COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Limited loan guarantee. The Company, together with Lease Equity Appreciation Fund I, L.P. (“LEAF I”), one of its sponsored commercial finance investment partnerships, had provided a limited guarantee to a lender to LEAF I in exchange for a waiver of any existing defaulted loan covenants and certain future financial covenants and payment. On March 20, 2014, pursuant to the guarantee, the Company paid $954,000 to the lender on behalf of LEAF I to pay off the remaining loan balance and became subrogated to the lender's position on the loan.

On July 31, 2014, LEAF I was liquidated. In connection with that event, the Company assumed the LEAF I leases and notes, which were recorded at fair value, in payment of its outstanding loan receivable due from LEAF I. The Company will reflect a loss on this transaction of approximately $200,000 in its third quarter ending September 30, 2014.

Broker-dealer capital requirement.  Resource Securities serves as a dealer-manager for the sale of securities of direct participation investment programs, both public and private, sponsored by subsidiaries of the Company who also serve as general partners and/or managers of these programs.  Additionally, Resource Securities serves as an introducing agent for transactions involving sales of securities of financial services companies, REITs and insurance companies for the Company and for RSO.  As a broker-dealer, Resource Securities is required to maintain minimum net capital, as defined in regulations under the Securities Exchange Act of 1934, as amended, which was $100,000 and $221,000 as of June 30, 2014 and December 31, 2013, respectively.  As of June 30, 2014 and December 31, 2013, Resource Securities net capital was $1.2 million and $2.7 million, respectively, which exceeded the minimum requirements by $1.1 million and $2.5 million, respectively.

Legal proceedings. The Company is also a party to various routine legal proceedings arising out of the ordinary course of business. Management believes that none of these actions, individually or, in the aggregate, will have a material adverse effect on the Company's consolidated financial condition or operations.

Real estate commitments.  As a specialized asset manager, the Company sponsors and manages investment funds in which it may make an equity investment along with outside investors.  This equity investment is generally based on a percentage of funds raised and varies among investment programs.  With respect to Opportunity REIT II, the Company is committed to invest 1% of the first $100.0 million of equity raised. During 2013, the Company invested $200,000. In April 2014, the Company fully funded its commitment with an additional investment of $1.0 million.

General corporate commitments. The Company is also party to employment agreements with certain executives that provide for compensation and other benefits, including severance payments under specified circumstances.

As of June 30, 2014, except for the executive compensation, the Company did not believe it was probable that any payments would be required under any of its commitments and contingencies and, accordingly, no liabilities were recorded in the consolidated financial statements.