Saturday, November 28, 2015

POSTED: Tuesday, November 17, 2015, 8:03 PM
David Danon at his home on Aug. 19, 2014. (TOM GRALISH/Staff Photographer)

A New York State Supreme Court justice has ruled that a former Vanguard Group tax lawyer cannot expect to collect a whistleblower's cut of potential back state taxes owed by the mutual-fund giant because he was employed by Vanguard at the time he secretly filed the complaint.

David Danon's state whistleblower complaint, filed in 2013 and made public a year later, "must be dismissed" and cannot be re-filed because Danon violated New York State legal-ethics rules when he and his lawyers brought the suit while he was still working at Vanguard and "in a position to obtain confidential information" against his employer, State Supreme Court Justice Joan Madden wrote in her opinion, dated Nov. 13.

In New York State, the Supreme Court is the highest trial-level court. It is not an appellate court, as the supreme courts in Pennsylvania and New Jersey are.

Joseph N. DiStefano @ 8:03 PM  Permalink | 0 comments
POSTED: Friday, November 13, 2015, 11:44 AM

Stonebridge Financial Corp., a West Chester company that filed for bankruptcy reorganization in June, says it agreed Nov. 9 to sell money-losing Stonebridge Bank to a group of Lancaster-based investors, pending bank regulators' approval.

In a statement, Stonebridge boss Daniel J. Machon Jr. said the deal left his bank "poised for growth" if it is approved by regulators, adding that the investors plan to "greatly improve" the bank's financial strength. Stonebridge has lost money every year since 2007. Its capital base has slipped from $34 million in 2008 to $7 million on June 30, according to Federal Deposit Insurance Corp. figures. Loans and other assets fell to $130 million, from $487 million, in the same period. The bank has a branch in Warminster and a loan office in Southampton.

The buyers believe that the recent wave of bank mergers, with more expected soon, "created an opening for a locally-owned and based community bank in the south-central Pennsylvania region," said one of the investors, former Pa. State Rep. Gordon Denlinger (R-Lancaster County), in this statement.

Joseph N. DiStefano @ 11:44 AM  Permalink | 0 comments
POSTED: Thursday, November 12, 2015, 4:56 PM

Brian DiSabatino, fourth generation in the Wilmington builder clan that runs general contractor EDiS (and whose cousins run a dozen specialized firms that bear the family name), spent Veterans' Day evening hosting a North Korean refugee, Ji Seong-Ho, whose message DiSabatino brought home: "Freedom isn't free."

At Brandywine Baptist Church off US 202, Ji, through a translator, told of growing up hungry in the "giant prison camp" of North Korea. He told of classmates who disappeared amid the great hunger of the 1990s; of his parents, brother and sister, surviving with him on corn gruel; of the misery of his town's main employers, the coal mines and political prison Camp 22; of stealing coal from freight trains -- a filthy and common occupation in his northern village; of sneaking into China, meeting Korean Christian missionaries, and getting arrested smuggling rice home to his family; of the coal-train accident that cost him his left arm and leg; and the harsh doctor who saved his life.

"I was so hungry I hallucinated food in the sky," he told the crowd. "People who complained, who asked, 'Why am I hungry? Why is there no food?, who became Christian," were sent to the camps. He talked of the lies, of leaders Kim Il-Sung and Kim Jong-Il claiming to share the people's suffering and warning of the poverty of South Korea and the United States. His grandmother starved. His father fought to master his hunger and prevent himself from drinking the kids' gruel. 
More than anything, Ji said, the North Korea police seemed to worry about embarrassing their leaders. Any punishment to children or crippled people were handed out freely, if it seemed to someone in uniform that blaming the society's victims would somehow save face for the government. 

Joseph N. DiStefano @ 4:56 PM  Permalink | 0 comments
POSTED: Thursday, November 12, 2015, 3:00 PM
The Vanguard Group, the Malvern-based mutual fund company, reclassified 2,100 U.S. employees, out of its 14,200 global staff, as hourly employees, instead of salaried. (DAVID SWANSON / Staff Photographer)

Vanguard Group assets have surged to a record $3.4 trillion, with investors pumping in nearly $200 billion so far this year (after a record $215 billion last year), plus investment profits. The Malvern mutual fund giant, with its low-fee indexed and managed funds, adds extra to investors' wallets ($14 billion last year, if you consider what they would have paid other fund companies, at higher industry-average fees), says Vanguard spokesman John Woerth.

But Vanguard is low-balling the value of an asset in every one of its investors' portfolio: shares of Vanguard Group Inc. itself, the fund management and service company that is owned by Vanguard's funds, in an arrangement Vanguard calls "unique" in the mutual fund business.

How much is Vanguard worth? As a private company, you can't buy Vanguard Group shares on the stock market. Let's compare to other big fund managers who are publicly-traded: BlackRock (with $5 trillion in client assets, a third larger than Vanguard, and $15 billion in yearly revenues, at least triple Vanguard fees) has a stock market value of $58 billion. Federated Investments (with $350 billion in assets and $900 million in revenues, both a fraction of Vanguard's), is worth $3.5 billion. That implies a back-of-the-envelope value for Vanguard Group could reach $10 billion or more, with every Vanguard fund shareholder owning a piece. 

Joseph N. DiStefano @ 3:00 PM  Permalink | 0 comments
POSTED: Wednesday, November 11, 2015, 3:21 PM
Worn coins similar to these were purchased by the U.S. Mint in Philadelphia and then seized in a Homeland Security probe last winter. (iStockphoto)

"Because of the possibility of unlawful activity" in the federal Coin Exchange program, which buys worn old coins from recyclers and hoarders and melts them into new coins, "the United States Mint is suspending its redemption of bent and partial coins for a period of six months to assess the security of the program," Richard A. Peterson, director for manufacturing and qulaity at the U.S. Mint, said here in the Federal Register on Oct. 29. 

That was a week after I reported some of the China-based companies that had been among the busiest sellers of recycled coins to the U.S. government filed a lawsuit to get back "$5.5 million in cash, a Porsche Cayman Coupe, and a Texas warehouse" seized by Homeland Security agents last winter.

Federal border control agents acted illegally when they decided the worn coins were fakes and seized the mint's payments to Wealthy Max Ltd., America Naha Inc., and XRacer Sports Co. Ltd., along with the car and warehouse, Wealthy Max's lawyer, Bradford L. Geyer alleged. He asked a federal judge in Newark to dismiss the government's civil forfeiture complaint, on grounds Homeland Security violated federal rules on seizing property alleged to be connected to crimes. Wealth Max's petition has been transferred to federal court in Philadelphia. Still pending.

Joseph N. DiStefano @ 3:21 PM  Permalink | 0 comments
POSTED: Wednesday, November 11, 2015, 11:49 AM

Boenning & Scattergood, the century-old, West Conshohocken-based investment banking-trading-brokerage firm active in Pa. and Ohio municipal, bank and utility finance and investment, is doubling its small research analyst staff and adding coverage of real estate and Internet-and-media stocks. 

Murali (MOR-ley) Sankar, a Brooklyn-based analylst specializing in digital advertising and other media and Internet stocks, has signed on with Boenning after a brief stint at Janney Capital Markets earlier this year, confirms Michael Galantino, who runs Boenning's private clients group and serves on its capital markets committee. Sankar was previously a buy-side analyst at JPMorgan Asset Management.

"We continue expanding" the services of Boenning's capital markets group, research director Matt Schultheis said in a statement. Sankar has an MBA from the U of Michigan and an MS from Delft University of Technology in the Netherlands. He joins utilities analyst Ryan Connor and Schultheis, a veteran bank analyst, at Boenning. The move comes four years after the firm reversed a more-ambitious expansion by laying off pharma, retail and tech-investment analysts hired in 2008 when deals dried up.

Joseph N. DiStefano @ 11:49 AM  Permalink | 0 comments
POSTED: Monday, November 9, 2015, 2:34 PM

RCS Capital Corp., the New York-based securities brokerage cobbled together in a string of deals by Nicholas Schorsch, says Apollo Global Management LLC, the hedge fund group co-owned by Sixers owner Josh Harris, has cancelled its $378 million deal to acquire control of RCS.

Apollo will purchase RCS's Realty Capital Securities and Strategic Capital brokerage, but for only $6 million, down from the earlier $25 million price announced for RCS's wholesale brokerage group. RCS also said it will sell its Hattears Liquid Alternatives investment sales group to its managers for $5.5 milliion, pending adjustments..

RCS shares fell 40 cents by midafternoon to trade around 53 cents, a big drop from last year's $40 high. Schorsch owns around one-quarter of RCS; that stake has lost more than $750 million in value since another Schorsch-founded company, American Realty Capital Partners (later renamed Vereit), acknowledged issuing phony earnings statements last fall. Schorsch has since left Vereit which faces shareholder lawsuits and government scrutiny.

Joseph N. DiStefano @ 2:34 PM  Permalink | 0 comments
POSTED: Monday, November 9, 2015, 12:18 PM
File photo: John C. Bogle, founder of the Vanguard Group, Inc. (Candace DiCarlo)

The "unremitting" buzz around Vanguard Group founder John C. Bogle's well-publicized prediction -- that stocks will likely yield only an average 6%, bonds 3%, over the next ten years, with U.S. stocks "as low as 4% before inflation," as he recently told Morningstar Inc. --

sent veteran Vanguard-watcher Daniel P. Wiener, publisher of the Independent Adviser for Vanguard Investors newsletter, scurrying to extract past Bogle return projections and evaluate their accuracy - "something no one else appears to have done," Wiener claims.

The New York-based investment publisher's conclusion: "Bogle isn't always right. In fact, he's almost never right," and often underestimates. Wiener lists past examples culled from AP, Dow-Jones, CNBC, Vanguard's own materials and other news and investment sources:

Joseph N. DiStefano @ 12:18 PM  Permalink | 0 comments
About this blog

PhillyDeals posts interviews, drafts and updates that Joseph N. DiStefano writes alongside his Sunday and Monday columns and ongoing articles about Philadelphia-area business.

DiStefano studied economics, history and a little engineering at Penn. He taught writing and research at St. Joe’s. He has written for the Inquirer since 1989, except when he left a few times to work at Bloomberg and elsewhere. He wrote the book Comcasted, and raised six kids with his wife, who is a saint.

Reach Joseph N. at, 215.854.5194, @PhillyJoeD. Read his blog posts at and his Inquirer columns at Bloomberg posts his items at NH BLG_PHILLYDEAL.

Reach Joseph at or 215 854 5194.

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