SIEBERT FINANCIAL CORP — Proxy Solicitation & Information Statement 1999

Nov 23, 1999

SCHEDULE 14A INFORMATION REQUIRED IN PROXY STATEMENT Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant [x] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [x] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12 SIEBERT FINANCIAL CORP. ------------------------------------------------ (Name of Registrant as Specified In Its Charter) ------------------------------------------------ (Name of Person(s) Filing Proxy Statement, if other than the Reqistrant) Payment of Filing Fee (Check Appropriate Box): [x] No fee required [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 1) Title of each class of securities to which transaction applies: 2) Aggregate number of securities to which transaction applies: 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): 4) Proposed maximum aggregate value of transaction: 5) Total fee paid: [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing 1) Amount Previously Paid: 2) Form, Schedule or Registration Statement No.: 3) Filing Party: 4) Dated Filed: SIEBERT FINANCIAL CORP. 885 THIRD AVENUE, SUITE 1720 NEW YORK, NEW YORK 10022 (212) 644-2400 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON DECEMBER 21, 1999 Dear Shareholders: We will hold the 1999 Annual Meeting of Shareholders of Siebert Financial Corp., a New York corporation (the "Company"), at The Four Seasons Hotel, 57 East 57th Street, New York, New York, on Tuesday, December 21, 1999 at 10:00 a.m., local time. The meeting's purpose is to: 1. Elect five directors; 2. Ratify and approve the selection of Richard A. Eisner & Company, LLP as independent auditors for 1999; and 3. Consider any other matters that are properly presented at the Annual Meeting and any adjournment. You may vote at the Annual Meeting if you were one of our shareholders at the close of business on Monday, November 15, 1999. Along with the attached Proxy Statement, we are also enclosing a copy of our 1998 Annual Report to Shareholders, which includes our financial statements. To assure your representation at the meeting, please vote, sign and mail the enclosed proxy as soon as possible. We have enclosed a return envelope, which requires no postage if mailed in the United States, for that purpose. Your proxy is being solicited by the Board of Directors. PLEASE VOTE - YOUR VOTE IS IMPORTANT Daniel Iesu Secretary November 22, 1999 SIEBERT FINANCIAL CORP. 885 THIRD AVENUE, SUITE 1720 NEW YORK, NEW YORK 10022 (212) 644-2400 PROXY STATEMENT FOR THE 1999 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON DECEMBER 21, 1999 INFORMATION ABOUT THE ANNUAL MEETING AND VOTING Annual Meeting: December 21, 1999 The Four Seasons Hotel 10:00 a.m., local time. 57 East 57th Street New York, New York Record Date: Close of business on Monday, November 15, 1999. If you were a shareholder at that time, you may vote at the meeting. Each share is entitled to one vote. On the record date, we had 22,883,005 shares of our common stock outstanding. Of those shares, 19,878,700 shares were beneficially owned or controlled by Muriel Siebert, our Chair and President and one of our directors. Agenda: 1. Elect five directors. 2. Ratify the selection of Richard A. Eisner & Company, LLP as our independent auditors for 1999. 3. Any other proper business. Vote Required: Proposal 1: The five nominees for director who receive the most votes will be elected. If you do not vote for a nominee, or you indicate "withhold authority to vote" for any nominee on your proxy card, your vote will not count either for or against the nominee. Proposal 2: The affirmative vote of a majority of the votes cast at the meeting, whether in person or by proxy, is required to ratify the selection of the auditors. Broker Non-votes: If your broker does not vote on any of the two proposals, it will have no effect on the votes with respect to any of the two proposals. Proxies: Please vote; your vote is important. Prompt return of your proxy will help avoid the costs of resolicitation. Unless you tell us on the proxy card to vote 1 differently, we will vote signed returned proxies "FOR" the ratification of the appointment of the auditors, and "FOR" the Board's nominees for director. If any nominee cannot or will not serve as a director, your proxy will vote in accordance with his or her best judgment. At the time we began printing this proxy statement, we did not know of any matters that needed to be acted upon at the meeting other than those discussed in this proxy statement. However, if any additional matters are presented to the shareholders for action at the meeting, your proxy will vote in accordance with his or her best judgment. Proxies Solicited by: The Board of Directors Revoking Your Proxy: You may revoke your proxy before it is voted at the meeting. Proxies may be revoked if you either: o deliver a signed, written revocation letter, dated later than the proxy, to Daniel Iesu, Secretary, at Siebert Financial Corp., 885 Third Avenue, Suite 1720, New York, New York 10022; o deliver a signed proxy, dated later than the first one, to Mr. Iesu at the address above; or o attend the Annual Meeting and vote in person or by proxy. Attending the meeting alone will not revoke your proxy. Cost of Solicitation: We will pay all costs of soliciting these proxies, estimated at $3,500 in the aggregate. Although we are mailing these proxy materials, our directors, officers and employees may also solicit proxies by telephone, facsimile, mail or personal contact. These persons will receive no additional compensation for their services, but we may reimburse them for reasonable out-of-pocket expenses. We will also furnish copies of solicitation materials to fiduciaries, custodians, nominees and brokerage houses for forwarding to beneficial owners of our shares of common stock held in their names, and we will reimburse them for reasonable out-of-pocket expenses. American Stock Transfer & Trust Company, our transfer agent, is assisting us in the solicitation of proxies for the meeting for no additional fee. Your Comments: Your comments about any aspects of our business are welcome. You may use the space provided on the proxy card for this purpose, if desired. Although we may not respond on an individual basis, your comments help us to measure your satisfaction, and we may benefit from your suggestions. 2 EXECUTIVE COMPENSATION AND OTHER INFORMATION Executive Compensation: The following table shows salaries and bonuses paid during the last three years for our Chief Executive Officer and for our executive officers whose total annual salary and bonus exceeded $100,000. Summary Compensation Table

Stock Options: Our 1997 Stock Option Plan was adopted by the Board in March 1997 and approved by our shareholders on December 1, 1997. The Plan permits the issuance of either options intended to qualify as incentive stock options, or ISOs, under Section 422 of the Internal Revenue Code of 1986, or options not intended to so qualify. The aggregate fair market value of our common stock for which a participant is granted ISOs that first become exercisable during any given calendar year will be limited to $100,000. To the extent this limitation is exceeded, an option will be treated as a nonqualified stock option. The Plan provides for the grant of options to purchase up to 2,100,000 shares of our common stock to our employees and the employees of our subsidiaries. The Plan is administered by a committee of the Board, consisting of Patricia L. Francy and Jane H. Macon, which selects persons to receive awards under the Plan, determines the amount of each award and the terms and conditions governing the award, interprets the Plan and any awards granted thereunder, establishes rules and regulations for the administration of the Plan and takes any other action necessary or desirable for the administration of the Plan. The Plan may be amended by the Board as it deems advisable. No amendment will become effective, however, unless approved by the affirmative vote of our shareholders if shareholder approval is necessary for the continued validity of the Plan or if the failure to obtain shareholder approval would adversely affect 3 the compliance of the Plan under any rule or regulation applicable to it. No amendment may, without the consent of a participant, impair a participant's rights under any option previously granted under the Plan. The price for which shares of our common stock may be purchased upon the exercise of an option will be the fair market value of the shares on the date of the grant of such option. An ISO granted to an employee who owns stock possessing more than 10% of the total combined voting power of all classes of our stock, however, shall have a purchase price for the underlying shares equal to 110% of the fair market value of our common stock on the date of grant. An option generally may be granted for a term not to exceed ten years from the date the option is granted. All options will be exercisable in accordance with the terms and conditions set forth in the option agreement evidencing the grant of each option. Except under limited circumstances involving termination of employment due to retirement or death or disability, a participant may not exercise any option granted under the Plan within the first year after the date of the grant of the option. Full payment of the purchase price for shares of our common stock purchased upon the exercise, in whole or in part, of an option must be made at the time of the exercise. The Plan provides that the purchase price may be paid in cash or in shares of our common stock valued at their fair market value on the date of purchase. Alternatively, an option may be exercised in whole or in part by delivering a properly executed exercise notice, together with irrevocable instructions to a broker to deliver promptly to us the amount of sale or loan proceeds necessary to pay the purchase price and applicable withholding taxes. During the year ended December 31, 1998, we granted options to purchase: (1) 40,000 shares of our common stock to our Executive Vice President and Chief Operating Officer at an exercise price of $2.6875 per share, (2) 8,000 shares of our common stock to our Secretary at an exercise price of $2.6875 per share, and (3) 10,000 shares of our common stock to our Chief Financial Officer at an exercise price of $6.6250. These options are exercisable at a rate of 20% on the first, second, third, fourth and fifth anniversaries of the date of grant and expire after the tenth anniversary of the date of grant. The following table sets forth certain summary information concerning individual grants of stock options made during the year ended December 31, 1998 to each of the officers named in the Summary Compensation Table. 4

• ----------------- (1) These amounts represent assumed rates of appreciation in the price of our common stock during the terms of the options in accordance with rates specified in applicable federal securities regulations. Actual gains, if any, on stock option exercises will depend on the future price of our common stock and overall stock market conditions. The following table sets forth at December 31, 1998 the number of options and the value of unexercised options held by each of the officers named in the Summary Compensation Table. None of the individuals named in the table exercised options during 1998 to purchase shares of our common stock.

----------------------- (1) The dollar values have been calculated by determining the difference between the closing price of our common stock at December 31, 1998, $9.375 per share, and the exercise prices of the options. Restricted Stock Award Plan: Our 1998 Restricted Stock Award Plan provides for awards to key employees of not more than 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, 1998, 38,000 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. 5 The following table sets forth at December 31, 1998 the number of shares awarded under the Restricted Stock Award Plan to each of the officers named in the Summary Compensation Table. Long-Term Incentive Plans B Awards In Last Fiscal Year Number of Shares, Units Performance or Other or Period Until Other Maturation Name Rights or Payout - ---- ------ --------- Muriel F. Siebert - - Nicholas P. Dermigny 400 1 year Daniel Iesu 400 1 year Employment Agreement: We entered into an Employment Agreement dated as of April 9, 1999 with Daniel Jacobson to serve as our Vice Chairman, an officer position, beginning May 3, 1999. The agreement provides for an annual base salary of $185,000 plus such bonuses as may be authorized from time to time by our Board of Directors. The agreement has an initial three year term, with automatic extensions of one year unless terminated. If we terminate the agreement other than for cause or the permanent disability or death of Mr. Jacobson, he will be entitled to continue to receive his base salary for a period of (1) three years if the termination occurs during the first two years of the agreement, (2) two years if the termination occurs during years three or four of the agreement (3) and one year if the termination occurs thereafter. If we terminate the agreement due to the permanent disability of Mr. Jacobson, he will be entitled to continue to receive his base salary for a period of one year. In accordance with the agreement, we also granted an option to purchase 20,000 shares of our common stock to Mr. Jacobson at an exercise price of $32.50 per share. Director Compensation: Our non-employee directors receive an annual cash fee of $10,000. In addition, in 1997, we granted to each of our non-employee directors an option to purchase 40,000 shares of our common stock at $2.3125 per share. We do not compensate our employees or employees of our subsidiaries who serve as directors. Certain Relationships And Related Transactions: As a registered broker-dealer, our subsidiary is subject to the Uniform Net Capital Rule (Rule 15c3-1) under the Securities Exchange Act of 1934. "Net capital" is defined as net worth (assets minus liabilities), plus qualifying subordinated borrowings, less certain deductions. Ms. Siebert loaned us 6 $3 million pursuant to subordinated notes bearing interest at rates ranging from 4% to 8%. These notes were repaid in September 1999. In 1998, we loaned an aggregate of $4 million to Siebert, Bradford, Shank & Co., L.L.C., or "SBS", pursuant to Temporary Subordinated Loan Agreements entered into under the rules of the NASD. These loans were subsequently repaid. We hold 49% of the equity interest of SBS. The foregoing relationship and transactions have been approved by the Board or a committee of the Board or by the shareholders and, to the extent that these arrangements are available from non-affiliated parties, are on terms no less favorable to us than those available from non-affiliated parties. 7 SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS Management Ownership: The following table lists share ownership of our common stock as of November 1, 1999. The information includes beneficial ownership by each of our directors and executive officers, by all directors and executive officers as a group and beneficial owners known by our management to hold at least 5% of our common stock. To our knowledge, each person named in the table has sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. Any information in the table on beneficial owners known by management to hold at least 5% of our common stock is based on information furnished to us by such persons or groups and statements filed with the SEC.

• Less than 1% - -------------------- (1) The address for each person named in the table is c/o Siebert Financial Corp., 885 Third Avenue, New York, New York 10022. (2) Percentages are computed in accordance with Rule 13d-3 under the Securities Exchange Act of 1934. (3) Consists of 2,000 shares of our common stock that Mr. Cohen has the right to acquire pursuant to a stock option grant within 60 days of the date of this table. (4) Consists of 40,000 shares of our common stock that Mr. Dermigny has the right to acquire pursuant to a stock option grant within 60 days of the date of this table. (5) Consists of 20,000 shares of our common stock that the director has the right to acquire pursuant to a stock option grant within 60 days of the date of this table. (6) Includes options to purchase an aggregate of 82,000 shares of our common stock described above. 8 PROPOSAL 1: ELECTION OF DIRECTORS Generally: Our Board has nominated five directors for election at the meeting. Each nominee currently is serving as one of our directors. If you re-elect them, they will hold office until the next annual meeting or until their successors have been elected. NOMINEES: MURIEL F. SIEBERT Muriel Siebert has been Chair, President Age 67 and a director of Muriel Siebert & Co., Inc. since 1967 and the Siebert Financial Corp. since November 8, 1996. The first woman member of the New York Stock Exchange on December 28, 1967, Ms. Siebert served as Superintendent of Banks of the State of New York from 1977 to 1982. She is a director of the New York State Business Council, the Commission of Judicial Nomination and the Boy Scouts of Greater New York. NICHOLAS P. DERMIGNY Nicholas Dermigny has been our Executive Age 41 Vice President and Chief Operating Officer since joining us in 1989. Prior to 1993, he was responsible for our retail discount division. Mr. Dermigny became an officer and director on November 8, 1996. PATRICIA L. FRANCY Patricia Francy is Treasurer and Age 54 Controller of Columbia University. She previously served as the University's Director of Finance and Director of Budget Operations and has been associated with the University since 1969. Ms. Francy became a director on March 11, 1997. JANE H. MACON Jane Macon is a partner with the law Age 53 firm of Fulbright & Jaworski L.L.P., San Antonio, Texas. Fulbright & Jaworski L.L.P. provides legal services to us. Ms. Macon has been associated with us since 1983. Ms. Macon became a director on November 8, 1996. 9 DANIEL JACOBSON Daniel Jacobson has been our Vice Age 71 Chairman since May 1999. Prior to joining us, Mr. Jacobson was a partner at Richard A. Eisner & Company, LLP, our independent auditors. Mr. Jacobson is also a director of Barnwell Industries, Inc. Mr. Jacobson became an officer and a director on May 3, 1999. Board Meetings: In 1998, the Board held eleven meetings and acted once by unanimous written consent. Each incumbent director attended at least 75% of his or her Board meetings and all of his or her committee meetings. Board Committees: The Board has standing Audit and Compensation Committees, each currently consisting of Ms. Macon and Ms. Francy. The duties of the Audit Committee include: o review with the independent public accountants of the scope of their audit, the audited consolidated financial statements, and any internal control comments contained in the independent public accountants' management letter, including corrective action taken by management; o review of our interim unaudited financial reports; o review with the independent public accountants of the adequacy of our internal accounting control systems; and o review and approval of management's recommendation for the appointment of outside independent public accountants. The Audit Committee held one meeting during 1998. The duties of the Compensation Committee include: o the development, administration and monitoring of our executive compensation policies and the recommendation to the Board of those policies; and o the annual review of the salaries of our executive officers, including our Chief Executive Officer. When setting the salary of the executive officers for 1999, the Compensation Committee considered the compensation for such persons in previous years. The Compensation Committee held one meeting during 1998. 10 Indemnification of Officers and Directors: We indemnify our executive officers and directors to the extent permitted by applicable law against liabilities incurred as a result of their service to us and against liabilities incurred as a result of their service as directors of other corporations when serving at our request. We have a directors and officers liability insurance policy, underwritten by Executive Risk Indemnity, Inc., in the aggregate amount of $10.0 million. The policy term is from November 8, 1998 to November 8, 2000. As to reimbursements by the insurer of our indemnification expenses, the policy has a $150,000 deductible; there is no deductible for covered liabilities of individual directors and officers. In addition, we have an excess directors and officers liability insurance policy, underwritten by the Gulf Insurance Company, in the amount of $5 million. Vote Required: The five nominees for director who receive the most votes will be elected. The enclosed proxy allows you to vote for the election of all of the nominees listed, to "withhold authority to vote" for one or more of the nominees or to "withhold authority to vote" for all of the nominees. If you do not vote for a nominee, or you indicate "withhold authority to vote" for any nominee, on your proxy card, your vote will not count either for or against the nominee. Also, if your broker does not vote on any of the three proposals, it will have no effect on the election. The persons named in the enclosed proxy intend to vote "FOR" the election of all of the nominees. Each of the nominees currently serves as a director and has consented to be nominated. We do not foresee that any of the nominees will be unable or unwilling to serve, but if such a situation should arise your proxy will vote in accordance with his or her best judgment. THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR. 11 PROPOSAL 2: APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS Generally: We are asking you to ratify the Board's selection of Richard A. Eisner & Company, LLP as our independent certified public accountants for 1999. The Audit Committee recommended the selection of Richard A. Eisner & Company, LLP to the Board. Although the selection of auditors does not require ratification, we are submitting this proposal to you because the Board believes that this matter is of such significance as to warrant your participation. If you do not ratify the appointment, the Board, after review by the Audit Committee, will consider the appointment of other independent certified public accountants. A representative of Richard A. Eisner & Company, LLP will attend the meeting to answer your questions. Vote Required: The affirmative vote of a majority of the votes cast at the meeting, whether in person or by proxy, is required to ratify the selection of the auditors. THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE RATIFICATION AND APPROVAL OF THE APPOINTMENT OF RICHARD A. EISNER & COMPANY, LLP AS OUR AUDITORS FOR 1999. 12 SHAREHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING If you wish to submit proposals to be presented at the 2000 Annual Meeting of our shareholders, the proposals must be received by us no later than January 31, 2000 for them to be included in our proxy materials for that meeting. OTHER MATTERS The Board does not know of any other matters to be presented at the meeting. If any additional matters are properly presented to the shareholders for action at the meeting, the persons named in the enclosed proxies and acting thereunder will have discretion to vote on these matters in accordance with their own judgment. YOU MAY OBTAIN A COPY OF OUR ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WITHOUT CHARGE BY WRITING TO: DANIEL IESU, SECRETARY, SIEBERT FINANCIAL CORP., 885 THIRD AVENUE, SUITE 1720, NEW YORK, NEW YORK 10022 OR CALLING 800-872-0711. By Order of the Board of Directors Daniel Iesu Secretary Dated: November 22, 1999 PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE VOTE - YOUR VOTE IS IMPORTANT 13 SIEBERT FINANCIAL CORP. P R O X Y THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS ANNUAL MEETING OF SHAREHOLDERS -- DECEMBER 21, 1999 The undersigned hereby appoint Daniel Iesu and Mitchell M. Cohen, and each of them, the proxies of the undersigned, with power of substitution to each of them to vote all shares of Siebert Financial Corp. which the undersigned is entitled to vote at the Annual Meeting of Shareholders of Siebert Financial Corp. to be held at The Four Seasons Hotel, 57 East 57th Street, New York, New York on Tuesday, December 21, 1999 at 10:00 A.M., local time, and at any adjournments thereof. Unless otherwise specified in the spaces provided, the undersigned's vote will be cast FOR items (1) and (2). (Continued, and to be signed and dated, on the reverse side) 1. THE ELECTION OF DIRECTORS: FOR ALL NOMINEES LISTED BELOW [ ] (except as marked to the contrary below) WITHHOLD AUTHORITY [ ] (to vote for all nominees listed below) NOMINEES: Muriel F. Siebert, Nicholas P. Dermigny, Patricia L. Francy, Jane H. Macon and Daniel Jacobson (INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's name on the space provided below). 2. Ratification of selection of Richard A. Eisner & Company, LLP as independent accountants: FOR [ ] AGAINST [ ] ABSTAIN [ ] 3. In their discretion on any other business which may properly come before the meeting or any adjournments thereof. Please sign exactly as your name or names appear above. When signing as attorney, executor, administrator, trustee or guardian, please give your full title as such. ----------------------------- (Signature of Stockholder) ----------------------------- (Signature of Joint Owner, if any) Date _____, 1999 Votes MUST be indicated (x) in Black or Blue Ink. Please Sign and Return Promptly in Enclosed Envelope. No Postage is Required.