Amounts earned from its management contract are disclosed as part of management fee revenue in the tables at the end of this section. Payments received under the shared services arrangement are disclosed as part of shared services (paid) / received in the tables at the end of this section. In 2011, MFCA merged into Tiptree. No employees of the Company serve on the board of Tiptree and Tiptree is not an equity method investee of the Company. Therefore, Tiptree is not a related party.

6. The Deep Value GP and the Deep Value GP II have been identified as related parties because the Deep Value GPs are equity method affiliates of the Company. Income or loss recognized under the equity method is disclosed in the table at the end of this section. The Company previously served as the investment advisor to these funds and sold these contracts in March 2011. See note 5.

7. Deep Value (as a group) has been identified as a related party because in the absence of the fair value option of FASB ASC 825, the onshore and offshore feeder funds in which the Company had an investment would be treated as equity method affiliates of the Company. The Company had a management contract with and an investment in Deep Value. Amounts earned from its management contract are disclosed as part of management fee revenue in the tables at the end of this section. Gains or losses recognized from its investment are disclosed as part of gain / (loss) in the tables at the end of this section. The Company previously served as the investment advisor to these funds and sold these advisory contracts in March 2011. See note 5.

8. Star Asia SPV has been identified as a related party because it is an equity method investee of the Company. Income or loss recognized under the equity method is disclosed in the table at the end of this section. See note 3-F.

9. Duart Capital has been identified as a related party because it is an equity method investee of the Company. Income or loss recognized under the equity method is disclosed in the table at the end of this section. See note 3-F.

10. The Duart Fund has been identified as a related party because in the absence of the fair value option of FASB ASC 825, the onshore feeder fund in which the Company had an investment was treated as an equity method affiliate of the Company. Gains or losses recognized from its investment are disclosed as part of gain / (loss) in the tables at the end of this section. See note 3-F.

11. Star Asia Opportunity has been identified as a related party because it is an equity method investee of the Company. Income or loss recognized under the equity method is disclosed in the table at the end of this section. See note 3-F.

12. Star Asia Capital Management has been identified as a related party because it is an equity method investee of the Company. Income or loss recognized under the equity method is disclosed in the table at the end of this section. See note 3-F.

13. Star Asia Opportunity II has been identified as a related party because it was an equity method investee of the Company until its reorganization in December 2012. Income or loss recognized under the equity method is disclosed in the table at the end of this section. See note 3-F.

14. The Star Asia Special Situations Fund has been identified as a related party because in the absence of the fair value option of FASB ASC 825, the investment the Company has in the Star Asia Special Situations Fund would be treated as an equity method affiliate of the Company. Dividends received from that investment are disclosed as part of dividend income in the tables at the end of this section. Gains and losses recognized from its investment are disclosed as part of gain / (loss) in the tables at the end of this section.

15. SAA Manager serves as the external manager of the Star Asia Special Situations Fund. SAA Manager has been identified as a related party because it is an equity method investee of the Company. Income or loss recognized under the equity method is disclosed in the table at the end of this section. See note 3-F.

16. SAP GP has been identified as a related party because the SAP GP is an equity method affiliate of the Company. Income or loss recognized under the equity method is disclosed in the table at the end of this section. See note 3-F. During the year ended December 31, 2012, the Company did not make an investment or recognize any income or loss under the equity method related to this entity.

The following tables display the routine intercompany transactions recognized in the statements of operations from the identified related parties during the years ended December 31, 2012, 2011, and 2010, respectively, which are described above. Amounts shown as shared services (paid) / received are included as a component of operating expense in the Company’s consolidated statements of operations:

RELATED PARTY TRANSACTIONS

Year ended December 31, 2012

(Dollars in Thousands)


	Management fee revenue		Net trading		Principal transactions and other income					Income /(loss) from equity method affiliates			Shared Services (Paid) / Received
	Management fee revenue		Net trading		Dividend income and other		Gain/ (Loss)			Income /(loss) from equity method affiliates			Shared Services (Paid) / Received
CBF	$	64	$	—	$	—	$	—		$	—		$	—
TBBK		—		156		—		—			—			—
Star Asia		—		—		—		(7,274	)		—			—
Star Asia Manager		—		—		—		—			1,101			—
Star Asia SPV		—		—		—		—			1,581			—
Star Asia Opportunity		—		—		—		—			544			—
Star Asia Opportunity II		—		—		—		—			(382	)		—
Star Asia Capital Management		—		—		—		—			504			—
Star Asia Special Situations Fund		—		—		—		662			—			—
SAA Manager		—		—		—		—			(8	)		—
EuroDekania		139		—		970		(331	)		—			—
Deep Value		—		—		—		—			1,712			—

Total	$	203	$	156	$	970	$	(6,943	)	$	5,052		$	—

RELATED PARTY TRANSACTIONS

Year ended December 31, 2011

(Dollars in Thousands)


	Management fee revenue		Net trading			Principal transactions and other income					Income /(loss) from equity method affiliates			Shared Services (Paid) / Received
	Management fee revenue		Net trading			Dividend income and other		Gain/ (Loss)			Income /(loss) from equity method affiliates			Shared Services (Paid) / Received
CBF	$	273	$	—		$	—	$	—		$	—		$	—
TBBK		—		658			—		—			—			—
Star Asia		—		—			38		(542	)		—			—
Star Asia Manager		—		—			—		—			1,694			—
Star Asia SPV		—		—			—		—			702			—
Star Asia Opportunity		—		—			—		—			405			—
Star Asia Capital Management		—		—			—		—			44			—
EuroDekania		667		(101	)		298		579			—			—
MFCA		—		—			32		71			—			9
Deep Value		452		—			—		(9	)		4,351			—
Duart Fund		—		—			—		(456	)		—			—
Duart Capital and other		—		—			—		—			(964	)		—

Total	$	1,392	$	557		$	368	$	(357	)	$	6,232		$	9

RELATED PARTY TRANSACTIONS

Year ended December 31, 2010

(Dollars in Thousands)


	Management fee revenue		Net trading		Principal transactions and other income					Income/(loss) from equity method affiliates			Shared Services (Paid) / Received
	Management fee revenue		Net trading		Dividend income		Gain/ (Loss)			Income/(loss) from equity method affiliates			Shared Services (Paid) / Received
Brigadier	$	54	$	—	$	—	$	64		$	—		$	—
RAIT		—		134		—		387			—			(10	)
CBF		261		—		—		—			—			—
Star Asia		—		—		—		18,126			—			—
Star Asia Manager		—		—		—		—			834			—
Star Asia SPV		—		—		—		—			263			—
EuroDekania		667		138		—		525			—			—
MFCA		—		—		90		100			—			17
Deep Value		2,538		—		—		4,481			6,070			—
Duart Fund		—		—		—		(223	)		—			—
Duart Capital		—		—		—		—			(1,283	)		—

Total	$	3,520	$	272	$	90	$	23,460		$	5,884		$	7

The following related party transactions are non-routine and are not included in the tables above:

F. Initial Investment in the Star Asia Special Situations Fund

In December 2012, the Company made an initial investment of $1,841 into the Star Asia Special Situations Fund. See notes 3-F, 8, 9, and 15.

G. Additional Investment in Star Asia

In March 2010, the Company purchased 2,279,820 common shares of Star Asia for $1,334 and 1,139,910 units of Star Asia SPV for $4,058 (a total of $5,392) directly from Star Asia as part of a rights offering. See notes 8, 9, and 15.

In June 2010, the Company received an in kind distribution of $55 in the form of 109,890 shares of Star Asia from the Company’s equity method affiliate, Star Asia SPV. See note 15.

H. Subordinated Notes Payable

On August 27, 2010, the Company’s broker-dealer subsidiary, CCS, repurchased a total of $8,081 principal amount of Subordinated Notes for a total purchase price of $6,762, including accrued interest. The Company recognized a gain from repurchase of debt of $1,632 for the year ended December 31, 2010. See note 17. Of the $3,863 principal amount repurchased from related parties, $2,636 and $1,164 were repurchased from Daniel G. Cohen, the Company’s Chairman and Chief Executive Officer, and Christopher Ricciardi, the Company’s former president, respectively, for a purchase price, including accrued interest of $2,206 and $975 payable to Messrs. Cohen and Ricciardi, respectively. See note 17.

As of December 31, 2012 and 2011, the Company had no outstanding subordinated notes payable to the Company’s employees.

I.Resource Securities, Inc. (formerly known as Chadwick Securities, Inc.), a registered broker-dealer subsidiary of Resource America, Inc. (“REXI”)

REXI is a publicly traded specialized asset management company in the commercial finance, real estate, and financial fund management sectors. It has been identified as a related party because (i) the chairman of the board of REXI is the father of the Company’s Chairman and Chief Executive Officer; and (ii) the chief executive officer of REXI is the brother of the Company’s Chairman and Chief Executive Officer. In September 2012, the Company paid a fee of $6 to Resource Securities, Inc. for its services as the introducing agent for a transaction in which the Company bought back $1,177 principal amount of subordinated notes payable from an unrelated third party. The $6 fee was treated as a reduction to the gain recognized on the repurchase of debt, which was included as a component of non-operating income / (expense) in the Company’s consolidated statements of operations for the year ended December 31, 2012. See note 17.

J. Directors and Employees

In addition to the employment agreements the Company has entered into with its Chairman and its Chief Financial Officer, the Company has entered into its standard indemnification agreement with each of its directors and executive officers.