26. COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company leases office space in several cities under agreements. Future minimum commitments under these operating leases are as follows.



FUTURE LEASE COMMITMENTS
(Dollars in Thousands)


	Lease		Less: Sublease		Net Commitment
2016	$	4,057	$	(2,490)	$	1,567
2017		1,316		(363)		953
2018		763		(313)		450
2019		687		(288)		399
2020		700		(293)		407
2021 and Thereafter		146		(74)		72
	$	7,669	$	(3,821)	$	3,848

Rent expense for the years ended December 31, 2015, 2014, and 2013 was $1,305, $1,660, and $2,619, respectively, and was included in business development, occupancy, equipment expense in the consolidated statements of operations. Rent expense was recorded net of sublease income of $731, $784, and $304, for the year ended December 31, 2015, 2014, and 2013, respectively. The lease commitments noted above represent the actual cash commitments and will not necessarily match the amount of rent expense recorded in the consolidated statements of operations. See note 3-N.

Legal and Regulatory Proceedings

The Company’s former U.S. broker-dealer subsidiary, Cohen & Company Securities, LLC (“CCS”), and one of its registered investment adviser subsidiaries, CIRA SCM, LLC (“CIRA”), were parties to litigation commenced on June 7, 2013, in the Supreme Court of the State of New York, captioned NRAM PLC (f/k/a Northern Rock (Asset Management) PLC) v. Société Générale Corporate and Investment Banking, et al. The litigation settled in December 2015, and CCS and CIRA, which were indemnified parties, received full releases pursuant to the settlement agreement. On December 29, 2015, the parties filed a Stipulation of Discontinuance discontinuing the litigation with prejudice.

In October 2013, the Company received a Pennsylvania corporate net income tax assessment from the Pennsylvania Department of Revenue in the amount of $4,683 (including penalties) plus interest related to a subsidiary of AFN for the 2009 tax year. The assessment denied this subsidiary’s Keystone Opportunity Zone (“KOZ”) credit for that year. The Company filed an administrative appeal of this assessment with the Pennsylvania Department of Revenue Board of Appeals, which was denied in June 2014. The Company filed an appeal with the Pennsylvania Board of Finance and Revenue, which was also denied in May 2015. The Company has filed an appeal with the Pennsylvania Commonwealth Court. The Company has evaluated the assessment in accordance with the provisions of ASC 740 and determined not to record any reserve for this assessment.

In addition to the matters set forth above, the Company is a party to various routine legal proceedings, claims and regulatory inquiries arising out of the ordinary course of the Company’s business. Management believes that the results of these routine legal proceedings, claims, and regulatory matters will not have a material adverse effect on the Company’s financial condition, or on the Company’s operations and cash flows. However, the Company cannot estimate the legal fees and expenses to be incurred in connection with these routine matters and, therefore, is unable to determine whether these future legal fees and expenses will have a material impact on the Company’s operations and cash flows. It is the Company’s policy to expense legal and other fees as incurred.

Alesco XIV Guarantee

AFN invested in a CDO (Alesco XIV) in which Assured Guaranty (“Assured”) was providing credit support to the senior interests in securitizations. Alesco XIV made a loan (the “Guaranteed Loan”) to a particular borrower and AFN entered into an arrangement with Assured whereby AFN agreed to make payments to Assured upon the occurrence of both (i) a loss on the Guaranteed Loan and (ii) a loss suffered by Assured on its overall credit support arrangement to Alesco XIV security holders. This arrangement was accounted for as a guarantee by the Company. As of December 31, 2012, the Company had a liability of $1,084 related to this arrangement that was included in accounts payable and other liabilities in the Company’s consolidated balance sheets. In May 2013, the underlying loan was paid off in full by the borrower. As a result, the Company’s guarantee with Assured was extinguished. For the year ended December 31, 2013, the Company recognized other income of $1,084, which was included as a component of principal transactions and other income in the Company’s consolidated statements of operations, and wrote off the liability.