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Item 7. Management’s Discussion and Analysis

2024-05-10 compared with 2023-03-29 · 478 added, 208 removed, 52 unchanged (93% of the section changed)

MANAGEMENT’S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included in Part II, Item 8 - Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

In addition to our historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs.

MANAGEMENT’S DISCUSSIONS AND

ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial

statements and the related notes included in Part II, Item 8 - Financial Statements and Supplementary Data of this Report.

to our historical consolidated financial 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 this Annual Report on Form 10-K, particularly in Part I, Item 1A - Risk Factors.

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

We operate in business lines such as retail brokerage, investment advisory, insurance, and technology development through our wholly-owned and majority-owned subsidiaries.

Results in the businesses in which we operate are highly correlated to general economic conditions and, more specifically, to the direction of the U.S.

could cause or contribute to these differences include those discussed below and elsewhere in this Report, particularly in Part I, Item

1A - Risk Factors.

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

We operate in business lines such as

retail brokerage, investment advisory, insurance, and technology development through our wholly-owned and majority-owned subsidiaries.

in the businesses in which we operate are highly correlated to general economic conditions and, more specifically, to the direction of

equity and fixed-income markets.

Market volatility, overall market conditions, interest rates, economic, political, and regulatory trends, and industry competition are among the factors which could affect us and which are unpredictable and beyond our control.

These factors affect the financial decisions made by market participants who include investors and competitors, impacting their level of participation in the financial markets.

In addition, in periods of reduced financial market activity, profitability is likely to be adversely affected because certain expenses remain relatively fixed, including salaries and related costs, as well as portions of communications costs and occupancy expenses.

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

Transactions with Tigress and Hedge Connection

On November 16, 2021, we purchased 24% of the outstanding membership interests in Tigress, a disabled and woman-owned financial services firm, in exchange for 24% of RISE and shares of Siebert common stock.

On January 21, 2022, we purchased 20% of Hedge Connection, a woman-owned fintech company, and an option to acquire the remaining interest in Hedge Connection in exchange for consideration of $600,000 and 3.33% of RISE.As of the date of this Report, Siebert is currently evaluating the terms upon which it will transfer its remaining ownership of Tigress to Gloria E.

Gebbia pursuant to the Reorganization Agreement.

Refer to Note 3 – Transactions with Tigress and Hedge Connection for further detail on the terms and accounting treatment of these transactions.

Siebert 2022 Form-10K 23

As part of these transactions, Tigress’ founder, Cynthia DiBartolo, continued as CEO of Tigress, and assumed the position as CEO of RISE.

Gebbia, one of Siebert’s and RISE’s directors, assumed the position of Chief Impact Officer at RISE.

DiBartolo was appointed to Siebert’s and RISE’s Board of Directors and Ms.

Gebbia was appointed to Tigress’ Board of Directors.

In addition, Lisa Vioni, founder of Hedge Connection, provided RISE with the right to appoint one director to the Board of Directors of Hedge Connection, and Ms.

Vioni was appointed to the Board of Directors of RISE as well as to the position of President of RISE Prime – Capital Introduction, a division of RISE.

Based upon the strategic direction of these ventures, management of the respective businesses decided to unwind the original transactions with Siebert, RISE, Hedge Connection and Tigress.

As a result, we exchanged our 7% ownership of Tigress for all of Tigress’ ownership of RISE.

We also entered into an agreement with Hedge Connection whereby we re-conveyed 20% of the common stock of Hedge Connection and the related option to acquire 100% of Hedge Connection in exchange for 3.17% of RISE and the cancellation of Siebert’s note payable to Hedge Connection.

As part of these agreements, Ms.

DiBartolo and Ms.

Vioni resigned from their respective positions within Siebert and RISE.

The financial impact of these transactions with Tigress and Hedge Connection was a one-time loss of approximately $4.7M for the year ended December 31, 2022, of which $4.0M was due to an impairment of our investment in Tigress.

These expenses are recorded in the line items “Impairment of equity method investment in related party” and “Loss on sale of equity method investment in related parties” in the statements of operations.

Management is assessing the future strategic direction of RISE, taking into consideration current market conditions, demand trends, and resources.

Termination of Clearing Arrangements with GSCO and Pershing

On August 30, 2021, Goldman Sachs & Co.

LLC (“GSCO”) notified RISE that its clearing arrangement with RISE will be terminated.

Due to the termination of RISE’s clearing arrangement with GSCO, substantially all the revenue producing customers of RISE have transitioned to other prime service providers.

Revenue and pre-tax income from customers that have transitioned to other prime service providers was approximately $12.6 million and $1.8 million, respectively, for the year ended December 31, 2021.

As of December 31, 2022, we were in the process of terminating our clearing relationships with GSCO and Pershing LLC (“Pershing”).

As of the date of this Report, we are no longer doing active business with these clearing vendors, and anticipate the full termination of these relationships by the end of the first quarter of 2023.

Market volatility, overall market conditions, interest rates, economic, political, and regulatory

trends, and industry competition are among the factors which could affect us and which are unpredictable and beyond our control.

factors affect the financial decisions made by market participants who include investors and competitors, impacting their level of participation

in the financial markets.

In addition, in periods of reduced financial market activity, profitability is likely to be adversely affected

because certain expenses remain relatively fixed, including salaries and related costs, as well as portions of communications costs and

occupancy expenses.

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

Trends and Key Factors

Affecting our Operations

Interest Rates

We are exposed to market risk from changes in 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 primarily earn interest, marketing and distribution fees from margin interest charged on clients’ margin balances, interest on cash and securities segregated for regulatory purposes, and distribution fees from money market mutual funds in clients’ accounts.

We primarily earn interest, marketing and distribution fees from margin interest charged on clients’ margin balances, interest on

cash and securities segregated for regulatory purposes, and distribution fees from money market mutual funds in clients’ accounts.

Securities segregated for regulatory purposes consist solely of U.S.

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If prices of U.S.

government securities within our portfolio decline, we anticipate the impact to be temporary as we intend to hold these securities to maturity.

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

In third quarter of 2022, we reassessed our technology needs and entered into a software license agreement with a different 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.

We believe this new technology provider will be key to creating a platform for the next generation of retail customers and the termination of our original technology relationship had minimal impact on our current operations.

Refer to Note 6 – Prepaid Service Contract for further detail on the accounting and financial impact of the termination of our original technology relationship.

government securities within

our portfolio decline, we anticipate the impact to be temporary as we intend to hold these securities to maturity.

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 Initiatives

During 2022 and 2023 we terminated

agreements with prior technology vendors that were primarily developing our Retail Platform, refer to Note 7 - Prepaid Service Contract

and Note 10 – Software, Net for further detail.

During 2023, we reassessed our technology needs and strategic direction and hired

new technology personnel, changed our primary software development vendor, and made additional investments in technology development related

to our Retail Platform and additional technology services for our customers.

We believe these changes will

be key to creating a Retail Platform and additional technology services for the next generation of retail customers, correspondent clearing,

as well as the overall growth of our business.

The termination of agreements with our prior technology vendors had minimal impact on our

current operations.

with Kakaopay

April 27, 2023, we entered into the First Tranche Stock Purchase Agreement with Kakaopay, a company established under the Laws of the

Republic of Korea, pursuant to which we issued to Kakaopay 8,075,607 shares of our common stock at a per share price of Two Dollars Fifteen

Cents ($2.15), which represented at the time of issuance 19.9% of our outstanding equity securities on a fully diluted basis (the “First

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

Purchase Agreement (the “Second Tranche Stock Purchase Agreement”), pursuant to which we agreed to issue to Kakaopay additional

shares at a per share price of Two Dollars Thirty Five Cents ($2.35), that would have resulted in Kakaopay owning 51% of the outstanding

equity securities of Siebert on a fully diluted basis.

Siebert 2023 Form-10K 20

First Tranche closed on May 18, 2023 and, in connection therewith, we entered into the Registration Rights Agreement and a Stockholders’

Agreement (the “Original Stockholders’ Agreement”) with Kakaopay.

December 19, 2023, we entered into a Termination and Settlement Agreement (the “Settlement Agreement”) with Kakaopay, Kakaopay

Securities Corp.

(“Kakaopay Securities”), MSCO and certain Gebbia parties named therein.

Under the Settlement Agreement, the

parties mutually agreed to terminate the Second Tranche Stock Purchase Agreement.

The parties terminated the Second Tranche Stock Purchase

Agreement after reaching a compromise regarding their disagreement over, among other things, the occurrence of a “Purchaser Material

Adverse Effect” in the Second Tranche Stock Purchase Agreement, and the ability of the closing conditions in the Second Tranche

Stock Purchase Agreement to be satisfied.

Certain related agreements were also terminated, including the Foreign Broker-Dealer Fee Sharing

Agreement, dated April 27, 2023, between MSCO and Kakaopay Securities, and the Support and Restrictive Covenant Agreements by certain

Gebbia stockholders, each dated April 27, 2023.

The parties also agreed (i) to amend and restate the Original Stockholders’ Agreement

as described below, (ii) that Siebert will pay Kakaopay a fee of $5 million (payable in ten quarterly installments beginning on March

29, 2024) and (iii) to customary releases.

Kakaopay continues to own the 8,075,607 shares of our common stock that it purchased from Siebert

in May 2023, and Kakaopay agreed to certain standstill restrictions with respect to its ownership of our common stock, subject to certain

connection with the foregoing, on December 19, 2023, we entered into an Amended and Restated Stockholders’ Agreement (the “A&R

Stockholders’ Agreement”) with Kakaopay, certain stockholders listed on Schedule I thereto and John J.

Gebbia (in his individual

capacity and as representative of the Gebbia Stockholders (as defined therein)) to amend and restate the Original Stockholders’

the A&R Stockholders’ Agreement, Kakaopay is entitled to nominate one director to our board of directors (the “Board”)

and the Gebbia Stockholders are entitled to designate six directors to the Board, in each case, subject to certain conditions.

and each Gebbia Stockholder agreed to vote all shares of common stock held by such stockholder to elect directors nominated by Kakaopay

and Gebbia Stockholders.

A&R Stockholders’ Agreement also, among other things, provides that certain specified events, including certain significant

merger and acquisition transactions and related party transactions, stock exchange delistings, amendments to organizational documents

that materially and disproportionally prejudice Kakaopay and certain equity issuances, will require the prior written consent of two-thirds

of the Board, including at least one Kakaopay director and one Gebbia director.

The A&R Stockholders’ Agreement also provides

Siebert and the non-transferring party a right of first refusal if Kakaopay or any of the Gebbia Stockholders desires to accept a bona

fide offer to transfer all or any portion of its or their shares, subject to certain exceptions, and includes tag-along rights in favor

of Kakaopay and the Gebbia Stockholders.

The A&R Stockholders’ Agreement will terminate at such time as either the Gebbia Stockholders,

in the aggregate, or Kakaopay, hold less than five percent of the issued and outstanding Common Stock on a fully-diluted basis.

incurred $5,943,000 associated with the termination of the transaction with Kakaopay which is recorded in the line item “Transaction

termination costs” in the consolidated statements of operations.

This amount consisted of the $5,000,000 fee to Kakaopay (payable

in ten quarterly installments beginning on March 29, 2024) adjusted for the present value of the payments, as well as legal and other

consulting costs associated with the transaction of approximately $1,481,000.

was an institutional brokerage for which all its revenue producing customers transitioned to other prime service providers by the first

quarter of 2022.

Net revenue from customers that have transitioned to other prime service providers was approximately $0.3 million for

the year ended December 31, 2022.

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.

part of this transition, Siebert had an agreement with JonesTrading Institutional Service, LLC (“JonesTrading”) whereby JonesTrading

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

For the years ended

December 31, 2023 and 2022, this agreement resulted in income of $265,000 and $137,000, respectively, which is recorded in the line item

“Other income” in the consolidated statements of operations.

a result of the transactions described in Note 3 – Transactions with Tigress and Hedge Connection, Siebert’s ownership in

RISE increased to 68% and, therefore, Siebert continued to consolidate RISE from October 18, 2022 through December 31, 2022.

been no further transactions completed by Siebert related to RISE’s membership interests for the year ended December 31, 2023.

Siebert 2023 Form-10K 21

Transactions with

Tigress and Hedge Connection

On November 16, 2021, we purchased

24% of the outstanding membership interests in Tigress, a disabled and woman-owned financial services firm, in exchange for 24% of RISE

and shares of Siebert common stock.

On January 21, 2022, we purchased 20% of Hedge Connection, a woman-owned fintech company, and an option

to acquire the remaining interest in Hedge Connection in exchange for consideration of $600,000 and 3.33% of RISE.

As part of these transactions,

Tigress’ founder, Cynthia DiBartolo, continued as CEO of Tigress, and assumed the position as CEO of RISE.

of Siebert’s and RISE’s directors, assumed the position of Chief Impact Officer at RISE.

DiBartolo was appointed to Siebert’s

and RISE’s Board of Directors and Ms.

Gebbia was appointed to Tigress’ Board of Directors.

In addition, Lisa

Vioni, founder of Hedge Connection, provided RISE with the right to appoint one director to the Board of Directors of Hedge Connection,

Vioni was appointed to the Board of Directors of RISE as well as to the position of President of RISE Prime – Capital Introduction,

a division of RISE.

Based upon the strategic direction

of these ventures, management of the respective businesses decided to unwind the original transactions with Siebert, RISE, Hedge Connection

As a result, we exchanged our 7% ownership of Tigress for all of Tigress’ ownership of RISE.

We also entered into an

agreement with Hedge Connection whereby we re-conveyed 20% of the common stock of Hedge Connection and the related option to acquire 100%

of Hedge Connection in exchange for 3.17% of RISE and the cancellation of Siebert’s note payable to Hedge Connection.

part of these agreements, Ms.

DiBartolo and Ms.

Vioni resigned from their respective positions within Siebert and RISE.

also resigned from her position within Tigress.

financial impact of the transaction with Hedge Connection was a one-time loss of $719,000 for the year ended December 31, 2022, which

is in the line item “Loss on sale of equity method investment in related party” on the consolidated statements of operations.

The Company recognized impairment charges of its investment in Tigress of approximately $185,000 and $4,015,000 during the years ended

December 31, 2023 and 2022, respectively, which are in the line item “Impairment of investments” on the consolidated statements

of operations.

Refer to Note 3 – Transactions with Tigress and Hedge Connection for further detail on the terms and accounting treatment

of these transactions.

Client Account and Activity Metrics

The following tables set forth metrics we use in analyzing our client account and activity trends for the periods indicated.

Client Account Metrics – Retail and Institutional Customer Net Worth

As of December 31,

Retail and institutional customer net worth (in billions)

The following tables set forth

metrics we use in analyzing our client account and activity trends for the periods indicated.

Client Account Metrics – Retail Customers

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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 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 funds

● 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 Account Metrics – Institutional Customers

As of December 31,

Institutional customer net worth (in billions)

Institutional customer net worth represents the total value of securities and cash in the institutional customer accounts after deducting margin debits and short positions.

Account Growth Initiatives

During 2023, our management

team engaged in several account growth initiatives that led to significant growth in our retail customer accounts from 2022.

drivers of this growth were related to a partnership with NFS as well as new retail accounts from corporate services.

Siebert 2023 Form-10K 22

Client Activity Metrics – Retail Customers

Year Ended December 31,

Total retail trades

Total retail trades represents retail trades that generate commissions

Statements of Operations and Financial Condition

Statements of Operations for the Year Ended December 31, 2022 and 2021

Commissions and fees for the year ended December 31, 2022 were $7,477,000 and decreased by $10,775,000 from the corresponding period in the prior year primarily due to the loss of institutional customers of RISE as well as market conditions during 2022.

Interest, marketing and distribution fees for the year ended December 31, 2022 were $17,234,000 and increased by $4,337,000 from the corresponding period in the prior year, primarily due to a rising interest rate environment which increased margin interest, 12b-1 money market fees, as well as interest on U.S.

treasuries and cash deposits within MSCO of an aggregate of $7.5 million, partially offset by the loss of interest income from institutional customers in RISE of $3.2 million.

Principal transactions and proprietary trading for the year ended December 31, 2022 were $3,743,000 and decreased by $11,904,000 from the corresponding period in the prior year primarily due to the factors discussed below.

The decrease in realized and unrealized gain on primarily riskless principal transactions was primarily due to weaker market conditions in 2022 within this business line.

The increase in unrealized loss on our portfolio of U.S.

Consolidated Statements of Operations and Financial

Consolidated Statements of Operations for

the Years Ended December 31, 2023 and 2022

Commissions and fees for the

year ended December 31, 2023 were $7,541,000 and increased by $201,000 from the corresponding period

in the prior year, primarily due to market conditions.

Interest, marketing and distribution

fees for the year ended December 31, 2023 were $29,577,000 and increased by $12,343,000 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 year ended December 31, 2023 were $13,094,000 and increased by $9,351,000

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

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

in unrealized gain on our portfolio of U.S.

government securities was due to the following.

Siebert 2022 Form-10K 26

In 2022 Siebert invested in treasury bill and treasury notes which are primarily in the line item “Cash and securities segregated for regulatory purposes” on the statements of financial condition, in order to enhance its yield on its 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 of approximately $3.9 million on our government securities portfolio for the year ended December 31, 2022.

The aggregate unrealized loss of on the portfolio 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 August 2024.

We intend to hold these securities to maturity and as such, the aggregate unrealized loss of approximately $3.9 million on the portfolio as of December 31, 2022 will be returned over the duration of the government securities, at a point no later than the maturity of the securities.

The maturities of the government securities are primarily in 2023 and the latest maturity is August 2024.

If the value of our portfolio of government securities declines further, we will incur further unrealized losses;

however, we anticipate this loss to be temporary as we intend to hold these securities to maturity.

The portfolio of U.S.

government securities represents less than half of the total value of our cash and securities segregated for regulatory purposes, and we believe 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.

government securities

yields, which created an unrealized loss on our U.S.

government securities portfolio.

In 2023, we recorded the reversal of the unrealized

loss resulting in a realized and unrealized gain due to the securities coming closer to maturity, the latest maturity being April 2025.

We continually invest in U.S.

government securities based on market yields and cash needs.

is a summary of the change in the principal transactions and proprietary trading line item for the periods presented.

Year Ended December 31

Year over Year Increase

Principal transactions and proprietary trading

Realized and unrealized gain on primarily riskless principal transactions

Unrealized loss on portfolio of U.S.

Realized and unrealized gain

(loss) on portfolio of U.S.

government securities

Total Principal transactions and proprietary trading

Market making for the year ended December 31, 2022 was $2,443,000 and decreased by $3,454,000 from the corresponding period in the prior year primarily due to market conditions.

Stock borrow / stock loan for the year ended December 31, 2022 was $14,518,000 and increased by $2,654,000 from the corresponding period in the prior year primarily due to the growth of the business, expansion of our stock locate revenues, and additional securities lending and locate counterparty relationships.

Advisory fees for the year ended December 31, 2022 were $1,862,000 and increased by $194,000 from the corresponding period in the prior year primarily due to the expansion of the advisory business.

Other income for the year ended December 31, 2022 was $2,825,000 and increased by $1,543,000 from the corresponding period in the prior year primarily due to an increase in income from consulting services and termination payment from a technology partner.

Market making for the year

ended December 31, 2023 was $1,304,000 and decreased by $1,139,000 from the corresponding period

in the prior year, primarily due to market conditions.

Stock borrow / stock loan

for the year ended December 31, 2023 was $16,172,000 and increased by $1,654,000 from the corresponding

period in the prior year, primarily due to the growth of stock locate and securities lending businesses.

Advisory fees for the year

ended December 31, 2023 were $1,928,000 and increased by $66,000 from the corresponding period in

the prior year.

Other income for the year

ended December 31, 2023 was $1,898,000 and decreased by $1,064,000 from the corresponding period

in the prior year, primarily due to the termination of consulting fee income from a technology vendor.

Operating Expenses

Employee compensation and benefits for the year ended December 31, 2022 were $28,734,000 and decreased by $7,690,000 from the corresponding period in the prior year primarily due to a decrease in commissions payouts from RISE related to the loss of our institutional customers and a decrease in payouts related to fixed income, market making, and commission revenue, partially offset by an increase in payouts related to stock borrow / stock loan as well as an increase in executive compensation.

Clearing fees, including execution costs for the year ended December 31, 2022 were $2,143,000 and decreased by $2,674,000 from the corresponding period in the prior year primarily due to a decrease in our institutional clearing costs related to RISE as well as the recognition of our business development credit from our agreement with NFS.

Technology and communications expenses for the year ended December 31, 2022 were $4,471,000 and decreased by $291,000 from the corresponding period in the prior year primarily due to a decrease in technology costs related to RISE, partially offset by an increase in software licenses and other technology expenses.

Other general and administrative expenses for the year ended December 31, 2022 were $4,010,000 and increased by $324,000 from the corresponding period in the prior year primarily due to an increase in travel and entertainment related to marketing initiatives for our corporate services and securities finance business lines, an increase in insurance costs, partially offset by a legal settlement occurring in 2021.

Siebert 2022 Form-10K 27

Data processing expenses for the year ended December 31, 2022 were $3,169,000 and increased by $320,000 from the corresponding period in the prior year primarily due to an increase in service bureau charges.

Rent and occupancy expenses for the year ended December 31, 2022 were $1,955,000 and increased by $25,000 from the corresponding period in the prior year.

Professional fees for the year ended December 31, 2022 were $3,202,000 and increased by $507,000 from the corresponding period in the prior year primarily due to an increase in legal and consulting fees related to certain transactions such as the unwinding of Tigress and Hedge Connection.

Depreciation and amortization expenses for the year ended December 31, 2022 were $995,000 and decreased by $450,000 from the corresponding period in the prior year primarily due to the completion of useful lives of assets within STCH and write-offs of intangible assets related to RISE occurring in 2021.

Referral fees for the year ended December 31, 2022 were $0 and decreased by $1,213,000 from the corresponding period in the prior year primarily due to the loss of our institutional customers of RISE.

Interest expense for the year ended December 31, 2022 was $440,000 and increased by $79,000 from the corresponding period in the prior year primarily due to additional interest incurred from the mortgage with East West Bank established in 2022.

Loss on impairment for the year ended December 31, 2022 was $0 and decreased by $699,000 from the corresponding period in the prior year primarily due to the impairment of our RISE customer relationships intangible asset due to the termination of our clearing arrangement with GSCO occurring in the third quarter of 2021.

Advertising and promotion expense for the year ended December 31, 2022 was $543,000 and increased by $499,000 from the corresponding period in the prior year primarily due to an increase in promotional costs for various marketing initiatives.

Earnings of Equity Method Investment in Related Parties

The earnings of equity method investment in related parties for the year ended December 31, 2022 was $4,000 and decreased by $168,000 from the corresponding period in the prior year primarily due to a decrease in the earnings of Tigress and our proportional income.

Impairment of Equity Method Investment in Related Party

Impairment of equity method investment in related party for the year ended December 31, 2022 was $4,015,000 and increased by $4,015,000 from the corresponding period in the prior year due to the impairment of our investment in Tigress.

Loss on Sale of Equity Method Investment in Related Parties

Loss on sale of equity method investment in related parties for the year ended December 31, 2022 was $719,000 and increased by $719,000 from the corresponding period in the prior year due to our loss on the transactions between Siebert, RISE, Hedge Connection and Tigress.

Employee compensation and

benefits for the year ended December 31, 2023 were $31,936,000 and increased by $3,202,000 from

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

fees, including execution costs for the year ended December 31, 2023 were $1,672,000 and decreased by $471,000 from the corresponding

period in the prior year, primarily due to the elimination of RISE clearing and execution charges.

Technology and communications

expenses for the year ended December 31, 2023 were $3,364,000 and decreased by $1,107,000 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 an agreement with a technology vendor that was terminated in 2022.

Other general and administrative

expenses for the year ended December 31, 2023 were $4,410,000 and increased by $400,000 from the

corresponding period in the prior year, primarily due to an increase in travel expenses as well as expense primarily related to the Miami

office building.

Siebert 2023 Form-10K 23

Data processing expenses for

the year ended December 31, 2023 were $3,236,000 and increased by $67,000 from the corresponding

period in the prior year.

Rent and occupancy expenses

for the year ended December 31, 2023 were $1,873,000 and decreased by $82,000 from the corresponding

period in the prior year, primarily due to the elimination of certain leases in 2023.

Professional fees for the

year ended December 31, 2023 were $4,459,000 and increased by $1,257,000 from the corresponding

period in the prior year, primarily due to an increase in board of director compensation, executive officer compensation, as well as other

consulting costs.

Depreciation and amortization

expenses for the year ended December 31, 2023 were $2,020,000 and increased by $1,025,000 from the

corresponding period in the prior year, primarily due to the write-off of certain technology assets in 2023.

Interest expense for the year

ended December 31, 2023 was $263,000 and decreased by $177,000 from the corresponding period in

the prior year, primarily due to the elimination in interest related to notes payable at the end of 2022.

and promotion expenses for the year ended December 31, 2023 were $155,000 and decreased by $388,000 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 earnings of equity method

investment in related party for the year ended December 31, 2023 was $111,000 and increased by $107,000

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

impairment of investments for the year ended December 31, 2023 was a loss of $1,035,000 and decreased by $2,980,000 from the corresponding

period in the prior year, primarily due to the impairment of our investment in Tigress occurring in 2022, partially offset by the impairment

in 2023 of our investment in a technology provider of a trading platform (“Trading Technology Provider”).

Loss on sale of equity method

investment in related party for the year ended December 31, 2023 was $0 and decreased by $719,000 from the corresponding period in the

prior year due to our loss on the transactions between Siebert, RISE, Hedge Connection and Tigress in 2022.

Transaction termination costs

for the year ended December 31, 2023 was $5,943,000 and increased by $5,943,000 from the corresponding period in the prior year due to

costs associated with the termination of the Kakaopay transaction.

Provision For (Benefit From) Income Taxes

The benefit from income taxes for the year ended December 31, 2022 was $1,300,000 and decreased from the provision for income taxes by $3,021,000 from the corresponding period in the prior year.

Refer to Note 19 – Income Taxes for further detail.

Net Loss Attributable to Noncontrolling Interests

As further discussed in Note 1 – Organization and Basis of Presentation, we consolidate RISE’s financial results into our financial statements and reflect the portion of RISE not held by Siebert as a noncontrolling interests in our financial statements.

The net loss attributable to noncontrolling interests for the year ended December 31, 2022 was $1,000,000, and increased by $970,000 from the corresponding period in the prior year due to an increase in RISE’s net loss for 2022 and Siebert’s ownership of RISE.

Statements of Financial Condition as of December 31, 2022 and 2021

Assets as of December 31, 2022 were $728,048,000 and decreased by $676,187,000 from December 31, 2021, primarily due to a decrease in securities borrowed, receivables from customers, and cash and securities segregated for regulatory purposes, partially offset by an increase in cash and cash equivalents.

Liabilities as of December 31, 2022 were $678,128,000 and decreased by $675,601,000 from December 31, 2021, primarily due to a decrease in securities loaned, payables to customers, and notes payable – related party.

Liquidity and Capital Resources

We 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, there are no known or material events that would require us to use large amounts of our liquid assets to cover expenses.

The provision for income taxes

for the year ended December 31, 2023 was $3,415,000 and increased from the benefit for income taxes by $4,715,000 from the corresponding

period in the prior year.

The change from the corresponding period in the prior year is primarily due to substantial increase in pre-tax

earnings for the year ended December 31, 2023.

Refer to Note 18 – Income Taxes for additional detail.

Net Income (Loss)

Attributable to Noncontrolling Interests

further discussed in Note 2 – Summary of Significant Accounting Policies, we consolidate RISE’s financial results into our

consolidated financial statements and reflect the portion of RISE not held by Siebert as

a noncontrolling interests in our consolidated financial statements.

net income attributable to noncontrolling interests for the year ended December 31, 2023 was $18,000, and increased by $1,018,000 from

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

Siebert 2023 Form-10K 24

Consolidated Statements of Financial Condition

as of December 31, 2023 and 2022

Assets as of December 31,

2023 were $801,800,000 and increased by $73,752,000 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.

Liabilities as of December

31, 2023 were $731,091,000 and increased by $52,963,000 from December 31, 2022, primarily due to

an increase in securities loaned partially offset by a decrease in payables to customers and payables to non-customers.

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, 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 $14.8 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 in the line

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

Cash and Cash Equivalents

Our cash and cash equivalents were $23.7 million and $3.8 million as of December 31, 2022 and 2021, respectively.

cash and cash equivalents were $5.7 million and $23.7 million as of December 31, 2023 and 2022, respectively.

Debt Agreements

We have a $4.4 million mortgage and a $2.7 million loan outstanding with East West Bank, and an unutilized line of credit for short term overnight demand borrowing of up to $25 million with BMO Harris as of December 31, 2022.

The ability to borrow an additional $5.0 million on our loan with East West Bank expired on July 22, 2022;

however, we do not believe this will impact our ability to fund our operations.

have a $4.3 million mortgage with East West Bank and an unutilized line of credit for short term overnight demand borrowing of up to $25

million with BMO Harris as of December 31, 2023.

For the year ended December 31, 2023, we paid off our $2.7 million loan outstanding with

East West Bank.

As of December 31, 2023, we were in compliance with all covenants related to our debt agreements.

Cash Requirements

The following table summarizes our short- and long-term material cash requirements as of December 31, 2022:

following table summarizes our short- and long-term material cash requirements as of December 31, 2023.

Payments Due By Period

Operating lease commitments

Kakaopay fee (1)

Mortgage with East West Bank (2)

Loan with East West Bank

On December 30, 2021, we purchased the Miami office building and are building out this space to be one of our primary operating centers.

The total estimated cost for the build out is $1.5 million, with $338,000 financed through a commitment with East West Bank and the remainder being cash.

As of December 31, 2022, we have incurred approximately $1.0 million out of the $1.5 million of the build out costs.

Technology vendors (3)

Leasehold improvements (4)

(1) Pursuant to the Settlement Agreement with Kakaopay, Siebert

will pay Kakaopay a fee of $5 million (payable in ten quarterly installments beginning on March 29, 2024.) See Management’s Discussion

and Analysis of Financial Condition and Results of Operations – Transaction with Kakaopay for further detail.

(2) On December 30, 2021, we purchased the Miami office building

and financed part of the purchase price with a mortgage with East West Bank.

(3) In 2023 we entered into agreements with technology vendors

for certain development projects related to our Retail Platform and equity management solutions.

As of December 31, 2023, we have incurred

approximately $0.5 million out of the $2.6 million total budget for these projects.

(4) On July 7, 2023, we entered into a lease agreement expiring

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

The estimated build out cost for this office space

is approximately $800,000.

As of December 31, 2023, we have incurred approximately $129,000 out of the $800,000 of the estimated build

Siebert 2023 Form-10K 25

Shelf Registration Statement

On February 18, 2022, we filed a shelf registration statement on Form S-3 that was declared effective on March 2, 2022 by the SEC for the potential offering, issuance and sale by us of up to $100.0 million of our common stock, preferred stock, warrants to purchase our common stock and/or preferred stock, units consisting of all or some of these securities and subscription rights to purchase all or some of these securities.

The registration statement was filed in reliance on General Instruction I.B.6 of Form S-3, which imposes a limitation on the maximum amount of securities that we may sell pursuant to the registration statement during any twelve-month period.

Assuming 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.

Shelf Registration

February 18, 2022, we filed a shelf registration statement on Form S-3 that was declared effective on March 2, 2022 by the SEC for the

potential offering, issuance and sale by us of up to $100.0 million of our common stock, preferred stock, warrants to purchase our common

stock and/or preferred stock, units consisting of all or some of these securities and subscription rights to purchase all or some of these

However, since we filed this Report after its scheduled due date, we no longer satisfy the eligibility requirements for use

of registration statements on Form S-3, which requires that we file in a timely manner all reports required to be filed during the prior

twelve calendar months.

As a result, we have suspended use of the shelf registration statement.

At the Market Offering

On May 27, 2022, we entered into a Capital on Demand TM Sales Agreement with JonesTrading as agent, pursuant to which we may offer and sell, from time to time through JonesTrading, shares of our common stock having an aggregate offering amount of up to $9.6 million under our shelf registration statement on Form S-3.

For the year ended December 31, 2022, we did not sell any shares pursuant to this Sales Agreement.

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

and sell, from time to time through JonesTrading, shares of our common stock having an aggregate offering amount of up to $9.6 million

under our shelf registration statement on Form S-3.

For the years ended December 31, 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.

Net Capital, Reserve Accounts, Segregation of Funds, and Other Regulatory Requirements

MSCO is subject to the Uniform Net Capital Rules of the SEC (Rule 15c3-1) and the Customer Protection Rule (15c3-3) of the Exchange Act and maintains capital and segregated cash reserves in excess of regulatory requirements.

As noted above, since we

filed this Report after its scheduled due date, we no longer satisfy the eligibility requirements for use of registration statements on

As a result, we have suspended use of the shelf registration statement and we are not able to access the At the Market program

as of the date of this Report.

Net Capital, Reserve Accounts, Segregation

of Funds, and Other Regulatory Requirements

is subject to the Uniform Net Capital Rules of the SEC (Rule 15c3-1) and the Customer Protection Rule (15c3-3) of the Exchange Act and

maintains capital and segregated cash reserves in excess of regulatory requirements.

Requirements under these regulations may vary;

however, MSCO has adequate reserves and contingency funding plans in place to sufficiently meet any regulatory requirements.

In addition to net capital requirements, as a self-clearing broker-dealer, MSCO is subject to cash deposit and collateral requirements with clearing houses, such as the DTCC and OCC, which may fluctuate significantly from time to time based upon the nature and size of clients’ trading activity and market volatility.

RISE, as a member of FINRA, is subject to the SEC Uniform Net Capital Rule 15c3-1 and the corresponding regulatory capital requirements.

MSCO can transfer funds to Siebert as long as it 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 years ended December 31, 2022 and 2021, MSCO and RISE had sufficient net capital to meet their respective liquidity and regulatory capital requirements.

MSCO has adequate reserves and contingency funding plans in place to sufficiently meet any regulatory requirements.

In addition to net

capital requirements, as a self-clearing broker-dealer, MSCO is subject to cash deposit and collateral requirements with clearing houses,

such as the DTCC and OCC, which may fluctuate significantly from time to time based upon the nature and size of clients’ trading

activity and market volatility.

RISE, as a member of FINRA, is subject to the SEC Uniform Net Capital Rule 15c3-1 and the corresponding

regulatory capital requirements.

MSCO can transfer funds to

Siebert as long as it 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 years ended December 31, 2023 and 2022, MSCO and RISE had sufficient net capital to meet their respective liquidity and regulatory

capital requirements.

Refer to Note 19 – Capital Requirements for more detail on our capital requirements.

Cash provided by and used

in operating activities consisted of net income (loss) adjusted for certain non-cash items.

Net operating assets and liabilities at any

specific point in time are subject to many variables, including variability in customer activity, the timing of cash receipts and payments,

and vendor payment terms.

The total changes in our consolidated statements of cash flows, especially our operating cash flow, are not

necessarily indicative of the ongoing results of our business as we have customer assets and liabilities on our consolidated statements

of financial condition.

For the year ended December

31, 2023, cash used in operating activities increased by $5.7 million compared to 2022, which was primarily driven by an increase in working

capital partially offset by an increase in net income.

The net change of receivables and payables from / to customers, receivables and

payables from / to non-customers, and securities borrowed and securities loaned between the periods offset each other.

For the year ended December

31, 2023, cash used in investing activities increased by $0.7 million compared to 2022, which was primarily driven by the build out of

the Miami office building as well as investment in our Retail Platform and other technology initiatives in 2023.

For the year ended December

31, 2023, cash flows provided by financing activities increased by $17.3 million compared to 2022, which was primarily driven by the issuance

of the Company’s common stock related to the transaction with Kakaopay.

Refer to Note 5 – Kakaopay Transaction for additional

Siebert 2023 Form-10K 26

Cash provided by and used in operating activities consisted of net income (loss) adjusted for certain non-cash items.

Net operating assets and liabilities at any specific point in time are subject to many variables, including variability in customer activity, the timing of cash receipts and payments, and vendor payment terms.

The total changes in our statements of cash flows, especially our operating cash flow, are not necessarily indicative of the ongoing results of our business as we have customer assets and liabilities on our statements of financial condition.

For the year ended December 31, 2022, we had negative operating cash flow due to the net effect of the change in payables to customers and receivables from customers.

Other items within operating cash flow mostly offset each other, most notably our net loss and the adjustment from the impairment of equity method investment in related party.

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 outflows due to the repayment of the notes payable - related party to Gloria E.

Gebbia and Hedge Connection, as well as the repayment of our loan with East West Bank.

For the year ended December 31, 2021, we had positive operating cash flow.

We had investing cash outflows related to the purchase of the Miami office building, equity of OpenHand, software assets and miscellaneous office facilities.

We had financing cash inflow related to the mortgage from East West Bank to finance part of the purchase of the Miami office building as well as an incremental note payable from Gloria E.

Long Term Contracts

Contract with NFS

Effective 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.

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 December 31, 2022, we do not expect to terminate the contract with NFS before the end of the contract term.

Refer to Note 15 – Deferred Contract Incentive and Note 22 – Commitments, Contingencies and Other for additional detail.

however, as of December 31, 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.

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

things, extends the term of their arrangement for a five-year period ending June 2028, with an option to terminate after three years.

The total minimum expense for this arrangement is estimated at approximately $1.2 million over the duration of the contract.

Off-Balance Sheet Arrangements

We enter into various transactions to meet the needs of customers, conduct trading activities, and manage market risks and are, therefore, subject to varying degrees of market and credit risk.

In the normal course of business, our customer activities involve the execution, settlement, and financing of various customer securities transactions.

These activities may expose us to off-balance sheet risk in the event the customer or other broker is unable to fulfill their contracted obligations and we are forced to purchase or sell the financial instrument underlying the contract at a loss.

There were no material losses for unsettled customer transactions for the years ended December 31, 2022 and 2021.

enter into various transactions to meet the needs of customers, conduct trading activities, and manage market risks and are, therefore,

subject to varying degrees of market and credit risk.

In the normal course of business, our customer activities involve the execution,

settlement, and financing of various customer securities transactions.

These activities may expose us to off-balance sheet risk in the

event the customer or other broker is unable to fulfill their contracted obligations and we are forced to purchase or sell the financial

instrument underlying the contract at a loss.

There were no material losses for unsettled customer transactions for the years ended December

31, 2023 and 2022.

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

Siebert 2022 Form-10K 32

Transaction with J2

Financial Technology

January 18, 2024, Siebert Technologies, LLC (“STCH”) entered into a Purchase Agreement (the “Purchase Agreement”)

with J2 Financial Technology, Inc., d/b/a “Guild”, a Delaware corporation.

the Purchase Agreement, STCH purchased a mobile self-directed trading app for the total purchase price of $385,000.

The purchase price

consisted of 200,000 restricted shares of our common stock (priced at the historical 30-day moving average as of January 18, 2024) worth

approximately $350,000 and $35,000 cash.

Critical Accounting Policies and Estimates

We generally follow accounting policies standard in the brokerage industry and believe that our policies appropriately reflect our financial position and results of operations.

Our management team makes significant estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities included in the consolidated financial statements.

The estimates relate primarily to revenue and expense items in the normal course of business as to which we receive no confirmations, invoices, or other documentation, at the time the books are closed for a period.

We use our best judgment, based on our knowledge of revenue transactions and expenses incurred, to estimate the amount of such revenue and expenses.

We are not aware of any material differences between the estimates used in closing our books for the last five years and the actual amounts of revenue and expenses incurred when we subsequently receive the actual confirmations, invoices or other documentation.

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

The preparation of our consolidated financial statements requires us to make judgments and estimates that may have a significant impact on our financial results.

We believe that the critical accounting policies listed below are particularly subject to management's judgments and estimates and could materially affect our results of operations and financial position.

Refer to Note 2 – Summary of Significant Accounting Policies for additional detail on our significant accounting policies.

Estimates of effective income tax rates, uncertain tax positions, deferred income taxes and related valuation allowances

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.

Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized.

In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.

If we determine that we would be able to realize deferred taxes in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

We record uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

We recognize interest and penalties related to unrecognized tax benefits on the provision for income taxes line in the statements of operations.

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

We generally follow accounting

policies standard in the brokerage industry and believe that our policies appropriately reflect our financial position and results of

Our management team makes significant estimates that affect the reported amounts of assets, liabilities, and expenses, and

the related disclosure of contingent assets and liabilities included in the consolidated financial statements.

The estimates relate primarily

to expense items in the normal course of business as to which we receive no confirmations, invoices, or other documentation, at the time

the books are closed for a period.

We use our best judgment, based on our knowledge of expenses incurred, to estimate the amount of such

We are not aware of any material differences between the estimates used in closing our books for the periods presented and the

actual amounts of expenses incurred when we subsequently receive the actual confirmations, invoices or other documentation.

Our consolidated

financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

The preparation of our consolidated financial statements requires us to make judgments and estimates that may have a significant

impact on our financial results.

We believe that the critical accounting policies listed below are particularly subject to management’s

judgments and estimates and could materially affect our results of operations and financial position.

Refer to Note 2 – Summary

of Significant Accounting Policies for additional detail on our significant accounting policies.

Estimates of effective income tax rates,

uncertain tax positions, deferred income taxes and related valuation allowances

We account for income taxes

under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax

consequences of events that have been included in the consolidated financial statements.

Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the consolidated

financial statements and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences

are expected to reverse.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period

that includes the enactment date.

Siebert 2023 Form-10K 27

We recognize deferred tax

assets to the extent that we believe that these assets are more likely than not to be realized.

In making such a determination, we consider

all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable

income, tax-planning strategies, and results of recent operations.

If we determine that we would be able to realize deferred taxes in

the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would

reduce the provision for income taxes.

We record uncertain tax positions

in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax

positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not

recognition threshold we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate

settlement with the related tax authority.

We recognize interest and

penalties related to unrecognized tax benefits on the provision for income taxes line on the consolidated statements of operations.

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

Goodwill and other intangible assets

Goodwill is recognized as a result of business combinations and represents the excess of the purchase price over the fair value of net tangible assets and identifiable intangible assets acquired.

The valuation of goodwill and acquired intangible assets requires significant judgment and estimates by management.

For example, the valuation of certain intangible assets required management’s estimates of future earnings and cash flows as well as judgment in determining market approaches.

The useful life of the finite lived intangible assets was determined based on management's estimate of the period over which those intangible assets were expected to provide economic benefit.

Management applies judgment in conducting impairment testing for goodwill and intangible assets, including estimates of fair value based on the income or market approach and estimates required to determine the useful lives of finite lived intangible assets.

We test goodwill and all intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable , or at least annually.

If our estimates of fair value change due to future events differing significantly from the forecasts used to determine fair value or there are changes in our business or other factors, we will assess the amount of impairment and recognize it in our financial statements during that reporting period.

We also evaluate the useful life of finite lived intangible assets on an annual basis to determine if events or trends warrant a change in estimate of the useful life.

Changes in the estimated useful lives of finite lived intangible assets could result in the recognition of an impairment or a change in the remaining life of these assets.

We have concluded that as of December 31, 2022 and 2021, there has been no impairment to the carrying value of Siebert’s goodwill;

however, there has been an impairment of $4,015,000 to the carrying value of our equity method investment in Tigress for the year ended December 31, 2022, and an impairment of $699,000 to the RISE customer relationships intangible asset for the year ended December 31, 2021 due to the termination of GSCO’s clearing arrangement with RISE.

Refer to Note 2 – Summary of Significant Accounting Policies and Note 3 – Transactions with Tigress and Hedge Connection for additional detail.

is recognized as a result of business combinations and represents the excess of the purchase price over the fair value of net tangible

assets and identifiable intangible assets acquired.

valuation of goodwill and acquired intangible assets requires significant judgment and estimates by management.

For example, the valuation

of certain intangible assets required management’s estimates of future earnings and cash flows as well as judgment in determining

market approaches.

The useful life of the finite lived intangible assets was determined based on management’s estimate of the period over

which those intangible assets were expected to provide economic benefit.

Management applies judgment in conducting impairment testing

for goodwill and intangible assets, including estimates of fair value based on the income or market approach and estimates required to

determine the useful lives of finite lived intangible assets.

test goodwill and all intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount may

not be recoverable, or at least annually.

If our estimates of fair value change due to future events differing significantly from the

forecasts used to determine fair value or there are changes in our business or other factors, we will assess the amount of impairment

and recognize it in our consolidated financial statements during that reporting period.

also evaluate the useful life of finite lived intangible assets on an annual basis to determine if events or trends warrant a change in

estimate of the useful life.

Changes in the estimated useful lives of finite lived intangible assets could result in the recognition of

an impairment or a change in the remaining life of these assets.

have concluded that as of December 31, 2023 and 2022, there has been no impairment to the carrying value of Siebert’s goodwill;

however, there has been an impairment to the carrying value of our investment in the Trading Technology Provider and our equity method

investment in Tigress for the years ended December 31, 2023 and 2022, which is included in line item “Impairment of investments”

on the consolidated statements of operations.

to Note 2 – Summary of Significant Accounting Policies, Note 3 – Transactions

with Tigress and Hedge Connection, and Note 13 – Investments, Cost for additional detail.

Siebert 2023 Form-10K 28

Accruals for contingent liabilities

Accruals for contingent liabilities related to legal and regulatory claims as well as employee healthcare expenses under our self-insured plan reflect an estimate of probable losses.

In making such estimates for legal and regulatory claims, we consider many factors, including the progress of the matter, prior experience and the experience of others in similar matters, available defenses, insurance coverage, indemnification provisions and the advice of legal counsel and other experts.

In making such estimates for employee healthcare expenses, we consider many factors, including trends of our health insurance expenses and our insurance reserve limits.

We believe that our present insurance coverage and reserves are sufficient to cover currently estimated exposures, but there can be no assurance that we will not incur liabilities in excess of recorded reserves or in excess of our insurance limits.

Significant judgment is required in making these estimates, and the actual cost may be materially different than the estimated costs.

Refer to Note 22 – Commitments, Contingencies and Other for additional detail.

Variable Interest Entities

We evaluate whether an entity is a VIE and determine if the primary beneficiary status is appropriate on a quarterly basis.

We consolidate a VIE for which we are the primary beneficiary.

When assessing the determination of the primary beneficiary, we consider all relevant facts and circumstances, including factors such as the power to direct the activities of the VIE that most significantly impact its economic performance, the obligation to absorb the losses and/or the right to receive the expected returns of the VIE.

Through this evaluation, as of December 31, 2022, we determined that RISE is a VIE and we are the primary beneficiary, primarily due to Siebert’s power to direct the activities of RISE that most significantly impact its economic performance.

Additionally, Siebert may be obligated to fund RISE’s operations at an amount that is disproportional to its ownership percentage.

for contingent liabilities related to legal and regulatory claims as well as employee healthcare expenses under our self-insured plan

reflect an estimate of probable losses.

In making such estimates for legal and regulatory claims, we consider many factors, including

the progress of the matter, prior experience and the experience of others in similar matters, available defenses, insurance coverage,

indemnification provisions and the advice of legal counsel and other experts.

In making such estimates for employee healthcare expenses,

we consider many factors, including trends of our health insurance expenses and our insurance reserve limits.

We believe that our present

insurance coverage and reserves are sufficient to cover currently estimated exposures, but there can be no assurance that we will not

incur liabilities in excess of recorded reserves or in excess of our insurance limits.

Significant judgment is required in making these

estimates, and the actual cost may be materially different than the estimated costs.

Refer to Note 21 – Commitments,

Contingencies and Other for additional detail.

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”).

Siebert 2022 Form-10K 34

December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, “Improvements to Income Tax Disclosures”

(“ASU 2023-09”).

The ASU is intended to enhance the transparency and decision usefulness of income tax disclosures.

The amendments

in the ASU address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income

taxes paid information.

ASU 2023-09 will be effective for us for annual periods beginning after December 15, 2024, though early adoption

is permitted.

We are still evaluating the presentational effect that ASU 2023-09 will have on our consolidated financial statements, but

we expect considerable changes to our income tax footnote.

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”).

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-K

Item 7. Management’s Discussion and Analysis