SIEBERT FINANCIAL CORP — Interim / Quarterly Report 2011

May 16, 2011

10-Q 1 n11948_10-q.htm FORM 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q

(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period
ended March
31, 2011
OR
o	TRANSITION REPORT PURSUANT TO 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	11-1796714
(State or
Other Jurisdiction of Incorporation or	(I.R.S. Employer Identification No.)
Organization)

885 Third Avenue, New York, NY 10022
(Address of Principal Executive Offices) (Zip Code)
(212) 644-2400
(Registrant’s Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, if Changed Since
Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)

| Large
Accelerated Filer o | Accelerated
Filer o |
| --- | --- |
| Non-Accelerated
Filer o | Smaller
Reporting Company x |

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: May 13, 2011, there were 22,118,435 shares of Common Stock, par value $.01 per share outstanding.

Unless the context otherwise requires, the “Company” shall mean Siebert Financial Corp. and its wholly owned subsidiaries and “Siebert” shall mean Muriel Siebert & Co., Inc., a wholly owned subsidiary of the Company.

Certain statements contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” below and elsewhere in this report, as well as oral statements that may be made by us or by our officers, directors or employees acting on our behalf, that are not statements of historical or current fact constitute “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward looking statements involve risks and uncertainties and known and unknown factors that could cause our actual results to be materially different from our historical results or from any future results expressed or implied by such forward looking statements, including, without limitation: changes in general economic and market conditions; 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 lower rates on commissions than we do; 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 our customers; computer and telephone system failures; our level of spending on advertising and promotions; trading errors and the possibility of losses from customer non-payment of amounts due; other increases in expenses and changes in net capital or other regulatory requirements. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date when such statements were made or to reflect the occurrence of unanticipated events. An investment in us involves various risks, including those mentioned above and those which are detailed from time to time in our Securities and Exchange Commission filings.

1

Part I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Siebert Financial Corp. & Subsidiaries Consolidated Statements of Financial Condition

	March 31, 2011
	(unaudited)
ASSETS
Cash and cash equivalents	$ 23,052,000	$	22,646,000
Cash equivalents – restricted	1,532,000		1,532,000
Receivable from brokers	1,836,000		1,563,000
Securities owned, at fair value	1,131,000		1,116,000
Furniture, equipment and leasehold improvements, net	1,120,000		1,246,000
Investment in and advances to affiliates	8,206,000		9,816,000
Income tax refund receivable	437,000		795,000
Prepaid expenses and other assets	955,000		741,000
Intangibles, net	645,000		648,000
	$ 38,914,000	$	40,103,000
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Accounts payable and accrued liabilities	4,297,000		3,477,000
Contingencies
Stockholders’ equity:
Common stock, $.01 par value; 49,000,000 shares authorized, 23,211,846
shares issued, and 22,118,751 and 22,122,678 shares outstanding at March 31,
2011 and December 31, 2010, respectively	232,000		232,000
Additional paid-in capital	19,486,000		19,484,000
Retained earnings	19,605,000		21,609,000
Less: 1,093,095 and 1,089,168 shares of treasury stock, at cost at
March 31, 2011 and December 31, 2010, respectively	(4,706,000	)	(4,699,000	)
	34,617,000		36,626,000
	$ 38,914,000	$	40,103,000

See notes to condensed consolidated financial statements.

2

Siebert Financial Corp. & Subsidiaries Consolidated Statements of Operations (unaudited)

	Three Months Ended March 31, — 2011		2010
Revenues:
Commissions and fees	$ 3,945,000		$ 3,708,000
Investment banking	1,172,000		347,000
Trading profits	377,000		234,000
Interest and dividends	9,000		24,000
	5,503,000		4,313,000
Expenses:
Employee compensation and benefits	2,462,000		2,456,000
Clearing fees, including floor brokerage	924,000		1,252,000
Professional fees	1,413,000		2,130,000
Advertising and promotion	100,000		143,000
Communications	557,000		649,000
Occupancy	271,000		311,000
Other general and administrative	685,000		684,000
	6,412,000		7,625,000
(Loss) income from equity investees	(1,084,000	)	1,323,000
Loss before income taxes	(1,993,000	)	(1,989,000	)
Income tax expense (benefit)	11,000		(795,000	)
Net loss	$ (2,004,000	)	$ (1,194,000	)
Net loss per share of common stock - Basic and Diluted	$ (.09	)	$ (.05	)
Weighted average shares outstanding - Basic and Diluted	22,121,188		22,188,174

See notes to condensed consolidated financial statements.

3

Siebert Financial Corp. & Subsidiaries Consolidated Statements of Cash Flows (unaudited)

	Three Months Ended March 31, — 2011		2010
Cash flows from operating activities:
Net loss	$ (2,004,000	)	$ (1,194,000	)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization	132,000		126,000
Loss (income) from equity investees	1,084,000		(1,323,000	)
Distribution from equity investees	479,000		948,000
Deferred taxes	—		45,000
Stock based compensation	2,000		2,000
Changes in:
Securities owned, at fair value	(15,000	)	(2,000	)
Receivable from brokers	(273,000	)	816,000
Income tax refund receivable	358,000		(850,000	)
Prepaid expenses and other assets	(214,000	)	(55,000	)
Accounts payable and accrued liabilities	820,000		938,000
Net cash provided by (used in) operating activities	369,000		(549,000	)
Cash flows from investing activities:
Purchase of furniture, equipment and leasehold improvements	(3,000	)	(63,000	)
Collection (payment) of advances made to equity investees	47,000		(27,000	)
Net cash provided by (used in) investing activities	44,000		(90,000	)
Cash flows from financing activities:
Purchase of treasury shares	(7,000	)	(14,000	)
Net cash used in financing activities	(7,000	)	(14,000	)
Net increase (decrease) in cash and cash equivalents	406,000		(653,000	)
Cash and cash equivalents - beginning of period	22,646,000		24,184,000
Cash and cash equivalents - end of period	$ 23,052,000		$ 23,531,000
Supplemental cash flow disclosures:
Cash paid for:
Income taxes	$ 11,000		$ 7,000

See notes to condensed consolidated financial statements

4

Siebert Financial Corp. & Subsidiaries Notes to Condensed Consolidated Financial Statements Three Months Ended March 31, 2011 and 2010 (Unaudited)

1.	Organization and Basis of Presentation:
	The consolidated financial statements include the accounts of Siebert
Financial Corp. (the “Company”) and its wholly owned subsidiaries Muriel
Siebert & Co., Inc. (“Siebert”) and Siebert Women’s Financial Network,
Inc. (“WFN”). All material intercompany balances and transactions have been
eliminated. Investment in two entities in which the Company has ownership
interests of 49% and 33.33%, respectively, are accounted for by the equity
method.
	The
condensed consolidated interim financial statements presented herein are
unaudited and include all adjustments (consisting of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of the financial position and results of operations of the
interim periods pursuant to the rules and regulations of the Securities and Exchange
Commission (the “SEC”). Certain information and footnote disclosures normally
included in annual financial statements prepared in accordance with generally
accepted accounting principles (“GAAP”) in the United States of America
(“U.S.”) have been condensed or omitted pursuant to SEC rules and
regulations, although the Company believes that the disclosures made are
adequate to make the information not misleading. The balance sheet at
December 31, 2010 has been derived from the audited consolidated statement of
financial condition at that date, but does not include all information and
footnotes required by U.S. GAAP for complete financial statements. These
condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements included in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2010. Because of the
nature of the Company’s business, the results of operations for the three
months ended March 31, 2011 are not necessarily indicative of operating
results for the full year.
2.	Securities:
	Securities owned are carried at fair value with realized and
unrealized gains and losses reflected in trading profits. Siebert clears all
its security transactions through unaffiliated clearing firms on a fully
disclosed basis. Accordingly, Siebert does not hold funds or securities for,
or owe funds or securities to, its customers. Those functions are performed
by the clearing firms.
3.	Fair Value of Financial Instruments:
	Authoritative accounting guidance defines fair value, establishes a
framework for measuring fair value and establishes a fair value hierarchy.
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between participants at the
measurement date. Fair value measurements are not adjusted for transaction
costs. The fair value hierarchy prioritizes inputs to valuation techniques
used to measure fair value into three levels:
	Level 1 – Unadjusted quoted prices in active markets for identical
assets or liabilities.
	Level 2 – Inputs other than quoted prices that are observable, either
directly or indirectly, and reasonably available.

5

| Level 3 – Unobservable inputs which reflect the assumptions that
management develops based on available information about the assumptions
market participants would use in valuing the asset or liability. |
| --- |
| The classification of financial instruments valued at fair value at
March 31, 2011 is as follows: |

| Financial
Instruments | Level 1 | Level 2 | Total |
| --- | --- | --- | --- |
| Cash equivalents | $ 21,266,000 | — | $ 21,266,000 |
| Securities | 264,000 | $ 867,000 | 1,131,000 |
| | $ 21,530,000 | $ 867,000 | $ 22,397,000 |

| | Securities include common stock of $264,000 at March 31, 2011, valued
on the last business day of the period at the last available reported sales
price on the primary securities exchange (Level 1) and municipal bonds of
$867,000 at March 31, 2011, valued based on prices obtained from pricing
sources, which derive values from observable inputs (Level 2). |
| --- | --- |
| 4. | Per Share Data: |
| | Basic earnings (loss) per
share is calculated by dividing net income (loss) by the weighted average
outstanding common shares during the period. Diluted earnings per share is
calculated by dividing net income by the number of shares outstanding under
the basic calculation and adding all dilutive securities, which consist of
options. The Company incurred a net loss for the three months ended March 31,
2011 and 2010. Accordingly, basic and diluted net loss per common share are
the same for each period as the effect of stock options is anti-dilutive.
Shares of underlying stock options not included in the diluted computation
amounted to 1,228,200 in 2011 and 1,704,700 in 2010. |
| 5. | Net Capital: |
| | Siebert is subject to the SEC’s Uniform Net Capital Rule (Rule
15c3-1), which requires the maintenance of minimum net capital. Siebert has
elected to use the alternative method, permitted by the Rule, which requires
that Siebert maintain minimum net capital, as defined, equal to the greater
of $250,000 or two percent of aggregate debit balances arising from customer
transactions, pursuant to the Rule. As of March 31, 2011, Siebert had net
capital of approximately $19,724,000 as compared with net capital
requirements of $250,000. |
| 6. | Revenue: |
| | Commissions
and fees earned on customer trades together with related clearing expenses
are recorded on a trade-date basis. |
| | Trading
profits are also recorded on a trade-date basis. |
| | Investment
banking revenue includes gains and fees, net of syndicate expenses, arising
from underwriting syndicates in which the Company participates. Investment
banking management fees are recorded on the offering date, sales concessions
on the settlement date and underwriting fees at the time the underwriting is
completed and the income is reasonably determinable. |
| | Interest
is recorded on an accrual basis and dividends are recorded on the ex-dividend
date. |

6

7.	Capital Transactions:
	On January 22, 2008, the Board of Directors of the Company authorized
a buy back of up to 300,000 shares of common stock. Shares will be purchased
from time to time, at management’s discretion, in the open market and in
private transactions. The Company purchased 3,927 shares at an average price
of $1.89 in the first quarter of 2011.
8.	Investment in and advances to affiliates:
	Siebert, Brandford, Shank & Co., L.L.C. (“SBS”)
	Siebert holds a 49% ownership interest in SBS which is engaged in
municipal bond underwritings. Income or loss from SBS is considered to be
integral to Siebert’s operations and material to the results of operations.
	Summarized financial data of SBS is set forth below.

	March 31, — 2011	2010
Total assets, including secured demand note
of $1,200,000 in each period due from Siebert	$ 34,767,000
Total liabilities, including subordinated
liabilities of $1,200,000 in each period due to Siebert	18,705,000
Total members’ capital	16,063,000
Regulatory minimum net capital requirement	250,000
Total revenues	3,945,000	$	13,166,000
Net (loss) income	(2,170,000	)	2,684,000

| Siebert charged SBS $19,000 for the three months ended March 31, 2011
and 2010, respectively, for general and administrative services, which
Siebert believes approximates the cost of furnishing such services. |
| --- |
| Siebert’s share of net (loss) income for the three months ended March
31, 2011 and 2010 amounted to $(1.1) million and $1.3 million, respectively. |
| Siebert received distributions from SBS of $479,000 during the three
months ended March 31, 2011, and Siebert’s share of undistributed earnings
from SBS amounted to $7,479,000 at March 31, 2011. 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. |
| SBS Financial Products Company, LLC
(“SBSFPC”) |
| The Company has a 33.33% ownership interest in, and the two
individual principals of SBS have an aggregate 66.66% ownership interest in,
SBSFPC which engages in derivatives transactions related to the municipal
underwriting business. Income/(loss) from SBSFPC is considered to be integral
to the Company’s operations and material to the results of operations. |
| Summarized financial data of SBSFPC is set forth below. |

7

Total assets	March 31, 2011 — $ 162,333,000		March 31, 2010
Total
liabilities	161,483,000
Total
members’ capital	850,000
Total revenues	(12,000	)*	$ 77,000
Net (loss)
income	(63,000	)	25,000

	*Attributable to unrealized loss on derivative contracts.
	The Company’s share of net (loss) income for the three months ended
March 31, 2011 and 2010 amounted to $(21,000) and $8,000, respectively.
	At March 31, 2011, SBSFPC had an accumulated loss of $350,000 of
which the Company’s share was $117,000.
9.	Contingent Liabilities:
	Retail customer transactions are cleared through clearing brokers on
a fully disclosed basis. If customers do not fulfill their contractual
obligations, the clearing broker may charge Siebert for any loss incurred in
connection with the purchase or sale of securities at prevailing market
prices to satisfy the customer obligations. Siebert regularly monitors the
activity in its customer accounts for compliance with its margin
requirements. Siebert is exposed to the risk of loss on unsettled customer
transactions if customers are unable to fulfill their contractual
obligations. There were no material losses for unsettled customer
transactions for the three months ended March 31, 2011 and 2010.
	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.
10.	Income taxes:
	Due to cumulative losses incurred by the Company and its subsidiaries
during the current three month period and prior three years, the Company has
concluded that it is not more likely than not that it will realize its net
deferred tax asset and, accordingly, has recorded a valuation allowance to
fully offset its net deferred tax asset at March 31, 2011, which amounted to
$2,871,000.
Item 2. Management’s Discussion and Analysis
of Financial Condition and Results of Operations
	This discussion should be read in
conjunction with our audited consolidated financial statements as of and for
the year ended December 31, 2010, and our unaudited consolidated financial
statements and the notes thereto contained elsewhere in this Quarterly
Report.
Business Environment
	The financial crisis affecting the
global economy has created historic volatility in the marketplace. Our
working capital is invested primarily in money market funds, so that
liquidity has not been materially affected. The crisis did have the effect of
reducing participation in the securities market by our retail and
institutional customers, which had an adverse effect on our 2010 revenues and
a lesser effect in 2011. Our affiliate, Siebert, Brandford, Shank & Co.,
L.L.C. had a loss for the current period of approximately $2.2 million due to
industry volumes dramatically declining in the

8

| current period this year as compared to the same period last year due
to municipalities struggling with the fiscal crisis, concerns about defaults
at the state and local level and the expiration of the Build America Bonds
program. This resulted in a loss to the Company of $1.1 million for the
current three month period. Our expenses include the costs of an arbitration
proceeding commenced by a former employee following the termination of his
employment, which remains unresolved. The Company believes that the action is
without merit, but the costs of defense, which are included as professional
expenses, have adversely affected the Company’s results of operation and may
continue to affect the results of operations until the action is completed.
Competition in the brokerage industry remains intense. |
| --- |
| The following table sets forth certain metrics as of March 31, 2011
and 2010 and for the three months ended March 31, 2011 and 2010,
respectively, which we use in evaluating our business. |

Retail Customer Activity:	For the Three Months ended March 31, — 2011	2010
Total retail trades:	114,029	101,829
Average commission per retail trade:	$ 21.72	$ 21.44

	As of March 31, — 2011	2010
Retail customer balances:
Retail customer net worth (in billions):	$ 7.0	$ 6.4
Retail customer money market fund value (in
billions):	$ 1.0	$ 1.0
Retail customer margin debit balances (in
millions):	$ 237.6	$ 176.7
Retail customer accounts with positions:	48,639	52,654

Description:

•	Total retail trades represent retail trades that generate commission.
•	Average commission per retail trade represents the average commission
generated for all types of retail customer trades.
•	Retail customer net worth represents the total value of securities
and cash in the retail customer accounts before deducting margin debits.
•	Retail customer money market fund value represents all retail
customers accounts invested in money market funds.
•	Retail customer margin debit balances represents credit extended to
our customers to finance their purchases against current positions.

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• Retail customer accounts with positions represents retail customers with cash and/or securities in their accounts.

| |
| --- |
| Recent Developments |
| On January 22, 2008, our Board of Directors
authorized a buy back of up to 300,000 shares of common stock. Shares will be
purchased from time to time, in our discretion, in the open market and in
private transactions. The Company purchased 3,927 shares at an average price
of $1.89 in the first quarter of 2011. |
| Critical Accounting Policies |
| We generally follow accounting policies
standard in the brokerage industry and believe that our policies
appropriately reflect our financial position and results of operations. Our
management makes significant estimates that affect the reported amounts of
assets, liabilities, revenues and expenses and the related disclosure of
contingent assets and liabilities included in the financial statements. The
estimates relate primarily to revenue and expense items in the normal course
of business as to which we receive no confirmations, invoices, or other
documentation at the time the books are closed for a period. We use our best
judgment, based on our knowledge of these revenue transactions and expenses incurred,
to estimate the amounts of such revenue and expense. 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
intangible assets, and the fair market value of intangible assets. Our
management believes that its estimates are reasonable. |
| Results of Operations |
| We had a net loss of $2.0 million and
$1.2 million for the three months ended March 31, 2011 and 2010,
respectively. |
| Total revenues for the three months
ended March 31, 2011 were $5.5 million, an increase of $1.2 million or 27.6%
from the same period in 2010. |
| Commission and fee income for the three
months ended March 31, 2011 was $3.9 million, an increase of $237,000 or 6.4%
from the same period in 2010 primarily due to an increase in retail customers
trading volumes as well as an increase in the average commission charged per
trade as well as an increase in fees from margin debits due to higher margin
debit balances. Additionally, there was an increase in our institutional
trading commissions offset by a decrease in commissions generated by our
commission recapture operations. |

10

| Investment banking revenues for the
three months ended March 31, 2011 were $1.2 million, an increase of $825,000
or 237.8% from the same period in 2010 primarily due to our participation in
more new issues in the equity and debt markets as a result of increased
activity in the market place. |
| --- |
| Trading
profits were $377,000 for the three months ended March 31, 2011, an increase
of $143,000 or 61.1% from the same period in 2010 primarily due to an overall
increase in customer trading volume in the debt markets and the addition of a
debt sales-trader in the first quarter of 2011. |
| Interest
and dividends for the three months ended March 31, 2011 were $9,000, a
decrease of $15,000 or 62.5% from the same period in 2010 primarily due to
lower cash balances. |
| Total expenses for the three months
ended March 31, 2011 were $6.4 million, a decrease of $1.2 million or 15.9%
from the same period in 2010. |
| Employee compensation and benefit costs
for the three months ended March 31, 2011 and 2010 was $2.5 million. There
was a decrease in compensation due to a reduction in headcount for registered
representatives offset by an increase in commissions paid based on production
in the capital markets and retail operations as well as an increase in health
benefits. |
| Clearing and floor brokerage costs for
the three months ended March 31, 2011 were $924,000, a decrease of $328,000
or 26.2% from the same period in 2010 primarily due to the execution of a
Fully Disclosed Clearing Agreement with our primary clearing firm in the
second quarter of 2010 which reduced our fees for clearing costs. |
| Professional fees were $1.4 million for
the three months ended March 31, 2011, a decrease of $717,000, or 33.7% from
the same period in 2010 primarily due to a decrease in legal fees relating to
a dispute with a former employee. |
| Advertising and promotion expenses for
the three months ended March 31, 2011 were $100,000, a decrease of $43,000 or
30.1% from the same period in 2010 due to a decrease in production and airing
of television commercials. |
| Communications expense for the three
months ended March 31, 2011 was $557,000, a decrease of $92,000 or 14.2% from
the same period in 2010 primarily due to a decrease in hosting and
communication costs associated with our website. |
| Occupancy costs for the three months
ended March 31, 2011 were $271,000, a decrease of $40,000 or 12.9% from the
same period in 2010 due to a decrease in rents in the New York office. |
| Other general and administrative
expenses were $685,000, an increase of $1,000 or 0.2% from the same period in
2010 due to an increase in system updates, placement fees, depreciation and
printing costs offset by decreases in registration fees, travel and
entertainment, supplies, transportation and postage. |
| Loss from Siebert’s equity investment
in Siebert Brandford Shank & Co., L.L.C., an entity in which Siebert holds
a 49% equity interest (“SBS”), for the three months ended March 31, 2011 was
$1.1 million, compared to income of $1.3 million from the same period in 2010
due to SBS participating in fewer managed and co-managed transactions. Loss
from our equity investment in SBS Financial Products Company, LLC, an entity
in which we hold a 33% equity interest (“SBSFPC”) for the three months ended
March 31, 2011 was $21,000 as compared to income of $8,000 from the same
period in 2010. This loss in 2011 was due to the mark to market loss in
positions. Income and loss from equity investees is considered to be integral
to our operations and material to the results of operations. |

11

| |
| --- |
| Liquidity and Capital Resources |
| Our assets are highly liquid,
consisting generally of cash, money market funds and commercial paper. Our
total assets at March 31, 2011 were $39 million. As of that date, $25
million, or 64%, of our total assets 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 March
31, 2011, Siebert’s regulatory net capital was $19.7 million, $19.5 million
in excess of its minimum capital requirement of $250,000. |
| On January 22, 2008, the Board of Directors
of the Company authorized a buy back of up to 300,000 shares of common stock.
Shares will be
purchased from time to time, in our discretion, in the open market and in
private transactions. The Company purchased 3,927 shares at an average price
of $1.89 in the first quarter of 2011. |
| Siebert has entered into a Secured
Demand Note Collateral Agreement with SBS under which Siebert is obligated to
lend to SBS up to $1.2 million on a subordinated basis collateralized by cash
equivalents of approximately $1.5 million as of March 31, 2011. Amounts
pledged by Siebert under the facility are reflected on our balance sheet as
“cash equivalents – restricted”. SBS pays Siebert interest on this amount at
the rate of 4% per annum. The facility expires on August 31, 2012 at which
time SBS is obligated to repay to Siebert any amounts borrowed by SBS
thereunder. |
| Item 3.
Quantitative and Qualitative Disclosures About Market Risk |
| Working capital is generally invested
temporarily in dollar denominated money market funds and United States
Treasury Bills. These investments are not subject to material changes in
value due to interest rate movements. |
| Retail customer transactions are
cleared through clearing brokers on a fully disclosed basis. If customers do
not fulfill their contractual obligations, the clearing broker may charge
Siebert for any loss incurred in connection with the purchase or sale of
securities at prevailing market prices to satisfy the customers’ obligations.
Siebert regularly monitors the activity in its customer accounts for
compliance with its margin requirements. Siebert is exposed to the risk of
loss on unsettled customer transactions if customers and other counterparties
are unable to fulfill their contractual obligations. There were no material
losses for unsettled customer transactions as of March 31, 2011. |
| Item 4. Controls and Procedures |
| We carried out an evaluation, under the
supervision and with the participation of management, including our Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures as of the end of the
period covered by this report pursuant to Rule 13a-15(e) or Rule 15d-15(e) of
the Securities Exchange Act 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 |

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| periods specified in the rules and forms of the Securities and
Exchange Commission and to ensure that information required to be disclosed
is accumulated and communicated to our management, including our Chief
Executive Officer and Chief Financial Officer to allow timely decisions
regarding timely disclosure. |
| --- |
| There were no changes in our internal control over financial
reporting that occurred during our most recent fiscal quarter that have
materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting. |

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Part II - OTHER INFORMATION

ITEM 1. Legal Proceedings

We are involved in various routine lawsuits of a nature we deemed to be customary and incidental to our business. In the opinion of management, the ultimate disposition of such actions will not have a material adverse effect on our financial position or results of operations.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2010, which could materially affect our business, financial position and results of operations. There are no material changes from the risk factors set forth in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2010.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

On January 23, 2008, our Board of Directors authorized the repurchase of up to 300,000 shares of our common stock. Shares will be purchased from time to time, in our discretion, in the open market and in private transactions.

We purchased 3,927 shares at an average price of $1.89 in the first quarter of 2011.

A summary of our repurchase activity for the three months ended March 31, 2011 is as follows:

Issuer Purchases Of Equity Securities

| Period — January 2011 | 682 | Average
Price Paid Per Share — $ 1.84 | 92,267 | 207,733 |
| --- | --- | --- | --- | --- |
| February
2011 | 1,056 | $ 1.89 | 93,323 | 206,677 |
| March 2011 | 2,189 | $ 1.91 | 95,512 | 204,488 |
| Total | 3,927 | $ 1.89 | 95,512 | 204,488 |

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Item 6. Exhibits

| 31.1 | Certification of Muriel F.
Siebert pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| --- | --- |
| 31.2 | Certification of Joseph M.
Ramos, Jr. pursuant to Exchange Act Rule 13a-14(a) and 15d-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1 | Certification of 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. |

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| SIEBERT
FINANCIAL CORP. | |
| --- | --- |
| By: | /s/ Muriel F. Siebert |
| | Muriel F.
Siebert |
| | Chairwoman
and President |
| | (principal
executive officer) |
| Dated: May
16, 2011 | |
| By: | /s/ Joseph M. Ramos, Jr. |
| | Joseph M.
Ramos, Jr. |
| | Executive
Vice President and Chief Financial Officer |
| | (principal
financial and accounting officer) |
| Dated: May
16, 2011 | |

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