Investment and Advances to Affiliates

9 Months Ended

Sep. 30, 2011

Notes to Financial Statements

Investment 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 from SBS is considered to be integral to Siebert’s operations and material to its results of operations.

	September 30,
	2011			2010
Total assets including secured demand note of $1,200,000 in each period due from Siebert	$	68,858,000
Total liabilities including subordinated liabilities of $1,200,000 in each period due to Siebert		52,864,000
Total members’ capital		15,994,000
Regulatory minimum net capital requirement		385,000
Nine months ended:
Total revenues		17,659,000			31,661,000
Net (loss) income		(800,000	)		5,028,000
Three months ended:
Total revenues		8,911,000			9,290,000
Net income		1,985,000			1,291,000

Siebert charged SBS $56,000 for the nine months ended September 30, 2011 and 2010, respectively, and $18,000 for the three months ended September 30, 2011 and 2010, respectively, for general and administrative services, which Siebert believes approximates the cost SBS would have paid to an unaffiliated third party to furnish such services.

Siebert’s share of net income (loss) for the three months ended September 30, 2011 and 2010 amounted to $973,000 and $633,000, respectively, and for the nine months ended September 30, 2011 and 2010 amounted to $(392,000) and $2,464,000, respectively.  

Siebert received distributions from SBS of $1.2 million during the nine months ended September 30, 2011, and Siebert’s share of undistributed earnings from SBS amounted to $7,445,000 at September 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.  

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.

	September 30,
	2011			2010
Total assets	$	237,388,000
Total liabilities		236,505,000
Total members’ capital		883,000
Nine months ended:
Total revenues		118,000			110,000
Net (loss)		(30,000	)		(35,000	)
Three months ended:
Total revenues		56,000			36,000
Net income		5,000			(13,000	)

The Company’s share of net loss for the nine months ended September 30, 2011 and 2010 amounted to $10,000 and $12,000, respectively. The Company’s share of net income for the three months ended September 30, 2011 amounted to $2,000 and the Company’s share of the net loss for the three months ended September 30, 2010 amounted to $4,000.

At September 30, 2011, SBSFPC had an accumulated loss of $317,000 of which the Company’s share was $106,000.