Wednesday, July 23, 2014
Inquirer Daily News

POSTED: Tuesday, July 22, 2014, 4:00 PM
Norman Bay is currently the director of the Office of Enforcement at the Federal Energy Regulatory Commission and is President Obama's nominee to fill the vacant top post there. (Photo from

On July 15, U.S. Sen. Robert Casey, D-Pa., voted with most of his Democratic colleagues and against most of the Republican minority to confirm Norman Bay, head of enforcement for the Federal Energy Regulatory Commission, as the agency's next chairman. 

On July 18, Casey sent a letter to Energy Department inspector general Gregory H. Friedman asking for a seven-point review of FERC enforcement -- the group Bay heads.

Casey wants FERC to ensure Bay's unit has been investigating "fairly," providing "efficient" oversight of its investigations, not conducting "unnecessarily prolonged investigations," not "violat(ing) its requirements for confidentiality" in investigations, "allocating its limited resources" to prioritize important investigations, and questioning whether FERC, on Bay's watch, had investigated "alleged market manipulation" or "pursued enforcement actions" in cases where the alleged behaviors were not illegal "at the time they occurred."

POSTED: Tuesday, July 22, 2014, 3:09 PM
A screen grab from Reed Tech's website,

Reed Tech, the 1,000-worker, Horsham-based intellectual-property (IP) company that manages the U.S. Patent and Trademark Office's content-management software and advises inventors, engineers and lawyers on how best to apply, has completed its first-ever acquisition in its 48-year history, buying Minnesota-based PatentCore and its platform, PatentAdvisor, for a sum neither party will disclose.

What's PatentAdvisor? "Think of us like in Moneyball," the book and movie about baseball strategies based on probability, says PatentCore founder Chris Holt. "We bring statistics to the patent application process," and advise Big Tech and start-up clients on which patent applications are most likely to be approved, based on prior patents and the record of the arm of the patent office that's reviewing each proposal.

Reed Tech is part of LexisNexis, the law and news archive, which is in turn owned by Anglo-Dutch publishing cooperative Reed Elsevier. Besides easing applications for USPTO, Reed Tech has "a nice business in the life-sciences industry," vice president Ethan Eisner told me. "We do a lot of work with pharmaceutical companies and medical-device companies, and with FDA directly, helping the companies meet regulatory requirements around product labels and unique identifying information."  

POSTED: Tuesday, July 22, 2014, 11:50 AM

A highway contractor active in Pennsylvania gives me this view of the "public-private partnerships" that President Obama and Gov. Corbett (with his Rapid Bridge Replacement Program) assure us will change the way our governments fund highway and bridge repairs: "As a highway bill, this is a boondoggle. I can assure you that the money involved will be far in excess of what would have been spent utilizing PennDOT’s current procurement process."

But won't PennDOT's scheme get 560 much-needed bridges (most far from Philly) repaired and maintained more quickly? I asked. Maybe, maybe not, the contractor said. But this isn't really about completion dates, he added: "It is the difference of paying as you go with current taxes and fees or having the private sector provide the up-front money and then take 'availability payments' over 30-35 years once the work has been completed."

So how big are those payments, and how much will private highway financing cost, compared to government bonds? That's the question Obama didn't address and his Transportation and Treasury secretaries refuse to address, and PennDOT won't know until the bids are in. But you don't need the details to see that "P3’s are financed at (high) rates that cannot be gotten anywhere but hedge funds. 12-15% are typical. When the cost of this work, plus the financing of same, is removed from Pennsylvania’s highway fund, the drain on resources will be extensive and continue for a long time.

POSTED: Monday, July 21, 2014, 3:50 PM
A Moody's sign is displayed on 7 World Trade Center, the company's corporate headquarters in New York, Feb. 6, 2013. (Brendan McDermid / Reuters)

Moody's Investors Service says it has cut Pennsylvania's bond rating to Aa3, down a notch from Aa2. Only New Jersey (A1) and Illinois (A3) now have lower ratings, among U.S. states. The cut is Moody's response to Pennsylvania's "imbalanced" 2015 state budget and fiscal problems which "will further deteriorate" due to the General Assembly's one-time gimmicks and "non-recurring revenues," along with Pennsylvania's slow economic growth, which has lagged other states despite Gov. Corbett's attempts to attract industry by avoiding new taxes and easing business regulation.

Looking on the bright side, Moody's noted Pennsylvania gives Gov. Corbett the power to cut spending between budgets if he wants, noted analyst Kimberly Lyons in the report. But Pennsylvania remains highly indebted, with a growing gap between the money the state has promised to pay retired elected officials, state workers and teachers and the amount it has set aside to pay them, and low cash reserves, Moody's added. The state is expected to continue to "grow slower than the U.S. on average." 

The ratings cover $11 billion in state general-obligation debt plus another $2 billion in bonds backed by state appropriations. Pennsylvania last had its Moody's ratings cut in 2012. The lower the rating, the less likely a borrower is to repay debt, and the more it will typically have to pay to sell future bonds. Recent near-record low interest rates have kept low bond ratings from boosting financing costs a lot, but are expected to hurt more as U.S. interest rates rise in the future.

POSTED: Monday, July 21, 2014, 2:49 PM

Gene Lockhart, who parlayed top jobs at First Manhattan, MasterCard, BofA and AT&T into a post-2000 career as a financial tech start-up picker (he's also on the board of Vernon Hill's MetroBank Plc in London), has lately joined Philadelphia's own MissionOG because that firm's cofounders, Andrew Newcomb and his partners from Ecount, the Conshohocken-based prepaid-debit-card outfit, refused to sell Ecount when Lockhart wanted to combine it with his larger rival firm, Netspend. "Three times I tried to acquire them, I could never hit the number they got from Citigroup," which paid $220 million for Ecount in 2008.

These Philly guys are smart, Lockhart figured. Would be more fun to be on the same side, next deal.

So Lockhart has joined MissionOG (after TSYS bought Netspend for $1.4 billion, freeing him for the next round of dealmaking). Already he's broadened MissionOG's outlook to add UK-based Pay4Later (corrected), which funds installment payments for appliances, a business Lockhart says it plans to spread through the U.S., where he says bank regulators have made it tough for traditional lenders to compete: "Say MetroBank wants to offer borrowers with a 620 or 640 (low-ish) FICo score, 24% (APR) loans for a 12-month period, at $125 a month. They connect Metro and four other banks to a merchant that sells that kind of item to that kind of risk profile. Like a Lending Tree."

POSTED: Monday, July 21, 2014, 2:10 PM
In this handout image provided by American Apparel, CEO of American Apparel Dov Charney poses for a photo on undated in Los Angeles, California. (Photo by American Apparel via (Getty Images)

A young professional of my acquaintance ("The Pro") was ambling through the Cherry Hill Mall on Sunday when he noticed a very purposeful man with a bold familiar face and a cool MP3 player "walking through people." The Pro turned to his companions and asked, "Is there an American Apparel store near here?"

Very near, it turned out -- and close enough for the Pro to watch the very purposeful man stride into that American Apparel store as if he owned the place, walk up to a young woman clerk, look down at her feet, and ask, "Are those Keds you're wearing? You have to wear our shoes here."

"That was Dov Charney, absolutely," the Pro told me later. But wasn't Charney, the bombastic American Apparel CEO, fired last month for improper conduct? Yes, but: The company has taken Charney back as a strategic consultant while a board committee reviews the accusations against him. Indeed, according to this SEC filing, Charney agrees not to interfere with the investigation, or access company computers, while that's still going on. Meanwhile: "Mr. Charney will be entitled to receive his base salary as a consultant to the Company." Though he also "will have no supervisory authority over any employees of the Company." So in theory the clerk can keep her Keds on.

POSTED: Friday, July 18, 2014, 8:47 AM
At the damaged I-495 bridge in Wilmington, President Obama urges action by Congress and the private sector to invest in and repair the nation's infrastructure. (Michael S. Wirtz / Staff Photographer)

UPDATE from my column in Sunday's Philadelphia Inquirer: After getting stonewalled by Obama's Transportation (Foxx) and Treasury (Lew) secretaries about what the president was actually suggesting for highway funding, I asked Frank M. Rapoport, the Berwyn-based lawyer for Peckar & Abramson P.C., who has been mobilizing for a return to private road-funding almost since the government bought Lancaster Pike from the Pennsylvania Railroad, tore down the tollgates and tacked up those Lincoln Highway signs, to explain what's really going on.

"There was not an 'agenda' by the Republicans to help public-private partnerships directly," Rapaport insisted. "They were just against the gas-tax increase. Thus, Obama is doing what he can, to help the governors and mayors."

OK, I told Rapoport. But your construction guys couldn't have planned this better if it was a conspiracy with the GOP. He laughed.

POSTED: Friday, July 18, 2014, 8:17 AM

Safeguard Scientifics, Wayne, has joined Michigan-based Biostar Ventures and other investors pumping $11.6 million into Trice Medical, a King of Prussia company that makes "mi-eye," a mini-camera and light mounted on a 14-gauge needle -- the kind they use in vaccinations -- and wired to an Android tablet, which CEO Jeff O'Donnell tells me can be used to probe hips and shoulders, "averting the need for an expensive MRI" or exploratory surgery. 

O'Donnell is a serial startup CEO: He previously ran Embrella Cardiovascular of Wayne, which he sold to Edwards Life Sciences in March 2011 for $43 million, four times what investors put in. He also ran Photomedex (based in Montgomeryville), Kensey Nash of Exton, and Cardiovascular Dynamics, Irvine, Calif.

About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at or 215 854 5194.

Joseph N. DiStefano
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