8. Investment In and Advances to Affiliates:

9 Months Ended

Sep. 30, 2014

Notes to Financial Statements

8. Investment In and Advances to Affiliates:

Siebert, Brandford, Shank & Co., L.L.C. (“SBS”)

During the nine months ended September 30, 2014, Siebert held a 49% ownership interest in SBS which is engaged in municipal bond underwritings (see note 12). Income or loss from SBS is considered to be integral to Siebert’s operations and material to its results of operations. See note 13 for a description of a subsequent event in which Siebert and the other members of SBS contributed their SBS membership interests into a newly formed entity in exchange for equal percentage interests in the new entity and then Siebert sold substantially all of the assets of its capital markets business to the newly formed entity.

Summarized financial data of SBS is set forth below.

	September 30,
	2014			2013
Total assets including secured demand note of $1,200,000 due from Siebert		25,802,000
Total liabilities including subordinated liabilities of $1,200,000 due to Siebert		9,905,000
Total members’ capital		15,897,000
Regulatory minimum net capital requirement		250,000
Nine months ended:
Total revenues		16,661,000			16,991,000
Net income (loss)		8,000			(380,000	)
Three months ended:
Total revenues		4,277,000			7,962,000
Net (loss) income		(802,000	)		1,562,000

Siebert charged SBS $75,000 for the nine months ended September 30, 2014 and 2013 respectively, and $25,000 for the three months ended September 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 September 30, 2014 and 2013 amounted to ($393,000) and $765,000, respectively, and for the nine months ended September 30, 2014 and 2013 amounted to $4,000 and ($186,000), respectively.

Siebert received distributions from SBS of $13,000 during the nine months ended September 30, 2014, and Siebert’s share of undistributed earnings from SBS amounted to $7,793,000 at September 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 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 (see note 12). As of September 30, 2014, SBSFPC’s operations were being phased out.

Summarized financial data of SBSFPC is set forth below.

	September 30,			September 30,
	2014			2013
Total assets		551,000
Total liabilities		—
Total members’ capital		551,000
Nine months ended:
Total revenues		0			(226,000	)*
Net loss		(18.000	)		(430,000	)
Three months ended:
Total revenues		0			(18,000	)*
Net loss		(7,000	)		(70,000	)
*Negative balance was attributable to unrealized loss on derivative contracts.

The Company’s share of net loss of SBSFPC for the three months ended September 30, 2014 and 2013 amounted to ($3,000) and ($23,000), respectively. The Company’s share of net income (loss) of SBSFPC for the nine months ended September 30, 2014 and 2013 amounted to ($6,000) and ($143,000), respectively.

The Company did not receive a distribution from SBSFPC during the nine months ended September 30, 2014.

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. 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 the financial institution.