Clearing
and floor brokerage expenses for the three months ended September 30, 2014 were
$441,000, a decrease of $154,000 or 25.9% from the same period in 2013
primarily due to the decrease in volume of trade executions for retail customers.
Professional
fees for the three months ended September 30, 2014 were $1.1 million, a
decrease of $1.0 million or 48.5% from the same period in 2013 primarily due to
an decrease in legal fees relating to a dispute with a former employee.
Advertising
and promotion expenses for the three months ended September 30, 2014 were
$74,000, a decrease of $48,000 or 39.3% from the same period in 2013 due to a
decrease in local media and print advertising.
Communications
expense for the three months ended September 30, 2014, was $236,000, a decrease
of $81,000 or 25.6% from the same period in 2013 due to a new phone system and
phone vendor.
Occupancy
expenses for the three months ended September 30, 2014 were $206,000, a
decrease of $60,000 or 22.6% from the same period in 2013 due to our Palm Beach
branch closing on March 31, 2014, reduction in our Jersey City branch operating
expenses, and New York rent rebates as per our new lease.
Other
general and administrative expenses for the three months ended September 30,
2014 were $529,000, a decrease of $122,000 or 18.7% from the same period in
2013 due to a decrease in travel and entertainment and registration fees.
Loss from
Siebert’s equity investment in SBS, an entity in which Siebert holds an indirect 49%
equity interest, for the three months ended September 30, 2014 was a loss of
$393,000, as compared to net income of $765,000 from the same period in 2013
due to SBS participating in fewer senior managed or co-managed transactions.
Loss from our equity investment in SBSFPC, an entity in which the company holds
a 33.33% equity interest, for the three months ended September 30, 2014 was a
loss of $3,000 as compared to a loss of $23,000 from the same period in 2013 due
to the business winding down.
No tax benefit related to the
pre-tax loss was recorded for the three months ended September 30, 2014 and
September 30, 2013 due to the recording of a full valuation allowance to offset
deferred tax assets based on recent losses and the likelihood of realization of
such assets.
Nine Months Ended
September 30, 2014 Compared to Nine Months Ended September 30, 2013
Total
revenues for the nine months ended September 30, 2014 were $10.9 million, a
decrease of $1.3 million or 10.9% from the same period in 2013.
Commission
and fee income for the nine months ended September 30, 2014 was $8.0 million, a
decrease of $629,000 or 7.3% from the same period in 2013 primarily due to a
decrease in average commissions charged per trade and reduced retail and
institutial trading volumes.
Investment
banking revenues for the nine months ended September 30, 2014 were $1.7
million, a decrease of $242,000 or 12.4% from the same period in 2013 due to
our participation in fewer issues in the equity and debt capital markets.
Trading
profits for the nine months ended September 30, 2014 were $1.1 million, a
decrease of $458,000 or 29.3% from the same period in 2013 due to an overall
decrease in customer trading volume in the debt markets.
Interest
and dividends for the nine months ended September 30, 2014 were $43,000, a
decrease of $4,000 or 8.5% from the same period in 2013 primarily due to lower
cash and cash equivalents balances from the previous year.
14
Total
expenses for the nine months ended September 30, 2014 were $18.4 million, an
increase of $2.1 million or 13.1% from the same period in 2013.
Employee
compensation and benefit expense for the nine months ended September 30, 2014
were $5.9 million, a decrease of $627,000 or 9.6% from the same period in 2013
due to a decrease in commissions paid based on production in the capital
markets. We also had a reduction in head count from the previous year.
Clearing
and floor brokerage expenses for the nine months ended September 30, 2014 were
$1.4 million, a decrease of $438,000 or 23.6% from the same period in 2013, due
to lower retail trading volumes.
Professional
fees for the nine months ended September 30, 2014 were $3.4 million, a decrease
of $639,000 or 15.7% from the same period in 2013 primarily due to a decrease
in legal fees relating to a dispute with a former employee and a final
settlement in the case totaling $4.3 million, which was recorded as a loss related
to arbitration settlement on the condensed consolidated statement of
operations.
Advertising
and promotion expenses for the nine months ended September 30, 2014 were
$196,000, a decrease of $101,000 or 34.0% from the same period in 2013 primarily
due to a decrease in online advertising.
Communications
expense for the nine months ended September 30, 2014 was $758,000, a decrease
of $234,000 or 23.6% from the same period in 2013 due to a new phone system and
phone vendor.
Occupancy
expenses for the nine months ended September 30, 2014 were $658,000, a decrease
of $124,000 or 15.9% from the same period in 2013 due to our Palm Beach branch
closing on 3/31/14, reduction in our Jersey City branch operating expenses, and
New York rent rebates as per our new lease.
Other
general and administrative expenses for the nine months ended September 30,
2014 were $1.8 million, a decrease of $4,000 or 0.2% from the same period in
2013.
Income from
Siebert’s equity investment in SBS, an entity in which Siebert holds an indirect 49%
equity interest, for the nine months ended September 30, 2014 was a gain of
$4,000, compared to a loss of $186,000 from the same period in 2013 due to SBS
participating in more senior managed or co-managed transactions. Income from
our equity investment in SBSFPC, an entity in which the company holds a 33.33%
equity interest, for the nine months ended September 30, 2014 was a loss of
$6,000 a as compared to a loss of $143,000 from the same period in 2013 due to
the business winding down.
No
tax benefit related to the pre-tax loss was recorded for the nine months ended
September 30, 2014 due to the recording of a full valuation allowance to offset
deferred tax assets based on recent cumulative losses and the likelihood of
realization of such assets.
Liquidity and Capital Resources
Our assets
are highly liquid, consisting generally of cash in money market funds. Our
total assets at September 30, 2014 were $20.3 million. As of that date, we
regarded $8.3 million, or 40.8%, of total assets as highly liquid.
Siebert is
subject to the net capital requirements of the SEC, the Financial Industry
Regulatory Authority (FINRA) and other regulatory authorities. At September 30,
2014, Siebert’s regulatory net capital was $6.1 million, $5.8 million in excess
of its minimum capital requirement of $250,000.
On January
22, 2008, the Board of Directors of the Company authorized a buy back of up to
300,000 shares of common stock. During the nine months ended September 30, 2014
no shares were purchased.
15
Siebert has
entered into a Secured Demand Note Collateral Agreement with SBS under which
Siebert is obligated to lend to SBS up to $1.2 million on a subordinated basis
collateralized by cash equivalents of approximately $1.5 million as of
September 30, 2014. Amounts pledged by Siebert under the facility are reflected
on our balance sheet as “cash equivalents – restricted”. SBS pays Siebert
interest on this amount at the rate of 4% per annum. The facility expires on
August 31, 2015, at which time SBS is obligated to repay to Siebert any amounts
borrowed by SBS thereunder.
Item 3. Quantitative
and Qualitative Disclosures About Market Risk
Working
capital is generally invested temporarily in dollar denominated money market
funds. These investments are not subject to material changes in value due to
interest rate movements.
Retail
customer transactions are cleared through clearing brokers on a fully disclosed
basis. If customers do not fulfill their contractual obligations, the clearing
broker may charge Siebert for any loss incurred in connection with the purchase
or sale of securities at prevailing market prices to satisfy the customers’
obligations. Siebert regularly monitors the activity in its customer accounts
for compliance with its margin requirements. Siebert is exposed to the risk of
loss on unsettled customer transactions if customers and other counter-parties
are unable to fulfill their contractual obligations. There were no material
losses for unsettled customer transaction as of September 30, 2014.
Item 4. Controls and
Procedures
We
carried out an evaluation, under the supervision and with the participation of
management, including our Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of our disclosure controls and
procedures as of the end of the period covered by this report pursuant to Rule
13a-15(e) or Rule 15d-15(e) of the Securities Exchange of 1934, as amended.
Based on that evaluation, our management, including the Chief Executive Officer
and Chief Financial Officer, concluded that our disclosure controls and
procedures are effective to ensure that the information we are required to
disclose in reports that we file or submit under the Securities Exchange Act of
1934, as amended, is recorded, processed, summarized and reported within the
time periods specified in the rules and forms of the Securities and Exchange
Commission and to ensure that information required to be disclosed is
accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, to allow timely decisions regarding timely
disclosure.
There
were no changes in our internal control over financial reporting that occurred
during our most recent fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
We are involved in various routine lawsuits of a nature we deem to be
customary and incidental to our business. In the opinion of management, the
ultimate disposition of such actions will not have a material adverse effect on
the Company’s financial position or results of operations.
In July 2014, the Company entered into a settlement agreement with
respect to a dispute with a former employee, which arose in a prior year.
Pursuant to the settlement, the Company paid $4,300,000 to the former employee,
and all claims and counterclaims have been dismissed and released.
Item 1A. Risk Factors
In addition to the other information set forth in this report, you
should carefully consider the factors discussed in Part I, Item 1A. “Risk
Factors” in our Annual Report on Form 10-K for the year ended December 31,
2013, which could materially affect our business, financial position and
results of operations. There are no material changes from the risk
16
factors set forth in Part
I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year
ended December 31, 2013.
Item 2. Unregistered
Sales of Equity Securities and Use of Proceeds
On January 23, 2008, our
Board of Directors authorized the repurchase of up to 300,000 shares of our
common stock. Shares will be purchased from time to time, in our discretion, in
the open market and in private transactions. There is no expiration date for
our stock repurchase plan. We did not purchase any shares in the third quarter
of 2014.
A summary of our
repurchase activity for the three months ended September 30, 2014 is as
follows:
Issuer Purchases of
Equity Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
Total Number
Of Shares
Purchased
|
|
Average Price
Paid Per Share
|
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
|
|
Maximum
Number of Shares
That May Yet Be
Purchased Under
The Plans
|
|
|
July 2014
|
|
--
|
|
--
|
|
|
129,137
|
|
|
|
170,863
|
|
|
|
August 2014
|
|
--
|
|
--
|
|
|
129,137
|
|
|
|
170,863
|
|
|
|
September 2014
|
|
--
|
|
--
|
|
|
129,137
|
|
|
|
170,863
|
|
|
|
Total
|
|
|
|
|
|
|
129,137
|
|
|
|
170,863
|
|
|
All of the purchases were
made in open market transactions.
Item 6. Exhibits
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|
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|
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31.1
|
Certification of
Suzanne Shank pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
31.2
|
Certification of Joseph
M. Ramos, Jr. pursuant to Exchange Act Rule 13a-14(a) and 15d-14(a), as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
32.1
|
Certification of
Suzanne Shank of Periodic Financial Report under Section 906 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
32.2
|
Certification of Joseph
M. Ramos, Jr. of Periodic Financial Report under Section 906 of the
Sarbanes-Oxley Act of 2002.
|
17
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
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|
|
|
|
|
|
SIEBERT FINANCIAL CORP.
|
|
| |
|
|
|
|
|
By:
|
/s/ Suzanne
Shank
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|
|
|
|
Suzanne Shank
|
|
|
|
|
Chief Executive Officer
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|
|
|
(principal executive officer)
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|
|
Dated: November 14, 2014
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|
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|
|
|
|
By:
|
/s/
Joseph M. Ramos, Jr.
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|
|
|
|
Joseph M. Ramos, Jr.
|
|
|
|
|
Executive Vice President, Chief Operating Officer,
|
|
|
|
Chief Financial Officer and Secretary
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|
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|
(Principal financial and accounting officer)
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Dated: November 14, 2014
|
|
18
Exhibit 31.1
CERTIFICATION
PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
|
|
|
|
I, Suzanne Shank, certify that:
|
|
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|
|
|
(1) I
have reviewed this quarterly report on Form 10-Q of Siebert Financial
Corp.;
|
|
|
|
|
|
(2) Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
|
|
|
|
|
|
(3) Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
|
|
|
|
|
|
(4) The
registrant’s other certifying officer and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
|
|
|
|
|
|
a. Designed
such disclosure controls and procedures, or caused such disclosure controls
and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
|
|
|
|
|
|
b. Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
|
|
|
|
|
|
c. Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
|
|
|
|
|
|
d. Disclosed
in this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter
(the registrant’s fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
|
|
|
|
|
|
(5) The
registrant’s other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
|
|
|
|
|
|
a. All
significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
|
|
|
|
|
|
b. Any
fraud, whether or not material, that involves management or other employees
who have a significant role in the registrant’s internal control over
financial reporting.
|
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Date:
November 14, 2014
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By
|
: /s/
Suzanne Shank
|
|
|
|
|
|
|
|
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Suzanne
Shank
|
|
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Chief
Executive Officer (principal executive officer)
|
19
Exhibit 31.2
CERTIFICATION
PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
|
|
|
|
I, Joseph M. Ramos, Jr.,
certify that:
|
|
|
|
|
|
(1) I
have reviewed this quarterly report on Form 10-Q of Siebert Financial
Corp.;
|
|
|
|
|
|
(2) Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
|
|
|
|
|
|
(3) Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report;
|
|
|
|
|
|
(4) The
registrant’s other certifying officer and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
|
|
|
|
|
|
a.
Designed such
disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
|
|
|
|
|
|
b.
Designed such
internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
|
|
|
|
|
|
c.
Evaluated the
effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
|
|
|
|
|
|
d.
Disclosed in this
report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter
(the registrant’s fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
|
|
|
|
|
|
(5) The
registrant’s other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
|
|
|
|
|
|
a. All
significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
|
|
|
|
|
|
b. Any
fraud, whether or not material, that involves management or other employees
who have a significant role in the registrant’s internal control over
financial reporting.
|
|
|
|
|
|
|
Date:
November 14, 2014
|
By:
|
/s/ Joseph M. Ramos, Jr.
|
|
|
|
|
|
|
|
|
Joseph
M. Ramos, Jr.
|
|
|
Executive
Vice President, Chief Operating Officer,
|
|
|
Chief
Financial Officer and Secretary
|
|
|
(Principal
financial and accounting officer)
|
20
Exhibit 32.1
CERTIFICATION
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Quarterly Report of Siebert Financial Corp. (the “Company”)
on Form 10-Q for the quarterly period ended September 30, 2014, as filed with
the Securities and Exchange Commission on the date hereof (the “Report”), I,
Suzanne Shank, in my capacity as Chief Executive Officier of the Company,
hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the
Sarbanes-Oxley Act of 2002, that to my knowledge:
1. the
Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
2. the
information contained in the Report fairly presents, in all material respects,
the financial condition of the Company at the end of the period covered by the
Report and the results of operations of the Company for the period covered by
the Report.
|
|
|
|
|
|
|
/s/ Suzanne Shank
|
|
Dated: November 14, 2014
|
|
|
|
|
|
|
|
Suzanne Shank
|
|
|
|
|
Chief Executive Officer
(principal executive officer)
|
|
|
A signed original of this
written statement required by Section 906, or other document authenticating,
acknowledging, or otherwise adopting the signature that appears in typed form
within the electronic version of this written statement required by Section
906, has been provided to Siebert Financial Corp. and will be retained by
Siebert Financial Corp. and furnished to the Securities and Exchange Commission
or its staff upon request.
21
Exhibit 32.2
CERTIFICATION
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Siebert Financial Corp. (the
“Company”) on Form 10-Q for the quarterly period ended September 30, 2014, as
filed with the Securities and Exchange Commission on the date hereof (the
“Report”), I, Joseph M. Ramos, Jr., in my capacity as Executive Vice President
and Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C.
§1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to
my knowledge:
1. the
Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
2. the
information contained in the Report fairly presents, in all material respects,
the financial condition of the Company at the end of the period covered by the
Report and the results of operations of the Company for the period covered by
the Report.
|
|
|
|
|
|
|
/s/ Joseph
M. Ramos, Jr.
|
|
Dated:
November 14, 2014
|
|
|
|
|
|
|
|
Joseph M.
Ramos, Jr.
|
|
|
|
|
Executive
Vice President and Chief Operating Officer
|
|
|
|
|
Chief
Financial Officer and Secretary
|
|
|
|
|
(Principal
financial and accounting officer)
|
|
|
A signed original of this written statement required by Section 906, or
other document authenticating, acknowledging, or otherwise adopting the
signature that appears in typed form within the electronic version of this
written statement required by Section 906, has been provided to Siebert
Financial Corp. and will be retained by Siebert Financial Corp. and furnished
to the Securities and Exchange Commission or its staff upon request.
22
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