The Retail Division
Discount Brokerage and Related Services. Siebert became a discount broker on
May 1, 1975. Siebert believes that it has been in business and a member of The
New York Stock Exchange, Inc. (the “NYSE”) longer than any other
discount broker. In 1998, Siebert began to offer its customers access to their
accounts through SiebertNet, its Internet website. Siebert’s focus in
its discount brokerage business is to serve retail clients seeking a wide selection
of quality investment services, including trading through a broker on the telephone,
through a wireless device or via the Internet, at commissions that are substantially
lower than those of full-commission firms. Siebert clears its securities transactions
on a fully disclosed basis through National Financial Services Corp. (“NFS”),
a wholly owned subsidiary of Fidelity Investments.
Siebert serves investors who make their own investment decisions. Siebert seeks
to assist its customers in their investment decisions by offering a number of
value added services, including easy access to account information. Siebert’s
representatives are available to assist customers with information via toll-free
800 service Monday through Friday between 7:30 a.m. and 7:30 p.m.
Eastern Time. Through its SiebertNet, Mobile Broker, inter-active voice recognition
and Siebert Brokerage Express services, 24-hour access is available to customers.
Independent Retail Execution Services. Siebert and NFS monitor order flow in
an effort to ensure that we are getting the best possible trade executions for
customers. Siebert does not make markets in securities, nor does it take positions
against customer orders.
Siebert’s equity orders are routed by NFS in a manner intended to afford
its customers the opportunity for price improvement on all orders. The firm
also offers customers execution services through various electronic communication
networks (“ECNs”) for an additional fee. These systems give customer’s
access to numerous ECNs before and after regular market hours. Siebert believes
that its over-the counter executions consistently afford its customers the opportunity
for price improvement.
Customers may also indicate online interest in buying or selling fixed income
securities, including municipal bonds, corporate bonds, mortgage-backed securities,
government sponsored enterprises, unit investment trusts or certificates of
deposit. These transactions are serviced by registered representatives.
Retail Customer Service. Siebert believes that superior customer service enhances
its ability to compete with larger discount brokerage firms and therefore provides
retail customers, at no additional charge, with personal service via toll-free
access to dedicated customer support personnel for all of its products and services.
Customer service personnel are located in each of Siebert’s branch offices.
Siebert has retail offices in New York, New York; Boca Raton, Florida; and Beverly
Hills, California. Siebert uses a proprietary Customer Relationship Management
System that enables representatives, no matter where located, to view a customer’s
service requests and the response thereto. Siebert’s telephone system
permits the automatic routing of calls to the next available agent having the
appropriate skill set.
Retirement Accounts. Siebert offers customers a variety of self-directed retirement
accounts for which it acts as agent on all transactions. Custodial services
are provided through an affiliate of NFS, the firm’s clearing agent, which
also serves as trustee for such accounts. Each IRA, SEP IRA, ROTH IRA, 401(k)
and KEOGH account can be invested in mutual funds, stocks, bonds and other investments
in a consolidated account.
Customer Financing. Customer’s margin accounts are carried through NFS
which lends customers a portion of the market value of certain securities held
in the customer’s account. Margin loans are collateralized by these securities.
Customers also may sell securities short in a margin account, subject to minimum
equity and applicable margin requirements, and the availability of such securities
to be borrowed. In permitting customers to engage in margin, short sale or any
other transaction, Siebert assumes the risk of its customers’ failure
to meet their obligations in the event of adverse changes in the market value
of the securities positions. Both Siebert and NFS reserve the right to set margin
requirements higher than those established by the Federal Reserve Board.
Siebert has established policies with respect to maximum purchase commitments
for new customers or customers with inadequate collateral to support a requested
purchase. Managers have some flexibility in the allowance of certain transactions.
When transactions occur outside normal guidelines, Siebert monitors accounts
closely until their payment obligations are completed; if the customer does
not meet the commitment, Siebert takes steps to close out the position and minimize
any loss. Siebert has not had significant credit losses in the last five years.
Information and Communications Systems. Siebert relies heavily on the data technology
platform provided by its clearing agent, NFS. This platform offers an interface
to NFS’ main frame computing system where all customer account records
are kept and is accessible by Siebert’s network. Siebert’s systems
also utilize browser based access and other types of data communications. Siebert’s
representatives use NFS systems, by way of Siebert’s technology platform,
to perform daily operational functions which include trade entry, trade reporting,
clearing related activities, risk management and account maintenance.
Siebert’s data technology platform offers services used in direct relation
to customer related activities as well as support for corporate use. Some of
these services include email and messaging, market data systems and third party
trading systems, business productivity tools and customer relationship management
systems. Siebert’s branch offices are connected to the main offices in
New York, New York and Jersey City, New Jersey via a virtual private network.
Siebert’s data network is designed with redundancy in case a significant
business disruption occurs.
Siebert’s voice network offers a call center feature that can route and
queue calls for certain departments within the organization. Additionally, the
systems call manager offers reporting and tracking features which enable staff
to determine how calls are being managed, such as time on hold, call duration
and total calls by agent.
To ensure reliability and to conform to regulatory requirements related to business
continuity, Siebert maintains backup systems and backup data. However, in the
event of a wide-spread disruption, such as a massive natural disaster, Siebert’s
ability to satisfy the obligations to customers and other securities firms could
be significantly hampered or completely disrupted. For more information regarding
Siebert’s Business Continuity Plan, please visit our website at www.siebertnet.com
or write to us at Muriel Siebert & Co., Inc., Compliance Department, 885
Third Avenue, Suite 3100, New York, NY 10022.
Our website has design, navigation, and functionality features such as:
Informative trading screens: Customers can stay in touch while trading, double-check
balances, positions and order status, see real time quotes, intraday and annual
charts and news headlines – automatically – as they place orders.
Multiple orders: Customers can place as many as 10 orders at one time.
Tax-lot trading: Our online equity order entry screen allows customers to
specify tax lots which display with cost basis and current gain/loss on a real-time
positions page.
Trailing stop orders: Customers can enter an order that trails the market
as a percentage of share price or with a flat dollar value and the system will
execute their instructions automatically.
Contingent orders: Customers can place One-Triggers-Two Bracket and One-Cancels-Other
Bracket orders.
An easy-to-install desktop security program that may be installed to help
protect against certain types of online fraud such as “keylogging”
and “phishing.”
The Capital Markets Division
Siebert’s Capital Markets Group (“SCM”) division served the
Company as a co-manager, underwriting syndicate member, or selling group member
on a wide spectrum of securities offerings for corporations and Federal agencies.
The principal activities of SCM were investment banking and institutional equity
execution services. SCM provided Muriel Siebert & Co., Inc. high-quality
brokerage service to both institutional investors and issuers of equity and
fixed-income securities.
On November 4, 2014, the Company, which held a 49% membership interest in, and
the other members of, Siebert Brandford Shank & Co., LLC (“SBS”),
contributed their SBS membership interests into a newly formed Delaware limited
liability company, Siebert Brandford Shank Financial, L.L.C. (“SBSF”),
in exchange for the same percentage interests in SBSF. On the same day, the
Company entered into an Asset Purchase Agreement (the “Purchase Agreement”)
with SBS and SBSF, pursuant to which the Company sold substantially all of the
SCM assets to SBSF. Pursuant to the Purchase Agreement, SBSF assumed post-closing
liabilities relating to the transferred business.
The Purchase Agreement provides for an aggregate purchase price for the disposition
of $3,000,000, payable by SBSF after closing in annual installments commencing
on March 1, 2016 and continuing on each of March 1, 2017, 2018, 2019 and 2020.
The transferred business was contributed by SBSF to, and operated by SBS. The
amount payable to the Company on each annual payment date will equal 50% of
the net income attributable to the transferred business recognized by, SBS in
accordance with generally accepted accounting principles during the fiscal year
ending immediately preceding the applicable payment date; provided that, if
net income attributable to the transferred business generated prior to the fifth
annual payment date is insufficient to pay the remaining balance of the purchase
price in full on the fifth annual payment date, then the unpaid amount of the
purchase price will be paid in full on March 1, 2021. The annual installment
payable on March 1, 2016 is based on the net income attributable to the capital
markets business for the year ended December 31, 2015, amounted to $493,000.
Transferred assets of SCM, consisted of customer accounts and goodwill, which
had no carrying value to the Company, and the Company recorded a gain on sale
of $1,820,000, which reflected the fair value of the purchase obligation. Such
fair value was based on the present value of estimated annual installments to
be received during 2016 through 2020 from forecasted net income of the transferred
business plus a final settlement in 2021, discounted at 11.5% (representing
SBS’s weighted average cost of capital).
The discount recorded for the purchase obligation is being amortized as interest
income using an effective yield initially calculated based on the original carrying
amount of the obligation and estimated annual installments to be received and
adjusted in future periods to reflect actual installments received and changes
in estimates of future installments.