The aggregate market
value of the Common Stock held by non-affiliates of the registrant (based upon the last sale price of the Common Stock reported
on the NASDAQ Capital Market as of the last business day of the registrant’s most recently completed second fiscal quarter
(June 30, 2015), was $3,546,760.
The number of shares
of the registrant’s outstanding Common Stock, as of March 11, 2016, was 22,085,126 shares.
Documents Incorporated
by Reference: Definitive Proxy Statement to be filed pursuant to Regulation 14A of the Exchange Act on or before April 30, 2016
is incorporated by reference into Part III.
Statements in this
Annual Report on Form 10-K, as well as oral statements that may be made by the Company or by officers, directors or employees of
the Company acting on the Company’s 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 the actual results of the Company to be materially
different from 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 the Company; 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 the Company’s customers; computer and
telephone system failures; the level of spending by the Company 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
General
Siebert Financial Corp.
is a holding company that conducts its retail discount brokerage business through its wholly-owned subsidiary,
Muriel Siebert & Co., Inc., (“MSCO”) a Delaware corporation. In addition, in 2014 we began business as a registered
investment advisor through our wholly-owned subsidiary, Siebert Investment Advisors, Inc. (“SIA”) The estate of Muriel
F. Siebert, our former Chairwoman, Chief Executive Officer and President, owns approximately 90% of our outstanding common stock,
par value $.01 per share (the “Common Stock”). For purposes of this Annual Report, the terms “Siebert,”
“Company,” “we,” “us” and “our” refer to Siebert Financial Corp. and its consolidated
subsidiaries, unless the context otherwise requires.
Our principal offices
are located at 885 Third Avenue, New York, New York 10022, and our phone number is (212) 644-2400. Our Internet address is www.siebertnet.com.
Our SEC filings are available through our website at
www.siebertnet.com
, where you are able to obtain copies of the Company’s
public filings free of charge. Our Common Stock trades on the NASDAQ Capital Market under the symbol “SIEB”.
Business Overview
Siebert’s principal
activity is providing online and traditional discount brokerage and related services to retail investors. On November 4, 2014,
the Company sold its capital market business to an affiliate, Siebert Brandford Shank Financial, LLC (“SBSF”) (see
Note B) and on November 9, 2015, sold its 49% membership interest in SBSF (see Note C).
The Retail Division
Discount Brokerage
and Related Services.
Siebert became a discount broker on May 1, 1975. Siebert believes that it has been in business and a
member of The New York Stock Exchange, Inc. (the “NYSE”) longer than any other discount broker. In 1998, Siebert began
to offer its customers access to their accounts through SiebertNet, its Internet website. Siebert’s focus in its discount
brokerage business is to serve retail clients seeking a wide selection of quality investment services, including trading through
a broker on the telephone, through a wireless device or via the Internet, at commissions that are substantially lower than those
of full-commission firms. Siebert clears its securities transactions on a fully disclosed basis through National Financial Services
Corp. (“NFS”), a wholly owned subsidiary of Fidelity Investments.
Siebert serves investors
who make their own investment decisions. Siebert seeks to assist its customers in their investment decisions by offering a number
of value added services, including easy access to account information. Siebert’s representatives are available to assist
customers with information via toll-free 800 service Monday through Friday between 7:30 a.m. and 7:30 p.m.
Eastern Time. Through
its SiebertNet, Mobile Broker, inter-active voice recognition and Siebert Brokerage Express services, 24-hour access is available
to customers.
Independent Retail
Execution Services.
Siebert and NFS monitor order flow in an effort to ensure that we are getting the best possible trade
executions for customers. Siebert does not make markets in securities, nor does it take positions against customer orders.
Siebert’s equity
orders are routed by NFS in a manner intended to afford its customers the opportunity for price improvement on all orders. The
firm also offers customers execution services through various electronic communication networks (“ECNs”) for an additional
fee. These systems give customer’s access to numerous ECNs before and after regular market hours. Siebert believes that
its over-the counter executions consistently afford its customers the opportunity for price improvement.
Customers may also
indicate online interest in buying or selling fixed income securities, including municipal bonds, corporate bonds, mortgage-backed
securities, government sponsored enterprises, unit investment trusts or certificates of deposit. These transactions are serviced
by registered representatives.
Retail Customer
Service.
Siebert believes that superior customer service enhances its ability to compete with larger discount brokerage firms
and therefore provides retail customers, at no additional charge, with personal service via toll-free access to dedicated customer
support personnel for all of its products and services. Customer service personnel are located in each of Siebert’s branch
offices. Siebert has retail offices in New York, New York; Boca Raton, Florida; and Beverly Hills, California. Siebert uses a
proprietary Customer Relationship Management System that enables representatives, no matter where located, to view a customer’s
service requests and the response thereto. Siebert’s telephone system permits the automatic routing of calls to the next
available agent having the appropriate skill set.
Retirement Accounts.
Siebert offers customers a variety of self-directed retirement accounts for which it acts as agent on all transactions. Custodial
services are provided through an affiliate of NFS, the firm’s clearing agent, which also serves as trustee for such accounts.
Each IRA, SEP IRA, ROTH IRA, 401(k) and KEOGH account can be invested in mutual funds, stocks, bonds and other investments in
a consolidated account.
Customer Financing.
Customer’s margin accounts are carried through NFS which lends customers a portion of the market value of certain securities
held in the customer’s account. Margin loans are collateralized by these securities. Customers also may sell securities
short in a margin account, subject to minimum equity and applicable margin requirements, and the availability of such securities
to be borrowed. In permitting customers to engage in margin, short sale or any other transaction, Siebert assumes the risk of
its customers’ failure to meet their obligations in the event of adverse changes in the market value of the securities positions.
Both Siebert and NFS reserve the right to set margin requirements higher than those established by the Federal Reserve Board.
Siebert has established
policies with respect to maximum purchase commitments for new customers or customers with inadequate collateral to support a requested
purchase. Managers have some flexibility in the allowance of certain transactions. When transactions occur outside normal guidelines,
Siebert monitors accounts closely until their payment obligations are completed; if the customer does not meet the commitment,
Siebert takes steps to close out the position and minimize any loss. Siebert has not had significant credit losses in the last
five years.
Information and
Communications Systems.
Siebert relies heavily on the data technology platform provided by its clearing agent, NFS. This platform
offers an interface to NFS’ main frame computing system where all customer account records are kept and is accessible by
Siebert’s network. Siebert’s systems also utilize browser based access and other types of data communications. Siebert’s
representatives use NFS systems, by way of Siebert’s technology platform, to perform daily operational functions which include
trade entry, trade reporting, clearing related activities, risk management and account maintenance.
Siebert’s data technology platform
offers services used in direct relation to customer related activities as well as support for corporate use. Some of these services
include email and messaging, market data systems and third party trading systems, business productivity tools and customer relationship
management systems. Siebert’s branch offices are connected to the main offices in New York, New York and Jersey City, New
Jersey via a virtual private network. Siebert’s data network is designed with redundancy in case a significant business
disruption occurs.
Siebert’s voice network offers a
call center feature that can route and queue calls for certain departments within the organization. Additionally, the systems
call manager offers reporting and tracking features which enable staff to determine how calls are being managed, such as time
on hold, call duration and total calls by agent.
To ensure reliability and to conform to
regulatory requirements related to business continuity, Siebert maintains backup systems and backup data. However, in the event
of a wide-spread disruption, such as a massive natural disaster, Siebert’s ability to satisfy the obligations to customers
and other securities firms could be significantly hampered or completely disrupted. For more information regarding Siebert’s
Business Continuity Plan, please visit our website at
www.siebertnet.com
or write to us at Muriel Siebert & Co., Inc.,
Compliance Department, 885 Third Avenue, Suite 3100, New York, NY 10022.
Our website has design, navigation, and
functionality features such as:
|
▪
|
Informative trading
screens: Customers can stay in touch while trading, double-check balances, positions
and order status, see real time quotes, intraday and annual charts and news headlines
– automatically – as they place orders.
|
|
▪
|
Multiple orders: Customers
can place as many as 10 orders at one time.
|
|
▪
|
Tax-lot trading: Our
online equity order entry screen allows customers to specify tax lots which display with
cost basis and current gain/loss on a real-time positions page.
|
|
▪
|
Trailing stop orders:
Customers can enter an order that trails the market as a percentage of share price or
with a flat dollar value and the system will execute their instructions automatically.
|
|
▪
|
Contingent orders: Customers
can place One-Triggers-Two Bracket and One-Cancels-Other Bracket orders.
|
|
▪
|
An easy-to-install desktop
security program that may be installed to help protect against certain types of online
fraud such as “keylogging” and “phishing.”
|
The Capital Markets Division
Siebert’s Capital
Markets Group (“SCM”) division served the Company as a co-manager, underwriting syndicate member, or selling group
member on a wide spectrum of securities offerings for corporations and Federal agencies. The principal activities of SCM were
investment banking and institutional equity execution services. SCM provided Muriel Siebert & Co., Inc. high-quality brokerage
service to both institutional investors and issuers of equity and fixed-income securities.
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 “Purchase Agreement”) with SBS and SBSF, pursuant to which the Company sold substantially
all of the SCM assets to SBSF. Pursuant to the Purchase Agreement, SBSF assumed post-closing liabilities relating to the transferred
business.
The 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. The
annual installment payable on March 1, 2016 is based on the net income attributable to the capital markets business for the year
ended December 31, 2015, amounted to $493,000.
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, 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 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 year ended December
31, 2015 amounted to $235,000 based on a yield of approximately 12%.
Siebert Brandford Shank Financial,
LLC
On November 9, 2015,
the Company sold its 49% membership investment in SBSF back to SBSF for $8,000,000 of which $4,000,000 was paid in cash and the
balance of which was paid in the form of a secured junior subordinated promissory note of $4,000,000 (the “SBSF Junior Note”).
The sale of the investment in SBSF, which was accounted for by the equity method, represents a strategic shift for the Company
based on its significance to the Company’s financial condition and results of operations and the major effect it will have
on the Company’s operations and financial results and, accordingly, the Company’s share of operating results of the
investment are reflected as discontinued operations in the accompanying statement of operations. The investment was sold for approximately
$448,000 less than the carrying value of the investment at November 9, 2015, after adjusting the carrying value of the investment
for the Company’s equity in SBSF’s results of operations through such date. Such loss is also included in discontinued
operations.
SBS Financial Products Company, LLC
Effective April 19,
2005, Siebert Financial Corp. (“SFC”) entered into an Operating Agreement with Suzanne Shank and Napoleon Brandford
III, the two individual principals (the “Principals”) of SBS Financial Products Company, LLC, a Delaware limited liability
company (“SBSFPC”). Pursuant to the terms of the Operating Agreement, SFC and each of the Principals made an initial
capital contribution of 33.33% initial interest in SBSFPC. SBSFPC engaged in derivatives transactions related to the municipal
underwriting business. SBSFPC closed down operations as of December 31, 2014.
Certain risks are
involved in the underwriting of securities. Underwriting syndicates agree to purchase securities at a discount from the initial
public offering price. An underwriter is exposed to losses on the securities that it has committed to purchase if the securities
must be sold below the cost to the syndicate. In the last several years, investment banking firms have increasingly underwritten
corporate and municipal offerings with fewer syndicate participants or, in some cases, without an underwriting syndicate.
In
these cases, the underwriter assumes a larger part or all of the risk of an underwriting transaction. Under Federal securities
laws, other laws and court decisions, an underwriter is exposed to substantial potential liability for material misstatements
or omissions of fact in the prospectus used to describe the securities being offered.
Siebert Investment Advisors, Inc.
Siebert Investment
Advisors Inc. (“SIA”) is a registered investment adviser that began business in 2014. SIA is a wholly owned subsidiary
of Siebert Financial Corp and affiliated with Muriel Siebert & Co., a registered broker dealer. SIA is a boutique investment
management firm that greatly extends our ability to meet our customer’s investment needs.
SIA offers advice
to clients regarding asset allocation and the selection of investments. Our investment management services include the design,
implementation, and continued monitoring of client accounts on a discretionary or non-discretionary basis. Investment selections
and recommendation are guided by the stated objectives of the customer, other considerations include the customer’s risk
profile and financial status.
SIA offers to its
clients a number of Asset Management Programs (“Managed Programs”) consisting of asset allocation, flexible asset
management and focused or completion strategies. In these Managed Programs, SIA acts as the co-adviser to clients. IA Representatives
will assist each client in reviewing information about the programs, completing a client questionnaire to determine the client’s
risk tolerance, financial situation and investment objectives and selecting an investment strategy. SIA does not ever act as portfolio
manager directly; SIA selects other investment advisers to act as portfolio manager on behalf of its clients.
Advertising, Marketing and Promotion
Siebert develops and
maintains its retail customer base through printed advertising in financial publications, internet advertising and social media.
Additionally, a significant number of the firm’s new accounts are developed directly from referrals by satisfied customers.
Competition
Siebert encounters
significant competition from full-commission, online and discount brokerage firms, as well as from financial institutions, mutual
fund sponsors and other organizations, many of which are significantly larger and better capitalized than Siebert. Although there
has been consolidation in the industry in both the online and traditional brokerage business during recent years, Siebert believes
that additional competitors such as banks, insurance companies, providers of online financial and information services and others
will continue to be attracted to the online brokerage industry. Many of these competitors are larger, more diversified, have greater
capital resources, and offer a wider range of services and financial products than Siebert. Some of these firms are offering their
services over the Internet and have devoted more resources to and have more elaborate websites than Siebert. Siebert competes
with a wide variety of vendors of financial services for the same customers. Siebert believes that its main competitive advantages
are high quality customer service, responsiveness, cost and products offered, the breadth of product line and excellent executions.
Regulation
The securities industry
in the United States is subject to extensive regulation under both Federal and state laws. The Securities and Exchange Commission
(“SEC”) is the Federal agency charged with administration of the Federal securities laws. Siebert is registered as
a broker-dealer with the SEC, and is a member of the New York Stock Exchange (“NYSE”) and the Financial Industry Regulatory
Authority (“FINRA”). Much of the regulation of broker-dealers has been delegated to self-regulatory organizations,
principally FINRA and national securities exchanges such as the NYSE, which is Siebert’s primary regulator with respect
to financial and operational compliance. These self-regulatory organizations adopt rules (subject to approval by the SEC) governing
the industry and conduct periodic examinations of broker-dealers. Securities firms are also subject to regulation by state securities
authorities in the states in which they do business. Siebert is registered as a broker-dealer in 50 states, the District of Columbia
and Puerto Rico.
The principal purpose
of regulation and discipline of broker-dealers is the protection of customers and the securities markets, rather than protection
of creditors and stockholders of broker-dealers. The regulations to which broker-dealers are subject cover all aspects of the
securities business, including training of personnel, sales methods, trading practices among broker-dealers, uses and safekeeping
of customers’ funds and securities, capital structure of securities firms, record keeping, fee arrangements, disclosure
to
clients, and the conduct
of directors, officers and employees. Additional legislation, changes in rules promulgated by the SEC and by self-regulatory organizations
or changes in the interpretation or enforcement of existing laws and rules may directly affect the method of operation and profitability
of broker-dealers. The SEC, self-regulatory organizations and state securities authorities may conduct administrative proceedings
which can result in censure, fine, cease and desist orders or suspension or expulsion of a broker-dealer, its officers or its
employees.
As a registered broker-dealer
and FINRA member organization, Siebert is required by Federal law to belong to the Securities Investor Protection Corporation
(“SIPC”) which provides, in the event of the liquidation of a broker-dealer, protection for securities held in customer
accounts held by the firm of up to $500,000 per customer, subject to a limitation of $250,000 on claims for cash balances. SIPC
is funded through assessments on registered broker-dealers. In addition, Siebert, through NFS, has purchased from private insurers
additional account protection in the event of liquidation up to the net asset value, as defined, of each account. Stocks, bonds,
mutual funds and money market funds are included at net asset value for purposes of SIPC protection and the additional protection.
Neither SIPC protection nor the additional protection insures against fluctuations in the market value of securities.
Siebert is also authorized
by the Municipal Securities Rulemaking Board (the “MSRB”) to effect transactions in municipal securities on behalf
of its customers and has obtained certain additional registrations with the SEC and state regulatory agencies necessary to permit
it to engage in certain other activities incidental to its brokerage business.
Margin lending arranged
by Siebert is subject to the margin rules of the Board of Governors of the Federal Reserve System and the NYSE. Under such rules,
broker-dealers are limited in the amount they may lend in connection with certain purchases and short sales of securities and
are also required to impose certain maintenance requirements on the amount of securities and cash held in margin accounts. In
addition, those rules and rules of the Chicago Board Options Exchange govern the amount of margin customers must provide and maintain
in writing uncovered options.
Net Capital Requirements
As a registered broker-dealer,
Siebert is subject to the SEC’s Uniform Net Capital Rule (Rule 15c3-1) (the “Net Capital Rule”), which has also
been adopted by the NYSE. The Net Capital Rule specifies minimum net capital requirements for all registered broker-dealers and
is designed to measure financial integrity and liquidity. Failure to maintain the required regulatory net capital may subject
a firm to suspension or expulsion by the NYSE and FINRA, certain punitive actions by the SEC and other regulatory bodies and,
ultimately, may require a firm’s liquidation.
Regulatory net capital
is defined as net worth (assets minus liabilities), plus qualifying subordinated borrowings, less certain deductions that result
from excluding assets that are not readily convertible into cash and from conservatively valuing certain other assets. These deductions
include charges that discount the value of security positions held by Siebert to reflect the possibility of adverse changes in
market value prior to disposition.
The Net Capital Rule
requires notice of equity capital withdrawals to be provided to the SEC prior to and subsequent to withdrawals exceeding certain
sizes. The Net Capital Rule also allows the SEC, under limited circumstances, to restrict a broker-dealer from withdrawing equity
capital for up to 20 business days. The Net Capital Rule of the NYSE also provides that equity capital may not be drawn or cash
dividends paid if resulting net capital would be less than 5 percent of aggregate debits.
Under applicable regulations,
Siebert is required to maintain regulatory net capital of at least $250,000. At December 31, 2015 and 2014, Siebert had net capital
of $8.1 million and $5.1 million, respectively. Siebert claims exemption from the reserve requirement under Section 15c3-3(k)(2)(ii).
Employees
As of March 13, 2016,
we had approximately 43 full-time employees, one of whom was a corporate officer. None of our employees are represented by a union,
and we believe that relations with our employees are good.
Securities market volatility and
other securities industry risk could adversely affect our business
Most of our revenues
are derived from our securities brokerage business. Like other businesses operating in the securities industry, our business is
directly affected by volatile trading markets, fluctuations in the volume of market activity, economic and political conditions,
upward and downward trends in business and finance at large, legislation and regulation affecting the national and international
business and financial communities, currency values, inflation, market conditions, the availability and cost of short-term or
long-term funding and capital, the credit capacity or perceived credit-worthiness of the securities industry in the marketplace
and the level and volatility of interest rates. We also face risks relating to trading losses, losses resulting from the ownership
or underwriting of securities, counterparty failure to meet commitments, customer fraud, employee fraud, issuer fraud, errors
and misconduct, failures in connection with the processing of securities transactions and litigation. A reduction in our revenues
or a loss resulting from our ownership of securities or sales or trading of securities could have a material adverse effect on
our business, results of operations and financial condition. In addition, as a result of these risks, our revenues and operating
results may be subject to significant fluctuations from quarter to quarter and from year to year.
Lower price levels in the securities
markets may reduce our profitability.
Lower price levels
of securities may result in (i) reduced volumes of securities, options and futures transactions, with a consequent reduction in
our commission revenues, and (ii) losses from declines in the market value of securities we held in investment. In periods of
low volume, our levels of profitability are further adversely affected because certain of our expenses remain relatively fixed.
Sudden sharp declines in market values of securities and the failure of issuers and counterparties to perform their obligations
can result in illiquid markets which, in turn, may result in our having difficulty selling securities. Such negative market conditions,
if prolonged, may also lower our revenues from investment banking and other activities. A reduction in our revenues from investment
banking or other activities could have a material adverse affect on our business, results of operations and financial condition.
There is intense competition in
the brokerage industry.
Siebert encounters
significant competition from full-commission, online and other discount brokerage firms, as well as from financial institutions,
mutual fund sponsors and other organizations many of which are significantly larger and better capitalized than Siebert. Over
the past several years, price wars and lower commission rates in the discount brokerage business in general have strengthened
our competitors. Siebert believes that such changes in the industry will continue to strengthen existing competitors and attract
additional competitors such as banks, insurance companies, providers of online financial and information services, and others.
Many of these competitors are larger, more diversified, have greater capital resources, and offer a wider range of services and
financial products than Siebert. Siebert competes with a wide variety of vendors of financial services for the same customers.
Siebert may not be able to compete effectively with current or future competitors.
Some competitors in
the discount brokerage business offer services which we may not. In addition, some competitors have continued to offer lower flat
rate execution fees that are difficult for any conventional discount firm to meet. Industry-wide changes in trading practices
are expected to cause continuing pressure on fees earned by discount brokers for the sale of order flow. Many of the flat fee
brokers impose charges for services such as mailing, transfers and handling exchanges which Siebert does not and also direct their
execution to captive market makers. Continued or increased competition from ultra low cost, flat fee brokers and broader service
offerings from other discount brokers could limit our growth or lead to a decline in Siebert’s customer base which would
adversely affect our business, results of operations and financial condition.
We are subject to extensive government
regulation.
Our business is subject
to extensive regulation in the United States, at both the Federal and state level. We are also subject to regulation by self–regulatory
organizations and other regulatory bodies in the United States, such as the SEC, the NYSE, FINRA and the MSRB. We are registered
as a broker-dealer in 50 states, the District of Columbia and Puerto Rico. The regulations to which we are subject as a broker-dealer
cover all aspects of the securities business including: training of personnel, sales methods, trading practices, uses and safe
keeping of customers’ funds and securities, capital structure, record keeping, fee arrangements, disclosure and the conduct
of directors, officers and employees. Failure to comply with any of these laws, rules or regulations, which may be subject to
the uncertainties of interpretation, could result in civil penalties, fines, suspension or expulsion and have a material adverse
effect on our business, results of operations and financial condition.
The laws, rules and
regulations, as well as governmental policies and accounting principles, governing our business and the financial services and
banking industries generally have changed significantly over recent years and are expected to continue to do so. We cannot predict
which changes in laws, rules, regulations, governmental policies or accounting principles will be adopted. Any changes in the
laws, rules, regulations, governmental policies or accounting principles relating to our business could materially and adversely
affect our business, results of operations and financial condition.
We are subject to net capital requirements.
The SEC, FINRA, and
various other securities and commodities exchanges and other regulatory bodies in the United States have rules with respect to
net capital requirements which affect us. These rules have the effect of requiring that at least a substantial portion of a broker-dealer’s
assets be kept in cash or highly liquid investments. Our compliance with the net capital requirements could limit operations that
require intensive use of capital, such as underwriting or trading activities. These rules could also restrict our ability to withdraw
our capital, even in circumstances where we have more than the minimum amount of required capital, which, in turn, could limit
our ability to implement growth strategies. In addition, a change in such rules, or the imposition of new rules, affecting the
scope, coverage, calculation or amount of such net capital requirements, or a significant operating loss or any unusually large
charge against net capital, could have similar adverse effects.
Our customers may fail to pay us.
A principal credit
risk to which we are exposed on a regular basis is that our customers may fail to pay for their purchases or fail to maintain
the minimum required collateral for amounts borrowed against securities positions maintained by them. We cannot assure you that
the policies and procedures we have established will be adequate to prevent a significant credit loss.
An increase in volume on our systems
or other events could cause them to malfunction.
During 2015, we received
and processed up to approximately 70%
of our trade orders electronically. This method of trading is heavily dependent on
the integrity of the electronic systems supporting it. While we have never experienced a significant failure of our trading systems,
heavy stress placed on our systems during peak trading times could cause our systems to operate at unacceptably low speeds or
fail altogether. Any significant degradation or failure of our systems or the systems of third parties involved in the trading
process (e.g., online and Internet service providers, record keeping and data processing functions performed by third parties,
and third party software), even for a short time, could cause customers to suffer delays in trading. These delays could cause
substantial losses for customers and could subject us to claims from these customers for losses. There can be no assurance that
our network structure will operate appropriately in the event of a subsystem, component or software failure. In addition, we cannot
assure you that we will be able to prevent an extended systems failure in the event of a power or telecommunications failure,
an earthquake, terrorist attack, fire or any act of God. Any systems failure that causes interruptions in our operations could
have a material adverse effect on our business, financial condition and operating results.
We rely on information processing
and communications systems to process and record our transactions.
Our operations rely
heavily on information processing and communications systems. Our system for processing securities transactions is highly automated.
Failure of our information processing or communications systems for a significant period of time could limit our ability to process
a large volume of transactions accurately and rapidly. This could cause us to be unable to satisfy our obligations to customers
and other securities firms, and could result in regulatory violations. External events, such as an earthquake, terrorist attack
or power failure, loss of external information feeds, such as security price information, as well as internal malfunctions such
as those that could occur during the implementation of system modifications, could render part or all of these systems inoperative.
We may not be able to keep up pace
with continuing changes in technology.
Our market is characterized
by rapidly changing technology. To be successful, we must adapt to this rapidly changing environment by continually improving
the performance, features and reliability of our services. We could incur substantial costs if we need to modify our services
or infrastructure or adapt our technology to respond to these changes. A delay or failure to address technological advances and
developments or an increase in costs resulting from these changes could have a material and adverse effect on our business, financial
condition and results of operations.
We depend on our ability to attract
and retain key personnel.
Our continued success
was principally dependent on our founder, Muriel F. Siebert, our former Chairwoman, Chief Executive Officer and President, and
our senior management. The loss of the services of any of these individuals could significantly harm our business, financial condition
and operating results. However the appointment of Suzanne Shank as Acting Chief Executive Officer and Joseph Ramos as Chief Operating
Officer has stabilized the Company as a result of our loss of Ms. Siebert. On March 3, 2015 Suzanne Shank completed her role as
acting Chief Executive Officer of our Company to devote full time to her continuing position as Chief Executive Officer of SBSF.
Our principal shareholder may control
many key decisions.
The estate of Ms.
Muriel F. Siebert currently owns approximately 90% of our outstanding common stock. The executors of the estate, Jane Macon and
Patricia Francy, who are both directors of the Company, have the power to elect the entire Board of Directors and, except as otherwise
provided by law or our Certificate of Incorporation or by-laws, to approve any action requiring shareholder approval without a
shareholders meeting.
There may be no public market for
our common stock.
Only approximately
2,200,000
shares, or approximately 10% of our shares outstanding, are currently held by the public. Although our common
stock is traded in The NASDAQ Capital Market, there can be no assurance that an active public market will continue.
Item 1B.
|
UNRESOLVED
STAFF COMMENTS
|
None.
Siebert currently
maintains three retail discount brokerage offices. Customers can visit these offices to obtain market information, place orders,
open accounts, deliver and receive checks and securities, and obtain related customer services in person. Nevertheless, most of
Siebert’s activities are conducted on the Internet or by telephone and mail.
Siebert operates its business out of the
following three leased offices:
|
|
|
|
|
|
|
|
|
|
|
Location
|
|
Approximate
Office Area in
Square Feet
|
|
Expiration Date
of
Current Lease
|
|
Renewal
Terms
|
|
Corporate Headquarters
|
|
|
|
|
|
|
|
|
|
|
885 Third Avenue
|
|
|
|
|
|
|
|
|
|
|
New York, NY 10022
|
|
|
8,585
|
|
|
2/28/17
|
|
|
None
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail Offices
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9701 Wilshire Boulevard, Suite 1111
|
|
|
|
|
|
|
|
|
|
|
Beverly Hills, CA 90212
|
|
|
1,189
|
|
|
Month to Month
|
|
|
None
|
|
|
|
|
|
|
|
|
|
|
|
|
4400 North Federal Highway
|
|
|
|
|
|
|
|
|
|
|
Boca Raton, FL 33431
|
|
|
2,438
|
|
|
Month to Month
|
|
|
None
|
|
Item 3.
|
LEGAL PROCEEDINGS
|
In
December 2015, a current employee of MSCO commenced an arbitration before FINRA against MSCO, alleging a single cause of action
for employment retaliation under the Sarbanes-Oxley Act of 2002. In February 2016, the employee amended his claim to replace the
Sarbanes-Oxley claim with a substantially identical claim arising under the Dodd-Frank Act of 2010. In the opinion of management,
this matter is without merit, and its ultimate outcome will not have a significant effect on the financial position of the Company.
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 counter claims in the arbitration.
Pursuant to the settlement, the Company paid $4,300,000 to the former employee, and the claims and counterclaims have been dismissed
and released. The accompanying statement of operations reflects a change to give effect to the settlement.
The Company is party
to certain claims, suits and complaints arising in the ordinary course of business. In the opinion of management, all such matters
are without merit, or involve amounts which would not have a significant effect on the financial position of the Company.
Item 4.
|
MINE SAFETY
DISCLOSURES
|
Not applicable
PART II
Item 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
|
Our common stock
traded on the NASDAQ Global Market until June 29, 2011 when our common stock started trading on the NASDAQ Capital Market, under
the symbol “SIEB”. The high and low sales prices of our common stock reported by NASDAQ during the following calendar
quarters were:
|
|
|
|
|
|
|
|
|
|
|
High
|
|
|
Low
|
|
First Quarter – 2014
|
|
$
|
4.45
|
|
|
$
|
1.61
|
|
|
|
|
|
|
|
|
|
|
Second Quarter – 2014
|
|
$
|
3.44
|
|
|
$
|
2.67
|
|
|
|
|
|
|
|
|
|
|
Third Quarter – 2014
|
|
$
|
2.85
|
|
|
$
|
2.05
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter – 2014
|
|
$
|
2.90
|
|
|
$
|
2.03
|
|
|
|
|
|
|
|
|
|
|
First Quarter – 2015
|
|
$
|
2.62
|
|
|
$
|
1.44
|
|
|
|
|
|
|
|
|
|
|
Second Quarter – 2015
|
|
$
|
2.11
|
|
|
$
|
1.45
|
|
|
|
|
|
|
|
|
|
|
Third Quarter – 2015
|
|
$
|
1.95
|
|
|
$
|
1.35
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter – 2015
|
|
$
|
1.56
|
|
|
$
|
1.14
|
|
On March 11, 2016,
the closing price of our common stock on the NASDAQ Capital Market was $1.20 per share. There were 130 holders of record of our
common stock and more than 1,500 beneficial owners of our common stock on March 11, 2016.
On January 4, 2011,
we received notice from The NASDAQ Stock Market stating that for more than 30 consecutive business days, the market value of publicly
held shares closed below the minimum $5 million required for continued listing on The NASDAQ Global Market under NASDAQ Rule 5450(b)(1)(C).
Market value of publicly held shares is calculated by multiplying the publicly held shares, which is total shares outstanding
less any shares held by officers, directors, or beneficial owners of more than 10%, by the closing bid price. The estate of Muriel
F. Siebert owns approximately 90% of our outstanding common stock. The value of shares by the estate of Muriel F. Siebert’s
estate, and the value of shares beneficially owned by other officers and directors of the Company, is therefore excluded from
the market value of publicly held shares of the Company.
NASDAQ Rule 5810(c)(3)(D)
provided the Company a grace period of 180 calendar days, or until July 5, 2011, to regain compliance with The NASDAQ Stock Market
requirement. As the market value of publicly held shares did not reach the required value during the grace period, our common
stock was transferred to the NASDAQ Capital Market on June 29, 2011.
Dividend Policy
Our Board of Directors
periodically considers whether to declare dividends. In considering whether to pay such dividends, our Board of Directors will
review our earnings capital requirements, economic forecasts and such other factors as are deemed relevant. Some portion of our
earnings will be retained to provide capital for the operation and expansion of our business.
Issuer Purchases of Equity Securities
On January 23, 2008,
our Board of Directors authorized the repurchase of up to 300,000 shares of our common stock. We will purchase shares from time
to time, in our discretion, in the open market and in private transactions. No shares were purchased in 2015.
A summary of our repurchase
activity for the three months ended December 31, 2015 is as follows:
Period
|
|
|
Total
Number
Of Shares
Purchased
|
|
|
Average
Price
Paid Per
Share
|
|
|
Cumulative
Number
of
Shares Purchased
as Part of Publicly
Announced Plans
|
|
|
Maximum
Number of
Shares
That May Yet Be
Purchased Under
The Plan
|
|
October 2015
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
129,137
|
|
|
|
170,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 2015
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
129,137
|
|
|
|
170,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 2015
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
129,137
|
|
|
|
170,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
0
|
|
|
$
|
0
|
|
|
|
129,137
|
|
|
|
170,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Compensation Plan Information
The following table sets forth information
as of December 31, 2015 with respect to our equity compensation plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
Category
|
|
|
|
|
Number
of Securities to be
issued upon exercise of
outstanding options,
warrants and rights
|
|
|
Weighted-
average
exercise price of
outstanding
options,
warrants and
rights
|
|
|
Number
of Securities
remaining available for
issuance under equity
compensation plans
(excluding securities
reflected in column (a))
|
|
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
Equity compensation plans approved by security holders (1)
|
|
|
|
|
265,000
|
|
$
|
3.02
|
|
|
1,760,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
265,000
|
|
$
|
3.02
|
|
|
1,760,000
|
|
(1) Consists of our 1997 and 2007
compensation plans.
Our Performance
|
The graph below compares our performance from December 31, 2010 through December 31, 2015
against the performance of the NASDAQ Composite Index and a peer group. The peer group consists of Ameritrade Holding Corporation,
E*Trade Financial Corporation and the Charles Schwab Corporation.
|
|
|
|
Cumulative
Total Return
|
|
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
Siebert Financial Corp.
|
|
|
100.00
|
|
|
83.14
|
|
|
97.09
|
|
|
93.60
|
|
|
127.91
|
|
|
75.00
|
|
Nasdaq Composite
|
|
|
100.00
|
|
|
100.53
|
|
|
116.92
|
|
|
166.19
|
|
|
188.98
|
|
|
199.95
|
|
Peer Group
|
|
|
100.00
|
|
|
70.30
|
|
|
86.02
|
|
|
161.49
|
|
|
190.97
|
|
|
206.08
|
Item 6.
|
SELECTED FINANCIAL DATA
|
(In thousands except share and per share
data)
The Following Selected Financial Information
Should Be Read In Conjunction with Our Consolidated Financial
Statements and the Related Notes Thereto.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
Income statement data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues
|
|
$
|
10,096
|
|
|
|
15,815
|
|
|
$
|
16,401
|
|
|
$
|
20,983
|
|
|
$
|
20,199
|
|
Net loss
|
|
$
|
(2,869
|
)
|
|
|
(6,557
|
)
|
|
$
|
(5,912
|
)
|
|
$
|
(171
|
)
|
|
$
|
(5,379
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(.13
|
)
|
|
|
(0.30
|
)
|
|
$
|
(0.27
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.24
|
)
|
Diluted
|
|
$
|
(.13
|
)
|
|
|
(0.30
|
)
|
|
$
|
(0.27
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding (basic)
|
|
|
22,085,126
|
|
|
|
22,085,126
|
|
|
|
22,087,324
|
|
|
|
22,100,759
|
|
|
|
22,114,121
|
|
Weighted average shares outstanding (diluted)
|
|
|
22,085,126
|
|
|
|
22,085,126
|
|
|
|
22,087,324
|
|
|
|
22,100,759
|
|
|
|
22,114,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of financial condition data (at year
end):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
17,785
|
|
|
|
20,728
|
|
|
$
|
27,970
|
|
|
$
|
33,456
|
|
|
$
|
34,823
|
|
Total liabilities excluding subordinated borrowings
|
|
$
|
2,102
|
|
|
|
2,176
|
|
|
$
|
2,861
|
|
|
$
|
2,416
|
|
|
$
|
3,599
|
|
Stockholders’ equity
|
|
$
|
15,683
|
|
|
|
18,552
|
|
|
$
|
25,109
|
|
|
$
|
31,040
|
|
|
$
|
31,224
|
|
Cash dividends declared on common shares
|
|
$
|
0
|
|
|
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Item 7.
|
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 and the Notes thereto contained elsewhere in
this Annual Report.
Our working capital
is invested primarily in money market funds, so that liquidity has not been materially affected. The recent financial crisis did
have the effect of reducing participation in the securities market by our retail and institutional customers, which had an adverse
effect on our revenues. While the stock market improved in 2015 our revenues did not. For the period ended November 9, 2015, in
which Siebert sold its 49% equity interest to our former affiliate resulting in discontinued operations, income of our affiliate,
SBSF increased to $1.4 million as a result of an increase in the number of offerings by municipalities. A loss resulted from the
disposal of this equity investment in the amount of $52,000 for 2015 which includes equity earnings of former affiliate of $671,000,
net of $448,000 loss related to disposal of investment in 2015, net of income tax of $275,000. Siebert also earned interest income
from the receivable from the SCM sale to SBSF of $235,000 in 2015 which is included in revenue in continuing operations as the
receivable will be retained by Siebert. The Company’s professional expenses during 2014 and 2013 include the costs of an
arbitration proceeding commenced by a former employee following the termination of his employment, which was resolved in 2014
resulting in a $4,300,000 settlement payment. The action has adversely affected the Company’s results of operations. Competition
in the brokerage industry remains intense.
On November 4, 2014,
the Company, which at the time 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, LLC (“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. The annual installment payable on March 1, 2016 was based on the net income attributable to the capital
markets business for the year ended December 31, 2015, which amounted to $493,000 and was paid on March 3, 2016.
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
December 31, 2015, amounted to approximately $235,000 based on a yield of approximately 12%.
The following table
sets forth certain metrics as of December 31, 2015, 2014 and 2013, respectively, which we use in evaluating our business.
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Twelve Months
ended December 31,
|
|
Retail Customer Activity:
|
|
2015
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
Total retail trades:
|
|
|
259,624
|
|
|
293,419
|
|
|
327,285
|
|
Average commission per retail trade:
|
|
$
|
22.29
|
|
|
19.50
|
|
$
|
21.70
|
|
|
|
As
of December 31,
|
|
|
|
2015
|
|
|
2014
|
|
Retail customer balances:
|
|
|
|
|
|
|
|
|
Retail customer net worth (in billions):
|
|
$
|
6.8
|
|
|
$
|
7.3
|
|
Retail customer money market fund value (in billions):
|
|
$
|
.9
|
|
|
$
|
1.0
|
|
Retail customer margin debit balances (in millions):
|
|
$
|
254.7
|
|
|
$
|
232.3
|
|
Retail customer accounts with positions:
|
|
|
30,851
|
|
|
|
32,962
|
|
Description:
|
•
|
Total retail trades represents
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
debit balances represents 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.
|
We, like other securities
firms, are directly affected by general economic and market conditions including fluctuations in volume and prices of securities,
changes and the prospect of changes in interest rates, and demand for brokerage and investment banking services, all of which
can affect our profitability. In addition, in periods of reduced financial market activity, profitability is likely to be adversely
affected because certain expenses remain relatively fixed, including salaries and related costs, portions of communications costs
and occupancy expenses. Accordingly, earnings for any period should not be considered representative of earnings to be expected
for any other period.
Competition continues
to intensify among all types of brokerage firms, including established discount brokers and new firms entering the on-line brokerage
business. Electronic trading continues to account for an increasing amount of trading activity, with some firms charging very
low trading execution fees that are difficult for any conventional discount firm to meet. Some of these brokers, however, impose
asset based charges for services such as mailing, transfers and handling exchanges which we do not currently impose, and also
direct their orders to market makers where they have a financial interest. Continued competition could limit our growth or even
lead to a decline in our customer base, which would adversely affect our results of operations. Industry-wide changes in trading
practices, such as the continued use of Electronic Communications Networks, are expected to put continuing pressure on commissions/fees
earned by brokers while increasing volatility.
We are a party to
an Operating Agreement (the “Operating Agreement”), with Suzanne Shank and Napoleon Brandford III, the two individual
principals (the “Principals”) of SBSFPC. Pursuant to the terms of the Operating Agreement, the Company and each of
the Principals made an initial capital contribution of $400,000 in exchange for a 33.33% initial interest in SBSFPC. SBSFPC engages
in derivatives transactions related to the municipal underwriting business. The Operating Agreement provides that profit and loss
will be shared 66.66% by the Principals and 33.33% by us. The Company and principals closed down the operations of SBSFPC in 2014.
In 2014, we began
business as a registered investment advisor through our wholly-owned subsidiary, Siebert Investment Advisors, Inc. (“SIA”).
SIA is a boutique investment management firm that greatly extends our ability to meet our customer’s investment needs. SIA
offers advice to clients regarding asset allocation and the selection of investments. Our investment management services include
the design, implementation, and continued monitoring of client accounts on a discretionary or non-discretionary basis. Investment
selections and recommendation are guided by the stated objectives of the customer, other considerations include the customer’s
risk profile and financial status.
SIA offers to its
clients a number of Asset Management Programs (“Managed Programs”) consisting of asset allocation, flexible asset
management and focused or completion strategies. In these Managed Programs, SIA acts as the co-adviser to clients. IA Representatives
will assist each client in reviewing information about the programs, completing a client questionnaire to determine the client’s
risk tolerance, financial situation and investment objectives and selecting an investment strategy. SIA does not ever act as portfolio
manager directly, SIA selects other investment advisers to act as portfolio manager on behalf of its clients. During 2015, the
results of SIA operations are immaterial to the operations of the Company.
On January 23, 2008,
our Board of Directors authorized a buy back of up to 300,000 shares of our common stock. Under this program, shares are purchased
from time to time, at our discretion, in the open market and in private transactions. No shares were purchased during 2015.
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 revenue transactions and expenses incurred, to estimate the amount of such revenue and expenses. We are not aware of any material
differences between the estimates used in closing our books for the last five years and the actual amounts of revenue and expenses
incurred when we subsequently receive the actual confirmations, invoices or other documentation. Estimates are also used in determining
the useful lives of intangibles assets, and the fair market value of intangible assets. Our management believes that its estimates
are reasonable.
Results of Operations
Year Ended December 31, 2015 Compared
to Year Ended December 31, 2014
Revenues.
Total
revenues for 2015 were $10.1 million, a decrease of $5.8 million, or 36.3%, from 2014. Commission and fee income
decreased $1.6 million, or 14.9%, from the prior year to $9.2 million primarily due to a decrease in retail trading. The
Capital Markets Division was sold to our former affiliate SBSF on November 4, 2014 resulting in reduced institutional trading
commissions and investment banking revenues. Commission recapture operations were shut down on September 30, 2014.
Investment banking
revenues decreased $1.8 million or 97.8%, from the prior year to $40,000 in 2015 due to the Capital Markets division being sold
on November 4, 2014 to our former affiliate.
Trading profits
decreased $776,000, or 57.4%, from the prior year to $575,000 in 2015 primarily due to an overall decrease in trading volume primarily
in the debt markets.
The Company recorded a
gain on the sale of our Capital Markets Segment of $1,820,000, which reflected the fair value of the purchase obligation (transferred
assets of the Company’s capital markets business, consisted of customer accounts and goodwill, which had no carrying value
to the Company. 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 sale was for $3,000,000 recorded at a discount.
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
December 31, 2015 amounted to $235,000 based on a yield of approximately 12%.
Income from interest
and dividends increased $232,000, or 246.8%, from the prior year to $326,000 in 2015 primarily due to accrued interest on our
receivable from business sold to affiliate (see above paragraph) and the sale of our equity interest to our former affiliate offset
by secured demand note interest with our former affiliate which expired on August 31, 2015.
Expenses.
Total
expenses for 2015 were $13.2 million, a decrease of $9.3 million, or 41.3%, from the prior year.
Employee compensation
and benefit costs decreased $2.9 million, or 34.9%, from the prior year to $5.4 million in 2015. This decrease was due to a reduction
in head count from the previous year, as well as the Capital Markets Division being sold to SBSF on November 4, 2014.
Clearing and floor
brokerage fees decreased $426,000, or 25.6%, from the prior year to $1.2 million in 2015 primarily due to lower retail trading
volumes, as well as shutting down our rebate recapture business on September 30, 2014.
Professional fees
decreased $1.1 million, or 25.8% from the prior year to $3.2 million in 2015 primarily due to a decrease in legal fees relating
to a dispute with a former employee (see settlement of case below).
In July 2014, the
Company entered into a settlement agreement in regard 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 counter claims in the arbitration.
Pursuant to the settlement, the Company paid $4,300,000 to the former employee, and the claims and counterclaims have been dismissed
and released.
Advertising and
promotion expense increased $20,000, or 8.1%, from the prior year to $268,000 in 2015 due to an increase in social media advertising.
Communications expense
decreased $270,000, or 31.2%, from the prior year to $595,000 in 2015 due to a new phone system and phone vendor. Quote fees were
down as well due to the reduction in Bloomberg terminals due to the sale of our Capital Markets segment on November 4, 2014. Retail
trading revenues were down causing quotes to go down.
Occupancy costs
decreased $12,000, or 1.5%, from the prior year to $776,000 in 2015 due to our Palm Beach branch closing on March 31, 2014 and
the Jersey City branch closing down on June 30, 2015, offset by increases in rent at our Beverly Hills office due to our month
to month status. Security deposits were written off to rent for Jersey City and a former Beverly Hills location.
Other general and
administrative expenses decreased $309,000, or 15.2%, from the prior year to $1.7 million in 2015 due decreases in office expense
in travel, entertainment, computer security updates, and registration expense.
Discontinued
operations - Loss from our equity investment in SBSF, an entity which Siebert sold its 49% equity interest to on November
9, 2015, for 2015 was $52,000 which includes equity earnings of former affiliate of $671,000, net of $448,000 loss related
to disposal of investment in 2015, net of income tax of $275,000, compared to income of $84,000 net of income tax of $27,000
for 2014, a decrease of $139,000, primarily due to SBSF participating in more municipal bond offerings as senior- and
co-manager. Income from our equity investment in SBSFPC, an entity in which we hold a 33% equity interest, for 2015 was $0 as
compared to a loss of $17,000 from the same period in 2014. This decrease was principally due to SBSFPC winding down and
shutting down their operations in 2014.
Income tax benefit
for the year ended December 31, 2015 and 2014 was $275,000 and $27,000, respectively. The benefit for income taxes for 2015 and 2014
represent the utilization of the loss from continuing operations against income from discontinued operations, exclusive in 2015
of the capital loss from disposal of the investment in former affiliate. The Company has recorded a valuation allowance to fully
offset our deferred tax asset at December 31, 2015 and 2014.
Results of Operations
Year Ended December 31, 2014 Compared
to Year Ended December 31, 2013
Revenues.
Total
revenues for 2014 were $15.9 million, a decrease of $549,000, or 3.3%, from 2013. Commission and fee income decreased $1.2 million,
or 9.9%, from the prior year to $10.8 million primarily due to a decrease in retail trading and in the average commission charged
per retail trade. Capital Markets Division was sold to our former affiliate SBSF on November 4, 2014 resulting in reduced institutional
trading commissions and investment banking revenues. Commission recapture operations were shut down on September 30, 2014.
Investment banking
revenues decreased $588,000 or 24.3%, from the prior year to $1.8 million in 2014 due to our participation in fewer new issues
in the equity and debt capital markets. The Capital Markets division was sold on November 4, 2014 to our affiliate.
Trading profits
decreased $625,000, or 31.6%, from the prior year to $1.4 million in 2014 primarily due to an overall decrease in trading volume
primarily in the debt markets.
The Company recorded a
gain on the sale of our Capital Markets Segment of $ 1,820,000, which reflected the fair value of the purchase obligation (transferred
assets of the Company’s capital markets business, consisted of customer accounts and goodwill, which had no carrying value
to the Company. 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 sale was for $3,000,000 recorded at a discount.
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
from November 4, 2014 to December 31, 2014 amounted to $36,641 based on a yield of approximately 12%.
Income from
interest and dividends increased $32,000, or 51.6%, from the prior year to $94,000 in 2014 primarily due to accrued interest
on our receivable from business sold to former affiliate in 2014.
Expenses.
Total
expenses for 2014 were $22.5 million, an increase of $247,000, or 1.1%, from the prior year.
Employee compensation
and benefit costs decreased $995,000, or 10.7%, from the prior year to $8.3 million in 2014. This decrease was due a reduction
in head count from the previous year.
Clearing and floor
brokerage fees decreased $717,000, or 30.1%, from the prior year to $1.7 million in 2014 primarily due to lower retail trading
volumes, lower execution charges for institutional equity trading, as well as shutting down our rebate recapture business on September
30, 2014.
Professional fees
decreased $1.0 million, or 18.6% from the prior year to $4.3 million in 2014 primarily due to a decrease in legal fees relating
to a dispute with a former employee (see settlement of case below).
In July 2014, the
Company entered into a settlement agreement in regard 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 counter claims in the arbitration.
Pursuant to the settlement, the Company paid $4,300,000 to the former employee, and the claims and counterclaims have been dismissed
and released.
Advertising and
promotion expense decreased $157,000, or 38.8%, from the prior year to $248,000 in 2014 due to a decrease in online and print
advertising.
Communications expense
decreased $431,000, or 33.3%, from the prior year to $865,000 in 2014 due to a new phone system and phone vendor. Quote fees were
down as well due to the reduction in Bloomberg terminals due to the sale of our Capital Markets segment on November 4, 2014. Retail
trading revenues were down causing quotes to go down.
Occupancy costs
decreased $258,000, or 24.7%, from the prior year to $788,000 in 2014 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 lease.
Impairment of intangibles
of $300,000 in 2013 was the result of the Company writing down the carrying value of its unamortized intangible assets to zero.
Other general and
administrative expenses decreased $212,000, or 9.4%, from the prior year to $2.0 million in 2014 due decreases in office expense
in travel, entertainment, computer security updates, and registration expense.
Discontinued Operations
- Income from our equity investment in SBSF, an entity in which Siebert holds a 49% equity interest, for 2014 was $84,000 compared
to income of $94,000 for 2013, a decrease of $10,000, primarily due to SBSF participating in fewer municipal bond offerings as
senior- and co-manager. Losses from our equity investment in SBSFPC, an entity in which we hold a 33% equity interest, for 2014
was a loss of $17,000 as compared to a loss of $159,000 from the same period in 2013. This decrease was principally due to SBSFPC
winding down and shutting down their operations in 2014.
Income tax (benefit) provision for the year ended December 31, 2014 and 2013 was $(27,000) and $19,000, respectively. The benefit for income
taxes for 2014 represent the utilization of the loss from continuing operations against income from discontinued operations.
The provision for income taxes for 2013 represents New York State, New York City and Internal Revenue Service payments. The
Company has recorded a valuation allowance to fully offset our deferred tax asset at December 31, 2014 and 2013.
Liquidity and Capital Resources
Our working
capital is invested in cash and money market funds. Our total assets at December 31, 2015 were $17.8 million, of which we regarded
$9.4 million, or 53%, as highly liquid.
Siebert is subject
to the net capital requirements of the SEC, the NYSE and other regulatory authorities. At December 31, 2015, Siebert’s regulatory
net capital was $8.1 million, which was $7.9 million in excess of its minimum capital requirement of $250,000.
The Company entered
into a Secured Demand Note Collateral Agreement with SBS under which the Company is obligated to lend SBS up to $1,200,000 on
a subordinated basis collateralized by cash equivalents of approximately $1,532,000. SBS pays the Company interest on this amount
at the rate of 4% per annum, which amounted to $32,000 for the period from January 1, 2015 to August 31, 2015, the date the facility
expired and was not renewed and the collateral was released from restricted cash.
Contractual Obligations
Below is a table
that presents our obligations and commitments at December 31, 2015:
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Payment Due By Period
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Contractual
Obligations
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Total
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Less
Than
1 Year
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1-3
Years
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3-5
Years
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More
Than
Five Years
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Operating lease obligations
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$
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631,000
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$
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541,000
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$
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90,000
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$
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0
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$
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0
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Off-Balance Sheet Arrangements
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 and other
counterparties are unable to fulfill their contractual obligations. There were no material losses for unsettled customer transactions
in 2015.
Item 7A.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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Financial Instruments Held For Trading
Purposes:
Through Siebert, we maintain inventories
in sexchange-listed equity securities and municipal securities on both a long and short basis. We did not have any short positions
at December 31, 2015. The Company does not directly engage in derivative transactions, has no interest in any special purpose
entity and has no liabilities, contingent or otherwise, for the debt of another entity. The Company entered into a Secured Demand
Note Collateral Agreement with SBS under which the Company is obligated to lend SBS up to $1,200,000 on a subordinated basis collateralized
by cash equivalents of approximately $1,532,000. SBS pays the Company interest on this amount at the rate of 4% per annum, which
amounted to $32,000 for the period from January 1, 2015 to August 31, 2015, the date the facility expired and was not renewed
and the collateral was released from restricted cash.
Financial Instruments Held For Purposes
Other Than Trading:
We generally invest
working capital temporarily in dollar denominated money market funds and commercial paper. 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 counterparties are unable to fulfill their contractual obligations. There were no material losses for unsettled customer
transactions in 2015.
Item 8.
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FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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See financial statements
and supplementary data required pursuant to this item beginning on page F-1 of this Annual Report on Form 10-K.
Item 9.
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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
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None.
Item 9A.
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CONTROLS AND PROCEDURES
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We carried out an
evaluation, under the supervision and with the participation of management, including our former 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 of Securities Exchange of 1934, as amended. Based on that evaluation,
our management, including our former 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 former Chief Executive Officer and Chief Financial Officer, to allow timely
decisions regarding timely disclosure.
Management’s Report on Internal Control
over Financial Reporting
Our management is
responsible for establishing and maintaining adequate internal control over financial reporting (as that term is defined in Exchange
Act Rule 13a-15(f)). To evaluate the effectiveness of our internal control over financial reporting, we use the 2013 framework
in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(the “2013 COSO Framework”). Using the 2013 COSO Framework, our management, including our former Chief Executive Officer
and Chief Financial Officer, evaluated our internal control over financial reporting and concluded that our internal control over
financial reporting was effective as of December 31, 2015.
Changes in Internal Control over
Financial Reporting
There were no changes
in our internal control over financial reporting during the most recently completed fiscal quarter that materially affected, or
are reasonably likely to materially affect, our internal control over financial reporting.
Limitation of the Effectiveness of
Internal Controls
None
Item 9B.
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OTHER INFORMATION
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None
PART III
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Item 10.
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DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
Identification of Directors
The names of our directors
and their ages, positions, and biographies are set forth below.
Patricia
L. Francy
Age 70
|
Patricia
Francy retired as Special Advisor for Alumni Relations and Treasurer & Controller,
Columbia University, December 31, 2005. Ms. Francy is a director of Old Westbury Funds,
Inc., the Matheson Foundation, the Guttman Foundation and the Muriel F. Siebert Foundation.
Ms. Francy became a director on March 11, 1997. Ms. Francy is one of two executors of
the Estate of Muriel F. Siebert, our former Chairwoman, President and Chief Executive
Officer, although she does not possess the power in that capacity to control the voting
of the shares of our common stock held by the Estate.
Specific experience, qualifications,
attributes or skills:
Ms. Francy served as Treasurer
and Controller of Columbia University from 1989 until 2003. She had been affiliated with Columbia University since 1968,
and has served as a Director of Finance and Director of Budget Operations. Ms. Francy was Governor of the Columbia University
Club of New York, and a former director for the Children’s Tumor Foundation and the Metropolitan New York Library
Council. She serves on the Outward Bound Advisory Board. Ms. Francy participates as director emeritus of Junior Achievement
Worldwide, and is a member of the Economic Club of New York and the International Women’s Forum. Ms. Francy provides
expertise on financial matters
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Nancy
Peterson Hearn
Age 81
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Nancy
Peterson Hearn is Chairwoman of Peterson Tool Company, Inc. and was its President/CEO
from 1979 until 2012. Ms. Hearn became a director on June 4, 2001.
Specific experience, qualifications,
attributes or skills:
A nationally recognized business
entrepreneur, Nancy Peterson Hearn is chairman of Peterson Tool Company, Inc. Under her leadership, the company has made
exponential gains in sales, production and reputation, and is ranked among the world’s premier designers and manufacturers
of custom insert tooling. Peterson Tool successfully received ISO 9001 certification, and has earned numerous quality
and certification awards including General Motors’ Targets for Excellence Award and Caterpillar’s coveted
Certified Supplier of Quality Materials awards.
She was the first American to
earn the prestigious Veuve Clicquot Business Woman of the Year Award (1990). Ms. Hearn has a distinguished leadership
record that includes roles on some of the most prestigious boards in the nation. She has served as Vice Chair of the Foundation,
Southeast Region Chair and Membership Chair for Committee of 200 (“C200”), an international organization of
businesswomen, which has established the Nancy Sanders Peterson Scholars Award in her honor. She chaired the C200 Auction
from 2000 to 2008, and her efforts helped raise several millions of dollars for the C200 Foundation. She has also served
on the boards of The Society of International Business Fellows, the Aquinas College Board of Governors, the Mississippi
University for Women’s National Board of Distinguished Women, Nashville Symphony, Cheekwood Museum and Botanical
Gardens and Nashville Ballet.
Most recently, she received the
Golden Micrometer Award from Precision Machine Producers Association for 40 Years of service in the metal working industry.
Ms. Hearn has a longstanding record
of community activism that includes roles in Leadership Nashville, the Tennessee Workforce Development Board, the
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Tennessee
Council on Vocational Education, and has been recognized by The National Federation of
Parents for Drug Free Youth. As a spokesperson for private industry, she champions the
advancement of sound economic policies and professional healthcare standards.
Ms.
Hearn is the mother of six adult children, two of whom are actively involved in Peterson
Tool Company, Inc.
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Jane
H. Macon
Age 69
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Jane
Macon is a Partner with the law firm of Bracewell & Giuliani, LLP. Prior to joining
the Bracewell firm in October 2013, she was a Partner in the law firm of Fulbright &
Jaworski L.L.P., San Antonio, Texas for nearly 30 years. Norton Rose Fulbright US LLP
(formerly Fulbright & Jaworski L.L.P.) and Bracewell & Giuliani, LLP continue
to provide legal services to the Company. Ms. Macon became a director on November 8,
1996 and was named Chairwoman in August 2013. Ms. Macon is one of two executors of the
Estate of Muriel F. Siebert, our former Chairwoman, President and Chief Executive Officer
and, in that capacity, she possesses the power to control the voting and disposition
of the shares of our common stock held by the Estate.
Specific experience, qualifications,
attributes or skills:
Ms. Macon centers her legal practice
on public finance and administrative law, public and private partnerships, real estate, zoning, platting, condemnation
and municipal bonds. Prior to joining Fulbright & Jaworski L.L.P. in 1983, Ms. Macon served as the first female city
attorney of the City of San Antonio where she served in that position from 1977 to 1983. Active in professional organizations,
Ms. Macon is a past president of the International Women’s Forum, the Women Lawyers of Texas and the San Antonio
Young Lawyers Association. She presently serves as the program chair of the San Antonio Bar Association. She has served
as a member of the Boards of Directors for the following national boards: NOW Legal Defense Fund, Child Care Action Campaign,
Center for Democracy, National Women’s Political Caucus, National Nurses League and National Civic League (formerly
National Municipal League). Ms. Macon is also a member of the San Antonio and American Bar Associations and the State
Bar of Texas. She has received both awards as Outstanding Young Lawyer of Texas and the Outstanding Young Lawyer of San
Antonio and is listed in Who’s Who in America. Ms. Macon was recently awarded the Prevent Blindness Texas Person
of Vision Award signed by Gov. Rick Perry and the Hope Award by the WOW (Women’s Opportunity Week by the Greater
San Antonio Chamber of Commerce). Ms. Macon provides expertise on legal matters.
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Robert
P. Mazzarella
Age 69
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Robert
Mazzarella formerly served as a director and as a member of the audit and compensation
committees of Placemark Investments, Inc., a registered investment adviser in Wellesley,
Massachusetts, and Investors Capital Holdings Ltd., in Lynfield Massachusetts. Mr. Mazzarella
also acts as a consultant to a number of major financial services firms and venture capital
firms. Mr. Mazzarella became a director on March 1, 2004.
Specific experience, qualifications,
attributes or skills:
Mr. Mazzarella retired from Fidelity
Investments Brokerage Services LLC in January 2002, at which time he served as its president. The Board of Directors has
determined that Mr. Mazzarella qualifies as an “audit committee financial expert” under the applicable rules
of the Securities and Exchange Commission. Mr. Mazzarella provides expertise on financial and brokerage matters.
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Identification of Executive Officers
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Name
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Age
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Position
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Joseph M. Ramos, Jr.
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57
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Executive
Vice President, Chief Operating Officer, Chief Financial Officer and Secretary
Mr. Ramos
has been Executive
Vice President, Chief Financial Officer and Assistant Secretary of Siebert since February 10, 2003, Chief Financial Officer
of Siebert, Brandford, Shank, & Co., L.L.C. since April 20, 2009 and Chief Operating Officer Since June 10, 2013.
From May 1999 to February 2002, Mr. Ramos served as Chief Financial Officer of Internet Financial Services, Inc. From
November 1996 to May 1999, Mr. Ramos served as Chief Financial Officer of Nikko Securities International, Inc. From September
1987 to March 1996, Mr. Ramos worked at Cantor Fitzgerald and held various accounting and management positions, the last
as Chief Financial Officer of their registered broker-dealer based in Los Angeles. From October 1982 to September 1987,
Mr. Ramos was an audit manager for Deloitte & Touche LLP, a public accounting firm. Mr. Ramos is a Certified Public
Accountant licensed in the State of New York.
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Corporate Governance
Board Meetings
The Board of Directors
held 12 regular meetings during 2015. Each incumbent director attended at least 75% of his or her Board of Directors meetings
and all of his or her committee meetings.
Controlled Company
We are a “Controlled
Company” as defined in Rule 5615(c)(1) of The Nasdaq Stock Market because the Estate of Muriel F. Siebert, our former Chairwoman,
President and Chief Executive Officer, holds more than 50% of our voting power for the election of directors. As a “Controlled
Company” we are not required to have a majority of our Board of Directors comprised of independent directors, a compensation
committee comprised solely of independent directors or a nominating committee comprised solely of independent directors.
Audit Committee
of the Board of Directors
The Audit Committee
of our Board of Directors currently consists of Ms. Francy, Chairwoman, Ms. Hearn and Mr. Mazzarella. The Board of Directors has
determined that Ms. Francy, Ms. Hearn and Mr. Mazzarella is each an “independent director” within the meaning of Rule
5605(a)(2) of The Nasdaq Stock Market and within the meaning of the applicable rules and regulations of the Securities and Exchange
Commission. The Audit Committee held six meetings during 2015.
The Board of Directors
has determined that Mr. Mazzarella qualifies as an “audit committee financial expert” under the applicable rules of
the Securities and Exchange Commission.
The Audit Committee
was established to (i) assist the Board of Directors in its oversight responsibilities regarding the integrity of our financial
statements, our compliance with legal and regulatory requirements and our auditor’s qualifications and independence, (ii)
prepare the report of the Audit Committee contained herein, (iii) retain, consider the continued retention and terminate our independent
auditors, (iv) approve audit and non-audit services performed by our independent auditors and (v) perform any other functions
from time to time delegated by the Board of Directors. The Board of Directors has adopted a written charter for the Audit Committee,
which is available on the website of Muriel Siebert & Co., Inc. at https://www.siebertnet.com/html/StartAboutAuditCommittee.aspx.
Compensation
Committee of the Board of Directors
The Compensation Committee
of our Board of Directors currently consists of Ms. Macon, Chairwoman, Ms. Francy and Mr. Mazzarella. The Compensation Committee
reviews and determines all forms of compensation provided to our executive officers and directors. The Compensation Committee
also administers our stock option and other employee benefit plans. The Compensation Committee does not function pursuant to a
formal written charter and as a “Controlled Company” we are not required to comply with The Nasdaq Stock Market’s
independence requirements. The Compensation Committee held no meetings during 2015.
The Compensation Committee
evaluates the performance of the Chief Executive Officer in terms of our operating results and financial performance and determines
her compensation in connection therewith. For the 2015 fiscal year, the Company did have a Chief Financial Officer and Chief Operating
Officer who acted as our principal executive officer.
In accordance with
general practice in the securities industry, our executive compensation includes base salaries, an annual discretionary cash bonus,
and stock options and other equity incentives that are intended to align the financial interests of our executives with the returns
to our shareholders. The Compensation Committee determines compensation of our executive officers (other than the Chief Executive
Officer) after carefully reviewing self-evaluations completed by the executive officers, each executive officer’s business
responsibilities, current compensation, the recommendation of our Chief Executive Officer and our financial performance. We did
not change the 2015 base salaries of any of our executive officer from the levels in effect at the end of 2014. After evaluating
our financial performance in 2015, our Compensation Committee did award our executive officer a 100,000 bonus for 2015. In addition,
we did not award any stock options or other equity incentives to our executive officer in 2015.
As part of its oversight
of the Company’s executive compensation, the Compensation Committee considers the impact of the Company’s executive
compensation, and the incentives created by the compensation awards that it administers, on the Company’s risk profile.
In addition, the Company reviews all of its compensation policies and procedures, including the incentives that they create and
factors that may reduce the likelihood of excessive risk taking, to determine whether they present a significant risk to the Company.
The review found that there were no excessive risks encouraged by the Company’s rewards programs and the rewards programs
do not produce payments that have a material impact on the financial performance of the Company.
Nominating Committee
of the Board of Directors
The Nominating Committee
of the Board of Directors currently consists of Ms. Hearn, Chairwoman, Ms. Francy and Ms. Macon. The Nominating Committee does
not function pursuant to a formal written charter and as a “Controlled Company” we are not required to comply with
The Nasdaq Stock Market’s independence requirements. The Nominating Committee did not meet in 2015.
The purpose of the
Nominating Committee is to identify individuals qualified to become members of our Board of Directors and to recommend to the
Board of Directors or the shareholders that such individuals be selected for directorship. In identifying and evaluating nominees
for director, the Nominating Committee considers each candidate’s experience, integrity, background and skills as well as
other qualities that the candidate may possess and factors that the candidate may be able to bring to the Board of Directors.
We do not have a formal policy with regard to the consideration of diversity in identifying director nominees. However, the Board
of Directors believes that it is essential that its members represent diverse viewpoints, with a broad array of experiences, professions,
skills, geographic representation and backgrounds that, when considered as a group, provide a sufficient mix of perspectives to
allow the Board of Directors to best fulfill its responsibilities to the long-term interests of our shareholders.
The Nominating Committee
will consider shareholder nominees for election to our Board of Directors. In evaluating such nominees, the Nominating Committee
will use the same selection criteria the Nominating Committee uses to evaluate other potential nominees.
Indemnification
of Officers and Directors
We indemnify our executive
officers and directors to the extent permitted by applicable law against liabilities incurred as a result of their service to
us and against liabilities incurred as a result of their service as directors of other corporations when serving at our request.
We have a director’s and officer’s liability insurance policy, underwritten by Illinois National Insurance Company,
a member of the American International Group, Inc., in the annual aggregate amount of $15 million. As to reimbursements by the
insurer of our indemnification expenses, the policy has a $250,000 deductible; there is no deductible for covered liabilities
of individual directors and officers.
Annual Shareholders
Meeting Attendance Policy
It is the policy of
our Board of Directors that all of our directors are strongly encouraged to attend each annual shareholders meeting. All of our
directors attended the 2015 annual meeting of shareholders.
Code of Ethics
We have adopted a
Code of Ethics for Senior Financial Officers applicable to our chief executive officer, chief financial officer, treasurer, controller,
principal accounting officer, and any of our other employees performing similar functions. A copy of the Code of Ethics for Senior
Financial Officers is available on our website at https://www.siebertnet.com/html/StartAboutGovernance.aspx.
Board Leadership
Structure and Board of Directors
Jane Macon is the
Chairwoman of our Board of directors. The Board of Directors does not have a lead independent director. The Company believes this
structure allows all of the directors to participate in the full range of the Board’s responsibilities with respect to its
oversight of the Company’s management. The Board of Directors has determined that this leadership structure is appropriate
given the size of the Company, the number of directors overseeing the Company and the Board of Directors’ oversight responsibilities.
The Board of Directors
holds four to seven regular meetings each year to consider and address matters involving the Company. The Board of Directors also
may hold special meetings to address matters arising between regular meetings. These meetings may take place in person or by telephone.
The independent directors also regularly meet in executive sessions outside the presence of management. The Board of Directors
has access to legal counsel for consultation concerning any issues that may occur during or between regularly scheduled Board
meetings. As discussed above, the Board has established an Audit Committee, a Compensation Committee and a Nominating Committee
to assist the Board in performing its oversight responsibilities.
The Board of
Directors’ Role in Risk Oversight
Consistent with its
responsibility for oversight of the Company, the Board of Directors, among other things, oversees risk management of the Company’s
business affairs directly and through the committee structure that it has established. The principal risks associated with the
Company are risks related to securities market volatility and the securities industry, lower price levels in the securities markets,
intense competition in the brokerage industry, extensive government regulation, net capital requirements, customers’ failure
to pay, investment banking activities, an increase in volume on our systems or other events which could cause them to malfunction,
reliance on information processing and communications systems, continuing changes in technology, dependence on the ability to
attract and retain key personnel, the ability of our principal shareholder to control many key decisions and there may be no public
market for our common stock.
The Board of Directors’
role in the Company’s risk oversight process includes regular reports from senior management on areas of material risk to
the Company, including operational, financial, legal, regulatory, strategic and reputational risks. The full Board of Directors
(or the appropriate committee) receives these reports from management to identify and discuss such risks.
The Board of Directors
periodically reviews with management its strategies, techniques, policies and procedures designed to manage these risks. Under
the overall supervision of the Board of Directors, management has implemented a variety of processes, procedures and controls
to address these risks.
The Board of Directors
requires management to report to the full Board of Directors on a variety of matters at regular meetings of the Board of Directors
and on an as-needed basis, including the performance and operations of the Company and other matters relating to risk management.
The Audit Committee also receives regular reports from the Company’s independent registered public accounting firm on internal
control and financial reporting matters. These reviews are conducted in conjunction with the Board of Directors’ risk oversight
function and enable the Board of Directors to review and assess any material risks facing the Company.
Compliance with Section 16(a) of the
Exchange Act
Section 16(a) of the
Exchange Act requires our executive officers and directors and persons who beneficially own more than 10% of our common stock
to file initial reports of ownership and reports of changes in ownership with the Securities and Exchange Commission. These executive
officers, directors and shareholders are required by the Securities and Exchange Commission to furnish us with copies of all forms
they file pursuant to Section 16(a).
No forms were filed
under Section 16(a) or were furnished to us during fiscal 2015. Based solely upon this review, we believe that during fiscal 2015
all Section 16(a) filing requirements applicable to our executive officers, directors and greater than 10% beneficial owners were
complied with on a timely basis.
|
Item 11.
|
EXECUTIVE
COMPENSATION
|
Summary Compensation Table
The following table
shows, during the years ended December 31, 2015 and 2014, the annual compensation paid to or earned by (1) our Acting Chief Executive
Officer and (2) Executive Vice President, Chief Operating in Chief Financial Officer (collectively, the “Named Executive
Officers”).
Name and principal
position
|
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock
Awards
($)
|
|
Option
Awards
($)
(1)
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
Non-qualified
Deferred
Compensation
Earnings
($)
|
|
All Other
Compensation
($)
|
|
Total
($)
|
Suzanne Shank
(2)
|
|
2015
|
|
41,669
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
41,669
|
Acting Chief Executive
Officer
|
|
2014
|
|
250,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
250,000
|
|
Joseph
M. Ramos, Jr.
(3)
|
|
2015
|
|
385,000
|
|
100,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
485,000
|
Executive
Vice President,
Chief Operating Officer and Chief Financial Officer
|
|
2014
|
|
385,000
|
|
100,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
485,000
|
|
(1)
|
Represents the dollar amount
recognized for financial statement reporting in accordance with ASC Topic 718.
|
|
(2)
|
Ms. Shank was named Active
Chief Executive Officer effective September 16, 2013 at a salary of $250,000 annually.
Ms. Shank has resigned from her position as Acting Chief Executive Officer of Siebert
Financial Corporation effective as of February 27, 2015.
|
|
(3)
|
Mr. Ramos was named to the
additional position of Chief Operating Officer effective June 17, 2013.
|
Grants of Plan-Based Awards
Our Compensation Committee
did not approve grants of options to purchase our common stock or other equity awards under our 2007 Long-Term Incentive Plan
to any of our Named Executive Officers in 2015.
Outstanding Equity Awards at December 31, 2015
The following table sets forth the outstanding
equity award holdings of our Named Executive Officers at December 31, 2015:
|
|
OPTION AWARDS
|
|
|
|
|
|
STOCK AWARDS
|
|
Name
|
|
|
Number
of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number
of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
|
Option
Exercise
Price ($)
|
|
Option
Expiration
Date
|
|
Number
of Shares
or Units of
Stock That
Have Not
Vested (#)
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested (#)
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout Value
of Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested (#)
|
|
Suzanne
Shank
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Joseph M. Ramos, Jr.
|
|
|
25,000
|
|
|
—
|
|
—
|
|
|
2.75
|
|
|
|
8/11/16
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Termination of Employment and Change-in-Control Arrangements
Employment Agreements.
We are not a party
to an employment agreement with any Named Executive Officer. All of our Named Executive Officers are employees at will.
Option Agreements.
The Option Agreements
we entered into with our Named Executive Officers provide that in the event of a Change in Control (as defined below) of our Company,
the options shall immediately become fully exercisable. A Change in Control means the occurrence of (i) any consolidation or merger
in which we are not the continuing or surviving entity or pursuant to which shares of our common stock are converted into cash,
securities or other property, other than a consolidation or merger in which the holders of our common stock immediately prior
to such consolidation or merger own not less than 50% of the total voting power of the surviving entity immediately after the
consolidation or merger, (ii) any sale, lease, exchange or other transfer of all or substantially all of our assets, (iii) the
approval by our shareholders of any plan or proposal for our complete liquidation or dissolution or (iv) any person or entity
becoming the owner of 50% or more of our common stock. All options to purchase our common stock issued to Mr. Ramos have vested
and are fully exercisable.
Compensation of Directors
In September 2013,
our non-employee director’s fees were increased annually to $60,000 from $40,000 for service on our Board of Directors.
We do not compensate our employees or employees of our subsidiaries for service as directors.
Name
|
|
Fees
Earned
or Paid
in
Cash ($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
|
All
Other
Compensation
($)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patricia L. Francy
(1)
|
|
|
60,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
60,000
|
|
Nancy Peterson Hearn
(2)
|
|
|
60,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
60,000
|
|
Jane H. Macon
(3)
|
|
|
60,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
60,000
|
|
Robert P. Mazzarella
(4)
|
|
|
60,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
60,000
|
|
|
(1)
|
Ms. Francy is the Chairwoman
of the Audit Committee.
|
|
(2)
|
Ms. Hearn is the Chairwoman
of the Nominating Committee.
|
|
(3)
|
Ms. Macon is the Chairwoman
of the Board and Compensation Committee.
|
|
(4)
|
Mr. Mazzarella is the
Audit Committee Financial Expert.
|
Audit Committee Report to Shareholders
The Audit Committee
has reviewed and discussed with management the audited financial statements for the fiscal year ended December 31, 2015. The Audit
Committee has also discussed with our independent registered public accounting firm the matters required to be discussed by Auditing
Standards No. 16, adopted by the Public Company Accounting Oversight Board (United States) regarding, “Communications with
Audit Committees,” including our critical accounting policies and our interests, if any, in “off balance sheet”
entities. Additionally, the Audit Committee has received the written disclosures and representations from the independent registered
public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board (United States) regarding
“Communication with Audit Committees concerning Independence” and has discussed with the independent registered public
accounting firm the independent registered public accounting firm’s independence.
Based on the review
and discussions referred to within this report, the Audit Committee recommended to the Board of Directors that the audited financial
statements for the fiscal year ended December 31, 2015 be included in Siebert Financial Corp.’s Annual Report on Form 10-K
for filing with the Securities and Exchange Commission.
Audit Committee,
Patricia L. Francy, Chairwoman
Nancy Peterson Hearn
Robert P. Mazzarella
|
Item 12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
The following table
lists share ownership of our common stock as of March 13, 2016. The information includes beneficial ownership by each of our directors,
the persons named in the Summary Compensation Table, all directors and executive officers as a group and beneficial owners known
by our management to hold at least 5% of our common stock. To our knowledge, each person named in the table has sole voting and
investment power with respect to all shares of common stock shown as beneficially owned by such person. No persons or groups filed
statements with the Securities and Exchange Commission during 2015 disclosing that they held more than 5% of our common stock.
Name
of Beneficial Owner(1)
|
|
|
Shares
of Common Stock
|
|
|
Percent
of Class
|
The Estate of Muriel F. Siebert
|
|
|
19,878,700
|
|
|
|
89.9
|
%
|
Joseph M. Ramos, Jr.
|
|
|
25,000
|
(2)
|
|
|
*
|
|
Patricia L. Francy
|
|
|
61,000
|
(3)
|
|
|
*
|
|
Nancy Peterson Hearn
|
|
|
60,000
|
(2)
|
|
|
*
|
|
Jane H. Macon
|
|
|
61,000
|
(3)
|
|
|
*
|
|
Robert P. Mazzarella
|
|
|
60,000
|
(2)
|
|
|
*
|
|
Directors and current executive officers as a group
(6 persons)
|
|
|
267,000
|
(4)
|
|
|
1.2
|
%
|
|
(1)
|
The address for each
person named in the table is c/o Siebert Financial Corp., 885 Third Avenue, Suite 3100,
New York, New York 10022.
|
|
(2)
|
Represents options to
purchase shares of our common stock which are currently exercisable.
|
|
(3)
|
Includes options to
purchase 60,000 shares of our common stock which are currently exercisable.
|
|
(4)
|
Includes options to
purchase an aggregate of 265,000 shares of our common stock described above which are
currently exercisable.
|
|
Item 13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
Review and Approval of Related Party
Transactions
As set forth in our
Amended and Restated Audit Committee Charter, the Audit Committee is responsible for reviewing and approving all related party
transactions.
Our Code of Ethics
for Senior Financial Officers, applicable to our chief executive officer, chief financial officer, controller, treasurer, principal
accounting officer and other employees performing similar functions, provides that our Senior Financial Officers should endeavor
to avoid any actual or potential conflict of interest between their personal and professional relationships and requires them
to promptly report and disclose all material facts relating to any such relationships or financial interests which give rise,
directly or indirectly, to an actual or potential conflict of interest to the Audit Committee. The Code of Ethics also provides
that no Senior Financial Officer should knowingly become involved in any actual or potential conflict of interest without the
relationship or financial interest having been approved by the Audit Committee. Our Code of Ethics does not specify the standards
that the Audit Committee would apply to a request for a waiver of this policy.
|
Item 14.
|
PRINCIPAL
ACCOUNTING FEES AND SERVICES
|
EisnerAmper LLP currently
serves as our independent registered public accounting firm.
Audit Fees
Our Audit Committee
has determined that the services described below that were rendered by EisnerAmper LLP are compatible with the maintenance of
EisnerAmper LLP’s independence from our management.
Audit Fees
The aggregate fees
billed by EisnerAmper LLP for professional services rendered for the audit of our annual financial statements and reviews of our
quarterly financial statements were $214,000
for the year ended December 31, 2015 and
$212,000 for the year ended December 31, 2014.
Audit-Related
Fees
EisnerAmper LLP did
not perform any audit-related services during the years ended December 31, 2015 and December 31, 2014.
Tax Fees
EisnerAmper LLP billed
aggregate fees of $57,000 during each the years ended December 31, 2015 and December 31, 2014 for tax compliance services, respectively.
All Other Fees.
The aggregate fees billed by EisnerAmper LLP during the years ended December 31, 2015 for other products and services totaled
$11,000 related to examination of agreements. No other products or services were rendered for the year ended December 31,
2014.
Pre-Approval Policy
The Audit Committee
pre-approves all audit and non-audit services provided by our independent auditors prior to the engagement of the independent
auditors with respect to such services. With respect to audit services and permissible non-audit services not previously approved,
the Audit Committee has authorized the Chairwoman of the Audit Committee to approve such audit services and permissible non-audit
services, provided the Chairwoman informs the Audit Committee of such approval at the next regularly scheduled meeting. All “Audit
Fees”, “Tax Fees” and “All Other Fees” set forth above were pre-approved by the Audit Committee
in accordance with its pre-approval policy.
CONSOLIDATED STATEMENTS
OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Cash Flows From Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(2,869,000
|
)
|
|
$
|
(6,557,000
|
)
|
|
$
|
(5,912,000
|
)
|
Adjustments to reconcile net loss
to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
284,000
|
|
|
|
267,000
|
|
|
|
130,000
|
|
Gain on the disposition of business
sold to former affiliate
|
|
|
—
|
|
|
|
(1,820,000
|
)
|
|
|
—
|
|
Equity in (earnings) loss of former
affiliate
|
|
|
(671,000
|
)
|
|
|
(67,000
|
)
|
|
|
65,000
|
|
Loss on sale of investment in former
affiliate
|
|
|
448,000
|
|
|
|
—
|
|
|
|
—
|
|
Amortization of discount on receivable
from former affiliate
|
|
|
(235,000
|
)
|
|
|
(37,000
|
)
|
|
|
—
|
|
Accrued interest on note receivable
from former affiliate
|
|
|
(46,000
|
)
|
|
|
—
|
|
|
|
—
|
|
Distributions from former affiliate
|
|
|
98,000
|
|
|
|
13,000
|
|
|
|
1,212,000
|
|
Impairment of intangibles
|
|
|
|
|
|
|
—
|
|
|
|
300,000
|
|
Changes in:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalent - restricted
|
|
|
1,532,000
|
|
|
|
—
|
|
|
|
—
|
|
Securities owned, at fair value
|
|
|
(105,000
|
)
|
|
|
(82,000
|
)
|
|
|
(151,000
|
)
|
Receivable from former affiliate investee
equity interest
|
|
|
—
|
|
|
|
(76,000
|
)
|
|
|
—
|
|
Receivable from clearing and other
brokers
|
|
|
162,000
|
|
|
|
317,000
|
|
|
|
818,000
|
|
Prepaid expenses and other assets
|
|
|
84,000
|
|
|
|
33,000
|
|
|
|
149,000
|
|
Accounts payable
and accrued liabilities
|
|
|
(74,000
|
)
|
|
|
(685,000
|
)
|
|
|
445,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used
in operating activities
|
|
|
(1,392,000
|
)
|
|
|
(8,694,000
|
)
|
|
|
(2,944,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of furniture, equipment
and leasehold improvements
|
|
|
(41,000
|
)
|
|
|
(154,000
|
)
|
|
|
(520,000
|
)
|
Distributions from equity investees
|
|
|
—
|
|
|
|
173,000
|
|
|
|
6,000
|
|
Proceeds from sale of investment
in former affiliate
|
|
|
4,000,000
|
|
|
|
—
|
|
|
|
—
|
|
Collection
(payment) of advances to former affiliate
|
|
|
104,000
|
|
|
|
—
|
|
|
|
(1,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided
by/ (used in) investing activities
|
|
|
4,063,000
|
|
|
|
19,000
|
|
|
|
(515,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of treasury shares
|
|
|
—
|
|
|
|
—
|
|
|
|
(19,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
and cash equivalents
|
|
|
2,671,000
|
|
|
|
(8,675,000
|
)
|
|
|
(3,478,000
|
)
|
Cash and cash
equivalents - beginning of year
|
|
|
6,749,000
|
|
|
|
15,424,000
|
|
|
|
18,902,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents - end of year
|
|
$
|
9,420,000
|
|
|
$
|
6,749,000
|
|
|
$
|
15,424,000
|
|
Supplemental Cash Flow Disclosures:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes paid, net
|
|
$
|
|
|
|
$
|
—
|
|
|
$
|
19,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
cash flow disclosure:
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing
activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Note received on sale of investment
in former affiliate
|
|
$
|
4,000,000
|
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements.
SIEBERT FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
N
ote
A - BUSINESS
Siebert Financial Corp. (the “Financial”)
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 Financial 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. On November 4, 2014, Siebert sold its capital markets business to an affiliate
Siebert Brandford Shank Financial, LLC (“SBSF”) (see Note B). Another wholly owned subsidiary, Siebert’s
Women’s Financial Network Inc. (“WFN”), is engaged in providing products, services and information devoted to
women’s financial needs. In the fourth quarter of 2013, management decided to substantially reduce the resources allocated
to the WFN operation (see Note F). The accompanying consolidated financial statements include the accounts of Financial and its
subsidiaries. All significant intercompany accounts and transactions have been eliminated. Financial, Siebert, WFN and SIA collectively
are referred to herein as the “Company”.
The municipal bond investment banking
business was conducted by Siebert Brandford Shank & Co., LLC, a wholly-owned subsidiary of SBSF and related
derivatives transactions were conducted by SBS Financial Products Company, LLC (“SBSFP”), non - controlled investees
in which the Company held a 49% and 33% equity interest respectively. Such investees are accounted for by the equity method of
accounting (see Note E). The equity method provides that the Company records its share of the investees’ earnings or losses
in its results of operations with a corresponding adjustment to the carrying value of its investment. In addition, the investment
is adjusted for capital contributions to and distributions from the investees. Operations of SBSFP ceased in December 2014 and
on November 9, 2015, the Company sold its 49% membership investment in SBSF back to SBSF (see Note C). The Company’s share
of income (loss) from its investees is classified as discontinued operations
in the accompanying
statements of operations.
NOTE B – SALE OF 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 interest into a newly formed Delaware limited liability company, SBSF, in exchange for the same percentage
interests in SBSF. On the same day the Company entered an Asset Purchase Agreement (the “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 Purchase Agreement, SBSF assumed post-closing liabilities relating to the transferred business.
The 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. The annual
installment payable on March 1, 2016, based on the net income attributable to the capital markets business for the year ended
December 31, 2015, which amounted to $493,000 and was paid on March 3, 2016.
Transferred assets of the Company’s
capital markets business, consisted of customer accounts 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 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 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 year ended December
31, 2015 amounted to $235,000 based on a yield of approximately 12%.
As
a result of the Company’s continuing involvement in the capital markets business through its then 49% ownership in SBSF,
result of operations of the capital markets business and the gain on sale were not reflected as discontinued operations in the
accompanying financial statements.
Note
C - Sale of Investment in Affiliate
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 of 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 where there are subsequent changes in the activities with a disposed
component that would no longer preclude discontinued operations (See Note B).
On November 9, 2015, the Company sold
its 49% membership investment in SBSF back to SBSF for $8,000,000 of which $4,000,000 was paid in cash and the balance of which
was paid in the form of a secured junior subordinated promissory note of $4,000,000 (the “SBSF Junior Note”). The
sale of the investment in SBSF, which was accounted for by the equity method, represents a strategic shift for the Company based
on its significance to the Company’s financial condition and results of operations and the major effect it will have on
the Company’s operations and financial results and, accordingly, the Company’s share of operating results of the investment
are reflected as discontinued operations in the accompanying statements of operations. The investment was sold for approximately
$448,000 less than the carrying value of the investment at November 9, 2015, after adjusting the carrying value of the investment
for the Company’s equity in SBSF’s results of operations through such date. Such loss is also included in discontinued
operations.
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. Interest accrued on the note through December 31, 2015 amounted to $46,000. 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 contains 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
SBSF Junior Note.
Note
D - Summary Of Significant Accounting Policies
[1]
|
Cash Equivalents:
|
|
|
|
Cash equivalents consist of highly liquid investments purchased with an original maturity
of 3 months or less. Cash equivalents are carried at fair value and amount to $9,053,000 and $6,179,000 at December 31, 2015
and 2014, respectively, consisting of money market funds.
|
|
|
|
Cash equivalents – restricted $1,532,000 at December 31, 2014 represented cash invested
in a money market fund which served as collateral for a secured demand note payable in the amount of $1,200,000 to SBS which
expired and was not renewed and the collateral was released from restricted cash. (see Note J).
|
|
|
[2]
|
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.
|
Note D - Summary Of
Significant Accounting Policies (continued)
[3]
|
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 market 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 as of December 31, 2015 is as follows:
|
|
|
|
2015
|
|
|
|
2014
|
|
Financial
Instrument
|
|
|
Level
1
|
|
|
|
Level
1
|
|
Cash equivalents
|
|
$
|
9,053,000
|
|
|
$
|
7,711,000
|
|
Securities
|
|
|
593,000
|
|
|
|
488,000
|
|
|
|
$
|
9,646,000
|
|
|
$
|
8,199,000
|
|
|
Securities consist of common stock, which is valued on the last business day of
the year at the last available reported sales price on the primary securities exchange.
|
|
|
[4]
|
Income Taxes:
|
|
|
|
The Company accounts for income taxes utilizing the asset and liability approach requiring
the recognition of deferred tax assets and liabilities for the expected future tax consequences of net operating loss carryforwards
and temporary differences between the basis of assets and liabilities for financial reporting purposes and tax purposes and
for net operating loss and other carryforwards. A valuation allowance is provided for deferred tax assets based on the likelihood
of realization.
|
|
|
[5]
|
Furniture, Equipment and Leasehold Improvements:
|
|
|
|
Furniture, equipment and leasehold improvements are stated at cost, net of accumulated depreciation
and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets,
generally five years. Leasehold improvements are amortized over the shorter of the estimated useful life of the improvements
or period of the lease.
|
|
|
[6]
|
Advertising Costs:
|
|
|
|
Advertising costs are charged to expense as incurred.
|
|
|
[7]
|
Use of Estimates:
|
|
|
|
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
|
|
|
[8]
|
Per Share Data:
|
|
|
|
Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted
average outstanding common shares during the year. 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 loss from continuing operations and a net loss for each of the years ended December 31, 2015, 2014 and
2013. Accordingly, basic and diluted per share data are the same for each year as the effect of stock options is anti-dilutive.
In 2015, 2014 and 2013, 265,000, 265,000 and 350,000 common shares, respectively, issuable upon the exercise of options were
not included in the computation.
|
|
Note D - Summary Of Significant Accounting Policies (continued)
|
|
|
[9]
|
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. In 2015 and 2014, fees also include investment advisory fees, which are recorded as earned.
|
|
|
|
Investment banking revenue, which relates to the capital markets business which was sold in
2014 (See Note B), 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.
|
|
|
|
Trading gains and losses 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.
|
|
|
|
Interest is recorded on an accrual basis and dividends are recorded on the ex-dividend date.
|
|
|
[10]
|
Stock-Based Compensation:
|
|
|
|
Share-based payments to employees, including grants of employee stock options, are recognized
in the statement of operations as an operating expense, based on their fair values on the grant date. Share-based compensation
costs are recognized on a straight-line basis over the requisite service periods of awards which would normally be the vesting
period of the options.
|
|
|
[11]
|
Intangibles:
|
|
|
|
Purchased intangibles which have finite useful lives are principally being amortized using
the straight-line method over estimated useful lives of three to five years. Domain names and other intellectual property
which are deemed to have an indefinite useful life are not amortized but are tested for impairment annually or more frequently
if events or changes in circumstances indicate that the asset might be impaired. The impairment test for indefinite-lived
intangibles consists of a comparison of their fair value with their carrying amount (see note F).
|
|
|
[12]
|
Valuation of Long-Lived Assets:
|
|
|
|
The Company evaluates the recoverability of its long-lived assets including amortizable intangibles
and recognizes an impairment loss in the event the carrying value of these assets exceeds the estimated future undiscounted
cash flows attributable to these assets. The Company assesses potential impairment to its long-lived assets when events or
changes in circumstances indicate that its carrying value may not be recoverable. Should impairment exist, the impairment
loss would be measured based on the excess of the carrying value of the assets over their fair value.
|
Note E - Investment
In former Affiliates
Investment in and advances to, equity in income / (loss) of,
and distributions received from, affiliates consist of the following:
December
31, 2015
|
|
|
SBSF
|
|
|
|
SBSFPC
|
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from equity investee
|
|
$
|
671,000
|
|
|
|
—
|
|
|
|
671,000
|
|
Distributions
|
|
$
|
98,000
|
|
|
|
—
|
|
|
|
98,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2014
|
|
|
SBSF
|
|
|
|
SBSFPC
|
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment and advances
|
|
$
|
7,979,000
|
|
|
|
—
|
|
|
|
7,979,000
|
|
Income (loss) from equity investees
|
|
$
|
84,000
|
|
|
|
(17,000
|
)
|
|
|
67,000
|
|
Distributions
|
|
$
|
13,000
|
|
|
|
173,000
|
|
|
|
186,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2013
|
|
|
SBS
|
|
|
|
SBSFPC
|
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment and advances
|
|
$
|
7,832,000
|
|
|
|
190,000
|
|
|
|
8,022,000
|
|
Income (loss) from
equity investees
|
|
$
|
94,000
|
|
|
|
(159,000
|
)
|
|
|
(65,000
|
)
|
Distributions
|
|
$
|
1,212,000
|
|
|
|
6,000
|
|
|
|
1,218,000
|
|
Siebert and two individuals (the “Principals”)
formed SBS to succeed to the tax-exempt underwriting business of the Siebert Brandford Shank division of Siebert. The agreements
with the Principals provide that profits will be shared 51% to the Principals and 49% to Siebert.
Pursuant to the terms of the Operating
Agreement, Financial 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 provided that income/(loss) be shared 66.66% by the Principals
and 33.33% by Financial. SBSFPC ceased operations in December 2014.
Balance sheet data for 2015 is as of November 9 subsequent
to the redemption of the Company’s interest, Revenue and net income for 2015 is for the period from January 1 through November
9.
Summarized consolidated financial data
of SBSF and SBS in 2015 and 2014 and financial data for SBS in 2013 follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets, including secured demand note of $1,200,000 in 2014 due from Siebert
|
|
$
|
30,903,000
|
|
|
$
|
28,518,000
|
|
|
|
|
|
Total liabilities, including obligations to Siebert of $6,051,000 to in 2015 and $3,057,000 in
2014
|
|
|
23,254,000
|
|
|
|
12,458,000
|
|
|
|
|
|
Total members’ capital
|
|
|
7,649,000
|
|
|
|
16,060,000
|
|
|
|
|
|
Regulatory minimum net capital requirement
|
|
|
250,000
|
|
|
|
250,000
|
|
|
|
|
|
Total revenue
|
|
|
27,774,000
|
|
|
|
24,806,000
|
|
|
$
|
24,965,000
|
|
Net income
|
|
|
1,369,000
|
(a)
|
|
|
171,000
|
|
|
|
193,000
|
|
|
(a)
|
Includes interest expense on
purchase obligation payable to Siebert of $195,000.
|
During 2015, 2014 and 2013 Siebert charged
SBS $100,000 for each year, respectively, for general and administrative services, which Siebert believes approximates the cost
of furnishing such services.
In 2015, 2014 and 2013 Siebert earned
interest income of $32,000, $48,000 and $48,000, respectively, from SBS in connection with subordinated loans available or made
to SBS and Siebert paid SBS interest earned on restricted cash equivalents of $1,000, $1,028 and $1,500 in 2015, 2014 and 2013,
respectively. In addition, in 2015 and 2014, Siebert earned interest income of $235,000 and $36,000, respectively from SBSF on
the purchase obligation in connection with the sale of the capital markets business (see Note B) and in 2015, Siebert earned interest
income of $46,000 from SBSF on the receivable arising from the redemption of its ownership interest (see Note C).
Note
E - Investment In former Affiliates (continued)
Summarized financial data of SBSFPC is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
26,000
|
|
|
|
|
|
Total liabilities
|
|
|
26,000
|
|
|
|
|
|
Total members’ capital
|
|
|
0
|
|
|
|
|
|
Total revenue
|
|
|
0
|
|
|
$
|
(222,000
|
)*
|
Net loss
|
|
|
(51,000
|
)
|
|
|
(478,000
|
)
|
*Negative balance was attributable to loss on derivative contracts
In July 2013, as a result of the filing
of a bankruptcy petition by the City of Detroit, SBSFPC unwound certain derivative contracts with a financial institution pursuant
to the terms of the contracts. The contracts were recorded as liabilities with a carrying value of $123,063,000. In connection
therewith, SBSFPC assigned certain derivative contracts with the City of Detroit to the financial institution, which were recorded
as assets with a carrying value of $123,063,000. No gain or loss was recognized by SBSFPC as a result of the unwinding and assignment
of these derivative contracts and SBSFPC has no continuing obligations or rights with respect to the derivative contracts. During
the quarter ended March 31, 2013 SBSFPC incurred a loss of $241,000 on the write down in value of the derivative contracts with
the City of Detroit to adjust their carrying value to the carrying value of the derivative contracts with the financial institution.
The Company received distributions from SBSFPC of $173,000 during 2014 which is shown on the statement of cash flows as an investing
activity as they represent a return of capital.
Effective September 16, 2013, Suzanne
Shank, one of the Principals having 25.5% ownership in SBS and 33.3% interest in SBSFP became the Company’s chief executive
officer. On March 3, 2015, Ms. Shank completed her role as acting chief executive officer of the Company to devote full time to
her continuing position as chief executive officer of SBSF.
Note
f - Furniture, Equipment And Leasehold Improvements, Net
Furniture, equipment and leasehold improvements
consist of the following:
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Equipment
|
|
$
|
375,000
|
|
|
$
|
524,000
|
|
Leasehold improvements
|
|
|
549,000
|
|
|
|
546,000
|
|
Furniture and fixtures
|
|
|
44,000
|
|
|
|
43,000
|
|
|
|
|
968,000
|
|
|
|
1,113,000
|
|
Less accumulated depreciation and amortization
|
|
|
(594,000
|
)
|
|
|
(504,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
374,000
|
|
|
$
|
609,000
|
|
Depreciation and amortization expense
for the years ended December 31, 2015, 2014 and 2013 amounted to 276,000, $257,000 and $120,000, respectively.
Note
F - Intangible Assets
In 2000, WFN acquired the stock of Women’s
Financial Network, Inc. and HerDollar.com, Inc., companies in the development stage which had yet to commence principal operations
and had no significant revenue for aggregate consideration of $2,310,000, including costs. The transactions were accounted for
as purchases of assets consisting of domain name, website and content, and a non-compete agreement (the “Acquired Intangible
Assets”). Related deferred tax assets attributable to net operating loss carryforwards of the acquired companies and deferred
tax liabilities attributable to the excess of the statement bases of the acquired assets over their tax bases were reflected as
an adjustment to the carrying amount of such intangibles (see Note G).
N
ote
F - I
ntangible
A
ssets
(
continued
)
Intangible assets consist of the following:
|
|
December 31, 2015
|
|
|
December
31, 2014
|
|
|
|
Gross
|
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
|
|
|
Carrying
|
|
|
|
Accumulated
|
|
|
|
Carrying
|
|
|
|
Amortization
|
|
|
|
|
Amount
|
|
|
|
Amortization
|
|
|
|
Amount
|
|
|
|
Accumulated
|
|
Amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Website, content and non-compete
|
|
$
|
1,850,000
|
|
|
|
1,850,000
|
|
|
$
|
1,850,000
|
|
|
|
1,850,000
|
|
Retail brokerage accounts
|
|
|
2,638,000
|
|
|
|
2,638,000
|
|
|
|
2,638,000
|
|
|
|
2,630,000
|
|
|
|
$
|
4,488,000
|
|
|
|
4,488,000
|
|
|
$
|
4,488,000
|
|
|
|
4,480,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense
|
|
|
|
|
|
$
|
8,000
|
|
|
|
|
|
|
$
|
10,000
|
|
During the fourth quarter of 2013, as
a result of management’s continuing strategic review of its operations, the Company determined to substantially reduce the
amount of resources allocated to the WFN domain. Accordingly, the Company wrote off the remaining carrying value of the intangible
asset of $300,000. No significant residual value is estimated for the asset.
Note G - Income Taxes
Financial files a consolidated federal income tax return with
its subsidiaries.
Income tax (benefit) expense consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
Federal income tax (benefit) expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
$
|
(228,000
|
)
|
|
$
|
(22,000
|
)
|
|
$
|
19,000
|
|
Deferred
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
(228,000
|
)
|
|
|
(22,000
|
)
|
|
|
19,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State and local:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
(47,000
|
)
|
|
|
(5,000
|
)
|
|
|
—
|
|
Deferred
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
(47,000
|
)
|
|
|
(5,000
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
(275,000
|
)
|
|
|
(27,000
|
)
|
|
|
19,000
|
|
Deferred
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
$
|
(275,000
|
)
|
|
$
|
(27,000
|
)
|
|
$
|
19,000
|
|
Income tax benefit in 2015 and 2014 represent
the utilization of the loss from continuing operations against income from discontinued operations, exclusive in 2015 of the capital
loss from disposal of the investment in the former affiliate. The provision for income taxes in 2013 represents a federal minimum
tax assessment of $19,000, including $4,000 of interest and penalties, relating to 2012.
Reconciliation between the income tax
(benefit) provision and income taxes computed by applying the statutory Federal income tax rate to loss before income taxes is
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
Expected income tax benefit at statutory
Federal tax rate (34%)
|
|
$
|
(1,051,000
|
)
|
|
$
|
(2,251,000
|
)
|
|
$
|
(2,004,000
|
)
|
State and local taxes, net of Federal tax effect
|
|
|
(68,000
|
)
|
|
|
(464,000
|
)
|
|
|
(413,000
|
)
|
Increase in valuation allowance
|
|
|
784,000
|
|
|
|
2,551,000
|
|
|
|
2,342,000
|
|
Permanent difference
|
|
|
13,000
|
|
|
|
39,000
|
|
|
|
46,000
|
|
Other
|
|
|
47,000
|
|
|
|
98,000
|
|
|
|
48,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit) expense
|
|
$
|
(275,000
|
)
|
|
$
|
(27,000
|
)
|
|
$
|
19,000
|
|
Note
G - Income Taxes (Continued)
The principal items giving rise to deferred
tax assets (liabilities) are as follows:
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Net operating loss credit carryforwards
|
|
$
|
9,456,000
|
|
|
$
|
8,046,000
|
|
Capital loss carryforwards
|
|
|
395,000
|
|
|
|
24,000
|
|
Alternative minimum tax carryforward
|
|
|
—
|
|
|
|
9,000
|
|
Employee stock based compensation
|
|
|
237,000
|
|
|
|
237,000
|
|
Retail brokerage accounts (c)
|
|
|
140,000
|
|
|
|
211,000
|
|
Contribution carryover
|
|
|
178,000
|
|
|
|
223,000
|
|
Furniture, equipment and leasehold improvements
|
|
|
181,000
|
|
|
|
115,000
|
|
Accrued expenses
|
|
|
252,000
|
|
|
|
337,000
|
|
Investment in former affiliate (a)
|
|
|
—
|
|
|
|
736,000
|
|
Other
|
|
|
44,000
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
10,883,000
|
|
|
|
9,968,000
|
|
Valuation allowance
|
|
|
(10,002,000
|
)
|
|
|
(9,218,000
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
|
881,000
|
|
|
|
750,000
|
|
Deferred tax liability:
|
|
|
|
|
|
|
|
|
Receivable from affiliate (b)
|
|
|
(881,000
|
)
|
|
|
(750,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
(a)
|
Attributable to non-deductible
bonus accrued at December 31, 2014 by an affiliate, which was deducted in 2015.
|
|
(b)
|
Relates to receivable from
business sold to affiliate treated as an installment sale for tax purposes.
|
|
(c)
|
Related
to acquired retail discount brokerage accounts, which are being amortized over 15 years
for tax purposes and have been fully amortized for financial reporting purposes.
|
Due to cumulative losses incurred by the
Company during the current and prior two years, the Company is unable to conclude that it is more likely than not that it will
realize its deferred tax asset in excess of the deferred tax liability and, accordingly, has recorded a valuation allowance to
fully offset such amount at December 31, 2015 and 2014.
At December 31, 2015, the Company has
state net operating loss carryforwards aggregating $15.4 million, which expires from 2029 through 2035. In addition, the Company
has federal net operating loss carryforwards of $20.3 million at December 31, 2015, which expires from 2030 through 2035. The
Company also has additional federal net operating loss carryforwards of $350,000 at December 31, 2015 which is attributable to
WFN and expires through 2020. Utilization of WFN’s federal net operating loss carryforwards is subject to annual limitations
under Section 382 of the Internal Revenue Code.
The Company applied the “more-likely-than
not” recognition threshold to all tax positions taken or expected to be taken in a tax return which resulted in no unrecognized
tax benefits reflected in the financial statements as of December 31, 2015. The Company classifies interest and penalties that
would accrue according to the provisions of relevant tax law as income taxes.
Tax years 2012 and thereafter are subject to examination by federal and certain
tax authorities. For other states the 2010 through 2013 tax years remain open to examination. The Company is currently under tax
examination by New York State for the years 2012 to 2014 and by the state of Illinois for the year 2012.
Note
H - Stockholders’ Equity
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 2 percent of aggregate debit balances arising from customer transactions, as defined. The Net Capital Rule
of the New York Stock Exchange also provides that equity capital may not be withdrawn or cash dividends paid if resulting net
capital would be less than 5% of aggregate debits. At December 31, 2015 and 2014, Siebert had net capital of approximately $8,131,000
and $5,100,000, respectively, as compared with net capital requirements of $250,000. Siebert claims exemption from the reserve
requirement under Section 15c3-3(k)(2)(ii) as it clears its customer transactions through an unaffiliated clearing firm on a fully
disclosed basis.
N
ote
h -
S
tockholders’ Equity (continued)
On January 23, 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 in the
open market and in private transactions. During 2013, the Company repurchased 12,266 shares of common stock at an average price
of $1.56. No shares were purchased during 2014 or 2015. As of December 31, 2015, 129,137 of common shares have been repurchased
pursuant to such authorization.
Note
I - Options
The Company’s 2007 Long-Term Incentive
Plan (the “Plan”) authorizes the grant of options to purchase up to an aggregate of 2,000,000 shares, subject to adjustment
in certain circumstances. Both non-qualified options and options intended to qualify as “Incentive Stock Options”
under Section 422 of the Internal Revenue Code may be granted under the Plan. A Stock Option Committee of the Board of Directors
administers the Plan. The committee has the authority to determine when options are granted, the term during which an option may
be exercised (provided no option has a term exceeding 10 years), the exercise price and the exercise period. The exercise price
shall not be less than the fair market value on the date of grant. No option may be granted under the Plan after December 2017.
Generally, employee options vest 20% per year for five years and expire ten years from the date of grant. At December 31, 2015,
options for 1,760,000 shares of common stock are available for grant under the Plan.
A summary of the Company’s stock
option transactions for the three years ended December 31, 2015 is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
Shares
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Shares
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Shares
|
|
|
Weighted
Average
Exercise
Price
|
|
Outstanding - beginning of the year
|
|
|
|
|
|
|
265,000
|
|
|
|
3.02
|
|
|
|
350,000
|
|
|
|
3.10
|
|
|
|
400,000
|
|
|
|
3.33
|
|
Cancelled
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(60,000
|
)
|
|
|
3.05
|
|
|
|
—
|
|
|
|
—
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
(25,000
|
)
|
|
|
5.06
|
|
Expired
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(25,000
|
)
|
|
|
4.04
|
|
|
|
(25,000
|
)
|
|
|
4.75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding - end of year
|
|
|
(a)
|
|
|
|
265,000
|
|
|
|
3.02
|
|
|
|
265,000
|
|
|
|
3.02
|
|
|
|
350,000
|
|
|
|
3.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fully vested and exercisable
at end of year
|
|
|
(a)
|
|
|
|
265,000
|
|
|
|
3.02
|
|
|
|
265,000
|
|
|
|
3.02
|
|
|
|
350,000
|
|
|
|
3.10
|
|
|
(a)
|
Weighted average remaining
contractual terms of 2.51 years and no aggregate intrinsic value.
|
For the years ended December 31, 2015,
2014 and 2013, no stock options were granted.
As of December 31, 2015, there was no
unrecognized compensation cost.
Note
J - Commitments, Contingencies And Other
|
(1)
|
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
in 2015, 2014 or 2013. Credit risk represents the potential loss that would occur if
counterparties fail to perform pursuant to the terms of their obligations. The Company
is subject to credit risk to the extent a custodian or broker with whom it conducts business
is unable to fulfill contractual obligations.
|
|
(2)
|
In the ordinary course of business
the Company is named a party to certain claims, suits and complaints. In the opinion
of management, pending matters are without merit, and their ultimate outcome will not have
a significant effect on the financial position or results of operations of the Company.
|
Note
J - Commitments, Contingencies And Other (continued)
|
(3)
|
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 counter claims in the arbitration. Pursuant to the
settlement, the Company paid $4,300,000 to the former employee, and the claims and counterclaims
have been dismissed and released. The accompanying 2014 statement of operations reflects
a charge to give effect to the settlement.
|
|
(4)
|
The Company rents discount
retail brokerage and other office space under long-term operating leases expiring in
various periods through 2017. These leases call for base rent plus escalations for taxes
and operating expenses.
|
Future minimum base rental
payments under these operating leases are as follows:
Year Ending
December 31,
|
|
|
Amount
|
|
|
|
|
|
|
|
2016
|
|
|
|
541,000
|
|
|
2017
|
|
|
|
90,000
|
|
|
|
|
|
$
|
631,000
|
|
|
|
Rent expense, including escalations for
operating costs, amounted to approximately $776,000, $788,000 and $1,046,000 for the
years ended December 31, 2015, 2014 and 2013, respectively. Rent is being charged to
expense over the entire lease term on a straight-line basis.
|
|
(5)
|
Siebert sponsors a defined
contribution retirement plan under Section 401(k) of the Internal Revenue Code that covers
substantially all employees. Participant contributions to the plan are voluntary and
are subject to certain limitations. Siebert may also make discretionary contributions
to the plan. No contributions were made by Siebert in 2015, 2014 and 2013.
|
|
(6)
|
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. The secured demand note payable held by SBS and a related $1,200,000
receivable due from SBS are included in investments in and advances to former affiliate
in the accompanying consolidated statement of financial condition of December 31, 2014.
Amounts that Siebert was obligated to lend under this arrangement was collateralized
by cash equivalents of $1,532,000. Any amounts loaned bore interest at 4% per annum.
On August 31, 2015, the facility expired and was not renewed and the collateral was released
from restricted cash.
|
Note
k - Summarized Quarterly Financial Data (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Revenue
|
|
$
|
2,624,000
|
|
|
2,104,000
|
|
|
2,536,000
|
|
|
2,832,000
|
|
$
|
3,718,000
|
|
|
3,705,000
|
|
|
3,454,000
|
|
|
4,975,000
|
|
Net income (loss)
|
|
$
|
(1,534,000
|
)
|
|
(407,000
|
)
|
|
(728,000
|
)
|
|
(200,000
|
)
(c)
|
$
|
28,000
|
|
|
(6,077,000
|
)(a)
|
|
(1,456,000
|
)
|
|
948,000
|
(b)
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
(.07
|
)
|
|
(.02
|
)
|
|
(.04
|
)
|
|
(.00
|
)
|
$
|
.00
|
|
|
(.28
|
)
|
|
(.07
|
)
|
|
.04
|
|
Discontinued operations
|
|
$
|
—
|
|
|
—
|
|
|
.01
|
|
|
(.01
|
)
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
(a)
|
Includes $4,300,000 loss
(.19 per share) related to arbitration settlement (see Note J3).
|
|
(b)
|
Includes $1,820,000
gain ($0.08 per share) related to sale of business.
|
|
(c)
|
Includes $448,000
loss ($0.02 per share) related to disposal of investment in former affiliate.
|
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Board of Managers
Siebert Brandford Shank Financial, LLC
Siebert Brandford Shank & Co., L.L.C.
New York, New York
We have audited the accompanying
consolidated statement of financial condition of Siebert Brandford Shank Financial, LLC and subsidiary (the
“Company”) as of December 31, 2014 and the related consolidated statements of operations, changes in
members’ capital and cash flows for the period from January 1, 2015 to November 9, 2015 and for the year ended December
31, 2014. In addition, we have audited the accompanying statement of operations, changes in members’ capital and cash
flows of Siebert Brandford Shank & Co., LLC (the “Company”) for the year ended December 31, 2013.
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial
statements referred to above present fairly, in all material respects, (i) the consolidated financial position of Siebert
Brandford Shank Financial, LLC and subsidiary as of December 31, 2014 and consolidated results of their operations and their
cash flows for the period from January 1, 2015 to November 9, 2015 and for the year ended December 31, 2014 and (ii) the
results of operations and cash flows of Siebert Brandford Shank & Co. LLC for the year ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.
/s/ EisnerAmper LLP
New York, New York
March 30, 2016
Siebert
Brandford Shank Financial, LLC and Subsidiary
Consolidated Statement of Financial
Condition
December 31, 2014
|
|
|
|
|
ASSETS
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
20,065,062
|
|
Accounts receivable
|
|
|
1,593,614
|
|
Due from broker
|
|
|
2,522,557
|
|
Secured demand note
|
|
|
1,200,000
|
|
Goodwill - Note B
|
|
|
1,001,000
|
|
Issuer relationships, net of amortization of $41,212 - Note B
|
|
|
777,788
|
|
Furniture, equipment and leasehold improvements,
net
|
|
|
684,736
|
|
Other assets
|
|
|
673,276
|
|
|
|
|
|
|
|
|
$
|
28,518,033
|
|
|
|
|
|
|
LIABILITIES AND MEMBERS’ CAPITAL
|
|
|
|
|
Liabilities:
|
|
|
|
|
Payable to affiliate
|
|
$
|
104,320
|
|
Asset purchase obligation payable to affiliate, net
of unamortized discount of $1,143,359
|
|
|
1,856,641
|
|
Accounts payable and accrued expenses
|
|
|
4,747,648
|
|
Deferred rent
|
|
|
549,287
|
|
|
|
|
7,257,896
|
|
|
|
|
|
|
Subordinated debt
|
|
|
5,200,000
|
|
|
|
|
|
|
Total liabilities
|
|
|
12,457,896
|
|
Commitments (Note G)
|
|
|
|
|
Members’ capital
|
|
|
16,060,137
|
|
|
|
|
|
|
|
|
$
|
28,518,033
|
|
See notes to consolidated financial
statements
Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December
31,
|
|
|
|
Period from
January 1, 2015
to
November 9,
2015
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Siebert Brandford Shank Financial, LLC
|
|
|
Siebert Brandford Shank Financial, LLC
|
|
|
Siebert Brandford Shank & Co.
LLC
|
|
|
|
and Subsidiary
|
|
|
and Subsidiary
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment banking
|
|
$
|
23,786,122
|
|
|
$
|
20,949,508
|
|
|
$
|
20,847,546
|
|
Trading profits
|
|
|
3,888,139
|
|
|
|
3,670,726
|
|
|
|
4,114,958
|
|
Commissions
|
|
|
473,117
|
|
|
|
182,771
|
|
|
|
—
|
|
Interest and other
|
|
|
4,116
|
|
|
|
3,395
|
|
|
|
2,817
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,151,494
|
|
|
|
24,806,400
|
|
|
|
24,965,321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee compensation and benefits
|
|
|
19,044,368
|
|
|
|
17,819,595
|
|
|
|
18,619,549
|
|
Clearing fees
|
|
|
469,014
|
|
|
|
383,538
|
|
|
|
122,209
|
|
Communications
|
|
|
1,015,599
|
|
|
|
929,496
|
|
|
|
889,207
|
|
Occupancy
|
|
|
898,897
|
|
|
|
1,186,967
|
|
|
|
1,088,755
|
|
Professional fees
|
|
|
1,187,892
|
|
|
|
895,951
|
|
|
|
528,313
|
|
Interest, including amortization of discount (including
$200,745, 84,691 and 48,000 to affiliate)
|
|
|
248,637
|
|
|
|
136,936
|
|
|
|
48,000
|
|
State and local income tax
|
|
|
66,818
|
|
|
|
31,901
|
|
|
|
36,326
|
|
General and administrative (including
$100,000, 100,000 and 100,000 to affiliate)
|
|
|
3,850,900
|
|
|
|
3,251,269
|
|
|
|
3,440,071
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,782,125
|
|
|
|
24,635,653
|
|
|
|
24,772,430
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
1,369,369
|
|
|
$
|
170,747
|
|
|
$
|
192,891
|
|
See notes to financial statements
SIEBERT BRANDFORD SHANK FINANCIAL, LLC AND SUBSIDIARY
Consolidated Statements of Changes
in Members’ Capital
|
|
|
|
|
Balance - January 1, 2013 (a)
|
|
$
|
18,196,500
|
|
Distributions to members
|
|
|
(2,473,529
|
)
|
Net income
|
|
|
192,891
|
|
|
|
|
|
|
Balance - December 31, 2013 (a)
|
|
|
15,915,862
|
|
Distributions to members
|
|
|
(26,472
|
)
|
Net income
|
|
|
170,747
|
|
|
|
|
|
|
Balance - December 31, 2014
|
|
|
16,060,137
|
|
Distributions to members
|
|
|
(200,000
|
)
|
Net income
|
|
|
1,369,369
|
|
|
|
|
|
|
Balance - November 9, 2015 (b)
|
|
$
|
17,229,506
|
|
|
(a)
|
Represents members’ capital of Siebert, Brandford,
Shank & Co., L.L.C.
|
|
(b)
|
Represents members’ capital prior to giving effect
to redemption of interest of Muriel Siebert & Co., Inc. and other member and related capital contributions which in part funded
such redemptions.
|
See notes to consolidated financial
statements
Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December
31,
|
|
|
|
Period from
January 1, 2015
to November 9, 2015
|
|
|
2014
|
|
|
2013
|
|
|
|
SIEBERT BRANDFORD
SHANK FINANCIAL, LLC
AND SUBSIDIARY
|
|
|
SIEBERT BRANDFORD
SHANK FINANCIAL, LLC
AND SUBSIDIARY
|
|
|
SIEBERT, BRANDFORD,
SHANK & CO., LLC
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
1,369,369
|
|
|
$
|
170,747
|
|
|
$
|
192,891
|
|
Adjustments to reconcile net income to net cash (used
in) /provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of discount on obligation due affiliate
|
|
|
194,581
|
|
|
|
36,641
|
|
|
|
—
|
|
Depreciation and amortization
|
|
|
408,577
|
|
|
|
267,973
|
|
|
|
250,154
|
|
Changes in:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(750,051
|
)
|
|
|
(1,031,467
|
)
|
|
|
395,913
|
|
Due to clearing broker
|
|
|
9,410,526
|
|
|
|
(2,514,399
|
)
|
|
|
(2,328,918
|
)
|
Securities owned, at fair value
|
|
|
(8,603,054
|
)
|
|
|
0
|
|
|
|
11,264,998
|
|
Other assets
|
|
|
(28,001
|
)
|
|
|
(54,533
|
)
|
|
|
139,264
|
|
Payable to (receivable from) former affiliate
|
|
|
(52,898
|
)
|
|
|
76,056
|
|
|
|
36,929
|
|
Accounts payable and accrued expenses
|
|
|
1,699,037
|
|
|
|
741,040
|
|
|
|
(1,368,577
|
)
|
Bank overdraft
|
|
|
—
|
|
|
|
(1,225,779
|
)
|
|
|
1,225,779
|
|
Deferred rent
|
|
|
(95,936
|
)
|
|
|
(72,788
|
)
|
|
|
(9,740
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) /provided
by operating activities
|
|
|
3,552,150
|
|
|
|
(3,606,509
|
)
|
|
|
9,798,693
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of leasehold improvements
and equipment
|
|
|
(41,746
|
)
|
|
|
(89,364
|
)
|
|
|
(47,759
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to members
|
|
|
(200,000
|
)
|
|
|
(26,472
|
)
|
|
|
(2,473,529
|
)
|
Subordinated borrowings
|
|
|
—
|
|
|
|
9,000,000
|
|
|
|
—
|
|
Subordinated repayments
|
|
|
(4,000,000
|
)
|
|
|
(5,000,000
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by/ (used in)
financing activities
|
|
|
(4,200,000
|
)
|
|
|
3,973,528
|
|
|
|
(2,473,529
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents
|
|
|
(689,596
|
)
|
|
|
277,655
|
|
|
|
7,277,405
|
|
Cash and cash equivalents -
beginning of period
|
|
|
20,065,062
|
|
|
|
19,787,407
|
|
|
|
12,510,002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents -
end of period
|
|
$
|
19,375,466
|
|
|
$
|
20,065,062
|
|
|
$
|
19,787,407
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxes paid
|
|
$
|
39,068
|
|
|
$
|
24,323
|
|
|
$
|
28,177
|
|
Interest paid
|
|
$
|
46,176
|
|
|
$
|
100,295
|
|
|
$
|
48,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note payable for purchase of business from affiliate
|
|
|
|
|
|
|
1,820,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets acquired related to business acquired
from affiliate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuer relationships
|
|
|
|
|
|
|
(819,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
|
|
|
|
(1,001,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non cash investing and financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of subordinated borrowing from former affiliate by cancellation of related secured demand note receivable from former affiliate
|
|
$
|
1,200,000
|
|
|
|
|
|
|
|
|
|
See notes to financial statements
SIEBERT BRANDFORD SHANK FINANCIAL, LLC AND SUBSIDIARY
Notes to Financial Statements
NOTE A – BUSINESS ORGANIZATION:
Siebert Brandford Shank Financial, LLC
(“SBSF” or the “Company”) was organized on November 4, 2014 and through its wholly owned subsidiary, Siebert,
Brandford, Shank & Co., L.L.C. (“SBS”), engages in the business of tax-exempt underwriting and related trading
activities and, commencing on November 4, 2014, the capital markets business (see Note B). The Company qualifies as a Minority
and Women Owned Business Enterprise in certain municipalities.
On November 9, 2015, SBSF
redeemed Muriel Siebert & Co., Inc., 49% membership interest in addition to the 25.5% membership interest of another
member. The accompanying 2015 financial statements are prepared immediately prior to, and do not give effect to such
transactions or the related debt and equity financing funding such transactions.
NOTE B – BUSINESS ACQUISITION
On November 4, 2014, the members of SBS
contributed their membership interest into a newly formed Delaware limited liability company, Siebert Brandford Shank Financial,
LLC (“SBSF”), in exchange for the same percentage interests in SBSF. On the same day Muriel Siebert & Co., Inc.,
(“Siebert”) entered an Asset Purchase Agreement (the “Purchase Agreement”) with SBS and SBSF, pursuant
to which Siebert sold substantially all of the assets relating to Siebert’s capital markets business to SBSF. Pursuant to
the Purchase Agreement, SBSF assumed post-closing liabilities relating to the transferred business. An individual having a 25.5%
membership interest in SBS prior to the contribution of membership interests to SBSF, was Siebert’s chief executive officer.
The 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 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.
The
annual installment payable on March 1, 2016 is based on the net income attributable to the capital markets business for the
year ended December 31, 2015, and amounted to $493,000.
Transferred assets of Siebert’s
capital markets business, consisted of issuer relationships and goodwill. Issuer relationships, were recorded at $819,000 representing
their fair value at the date of acquisition determined based on a discounted cash flow analysis (Level 3). Goodwill, which includes
employees of Siebert who transferred to SBS, was recorded at $1,001,000, representing the excess of the fair value ($1,820,000)
of SBSF’s purchase obligation to Siebert over the fair value of the issuer relationships.
Since the date of acquisition, revenue
of $199,000 and net loss of $129,000 attributable to the capital markets business is included in the accompanying statement of
operations for the year ended December 31, 2014.
The following represents the unaudited
pro forma amounts of revenue and net income of the Company for the year ended December 31, 2014, assuming the capital markets
business had been acquired as of January 1, 2014:
Revenue
|
|
$
|
27,729,000
|
|
Net Income
|
|
$
|
672,000
|
|
The above net income reflects the additional
amortization that would have been charged assuming the fair value adjustment to customer accounts had been applied as of January
1, 2014 and amortization of discount on the purchase obligation for the entire year.
SIEBERT BRANDFORD SHANK FINANCIAL, LLC AND SUBSIDIARY
Notes to Financial Statements
NOTE C – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
[1]
|
Principles of Consolidation:
|
Commencing on November 4, 2014,
the accompanying financial statements include the accounts of SBSF and its wholly-owned subsidiary SBS after elimination of intercompany
balances and transactions. Prior thereto, the financial statements represent those of SBS. The creation of SBSF and related transfer
thereto of the members’ interest in SBS did not result in any change in the carrying value of the existing assets or liabilities
of SBS in the consolidated financial statements as both entities were under common control.
Investment banking revenues
include gains and fees, net of syndicate expenses, arising primarily from municipal bond offerings in which the Company acts as
an underwriter or agent. 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
Security transactions are recorded
on a trade-date basis. Securities owned are valued at fair value. The resulting realized and unrealized gains and losses are reflected
as trading profits.
Commission revenue which relates
to the capital market business are recorded on a trade date basis.
Dividends are recorded on the
ex-dividend date, and interest income is recognized on an accrual basis.
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 market 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 market prices that are observable, either directly or indirectly, and reasonably
available.
|
|
Level 3
|
Unobservable inputs which reflect the assumptions that the managing members develop based on available
information about the assumptions market participants would use in valuing the asset or liability.
|
See Note C (4) for financial
instruments measured at fair value.
SIEBERT BRANDFORD SHANK FINANCIAL, LLC
AND SUBSIDIARY
Notes to Financial Statements
NOTE C – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Cash equivalents represent
short-term, highly liquid investments which are readily convertible to cash and have maturities of three months or less at time
of purchase. Cash equivalents, which are valued at fair value, consist of money market funds which amounted to $15,965,885 at December 31, 2014 (Level 1). The Company maintains its assets with financial institutions
which may at times exceed federally insured limits. In the event of financial institutions insolvency, recovery of the assets
may be limited.
[5]
|
Furniture, equipment and leasehold improvements, net:
|
Furniture, equipment and leasehold
improvements are stated at cost, net of accumulated depreciation and amortization. Depreciation is calculated using the straight-line
method over the estimated useful lives of the assets, generally five years. Leasehold improvements are amortized over the period
of the lease.
Issuer relationships, which
were recorded in connection with the acquisition of the capital markets business (see Note B), are being amortized by the straight-line
method over 2.9 years.
Intangible assets with finite
lives are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
The Company assesses the recoverability of its intangible assets by determining whether the unamortized balance can be recovered
over the assets’ remaining useful life through undiscounted estimated future cash flows. If undiscounted estimated future
cash flows indicate that the unamortized amounts will not be recovered, an adjustment will be made to reduce such amounts to fair
value based on estimated future cash flows discounted at a rate commensurate with the risk associated with achieving such cash
flows.
Goodwill, which was recorded
in connection with the acquisition of the capital markets business (see Note B), is not subject to amortization and is tested
for impairment annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired. The
impairment test consists of a comparison of the fair value of the reporting unit with the carrying amount its net assets, including
goodwill. Fair value is typically based upon estimated future cash flows discounted at a rate commensurate with the risk involved
or market-based comparables. If the carrying amount of the Company’s net assets exceeds the fair value of the reporting
unit, then an analysis will be performed to compare the implied fair value of goodwill with the carrying amount of goodwill. An
impairment loss will be recognized in an amount equal to the excess of the carrying amount over its implied fair value.
The preparation of financial
statements in conformity with accounting principles generally accepted in the United States of America requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
The Company is not subject
to federal income taxes. Instead, the members are required to include in their income tax returns their respective share of the
Company’s income or loss. The Company is subject to tax in certain state and local jurisdictions. Deferred taxes are not
significant.
NOTE D - SUBORDINATED BORROWINGS AND SECURED
DEMAND NOTE RECEIVABLE
The subordinated debt at December 31, 2014 consists of the
following:
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
Payable to affiliate (a)
|
|
$
|
1,200,000
|
|
Payable to clearing broker (b)
|
|
|
4,000,000
|
|
|
|
|
|
|
|
|
$
|
5,200,000
|
|
|
(a)
|
Consists of a Secured Demand
Note Collateral Agreement payable to Siebert, an indirect member of the Company, bearing
4% interest and which expired and was repaid on August 31, 2015 through an offset against a $1,200,000 secured demand note receivable due from Siebert. Interest expense
paid to Siebert in each of 2015, 2014 and 2013 amounted to $32,000, 48,000 and 48,000
respectively.
|
The secured demand note
receivable of $1,200,000 was collateralized by cash equivalents of Siebert of approximately $1,532,000 which expired and was
repaid on August 31, 2015.
Interest earned on the collateral amounted to approximately $1,000, $1,028 and $1,500 in 2015, 2014 and 2013,
respectively.
|
(b)
|
On December 9, 2014, SBS
entered into a temporary subordinated loan agreement with National Financial Services,
its clearing broker, in the amount of $4,000,000 bearing interest at the federal funds
rate plus 6% and maturing January 22, 2015. The note was repaid on January 22, 2015.
Interest expense accrued in 2014 amounted to approximately $16,000.
|
The subordinated borrowings are
available in computing net capital under the Securities and Exchange Commission’s (“SEC”) Uniform Net Capital
Rule. To the extent that such borrowing is required for the Company’s continued compliance with minimum net capital requirements,
it may not be repaid.
On March 24, 2014, SBS entered
into a temporary subordinated loan agreement with National Financial Services, its clearing broker, in the amount of $5,000,000
bearing interest at the federal funds rate plus 6% and maturing May 5, 2014. The note was repaid on May 5, 2014. Interest expense
paid was $36,542.
SIEBERT BRANDFORD SHANK FINANCIAL, LLC
AND SUBSIDIARY
Notes to Financial Statements
NOTE E - FURNITURE, EQUIPMENT AND LEASEHOLD
IMPROVEMENTS, NET
Furniture, equipment, and leasehold improvements
consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2014
|
|
|
|
|
|
|
|
|
|
|
Equipment
|
|
|
|
|
$
|
926,654
|
|
Furniture and leasehold improvements
|
|
|
|
|
|
|
1,718,826
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,645,480
|
|
Less accumulated depreciation and amortization
|
|
|
|
|
|
|
1,960,744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
684,736
|
|
Depreciation and amortization expense
for the period ended November 9, 2015 amounted to $160,046, For the periods ended December 31,2014 and 2013 the expense amounted
to $226,761 and $250,154 respectively.
NOTE F - NET CAPITAL
SBS is subject to the SEC’s Uniform
Net Capital Rule 15c3-1, which requires the maintenance of minimum net capital and that the ratio of aggregate indebtedness to
net capital, both as defined, shall not exceed 15 to 1. At December 31, 2014, SBS had net capital of $22,807,796 which was $22,557,796, in excess of its required net capital and its ratio
of aggregate indebtedness to net capital was 0.16 to 1. SBS claims exemption from the reserve requirements
under Section 15c3-3(k)(2)(ii).
NOTE G - COMMITMENTS
SBS rents office space under long-term
operating leases expiring through 2026. These leases call for base rent plus escalations for property taxes and other operating
expenses.
SBSF rents office space under long-term operating leases expiring
through 2020. These leases call for base rent plus escalations for property taxes and other operating expenses. Future minimum
base rent under these operating leases as of December 31, 2014 are as follows:
|
|
|
|
|
December 31, 2014
|
|
Amount
|
|
2015
|
|
$
|
1,043,000
|
|
2016
|
|
|
886,000
|
|
2017
|
|
|
639,000
|
|
2018
|
|
|
627,000
|
|
2019
|
|
|
587,000
|
|
Thereafter
|
|
|
185,000
|
|
|
|
$
|
3,967,000
|
|
Rent expense, including taxes and operating
expenses for 2015, 2014 and 2013 amounted to $1,055,944, $1,186,967 and $1,088,755, respectively.
In prior years, SBS purchased leasehold
improvements of approximately $620,000 which were reimbursed by the landlord. SBS recorded such reimbursement as a credit to deferred
rent liability, which is being recognized as a reduction of rental expense on a straight-line basis over the term of the lease.
Rent expense is being charged to operations
on a straight-line basis resulting in a deferred rent liability which, including the reimbursement discussed above amounted to $549,287 at December 31, 2014.
SIEBERT BRANDFORD SHANK FINANCIAL, LLC AND SUBSIDIARY
Notes to Financial Statements
NOTE H - ACCOUNTS PAYABLE AND ACCRUED
EXPENSES
Accounts payable and accrued expenses
consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
|
|
$
|
313,285
|
|
Accrued bonus and other employee compensation
|
|
|
|
|
|
|
4,233,521
|
|
Other accrued expenses
|
|
|
|
|
|
|
200,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,747,648
|
|
NOTE I - OTHER
During each of 2015, 2014, 2013 SBS was
charged $100,000 by Siebert for general and administrative services.
SIGNATURES
Pursuant to the requirements of Section
13 or 15(d) 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.
SIEBERT FINANCIAL CORP.
|
|
|
|
By:
|
/s/ Joseph M. Ramos, Jr.
|
|
|
Joseph M. Ramos, Jr.
|
|
|
Executive Vice President, Chief Operating Officer, Chief Financial Officer and Secretary
|
|
|
(principal executive, financial and accounting officer)
|
|
|
|
|
Date:
|
March 30, 2016
|
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
|
|
|
|
|
Name
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
Executive Vice President, Chief Operating Officer and Chief Financial Officer and Secretary (principal financial
and accounting officer)
|
|
|
/s/ Joseph M. Ramos, Jr.
|
|
|
March 30, 2016
|
Joseph M. Ramos, Jr.
|
|
|
|
|
|
|
|
|
/s/ Patricia L. Francy
|
|
Director
|
|
March 30, 2016
|
Patricia L. Francy
|
|
|
|
|
|
|
|
|
|
/s/ Jane H. Macon
|
|
Director
|
|
March 30, 2016
|
Jane H. Macon
|
|
|
|
|
|
|
|
|
|
/s/ Robert P. Mazzarella
|
|
Director
|
|
March 30, 2016
|
Robert P. Mazzarella
|
|
|
|
|
|
|
|
|
|
/s/ Nancy Peterson Hearn
|
|
Director
|
|
March 30, 2016
|
Nancy Peterson Hearn
|
|
|
|
|
|
|
|
EXHIBIT INDEX
|
|
|
|
Exhibit No.
|
|
Description Of Document
|
|
|
|
2.1
|
|
Plan and Agreement of Merger between J. Michaels, Inc. (“JMI”) and Muriel Siebert Capital Markets Group, Inc.
(“MSCMG”), dated as of April 24, 1996 (“Merger Agreement”) (incorporated by reference to Siebert Financial
Corp.’s Annual Report on Form 10-K for the fiscal year ended December 31, 1996)
|
|
|
|
2.2
|
|
Amendment No. 1 to Merger Agreement, dated as of June 28, 1996 (incorporated by reference to Siebert Financial Corp.’s
Annual Report on Form 10-K for the fiscal year ended December 31, 1996)
|
|
|
|
2.3
|
|
Amendment No. 2 to Merger Agreement, dated as of September 30, 1996 (incorporated by reference to Siebert Financial Corp.’s
Annual Report on Form 10-K for the fiscal year ended December 31, 1996)
|
|
|
|
2.4
|
|
Amendment No. 3 to Merger Agreement, dated as of November 7, 1996 (incorporated by reference to Siebert Financial Corp.’s
Annual Report on Form 10-K for the fiscal year ended December 31, 1996)
|
|
|
|
3.1
|
|
Certificate of Incorporation of Siebert Financial Corp., formerly known as J. Michaels, Inc. originally filed on April
9, 1934, as amended and restated to date (incorporated by reference to Siebert Financial Corp.’s Annual Report on Form
10-K for the fiscal year ended December 31, 1997)
|
|
|
|
3.2
|
|
By-laws of Siebert Financial Corp. (incorporated by reference to Siebert Financial Corp.’s Registration Statement
on Form S- 1 (File No. 333-49843) filed with the Securities and Exchange Commission on April 10, 1998)
|
|
|
|
10.1**
|
|
Siebert Financial Corp. 1998 Restricted Stock Award Plan (incorporated by reference to Siebert Financial Corp.’s
Annual Report on Form 10-K for the fiscal year ended December 31, 1997)
|
|
|
|
10.2**
|
|
Siebert Financial Corp. 1997 Stock Option Plan (incorporated by reference to Siebert Financial Corp.’s Annual Report
on Form 10-K for the fiscal year ended December 31, 1996)
|
|
|
|
10.3
|
|
Siebert, Brandford, Shank & Co., LLC Operating Agreement, among Siebert, Brandford, Shank & Co., L.L.C., Muriel
Siebert & Co., Inc., Napoleon Brandford III and Suzanne F. Shank, dated as of March 10, 1997 (incorporated by reference
to Siebert Financial Corp.’s Annual Report on Form 10-K for the fiscal year ended December 31, 1996)
|
|
|
|
10.4
|
|
Services Agreement, between Siebert, Brandford, Shank & Co., L.L.C. and Muriel Siebert & Co., Inc., dated as of
March 10, 1997 (incorporated by reference to Siebert Financial Corp.’s Annual Report on Form 10-K for the fiscal year
ended December 31, 1996)
|
|
|
|
10.5
|
|
Operating Agreement of SBS Financial Products Company, LLC, dated effective as of April 19, 2005, by and among Siebert
Financial Corp., Napoleon Brandford III and Suzanne Shank. (incorporated by reference to Siebert Financial Corp.’s Current
Report on Form 8-K filed with the Securities and Exchange Commission on May 17, 2005)
|
|
|
|
10.6**
|
|
Siebert Financial Corp. 2007 Long-Term Incentive Plan (incorporated by reference to Siebert Financial Corp.’s Registration
Statement on Form S-8 (File No. 333-144680) filed with the Securities and Exchange Commission on July 18, 2007)
|
|
|
|
10.7*
|
|
Fully Disclosed Clearing Agreement, by and between National Financial Services LLC and Muriel Siebert & Co., Inc.
dated May 5, 2010. (incorporated by reference to Siebert Financial Corp.’s Quarterly Report on Form 10-Q filed with
the Securities and Exchange Commission on August 16, 2010)
|
|
|
|
21
|
|
Subsidiaries of the registrant (incorporated by reference to Siebert Financial Corp.’s Annual Report on Form 10-K
for the year ended December 31, 2001)
|
|
|
|
23
|
|
Consent of Independent Auditors
|
|
|
|
31.1
|
|
Certification of Joseph M. Ramos, Jr. pursuant to Securities 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
|
|
*
|
Portions of the indicated document have been afforded confidential
treatment and have been filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the General Rules and Regulations promulgated under the Securities
Exchange Act of 1934, as amended.
|
|
**
|
Management contract or compensatory plan or arrangement.
|
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