8. Investment In and Advances to Affiliates:

6 Months Ended

Jun. 30, 2014

Notes to Financial Statements

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 its results of operations.

Summarized financial data of SBS is set forth below.

	June 30, 2014			June 30, 2013
Total assets, including secured demand note of $1,200,000 due from Siebert	$	22,413,000
Total liabilities, including subordinated liabilities of $1,200,000 due to Siebert		5,705,000
Total members’ capital		16,708,000
Regulatory minimum net capital requirement		250,000
Six months ended:
Total revenues		12,384,000		$	9,028,000
Net income (loss)		810,000			(1,941,000	)
Three months ended:
Total revenues		4,649,000			5,034,000
Net (loss)		(671,000	)		(713,000	)

Siebert charged SBS $50,000 for each of the six months ended June 30, 2014 and 2013, and $25,000 for each of the three months ended June 30, 2014 and 2013, 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 June 30, 2014 and June 30, 2013 amounted to ($329,000) and ($349,000), respectively, and for the six months ended June 30, 2014 and June 30, 2013 amounted to $397,000 and ($951,000) , respectively.

Siebert received a distribution from SBS of $9,000 during the six months ended June 30, 2014, and Siebert’s share of undistributed earnings from SBS amounted to $7.8 million at June 30, 2014. 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 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. As of June 30, 2014, SBSFPC’S operations were being phased out.

Summarized financial data of SBSFPC is set forth below.

	June 30, 2014			June 30, 2013
Total assets		558,000
Total liabilities		—
Total members’ capital		558,000
Six months ended:
Total revenues		—			(208,000	)*
Net loss		(11,000	)		(360,000	)
Three months ended:
Total revenues		—			14,000
Net loss		(10,000	)		(85,000	)
*Negative balance was attributable to unrealized loss on derivative contracts.

The Company’s share of net loss of SBSFPC for the three months ended June 30, 2014 and 2013 amounted to $3,000 and $28,000, respectively. The Company’s share of net loss for the six months ended June 30, 2014 and 2013 amounted to $3,000 and $120,000, respectively.

During the quarter ended March 31, 2013, SBSFPC incurred a loss of $241,000 on the write down in value of the derivative contracts with the City of Detroit to adjust their carrying value to the carrying value of the derivative contracts with a financial institution. In July 2013, as a result of the filing of a bankruptcy petition by the City of Detroit, SBSFPC unwound certain derivative contracts with a financial institution pursuant to the terms of the contracts. The contracts were recorded as liabilities with a carrying value of $123,063,000. In connection therewith, SBSFPC assigned certain derivative contracts with the City of Detroit to the financial institution, which were recorded as assets with a carrying value of $123,063,000. No gain or loss was recognized by SBSFPC as a result of the unwinding and assignment of these derivative contracts and SBSFPC has no continuing obligations or rights with respect to the derivative contracts.

At June 30, 2014, SBSFPC had cumulative distributions in excess of cumulative earnings in the amount of $642,000, of which the Company’s share was $214,000. The Company did not receive a distribution from SBSFPC during the six months ended June 30, 2014.