Investment in and advances to affiliates

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements

Investment in and advances to affiliates

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.

	2011	2010
Total assets including secured demand note of $1,200,000 due from Siebert	$21,332,000
Total liabilities including subordinated liabilities of $1,200,000 due to Siebert	7,322,000
Total members’ capital	14,010,000
Regulatory minimum net capital requirement	250,000
	June30
Six months ended:	2011	2010
Total revenues	$8,749,000	22,371,000
Net (loss) income	(2,784,000)	3,737,000
Three months ended:
Total revenues	4,804,000	9,205,000
Net (loss) income	(614,000)	1,053,000

Siebert charged SBS $38,000 for each of the six months ended June 30, 2011 and 2010, respectively, and $19,000 for each of the three months ended June 30, 2011 and 2010 for each of 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 June 30, 2011 and 2010 amounted to $(301,000) million and $516,000, respectively, and for the six months ended June 30, 2010 and 2009 amounted to $(1.4) million and $1.8 million, respectively.

Siebert received distributions from SBS of 1.2 million during the 6 months ended June 30, 2011 and Siebert’s share of undistributed earnings from SBS amounted to $6.5 million at June 30, 2011. Such amount 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 among Siebert and the principals of SBS and SBS’s continued compliance with its regulatory and net capital requirements.

The Company has a 33.33% ownership interest in, and the two individual principals of SBS have an aggregate 66.66% ownership interest in, SBS Financial Products Company, LLC, (“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.

	June 30,
	2011	2010
Total assets	$171,733,000
Total liabilities	170,855,000
Total members’ capital	879,000
Six months ended:
Total revenues	62,000	74,000
Net (loss)	(34,000)	( 22,000)
Three months ended:
Total revenues	74,000	(3,000)*
Net income	29,000	4,000

*Attributable to unrealized loss on derivative contracts.

The results of operations for the six months ended June 30, 2010 reflects a reduction of SBSFPC’s previously reported net income of $25,000 for the quarter ended March 31, 2010 to a net loss of $26,000 resulting from a $51,000 correction of unrealized gain on derivative contracts.

The company’s share of net income of SBSFPC for the three months ended June 30, 2011 amounted to $10,000. For the three months ended June 30, 2010, the Company reflected its share of SBSFPC’s operations as a net loss of $(15,700) which includes a loss of $(17,000) attributable to the correction of SBSFPC’s results for the quarter ended March 31, 2010 referred to above. Such correction was not material to the Company’s results of operations for the quarter ended June 30, 2010 or March 31, 2010. The Company’s share of net (loss) for the six months ended June 30, 2011 and 2010 amounted to $(11,000) and $(7,000) respectively. 

At June 30, 2011, SBSFPC had an accumulated loss of $321,000 of which the Company’s share was $107,000.