What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-11-14 compared with 2023-08-07 · 305 added, 304 removed, 189 unchanged (76% of the section changed)

5 unchanged sentences

information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs.

Our actual results

could differ materially from those discussed in the forward-looking statements.

Factors that could cause or contribute to these differences

include those discussed below and elsewhere in our 2022 Form 10-K, particularly in Part I, Item 1A - Risk Factors.

results could differ materially from those discussed in the forward-looking statements.

Factors that could cause or contribute to these

differences include those discussed below and elsewhere in our 2022 Form 10-K, particularly in Part I, Item 1A – Risk Factors.

are a financial services company and provide a wide variety of financial services to our clients.

11 unchanged sentences

Accordingly, earnings for any period should not be considered representative of earnings to be expected for any other

with Kakaopay

April 27, 2023, Siebert entered into a Stock Purchase Agreement with Kakaopay (the “First Tranche Stock Purchase Agreement”),

pursuant to which Siebert agreed to issue to Kakaopay Corporation (“Kakaopay”), a company established under the Laws of the

Republic of Korea and a fintech subsidiary of Korean-based conglomerate Kakao Corp., 8,075,607 shares of Common Stock (the “First

Tranche Shares”, and such transaction, the “First Tranche”) at a per share price of Two Dollars Fifteen Cents ($2.15),

which represented 19.9% of the outstanding equity securities of Siebert on a fully diluted basis (taking into account the issuance of

the First Tranche Shares).

The First Tranche Stock Purchase Agreement closed on May 18, 2023.

with the execution of the First Tranche Stock Purchase Agreement, Siebert and Kakaopay entered into a second Stock Purchase Agreement

(the “Second Tranche Stock Purchase Agreement”, and together with the First Tranche Stock Purchase Agreement, the “Stock

Purchase Agreements”), pursuant to which Siebert agreed to issue to Kakaopay an additional 25,756,470 shares of Common Stock (the

“Second Tranche Shares”, and such transaction, the “Second Tranche”) at a per share price of Two Dollars Thirty

Transaction with

April 27, 2023, Siebert entered into the First Tranche Stock Purchase Agreement, pursuant to which Siebert agreed to issue to Kakaopay

the First Tranche Shares at a per share price of Two Dollars Fifteen Cents ($2.15), which represented 19.9% of the outstanding equity

securities of Siebert on a fully diluted basis (taking into account the issuance of the First Tranche Shares).

The First Tranche Stock

Purchase Agreement closed on May 18, 2023.

with the execution of the First Tranche Stock Purchase Agreement, Siebert and Kakaopay entered into the Second Tranche Stock Purchase

Agreement, pursuant to which Siebert agreed to issue to Kakaopay the Second Tranche Shares at a per share price of Two Dollars Thirty

Five Cents ($2.35), so that Kakaopay will own 51% of the outstanding equity securities of Siebert on a fully diluted basis (taking into

account the issuance of the First Tranche Shares and the Second Tranche Shares).

copy of the First Tranche Stock Purchase Agreement and Second Tranche Stock Purchase Agreement, both dated April 27, 2023 are attached

in this Report as Exhibit 10.28 and Exhibit 10.29, respectively.

with the consummation of the First Tranche, Siebert, Kakaopay, and the certain family members related to Directors John J.

Gebbia (“Gebbia Stockholders”) entered into a Stockholders’ Agreement (the “Stockholders’ Agreement”)

whereby the parties agreed that Siebert’s Board of Directors would consist of seven directors.

The parties agreed that following

the consummation of the First Tranche, one of the seven directors would be designated by Kakaopay, and six (the “Gebbia Directors”)

would be nominated by the Gebbia Stockholders, of whom three shall be independent directors.

to the Stockholders’ Agreement, on May 24, 2023, the Board of Directors appointed Simon Shin to the Board of Directors.

of Directors at that time also appointed John J.

The consummation of the Second Tranche is subject to

a number of conditions, which have not yet been satisfied as of the date of this Report.

Refer to Note 5 – Kakaopay Transaction

for further detail regarding these conditions.

with the consummation of the First Tranche, Siebert, Kakaopay, and the Gebbia Stockholders entered into a Stockholders’ Agreement

(the “Stockholders’ Agreement”) whereby the parties agreed that Siebert’s Board of Directors would consist of

seven directors.

The parties agreed that following the consummation of the First Tranche, one of the seven directors would be designated

by Kakaopay, and six (the “Gebbia Directors”) would be nominated by the Gebbia Stockholders, of whom three shall be independent

to the Stockholders’ Agreement, on May 24, 2023, the Board of Directors appointed Shin Ho-cheol, also known as Simon Shin, to the

Board of Directors.

The Board of Directors at that time also appointed John J.

Gebbia as Chairman of the Board and Chief Executive Officer.

4 unchanged sentences

pursuant to the Second Tranche Stock Purchase Agreement and the date that such agreement is terminated.

of the date of this Report, prior to the close of the Second Tranche, Gloria E.

Gebbia, members of her family, and affiliated entities

are collectively Siebert’s largest stockholders (such stockholders, the “Gebbia Stockholders”), controlling approximately

43% of Siebert’s outstanding equity securities, under the Stockholders’ Agreement, holding the right to appoint six (6) of

Siebert’s seven (7)-member board of directors (the “Siebert Board”).

As discussed above, Kakaopay currently has the

right to appoint the seventh director, and exercised that right through the appointment of Simon Shin to the Siebert Board on May 24,

Upon the closing of the Second Tranche, Kakaopay will own approximately 51% of Siebert’s outstanding equity securities and

will have the right to appoint four (4) out of seven (7) directors of Siebert’s Board, while the Gebbia Stockholders will have the

right to appoint the remaining three (3) directors.

Pursuant to the Stockholders’ Agreement, at all times, three (3) of the seven

(7) directors of the Siebert Board are required to be independent directors in accordance with Nasdaq Listing Rule 5605.

addition to obtaining authorizations, approvals or permits from FINRA, state, and Korean regulators, as described in the Second Tranche

Stock Purchase Agreement, and other customary conditions to closing ( e.g.

, no breach of fundamental representations and warranties

and no material adverse effect), the consummation of the Second Tranche Stock Purchase Agreement is contingent upon Siebert meeting certain

business performance targets, as described in the Second Tranche Stock Purchase Agreement, and obtaining certain Siebert Board and shareholder

approvals, entering into certain agreements with key personnel and stockholders, obtaining certain third-party consents, and appointing

certain directors to Siebert’s Board, each as described further in the Second Tranche Stock Purchase Agreement.

and Kakaopay do not expect the closing of the Second Tranche to result in reorganization or significant changes to the Company’s

rather, the primary motivation for entering into the transaction with Kakaopay is to mutually expand Kakaopay’s and Siebert’s

business leveraging the strengths of both firms.

Kakaopay offers a diverse array of financial services and has approximately 40 million

registered users according to Kakaopay.

The Gebbia Family will continue to hold significant ownership of Siebert, and Siebert’s

current management team, led by the Gebbia Family, will continue to manage Siebert’s operations and branch locations.

Siebert intends

to utilize the additional capital from the first tranche and second tranche primarily to launch correspondent clearing, expand its securities

lending business, corporate services, order flow opportunities, and other initiatives.

Refer to Siebert’s Current Report on Form

8-K filed on May 3, 2023 for further detail regarding this transaction.

of the date of this Report, prior to the close of the Second Tranche, the Gebbia Stockholders are collectively Siebert’s largest

stockholders, controlling approximately 43% of Siebert’s outstanding equity securities, under the Stockholders’ Agreement,

holding the right to appoint six (6) of Siebert’s seven (7)-member Board of Directors.

As discussed above, Kakaopay currently has

the right to appoint the seventh director, and exercised that right through the appointment of Simon Shin to the Company’s Board

of Directors on May 24, 2023.

Upon the closing of the Second Tranche, Kakaopay will own approximately 51% of Siebert’s outstanding

equity securities and will have the right to appoint four (4) out of seven (7) directors of the Company’s Board of Directors, while

the Gebbia Stockholders will have the right to appoint the remaining three (3) directors.

Pursuant to the Stockholders’ Agreement,

at all times, three (3) of the seven (7) directors of the Company’s Board of Directors are required to be independent directors

in accordance with Nasdaq Listing Rule 5605.

Refer to the Company’s Current Report on Form 8-K filed on May 3, 2023, incorporated

herein by reference, for further detail regarding this transaction.

the closing of the First Tranche, Korean authorities have taken action against Kakaopay, its parent company, Kakao Corp., and their affiliates.

In addition, Kakao Corp., recently announced that it will establish an independent compliance committee for Kakao Corp.

and its subsidiaries

to address what it described as the current crisis at Kakao Corp.

and its subsidiaries.

Siebert believes these events have had a material

adverse effect on both Kakaopay and its ability to perform its obligations under the Second Tranche Stock Purchase Agreement and consummate

the transactions contemplated therein.

Accordingly, on November 11, 2023, Siebert delivered a notice to Kakaopay stating that a material

adverse effect had occurred with respect to Kakaopay and that, as a result, Siebert’s conditions to closing will not be satisfied.

The notice also specified that Kakaopay has indicated that it has no intention of satisfying the conditions precedent to Siebert preparing

the proxy statement contemplated by the Second Tranche Stock Purchase Agreement.

Siebert is considering its rights and obligations under

the Second Tranche Stock Purchase Agreement, including evaluating whether and under what circumstances the Second Tranche Stock Purchase

Agreement might be terminated, and has reserved all of its rights and remedies, including Siebert’s right to assert that Kakaopay

has materially breached a number of covenants in the Second Tranche Stock Purchase Agreement.

On November 12, 2023, Kakaopay delivered

a letter in response to the notice that expressed Kakaopay’s disagreement with the statements in the notice.

As a result of the

foregoing, Siebert has incurred and may incur additional legal expenses evaluating these matters, the amount of which is uncertain as

of the date hereof.

RISE was an institutional

brokerage for which all its revenue producing customers transitioned to other prime service providers by the first quarter of 2022.

expenses associated with the transition resulted in a loss of $0.3 million and $0.7 million for RISE for the three and six months ended

June 30, 2022, respectively.

expenses associated with the transition resulted in a loss of $0.2 million and $0.9 million for RISE for the three and nine months ended

September 30, 2022, respectively.

During 2022, there were various transactions involving the ownership of RISE.

Refer to Note 3 – Transactions

with Tigress and Hedge Connection and Note 4 – RISE for additional detail.

Refer to Note 3 –

Transactions with Tigress and Hedge Connection and Note 4 – RISE for additional detail.

As part of this transition,

1 unchanged sentence

of the net revenue produced by certain historical clients of RISE less any related expenses.

For the three months ended June 30, 2023

For the three months ended September 30,

2023 and 2022, this agreement resulted in pre-tax income of $78,000 and $61,000, respectively.

For the six months ended June 30, 2023 and 2022,

this agreement resulted in pre-tax income of $148,000 and $119,000, respectively.

We do not anticipate the pre-tax income related to this

agreement will offset the reduction in pre-tax income from customers that have transitioned to other prime service providers.

For the nine months ended September 30,

2023 and 2022, this agreement resulted in pre-tax income of $232,000 and $137,000, respectively.

We do not anticipate the pre-tax income

related to this agreement will offset the reduction in pre-tax income from customers that have transitioned to other prime service providers.

Management is assessing the

4 unchanged sentences

Transactions with Tigress and Hedge Connection

Siebert and RISE engaged in

certain transactions with Tigress and Hedge Connection to exchange equity, cash, and respective leadership positions.

Based upon the strategic

direction of these ventures, management of the respective businesses decided to unwind the original transactions with these entities.

As of June 30, 2023 and the date of this Report, Siebert owned 17% and 0% of Tigress, respectively.

Siebert and RISE engaged

in certain transactions with Tigress and Hedge Connection to exchange equity, cash, and respective leadership positions.

Based upon the

strategic direction of these ventures, management of the respective businesses decided to unwind the original transactions with these

See Note 3 – Transactions with Tigress and Hedge Connection and Note 12 – Equity Method Investment in Related Party

1 unchanged sentence

Interest Rates

We are exposed to market risk

from changes in interest rates.

Such changes in interest rates primarily impact revenue from interest, marketing, and distribution fees.

We are exposed to market

risk from changes in interest rates.

Such changes in interest rates primarily impact revenue from interest, marketing, and distribution

The Company primarily earns interest, marketing and distribution fees from margin interest charged on clients’ margin balances,

5 unchanged sentences

within our portfolio decline, we anticipate the impact to be temporary as we intend to hold our U.S.

government securities portfolio to

government securities portfolio

We seek to mitigate this risk by managing the average maturities of our U.S.

government securities portfolio and setting risk

parameters for securities owned, at fair value.

Technology Partner

third quarter of 2022, we entered into a software license agreement with a new technology provider for the development of a new retail

trading platform which will replace our current platforms and resulted in the termination of our original technology relationship.

June 2023, we launched a new trading platform to our retail clients.

We believe this new technology provider will be key to creating a

platform for the next generation of retail customers.

government securities portfolio and setting

risk parameters for securities owned, at fair value.

Client Account and Activity Metrics

4 unchanged sentences

Client Account Metrics

September 30,

Retail customer net worth (in billions)

3 unchanged sentences

Retail customer accounts

● Retail customer net worth represents the total value of securities

and cash in the retail customer accounts after deducting margin debits

● Retail customer margin debit balances represents credit extended to our customers to finance their purchases

against current positions

● Retail customer credit balances represents client cash held in brokerage accounts

● Retail customer money market fund value represents all retail customers accounts invested in money market

● Retail customer accounts represents the number of retail customers

Client Activity Metrics

Total retail trades

● Total retail trades represent retail trades that generate commissions

customer net worth represents the total value of securities and cash in the retail customer

accounts after deducting margin debits

customer margin debit balances represents credit extended to our customers to finance their

purchases against current positions

customer credit balances represents client cash held in brokerage accounts

customer money market fund value represents all retail customers accounts invested in money

customer accounts represents the number of retail customers

Statements of Operations and Financial Condition

Statements of Operations for the Three Months

Ended June 30, 2023 and 2022

Commissions and fees for the

three months ended June 30, 2023 were $1,952,000 and increased by $99,000 from the corresponding period in the prior year, primarily due

to market conditions.

Statements of Operations for the Three

Months Ended September 30, 2023 and 2022

Commissions and fees for

the three months ended September 30, 2023 were $1,986,000 and increased by $236,000 from the corresponding period in the prior year,

primarily due to market conditions.

Interest, marketing and distribution

fees for the three months ended June 30, 2023 were $7,416,000 and increased by $4,265,000 from the corresponding period in the prior year

primarily due to rising interest rates that resulted in an increase in margin interest income and interest income received on U.S.

fees for the three months ended September 30, 2023 were $7,194,000 and increased by $1,990,000 from the corresponding period in the prior

year primarily due to rising interest rates that resulted in an increase in margin interest income and interest income received on U.S.

government securities and bank deposits.

Principal transactions and

proprietary trading for the three months ended June 30, 2023 were $2,654,000 and increased by $1,573,000 from the corresponding period

in the prior year, primarily due to the factors discussed below.

The increase in realized and

unrealized gain on primarily riskless principal transactions was primarily due to market conditions.

The increase in unrealized gain on

our portfolio of U.S.

proprietary trading for the three months ended September 30, 2023 were $3,753,000 and increased by $2,800,000 from the corresponding

period in the prior year, primarily due to the factors discussed below.

The increase in realized

and unrealized gain on primarily riskless principal transactions was primarily due to market conditions.

The increase in unrealized gain

on our portfolio of U.S.

government securities was due to the following.

We invested in 1-year treasury bills and 2-year treasury notes in

order to enhance our yield on excess 15c3-3 deposits.

We invested in 1-year treasury bills and 2-year treasury notes

in order to enhance our yield on excess 15c3-3 deposits.

During 2022, there was an increase in U.S.

government securities yields, which created

an unrealized loss on our U.S.

government securities yields, which

created an unrealized loss on our U.S.

government securities portfolio.

In 2023, we began to record the reversal of the unrealized loss resulting

in an unrealized gain due to the securities coming closer to maturity.

We continually invest in US government securities based on market

yields and cash needs.

In 2023, we began to record the reversal of the unrealized loss

resulting in an unrealized gain due to the securities coming closer to maturity.

We continually invest in US government securities based

on market yields and cash needs.

We intend to hold our U.S.

government securities portfolio to maturity and as such, the aggregate unrealized loss of $2.4 million as of June 30, 2023 will be returned

over the duration of the government securities, at a point no later than the maturity of the securities, the latest maturity being April

government securities portfolio to maturity and as such, the aggregate unrealized loss of $1.3 million as of September 30, 2023 will

be returned over the duration of the government securities, at a point no later than the maturity of the securities, the latest maturity

being April 2025.

If the value of our portfolio of U.S.

government securities declines further, we will incur further unrealized losses;

we anticipate this loss to be temporary as we intend to hold our portfolio of U.S.

however, we anticipate this loss to be temporary as we intend to hold our portfolio of U.S.

government securities to maturity.

We believe that

the level invested reduces the risk of having to liquidate the securities prior to maturity.

that the level invested reduces the risk of having to liquidate the securities prior to maturity.

Below is a summary of the

change in the principal transactions and proprietary trading line item for the periods presented.

Three Months Ended June 30,

Three Months Ended September 30,

Principal transactions and proprietary trading

4 unchanged sentences

Market making for the three

months ended June 30, 2023 was $268,000 and decreased by $267,000 from the corresponding period in the prior year, primarily due to market

months ended September 30, 2023 was $223,000 and decreased by $500,000 from the corresponding period in the prior year, primarily due

to market conditions.

Stock borrow / stock loan

for the three months ended June 30, 2023 was $4,513,000 and increased by $365,000 from the corresponding period in the prior year, primarily

due to the expansion of stock locate counterparties and the growth of stock locate and securities lending businesses.

for the three months ended September 30, 2023 was $4,008,000 and decreased by $175,000 from the corresponding period in the prior year.

Advisory fees for the three

months ended June 30, 2023 were $471,000 and decreased by $5,000 from the corresponding period in the prior year.

months ended September 30, 2023 were $506,000 and increased by $69,000 from the corresponding period in the prior year, primarily due

to market conditions.

Other income for the three

months ended June 30, 2023 was $318,000 and decreased by $161,000 from the corresponding period in the prior year, primarily due to the

termination of consulting fee income from a technology partner.

months ended September 30, 2023 was $380,000 and decreased by $706,000 from the corresponding period in the prior year, primarily due

to the termination of consulting fee income from a technology partner.

Operating Expenses

Employee compensation and

benefits for the three months ended June 30, 2023 were $8,080,000 and increased by $712,000 from the corresponding period in the prior

year, primarily due to timing of commission payouts and an increase in incentive compensation.

Clearing fees, including execution

costs for the three months ended June 30, 2023 were $329,000 and decreased by $46,000 from the corresponding period in the prior year,

primarily due to a decrease in clearing costs with NFS.

benefits for the three months ended September 30, 2023 were $8,723,000 and increased by $1,433,000 from the corresponding period in the

prior year, primarily due to an increase in commission payouts and incentive compensation.

Clearing fees, including

execution costs for the three months ended September 30, 2023 were $581,000 and increased by $183,000 from the corresponding period in

the prior year, primarily due to an increase in market activity.

Technology and communications

expenses for the three months ended June 30, 2023 were $793,000 and decreased by $185,000 from the corresponding period in the prior year,

primarily due to a decrease in technology costs related to RISE as well as a decrease in costs related to a technology partner, partially

offset by an increase in software license cost.

expenses for the three months ended September 30, 2023 were $827,000 and decreased by $387,000 from the corresponding period in the prior

year, primarily due to a decrease in costs related to a technology partner.

Other general and administrative

expenses for the three months ended June 30, 2023 were $1,119,000 and increased by $184,000 from the corresponding period in the prior

year, primarily due to an increase in travel and entertainment expenses.

Data processing expenses for

the three months ended June 30, 2023 were $741,000 and increased by $54,000 from the corresponding period in the prior year, primarily

due to an increase in trading technology cost.

Rent and occupancy expenses

for the three months ended June 30, 2023 were $491,000 and increased by $35,000 from the corresponding period in the prior year.

Professional fees for the

three months ended June 30, 2023 were $1,007,000 and decreased by $25,000 from the corresponding period in the prior year, primarily due

to timing of legal fees, partially offset by an increase in board fees.

expenses for the three months ended September 30, 2023 were $1,108,000 and increased by $36,000 from the corresponding period in the

prior year, primarily due to an increase in travel and entertainment expenses.

Data processing expenses

for the three months ended September 30, 2023 were $725,000 and decreased by $207,000 from the corresponding period in the prior year,

primarily due to the termination of a technology vendor.

Rent and occupancy

expenses for the three months ended September 30, 2023 were $467,000 and decreased by $95,000 from the corresponding period in the

prior year primarily due to the termination of certain short term leases in 2023.

Professional fees for the three

months ended September 30, 2023 were $979,000 and increased by $105,000 from the corresponding period in the prior year, primarily due

to an increase in consulting and board of directors fees partially offset by a decrease in legal fees.

Depreciation and amortization

expenses for the three months ended June 30, 2023 were $261,000 and had no change from the corresponding period in the prior year.

expenses for the three months ended September 30, 2023 were $265,000 and increased by $25,000 from the corresponding period in the prior

Interest expense for the three

months ended June 30, 2023 was $94,000 and decreased by $9,000 from the corresponding period in the prior year, primarily due to a decrease

in interest related to notes payable.

Advertising and promotion

expense for the three months ended June 30, 2023 was $18,000 and decreased by $41,000 from the corresponding period in the prior year,

primarily due to a decrease in promotional costs for various marketing initiatives.

months ended September 30, 2023 was $40,000 and decreased by $68,000 from the corresponding period in the prior year, primarily due to

a decrease in interest related to notes payable.

Advertising and promotion expense

for the three months ended September 30, 2023 was $62,000 and increased by $4,000 from the corresponding period in the prior year.

Non-Operating Income (Loss)

The impairment of investments

for the three months ended June 30, 2023 was $1,035,000 and increased by $1,035,000 from the corresponding period in the prior year, primarily

due to the impairment of our investment in the Retail Platform and our investment in Tigress.

The earnings of equity method

investment in related party for the three months ended June 30, 2023 was $73,000 and increased by $59,000 from the corresponding period

in the prior year, primarily due to an increase in our proportional income from our investment in Tigress.

for the three months ended September 30, 2023 was $0 and there was no change from the corresponding period in the prior year.

The loss from equity method

investment in related party for the three months ended September 30, 2023 was $0 and decreased by $148,000 from the corresponding period

in the prior year, primarily due to no proportional loss from our investment in Tigress in the third quarter of 2023.

Provision For (Benefit From) Income Taxes

provision from income taxes for the three months ended June 30, 2023 was $969,000 and increased from the benefit for income taxes by $1,996,000

from the corresponding period in the prior year.

The change from the corresponding period in the prior year is primarily due to increased

pre-tax earnings in the second quarter of 2023.

provision from income taxes for the three months ended September 30, 2023 was $1,516,000 and increased from the provision for income

taxes by $1,043,000 from the corresponding period in the prior year.

The change from the corresponding period in the prior year is primarily

due to an increase in pre-tax earnings in the third quarter of 2023.

Refer to Note 18 – Income Taxes for additional detail.

2 unchanged sentences

statements and reflect the portion of RISE not held by Siebert as a noncontrolling interests in our financial statements.

The net income

attributable to noncontrolling interests for the three months ended June 30, 2023 was $25,000, and increased by $226,000 from the corresponding

period in the prior year, due to more expenses in RISE in 2022 associated with the exiting of the prime brokerage business.

Statements of Operations for the Six Months

Ended June 30, 2023 and 2022

Commissions and fees for the

six months ended June 30, 2023 were $3,853,000 and decreased by $340,000 from the corresponding period in the prior year, primarily due

to market conditions.

attributable to noncontrolling interests for the three months ended September 30, 2023 was $4,000, and decreased by $81,000 from the

corresponding period in the prior year, due to more expenses in RISE in 2022 associated with the exiting of the prime brokerage business.

Statements of Operations for the Nine Months

Ended September 30, 2023 and 2022

Commissions and fees for

the nine months ended September 30, 2023 were $5,839,000 and decreased by $104,000 from the corresponding period in the prior year, primarily

due to market conditions.

Interest, marketing and distribution

fees for the six months ended June 30, 2023 were $14,389,000 and increased by $8,876,000 from the corresponding period in the prior year

primarily due to rising interest rates that resulted in an increase in margin interest income and interest income received on U.S.

fees for the nine months ended September 30, 2023 were $21,583,000 and increased by $10,866,000 from the corresponding period in the

prior year primarily due to rising interest rates that resulted in an increase in margin interest income and interest income received

government securities and bank deposits.

Principal transactions and

proprietary trading for the six months ended June 30, 2023 were $5,454,000 and increased by $4,640,000 from the corresponding period in

the prior year due to multiple factors, which is detailed in the table below as well as in the above section titled “Statements

of Operations for the Three Months Ended June 30, 2023 and 2022.”

Six Months Ended June 30,

proprietary trading for the nine months ended September 30, 2023 were $9,207,000 and increased by $7,440,000 from the corresponding period

in the prior year due to multiple factors, which is detailed in the table below as well as in the above section titled “Statements

of Operations for the Three Months Ended September 30, 2023 and 2022.”

Nine Months Ended September 30,

Principal transactions and proprietary trading

3 unchanged sentences

Total Principal transactions and proprietary trading

Market making for the six

months ended June 30, 2023 was $613,000 and decreased by $686,000 from the corresponding period in the prior year, primarily due to market

Market making for the nine

months ended September 30, 2023 was $836,000 and decreased by $1,186,000 from the corresponding period in the prior year, primarily due

to market conditions.

Stock borrow / stock loan

for the six months ended June 30, 2023 was $7,955,000 and increased by $229,000 from the corresponding period in the prior year, primarily

due to the expansion of stock locate counterparties and the growth of stock locate and securities lending businesses.

Advisory fees for the six

months ended June 30, 2023 were $915,000 and decreased by $68,000 from the corresponding period in the prior year, primarily due to market

Other income for the six months

ended June 30, 2023 was $583,000 and decreased by $920,000 from the corresponding period in the prior year, primarily due to the termination

of consulting fee income from a technology partner.

for the nine months ended September 30, 2023 was $11,963,000 and increased by $54,000 from the corresponding period in the prior year,

primarily due to the growth of stock locate and securities lending businesses.

Advisory fees for the nine

months ended September 30, 2023 were $1,421,000 and increased by $1,000 from the corresponding period in the prior year.

Other income for the nine

months ended September 30, 2023 was $963,000 and decreased by $1,626,000 from the corresponding period in the prior year, primarily due

to the termination of consulting fee income from a technology partner.

Operating Expenses

Employee compensation and

benefits for the six months ended June 30, 2023 were $15,047,000 and increased by $585,000 from the corresponding period in the prior

year, primarily due to an increase in incentive compensation, partially offset by lower commission payouts, lower employee healthcare

costs and the elimination of compensation expense related to RISE in 2023.

Employee compensation and benefits

for the nine months ended September 30, 2023 were $23,770,000 and increased by $2,018,000 from the corresponding period in the prior year,

primarily due to an increase in incentive compensation and commission payouts, partially offset by lower employee healthcare costs and

the elimination of compensation expenses related to RISE in 2023.

Clearing fees, including execution

costs for the six months ended June 30, 2023 were $684,000 and decreased by $185,000 from the corresponding period in the prior year,

primarily due to a decrease in clearing costs with NFS.

costs for the nine months ended September 30, 2023 were $1,265,000 and decreased by $2,000 from the corresponding period in the prior

Technology and communications

expenses for the six months ended June 30, 2023 were $1,582,000 and decreased by $578,000 from the corresponding period in the prior year,

primarily due to a decrease in technology costs related to RISE as well as a decrease in costs related to a technology partner, partially

offset by an increase in software license cost.

expenses for the nine months ended September 30, 2023 were $2,409,000 and decreased by $965,000 from the corresponding period in the prior

year, primarily due to a decrease in technology costs related to RISE as well as a decrease in costs related to a technology partner,

partially offset by an increase in software license costs.

Other general and administrative

expenses for the six months ended June 30, 2023 were $2,212,000 and increased by $346,000 from the corresponding period in the prior year,

primarily due to an increase in travel and entertainment expenses.

Data processing expenses for

the six months ended June 30, 2023 were $1,592,000 and increased by $389,000 from the corresponding period in the prior year, primarily

due to an increase in trading technology cost.

Rent and occupancy expenses

for the six months ended June 30, 2023 were $969,000 and increased by $40,000 from the corresponding period in the prior year.

Professional fees for the

six months ended June 30, 2023 were $2,081,000 and increased by $353,000 from the corresponding period in the prior year, primarily due

to an increase in legal fees, board fees, and other consulting fees partially offset by a reduction in professional fees related to RISE

expenses for the nine months ended September 30, 2023 were $3,320,000 and increased by $381,000 from the corresponding period in the prior

year, primarily due to an increase in travel and entertainment expenses.

Data processing expenses for the

nine months ended September 30, 2023 were $2,317,000 and increased by $182,000 from the corresponding period in the prior year, primarily

due to an increase from timing of financial and trading technology costs partially offset by a decrease from the termination of a technology

Rent and occupancy expenses for

the nine months ended September 30, 2023 were $1,436,000 and decreased by $55,000 from the corresponding period in the prior year.

Professional fees for the nine

months ended September 30, 2023 were $3,060,000 and increased by $458,000 from the corresponding period in the prior year, primarily due

to an increase in consulting and board of director fees partially offset by a reduction in legal fees.

Depreciation and amortization

expenses for the six months ended June 30, 2023 were $451,000 and decreased by $69,000 from the corresponding period in the prior year,

primarily due to the completion of useful lives of certain software assets in 2022.

Interest expense for the six

months ended June 30, 2023 was $182,000 and decreased by $45,000 from the corresponding period in the prior year, primarily due to a decrease

in interest related to notes payable, partially offset by an increase in interest on our line of credit.

Advertising and promotion

expense for the six months ended June 30, 2023 was a credit of $10,000 and decreased by $182,000 from the corresponding period in the

prior year, primarily due to a reversal related to advertising expenses and a decrease in promotional costs for various marketing initiatives.

expenses for the nine months ended September 30, 2023 were $716,000 and decreased by $44,000 from the corresponding period in the prior

year, primarily due to the completion of useful lives of certain software assets in 2022, offset by depreciation expense from the Miami

office building.

Interest expense for the nine

months ended September 30, 2023 was $222,000 and decreased by $113,000 from the corresponding period in the prior year, primarily due

to a decrease in interest related to notes payable.

Advertising and promotion expenses

for the nine months ended September 30, 2023 were $52,000 and decreased by $178,000 from the corresponding period in the prior year, primarily

due to a decrease in promotional costs for various marketing initiatives.

Non-Operating Income (Loss)

The impairment of investments

for the six months ended June 30, 2023 was $1,035,000 and increased by $1,035,000 from the corresponding period in the prior year, primarily

due to the impairment of our investment in the Retail Platform and our investment in Tigress.

for the nine months ended September 30, 2023 was a loss of $1,035,000 and increased by $1,035,000 from the corresponding period in the

prior year, primarily due to the impairment of our investment in a Retail Platform and Tigress.

The earnings of equity method

investment in related party for the six months ended June 30, 2023 was $111,000 and decreased by $104,000 from the corresponding period

in the prior year, primarily due to a decrease in our proportional income from our investment in Tigress.

investment in related party for the nine months ended September 30, 2023 was $111,000 and increased by $44,000 from the corresponding

period in the prior year, primarily due to an increase in our proportional income from our investment in Tigress.

Provision For (Benefit From) Income Taxes

provision from income taxes for the six months ended June 30, 2023 was $2,105,000 and increased from the benefit for income taxes by $3,414,000

from the corresponding period in the prior year.

The change from the corresponding period in the prior year is primarily due to increased

pre-tax earnings in the six months ending June 30, 2023.

Refer to Note 18 – Income Taxes for additional detail.

provision from income taxes for the nine months ended September 30, 2023 was $3,621,000 and increased from the benefit for income taxes

by $4,457,000 from the corresponding period in the prior year.

The change from the corresponding period in the prior year is primarily

due to increased pre-tax earnings in the nine months ending September 30, 2023.

Refer to Note 18 – Income Taxes for additional

Net Income (Loss) Attributable to Noncontrolling

2 unchanged sentences

The net income

attributable to noncontrolling interests for the six months ended June 30, 2023 was $44,000, and increased by $364,000 from the corresponding

period in the prior year, primarily due to more expenses in RISE in 2022 associated with the exiting of the prime brokerage business.

attributable to noncontrolling interests for the nine months ended September 30, 2023 was $40,000, and increased by $445,000 from the

corresponding period in the prior year, primarily due to more expenses in RISE in 2022 associated with the exiting of the prime brokerage

Statements of Financial Condition as of

June 30, 2023 and December 31, 2022

Assets as of June 30, 2023

were $1,065,049,000 and increased by $337,001,000 from December 31, 2022, primarily due to an increase in securities borrowed partially

offset by a decrease in cash and cash equivalents and cash and securities segregated for regulatory purposes.

Liabilities as of June 30,

September 30, 2023 and December 31, 2022

Assets as of September 30,

2023 were $771,146,000 and increased by $43,098,000 from December 31, 2022, primarily due to an increase in securities borrowed, receivables

from customers, and securities owned, at fair value, partially offset by a decrease in cash and cash equivalents and cash and securities

segregated for regulatory purposes.

Liabilities as of September

30, 2023 were $699,581,000 and increased by $21,453,000 from December 31, 2022, primarily due to an increase in securities loaned partially

1 unchanged sentence

Liquidity and Capital Resources

expect to use our available cash, cash equivalents, and potential future borrowings under our debt agreements and potential issuance of

new debt or equity, to support and invest in our core business, including investing in new ways to serve our customers, potentially seeking

strategic acquisitions to leverage existing capabilities, and for general capital needs (including capital, deposit, and collateral requirements

imposed by regulators and SROs).

Based on our current level of operations, we believe our available cash, available lines of credit, overall

access to capital markets, and cash provided by operations will be adequate to meet our current liquidity needs for the foreseeable future.

As of the date of this Report, other than the items detailed in the section below, there are no known or material events that would require

us to use large amounts of our liquid assets to cover expenses.

capital infusion from Kakao Pay to Siebert from the First Tranche was approximately $15.4 million after the issuance cost.

expect to use our available cash, cash equivalents, and potential future borrowings under our debt agreements and potential issuance

of new debt or equity, to support and invest in our core business, including investing in new ways to serve our customers, potentially

seeking strategic acquisitions to leverage existing capabilities, and for general capital needs (including capital, deposit, and collateral

requirements imposed by regulators and SROs).

Based on our current level of operations, we believe our available cash, available lines

of credit, overall access to capital markets, and cash provided by operations will be adequate to meet our current liquidity needs for

the foreseeable future.

As of the date of this Report, other than the items detailed in the section below, there are no known or material

events that would require us to use large amounts of our liquid assets to cover expenses.

net capital infusion from Kakaopay to Siebert from the First Tranche was approximately $15.4 million after the issuance cost.

is currently being used to enhance our regulatory capital, and is primarily invested in U.S.

government securities and is recorded in

the line item “Securities owned, at fair value” on the statements of financial condition.

The capital to be raised from the

close of the second tranche is approximately $60.4 million.

capital from the First Tranche and Second Tranche provides Siebert with additional liquidity and ability to expand its various business

Siebert intends to utilize the additional capital primarily to launch correspondent clearing, expand its securities lending business,

corporate services, order flow opportunities, and other initiatives.

government securities and is in the line

item “Securities owned, at fair value” on the statements of financial condition.

The capital to be raised from the close of

the Second Tranche is approximately $60.4 million.

The consummation of the Second Tranche is subject to a number of conditions, which

have not yet been satisfied as of the date of this Report.

Refer to Note 5 – Kakaopay Transaction for further detail regarding these

Refer to the Company’s Current Report on Form 8-K filed on May 3, 2023, incorporated

herein by reference, for further detail regarding this transaction.

net capital from the First Tranche provides Siebert with additional liquidity and the ability to expand its various business lines.

current management intends to utilize the additional capital primarily to launch correspondent clearing, to expand its securities lending

business, corporate services, order flow opportunities, and other initiatives.

Cash and Cash Equivalents

cash and cash equivalents were $7.6 million and $23.7 million as of June 30, 2023 and December 31, 2022, respectively.

cash and cash equivalents were $4.9 million and $23.7 million as of September 30, 2023 and December 31, 2022, respectively.

Cash Requirements

following table summarizes our short- and long-term material cash requirements as of June 30, 2023.

following table summarizes our short- and long-term material cash requirements as of September 30, 2023.

Payments Due By Period

2 unchanged sentences

Technology vendor*

July 7, 2023, we entered into a new lease agreement expiring in December 2028 for office space in the World Financial Center in New York

This office will replace the New Jersey office as one of our key operating centers and the total commitment of the lease is approximately

March 31, 2023, we entered into an agreement with a technology vendor for certain development projects for a total of approximately $1.2

million over a term of 2 years.

Leasehold improvements**

* On March 31, 2023, we entered into an agreement with a technology

vendor for certain development projects.

As of September 30, 2023, the total budget for this project was approximately $1.1 million over

a term of 2 years.

** On July 7, 2023, we entered into a new lease agreement expiring

in December 2028 for office space in the World Financial Center in New York City.

This office will replace the New Jersey office as one

of our key operating centers and the total commitment of the lease is approximately $2.1 million.

The estimated build out cost for this

office space is approximately $500,000.

Debt Agreements

have a $4.4 million mortgage outstanding with East West Bank, and an unutilized loan for short term overnight demand borrowing of up to

$25 million with BMO Harris as of June 30, 2023.

In the second quarter of 2023, we paid off our $2.7 million loan outstanding with East

As of June 30, 2023, we were in compliance with all covenants related to our debt agreements.

have a $4.3 million mortgage outstanding with East West Bank, and an unutilized loan for short term overnight demand borrowing of up

to $25 million with BMO Harris as of September 30, 2023.

For the nine months ended September 30, 2023, we paid off our $2.7 million loan

outstanding with East West Bank.

As of September 30, 2023, we were in compliance with all covenants related to our debt agreements.

Shelf Registration

5 unchanged sentences

on the maximum amount of securities that we may sell pursuant to the registration statement during any twelve-month period.

remain subject to General Instruction I.B.6, at the time we sell securities pursuant to the registration statement, the amount of securities

to be sold plus the amount of any securities we have sold during the prior twelve months in reliance on Instruction I.B.6 may not exceed

one-third of the aggregate market value of our outstanding common stock held by non-affiliates as of a day during the 60 days immediately

preceding such sale as computed in accordance with Instruction I.B.6.

Whether we sell securities under the registration statement will

depend on a number of factors, including the market conditions at that time, our cash position at that time and the availability and terms

of alternative sources of capital.

At the Market Offering

we remain subject to General Instruction I.B.6, at the time we sell securities pursuant to the registration statement, the amount of

securities to be sold plus the amount of any securities we have sold during the prior twelve months in reliance on Instruction I.B.6

may not exceed one-third of the aggregate market value of our outstanding common stock held by non-affiliates as of a day during the

60 days immediately preceding such sale as computed in accordance with Instruction I.B.6.

Whether we sell securities under the registration

statement will depend on a number of factors, including the market conditions at that time, our cash position at that time and the availability

and terms of alternative sources of capital.

At the Market

May 27, 2022, we entered into a Capital on Demand TM Sales Agreement with JonesTrading as agent, pursuant to which we may offer

1 unchanged sentence

under our shelf registration statement on Form S-3.

For the three and six months ended June 30, 2023 and 2022, we did not sell any shares

pursuant to this Sales Agreement.

For the three and nine months ended September 30, 2023 and 2022, we did not sell

any shares pursuant to this Sales Agreement.

Refer to Note 21 – Commitments, Contingencies, and Other for additional detail.

13 unchanged sentences

Siebert as long as MSCO maintains its liquidity and regulatory capital requirements.

RISE can transfer funds to its shareholders, of which

Siebert is entitled to its proportional ownership interest, as long as RISE maintains its liquidity and regulatory capital requirements.

For the three and six months ended June 30, 2023 and 2022, MSCO and RISE had sufficient net capital to meet their respective liquidity

RISE can transfer funds to its shareholders, of

which Siebert is entitled to its proportional ownership interest, as long as RISE maintains its liquidity and regulatory capital requirements.

For the three and nine months ended September 30, 2023 and 2022, MSCO and RISE had sufficient net capital to meet their respective liquidity

and regulatory capital requirements.

7 unchanged sentences

of financial condition.

For the six months ended June 30, 2023, we had negative operating cash

flow primarily due to an increase in securities borrowed and securities owned, at fair value, as well as a decrease in payables to customers,

partially offset by an increase in securities loaned.

We had investing cash outflows primarily from the build out of the Miami office

building and development work related to our new retail trading platform and other technology initiatives.

We had financing cash inflows

primarily due to the Kakao Pay transaction offset by the repayment of our loan with East West Bank.

the six months ended June 30, 2022, we had negative operating cash flow primarily due to the decrease in securities loaned, partially

offset by the decrease in securities borrowed.

We had investing cash outflows primarily from the build out of the Miami office building

and development work related to software.

We had financing cash outflows related the repayment of a note payable - related party, partially

offset by the issuance and transfers of RISE membership interests.

the nine months ended September 30, 2023, we had negative operating cash flow primarily due to the net change in receivables and payables

to customers and non-customers as well as the net change in securities borrowed and securities loaned.

We had investing cash outflows

primarily from the build out of the Miami office building and development work related to technology initiatives.

We had financing cash

inflows primarily due to the Kakaopay transaction partially offset by the repayment of our loan with East West Bank.

the nine months ended September 30, 2022, we had negative operating cash flow primarily due to the net change in receivables and payables

to customers and non-customers as well as the net change in securities borrowed and securities loaned.

We had investing cash outflows

primarily from the build out of the Miami office building and development work related to technology initiatives.

We had financing cash

outflows related the repayment of a note payable – related party, partially offset by the issuance and transfer of RISE membership interests.

Long Term Contracts

Contract with NFS

August 1, 2021, MSCO entered into an amendment to its clearing agreement with NFS that, among other things, extends the term of their

arrangement for an additional four-year period commencing on August 1, 2021 and ending July 31, 2025.

As part of this agreement, we received

a one-time business development credit of $3 million, and NFS will pay us four annual credits of $100,000 over the term of the agreement.

The amendment also provides for an early termination fee;

however, as of June 30, 2023, we do not expect to terminate the contract with

NFS before the end of the contract term.

Refer to Note 16 – Deferred Contract Incentive and Note 21 – Commitments, Contingencies

and Other for additional detail.

Refer to Note 16 – Deferred

Contract Incentive and Note 21 – Commitments, Contingencies and Other for additional detail.

June 2023, MSCO entered into an amendment to its service agreement with Broadridge Securities Processing Solutions, LLC that, among other

9 unchanged sentences

instrument underlying the contract at a loss.

There were no material losses for unsettled customer transactions for the three and six

months ended June 30, 2023 and 2022.

There were no material losses for unsettled customer transactions for the three and nine

months ended September 30, 2023 and 2022.

Refer to Note 20 – Financial Instruments with Off-Balance Sheet Risk for additional detail.

Uncertain Tax Positions

We account for uncertain tax

positions in accordance with the authoritative guidance issued under ASC 740-10, which addresses the determination of whether tax benefits

claimed or expected to be claimed on a tax return should be recorded in the financial statements.

We may recognize the tax benefit from

an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities

based on the technical merits of the position.

The tax benefits recognized in the financial statements from such position should be measured

based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

ASC 740-10 also

provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure requirements.

We account for uncertain

tax positions in accordance with the authoritative guidance issued under ASC 740-10, which addresses the determination of whether tax

benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.

We may recognize the tax benefit

from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing

authorities based on the technical merits of the position.

The tax benefits recognized in the financial statements from such position

should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

ASC 740-10 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure

requirements.

We recognize interest and

2 unchanged sentences

and penalties would be included on the related tax liability line on the statements of financial condition.

As of both June 30, 2023 and

December 31, 2022, the Company recorded an uncertain tax position of $1,596,000 related to various tax matters, which is included in the

line item “Taxes payable” in the statements of financial condition.

As of both September 30,

2023 and December 31, 2022, the Company recorded an uncertain tax position of $1,596,000 related to various tax matters, which is included

in the line item “Taxes payable” in the statements of financial condition.

Critical Accounting Policies

2 unchanged sentences

and Analysis of Financial Condition and Results of Operations in our 2022 Form 10-K.

As of June 30, 2023, there have been

no changes to our critical accounting policies or estimates.

As of September 30, 2023, there have

been no changes to our critical accounting policies or estimates.

New Accounting Standards

Refer to Note 2 - Summary

of Significant Accounting Policies for additional information regarding new Accounting Standards Updates (“ASU”s) issued by

the Financial Accounting Standards Board (“FASB”).

of Significant Accounting Policies for additional information regarding new Accounting Standards Updates (“ASU”s) issued

by the Financial Accounting Standards Board (“FASB”).

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis