Siebert Financial Corp. • 2007 Annual Report SIEBERTFor more than 40 years, the Siebert name and brand have stood for integrity, innovation andcustomer service in the financial services industry. Founded in 1969 by Muriel Siebert, whoin 1967 became the first woman member of the New York Stock Exchange, our firm becamea discount broker on May 1, 1975, the first day it was permitted, and was also an earlyprovider of online brokerage services. Today, we are recognized as the country’s most promi-nent Woman-Owned Business Enterprise in the capital markets industry. In 2007, Siebert reaped the benefits of an unswerving focus on conservative business prin-ciples as macro economic events raised investor concerns about safety and soundness. In thisenvironment, our reputation for putting safety first became an even more valuable asset. Ourrevenues increased and we continued to invest in our future growth through development ofour new online trading platform and additional features we determined were required priorto making it generally available. Even as we enhance our Web-based business, we continueto strengthen personal relationships with our customers by offering those who prefer one-on-one interaction the services of professional registered representatives, both over the phoneand at our seven branch offices. We made further progress in our institutional brokerage andinvestment banking areas, participating in equity and debt underwritings and stock buybacksfor leading companies and adding new clients. Through our affiliate, Siebert BrandfordShank, L.L.C. we solidified our top ranking among women and minority owned municipalbond underwriters. At Siebert, our mission is the pursuit and delivery of value – both for our shareholders andfor our clients. Our focus is to drive growth by playing to our traditional strengths in selectareas of activity, while making continual advancements in our approach to take advantage ofever-evolving opportunities in the brokerage and capital markets areas. In this way, weremain true to the principles that have guided us and are well-positioned for the future.Advancing Our Vision In AChanging MarketplaceSIEBERTFINANCIALCORP. May 2008DearFellow Shareholders: Against the backdrop of a slowing economy and credit crunch spawned by the subprime mortgagemeltdown, the equity markets experienced extreme volatility during 2007, with swings as wide as 300points not uncommon in a single trading day.Concern about a lack of clear direction from the markets and the economy caused some individualinvestors to retreat to the sidelines. Nonetheless, we achieved significant progress on many fronts, cap-italizing on our strengths in retail and institutional brokerage, investment banking and underwriting.Financial PerformanceYour Company delivered positive earnings results throughout the year. Total 2007 revenue was $33.9million, up $5.1 million, or 17.7 percent, from 2006. Net income of $2.3 million, or $.10 cents pershare was a decrease of 34.1 percent over 2006 net income of $3,425,000 or $.15 per share. Netincome was reduced partly due to our ongoing investment in future growth through development ofour new online trading platform. This includes expenditures related to new features that are still being developed.Intuit Lawsuit UpdateAs you know, Siebert commenced a lawsuit against Intuit, Inc., in 2003 seekingexpenses and damages arising from the Joint Brokerage Service conductedunder the Strategic Alliance Agreement between Siebert and Intuit. Intuitcounterclaimed against Siebert for expenses and damages. Despite ourstrong belief in our case, your Company agreed to enter into a Stipulationand Order of Dismissal with Prejudice with Intuit, thus terminating thelitigation in October 2007 without any payments by either party. The par-ties also exchanged general releases. As a result of the settlement,$2,024,000 of liabilities recorded by Siebert for expenses prior to December31, 2003, were reversed in the fourth quarter of 2007. Siebert made the deci-sion to focus our time and resources on growing your Company as opposed tocontinuing the enormous costs incurred by lengthy and protracted litigation.Retail Brokerage ServicesOngoing announcements of much larger than anticipated subprime mortgage lossesincurred by banks, Wall Street firms and others caused investors to question the safety oftheir brokerage assets.Due to the fact that I have always run the firm conservatively, placing safety first, we wereable to speak from a very strong position regarding the issues of account protection andsafety of assets.We clear on a fully disclosed basis through National Financial Services LLC (NFS), aFidelity Investments company. NFS clears our clients’trades and is in custody of their accounts. In addition to account protection coverage required of all broker-dealers from the SecuritiesInvestment Protection Corp., National Financial has arranged for additional protection for cash and cov-ered securities to supplement its SIPC coverage. This additional protection is provided under a suretybond issued by the Customer Asset Protection Company (CAPCO), a licensed Vermont insurer with anA+ financial strength rating from Standard and Poor’s. NFS’excess-SIPC protection covers total accountnet equity for cash and securities in excess of the amounts covered by SIPC, for accounts of broker-deal-ers that clear through NFS. There is no specific dollar limit to the protection that CAPCO provides oncustomer accounts held at NFS. This provides Siebert clients the highest level of account protection avail-able in the brokerage industry.We maintain a solid foundation. Our balance sheet is strong and we have no investments in collateralizeddebt obligations or similar instruments. As a matter of policy, we do not take proprietary positions insecurities or make markets. In addition, we continue to differentiate ourselves through our:Competence— Our representatives can work large and sensitive orders through multiple electronic chan-nels as well as on the floor of the New York Stock Exchange; manage complex and advanced optionsstrategies; and direct orders to preferred market centers or electronic communications networks. Our pro-fessionals have access to the trading tools and technology that have become essential resources in anevolving world of high-speed electronic transactions.Customer Service— In an increasingly digital world, we provide investors a choice of whether to tradewith us online or through our professional, licensed registered representatives. We believe investorsdeserve to be treated as valued clients rather than anonymous account numbers and we aim to stand outfrom the crowd by consistently demonstrating that with every opportunity we have. Account Extras— In addition to the highest available level of account protection in the brokerage indus-try, we offer a choice of competitive taxable or tax-exempt money funds and margin interest rates amongthe lowest in the industry.We have often received recognition for our online brokerage service in surveys by independent industrypublications, such asKiplinger’sand Barron’s. As with our offline customers, we offer our online cus-tomers commissions and margin rates that are negotiable according to activity and/or account size. Webelieve our independent research offering is superior to much of the competition’s, with multiple third-party sources of analysts’opinions, real-time news and research updates and four third-party automatedstock selection systems. During 2007, we paused in our planned site development to add an enhanced security feature that willhelp us keep ahead of the curve on cyber-crime, unfortunately, an ever-increasing reality of today’s busi-ness environment. Besides other new features – for example, informative order tickets displaying posi-tions, balances and order status as well as real-time quotes, charts and news – the addition of this securi-ty feature delayed our planned roll-out. While we have excellent suppliers, this is a complex undertakingand the first time we have developed our own trading site. We are gratified that the new platform hasbegun a limited roll-out to clients and early feedback is generally positive. Going forward, we aim to position ourselves as the broker that provides a choice of excellence throughboth the electronic venue and highly professional human resources. We see this as the basis for an evenmore compelling value proposition and continued growth in our retail brokerage business. Siebert Capital MarketsThe Siebert Capital Markets (SCM) division provides high-quality brokerage services to institutionalclients and investment-banking services to corporations. Backed by the latest information technology andsystems, our traders and investment bankers offer value-added services to some of the nation’s largestinvestment managers, corporations and public retirement systems.The division continued to expand its business in 2007, acting as co-manager or underwriter in more than$107 billion of global debt and equity offerings. SCM participated in debt and equity transactions for over30 U.S. companies in 2007, including AT&TInc., Bank of America Corp., The Blackstone Group L.P.,IBM Corp., Kraft Foods, Inc., JPMorgan Chase & Co., Verizon Communications, Inc., and Wal-MartStores, Inc. As a result of these underwritings, Siebert retail clients have access to new issue debt andequity securities including corporates, preferreds and more.The division continues to add seasoned professionals to grow its business. On the institutional brokerageside, the trading department continues to bolster its electronic execution capabilities, resulting in a sig-nificant increase in its corporate share repurchase business.Municipal Underwriting Muriel Siebert and Co., Inc. owns 49 percent of Siebert Brandford Shank & Co., L.L.C. (SBS), whichhad Member’s Capital of approximately $9.9 million at the end of 2007. SBS has ranked in the top 25book-running senior-managing municipal bond underwriters for the past seven years. It is presentlyranked 18th and is also the nation’s number one book-running senior-managing municipal bond under-writer among woman and minority-owned firms. In 2007, SBS acted as book-running senior manager on over $4.7 billion in municipal financings and co-managed over $75 billion. Senior-managed deals included $1.5 billion for the New York City MunicipalWater; $903 million for Houston Combined Utility System; $828 million for the State of Connecticut;$793 million for Philadelphia Water & Wastewater; and $676 million for the City of Newark HousingAuthority. Siebert’s financial statements report only on its 49 percent share of earnings and retained earn-ings of SBS.SBS continues to have considerable and growing value as a corporate asset. In addition, our retail bro-kerage clients gain an advantage through our affiliation with SBS, a relationship that gives them accessto new-issue municipal securities at initial public offering prices.Stock Buy BackOn May 15, 2000, the Board of Directors of the Company authorized a buy back of up to one millionshares of our common stock. Under this program, shares are purchased from time to time, at our discre- tion, in the open market and in private transactions. We have so far purchased 999,500 shares of our com-mon stock and 500 additional shares of our common stock may still be purchased under this program.On January 23, 2008, the Board of Directors of the Company authorized a buy back of up to 300,000shares of common stock. Shares will be purchased from time to time in the open market and inprivate transactions.Dividend DeclarationOn June 4, 2007, the Company declared a dividend of twelve cents per share on its common stock, whichwas paid on June 29, 2007, to shareholders of record at the close of business on June 20, 2007.Chairwoman and majority shareholder, Muriel F. Siebert waived her right to receive the dividend inexcess of the aggregate amount of dividend to be paid to other shareholders. As a result she received adividend of approximately $280,000 as compared to the amount of approximately $2.4 million that wouldhave been paid on her total holdings. The remaining waived amount of approximately $2.1 million willbe retained by the company as capital available for use in its business.Ms. Siebert and our Board of Directors intend to consider the payment of a regular annual dividend dur-ing the second quarter of each year based on earnings, capital requirements, economic forecasts and othersuch factors as are deemed relevant. Some portion of the Company’s earnings will be retained to providecapital for the operation and expansion of its business.AStrong FoundationWe continue to operate on conservative business principles. Our balance sheet remains sound, with $48million in assets at year-end, of which $36 million, or 76 percent, is in cash or cash equivalents, and nodebt, positioning us well for further growth and expansion. Our commitment to providing the best dis-count brokerage services is absolute, as is our dedication to integrity. We continue to pursue potentialopportunities throughout our core and ancillary businesses. We look forward to building on this strongfoundation, as we begin another year of shared progress and achievement, continuing to enhance thevalue and extend the scope of your Company. Thank you for your support,Muriel SiebertChairwoman, President and Chief Executive OfficerP.S. We encourage all shareholders to take advantage of the Shareholder Discount Program throughwhich holders of at least 100 Siebert shares can receive a 10 percent commission discount plus two freetrades per year. For specific details, contact James Burzynski, Manager, New Accounts, at 800-872-0711and identify yourself as a shareholder. The New Accounts Department is open from 7:30 a.m. to 7:30 p.m.ET, Monday – Friday. UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
⌧ ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2007
(cid:134) TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to __________
Commission file number 0-5703
Siebert Financial Corp.
(Exact name of registrant as specified in its charter)
New York
(State or other jurisdiction of
incorporation or organization)
885 Third Avenue, New York, New York
(Address of principal executive offices)
11-1796714
(I.R.S. Employer
Identification No.)
10022
(Zip Code)
(212) 644-2400
Registrant’s telephone number
Securities registered under Section 12(b) of the Exchange Act:
Title of each class
NONE
Name of each exchange on which registered
NONE
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of class)
Indicate by checkmark if the registrant is a well known seasoned issuer, as defined in Rule 405 of the Securities Act. YES (cid:134) NO ⌧
Indicate by checkmark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
YES (cid:134) NO ⌧
Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. YES ⌧ NO (cid:134)
Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. (cid:134)
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller
reporting company. (See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act). Large accelerated filer (cid:134) Accelerated filer (cid:134) Non-accelerated filer (cid:134) Smaller reporting company ⌧
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2). YES (cid:134) NO ⌧
The number of shares of the Registrant’s outstanding Common Stock, as of March 11, 2008, was 23,214,132 shares. 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 Stock Market as of the last business day of the registrant’s most recently completed second fiscal
quarter (June 30, 2007), was $8,795,338.
Documents Incorporated by Reference: Proxy Statement to be filed pursuant to Regulation 14A of the Exchange Act on or
before April 29, 2008, incorporated by reference into Part III.
Special Note Regarding Forward-Looking Statements
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 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
equity 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.
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PART I
Item 1. BUSINESS
General
Siebert Financial Corp. (the “Company”) is a holding company that conducts its retail discount brokerage and investment
banking business through its wholly-owned subsidiary, Muriel Siebert & Co., Inc., a Delaware corporation (“Siebert”). Muriel Siebert,
the first woman member of the New York Stock Exchange, is our Chairwoman and President and owns approximately 90% of our
outstanding common stock, par value $.01 per share (the “Common Stock”).
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, where you are able to obtain
copies of the Company’s public filings free of charge. Our Common Stock trades on the Nasdaq Global Market under the symbol
“SIEB”.
Business Overview
Siebert’s principal activity is providing Internet and traditional discount brokerage and related services to retail investors and,
through its wholly owned subsidiary, Siebert Woman’s Financial Network, Inc (“WFN”), engages in providing products, services and
information all uniquely devoted to woman’s financial needs. Through its Capital Markets division, Siebert also offers institutional
clients equity execution services on an agency basis, as well as equity and fixed income underwriting and investment banking
services. We believe that we are the largest Woman-Owned Business Enterprise (“WBE”) in the capital markets business in the
country. In addition, Siebert, Brandford, Shank & Co., LLC (“SBS”), a company in which Siebert holds a 49% ownership interest, is
the largest Minority and Women’s Business Enterprise (“MWBE”) in the tax-exempt underwriting business in the country.
The Retail Division
Discount Brokerage and Related Services. Siebert became a discount broker on May 1, 1975, a date that would later come
to be known as “May Day.” 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 and competitive with the national discount brokerage
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 MarketPhone services, 24-hour
access is available to customers.
Independent Retail Execution Services. Siebert and our clearing agent 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 listed orders are routed by its clearing agent in a manner intended to afford its customers the opportunity for price
improvement on all orders. Siebert’s over the counter orders are executed by its clearing agent through a network of Nasdaq market
makers with no single market maker executing all trades. The firm also offers customers execution services through ARCA, Reuters’
Instinet™ systems and other electronic communication networks (“ECNs”)for an additional fee. These systems give customer’s access
to all ECNs before and after regular market hours. Siebert believes that its over-the counter executions consistently afford its
customers the opportunity for price improvement.
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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 presently has retail offices in New York, New York, Jersey City, New Jersey, Boca Raton, Surfside, Palm Beach and
Naples, 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. Customers margin accounts are carried through Siebert’s clearing agent 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 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 its clearing agents 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, accounts are monitored closely until their payment obligation is completed; if the
customer does not meet the commitment, steps are taken 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 LLC (“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 networks. Browser based access and other types of data communications are also
utilized and consumed by Siebert’s systems. 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 of 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 3rd Avenue, Suite 1720, New York, NY 10022.
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Current Developments
Siebert commenced a lawsuit against Intuit, Inc. (“Intuit”) in 2003 seeking expenses and damages arising from the Joint
Brokerage Service conducted under the Strategic Alliance Agreement between Siebert and Intuit. Intuit counterclaimed against Siebert
for expenses and damages. A Stipulation and Order of Dismissal with Prejudice entered into by the parties was filed in October 2007,
terminating the litigation without any payments by either party. The parties also exchanged general releases. As a result of the
settlement, $2,024,000 of liabilities recorded by Siebert for expenses prior to December 31, 2003, were reversed in the fourth quarter
of 2007.
Siebert terminated the fully disclosed clearing agreement (the “Clearing Agreement”) with Pershing LLC (formerly the
Pershing division of Donaldson, Lufkin & Jenrette Securities Corporation) (“Pershing”) in 2003. Based on consultation with counsel,
Siebert believes that the $1,500,000 that it advanced to Pershing in January 2003 should have been returned and that Pershing may be
liable for damages. Pershing expressed its belief that it was entitled to retain the advance and receive a minimum of $3 million for its
unreimbursed costs, a termination fee of $500,000 and $5 million for lost revenues. Siebert received a release for the $3 million
related to disputed claims for unreimbursed fees and costs. In 2004, Siebert decided not to commence proceedings against Pershing
and charged off the $1,500,000 advance to Pershing. Siebert believes the Pershing claims are without merit and that the ultimate
outcome of this matter will not have a material adverse effect on the Company’s results of operations or financial position.
On January 23, 2008, our board of directors authorized the repurchase of up to 300,000 shares of our common stock. Shares
will be purchased from time to time, in our discretion, in the open market and in private transactions. We intend to continue acquiring
shares pursuant to our stock repurchase program based upon the price of the stock and in accordance with applicable rules and
regulations.
The Capital Markets Division
In 1991, Siebert created its Capital Markets Group (“SCM”) division, which serves as a co-manager, underwriting syndicate
member, or selling group member on a wide spectrum of securities offerings for corporations and Federal agencies.
Principal activities of the Capital Markets Division are investment banking and institutional equity execution services. SCM
provides high-quality brokerage service to both institutional investors and issuers of equity and fixed-income securities.
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During 1996, Siebert formed the Siebert, Brandford, Shank division of the investment banking group to enhance Siebert’s tax
exempt underwriting activities. The operations of the Siebert, Brandford, Shank division were moved on July 1, 1998, to a newly
formed entity, SBS. Two individuals, Mr. Napoleon Brandford and Ms. Suzanne F. Shank, own 51% of the equity and are entitled to
51% of the net profits of SBS and Siebert is entitled to the balance. Through its investment in SBS, Siebert has become a more
significant factor in the tax exempt underwriting area, and expects to enhance its government and institutional relationships, as well as
the breadth of products that can be made available to retail clients. During 2007, SBS served as the lead manager of over $4 billion of
negotiated municipal new issues and served as a co-manager in over $75 billion of negotiated municipal new issues.
Since its inception, the Siebert, Brandford, Shank division and its successor SBS have co-managed offerings of
approximately $504 billion and lead managed offerings of approximately $21 billion. Clients include the States of California, Texas,
Washington, Ohio and Michigan and the Cities of Chicago, Detroit, Los Angeles, Houston, Dallas, Denver and St. Louis.
We entered into an Operating Agreement, effective as of April 19, 2005 (the “Operating Agreement”), with Suzanne Shank
and Napolean Brandford III, the two individual principals of SBS ( the “Principals”) of SBS Financial Products Company LLC, a
Delaware limited liability company (“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. Income from SBSFPC is considered to be integral to our operations.
SBS operates out of offices in New York, Seattle, Houston, Chicago, Detroit, Los Angeles, Washington, DC, San Antonio,
Anchorage, Miami and Dallas, Atlanta, Weehawken, San Diego and Baton Rouge.
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.
Advertising, Marketing and Promotion
Siebert develops and maintains its retail customer base through printed advertising in financial publications, broadcast
commercials over national and local cable TV channels, as well as promotional efforts and public appearances by Ms. Siebert.
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. The reduced volume of trading starting in early 2001 is leading to consolidation in the industry in both the online and
traditional brokerage business. 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 as they expand their
product lines. 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 such 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.
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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 and investment advisers. 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 or an investment adviser, its officers or its employees.
On March 4, 2005, Siebert consented without admitting or denying guilt to a $45,000 fine and censure by the NYSE due to
findings of books-and-records, financial, operational and supervisory deficiencies. This action was based on technical record keeping
and administrative deficiencies and there were no complaints from and no losses to any Siebert customers. As the NYSE expressly
noted, Siebert had no prior disciplinary history in its 37 years in business.
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 $100,000 on claims for cash
balances. The SIPC is funded through assessments on registered broker-dealers. In addition, Siebert, through it’s clearing agent, 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 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. Siebert is a member firm of the NYSE and FINRA. 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.
-7-
Under applicable regulations, Siebert is required to maintain regulatory net capital of at least $250,000. At December 31,
2007 and 2006, Siebert had net capital of $29.5 million and $27.7 million, respectively. Siebert claims exemption from the reserve
requirement under Section 15c3-3(k)(2)(ii).
Employees
As of March 11, 2008, we had approximately 90 employees, six of whom were corporate officers. None of our employees is
represented by a union, and we believe that relations with our employees are good.
Item 1A. RISK FACTORS
Securities market volatility and other securities industry risk could adversely affect our business
Our principal business activities include discount retail broker-dealer operations, as well as investment banking, institutional
sales and other related business lines. 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. The varied risks associated with our business and the securities industry in general
could adversely affect our commission and other revenues. A reduction in our revenues or a loss resulting from our underwriting or
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 adversely affecting the price of our common stock.
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
and underwriting positions. 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 discount 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. Siebert’s equity investee, SBS, a municipal bond underwriter, also encounters significant competition from firms engaged in
the municipal finance business. The general financial success of the securities industry over the past several years and the price wars
encountered and lower commission rates in the discount brokerage business in general have strengthened our existing 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 as they expand their product
lines. 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.
-8-
During 2007, competition continued to intensify both among all classes of brokerage firms and within the discount brokerage
business as well as from consolidation in the discount brokerage industry. Some competitors in the discount brokerage business offer
services which we do not, including financial advice and investment management. In the last two years, 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 Untied States, such as the SEC, the NYSE, FINRA and
the Municipal Securities Rulemaking Board (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.
Siebert, as a registered broker-dealer and FINRA member organization, 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 $100,000 on claims for cash
balances. SIPC is funded through assessments on registered broker-dealers. In addition, Siebert, through its clearing agent, has
purchased from private insurers additional account protection in the event of liquidation up to the net asset value, as defined by SIPC,
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 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.
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.
-9-
We are subject to net capital requirements.
The SEC, the NYSE 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 of 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 to 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 have
established policies with respect to maximum purchase commitments for new customers or customers with inadequate collateral to
support a requested purchase. However, our managers have some flexibility in the allowance of certain transactions. When
transactions occur outside normal guidelines, these accounts are monitored until their payment obligation is completed. If the
customer does not meet the commitment, we take steps to close out the position in an attempt to minimize losses.
We have personnel specifically responsible for monitoring all customer positions for the maintenance of required collateral.
These personnel also monitor accounts that may be concentrated in one or more securities whereby a significant decline in the value of
a particular security could reduce the value of the account’s collateral below the account’s loan obligation. While we have not had
significant credit losses in the last five years, we cannot assure you that the policies and procedures we have established will be
adequate to prevent a significant credit loss.
We face risks relating to our investment banking activities.
Certain risks are involved in the underwriting of securities. Investment banking and underwriting syndicates agree to
purchase securities at a discount from the public offering price. If the securities must be sold below the syndicate cost, an underwriter
is exposed to losses on the securities that it has committed to purchase. In the last several years, investment banking firms increasingly
have 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. While municipal securities
are exempt from the registration requirements of the Securities Act, underwriters of municipal securities are exposed to substantial
potential liability for material misstatements or omissions of fact in the offering documents prepared for these offerings.
An increase in volume on our systems or other events could cause them to malfunction.
We presently receive and process up to 65% 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. We cannot assure you 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.
-10-
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. Registered representatives equipped with online computer terminals can access customer account
information, obtain securities prices and related information and enter and confirm orders online.
To support our customer service delivery systems, as well as other applications such as clearing functions, account
administration, record keeping and direct customer access to investment information, we maintain a computer network in New York
City. Through our clearing agent, our computers are also linked to the major registered U.S. securities exchanges, the National
Securities Clearing Corporation and the Depository Trust Company. Failure of the 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 is principally dependent on our founder, Muriel F. Siebert, Chairwoman, Chief Executive Officer and
President and our senior management. In addition, the continued success of SBS may be dependent on the services of Napoleon
Brandford III and Suzanne Shank. The loss of the services of any of these individuals could significantly harm our business, financial
condition and operating results.
Our principal shareholder may control many key decisions.
Ms. Muriel Siebert currently owns approximately 90% of our outstanding common stock. Ms. Siebert will 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 Global Market, their can be no assurance that an active public market will
continue.
Item 1B. UNRESOLVED STAFF COMMENTS
None.
-11-
Item 2. PROPERTIES
Siebert currently maintains seven retail discount brokerage offices. Customers can visit the 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 seven leased offices:
Location
Corporate Headquarters, Retail and
Investment Banking Office
885 Third Ave.
New York, NY 10022
Retail Offices
9701 Wilshire Boulevard, Suite 1111
Beverly Hills, CA 90212
4400 North Federal Highway
Boca Raton, FL 33431
111 Pavonia Avenue(1)
Jersey City, NJ 07310
400 Fifth Avenue – South
Naples, FL 33940
1217 South Flager Drive, 3rd Floor
West Palm Beach, FL 33401
9569 Harding Avenue
Surfside, FL 33154
Approximate
Office Area in
Square Feet
Expiration Date
of
Current Lease
Renewal
Terms
7,828
1/14/11
None
1,200
10/31/10
None
2,438
5/31/09
None
7,768
6/30/09
None
1,008
4/30/08
None
3,000
9/30/12
None
1,150
8/30/10
None
(1)
Certain of our administrative and back office functions are performed at this location.
We believe that our properties are in good condition and are suitable for our operations.
Item 3. LEGAL PROCEEDINGS
We are involved in various routine lawsuits of a nature we deem to be customary and incidental to our business. In the
opinion of our management, the ultimate disposition of such actions will not have a material adverse effect on our financial position or
results of operations.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
No matter was submitted to a vote of shareholders during the fourth quarter of the fiscal year ended December 31, 2007.
-12-
PART II
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
Our common stock trades on the Nasdaq Stock Market under the symbol “SIEB”. The high and low sales prices of our
common stock reported by Nasdaq during the following calendar quarters were:
First Quarter - 2006 ......................................................................................................................................
High
$ 2.88
Second Quarter - 2006 ..................................................................................................................................
$ 2.99
Third Quarter - 2006 .....................................................................................................................................
$ 2.95
Fourth Quarter - 2006 ...................................................................................................................................
$ 5.70
First Quarter – 2007 ......................................................................................................................................
$ 4.50
Second Quarter – 2007 .................................................................................................................................
$ 5.37
Third Quarter – 2007 ....................................................................................................................................
$ 4.50
Fourth Quarter – 2007 ..................................................................................................................................
$ 5.76
January 1, 2008 - March 20, 2008 ................................................................................................................
$ 4.00
Low
2.39
2.35
2.35
2.75
3.26
3.37
3.06
3.13
3.00
$
$
$
$
$
$
$
$
$
On March 20, 2008, the closing price of our common stock on the Nasdaq Global Market was $3.16 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 20, 2008.
Dividend Policy
On June 4, 2007, the Board of Directors declared a dividend of twelve cents per share on our common stock, which was paid
on June 29, 2007 to shareholders of record at the close of business on June 20, 2007. The total amount paid on this dividend
declaration was $559,232. Ms. Muriel Siebert, the Chief Executive Officer and majority shareholder waived the right to receive the
dividend in excess of the aggregate amount paid to other shareholders. Other shareholders were paid dividends of $279,616.
On August 9, 2006, the Board of Directors declared a dividend of eight cents per share on our common stock, which was paid
on August 30, 2006 to shareholders of record at the close of business on August 21, 2006. The total amount paid on this dividend
declaration was $359,048. Ms. Muriel Siebert, the Chief Executive Officer and majority shareholder waived the right to receive the
dividend in excess of the aggregate amount paid to other shareholders. Other shareholders were paid dividends of $179,524.
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.
-13-
Issuer Purchase Of Equity Securities
On May 15, 2000, our Board of Directors authorized a buy back of up to one million 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 purchases of
common stock were made during the fourth quarter of 2007. We have purchased 999,500 shares of our common stock under this
program and 500 shares of our common stock may yet be purchased under this program.
On January 23, 2008, our Board of Directors authorized the repurchase of up to 300,000 shares of our common stock. Shares
will be purchased from time to time, in our discretion, in the open market and in private transactions. We intend to continue acquiring
shares pursuant to our stock repurchase program based upon the price of the stock and in accordance with applicable rules and
regulations.
The following table sets forth information as of December 31, 2007 with respect to our equity compensation plans.
Equity Compensation Plan Information
Plan Category
Number of Securities to be
issued upon exercise of
outstanding options,
warrants and rights
(a)
Weighted-
average
exercise price of
outstanding
options,
warrants and
rights
(b)
Number of Securities
remaining available for
issuance under equity
compensation plans
(excluding securities
reflected in column (a))
(c)
Equity compensation plans approved by security
holders(1) ................................................................
1,467,200
$ 4.28
2,000,000
Equity compensation plans not approved by security
holders(2) ................................................................
41,400
Total ..........................................................................
1,508,600
—
$ 4.28
18,600
2,018,600
(1)
(2)
Represents our 2007 Long-Term Incentive Plan.
Represents our 1998 Restricted Stock Award Plan.
Material Terms of the 1998 Restricted Stock Award Plan
Our 1998 Restricted Stock Award Plan provides for awards to key employees of not more than an aggregate of 60,000 shares of our
common stock, subject to adjustments for stock splits, stock dividends and other changes in our capitalization, to be issued either
immediately after the award or at a future date. As of December 31, 2007, 41,400 shares of our common stock under the Restricted
Stock Award Plan had been awarded and were outstanding. As provided in the plan and subject to restrictions, shares awarded may
not be disposed of by the recipients for a period of one year from the date of the award. Cash dividends on shares awarded are held by
us for the benefit of the recipients, subject to the same restrictions as the award. These dividends, without interest, are paid to the
recipients upon lapse of the restrictions.
-14-
Our Performance: The graph below compares our performance from December 31, 2002 through December 31, 2007, against the
performance of the Nasdaq Market Index and a peer group. The peer group consists of A.B. Watley Group Inc.,
Ameritrade Holding Corporation, E*Trade Group, Inc. and The Charles Schwab Corporation.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Siebert Financial Corp., The NASDAQ Composite Index
And A Peer Group
*
$100 invested on 12/31/02 in stock or index-including reinvestment of dividends.
Fiscal year ending December 31.
-15-
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.
Income statement data:
Total Revenues .........................................
Net income ................................................
Net income per share of common stock
Basic ......................................................
Diluted ...................................................
Weighted average shares outstanding
2007
2006
2005
2004
2003
$
$
$
$
33,914
2,258
0.10
0.10
$
$
$
$
28,818
3,425
0.15
0.15
$
$
$
$
29,323
1,863
0.08
0.08
$
$
$
$
26,392
533
0.02
0.02
$
$
$
$
22,796
123
0.01
0.01
(basic) ....................................................
22,206,346
22,129,566
22,093,369
22,113,228
22,305,369
Weighted average shares outstanding
(diluted) .................................................
22,273,550
22,252,851
22,127,940
22,276,562
22,453,538
Statement of financial condition data (at
year-end):
Total assets ................................................
Total liabilities excluding subordinated
borrowings .............................................
Stockholders’ equity .................................
$
$
$
47,924
5,704
42,220
$
$
$
46,869
6,460
40,409
$
$
$
43,027
5,975
37,052
$
$
$
41,560
6,460
35,100
$
$
$
40,026
4,891
35,135
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.
The uncertainty over the state of the economy due to the high price of oil and the increase of defaults relating to subprime
mortgages weighed on the markets in 2007 and continues to affect interest in buying stocks.
Competition continued 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 entered into an Operating Agreement, effective as of April 19, 2005 (the “Operating Agreement”), with Suzanne Shank
and Napolean Brandford III, the two individual principals of SBS ( the “Principals”) of SBS Financial Products Company LLC, a
Delaware limited liability company (“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. Income from SBSFPC is considered to be integral to our operation.
-16-
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.
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.
Siebert commenced a lawsuit against Intuit, Inc. (“Intuit”) in 2003 seeking expenses and damages arising from the Joint
Brokerage Service conducted under the Strategic Alliance Agreement between Siebert and Intuit. Intuit counterclaimed against Siebert
for expenses and damages. A Stipulation and Order of Dismissal with Prejudice entered into by the parties was filed in October 2007,
terminating the litigation without any payments by either party. The parties also exchanged general releases. As a result of the
settlement, $2,024,000 of liabilities recorded by Siebert for expenses prior to December 31, 2003, were reversed in the fourth quarter
of 2007.
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 effect the reported amounts of assets,
liabilities, revenues and expenses and the related disclosure of contigent 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, 2007 Compared To Year Ended December 31, 2006
Revenues. Total revenues for 2007 were $33.9 million, an increase of $5.1 million, or 17.7%, from 2006. Commission and
fee income increased $1.4 million, or 5.7%, from the prior year to $26.1 million due to an increase in institutional trading and the
commission recapture operations as well as increase in retail customer trading volumes offset slightly by a decrease in the average
commission charged per trade.
Investment banking revenues increased $1.7 million, or 97.7%, from the prior year to $3.4 million in 2007 due to our
participation in more new issues in the equity and debt capital markets.
-17-
Trading profits decreased $130,000, or 17.2%, from the prior year to $624,000 primarily due to decreased trading in
municipal, government and corporate bonds within our riskless trading group.
Siebert commenced a lawsuit against Intuit, Inc. (“Intuit”) in 2003 seeking expenses and damages arising from the Joint
Brokerage Service conducted under the Strategic Alliance Agreement between Siebert and Intuit. Intuit counterclaimed against Siebert
for expenses and damages. A Stipulation and Order of Dismissal with Prejudice entered into by the parties was filed in October 2007,
terminating the litigation without any payments by either party. The parties also exchanged general releases. As a result of the
settlement, $2,024,000 of liabilities recorded by Siebert for expenses prior to December 31, 2003, were reversed in the fourth quarter
of 2007.
Income from interest and dividends increased $131,000, or 8%, from the prior year to $1.8 million primarily due to higher
interest rates and higher cash balances.
Expenses. Total expenses for 2007 were $31.3 million, an increase of $4.6 million, or 17.2%, from the prior year.
Employee compensation and benefit costs increased $980,000 or 8.9%, from the prior year to $12.0 million primarily due to
an increase in commissions paid based on production offset by a decrease in health insurance and employment of temporary
employees.
Clearing and floor brokerage fees increased $490,000, or 9.4%, from the prior year to $5.7 million primarily due to an
increase in listed floor executions for institutional customers executed at the New York Stock Exchange and an increase in volume
relating to the commission recapture operation.
Professional fees increased $2.9 million, or 75.5% from the prior year to $6.7 million primarily due to an increase in legal
fees relating to the Intuit case and consulting fees relating to the our compliance with Sarbanes-Oxley.
Advertising and promotion expense decreased $195,000, or 21.2%, from the prior year to $725,000 primarily due to the
reduction in print advertising production in 2007 and the production and airing of television commercials in the Florida region in
2006.
Communications expense increased $306,000, or 17.9%, from the prior year to $2.0 million primarily due to an increase in
costs associated with our new website.
Occupancy costs increased $168,000, or 14.7%, from the prior year to $1.3 million principally due to the an increase in rent
in the Florida branches and New Jersey and California offices.
Other general and administrative expenses decreased $13,000, from the prior year to $2.9 million primarily due to a decrease
in depreciation and amortization expenses, employee placement fees, travel and entertainment costs and office expenses offset by
increases in printing, insurance and transportation costs.
Income from our equity investment in Siebert, Brandford, Shank & Co., LLC, an entity in which Siebert holds a 49% equity
interest (“SBS”), for 2007 was $1.4 million compared to income of $2.9 million for 2006, a decrease of $1.5 million or 51.8% from
the same period in 2006 primarily due to SBS participating in less municipal bond offerings especially in the last six months of the
year. SBS serves as an underwriter for municipal bond offerings. Income from our equity investment in SBS Financial Products
Company, LLC, an entity in which we hold a 33% equity interest (“SBSFPC”) for 2007, was $40,000 as compared to income of
$916,000, a decrease of $876,000 or 95.6% from the same period in 2006. This decrease was due to a decrease in the number and size
of the transactions. SBSFPC engages in derivatives transactions related to the municipal underwriting business. Income from equity
investees is considered to be integral to our operations and material to the results of operations.
Taxes. The provision for income taxes decreased by $711,000, or 28.6% from the prior year to $1.8 million due to a decrease
in net income before tax to $4.0 million in 2007 from $5.9 million in 2006.
Year Ended December 31, 2006 Compared To Year Ended December 31, 2005
Revenues. Total revenues for 2006 were $28.8 million, a decrease of $505,000, or 1.7%, from 2005. Commission and fee
income decreased $558,000, or 2.2%, from the prior year to $24.7 million primarily due to a decrease in commissions generated by the
commission recapture operations offset by increases in the institutional trading operations as well as retail customer operations.
Investment banking revenues decreased $668,000, or 28.2%, from the prior year to $1.7 million in 2006 due to our
participating in fewer new issues in the equity capital markets team.
-18-
Income from our equity investment in Siebert, Brandford, Shank & Co., LLC, an entity in which Siebert holds a 49% equity
interest (“SBS”), for 2006 was $2.9 million compared to income of $1.7 million, an increase of $1.2 million or 74.3% from the same
period in 2005. This increase was due to SBS participating in more managed and co-managed transactions as well as an increase
revenues from trading. SBS serves as an underwriter for municipal bond offerings. Income from our equity investment in SBS
Financial Products Company, LLC, an entity in which we hold a 33% equity interest (“SBSFPC”) for 2006, was $916,000 as
compared to income of $194,000, an increase of $722,000 or 372.2% from the same period in 2005. This increase was due to an
increase in the number and size of the transactions and the mark to market of the positions. SBSFPC engages in derivatives
transactions related to the municipal underwriting business.
Trading profits increased $52,000, or 7.4%, from the prior year to $754,000 primarily due to increased trading in municipal,
government and corporate bonds within our riskless trading group and the mark to market of our investment.
Income from interest and dividends increased $669,000, or 68.4%, from the prior year to $1.7 million primarily due to higher
interest rates and higher cash balances.
Expenses. Total expenses for 2006 were $26.7 million, a decrease of $1.3 million, or 4.5%, from the prior year.
Employee compensation and benefit costs decreased $450,000, or 3.9%, from the prior year to $11.0 million primarily due to
a decrease in headcount in customer service and new accounts departments, commission based on production and settlement of
employee related matters and termination of an executive officer in 2005.
Clearing and floor brokerage fees decreased $92,000, or 1.7%, from the prior year to $5.2 million primarily due to decreased
volume relating to the commission recapture business offset by an increase in fixed fees that are not related to volume that are charged
our clearing firm.
Professional fees decreased $498,000, or 11.6% from the prior year to $3.8 million primarily due to an decrease in legal fees
relating to litigation with Intuit and consulting fees relating to the commission recapture business.
Advertising and promotion expense increased $44,000, or 5.0%, from the prior year to $920,000 primarily due to the
production and airing of television commercials in the Florida region in the first quarter of 2006.
Communications expense decreased $17,000, or 1.0%, from the prior year to $1.7 million from actively pursuing alternative
vendors and utilizing new technologies.
Occupancy costs increased $93,000, or 8.8%, from the prior year to $1.2 million principally due to the an increase in
operating and utilities cost charged by the landlord in our Jersey City, New Jersey branch as well as our branches in the Florida region.
Other general and administrative expenses decreased $327,000, or 10.0%, from the prior year to $3.0 million primarily due to
a decrease in depreciation and amortization expenses, registration and exchange fees and costs relating to the institutional direct access
operations offset by increases in travel and entertainment and office supplies.
Taxes. The provision for income taxes increased by $1,134,000, or 84.0% from the prior year to $2.5 million due to an
increase in net income before tax to $5.9 million in 2006 from $3.2 million in 2005.
Liquidity and Capital Resources
Our assets are highly liquid, consisting generally of cash, money market funds and securities freely saleable in the open
market. Our total assets at December 31, 2007 were $48 million, of which, $36.3 million, or 76%, were regarded by us as highly
liquid.
Siebert is subject to the net capital requirements of the SEC, the NYSE and other regulatory authorities. At December 31,
2007, Siebert’s regulatory net capital was $29.5 million, $29.2 million in excess of its minimum capital requirement of $250,000.
Siebert terminated the fully disclosed clearing agreement (the “Clearing Agreement”) with Pershing LLC (formerly the
Pershing division of Donaldson, Lufkin & Jenrette Securities Corporation) (“Pershing”) in 2003. Based on consultation with counsel,
Siebert believes that the $1,500,000 that it advanced to Pershing in January 2003 should have been returned and that Pershing may be
liable for damages. Pershing expressed its belief that it was entitled to retain the advance and receive a minimum of $3 million for its
unreimbursed costs, a termination fee of $500,000 and $5 million for lost revenues. Siebert received a release for the $3 million
related to disputed claims for unreimbursed fees and costs. In 2004, Siebert decided not to commence proceedings against Pershing
and charged off the $1,500,000 advance to Pershing. Siebert believes the Pershing claims are without merit and that the ultimate
outcome of this matter will not have a material adverse effect on the Company’s results of operations or financial position.
-19-
Siebert has entered into a Secured Demand Note Collateral Agreement with SBS under which it is obligated to loan to SBS
up to $1.2 million pursuant to a secured promissory note on a subordinated basis. Amounts obligated to be loaned by Siebert under the
facility are reflected on our balance sheet as “cash equivalents - restricted”. SBS pays Siebert interest on this amount at the rate of 8%
per annum. The facility expires on August 31, 2009 at which time SBS is obligated to repay to Siebert any amounts borrowed by SBS
thereunder.
Below is a table that presents our obligations and commitments at December 31, 2007:
Contractual Obligations
Operating lease obligations
Total
$ 2,959,000
Less Than
1 Year
$ 1,105,000
1-3 Years
$ 1,786,000
3-5 Years
More Than
Five Years
$
68,000
$
0
Payment Due By Period
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Financial Instruments Held For Trading Purposes:
Through Siebert, we maintain inventories in exchange-listed and Nasdaq equity securities and municipal securities on both a
long and short basis. We did not have any short positions at December 31, 2007. The Company does not 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,
except for Siebert’s obligation under its Secured Demand Note Collateral Agreement of $1.2 million executed in favor of SBS. SBS
pays Siebert interest on this amount at the rate of 8% per annum. Siebert earned interest of $96,000 from SBS in each of the years that
Siebert’s commitment has been outstanding.
Financial Instruments Held For Purposes Other Than Trading:
Working capital is generally temporarily invested in dollar denominated money market funds and commercial paper. These
investments are not subject to material changes in value due to interest rate movements.
In the normal course of its business, Siebert enters into transactions in various financial instruments with off-balance sheet
risk. This risk includes both market and credit risk, which may be in excess of the amounts recognized in our financial statements.
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.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See financial statements and supplementary data required pursuant to this item beginning on page F-1 of this Report on Form
10-K.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
Item 9A(T). CONTROLS AND PROCEDURES
We carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the
end of the period covered by this report pursuant to Rule 13a-15 of Securities Exchange of 1934, as amended. Based on that
evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls
and procedures are effective to ensure that the information we are required to disclose in reports that we file or submit under the
Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in
the rules and forms of the Securities and Exchange Commission and to ensure that information required to be disclosed is accumulated
and communicated to our management, including our Chief Executive Officer and Chief Financial Officer to allow timely decisions
regarding timely disclosure.
-20-
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 framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (the “COSO Framework”). Using the COSO Framework, our management, including our 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, 2007.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control
over financial reporting. Management’s report was not subject to attestation by the our registered public accounting firm pursuant to
temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.
Changes in Internal Controls over Financial Reporting
There were no changes in our internal controls over financial reporting during the most recently completed fiscal quarter that
materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
Limitation of the Effectiveness of Internal Controls
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the
objectives of the internal control system are met. Because of the inherent limitations of any internal control system, no evaluation of
controls can provide absolute assurance that all control issues, if any, within a company have been detected.
Item 9B. OTHER INFORMATION
None
-21-
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
(a)
Identification of Directors
This information is incorporated by reference from our definitive proxy statement to be filed by the Company pursuant to
Regulation 14A on or prior to April 29, 2008.
(b)
Identification of Executive Officers
Name
Muriel F. Siebert
Ameen Esmail
Joseph M. Ramos, Jr.
Jeanne Rosendale
Daniel Iesu
Age
75
49
49
43
48
Position
Chairwoman and President
Executive Vice President and Director of Business Development
Executive Vice President and Chief Financial Officer
Executive Vice President and General Counsel
Secretary
Certain information regarding each executive officer’s business experience is set forth below.
Muriel F. Siebert has been Chairwoman, President and a director of Siebert since 1967 and the Company since November 8,
1996. Ms. Siebert became the first woman member of the New York Stock Exchange on December 28, 1967 and served as the first
woman Superintendent of Banks of the State of New York from 1977 to 1982. She is director of the New York State Business Council
and the Boy Scouts of Greater New York. She is the founder and past president of the Woman’s Forum, a former member of the State
of New York Commission on Judicial Nomination and is on the executive committee of the Economic Club of New York.
Ameen Esmail has been Executive Vice President and Director of Business Development since July 3, 2003. From 1984 to
1996, Mr. Esmail served as an Executive Vice President of Siebert. From 1996 to 2003, Mr. Esmail worked as an independent
consultant servicing the financial securities industry. Mr. Esmail earned a MBA from New York University’s Stern’s Graduate School
of Business in 2000.
Joseph M. Ramos, Jr. has been Executive Vice President, Chief Financial Officer and Assistant Secretary of Siebert since
February 10, 2003. From May 1999 to February 2002, Mr. Ramos served as Chief Financial Officer of A.B. Watley Group, 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.
-22-
Jeanne M. Rosendale has been Executive Vice President, General Counsel of Siebert since May 3, 2004. From February
2003 to April 2004, Ms. Rosendale served as Global Director Compliance for Knight Equity Markets. From 2001 through the end of
2002, Ms. Rosendale served as Managing Director, General Counsel and Chief Compliance Officer for TD Securities (USA) Inc. Ms.
Rosendale’s background likewise includes senior level legal positions with Citigroup and the law firm Weil Gotshal & Manges, LLP.
Ms. Rosendale received both her B.A. and J.D., with honors, from Fordham University. She is active in various industry groups such
as the SIA, the Bond Market Association, the LSTA and ISDA.
Daniel Iesu has been Secretary of Siebert since October 1996 and the Company since November 8, 1996. He has been
Controller of Siebert since 1989.
(c)
Compliance with Section 16(a) of the Exchange Act
This information is incorporated by reference from our definitive proxy statement to be filed pursuant to Regulation 14A on
or prior to April 29, 2008.
(d)
Code of Ethics
We have adopted a financial code of ethics that applies to our principal executive officer, principal financial officer, principal
accounting officer and all other employees performing similar functions. This financial code of ethics is posted on our website. The
Internet address for our website is http://www.siebertnet.com. We intend to satisfy the disclosure requirement under Item 5.05 of Form
8-K regarding an amendment to, or waiver from, a provision of this code of ethics by either filing a Form 8-K or posting such
information on our website, at the address and location specified above, within four business days following the date of such
amendment or waiver.
The information required by this item not set forth herein is incorporated by reference to our definitive proxy statement to be
filed pursuant to Regulation 14A on or prior to April 29, 2008.
Item 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference from our definitive proxy statement to be filed pursuant to
Regulation 14A on or prior to April 29, 2008.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
The information required by this item is incorporated by reference from our definitive proxy statement to be filed pursuant to
Regulation 14A on or prior to April 29, 2008.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item is incorporated by reference from our definitive proxy statement to be filed pursuant to
Regulation 14A on or prior to April 29, 2008.
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required in this item is incorporated by reference from our definitive proxy statement to be filed pursuant to
Regulation 14A on or prior to April 29, 2008.
-23-
PART IV
Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The exhibits required by Item 601 of the Regulations S-K filed as part of, or incorporated by reference in, this report are
listed in the accompanying Exhibit Index.
(a)
1.
The following documents are filed as part of this report:
Financial Statements
The consolidated Financial statements for the year ended December 31, 2007 commence on page F-1 of this report on Form
10-K.
2.
Financial Statement Schedules
None.
3.
Exhibits
The exhibits required by Item 601 of the Regulation S-K filed as part of, or incorporated by reference in, this report are listed in the
accompanying Exhibit Index. Exhibit Numbers 10.1, 10.2, 10.5 and 10.9 are management contracts, compensatory plans or
arrangements.
-24-
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
SIEBERT FINANCIAL CORP.
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Financial Condition at December 31, 2007 and 2006
Consolidated Statements of Income for each of the years in the three-year period ended December 31, 2007
Consolidated Statements of Changes in Stockholders’ Equity for each of the years in the three-year period ended
December 31, 2007
Consolidated Statements of Cash Flows for each of the years in the three-year period ended December 31, 2007
Notes to Consolidated Financial Statements
SIEBERT, BRANDFORD, SHANK & CO., LLC
Report of Independent Registered Public Accounting Firm
Statements of Financial Condition at December 31, 2007 and 2006
Statements of Operations for each of the years in the three-year period ended December 31, 2007
Statements of Changes in Members’ Capital for each of the years in the three-year period ended December 31, 2007
Statements of Cash Flows for each of the years in the three-year period ended December 31, 2007
Notes to Financial Statements
Page
F-1
F-2
F-3
F-4
F-5
F-6
F-17
F-18
F-19
F-20
F-21
F-22
(This page intentionally left blank.)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Siebert Financial Corp.
We have audited the accompanying consolidated statements of financial condition of Siebert Financial Corp. and subsidiaries (the
“Company”) as of December 31, 2007 and 2006, and the related consolidated statements of income, changes in stockholders’ equity
and cash flows for each of the years in the three-year period ended December 31, 2007. 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes 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, the consolidated financial position of
Siebert Financial Corp. and subsidiaries as of December 31, 2007 and 2006, and the consolidated results of their operations and their
cash flows for each of the years in the three-year period ended December 31, 2007 in conformity with U.S. generally accepted
accounting principles.
/s/ Eisner LLP
New York, New York
March 27, 2008
F-1
SIEBERT FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
ASSETS
Cash and cash equivalents
Cash equivalents - restricted
Receivable from clearing broker
Securities owned, at market value
Furniture, equipment and leasehold improvements, net
Investments in and advances to affiliates
Prepaid expenses and other assets
Intangibles, net
Deferred taxes
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
December 31,
2007
2006
$ 34,589,000
1,300,000
1,683,000
739,000
1,037,000
5,902,000
936,000
871,000
867,000
$ 32,606,000
1,300,000
2,468,000
510,000
6,765,000
1,211,000
1,182,000
827,000
$ 47,924,000
$ 46,869,000
Accounts payable and accrued liabilities
$ 5,704,000
$
6,460,000
Commitments and contingent liabilities - Note J
Stockholders’ equity:
Common stock, $.01 par value; 49,000,000 shares authorized, 23,211,846 shares issued and
22,212,346 shares outstanding at December 31, 2007 and 23,202,046, shares issued and
22,202,546 shares outstanding December 31, 2006
Additional paid-in capital
Retained earnings
Less: 999,500 shares of treasury stock at cost at December 31, 2007 and 2006
See notes to consolidated financial statements.
232,000
18,832,000
27,660,000
(4,504,000)
232,000
18,719,000
25,962,000
(4,504,000)
42,220,000
40,409,000
$ 47,924,000
$ 46,869,000
F-2
CONSOLIDATED STATEMENTS OF INCOME
Revenue:
Commissions and fees
Investment banking
Trading profits
Settlement of lawsuit
Interest and dividends
Expenses:
Employee compensation and benefits
Clearing fees, including floor brokerage
Professional fees
Advertising and promotion
Communications
Occupancy
Interest
Other general and administrative
2007
Year Ended December 31,
2006
2005
$ 26,119,000
3,369,000
624,000
2,024,000
1,778,000
$ 24,713,000
1,704,000
754,000
$ 25,271,000
2,372,000
702,000
1,647,000
978,000
33,914,000
28,818,000
29,323,000
11,957,000
5,693,000
6,667,000
725,000
2,017,000
1,314,000
10,977,000
5,203,000
3,798,000
920,000
1,711,000
1,146,000
2,942,000
2,955,000
11,427,000
5,295,000
4,296,000
876,000
1,728,000
1,053,000
2,000
3,282,000
31,315,000
26,710,000
27,959,000
Income from equity investees
1,432,000
3,801,000
1,849,000
Income before provision for income taxes
Provision for income taxes
Net income
Net income per share of common stock - basic
Net income per share of common stock - diluted
Weighted average shares outstanding - basic
Weighted average shares outstanding - diluted
4,031,000
1,773,000
5,909,000
2,484,000
2,258,000
$
3,425,000
0.10
0.10
$
$
0.15
0.15
$
$
$
3,213,000
1,350,000
1,863,000
0.08
0.08
$
$
$
22,206,346
22,273,550
22,129,566
22,252,851
22,093,369
22,127,940
See notes to consolidated financial statements.
F-3
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Balance - January 1, 2005
Net income
Treasury share purchases
Issuance of shares in connection with exercise of
employee stock options
Balance - December 31, 2005
Net income
Treasury share purchases
Issuance of shares in connection with exercise of
employee stock options
Dividend on common stock ($.08 per share)
Tax benefit arising from exercise of employee stock
options
Employee stock based compensation
Balance - December 31, 2006
Net income
Issuance of shares in connection with exercise of
employee stock options
Dividend on common stock ($.12 per share)
Tax benefit arising from exercise of employee stock
options
Employee stock based compensation
Balance - December 31, 2007
Number
Of
Shares
Common Stock
$.01 Par
Value
Additional
Paid -In
Capital
Retained
Earnings
Number
Of
Shares
Treasury Stock
Amount
Total
22,983,917
$ 229,000
$ 17,931,000
$ 21,033,000
1,863,000
901,616
14,818
$ (4,093,000) $ 35,100,000
1,863,000
(44,000)
(44,000)
55,485
1,000
132,000
23,039,402
230,000
18,063,000
22,896,000
3,425,000
916,434
(4,137,000)
83,066
(367,000)
162,644
2,000
447,000
(359,000)
51,000
158,000
23,202,046
232,000
18,719,000
25,962,000
2,258,000
999,500
(4,504,000)
9,800
27,000
(560,000)
133,000
37,052,000
3,425,000
(367,000)
449,000
(359,000)
51,000
158,000
40,409,000
2,258,000
27,000
(560,000)
23,211,846
$ 232,000
2,000
84,000
$ 18,832,000
$ 27,660,000
999,500
2,000
84,000
$ (4,504,000) $ 42,220,000
See notes to consolidated financial statements.
F-4
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash Flows From Operating Activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Income from equity investees
Distribution from equity investees
Deferred taxes
Employee stock based compensation
Changes in:
Securities owned, at market value
Receivable from clearing broker
Prepaid expenses and other assets
Accounts payable and accrued liabilities
Year Ended December 31,
2007
2006
2005
$ 2,258,000
$ 3,425,000
$ 1,863,000
690,000
(1,432,000 )
2,428,000
(40,000 )
84,000
(739,000 )
785,000
275,000
(756,000 )
780,000
(3,801,000)
1,427,000
(226,000)
158,000
1,128,000
(1,849,000)
1,573,000
(100,000)
(64,000)
(219,000)
485,000
(33,000)
547,000
(485,000)
Net cash provided by operating activities
3,553,000
1,965,000
2,644,000
Cash Flows From Investing Activities:
Purchase of furniture, equipment and leasehold improvements
Collection (Payment) of advances made to equity investees
(906,000 )
(133,000 )
(150,000)
37,000
(128,000)
(373,000)
Net cash used in investing activities
(1,039,000 )
(113,000)
(501,000)
Cash Flows From Financing Activities:
Dividend on common stock
Purchase of treasury shares
Proceeds from exercise of options
Tax benefit of exercised employee stock options
(560,000 )
27,000
2,000
(359,000)
(367,000)
449,000
51,000
(44,000)
133,000
Net cash (used in) provided by financing activities
(531,000 )
(226,000)
89,000
Net increase in cash and cash equivalents
Cash and cash equivalents - beginning of year
Cash and cash equivalents - end of year
Supplemental Cash Flow Disclosures:
Cash paid for:
Interest
Income taxes
1,983,000
32,606,000
1,626,000
30,980,000
2,232,000
28,748,000
$ 34,589,000
$ 32,606,000
$ 30,980,000
$ 2,087,000
$
$ 2,444,000
$
$
1,000
812,000
See notes to consolidated financial statements.
F-5
SIEBERT FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
[1]
Business:
Siebert Financial Corp. (“Financial”), through its wholly owned subsidiary, Muriel Siebert & Co., Inc. (“Siebert”), engages in
the business of providing discount brokerage services for customers, investment banking services for institutional clients and
trading securities for its own account, and, through its wholly owned subsidiary, Siebert Women’s Financial Network, Inc.
(“WFN”), engages in providing products, services and information all uniquely devoted to women’s financial needs. All
significant intercompany accounts and transactions have been eliminated. Financial, Siebert and WFN collectively are referred
to herein as the “Company”.
The municipal bond investment banking business and related derivatives transactions is being conducted by Siebert Brandford
Shank & Co., LLC (“SBS”), and SBS Financial Products Company, LLC (“SBSFP”), investees, which are accounted for by the
equity method of accounting (see Note C). The equity method provides that Siebert record its share of the investees’ earnings
or losses in its results of operations. Operations of equity investees are considered integral to Siebert’s operations.
[2]
Securities Transactions:
Securities transactions trading profits, commission revenues and related clearing expenses are recorded on a trade date basis.
Marketable securities are valued at market value. Interest is recorded on an accrual basis. Dividends are recorded on the ex-
dividend date. Siebert clears all its security transactions through two 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, which are highly capitalized.
[3]
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 temporary differences between the basis of assets and
liabilities for financial reporting purposes and tax purposes. Financial files a consolidated federal income tax return, which
includes Siebert and WFN.
[4]
Furniture, Equipment and Leasehold Improvements:
Property and equipment is stated at cost less accumulated depreciation. 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 or period of the lease.
[5]
Cash Equivalents:
Cash equivalents consist of highly liquid investments purchased with original maturity of three months or less including money
market funds and commercial paper.
[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.
F-6
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
[8]
Earnings Per Share:
Basic earnings per share is calculated by dividing net income by the weighted average outstanding shares during the period.
Diluted earnings per share is calculated by dividing net income by the number of shares outstanding under the basic calculation
and adding all dilutive securities, which consist of options. The treasury stock method is used to reflect the dilutive effect of
outstanding options, which, for 2007, 2006 and 2005 amounted to 67,204, 123,285 and 34,571 additional shares, respectively,
added to the basic weighted average outstanding shares of 22,206,346, 22,129,566 and 22,093,369 in those respective years. In
2007, 2006 and 2005, 1,162,500, 1,288,466 and 1,683,675 common shares, respectively, issuable upon the exercise of options
were not included in the computation of diluted income per share as the effect would have been anti-dilutive.
[9]
Investment Banking:
Investment banking revenue includes gains and fees, net of syndicate expenses, arising from underwriting syndicates in which
the Company participates. Investment banking management fees are recorded on the offering date, sales concessions on the
settlement date and underwriting fees at the time the underwriting is completed and the income is reasonably determinable.
[10] Cash Equivalents - Restricted:
Cash equivalents - restricted represents $1,300,000 of cash invested in a money market account which Siebert is obligated to
lend to SBS on a subordinated basis.
Any outstanding amounts loaned bear interest at 8% per annum and are repayable on August 31, 2009.
[11] Stock-Based Compensation:
In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123R “Share-Based Payment”
(“SFAS 123R”), which requires all share-based payments to employees, including grants of employee stock options, to be
recognized in the statement of operations as an operating expense, based on their fair values on grant date. Prior to the adoption
of SFAS 123R the Company accounted for stock based compensation using the intrinsic value method. The Company adopted
the provision of SFAS No. 123R effective January 1, 2006, using the modified prospective transition method. Under the
modified prospective method, non-cash compensation expense is recognized for the portion of outstanding stock option awards
granted prior to the adoption of SFAS 123R for which service has not been rendered, and for any future stock option grants.
Accordingly, periods prior to adoption have not been restated. The Company recognizes share-based compensation costs on a
straight-line basis over the requisite service periods of awards as compensation expense which would normally be the vesting
period of the options.
As a result of adopting SFAS No. 123R, the Company’s income before income tax and net income for the year ended
December 31, 2006 was $158,000 and $93,000, lower than if it had continued to account for share-based compensation by the
intrinsic value method. There was no effect on earnings per share. During 2006, 162,644 options were exercised with an
intrinsic value of $123,000. Prior to the adoption of SFAS No. 123R, the Company presented cash flows resulting from the tax
benefits of deductions from the exercise of stock options as operating cash flows in the Statement of Cash Flows. Since the
adoption of SFAS No. 123R, cash flows resulting from the tax benefits of the tax deduction in excess of the compensation cost
recognized for these options are classified as financing cash flows.
The following table illustrates the effect on net income and earnings per share if the fair value based method had been applied
to the year ended December 31, 2005.
Net income, as reported
Stock-based employee compensation determined under the fair value-based method, prior to
the adoption of SFAS 123R
Pro forma net income
$ 1,863,000
(424,000)
$ 1,439,000
Net income per share – basic:
As reported
Pro forma
Net income per share – diluted:
As reported
Pro forma
$
$
$
$
.08
.07
.08
.07
F-7
As of December 31, 2007, there were $81,000 of unrecognized compensation costs related to unvested options which are
expected to be recognized over a weighted-average period of 4 years.
[12]
Intangibles:
Purchased intangibles are principally being amortized using the straight-line method over estimated useful lives of three to five
years (see Note E).
[13] Valuation of Long-Lived Assets:
The Company evaluates the recoverability of its long-lived assets and requires the recognition of impairment of long-lived
assets in the event the net book 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 there is evidence that events or changes in
circumstances have made recovery of the assets’ carrying value unlikely. Should impairment exist, the impairment loss would
be measured based on the excess of the carrying value of the assets over the assets’ fair value.
[14] New Accounting Standards:
In June 2006, the Financial Accounting Standards Board (FASB) Issued FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes, an interpretation of FASB statement No. 109 (FIN 48). Fin 48 clarifies the accounting for
uncertainties in income taxes recognized in a company’s financial statements in accordance with Statement 109 and prescribes
a recognition threshold and measurement attributes for tax positions taken or expected to be taken on a tax return. Additionally,
FIN 48 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and
transition. We adopted the provisions of FIN 48 as of January 1, 2007. The adoption of FIN 48 did not impact our financial
position, results of operations or cash flows. Pursuant to FIN 48, we opted to classify interest and penalties that would accrue
according to the provisions of relevant tax law as interest and other general and administrative expenses.
In September 2006, the Financial Accounting Standards Board issued SFAS No. 157 (“SFAS 157”), “Fair Value
Measurements”. SFAS 157 defines fair value and establishes a framework for measuring fair value. It also expands the
disclosures about the use of fair value to measure assets and liabilities. SFAS 157 is effective as of the beginning of an entity’s
first fiscal year that begins after November 15, 2007. The Company expects that adoption of SFAS 157 will not have a material
effect on its financial statements.
In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities (“FAS 159”). The fair value option established by FAS 159 permits, but does not require, all
entities to choose to measure eligible items at fair value at specified election dates. An entity would report unrealized gains and
losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. FAS 159 is
effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. The Company does not expect
the adoption of FAS 159 will have a material impact on its financial statements.
In November 2005, the FASB issued FASB Staff Position FSP 115-1 which addresses the determination as to when an
investment is considered impaired, whether that impairment is other-than-temporary, and the measurement of an impairment
loss. This FSP also includes accounting considerations subsequent to the recognition of an other-than-temporary impairment
and requires certain disclosures about unrealized losses that have not been recognized as other-than-temporary impairments.
The guidance in this FSP amends Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments
in Debt and Equity Securities and APB Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock.
The Guidance in FSP 115-1 is applied to reporting periods beginning after December 15, 2005. The Company adopted this
standard effective January 1, 2006 and it did not have a material impact on its financial statements or disclosures.
In December 2007, the FASB issued SFAS 141 (revised 2007), Business Combinations, (“FAS 141R”). FAS 141R establishes
principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets
acquired, including goodwill, the liabilities assumed and any non-controlling interest in the acquiree. The Statement also
establishes disclosure requirements to enable users of the financial statements to evaluate the nature and financial effects of the
business combination. FAS 141R is effective for business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after December 15, 2008. The impact of adopting FAS 141R will
be dependent on the future business combinations that the Company may pursue after its effective date.
F-8
In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in
Consolidated Financial Statements-an amendment of ARB No. 51 (FAS 160). This standard establishes accounting and
reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The guidance will
become effective as of the beginning of the Company’s fiscal year beginning after December 15, 2008.
[15] Reclassification – In 2007, income from equity investees has been classified as a separate item in operations and no longer
reflected in revenues. The 2006 and 2005 income statements have been reclassified to confirm with the current year
presentation.
NOTE B - INTUIT LAWSUIT
Siebert commenced a lawsuit against Intuit, Inc. (“Intuit”) in 2003 seeking expenses and damages arising from the Joint Brokerage
Service conducted under the Strategic Alliance Agreement between Siebert and Intuit. Intuit counterclaimed against Siebert for
expenses and damages. A Stipulation and Order of Dismissal with Prejudice entered into by the parties was filed in October 2007,
terminating the litigation without any payments by either party. The parties also exchanged general releases. As a result of the
settlement, $2,024,000 of liabilities recorded by Siebert for expenses prior to December 31, 2003, were reversed in the fourth quarter
of 2007.
NOTE C - INVESTMENT IN AFFILIATES
Investment in and advances to, equity in income of, and distributions received from affiliates consist of the following:
December 31, 2007
Investment and advances
Income from equity investees
Distributions
December 31, 2006
Investment and advances
Income from equity investees
Distributions
December 31, 2005
Income from equity investees
Distributions
SBS
SBSFPC
TOTAL
$
$
$
$
$
$
$
$
5,055,000
1,391,000
1,780,000
SBS
5,307,000
2,885,000
1,378,000
$
$
$
$
$
$
847,000
41,000
648,000
SBSFPC
1,458,000
916,000
49,000
SBS
SBSFPC
1,656,000
1,567,000
$
$
193,000
6,000
$
$
$
$
$
$
$
$
5,902,000
1,432,000
2,428,000
TOTAL
6,765,000
3,801,000
1,427,000
TOTAL
1,849,000
1,573,000
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.
Financial entered into an Operating Agreement, effective as of April 19, 2005 (the “Operating Agreement”), with the Principals for the
formation of SBSFPC. Pursuant to the terms of the Operating Agreement, Financial 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 be shared 66.66% by the Principals and 33.33%
by Financial.
F-9
NOTE C - INVESTMENT IN AFFILIATES (CONTINUED)
Summarized financial data of SBS is as follows:
2007
2006
2005
Total assets, including secured demand note of 1,200,000 in each year due
from Siebert
$
17,885,000
$ 19,250,000
$
Total liabilities, including subordinated liabilities $1,200,000 in each year
due to Siebert
Total members’ capital
Total revenue
Net income
Regulatory minimum net capital requirement
7,984,000
9,901,000
24,426,000
2,840,000
452,000
8,556,000
10,694,000
26,235,000
5,888,000
490,000
21,086,000
3,377,000
During each of 2007, 2006 and 2005, Siebert charged SBS $240,000 for rent and general and administrative services, which Siebert
believes approximates the cost of furnishing such services. In addition, during each of the years 2007, 2006 and 2005, Siebert earned
interest income of $96,000, $96,000 and $96,000, respectively from SBS in connection with Siebert’s obligation to make a
subordinated loan for up to $1,200,000 available to SBS and Siebert paid SBS interest earned on the restricted cash equivalents of
$74,000, $67,000 and $52,000. (See Note J)
Siebert’s share of undistributed earnings from SBS amounts to $4,459,000 and $4,848,000 at December 31, 2007 and 2006,
respectively. Such amounts may not be immediately available for distribution to Siebert for various reasons including the amount of
SBS’s available cash, the provisions of the agreement between Siebert and the Principals and SBS’s continued compliance with its
regulatory net capital requirements.
Summarized financial data of SBSFPC is as follows:
Total assets
Total liabilities
Total members’ capital
Total revenue
Net income
2007
2006
2005
$
82,772,000
80,225,000
2,546,000
680,000
123,000
$ 49,209,000
44,842,000
4,367,000
5,495,000
2,750,000
$
1,185,000
582,000
Siebert’s share of undistributed earnings of SBSFPC amounts to $449,000 and $1,058,000 at December 31, 2007 and 2006,
respectively.
F-10
NOTE D - FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET
Furniture, equipment and leasehold improvements consist of the following:
Equipment
Leasehold improvements
Furniture and fixtures
Less accumulated depreciation and amortization
December 31,
2007
2006
$
1,363,000 $
129,000
41,000
2,122,000
162,000
21,000
1,533,000
(496,000)
2,305,000
(1,795,000)
$
1,037,000 $
510,000
Depreciation and amortization expense for the years ended December 31, 2007, 2006 and 2005 amounted to $379,000, $468,000 and
$605,000, respectively.
NOTE E - INTANGIBLE ASSETS, NET
In several transactions during September and October of 2000, WFN acquired the stock of WFN Women’s Financial Network, Inc.
(“WFNI”) and HerDollar.com, Inc., respectively, companies in the development stage which had yet to commence principal
operations, had no significant revenue and had assets consisting principally of websites, content and domain names, for aggregate
consideration of $2,310,000 including costs. The transactions have been 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 have been reflected in the accompanying consolidated financial statements as an
adjustment to the carrying amount of such intangibles (see Note F).
Intangible assets consist of the following:
Amortizable assets:
Website, content and non-compete
Retail brokerage accounts
Unamortized intangible assets:
Domain name/intellectual property
Amortization expense
Estimated amortization expense is as follows:
Year Ending
December 31,
2008
2009
December 31, 2007
December 31, 2006
Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Amortization
Accumulated
$
$
$
2,350,000
2,588,000
4,938,000
750,000
$
$
$
2,350,000
2,467,000
4,817,000
311,000
$
$
$
2,350,000
2,588,000
4,938,000
750,000
$
$
$
2,350,000
2,156,000
4,506,000
312,000
$ 101,000
20,000
$ 121,000
F-11
NOTE F - INCOME TAXES
Income tax provision consists of the following:
Federal income tax provision (benefit):
Current
Deferred
State and local tax provision (benefit):
Current
Deferred
Total tax provision (benefit):
Current
Deferred
2007
Year Ended December 31,
2006
2005
$
1,356,000
(32,000)
$
2,049,000
(183,000)
$
1,080,000
(81,000)
1,324,000
1,866,000
999,000
456,000
(7,000)
449,000
661,000
(43,000)
618,000
370,000
(19,000)
351,000
1,812,000
(39,000)
2,710,000
(226,000)
1,450,000
(100,000)
$
1,773,000
$
2,484,000
$
1,350,000
A reconciliation between the income tax provision and income taxes computed by applying the statutory Federal income tax rate to
income before taxes is as follows:
Expected income tax provision at statutory Federal tax rate (34%)
State and local taxes, net of Federal tax benefit
Permanent difference
Other
Income tax expense
2007
Year Ended December 31,
2006
2005
$
1,370,000
296,000
72,000
35,000
$
2,009,000
408,000
100,000
(33,000)
$
1,092,000
258,000
$
1,773,000
$ 2,484,0000
$
1,350,000
Deferred income taxes reflect the impact of temporary differences between the amounts of assets and liabilities for financial reporting
purposes and their tax basis. The principal items giving rise to deferred tax assets (liabilities) are as follows:
Net operating losses
Acquired Intangible assets
Furniture, equipment and leasehold improvements
Retail brokerage accounts
December 31,
2007
2006
$
$
339,000
(304,000)
182,000
650,000
377,000
(315,000)
81,000
684,000
$
867,000
$
827,000
F-12
Management believes that it is more likely than not that the deferred tax asset will be realized, and therefore no valuation allowance
has been provided.
Net operating loss carryforwards of $836,000 at December 31, 2007, which are attributable to WFN, expire through 2020. Utilization
of such net operating loss carryforwards is subject to annual limitations under Section 382 of the Internal Revenue Code.
In 2007 and 2006, the Company reduced current taxes payable by $2,000 and $51,000, respectively, resulting from the deductibility of
the difference between the exercise price of nonqualifying stock options granted by the Company and the market value of the stock on
the dates of exercise. The tax benefit was recorded as a credit to additional paid-in capital.
The Company is not subject to any tax examinations for any federal or major state tax jurisdiction for years prior to 2004.
NOTE G - 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, 2007 and 2006, Siebert had net capital of
approximately $29,459,000 and $27,723,000, respectively, as compared with net capital requirements of $250,000. Siebert claims
exemption from the reserve requirement under Section 15c3-3(k)(2)(ii).
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.
On June 4, 2007, the Board of Directors declared a dividend of twelve cents per share on common stock of the Company, which was
paid on June 29, 2007 to shareholders of record at the close of business on June 20, 2007. The Chief Executive Officer of the
Company waived the right to receive the dividend in excess of the aggregate amount paid to other shareholders which amounted to
approximately $280,000.
On August 9, 2006, the Board of Directors declared a dividend of eight cents per share on common stock of the Company, which was
paid on August 30, 2006 to shareholders of record at the close of business on August 21, 2006. The Chief Executive Officer of the
Company waived the right to receive the dividend in excess of the aggregate amount paid to other shareholders which amounted to
approximately $180,000.
NOTE H - 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 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, 2007, options for 2,000,000 shares of common stock are available for grant under the Plan.
F-13
NOTE H – OPTIONS (CONTINUED)
A summary of the Company’s stock option transaction for the three years ended December 31, 2007 is presented below:
2007
2006
2005
Weighted
Average
Exercise
Price
Shares
Weighted
Average
Exercise
Price
Shares
Weighted
Average
Exercise
Price
Shares
Outstanding - beginning of the year
Granted
Forfeited
Exercised
1,603,966 $
4.16
(126,966) $
(9,800) $
4.36
2.70
1,768,610 $
25,000 $
(27,000) $
(162,644) $
4.16
2.75
4.03
2.76
1,889,350 $
200,000 $
(265,255) $
(55,485) $
4.11
2.81
3.13
0.00
Outstanding - end of year
(a)
1,467,200 $
4.28
1,603,966 $
4.16
1,768,610 $
4.16
Fully vested and expected to vest at year
end
(b)
1,422,200 $
4.30
Exercisable at end of year
(b)
1,422,200 $
4.30
1,520,466 $
4.32
1,613,410 $
4.14
Weighted average fair value of options
granted
$
1.85
$
1.42
(a)
(b)
Weighted average remaining contractual terms of 4 years and aggregate intrinsic value of $146,000.
Weighted average remaining contractual terms of 3.9 years and aggregate intrinsic value of $136,000.
As of December 31, 2007, there was $81,000 of unrecognized compensation costs related to unvested options which is expected to be
recognized over a weighted-average period of 4 years.
The fair value of each option award is estimated on the date of grant using the Black-Sholes option pricing model using the following
weighted-average assumptions for the years ended December 31, 2006 and 2005:
Dividend yield
Expected volatility
Risk-free interest rate
Expected life (in years)
2006
2005
0.00%
50.40%
4.82%
7.5
0.00%
53.00%
4.30%
5.00
During 2006, the Company took into consideration guidance contained in SFAS No. 123R and SAB No. 107 when reviewing and
developing assumptions for the option grants. The weighted average expected life reflects the alternative simplified method permitted
by SAB No. 107, which defines the expected life as the average of the contractual term of the options and the weighted-average
vesting period for all option tranches. Expected volatility is based on historical volatility over the expected term.
NOTE I - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONCENTRATIONS OF CREDIT RISK
In the normal course of business, Siebert enters into transactions in various financial instruments with off-balance sheet risk. This risk
includes both market and credit risk, which may be in excess of the amounts recognized in the statement of financial condition. As of
December 31, 2007 and 2006, no such financial istruments were outstanding.
F-14
Retail customer transactions are cleared through clearing brokers on a fully disclosed basis. In the event that customers are unable to
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 customers’ obligations. Securities transactions entered into as of December 31,
2007 settled with no adverse effect on Siebert’s financial condition. Siebert regularly monitors the activity in its customer accounts for
compliance with its margin requirements.
NOTE J - COMMITMENTS, CONTINGENCIES AND OTHER
Siebert terminated the fully disclosed clearing agreement (the “Clearing Agreement”) with Pershing LLC (formerly the Pershing
division of Donaldson, Lufkin & Jenrette Securities Corporation) (“Pershing”) in 2003. Based on consultation with counsel, Siebert
believes that the $1,500,000 that it advanced to Pershing in January 2003 should have been returned and that Pershing may be liable
for damages. Pershing expressed its belief that it was entitled to retain the advance and receive a minimum of $3 million for its
unreimbursed costs, a termination fee of $500,000 and $5 million for lost revenues. Siebert received a release for the $3 million
related to disputed claims for unreimbursed fees and costs. In 2004, Siebert decided not to commence proceedings against Pershing
and charged off the $1,500,000 advance to Pershing. Siebert believes the Pershing claims are without merit and that the ultimate
outcome of this matter will not have a material adverse effect on the Company’s results of operations or financial position.
The Company rents discount retail brokerage and other office space under long-term operating leases expiring in various periods
through 2011. 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,
2008
2009
2010
2011
2012
Amount
1,105,000
905,000
709,000
172,000
68,000
$ 2,959,000
Rent expense, including escalations for operating costs, amounted to approximately $1,314,000, $1,071,000 and $985,000 for the
years ended December 31, 2007, 2006 and 2005, respectively. Rent is being charged to expense over the entire lease term on a
straight-line basis.
In addition to the Pershing matter, Siebert is party to certain claims, suits and complaints arising in the ordinary course of business. In
the opinion of management, all such claims, suits and complaints are without merit, or involve amounts which would not have a
significant effect on the financial position or results of operations of the Company. The Company believes that adequate provisions
have been made for such matters.
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 2007, 2006 and 2005.
Siebert is party to a Secured Demand Note Collateral Agreement with SBS which obligates 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 equity investees in the accompanying consolidated statement of financial condition.
Amounts that Siebert is obligated to lend under this arrangement are collateralized by cash equivalents of $1,300,000.
F-15
NOTE K – FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts reflected in the consolidated statements of financial condition for cash, cash equivalents, receivable from
broker, accounts payable and accrued liabilities approximate fair value due to the short term maturities of those instruments.
NOTE L - SUMMARIZED QUARTERLY FINANCIAL DATA (UNAUDITED)
Revenue
Net income
Earnings per share:
Basic
Diluted
First
Quarter
$ 8,072,000
985,000
$
$
$
0.04
0.04
$
$
$
$
2007
Second
Quarter
8,139,000
716,000
Third
Quarter
$ 7,450,000
$
$
(595,000) $
Fourth
Quarter
10,253,000(a) $ 7,830,000
552,000
First
Quarter
1,152,000(a) $
0.03
0.03
$
$
(0.03) $
(0.03) $
0.05
0.05
$
$
0.02
0.02
2006
Second
Quarter
8,856,000
1,341,000
0.06
0.06
$
$
$
$
$
$
$
$
Third
Quarter
7,732,000
897,000
0.04
0.04
Fourth
Quarter
8,201,000
635,000
0.03
0.03
$
$
$
$
(a) Includes $2,024,000 gain from settlement of lawsuit (See Note B).
F-16
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Managers
Siebert, Brandford, Shank & Co., L.L.C.
New York, New York
We have audited the accompanying statements of financial condition of Siebert, Brandford, Shank & Co., L.L.C. as of December 31,
2007 and 2006, and the related statements of operations, changes in members’ capital, and cash flows for each of the years in the
three-year period ended December 31, 2007. 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 auditing standards generally accepted in the United States of America as established
by the Auditing Standards Board (United States) and in accordance with the auditing standards of 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. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes 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, the financial position of Siebert,
Brandford, Shank & Co., L.L.C. as of December 31, 2007 and 2006, and the results of its operations changes in members’ capital, and
its cash flows for each of the years in the three-year period ended December 31, 2007 in conformity with accounting principles
generally accepted in the United States of America.
/s/ Eisner LLP
New York, New York
February 26, 2008
F-17
SIEBERT, BRANDFORD, SHANK & CO., L.L.C.
Statements of Financial Condition
ASSETS
Cash and cash equivalents
Securities owned, at market value
Accounts receivable
Receivable from affiliate
Receivable from broker
Secured demand note
Furniture and equipment, net
Other assets
LIABILITIES AND MEMBERS’ CAPITAL
Liabilities:
Payable to affiliate
Accounts payable and accrued expenses
Subordinated debt
Commitments - Note E
Members’ capital
December 31,
2007
2006
$ 11,651,394
180,871
1,354,222
55,345
2,734,082
1,200,000
204,190
504,608
$ 9,916,728
1,311,516
10,909
6,153,128
1,200,000
194,745
462,636
$ 17,884,712
$ 19,249,662
$
188,581
6,595,662
$
55,556
7,300,510
6,784,243
7,356,066
1,200,000
1,200,000
9,900,469
10,693,596
$ 17,884,712
$ 19,249,662
See Notes to Financial Statements
F-18
SIEBERT, BRANDFORD, SHANK & CO., L.L.C.
Statements of Operations
Revenues:
Investment banking
Trading profits
Interest and other
Expenses:
Employee compensation and benefits
Clearing fees
Communications
Occupancy
Professional fees
Interest
State and local income tax
General and administrative
Net income
Year Ended December 31,
2006
2005
2007
$ 20,942,441
2,896,590
586,643
$ 22,175,826
3,315,250
743,533
$ 18,085,786
2,597,064
403,260
24,425,674
26,234,609
21,086,110
16,208,308
552,552
635,037
661,172
97,276
96,000
324,571
3,011,081
15,563,860
365,216
593,246
655,677
290,797
96,000
182,004
2,599,982
12,890,686
370,003
539,191
640,666
633,137
96,000
151,214
2,388,043
21,585,997
20,346,782
17,708,940
$ 2,839,677
$ 5,887,827
$ 3,377,170
See Notes to Financial Statements
F-19
SIEBERT, BRANDFORD, SHANK & CO., L.L.C.
Statements of Changes in Members’ Capital
Balance - January 1, 2005
Distributions to members
Net income
Balance - December 31, 2005
Distributions to members
Net income
Balance - December 31, 2006
Distributions to members
Net income
Balance - December 31, 2007
See Notes to Financial Statements
$ 7,444,390
(3,202,770)
3,377,170
7,618,790
(2,813,021)
5,887,827
10,693,596
(3,632,804)
2,839,677
$ 9,900,469
F-20
SIEBERT, BRANDFORD, SHANK & CO., L.L.C.
Statements of Cash Flows
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
Changes in:
Securities owned, at market value
Accounts receivable
Receivable from broker
Other assets
Payable to (receivable from) affiliate
Accounts payable and accrued expenses
Year Ended December 31,
2006
2005
2007
$ 2,839,677
$ 5,887,827
$ 3,377,170
76,358
77,491
68,824
(180,871)
(42,706)
3,419,046
(41,972)
88,589
(704,848)
580,145
(291,222)
(5,985,081)
(47,900)
(35,258)
2,055,305
(570,134)
487,692
(160,569)
(71,305)
(45,983)
1,689,829
Net cash provided by operating activities
5,453,273
2,241,307
4,775,524
Cash flows used in investing activities:
Purchase of property and equipment
Cash flows used in financing activities:
Distributions to members
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents - beginning of year
(85,803)
(23,640)
(113,722)
(3,632,804)
(2,813,021)
(3,202,770)
1,734,666
9,916,728
(595,354)
10,512,082
1,459,032
9,053,050
Cash and cash equivalents - end of year
$ 11,651,394
$ 9,916,728
$ 10,512,082
Supplemental disclosures of cash flow information:
Taxes paid
Interest paid
$
$
304,570
96,000
$
$
152,000
96,000
$
$
120,000
96,000
See Notes to Financial Statements
F-21
SIEBERT, BRANDFORD, SHANK & CO., L.L.C.
Notes to Financial Statements
December 31, 2007, 2006 and 2005
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
[1] Organization and basis of presentation:
Siebert, Brandford, Shank & Co., L.L.C. (“SBS” or the “Company”) was formed on March 10, 1997 to engage in the business
of tax-exempt underwriting and related trading activities. The Company qualifies as a Minority and Women’s Owned Business
Enterprise in certain municipalities.
[2]
Securities transactions:
Securities transactions, commissions, revenues and expenses are recorded on a trade date basis. Securities owned are valued at
market value. The resulting unrealized gains and losses are reflected in income.
Securities owned, at December 31, 2007, consist of municipal bonds.
Dividends are recorded on the ex-dividend date, and interest income and expense are recognized on an accrual basis.
[3]
Investment banking:
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 offering date,
sales concessions on settlement date, and underwriting fees at the time the underwriting is completed and the income is
reasonably determinable.
[4]
Furniture and equipment, net:
Furniture and equipment are stated at cost and depreciation is calculated using the straight-line method over the lives of the
assets, generally five years.
[5] Cash equivalents:
For purposes of reporting cash flows, cash equivalents include money market funds.
[6] 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.
[7]
Income taxes:
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. The Company is subject to tax in certain state and local jurisdictions.
F-22
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
[8] New accounting pronouncement:
In June 2006, the Financial accounting Standards Board (FASB) issued FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 (FIN 48). FIN 48 clarifies the accounting for
uncertainties in income taxes recognized in a company’s financial statements in accordance with Statement 108 and prescribes
a recognition threshold and measurement attributes for tax positions taken or expected to be taken on a tax return. Additionally,
FIN 48 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and
transition. The Company adopted the provisions of FIN 48 as of January 1, 2007. The adoption of FIN 48 did not impact the
Company’s financial position, results or operations or cash flows. Pursuant to FIN 48, the Company has opted to classify
interest and penalties that would accrue according to the provisions of relevant tax law as interest and other general and
administrative expenses. The Company is not subject to any tax examination for any federal or major state tax jurisdiction for
the years prior to 2004.
In September 2006, the Financial Accounting Standards Board issued SFAS No. 157 (“SFAS 157”), “Fair Value
Measurements”. SFAS 157 defines fair value and established a framework for measuring fair value. It also expands the
disclosures about the use of fair value to measure assets and liabilities. SFAS 157 is effective the first fiscal year that begins
after November 15, 2007. The Company expects that adoption of SFAS 157 will not have a material effect on the Company’s
financial statements.
[9] Reclassification:
Certain previous years adjustments have been reclassified to conform with current year presentations.
NOTE B - SUBORDINATED BORROWINGS AND SECURED DEMAND NOTE RECEIVABLE
The subordinated debt at December 31, 2007 and 2006 consists of a Secured Demand Note Collateral Agreement payable to Muriel
Siebert & Co., Inc. (“Siebert”), in the amount of $1,200,000, bearing interest at 8% and due August 31, 2009. Interest expense paid to
Siebert for each of the years ended 2007, 2006 and 2005 amounts to $96,000, $96,000 and $96,000, respectively.
The subordinated borrowings are available in computing net capital under the Securities and Exchange Commission’s (the “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.
The secured demand note receivable of $1,200,000 is collateralized by cash equivalents of Siebert of approximately $1,300,000 at
December 31, 2007 and 2006. Interest earned on the collateral amounted to approximately $74,000, $67,000 and $52,000 in 2007,
2006 and 2005, respectively.
NOTE C - FURNITURE AND EQUIPMENT, NET
Furniture and equipment consist of the following:
Equipment
Furniture and fixtures
Less accumulated depreciation and amortization
2007
2006
$
492,782
185,084
$
437,684
170,492
677,866
(473,676)
608,176
(413,431)
$
204,190
$
194,745
F-23
NOTE D - NET CAPITAL
The Company is subject to the SEC’s Uniform Net Capital Rule 15c3-1, which requires the maintenance of minimum net capital and
requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. At December 31, 2007 and
2006, the Company had net capital of $10,028,000 and $10,965,000, respectively, which was $9,575,000 and $10,474,000,
respectively, in excess of its required net capital and its ratio of aggregate indebtedness to net capital was .68 to 1 and .67 to 1,
respectively. The Company claims exemption from the reserve requirements under Section 15c-3-3(k)(2)(ii).
NOTE E - COMMITMENTS
The Company rents office space under long-term operating leases expiring through 2013. These leases call for base rent plus
escalations for taxes and operating expenses. Future minimum base rent under these operating leases are as follows:
Year
2008
2009
2010
2011
2012
2013
Amount
$ 510,000
477,000
311,000
188,000
190,000
165,000
$ 1,841,000
Rent expense including taxes and operating expenses for 2007, 2006 and 2005 amounted to $661,172, $655,677 and $640,666,
respectively.
NOTE F - OTHER
During each of 2007, 2006 and 2005, the Company was charged $240,000 by Siebert for general and administrative services.
F-24
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SIEBERT FINANCIAL CORP.
SIGNATURES
By:
/s/ MURIEL F. SIEBERT
Muriel F. Siebert
Chair and President
Date: March 31, 2008
In accordance with the Exchange Act, 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
/s/ Muriel F. Siebert
Muriel F. Siebert
/s/ Jeanne Rosendale
Jeanne Rosendale
/s/ Joseph M. Ramos, Jr.
Joseph M. Ramos, Jr.
/s/ Patricia L. Francy
Patricia L. Francy
/s/ Leonard M. Leiman
Leonard M. Leiman
/s/ Jane H. Macon
Jane H. Macon
/s/ Robert P. Mazzarella
Robert P. Mazzarella
/s/ Nancy S. Peterson
Nancy S. Peterson
Chair, President and Director
(principal executive officer)
Executive Vice President,
and General Counsel
Chief Financial Officer
and Assistant Secretary
(principal financial and
accounting officer)
Director
Director
Director
Director
Director
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
March 31, 2008
Exhibit No.
2.1
EXHIBIT INDEX
Description Of Document
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 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 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 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 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 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
10.2
10.3
10.4
10.5
10.6
10.7
Siebert Financial Corp. 1998 Restricted Stock Award Plan (incorporated by reference to Siebert Financial Corp.’s
Form 10-K for the fiscal year ended December 31, 1997)
10(a) Siebert Financial Corp. 1997 Stock Option Plan (incorporated by reference to Siebert Financial Corp.’s Form
10-K for the fiscal year ended December 31, 1996)
LLC Operating Agreement, among Siebert, Brandford, Shank & Co., LLC, 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 Form 10-K for the fiscal year ended December 31, 1996)
Services Agreement, between Siebert, Brandford, Shank & Co., LLC and Muriel Siebert & Co., Inc., dated as of
March 10, 1997 (incorporated by reference to Siebert Financial Corp.’s Form 10-K for the fiscal year ended
December 31, 1996)
Siebert Financial Corp. 1998 Restricted Stock Award Plan (incorporated by reference to Siebert Financial Corp.’s
Form 10-K for the fiscal year ended December 31, 1997)
Strategic Alliance Agreement, dated as of April 29, 2002, by and between Intuit Inc, Muriel Siebert & Co., Inc. and
Investment Solutions, Inc. (incorporated by reference to Siebert Financial Corp.’s Form 10-Q for the quarter ended
June 30, 2002.)
Fully Disclosed Clearing Agreement, dated April 30, 2002, by and between the Pershing Division of Donaldson,
Lufkin and Jenrette Securities Corporation and Muriel Siebert & Co., Inc. (incorporated by reference to Siebert
Financial Corp.’s Form 10-Q for the quarter ended June 30, 2002.)
Exhibit No.
10.8
10.9
21
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)
Description Of Document
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)
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 Muriel F. Siebert pursuant to Securities Exchange Act Rules 13a-14 and 15d-14, as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
Certification of Joseph M. Ramos, Jr. pursuant to Securities Exchange Act Rules 13a-14 and 15d-14, as adopted
pursuant to Section 302 of the Sarbanes-Oxley act of 2002.
32.1
Certification of Muriel F. Siebert of Periodic Financial Report under Section 906 of the Sarbanes-Oxley Act of 2002
32.2
Certification of Joseph M. Ramos, Jr. of Periodic Financial Report under Section 906 of the Sarbanes- Oxley Act of
2002
EXHIBIT 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statements (Form S-8 No. 333-144680, No. 333-43837, No. 333-
43839, No. 333-72939 and No. 333-102701, and Form S-3, No. 333-81037) of Siebert Financial Corp. and in the related prospectus of
our report dated March 27, 2007 with respect to the consolidated financial statements of Siebert Financial Corp. included in this
Annual Report on Form 10-K for the year ended December 31, 2007. We also consent to the incorporation by reference of our report
dated February 26, 2008 with respect to the financial statements of Siebert, Brandford, Shank & Co., L.L.C. included in this Annual
Report on Form 10-K.
/s/ Eisner LLP
New York, New York
March 27, 2008
CERTIFICATION
PURSUANT TO EXCHANGE ACT RULE 13A-14 AND 15D-14,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 31.1
I, Muriel F. Siebert certify that:
1. I have reviewed this report on Form 10-K of Siebert Financial Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in
this annual report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this annual report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
annual report based on such evaluation; and
(d) Disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred during
the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting;
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the
equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
/s/ Muriel F. Siebert
Date: March 31, 2008
Muriel F. Siebert
Chair, Chief Executive Officer and President
(principal executive officer)
CERTIFICATION
PURSUANT TO EXCHANGE ACT RULE 13A-14 AND 15D-14,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 31.2
I, Joseph M. Ramos, Jr. certify that:
1. I have reviewed this report on Form 10-K of Siebert Financial Corp.;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in
this annual report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this annual report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
annual report based on such evaluation; and
(d) Disclosed in this annual report any change in the registrant’s internal control over financial reporting that occurred during
the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting;
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the
equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
/s/ Joseph M. Ramos, Jr.
Date: March 31, 2008
Joseph M. Ramos, Jr.
Chief Financial Officer
(principal financial and accounting officer)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.1
In connection with the Annual Report of Siebert Financial Corp. (the “Company”) on Form 10-K for the year ended December 31,
2007, as filed with the Securities and Exchange Commission (the “Report”), I, Muriel F. Siebert, in my capacity as Chair, Chief
Executive Officer and President of the Company, hereby certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) the Report filed by the Company with the Securities and Exchange Commission fully complies with the requirements of Section
13(a) of the Securities and Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of
the Company for the period covered by the report.
/s/ Muriel F. Siebert
Date: March 31, 2008
Muriel F. Siebert
Chair, Chief Executive Officer and President
A signed original of this written statement required by Section 906, or other documents authenticating, acknowledging, or otherwise
adopting the signature that appears in typed form within the electronic version of this written statement required by section 906, has
been provided to Siebert Financial Corp. and will be retained by Siebert Financial Corp. and furnished to the Securities and Exchange
Commission or its staff upon request.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.2
In connection with the Annual Report of Siebert Financial Corp. (the “Company”) on Form 10-K for the year ended December 31,
2007, as filed with the Securities and Exchange Commission (the “Report”), I, Joseph M. Ramos, Jr., in my capacity as Chief
Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, that to my knowledge:
(1) the Report filed by the Company with the Securities and Exchange Commission fully complies with the requirements of Section
13(a) of the Securities and Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of
the Company for the period covered by the report.
/s/ Joseph M. Ramos, Jr.
Joseph M. Ramos, Jr.
Chief Financial Officer
Date: March 31, 2008
A signed original of this written statement required by Section 906, or other documents authenticating, acknowledging, or otherwise
adopting the signature that appears in typed form within the electronic version of this written statement required by section 906, has
been provided to Siebert Financial Corp. and will be retained by Siebert Financial Corp. and furnished to the Securities and Exchange
Commission or its staff upon request.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
Amendment No. 1
(Mark One)
⌧ ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2007
(cid:134) TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to __________
Commission file number 0-5703
Siebert Financial Corp.
(Exact name of registrant as specified in its charter)
New York
(State or other jurisdiction of
incorporation or organization)
885 Third Avenue, New York, New York
(Address of principal executive offices)
11-1796714
(I.R.S. Employer
Identification No.)
10022
(Zip Code)
(212) 644-2400
Registrant’s telephone number
Securities registered under Section 12(b) of the Exchange Act:
Title of each class
NONE
Name of each exchange on which registered
NONE
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of class)
Indicate by checkmark if the registrant is a well know seasoned issuer, as defined in Rule 405 of the Securities Act. YES (cid:134) NO ⌧
Indicate by checkmark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES (cid:134) NO ⌧
Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES ⌧ NO (cid:134)
Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. (cid:134)
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.
(See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act).
Large accelerated filer (cid:134)
Non-accelerated filer (cid:134)
Accelerated filer (cid:134)
Smaller reporting company ⌧
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2). YES (cid:134) NO ⌧
The number of shares of the Registrant’s outstanding Common Stock, as of March 11, 2008, was 23,214,132 shares. 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
Stock Market as of the last business day of the registrant’s most recently completed second fiscal quarter (June 30, 2007), was $8,795,338.
Documents Incorporated by Reference: Proxy Statement to be filed pursuant to Regulation 14A of the Exchange Act on or before April 29,
2008, incorporated by reference into Part III.
Explanatory Note:
Siebert Financial Corp. (the “Company”) is filing this Amendment to the Annual Report on Form 10-K filed with the Securities
Exchange Commission on March 31, 2007 (the “Original Report”) solely to correct a typographical error appearing in the Consent of
Independent Registered Public Accounting Firm filed as Exhibit 23 to the Original Report. No other changes are being made by means
of this filing.
Item 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
The following documents are filed as part of this report:
1.
Financial Statements
PART IV
The consolidated Financial statements for the year ended December 31, 2007 commence on page F-1 of this report on Form
10-K.
2.
Financial Statement Schedules
None.
3.
Exhibits
Exhibit Numbers 10.1, 10.2, 10.5 and 10.9 are management contracts, compensatory plans or arrangements.
Exhibit No.
2.1
Description Of Document
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 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 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 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 Form 10-K for the fiscal year ended December 31, 1996)
3.1
3.2
10.1
10.2
10.3
10.4
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 Form 10-K for the
fiscal year ended December 31, 1997)
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)
Siebert Financial Corp. 1998 Restricted Stock Award Plan (incorporated by reference to Siebert Financial Corp.’s
Form10-K for the fiscal year ended December 31, 1997)
10(a) Siebert Financial Corp. 1997 Stock Option Plan (incorporated by reference to Siebert Financial Corp.’s Form
10-K for the fiscal year ended December 31, 1996)
LLC Operating Agreement, among Siebert, Brandford, Shank & Co., LLC, 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 Form 10-K for the fiscal year ended December 31, 1996)
Services Agreement, between Siebert, Brandford, Shank & Co., LLC and Muriel Siebert & Co., Inc., dated as of
March 10, 1997 (incorporated by reference to Siebert Financial Corp.’s Form 10-K for the fiscal year ended
December 31, 1996)
10.5
10.6
10.7
10.8
10.9
21
23
31.1
31.2
32.1
32.2
Siebert Financial Corp. 1998 Restricted Stock Award Plan (incorporated by reference to Siebert Financial Corp.’s
Form10-K for the fiscal year ended December 31, 1997)
Strategic Alliance Agreement, dated as of April 29, 2002, by and between Intuit Inc, Muriel Siebert & Co., Inc. and
Investment Solutions, Inc. (incorporated by reference to Siebert Financial Corp.’s Form 10-Q for the quarter ended
June30, 2002.)
Fully Disclosed Clearing Agreement, dated April 30, 2002, by and between the Pershing Division of Donaldson,
Lufkin and Jenrette Securities Corporation and Muriel Siebert & Co., Inc. (incorporated by reference to Siebert
Financial Corp.’s Form 10-Q for the quarter ended June 30, 2002.)
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)
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)
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)
Consent of Independent Registered Public Accounting Firm
Certification of Muriel F. Siebert pursuant to Securities Exchange Act Rules 13a-14 and 15d-14, as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002 (Previously filed)
Certification of Joseph M. Ramos, Jr. pursuant to Securities Exchange Act Rules 13a-14 and 15d-14, as adopted
pursuant to Section 302 of the Sarbanes-Oxley act of 2002. (Previously filed)
Certification of Muriel F. Siebert of Periodic Financial Report under Section 906 of the Sarbanes-Oxley Act of
2002(Previously filed)
Certification of Joseph M. Ramos, Jr. of Periodic Financial Report under Section 906 of the Sarbanes- Oxley Act of
2002(Previously filed)
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SIGNATURES
SIEBERT FINANCIAL CORP.
By:
/s/ MURIEL F. SIEBERT
Muriel F. Siebert
Chair and President
Date: April 1, 2008
EXHIBIT 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statements (Form S-8 No. 333-144680, No. 333-43837, No. 333-
43839, No. 333-72939 and No. 333-102701, and Form S-3, No. 333-81037) of Siebert Financial Corp. and in the related prospectus of
our report dated March 27, 2008 with respect to the consolidated financial statements of Siebert Financial Corp. included in this
Annual Report on Form 10-K for the year ended December 31, 2007. We also consent to the incorporation by reference of our report
dated February 26, 2008 with respect to the financial statements of Siebert, Brandford, Shank & Co., L.L.C. included in this Annual
Report on Form 10-K.
/s/ Eisner LLP
New York, New York
March 27, 2008
Patricia L. FrancyRetired Treasurer & ControllerColumbia UniversityMuriel F. SiebertChairwoman & PresidentChief Executive OfficerAmeen Esmail Executive Vice PresidentDirector of Business DevelopmentJoseph M. Ramos, Jr. Executive Vice PresidentChief Financial OfficerJeanne M. RosendaleExecutive Vice PresidentGeneral Counsel Daniel IesuSecretaryTransferAgentAmerican Stock Transfer & Trust CompanyIndependent AuditorEisner LLPMuriel F. SiebertChairwoman &PresidentChief Executive OfficerRobert P. MazzarellaRetired PresidentFidelity Investment BrokerageServices, LLCLeonard M. LeimanCounselFulbright & Jaworski L.L.P.Jane H. Macon, Esq. PartnerFulbright &Jaworski L.L.P.Nancy S. PetersonPresident and Chief Executive OfficerPeterson Tool Company, Inc.DIRECTORSOFFICERS Beverly Hills9701 Wilshire Boulevard, Beverly Hills, CA90212Telephone: 800.995.7880 Fax: 310.788.7888Boca Raton 4400 North Federal Highway, Suite 152, Boca Raton, FL33431Telephone: 800.728.3352 Fax: 561.368.9750Jersey City111 Town Square Place, Jersey City, NJ 07310Telephone: 800.872.0711 Fax: 201.239.5741Naples400 Fifth Avenue South, Suite 100, Naples, FL34102Telephone: 800.293.3891 Fax: 239.435.9788West Palm Beach1217 South Flagler Drive, Palm Beach, FL33401Telephone: 800.909.4503 Fax: 561.802.4444Surfside9569 Harding Avenue, Surfside, FL33154Telephone: 800.773.2980 Fax: 305.868.5670 Women’s Financial Network at Siebert885 Third Avenue, 17th Floor, New York, NY10022Telephone: 877.936.4968 Fax: 212.486.2784Siebert Brandford Shank & Co., L.L.C., offices located in:Atlanta • Anchorage • Chicago • Dallas • Detroit • Fort Worth • Houston • Los Angeles • Miami New York • Oakland • Orlando • San Antonio • San Diego • Seattle • Washington D.C. • WeehawkenMemberNYSE/FINRA/SIPC• Established1967 • NASDAQ Symbol SIEBMURIELSIEBERT&CO.,INC.New York Headquarters885 Third Avenue, 17th Floor, New York, NY10022Telephone: 877.327.8379 Fax: 212.486.2784Offices In:www.siebertnet.com