SEC Comment Letter for Cohen & Co Inc. (COHN) (CIK 0001270436) (COHN) — Dec 31, 2008
Cohen & Co Inc. (COHN) (CIK 0001270436)
Date: Dec. 31, 2008 · CIK: 0001270436 · Accession: 0000000000-08-064345
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-32026
Letter
Re: Alesco Financial, Inc. Form 10-K for the year ended December 31, 2007 Filed 03/12/08 Definitive Proxy Statement Filed 04/29/08 Form 10-Q for the quart er ended September 30, 2008 Filed 11/05/08 File No. 001-32026 Dear Mr. McEntee: We have reviewed your filings and have the following comments. Where indicated, we think you should re vise your documents in response to these comments. If you disagree, we will consider your explanation as to why our comment is inapplicable or a revision is unnecessary. In some of our co mments, we may ask you to provide us with information so we may better understand your disclosure. Please be as detailed as necessary in your explanati ons. After reviewing this information, we may raise additional comments. Please understand that the purpose of our re view process is to assist you in your compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing. We look forward to working with you in these respects. We welcome any questions you may have about our comments or any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter.
Mail Stop 4561 December 31, 2008 Mr. James J. McEntee, III Chief Executive Officer and President Alesco Financial, Inc. Cira Centre 2929 Arch Street 17 th Floor Philadelphia, PA 19104
Mr. James J. McEntee, III Alesco Financial, Inc. December 31, 2008 Page 2 Form 10-K for the year ended December 31, 2007
Item 1 – Business, page 11
1. You disclose that your manager performs certain legal, accounting, due diligence tasks, and other services that outsid e professionals or outside consultants otherwise would perform and that your ma nager is not paid or reimbursed for the time required to perform such tasks. Pleas e quantify the amount of these services and tell us if the value of these services is recorded in your financial statements. Please refer to SAB T opics 1(B) and 5(T). Item 9A - Controls and Procedures, page 89
2. Please clarify whether management’s assessment of the effectiveness of your internal control over financial reporting wa s that they are effective and if so, confirm that you will include a clear statemen t in the future as to whether or not the internal controls are effective or ineffective. Consolidated Statements of Income (Loss), page F-4
3. We note that you present a subtotal title d “Income before interest and other income, minority interest and taxes” on th e face of your statements of income. In future filings please remove this subtotal and present all operating expenses together. Consolidated Statements of Stockhol ders’ Equity (Deficit), page F-6
4. You disclose that you purchased minority interest preference shares in 2007 which resulted in a debit to APIC in an amount of $4.7 million. Please provide us with details of this tr ansaction, how you accounted for it, and the accounting guidance that you relied upon to determine the appropriate accounting treatment.
Note 2: Summary of Significant Accounting Policies, page F-9
5. We note that on page 39 you discuss your obligation to reacquire loans under certain circumstances. Pleas e tell us what considerat ion you gave to disclosing your accounting policies related to this obligation for transfers accounted for both as sales and financings under SFAS 140.
Note 4: Loans, page F-19
6. We note that you record all of your loans at amortized cost. Please tell us how you determined as of December 31, 2007 and September 30, 2008 that you had the intent and ability to hold these loans receivable for the foreseeable future or
Mr. James J. McEntee, III Alesco Financial, Inc. December 31, 2008 Page 3 until maturity. Please tell us how you c onsidered your current financial condition and liquidity demands, your current business plan, the current economic environment and related market conditions , and your past pr actices when making this determination. Please specifical ly address the fact that you sold approximately $516.2 million of adjustable ra te residential mort gages at realized losses of $2.0 million in the year ende d December 31, 2007 and recorded realized losses on the sale of levera ged loans and your residentia l mortgage portfolio in amounts of $1.4 million and $1.8 million, respec tively, in the nine months ended September 30, 2008; please tell us the reas ons for these sales and how the sales affected your conclusions regarding your re maining loans. For reference, please see SFAS 65 and SOP 01-6. Note 7: Minority Interests, page F-28
7. Based on your statement of cash flows and your footnote, it appears that you paid cash in an amount of $12.9 million for additional CDO investments. Please provide us with more details regard ing these acquisitions and the accounting guidance that you relied upon to determine th e appropriate accounting treatment. Note 8: Stock-Based Compensation, page F-29
8. You disclose that you re-measure the valu e of any earned and unvested shares of common stock granted to the officers and key employees of Cohen at each reporting date. Please tell us how you de termined that this was the appropriate accounting for such shares of stock and pr ovide us with your analysis under EITF 96-18. Exhibits 31.1 and 31.2
9. In future filings please ensure that you provide the exact form of the certification as set forth in Item 601(b)(31) of Regulat ion S-K. For example, we note that in paragraph 4(d), “registrant’s fourth fiscal quarter” should be revised to “registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report).” Definitive Proxy Statement on Schedule 14A
Names of Directors and Biogr aphical Information, page 7 10. We note that you have not provided disclosure regarding Mr. Ullom’s employment experience from 2000 through 2005 in accordance with Item 401 of Regulation S-K. Please include this disclo sure in future filings and tell us how you intend to comply.
Mr. James J. McEntee, III Alesco Financial, Inc. December 31, 2008 Page 4 Executive Officers, page 11
11. We note your disclosure that Mr. Carr worked for Arthur Andersen and KPMG from 1999 through 2006. In future filings pl ease disaggregate this information and specifically state when Mr. Carr worked at each entity. Please tell us how you intend to comply.
Compensation Discussion and Analysis, page 12 12. You state that you may benchmark your compensation program to comparative companies. If you used benchmarks, please tell us the companies included in the peer group. Similar disclosure should be included in future filings. See Item 402(b)(2)(xiv) of Regulation S-K. Th is disclosure should also include a discussion of where actual payments fall within targeted parameters. To the extent actual compensation was outside a targeted percentile range, include an explanation of the reasons for this. Pl ease tell us how you intend to comply. Equity-Based Compensation, page 13
13. Please tell us the specific items of cor porate and individual performance that are taken into account in determining equity -based compensation awards. Also, tell us the reasons behind the material diffe rences in the amounts awarded to the individual officers. Sim ilar disclosure should be provided future filings. Alternatively, tell us why you believe that disclosure of these targets is not required. Refer to Item 402(b)(2)(v) and (v ii) and Instruction 4 to Item 402(b). Interest of Certain Persons in Matters to be Acted Upon, page 21
14. In future filings, please present this di sclosure in the manner required by Item 407(e)(4) of Regulation S-K. Please tell us how you intend to comply. Fees Earned by Cohen & Company…., page 32
15. We note that without the collateral management fee credits, you would have owed your manager $5.9 million and $378,000 in management and incentive fees. We are aware that the term equity as used to determine your base management fee is not the same as stockholders’ equity as defined by GAAP. By using your formulas for both fees , please tell us how your manager’s compensation was determined.
Mr. James J. McEntee, III Alesco Financial, Inc. December 31, 2008 Page 5 Form 10-Q for the quarter ended September 30, 2008
Note 5: Loans, page 17
16. On page 11 you disclose that a loan is placed on non-accrual status at such time as you believe that scheduled debt service payments may not be paid when contractually due or the loan becomes 90 days delinquent. You also disclose on page 17 that as of September 30, 2008 you had placed $46.2 million of residential mortgage loans on non-accrual status. Additionally, you disclose that as of September 30, 2008 there were 199 residentia l mortgage loans that were over 90 days delinquent with a principal amount of $77.7 million. Please explain to us why the entire principal amount that is delinquent over 90 days is not on non- accrual status.
*****
Please respond to these comments within 10 business days or tell us when you will provide us with a response. Please understand that we may have additional comments after reviewing your responses to our comments.
We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes all in formation required under the Securities Exchange Act of 1934 and th at they have provided all information investors require for an informed invest ment decision. Since the company and its management are in possession of all facts re lating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made. In connection with responding to our comments, please provide, in writing, a statement from the company acknowledging that: • the company is responsible for the adequacy and accuracy of the disclosure in the filing;
• staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filings; and
• the company may not assert staff comme nts as a defense in any proceeding initiated by the Commission or any person under the federal secu rities laws of the United States.
In addition, please be advise d that the Division of Enfo rcement has access to all information you provide to the staff of the Divi sion of Corporation Fi nance in our review of your filings or in response to our comments on your filing.
Mr. James J. McEntee, III Alesco Financial, Inc. December 31, 2008 Page 6 You may contact Jessica Barb erich, Staff Accountant, at (202) 551-3782 or me at (202) 551-3498 if you have questions regard ing comments on the financial statements and related matters. Please contact Stacie Gorman, Staff Attorney, at (202) 551-3585 or Duc Dang, Staff Attorney, at (202 ) 551-3386 with any other questions. S i n c e r e l y , Linda van Doorn Senior Assistant Chief Accountant
Show Raw Text
Mail Stop 4561
December 31, 2008
Mr. James J. McEntee, III Chief Executive Officer and President Alesco Financial, Inc. Cira Centre 2929 Arch Street 17
th Floor
Philadelphia, PA 19104
Re: Alesco Financial, Inc.
Form 10-K for the year ended December 31, 2007
Filed 03/12/08 Definitive Proxy Statement Filed 04/29/08 Form 10-Q for the quart er ended September 30, 2008
Filed 11/05/08
File No. 001-32026
Dear Mr. McEntee:
We have reviewed your filings and have the following comments. Where
indicated, we think you should re vise your documents in response to these comments. If
you disagree, we will consider your explanation as to why our comment is inapplicable or
a revision is unnecessary. In some of our co mments, we may ask you to provide us with
information so we may better understand your disclosure. Please be as detailed as
necessary in your explanati ons. After reviewing this information, we may raise
additional comments. Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure requirements and to enhance the overall
disclosure in your filing. We look forward to working with you in these respects. We
welcome any questions you may have about our comments or any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter.
Mr. James J. McEntee, III
Alesco Financial, Inc.
December 31, 2008 Page 2 Form 10-K for the year ended December 31, 2007
Item 1 – Business, page 11
1. You disclose that your manager performs certain legal, accounting, due diligence
tasks, and other services that outsid e professionals or outside consultants
otherwise would perform and that your ma nager is not paid or reimbursed for the
time required to perform such tasks. Pleas e quantify the amount of these services
and tell us if the value of these services is recorded in your financial statements.
Please refer to SAB T opics 1(B) and 5(T).
Item 9A - Controls and Procedures, page 89
2. Please clarify whether management’s assessment of the effectiveness of your internal control over financial reporting wa s that they are effective and if so,
confirm that you will include a clear statemen t in the future as to whether or not
the internal controls are effective or ineffective.
Consolidated Statements of Income (Loss), page F-4
3. We note that you present a subtotal title d “Income before interest and other
income, minority interest and taxes” on th e face of your statements of income. In
future filings please remove this subtotal and present all operating expenses together.
Consolidated Statements of Stockhol ders’ Equity (Deficit), page F-6
4. You disclose that you purchased minority interest preference shares in 2007
which resulted in a debit to APIC in an amount of $4.7 million. Please provide us with details of this tr ansaction, how you accounted for it, and the accounting
guidance that you relied upon to determine the appropriate accounting treatment.
Note 2: Summary of Significant Accounting Policies, page F-9
5. We note that on page 39 you discuss your obligation to reacquire loans under
certain circumstances. Pleas e tell us what considerat ion you gave to disclosing
your accounting policies related to this obligation for transfers accounted for both as sales and financings under SFAS 140.
Note 4: Loans, page F-19
6. We note that you record all of your loans at amortized cost. Please tell us how
you determined as of December 31, 2007 and September 30, 2008 that you had the intent and ability to hold these loans receivable for the foreseeable future or
Mr. James J. McEntee, III
Alesco Financial, Inc.
December 31, 2008 Page 3
until maturity. Please tell us how you c onsidered your current financial condition
and liquidity demands, your current business plan, the current economic
environment and related market conditions , and your past pr actices when making
this determination. Please specifical ly address the fact that you sold
approximately $516.2 million of adjustable ra te residential mort gages at realized
losses of $2.0 million in the year ende d December 31, 2007 and recorded realized
losses on the sale of levera ged loans and your residentia l mortgage portfolio in
amounts of $1.4 million and $1.8 million, respec tively, in the nine months ended
September 30, 2008; please tell us the reas ons for these sales and how the sales
affected your conclusions regarding your re maining loans. For reference, please
see SFAS 65 and SOP 01-6.
Note 7: Minority Interests, page F-28
7. Based on your statement of cash flows and your footnote, it appears that you paid
cash in an amount of $12.9 million for additional CDO investments. Please
provide us with more details regard ing these acquisitions and the accounting
guidance that you relied upon to determine th e appropriate accounting treatment.
Note 8: Stock-Based Compensation, page F-29
8. You disclose that you re-measure the valu e of any earned and unvested shares of
common stock granted to the officers and key employees of Cohen at each
reporting date. Please tell us how you de termined that this was the appropriate
accounting for such shares of stock and pr ovide us with your analysis under EITF
96-18.
Exhibits 31.1 and 31.2
9. In future filings please ensure that you provide the exact form of the certification
as set forth in Item 601(b)(31) of Regulat ion S-K. For example, we note that in
paragraph 4(d), “registrant’s fourth fiscal quarter” should be revised to
“registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the
case of an annual report).”
Definitive Proxy Statement on Schedule 14A
Names of Directors and Biogr aphical Information, page 7
10. We note that you have not provided disclosure regarding Mr. Ullom’s
employment experience from 2000 through 2005 in accordance with Item 401 of
Regulation S-K. Please include this disclo sure in future filings and tell us how
you intend to comply.
Mr. James J. McEntee, III
Alesco Financial, Inc.
December 31, 2008 Page 4 Executive Officers, page 11
11. We note your disclosure that Mr. Carr worked for Arthur Andersen and KPMG
from 1999 through 2006. In future filings pl ease disaggregate this information
and specifically state when Mr. Carr worked at each entity. Please tell us how
you intend to comply.
Compensation Discussion and Analysis, page 12
12. You state that you may benchmark your compensation program to comparative companies. If you used benchmarks, please tell us the companies included in the
peer group. Similar disclosure should be included in future filings. See Item
402(b)(2)(xiv) of Regulation S-K. Th is disclosure should also include a
discussion of where actual payments fall within targeted parameters. To the
extent actual compensation was outside a targeted percentile range, include an
explanation of the reasons for this. Pl ease tell us how you intend to comply.
Equity-Based Compensation, page 13
13. Please tell us the specific items of cor porate and individual performance that are
taken into account in determining equity -based compensation awards. Also, tell
us the reasons behind the material diffe rences in the amounts awarded to the
individual officers. Sim ilar disclosure should be provided future filings.
Alternatively, tell us why you believe that disclosure of these targets is not
required. Refer to Item 402(b)(2)(v) and (v ii) and Instruction 4 to Item 402(b).
Interest of Certain Persons in Matters to be Acted Upon, page 21
14. In future filings, please present this di sclosure in the manner required by Item
407(e)(4) of Regulation S-K. Please tell us how you intend to comply.
Fees Earned by Cohen & Company…., page 32
15. We note that without the collateral management fee credits, you would have
owed your manager $5.9 million and $378,000 in management and incentive fees. We are aware that the term equity as used to determine your base
management fee is not the same as stockholders’ equity as defined by GAAP. By using your formulas for both fees , please tell us how your manager’s
compensation was determined.
Mr. James J. McEntee, III
Alesco Financial, Inc.
December 31, 2008 Page 5 Form 10-Q for the quarter ended September 30, 2008
Note 5: Loans, page 17
16. On page 11 you disclose that a loan is placed on non-accrual status at such time as you believe that scheduled debt service payments may not be paid when contractually due or the loan becomes 90 days delinquent. You also disclose on
page 17 that as of September 30, 2008 you had placed $46.2 million of residential
mortgage loans on non-accrual status. Additionally, you disclose that as of
September 30, 2008 there were 199 residentia l mortgage loans that were over 90
days delinquent with a principal amount of $77.7 million. Please explain to us why the entire principal amount that is delinquent over 90 days is not on non-
accrual status.
*****
Please respond to these comments within 10 business days or tell us when you
will provide us with a response. Please understand that we may have additional
comments after reviewing your responses to our comments.
We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes all in formation required under
the Securities Exchange Act of 1934 and th at they have provided all information
investors require for an informed invest ment decision. Since the company and its
management are in possession of all facts re lating to a company’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please provide, in writing, a statement from the company acknowledging that:
• the company is responsible for the adequacy and accuracy of the disclosure in the
filing;
• staff comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the filings; and
• the company may not assert staff comme nts as a defense in any proceeding
initiated by the Commission or any person under the federal secu rities laws of the
United States.
In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Divi sion of Corporation Fi nance in our review
of your filings or in response to our comments on your filing.
Mr. James J. McEntee, III
Alesco Financial, Inc. December 31, 2008 Page 6
You may contact Jessica Barb erich, Staff Accountant, at (202) 551-3782 or me at
(202) 551-3498 if you have questions regard ing comments on the financial statements
and related matters. Please contact Stacie Gorman, Staff Attorney, at (202) 551-3585 or
Duc Dang, Staff Attorney, at (202 ) 551-3386 with any other questions.
S i n c e r e l y ,
Linda van Doorn Senior Assistant Chief Accountant