UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
10-Q
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(Mark One) |
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☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended |
September
30, 2015 |
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or |
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☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from _________________________to
_________________________ |
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Commission file number |
0-5703 |
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Siebert
Financial Corp. |
(Exact Name of Registrant
as Specified in its Charter) |
New
York |
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11-1796714 |
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(State or Other Jurisdiction of Incorporation or |
(I.R.S. Employer Identification
No.) |
Organization) |
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885
Third Avenue, New York, NY 10022 |
(Address of Principal Executive
Offices) (Zip Code) |
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(212)
644-2400 |
(Registrant’s Telephone
Number, Including Area Code) |
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(Former Name, Former Address
and Former Fiscal Year, if Changed Since Last Report) |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
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Large Accelerated Filer ☐ |
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Accelerated Filer ☐ |
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Non-Accelerated Filer ☐ |
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Smaller Reporting Company ☒ |
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Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
Indicate
the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As
of November 9, 2015, there were 22,085,126 shares of Common Stock, par value $.01 per share, outstanding.
Unless
the context otherwise requires, the “Company” shall mean Siebert Financial Corp. and its wholly owned subsidiaries
and “Siebert” shall mean Muriel Siebert & Co., Inc., a wholly owned subsidiary of the Company.
Certain
statements contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
below and elsewhere in this report, as well as oral statements that may be made by us or by our officers, directors or employees
acting on our behalf, that are not statements of historical or current fact constitute “forward looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward looking statements involve risks and
uncertainties and known and unknown factors that could cause our actual results to be materially different from our historical
results or from any future results expressed or implied by such forward looking statements, including, without limitation: changes
in general economic and market conditions; changes and prospects for changes in interest rates; fluctuations in volume and prices
of securities; demand for brokerage and investment banking services; competition within and without the discount brokerage business,
including the offer of broader services; competition from electronic discount brokerage firms offering greater discounts on commissions
than we do; the prevalence of a flat fee environment; decline in participation in corporate or municipal finance underwritings;
limited trading opportunities; the method of placing trades by our customers; computer and telephone system failures; our level
of spending on advertising and promotion; trading errors and the possibility of losses from customer non-payment of amounts due;
other increases in expenses and changes in net capital or other regulatory requirements. We undertake no obligation to publicly
release the results of any revisions to these forward-looking statements which may be made to reflect events or circumstances
after the date when such statements were made or to reflect the occurrence of unanticipated events. An investment in us involves
various risks, including those mentioned above and those which are detailed from time to time in our Securities and Exchange Commission
filings.
Part
I - FINANCIAL INFORMATION
Item
1. Financial Statements
Siebert
Financial Corp. & Subsidiaries
Condensed Consolidated Statements of Financial Condition
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September 30,
2015 |
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December 31,
2014 |
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(Unaudited) |
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ASSETS |
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Cash and cash
equivalents |
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$ |
6,027,000 |
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$ |
6,749,000 |
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Cash equivalents
– restricted |
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— |
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1,532,000 |
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Receivable from
brokers |
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596,000 |
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788,000 |
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Securities owned,
at fair value |
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544,000 |
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488,000 |
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Furniture, equipment
and leasehold improvements, net |
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444,000 |
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609,000 |
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Investment in affiliate available
for sale |
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8,026,000 |
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7,979,000 |
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Receivable from
business sold to affiliate net of unamortized discount of $969,000 and $1,143,000 |
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2,031,000 |
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1,857,000 |
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Prepaid expenses
and other assets |
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498,000 |
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718,000 |
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Intangibles,
net |
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— |
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8,000 |
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$ |
18,166,000 |
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$ |
20,728,000 |
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LIABILITIES
AND STOCKHOLDERS’ EQUITY |
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Liabilities: |
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Accounts payable
and accrued liabilities |
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$ |
2,283,000 |
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$ |
2,176,000 |
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Contingencies
(Note 11) |
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Stockholders’
equity: |
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Common stock,
$.01 par value; 49,000,000 shares authorized, 23,211,846 shares issued and 22,085,126 shares outstanding at September 30,
2015 and December 31, 2014, respectively |
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232,000 |
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232,000 |
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Additional paid-in
capital |
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19,490,000 |
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19,490,000 |
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Retained earnings |
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921,000 |
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3,590,000 |
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Less: 1,126,720
shares of treasury stock, at cost at September 30, 2015 and December 31, 2014, respectively |
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(4,760,000 |
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(4,760,000 |
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15,883,000 |
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18,552,000 |
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$ |
18,166,000 |
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$ |
20,728,000 |
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See
notes to condensed consolidated financial statements.
Siebert
Financial Corp. & Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
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Three
Months Ended
September 30, |
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Nine
Months Ended
September 30, |
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2015 |
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2014 |
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2015 |
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2014 |
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Revenues: |
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Commissions
and fees |
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$ |
2,293,000 |
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$ |
2,410,000 |
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$ |
6,588,000 |
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$ |
8,027,000 |
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Investment banking |
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8,000 |
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558,000 |
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27,000 |
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1,703,000 |
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Trading profits |
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164,000 |
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472,000 |
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435,000 |
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1,104,000 |
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Interest on receivable from affiliate |
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60,000 |
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— |
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174,000 |
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— |
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Other interest and
dividends |
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11,000 |
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14,000 |
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40,000 |
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43,000 |
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2,536,000 |
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3,454,000 |
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7,264,000 |
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10,877,000 |
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Expenses: |
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Employee compensation
and benefits |
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1,289,000 |
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1,942,000 |
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4,000,000 |
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5,875,000 |
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Clearing fees,
including floor brokerage |
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298,000 |
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441,000 |
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983,000 |
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1,416,000 |
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Professional
fees |
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796,000 |
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1,086,000 |
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2,584,000 |
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3,421,000 |
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Loss related
to arbitration settlement |
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— |
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— |
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— |
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4,300,000 |
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Advertising
and promotion |
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72,000 |
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74,000 |
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193,000 |
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196,000 |
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Communications |
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153,000 |
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236,000 |
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475,000 |
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758,000 |
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Occupancy |
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174,000 |
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206,000 |
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580,000 |
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658,000 |
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Other general
and administrative |
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463,000 |
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532,000 |
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1,342,000 |
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1,762,000 |
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3,245,000 |
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4,517,000 |
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10,157,000 |
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18,386,000 |
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Loss from continuing
operations before income tax benefit |
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(709,000 |
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(1,063,000 |
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(2,893,000 |
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(7,509,000 |
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Income
tax benefit |
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— |
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— |
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92,000 |
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2,000 |
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Loss from continuing operations |
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(709,000 |
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(1,063,000 |
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(2,801,000 |
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(7,507,000 |
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Discontinued operations - Income (loss) from investment in affiliate available for sale, including $564,000 loss related to disposal of investment in 2015, net of income tax of $92,000 and $2,000 for nine months in 2015 and 2014, respectively |
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(19,000 |
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(393,000 |
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132,000 |
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2,000 |
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Net loss |
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($ |
728,000 |
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($ |
1,456,000 |
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($ |
2,669,000 |
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($ |
7,505,000 |
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Net loss per
share of common stock – |
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Continuing operations |
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($ |
.03 |
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($ |
.05 |
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($ |
.13 |
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($ |
.34 |
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Discontinued operations |
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$ |
— |
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($ |
.02 |
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$ |
.01 |
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$ |
— |
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Basic and diluted |
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($ |
.03 |
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($ |
.07 |
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($ |
.12 |
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($ |
.34 |
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Weighted average
shares outstanding - |
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Basic and diluted |
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22,085,126 |
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22,085,126 |
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22,085,126 |
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22,085,126 |
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See
notes to condensed consolidated financial statements.
Siebert
Financial Corp. & Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
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Nine
Months Ended
September 30, |
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2015 |
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2014 |
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Cash flows
from operating activities: |
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Net loss |
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($ |
2,669,000 |
) |
($ |
7,505,000 |
) |
Adjustments
to reconcile net loss to net cash (used in) operating activities: |
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Depreciation
and amortization |
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214,000 |
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284,000 |
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(Income) loss
from equity investee available for sale |
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(224,000 |
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(4,000 |
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Distribution
from equity investee available for sale |
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98,000 |
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13,000 |
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Interest
on receivable from equity investee available for sale |
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(174,000) |
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— |
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Other |
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— |
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6,000 |
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Changes in: |
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Cash equivalents - restricted |
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1,532,000 |
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— |
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Securities
owned, at fair value |
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(56,000 |
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(27,000 |
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Receivable
from brokers |
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192,000 |
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226,000 |
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Prepaid expenses
and other assets |
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220,000 |
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225,000 |
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Accounts payable
and accrued liabilities |
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107,000 |
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(146,000 |
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Net cash used
in operating activities |
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(760,000 |
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(6,928,000 |
) |
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Cash flows
from investing activities: |
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Purchase of
furniture, equipment and leasehold improvements |
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(41,000 |
) |
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(148,000 |
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Net collection (advances)
to equity investee available for sale |
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79,000 |
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(68,000 |
) |
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Net cash provided
by (used in) investing activities |
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38,000 |
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(216,000 |
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Net decrease
in cash and cash equivalents |
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(722,000 |
) |
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(7,144,000 |
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Cash and cash
equivalents - beginning of period |
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6,749,000 |
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15,424,000 |
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Cash and cash
equivalents - end of period |
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$ |
6,027,000 |
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$ |
8,280,000 |
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Supplemental
cash flow disclosures: |
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Cash paid for: |
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Income taxes,
net of refund received |
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$ |
15,000 |
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51,000 |
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See
notes to condensed consolidated financial statements.
Siebert Financial Corp. & Subsidiaries
Notes to Condensed Consolidated Financial Statements
Nine Months Ended September 30, 2015 and 2014
(Unaudited)
| 1. | Business and Basis of Presentation: |
Siebert Financial Corp. (the
“Company”) is a holding company that conducts its retail discount brokerage business through its wholly-owned subsidiary,
Muriel Siebert & Co., Inc. (“Siebert”), a Delaware corporation. Siebert’s principal activity is providing
online and traditional brokerage and related services to retail investors. In addition, in 2014 the Company began business as a
registered investment advisor through a wholly-owned subsidiary, Siebert Investment Advisors, Inc. (“SIA”). SIA offers
advice to clients regarding asset allocation and the selection of investments.
The consolidated financial statements
include the accounts of the Company and its wholly owned subsidiaries Siebert, Women’s Financial Network, Inc. (“WFN”)
and SIA. All material intercompany balances and transactions have been eliminated. Investment in Siebert Brandford Shank Financial,
L.L.C. (“SBSF”) in which the Company had a 49% membership interest is accounted for by the equity method and is classified as available for sale in the accompanying statements of financial condition. The investment was sold on November 9, 2015 (see Note 13). The Company’s share of income (loss) from SBSF is classified as discontinued operations in the accompanying statements of operations (see Note 3).
The condensed consolidated interim
financial statements presented herein are unaudited and include all adjustments (consisting of normal recurring adjustments) which
are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations of the
interim periods pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain
information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted
accounting principles (“GAAP”) in the United States of America (“U.S.”) have been condensed or omitted
pursuant to SEC rules and regulations, although the Company believes that the disclosures made are adequate to make the information
not misleading. The balance sheet at December 31, 2014 has been derived from the audited consolidated statement of financial condition
at that date, but does not include all information and footnotes required by U.S. GAAP for complete financial statements. These
condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in
the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. Because of the nature of the Company’s
business, the results of operations for the nine months ended September 30, 2015 are not necessarily indicative of operating
results for the full year.
| 2. | Sale of Capital Markets Group Business: |
On November 4, 2014,
the Company, which held a 49% membership interest in, and the other members of, Siebert Brandford Shank & Co.,
LLC (“SBS”), contributed their SBS membership interests into SBSF, a newly formed Delaware limited liability
company, in exchange for the same percentage interests in SBSF. On the same day, the Company entered into an Asset
Purchase Agreement (the “SCM Purchase Agreement”) with SBS and SBSF, pursuant to which the Company sold
substantially all of the Siebert Capital Markets Group (“SCM”) assets to SBSF. Pursuant to the SCM Purchase
Agreement, SBSF assumed post-closing liabilities relating to the transferred business.
| | The SCM Purchase Agreement provides for an aggregate purchase price for the disposition of $3,000,000,
payable by SBSF after closing in annual installments commencing on March 1, 2016 and continuing on each of March 1, 2017, 2018,
2019 and 2020. The transferred business was contributed by SBSF to, and operated by, SBS. The amount payable to the Company on each
annual payment date will equal 50% of the net income attributable to the transferred business recognized by SBS in accordance with
generally accepted accounting principles during the fiscal year ending immediately preceding the applicable payment date; provided
that, if net income attributable to the transferred business generated prior to the fifth annual payment date is insufficient to
pay the remaining balance of the purchase price in full on the fifth annual payment date, then the unpaid amount of the purchase
price will be paid in full on March 1, 2021. |
Transferred assets of SCM, consisted
of customer accounts and goodwill, which had no carrying value to the Company, and the Company recorded a gain on sale of $1,820,000
in the fourth quarter of 2014, which reflected the fair value of the purchase obligation. Such fair value was based on the present
value of estimated annual installments to be received during 2016 through 2020 from forecasted net income of the transferred business
plus a final settlement in 2021, discounted at 11.5% (representing SBS’s weighted average cost of capital).
The discount recorded for the
purchase obligation is being amortized as interest income using an effective yield initially calculated based on the original carrying
amount of the obligation and estimated annual installments to be received. Such yield will be adjusted in future periods to reflect
actual installments received and changes in estimates of future installments. Interest income recognized on the obligation for
the three and nine months periods ended September 30, 2015 amounted to approximately $60,000 and $174,000, respectively based on
a yield of approximately 12%. As a result of the Company’s continuing involvement in the capital markets business through
its 49% ownership in SBSF, results of operations of the capital market business were not reflected as discontinued operations in
the accompanying financial statements.
| 3. | Discontinued Operations: |
In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. ASU No. 2014-08 changes the definition of a discontinued operation to include only those disposals of components of an entity that represent a strategic shift that has (or will have) a major effect on the entity’s operations and financial results. ASU No. 2014-08 is effective prospectively to all new disposals in components (including equity method investees) and new classification as held for sale beginning in fiscal years beginning after December 15, 2014 with early adoption permitted. The company adopted this update in 2015.
The revised standard cannot be applied
to a component that was previously disposed of that was initially precluded from discontinued operations because of significant
continuing involvement even when there are subsequent changes in the activities with a disposed component that would no longer
preclude discontinued operations (see Note 2).
On November 9,
2015, Siebert sold its 49% membership investment in SBSF pursuant to a plan to sell and reflected negotiations that had commenced prior to September 30,
2015 (see Note 13). Accordingly, such investment has been classified as available for sale on
the statement of financial condition by September 30, 2015. The sale of the investment in SBSF which was accounted for by the
equity method represent a strategic shift for the company based on its significance to the Company’s consolidated
financial condition and results of operations and the effect it will have on the Company’s operations and
financial result and accordingly Siebert’s share of operating results of the investment are reflected as discontinued
operations for all periods presented. In addition, the investment was sold for $8,000,000, which was approximately $564,000
less than the carrying value of the investment at September 30, 2015 adjusting the carrying value of the investment
for Siebert’s equity in SBSF’s results of operations for the quarter ended September 30, 2015. Further,
no distributions was recorded from SBSF during the period from October 1, 2015 through November 9, 2015. Accordingly, a
$564,000 write down of the investment has been recorded in discontinued operations for the quarter ended September 30, 2015,
to reflect the investment at fair value as determined by its selling price.
4. Securities:
Securities owned are carried
at fair value with realized and unrealized gains and losses reflected in trading profits. Siebert clears all its security transactions
through unaffiliated clearing firms on a fully disclosed basis. Accordingly, Siebert does not hold funds or securities for, or
owe funds or securities to, its customers. Those functions are performed by the clearing firms.
5. Fair Value of Financial
Instruments:
Authoritative accounting guidance
defines fair value, establishes a framework for measuring fair value and establishes a fair value hierarchy. Fair value is the
price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between participants at
the measurement date. Fair value measurements are not adjusted for transaction costs. The fair value hierarchy prioritizes inputs
to valuation techniques used to measure fair value into three levels:
Level 1 – Unadjusted quoted
prices in active markets for identical assets or liabilities.
Level 2 – Inputs other
than quoted prices that are observable, either directly or indirectly, and reasonably available.
Level 3 – Unobservable
inputs which reflect the assumptions that management develops based on available information about the assumptions market participants
would use in valuing the asset or liability.
The classification of financial
instruments valued at fair value at September 30, 2015 is as follows:
|
Financial
Instruments |
|
Level 1 |
|
|
Cash equivalents |
|
$ |
5,589,000 |
|
|
Securities |
|
|
544,000 |
|
|
Total |
|
$ |
6,133,000 |
|
Cash equivalents primarily represent
investments in money market funds. Securities consist of common stock valued on the last business day of the period at the last
available reported sales price on the primary securities exchange. As of September 30, 2015, the Company did not hold
any Level 2 or Level 3 financial instruments.
6. Per Share Data:
Basic earnings (loss) per share
is calculated by dividing net income (loss) by the weighted average outstanding common shares during the period. Diluted earnings
per share is calculated by dividing net income by the number of shares outstanding under the basic calculation and adding all dilutive
securities, which consist of options. The Company incurred a net loss for the three and nine months ended September 30, 2015 and
September 30, 2014 respectively. Accordingly, basic and diluted loss from continuing operations and a per share data are the same for each period as the effect
of stock options is anti-dilutive. Shares of underlying stock options not included in the diluted computation amounted to 265,000
in 2015 and 2014.
7. Net Capital:
Siebert is subject to the SEC’s
Uniform Net Capital Rule (Rule 15c3-1), which requires the maintenance of minimum net capital. Siebert has elected to use the alternative
method, permitted by the Rule, which requires that Siebert maintain minimum net capital, as defined, equal to the greater of $250,000
or two percent of aggregate debit balances arising from customer transactions, pursuant to the Rule. As of September 30, 2015,
Siebert had net capital of approximately $4,434,000 as compared with net capital requirements of $250,000. Siebert claims exemptions
from the reserve requirement under section 15c3-3(k)(2)(ii).
8. Revenue:
Commission revenues and related
clearing expenses are recorded on a trade-date basis. Fees, consisting principally of revenue participation with the Company’s
clearing broker in distribution fees and interest, are recorded as earned.
Trading profits are also recorded
on a trade-date basis and principally represent riskless principal transactions which the Company, after receiving an order, buys
or sells securities as principal and at the same time sells or buys the securities with a markup or markdown to satisfy the order.
Investment banking revenue includes
gains and fees, net of syndicate expenses, arising from underwriting syndicates in which the Company participates. Investment banking
management fees are recorded on the offering date, sales concessions on the settlement date and underwriting fees at the time the
underwriting is completed and the income is reasonably determinable.
Interest is recorded on an accrual
basis and dividends are recorded on the ex-dividend date.
9. Capital Transactions:
On January 22, 2008, the Board
of Directors of the Company authorized a buy-back of up to 300,000 shares of common stock. Shares will be purchased from time to
time, at management’s discretion, in the open market and in private transactions. During the nine months ended September
30, 2015, there were no shares purchased and 170,863 shares may be purchased under the plan as of September 30, 2015.
At September 30, 2015, there
are 265,000 outstanding options at a weighted average exercise price of $3.02, which were fully vested and exercisable. As of September
30, 2015, there was no unrecognized compensation cost.
10. Investment in Affiliate:
Siebert, Brandford, Shank
Financials, L.L.C. (“SBSF”)
Siebert and two individuals (the
“Principals”) formed SBS, a wholly-owned subsidiary of SBSF, to succeed to the tax-exempt underwriting business of the
Siebert Brandford Shank division of Siebert (see Note 2). The agreement with the Principals provides that profits will be allocated
51% to the Principals and 49% to Siebert. Income or loss from SBS was considered to be integral to Siebert’s operations and material
to the results of operations. Siebert’s investment in SBSF was sold on November 9, 2015 (see Note 13).
Summarized financial data of SBSF in 2015 and
SBS in 2014 is set forth below.
|
|
|
|
|
|
|
|
SBSF |
|
SBS |
|
|
|
September 30, |
|
|
|
2015 |
|
2014 |
|
|
|
|
|
|
|
Total assets |
|
24,497,000 |
|
|
|
Total liabilities, including purchase obligation of $2,031,000 and advance payable of $26,000 due to Siebert |
|
7,030,000 |
|
|
|
Total members’ capital |
|
17,467,000 |
|
|
|
Regulatory minimum net capital requirement for SBS |
|
250,000 |
|
|
|
Nine months ended: |
|
|
|
|
|
Total revenues |
|
24,291,000 |
|
16,661,000 |
|
Net income |
|
1,607,000 |
(a) |
8,000 |
|
Three months ended: |
|
|
|
|
|
Total revenues |
|
10,322,000 |
|
4,277,000 |
|
Net income (loss) |
|
1,114,000 |
(a) |
(802,000 |
) |
|
|
|
|
|
|
(a) |
Includes interest expense on purchase obligation payable to Siebert of $174,000 (nine months) and
$60,000 (three months) |
Siebert charged SBS $75,000
for the nine months ended September 30, 2015 and 2014 respectively, and $25,000 for the three months ended September 30, 2015
and 2014, respectively, for general and administrative services, which Siebert believes approximates the cost of furnishing such
services.
Siebert’s share of SBSF’s
consolidated net income for the three and nine months ended September 30, 2015, respectively, amounted to $545,000 and $788,000, Siebert’s share of SBS’s net loss for the three months ended September 30, 2014 amounted
to ($393,000) and its share of SBS’s net income for the nine months ended September 30, 2014 amounted to $4,000. Such amounts are shown on discontinued operations. Siebert also earned interest income from the receivable from the SCM sale to SBSF of $60,000 and $174,000 for the three and nine months ended September 30, 2015 which is included in revenue in continuing operations as the receivable will be retained by Siebert.
Siebert made collections of $79,000,
net of advances from SBS, during the nine months ended September 30, 2015. As of September 30, 2015, Siebert had a receivable of approximately $26,000 due from SBS. Siebert received a distribution from SBSF of $98,000
during the nine months ended September 30, 2015, and Siebert’s share of undistributed earnings of SBSF amounted to $8.2 million
at September 30, 2015.
SBS Financial Products
Company, LLC (“SBSFPC”)
Pursuant to the terms of an Operating
Agreement, Siebert and each of the Principals owned a 33.33% interest in SBSFPC which engaged in derivatives transactions related
to the municipal underwriting business. The Operating Agreement provides that income (loss) be shared 66.66% by the Principals
and 33.33% by Financial. For the three and nine months ended September 30, 2014, SBSFPC had
nominal activity and ceased operations in December 2014. Results by SBSFPC for the 2014 periods have been included in other general and administrative expenses.
11. Contingencies and Commitments:
In July 2014, the Company
entered into a settlement agreement in regards to a dispute with a former employee, in which the former employee sought,
among other things, damages arising from his separation from the Company. The Company asserted counterclaims in the resulting
arbitration. Pursuant to the settlement, the Company paid $4,300,000 to the former employee, and all claims and counterclaims
have been dismissed and released. The accompanying financial statements for the nine months ended September 30, 2014 reflect
a charge to give effect to the settlement.
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 customer 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 are unable to fulfill
their contractual obligations. There were no material losses for unsettled customer transactions for the nine months ended September
30, 2015 and 2014.
Siebert is party to certain claims,
suits and complaints arising in the ordinary course of business. In the opinion of management all such claims, suits and complaints
are without merit, or involve amounts which would not have a material effect on the financial position or results of operations
of the Company.
Siebert was party to
a Secured Demand Note Collateral Agreement, as amended on July 29, 2013, with SBS which obligated Siebert to lend SBS, on
a subordinated basis, up to $1,200,000. The secured demand note payable held by SBS and a related $1,200,000 receivable
due from SBS are included in investment in the accompanying condensed consolidated statement of financial condition at
December 31, 2014. Amounts that Siebert was obligated to lend under this arrangement were collateralized by cash equivalents of
$1,532,000. Any amounts loaned bore interest at 4% per annum. The agreement expired on August 31, 2015 and the
collateral has been released from restricted cash as of September 30, 2015.
12. Income Taxes:
For the nine months ended September 30, 2015 and 2014, the Company recorded income tax benefits representing
the utilization of the loss from continuing operations against income from discontinued operations.
Other than the tax benefit referred to
above, no tax benefit has been recognized
for the loss in the 2015 and 2014 periods as the Company has provided a valuation allowance to fully reserve the related deferred
tax asset as realization of such asset is not considered more likely than not due to cumulative losses incurred by the Company
and its subsidiaries during the prior three years.
13. Subsequent Event:
On November
9, 2015, Siebert, entered into a purchase agreement pursuant to which SBSF repurchased Siebert’s 49% membership interest
in SBSF for an aggregate purchase price of $8.0 million, $4.0 million of which was paid in cash at closing and the balance of
which was paid in the form of a secured junior subordinated promissory note in the principal amount of $4.0 million (the “SBSF
Junior Note”). The SBSF Junior Note ranks junior in right of payment to up to $5.0 million of subordinated indebtedness
incurred by SBSF at the time of the repurchase closing (the “SBSF Senior Debt”). The SBSF Junior Note is secured by
a pledge by SBSF’s post-closing members of a number of the outstanding membership interests of SBSF that at all times will
equal no less than 49% of the outstanding SBSF membership interests on a fully diluted basis. The SBSF Junior Note matures on
November 9, 2020 and bears interest at a rate per year equal to 8% compounding monthly and payable in full at maturity. The SBSF
Junior Note does not require any principal amortization before maturity; however, SBSF has the option to prepay the interest or
principal without penalty. The SBSF Junior Note is subject to covenants and events of defaults that are substantially equivalent
to those applicable to the SBSF Senior Debt, including covenants restricting debt and lien incurrence by SBS and SBSF; provided
that the SBSF Junior Note is subject to customary intercreditor arrangements with the holders of the SBSF Senior Debt. Immediately
upon the dissolution, liquidation, termination or expiration of SBSF or SBS, or a change of control of SBSF or SBS, or sale of
all or substantially all of their consolidated assets, SBSF is obligated to prepay all of the then outstanding balance of the
Junior Subordinated Note.
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
This discussion should be read
in conjunction with our audited consolidated financial statements as of and for the year ended December 31, 2014, and the unaudited
condensed consolidated financial statements and the notes thereto contained elsewhere in this Quarterly Report.
Business Environment
Our working capital is invested
primarily in money market funds, so that liquidity has not been materially affected. The stock market has been volatile for the
nine months ended September 30, 2015 and our retail commissions has remained flat during this period. SBS had a gain for the current nine months period of approximately $1,607,000 as compared
to a gain of $8,000 for the same period last year. This resulted in a gain to the Company of $962,000 for the current nine month
period net of interest income on the receivable from the SCM sale to SBS
of $174,000 for the current nine month period. Our expenses
in 2014 include the costs and loss related to an arbitration proceeding commenced by a former employee following the termination
of his employment which was settled in July 2014. The costs of defense, which are included as professional expenses during the
2014 period and related loss on settlement for the period ended September 30, 2014, have adversely affected the Company’s
result of operations. Competition in the brokerage industry remains intense.
The following table sets forth
certain metrics for the three and nine months ended September 30, 2015 and 2014, respectively, which we use in evaluating our business.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
ended September 30, |
|
For the Nine Months
ended September 30, |
|
Retail Customer Activity: |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total retail trades: |
|
|
63,160 |
|
|
65,595 |
|
|
191,554 |
|
|
213,444 |
|
Average commission per retail trade: |
|
|
21.90 |
|
$ |
19.57 |
|
|
20.72 |
|
$ |
19.82 |
|
|
|
|
|
|
|
|
|
|
|
As of September 30, |
|
Retail customer balances: |
|
2015 |
|
2014 |
|
Retail customer net worth (in billions): |
|
$ |
6.6 |
|
$ |
7.3 |
|
Retail customer money market fund value (in billions): |
|
$ |
1.0 |
|
$ |
1.0 |
|
Retail customer margin debit balances (in million): |
|
$ |
246.3 |
|
$ |
241.3 |
|
Retail customer accounts with positions: |
|
|
31,481 |
|
|
33,799 |
|
Description:
| · | Total retail trades represent retail trades that generate commissions. |
| · | Average commission per retail trade represents the average commission generated for all types of
retail customer trades. |
| · | Retail customer net worth represents the total value of securities and cash in the retail customer
accounts before deducting margin debits. |
| · | Retail customer money market fund value represents all retail customers accounts invested in money
market funds. |
| · | Retail customer margin debits balances represent credit extended to our customers to finance their
purchases against current positions. |
| · | Retail customer accounts with positions represent retail customers with cash and/or securities
in their accounts. |
Like other securities firms,
we are directly affected by general economic and market conditions including fluctuations in volume and prices of securities, changes
and prospects for changes in interest rates and demand for brokerage and investment banking services, all of which can affect our
relative profitability. In periods of reduced market activity, profitability is likely to be adversely affected because certain
expenses, including salaries and related costs, portions of communications costs and occupancy expenses remain relatively fixed.
Earnings, or loss, for any period should not be considered representative of any other period.
Recent Developments
On November 4, 2014, the Company,
which held a 49% membership interest in, and the other members of, Siebert Brandford Shank & Co., LLC (“SBS”),
contributed their SBS membership interests into a newly formed Delaware limited liability company, Siebert Brandford Shank Financial,
L.L.C. (“SBSF”), in exchange for the same percentage interests in SBSF. On the same day, the Company entered into an
Asset Purchase Agreement (the “SCM Purchase Agreement”) with SBS and SBSF, pursuant to which the Company sold substantially
all of the assets relating to the Company’s capital markets business to SBSF. Pursuant to the SCM Purchase Agreement, SBSF
assumed post-closing liabilities relating to the transferred business.
The SCM Purchase Agreement provides
for an aggregate purchase price for the disposition of $3,000,000, payable by SBSF after closing in annual installments commencing
on March 1, 2016 and continuing on each of March 1, 2017, 2018, 2019 and 2020. The transferred business was contributed by SBSF
to, and operated by SBS. The amount payable to the Company on each annual payment date will equal 50% of the net income attributable
to the transferred business recognized by SBS in accordance with generally accepted accounting principles during the fiscal year
ending immediately preceding the applicable payment date; provided that, if net income attributable to the transferred business
generated prior to the fifth annual payment date is insufficient to pay the remaining balance of the purchase price in full on
the fifth annual payment date, then the unpaid amount of the purchase price will be paid in full on March 1, 2021.
Transferred assets of the Company’s
capital markets business consisted of issuer relationships and goodwill, which assets had no carrying value to the Company, and
the Company recorded a gain on sale of $1,820,000, which reflected the fair value of the purchase obligation. Such fair value (Level
3) was based on the present value of estimated annual installments to be received during 2016 through 2020 from forecasted net
income of the transferred business plus a final settlement in 2021, discounted at 11.5% (representing SBS’s weighted average
cost of capital).
The discount recorded for the
purchase obligation will be amortized as interest income using an effective yield, initially calculated based on the original carrying
amount of the obligation and estimated annual installments to be received and adjusted in future periods to reflect actual installments
received and changes in estimates of future installments. Interest income recognized on the obligation for the period ended September
30, 2015 amounted to approximately $174,000 based on a yield of approximately 12%.
As a result of the Company’s
continuing involvement in the capital markets business through its 49% ownership in SBSF, results of operations of the capital
markets business and the gain on sale were not reflected as discontinued operations in the accompanying statement of operations.
On January 23, 2008, the Board
of Directors of the Company authorized a buyback of up to 300,000 shares of common stock. Shares will be purchased from time to
time, in our discretion, in the open market and in private transactions. During the nine months ended September 30, 2015, the Company
did not purchase any shares.
On November 9,
2015, Siebert sold its 49% membership investment in SBSF pursuant to a plan to sell and reflected negotiations that had
commenced prior to September 30, 2015 (see Note 13). Accordingly, such investment has been classified as available for sale
on the statement of financial condition by September 30, 2015. The sale of the investment in SBSF which was accounted for by
the equity method represent a strategic shift for the company based on its significance to the Company’s
consolidated financial condition and results of operations and the effect it will have on the Company’s
operations and financial result and accordingly Siebert’s share of operating results of the investment are reflected as
discontinued operations for all periods presented. In addition, the investment was sold for $8,000,000, which was
approximately $564,000 less than the carrying value of the investment at September 30, 2015 adjusting the carrying value of
the investment for Siebert’s equity in SBSF’s results of operations for the quarter ended September 30, 2015.
Further, no distributions was recorded from SBSF during the period from October 1, 2015 through November 9, 2015.
Accordingly, a $564,000 write down of the investment has been recorded in discontinued operations for the quarter ended
September 30, 2015, to reflect the investment at fair value as determined by its selling price.
Critical Accounting Policies
We generally follow accounting
policies standard in the brokerage industry and believe that our policies appropriately reflect our financial position and results
of operations. Our management makes significant “estimates” that affect the reported amounts of assets, liabilities,
revenues and expenses and the related disclosure of contingent assets and liabilities included in the financial statements. The
estimates relate primarily to revenue and expense items in the normal course of business as to which we receive no confirmations,
invoices, or other documentation at the time the books are closed for a period. We use our best judgment, based on our knowledge
of these revenue transactions and expenses incurred, to estimate the amounts of such revenue and expense. Estimates are also used
in determining the useful lives of intangible assets, and the fair market value of intangible assets and securities. Our management
believes that its estimates are reasonable.
Results of Operations
We had a net loss of
$728,000 for the three months ended September 30, 2015 and a net loss of $1,456,000 for the three months ended September 30, 2014.
Three Months Ended September 30, 2015 Compared to Three
Months Ended September 30, 2014
Total revenues for
the three months ended September 30, 2015 were $2.5 million, a decrease of $918,000 or 26.6% from the same period in 2014.
Commission and fee
income for the three months ended September 30, 2015 was $2.3 million, a decrease of $117,000 or 4.9% from the same period in 2014
due to a decrease in retail trading volume.
Investment banking
revenues for the three months ended September 30, 2015 were $8,000, a decrease of $550,000 or 98.6% from the same period in 2014
due to our SCM division sale to our affiliate on November 04, 2014.
Trading profits were
$164,000 for the three months ended September 30, 2015, a decrease of $308,000 or 65.3% from the same period in 2014 due to an
overall decrease in trading volume primarily in the debt markets.
Interest
on receivable from affiliate for the three months ended September 30, 2015 were $60,000, an increase of $60,000 or 100.0% from
the same period in 2014 due to note receivable related to sale of our SCM division to our affiliate on November 4, 2014.
Other interest
and dividends for the three months ended September 30, 2015 were $11,000, a decrease of $3,000 or 21.4% from the same period
in 2014 primarily due to expiration of the Secured Demand Note Collateral Agreement with SBS on August 31, 2015.
Total expenses for
the three months ended September 30, 2015 were $3.2 million, a decrease of $1,272,000 or 28.2% from the same period in 2014.
Employee
compensation and benefit expenses for the three months ended September 30, 2015 were $1.3 million, a decrease of $653,000 or
33.6% from the same period in 2014 due to a decrease in commissions and bonus based on production in the capital markets due
to our SCM division sale to our affiliate on November 4, 2014 also creating a lower head count.
Clearing and floor
brokerage expenses for the three months ended September 30, 2015 were $298,000, a decrease of $143,000 or 32.4% from the same period
in 2014 primarily due to the decrease in volume of trade executions for retail customers as well as our commission recapture business
closing down operations on September 30, 2014.
Professional fees for
the three months ended September 30, 2015 were $796,000, a decrease of $290,000 or 26.7% from the same period in 2014 primarily
due to decreases in legal fees relating to a dispute with a former employee settled in July 2014.
Advertising and promotion
expenses for the three months ended September 30, 2015 were $72,000, a decrease of $2,000 or 2.7% from the same period in 2014
due to a decrease in local media and print advertising.
Communications expense
for the three months ended September 30, 2015, was $153,000, a decrease of $83,000 or 35.2% primarily due to savings from a lower
headcount in 2015 due to our Siebert Capital Markets division sale to our affiliate on November 04, 2014.
Occupancy expenses
for the three months ended September 30, 2015 were $174,000, a decrease of $32,000 or 15.5% from the same period in 2014 primarily
due to our Jersey City branch closing on June 30, 2015.
Other general and administrative
expenses for the three months ended September 30, 2015 were $463,000, a decrease of $69,000 or 13.0% due to a decrease in depreciation,
travel and entertainment, registration fees and transportation offset by an increase in D&O insurance and office expenses from
the same period in 2014.
Discontinued
operations - loss from investment in affiliate available for sale, in respect of SBSF in which Siebert held an indirect 49% equity
interest, for the three months ended September 30, 2015 was a loss of $19,000 compared to a loss of $393,000 from the same period in 2014
due to SBS participating in more senior managed or co-managed transactions.
No tax benefit related to the pre-tax loss
was recorded for the three months ended September 30, 2015 and September 30, 2014 due to the recording of a full valuation allowance
to offset deferred tax assets based on recent losses and the unlikelihood of realization of such assets.
Nine Months Ended September 30, 2015 Compared to Nine
Months Ended September 30, 2014
Total revenues for
the nine months ended September 30, 2015 were $7.3 million, a decrease of $3.6 million or 33.2% from the same period in 2014.
Commission and fee
income for the nine months ended September 30, 2015 was $6.6 million, a decrease of $1.4 million or 17.9% from the same period
in 2014 primarily due to a decrease in retail and institutional trading volumes.
Investment banking
revenues for the nine months ended September 30, 2015 were $27,000, a decrease of $1.7 million or 98.4% from the same period in
2014 due to our Siebert Capital Markets division sale to our affiliate on November 04, 2014.
Trading profits for
the nine months ended September 30, 2015 were $435,000, a decrease of $669,000 or 60.6% from the same period in 2014 due to an
overall decrease in institutional customer trading volume in the debt markets.
Interest
on receivable from affiliate for the nine months ended September 30, 2015 were $174,000, an increase of $174,000 or 100% from
the same period in 2014 due to note receivable related to sale of our SCM division to our affiliate on November 4, 2014.
Other interest
and dividends for the nine months ended September 30, 2015 were $40,000, a decrease of $3,000 or 7.0% from the same period in
2014 primarily due to expiration of the Secured Demand Note Collateral Agreement with SBS on August 31, 2015.
Total expenses for
the nine months ended September 30, 2015 were $10.2 million, a decrease of $8.2 million or 44.8% from the same period in 2014.
Employee
compensation and benefit expense for the nine months ended September 30, 2015 were $4.0 million, a decrease of $1.9 million
or 31.9% from the same period in 2014 due to a decrease in commissions and bonus based on production in the capital markets
due to our SCM division sale to our affiliate on November 4, 2014 also creating a lower head count.
Clearing and floor
brokerage expenses for the nine months ended September 30, 2015 were $983,00, a decrease of $433,000 or 30.6% from the same period
in 2014, due to lower retail trading volumes as well as our commission recapture business closing down operations on September
30, 2014.
Professional fees for
the nine months ended September 30, 2015 were $2.6 million, a decrease of $837,000 or 24.5% from the same period in 2014 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 in July 2014 on the condensed consolidated statement of operations.
Loss related to arbitration
settlement with a former employee for the nine months ended September 30, 2014 amounted to $4.3 million.
Advertising and promotion
expenses for the nine months ended September 30, 2015 were $193,000, a decrease of $3,000 or 1.5% from the same period in 2014
primarily due to a decrease in online advertising.
Communications expense
for the nine months ended September 30, 2015 was $475,000, a decrease of $283,000 or 37.3% primarily due to savings from a lower
headcount in 2015 due to our Siebert Capital Markets division sale to our affiliate on November 04, 2014.
Occupancy expenses
for the nine months ended September 30, 2015 were $580,000, a decrease of $78,000 or 11.9% from the same period in 2014 primarily
due to our Palm Beach branch closing on March 31, 2014 and our Jersey City branch closing on June 30, 2015.
Other general and administrative
expenses for the nine months ended September 30, 2015 were $1.3 million, a decrease of $420,000 or 23.8% from the same period in
2014 due to a decrease in depreciation, travel and entertainment, registration fees and transportation offset by an increase in
D&O insurance and office expenses from the same period in 2014.
Discontinued
operations - loss from investment in affiliate available for sale, in respect of SBSF in which Siebert held an indirect
49% equity interest, for the nine months ended September 30, 2015 was a gain of $132,000 which includes interest on
the receivable of $174,000 from the SCM division sale to SBS, compared to a gain of $2,000 from the same period in 2014 due
to SBS participating in more senior managed or co-managed transactions.
Other than
income tax benefits representing the utilization of the loss from continuing operations against income from discontinued
operations, no tax benefit related to the pre-tax loss from continuing operations was recorded for the nine months ended
September 30, 2015 and 2014 due to the recording of a full valuation allowance to offset deferred tax assets based on recent
cumulative losses and the unlikelihood of realization of such assets.
Liquidity and Capital Resources
Our assets are highly
liquid, consisting of cash in money market funds. Our total assets at September 30, 2015 were $18.2 million. As of that date, we
regarded $6.0 million, or 33.2%, of total assets as highly liquid.
On November 9, 2015, Siebert sold to SBSF its 49% membership
investment in SBSF in exchange for cash of $4,000,000 and a $4,000,000 secured junior subordinated promissory note bearing interest
at 8% and which matures on November 9, 2020 when the principal amount is due.
Siebert was party to a Secured Demand Note Collateral Agreement
with SBS which obligated Siebert to lend SBS, on a subordinated basis, up to $1,200,000 which required collateralization of cash
equivalents of $1,532,000. The agreement expired on August 31, 2015 and the collateral was released from restricted cash as of
September 30, 2015.
Siebert is subject
to the net capital requirements of the SEC, the Financial Industry Regulatory Authority (FINRA) and other regulatory authorities.
At September 30, 2015, Siebert’s regulatory net capital was $4.4 million, $4.2 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, 2015, no shares were purchased and 170,863 shares may be purchased under the plan as of September 30, 2015.
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, 2015.
Item 4. Controls and Procedures
We carried out an evaluation,
under the supervision and with the participation of management, including our 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 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
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, 2014, which could materially affect our business, financial position
and results of operations. There are no material changes from the risk factors set forth in Part I, Item 1A, “Risk Factors,”
of our Annual Report on Form 10-K for the year ended December 31, 2014.
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 2015 and 170,863 shares may be purchased under the plan as of September 30, 2015.
Item 6. Exhibits
| 31.1 | Certification of Joseph M. Ramos, Jr. 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. |
| 32.1 | Certification of Joseph M. Ramos, Jr. of Periodic Financial Report under Section 906 of the Sarbanes-Oxley
Act of 2002. |
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. |
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By: |
/s/ Joseph M. Ramos, Jr. |
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Joseph M. Ramos, Jr. |
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Executive Vice President, Chief Operating Officer, |
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Chief Financial Officer and Secretary |
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(Principal executive, financial and accounting officer) |
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Dated: November 16, 2015 |
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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,
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.
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By: |
/s/ Joseph M. Ramos,
Jr. |
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Joseph M. Ramos, Jr. |
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Executive Vice President, Chief Operating Officer, |
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Chief Financial Officer and Secretary |
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(Principal executive, financial and accounting
officer) |
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Dated: November 16, 2015 |
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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, 2015, as filed
with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph M. Ramos, Jr., in my capacity
as 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.
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Date: November 16, 2015 |
By: |
/s/ Joseph M. Ramos, Jr. |
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Joseph M. Ramos, Jr. |
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Executive Vice President, Chief Operating Officer, |
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Chief Financial Officer and Secretary |
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(Principal executive, 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.
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