SIEBERT FINANCIAL CORP, S-1/A, 1997-01-21

SIEBERT FINANCIAL CORP
S-1/A, 1997-01-21
SECURITY BROKERS, DEALERS & FLOTATION COMPANIES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 21, 1997

REGISTRATION NO. 333-18855

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- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 1

FORM S-1
------------------------
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

SIEBERT FINANCIAL CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
NEW YORK 6211 11-1796714
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) NUMBER)
</TABLE>

885 THIRD AVENUE, SUITE 1720
NEW YORK, NEW YORK 10022
(212) 644-2400
(ADDRESS, INCLUDING ZIP CODE, TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

T. K. FLATLEY
885 THIRD AVENUE, SUITE 1720
NEW YORK, NEW YORK 10022
(212) 644-2400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)

Copy to:

SARAH HEWITT, ESQ.
BROWN RAYSMAN MILLSTEIN FELDER & STEINER, LLP
120 WEST 45TH STREET
NEW YORK, NEW YORK 10036
(212) 944-1515

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

EXHIBIT INDEX ON PAGE II-5

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<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED JANUARY 21, 1997

PROSPECTUS

25,000 SHARES

[LOGO] SIEBERT FINANCIAL CORP.

COMMON STOCK

------------------------

Siebert Financial Corp., a New York corporation (the "Company"), is
offering to holders of record of its common stock, par value $.01 per share (the
"Common Stock"), outstanding on Friday, January 17, 1997 (the "Record Date"),
that number of shares of Common Stock which will permit such shareholder to
round up to the closest 100 shares any holdings of an odd amount for $9.375 per
share, free of commissions and underwriting discounts. An aggregate of up to
approximately 25,000 shares of Common Stock will be sold pursuant to this
offering if all the Company's shareholders take advantage of the offer. This
offer will expire on Friday, February 21, 1997 (the "Expiration Date").
Shareholders are encouraged to consider carefully the offer prior to the
Expiration Date. After the Expiration Date, the offer will be null and void. See
"Plan of Distribution."

REFERENCE IS MADE TO "INVESTMENT CONSIDERATIONS" BEGINNING ON PAGE 4 WHICH
CONTAINS MATERIAL INFORMATION THAT SHOULD BE CONSIDERED IN CONNECTION WITH THE
SECURITIES BEING OFFERED HEREBY.

The Common Stock is traded in the Nasdaq SmallCap Market under the symbol
"SIEB." The closing sale price of the Common Stock in the Nasdaq SmallCap Market
on January 15, 1997 was $9.375 per share. See "Price Range of Common Stock."

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

The date of this Prospectus is January 23, 1997.

<PAGE> 3

NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY OTHER PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION MAY NOT LAWFULLY BE MADE.

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (together with any amendments
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act") with respect to the shares of Common Stock
offered hereby. This Prospectus does not contain all the information set forth
in the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission and certain items of which may
be contained in schedules and exhibits to the Registration Statement as
permitted by the rules and regulations of the Commission to which reference is
hereby made for further information with respect to the Company and the Common
Stock. Items of information omitted from this Prospectus but contained in the
Registration Statement may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following regional offices of the Commission:
7 World Trade Center, New York, New York 10048, and Citicorp Center, 500 West
Madison, Suite 1400, Chicago, Illinois 60661. Copies of such material can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission
maintains a Web site that contains reports, proxy statements and information
statements and other information regarding registrants that file electronically
with the Commission. The address of the Web site is http://www.sec.gov.

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission referred to above. In addition, copies of such reports, proxy
statements and other information concerning the Company may also be inspected
and copied at the offices of The Nasdaq Stock Market, Inc. at 1735 K Street,
N.W., Washington, D.C. 20006-1506 where the Common Stock is traded.

2
<PAGE> 4

THE COMPANY

SIEBERT

The Company is a holding company which conducts all of its business
activities in the retail discount brokerage and investment banking business
through its wholly-owned subsidiary, Muriel Siebert & Co., Inc., a Delaware
corporation ("Siebert"). Muriel Siebert, the first woman member of the New York
Stock Exchange, is the Chair, President and a director and owns 97.5% of the
outstanding Common Stock of the Company.

Siebert provides discount brokerage services and related services to more
than 80,000 investor accounts. Siebert's focus in its discount brokerage
business is to serve retail clients who seek a wide selection of quality
investment services at commissions that are substantially lower than those of
full-commission firms and competitive with the leading national discounters.
Through the Capital Markets division, Siebert offers institutional clients
equity execution services on an agency basis and equity, fixed income and
municipal underwriting and investment banking services. Siebert is a participant
in the secondary markets for Municipal and U.S. Treasury securities. The Capital
Markets division trades listed bond funds and certain other securities for its
own account. The proprietary trading business is strictly segregated from that
of the agency business executed on behalf of institutional clients.

The firm is unique among discount brokerage firms in that through its
Capital Markets division it offers a wide array of underwriting and investment
banking services including acting as sole manager, co-manager and otherwise
participating in the management underwriting teams of, or acting as financial
advisors for, municipal, corporate debt and equity, government agency and
mortgage/asset backed securities issues.

BACKGROUND

The Company is the successor by merger to J. Michaels, Inc., a New York
corporation ("JMI"), a company which had been in the retail furniture business
for more than 100 years. Because of a decline in the strength of JMI's core
retail furniture business in Brooklyn, New York, management of JMI concluded
that the return on JMI's assets generated by its business was insufficient and
decided that it would be in the best interests of its shareholders to sell JMI's
assets and distribute the net proceeds after payment of all liabilities to the
shareholders of JMI. On April 24, 1996, JMI and Muriel Siebert Capital Markets
Group, Inc., a Delaware corporation owned by Ms. Siebert ("MSCMG"), entered into
a plan and agreement of merger (the "Merger Agreement") providing for the merger
(the "Merger") of MSCMG with and into JMI, on the terms and conditions contained
in the Merger Agreement, and, in connection therewith, after a distribution
concurrently with the consummation of the Merger, to transfer all of JMI's
remaining assets to a liquidating trust pursuant to the Merger Agreement and to
sell such assets and distribute the proceeds thereof to the shareholders of JMI.
The Merger was consummated on November 8, 1996. Shortly thereafter, the first
liquidating dividend of $11.50 per share was paid to shareholders of JMI. The
Company will have no continuing involvement with the liquidation of the
remaining assets of JMI.

THE OFFERING

The Company is offering to sell to each of its shareholders at $9.375 per
share, the closing sale price of the shares of Common Stock on the Nasdaq
SmallCap Market on January 15, 1997, that number of shares of Common Stock which
will permit such shareholder to round up to the nearest 100 shares any holdings
of an odd amount. The offer, which is free of commissions and underwriting
discounts, is intended to enable shareholders to increase and maintain their
equity interests in the Company since many shareholders do not like to hold
"odd-lots."

3
<PAGE> 5

INVESTMENT CONSIDERATIONS

This Prospectus contains forward-looking statements that involve risks and
uncertainties. Actual results could differ materially from those discussed in
the forward-looking statements as a result of certain factors, including those
set forth below and elsewhere in this Prospectus. In addition to all the other
information contained in this Prospectus, prospective purchasers should consider
the investment considerations set forth below prior to deciding whether to
invest in the Common Stock offered hereby.

MARKET CONDITIONS

The securities business is, by its nature, subject to significant risks,
particularly in volatile or illiquid markets, including the risk of trading
losses, losses resulting from the ownership or underwriting of securities,
counterparty failure to meet commitments, customer fraud, employee fraud, issuer
fraud, errors and misconduct, failures in connection with the processing of
securities transactions and litigation.

The Company's principal business activity, retail broker-dealer operations,
as well as its investment banking, institutional sales and other services, are
highly competitive and subject to various risks, volatile trading markets and
fluctuations in the volume of market activity. The securities business is
directly affected by many factors, including economic and political conditions,
broad trends in business and finance, legislation and regulation affecting the
national and international business and financial communities, currency values,
inflation, market conditions, the availability and cost of short-term or
long-term funding and capital, the credit capacity or perceived creditworthiness
of the securities industry in the marketplace and the level and volatility of
interest rates. These and other factors can contribute to lower price levels for
securities and illiquid markets.

Lower price levels of securities may result in (i) reduced volumes of
securities, options and futures transactions, with a consequent reduction in
commission revenues, and (ii) losses from declines in the market value of
securities held in trading, investment and underwriting positions. In periods of
low volume, levels of profitability are further adversely affected because
certain expenses remain relatively fixed. Sudden sharp declines in market values
of securities and the failure of issuers and counterparties to perform their
obligations can result in illiquid markets which, in turn, may result in the
Company having difficulty selling securities. Such negative market conditions,
if prolonged, may also lower the Company's revenues from investment banking and
other activities.

As a result of the varied risks associated with the securities business,
which are beyond the Company's control, the Company's commission and other
revenues could be adversely affected. A reduction in revenues or a loss
resulting from the underwriting or ownership of securities could have a material
adverse effect on the Company's results of operations and financial condition.
In addition, as a result of such risks, the Company's revenues and operating
results may be subject to significant fluctuations from quarter to quarter and
from year to year. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Business Environment."

COMPETITION

Siebert encounters significant competition from full-commission and
discount brokerage firms, as well as from financial institutions, mutual fund
sponsors and other organizations many of which are significantly larger and
better capitalized than Siebert. The Siebert Brandford Shank division also
encounters significant competition from firms engaged in the municipal finance
business. The general financial success of the securities industry over the past
several years has strengthened existing competitors. Siebert believes that such
success will continue to attract additional competitors such as banks, insurance
companies, providers of online financial and information services, and others as
they expand their product lines. Many of these competitors are larger, more
diversified, have greater capital resources, and offer a wider range of services
and financial products than Siebert. Siebert competes with a wide variety of
vendors of financial services for the same customers. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Business Environment."

4
<PAGE> 6

During 1996, competition has continued to intensify both among all classes
of brokerage firms and within the discount brokerage business as well as from
new firms not previously in the discount business announcing plans to become
significantly involved. Other firms, traditionally discount execution firms
primarily, have announced their intention to broaden their offerings to include
advice and investment management. Since 1994, some firms have offered low flat
rate execution fees that are difficult for any conventional discount firm to
meet. Many of the flat fee brokers, however, impose charges for services such as
mailing, transfers and handling exchanges which Siebert does not and also direct
their execution to captive market makers. Increased competition, broader service
offerings or the prevalence of a flat fee environment could also limit Siebert's
growth or even lead to a decline in Siebert's customer base which would
adversely affect its results of operations. See "Business -- Competition."

PRINCIPAL TRANSACTIONS

The Company's Capital Markets division underwriting and trading activities
involve the purchase, sale or short sale of securities as principal. These
activities involve the risks of changes in the market prices of such securities
and of decreases in the liquidity of the securities markets, which could limit
the Company's ability to resell securities purchased or to repurchase securities
sold short. In addition, these activities subject the Company's capital to
significant risks that counterparties will fail to perform their obligations.

RISKS ASSOCIATED WITH FEDERAL AND STATE REGULATION

The Company's business is, and the securities industry is, subject to
extensive regulation in the United States, at both the federal and state level.
As a matter of public policy, regulatory bodies are charged with safeguarding
the integrity of the securities and other financial markets and with protecting
the interests of customers participating in those markets and not with
protecting the interests of the Company's stockholders. In addition,
self-regulatory organizations and other regulatory bodies in the United States,
such as the Commission, the New York Stock Exchange (the "NYSE"), the National
Association of Securities Dealers, Inc. (the "NASD") and the Municipal
Securities Rulemaking Board (the "MSRB"), require strict compliance with their
rules and regulations. Failure to comply with any of these laws, rules or
regulations, some of which are subject to interpretation, could result in a
variety of adverse consequences including civil penalties, fines, suspension or
expulsion, which could have a material adverse effect upon the Company.

The laws and regulations, as well as governmental policies and accounting
principles, governing the financial services and banking industries have changed
significantly over recent years and are expected to continue to do so. During
the last several years Congress has considered numerous proposals that would
significantly alter the structure and regulation of such industries. The Company
cannot predict which changes in laws or regulations, or in governmental policies
and accounting principles, will be adopted, but such changes, if adopted, could
materially and adversely affect the business and operations of the Company. See
"Business -- Regulation."

NET CAPITAL REQUIREMENTS; HOLDING COMPANY STRUCTURE

The Commission, the NYSE and various other securities and commodities
exchanges and other regulatory bodies in the United States have rules with
respect to net capital requirements which affect the Company. These rules have
the effect of requiring that at least a substantial portion of a broker-dealer's
assets be kept in cash or highly liquid investments. Compliance with the net
capital requirements by the Company could limit operations that require
intensive use of capital, such as underwriting or trading activities. These
rules could also restrict the ability of the Company to withdraw capital from
the Company, even in circumstances where the Company has more than the minimum
amount of required capital, which, in turn, could limit the ability of the
Company to implement its strategies. In addition, a change in such rules, or the
imposition of new rules, affecting the scope, coverage, calculation or amount of
such net capital requirements, or a significant operating loss or any unusually
large charge against net capital, could have similar adverse effects. See
"Business -- Net Capital Requirements; Net Capital."

5
<PAGE> 7

KEY MANAGEMENT

The success of the Company is principally dependent on its founder, Muriel
F. Siebert, Chair and President. The loss of the services of Ms. Siebert would
adversely affect the Company. See "Management." The success of the Siebert
Brandford Shank division may be dependent on the services of Napoleon Brandford
III and Suzanne Shank, the loss of whose services may adversely affect the
Company.

PRINCIPAL SHAREHOLDER

Upon completion of the Offering, Ms. Siebert will own 97.0% of the
Company's outstanding Common Stock. Ms. Siebert will have the power to elect the
entire Board of Directors and, except as otherwise provided by law of the
Company's Certificate of Incorporation, to approve any action requiring
shareholder approval without a shareholders meeting. See "Management" and
"Principal Shareholders."

SIGNIFICANT INCREASE IN OVERHEAD

Recently, Siebert has opened retail discount brokerage offices in
Morristown, New Jersey and Palm Beach and Surfside (Bal Harbour), Florida and is
relocating its office in Los Angeles. In October 1996, Siebert formed the
Siebert Brandford Shank Division of Siebert to add to the former activities of
Siebert's tax exempt underwriting department the activities of 26 municipal
investment banking professionals. The Siebert Brandford Shank Division has
opened offices in San Francisco and Seattle and is paying rent on an interim
basis while negotiating to open or assume the leases for additional offices in
Houston, Dallas, Chicago and Detroit. As a result of the new office expenses and
the additional compensation expenses, Siebert's overhead expense has increased
significantly. There can be no assurance that Siebert will generate sufficient
additional revenue to cover such expense which could have a material adverse
effect upon the Company.

LIQUIDITY

Until recently, there has been no public market for the Common Stock or any
other securities of the Company. In addition, only 130,897 shares, or
approximately 2.5% of the shares outstanding, are held by the public. Although
the Common Stock is traded in the Nasdaq SmallCap Market, there can be no
assurance that an active public market will develop or continue.

SHARES ELIGIBLE FOR FUTURE SALE

There will be up to approximately 5,260,897 shares of Common Stock
outstanding immediately after completion of this offering, 5,105,000 of which,
owned by Muriel Siebert, will be "restricted securities" under the Securities
Act, and may only be sold pursuant to a registration statement under the
Securities Act or an applicable exemption from the registration requirements of
the Securities Act, including Rule 144 thereunder. The balance will be freely
tradeable in the public markets. Sale of a substantial number of shares of
Common Stock in the public market, whether by Ms. Siebert or other stockholders
of the Company, could adversely affect the prevailing market price of the
Common Stock.

IMMEDIATE DILUTION

Purchasers of Common Stock in this offering will experience immediate
dilution in net tangible book value of $7.88 per share, based on a public
offering price of $9.375 per share.

FORWARD-LOOKING STATEMENTS

This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. Actual
results could differ from those projected in any forward-looking statements for
the reasons detailed in the other sections of this "Risk Factors" portion of,
and elsewhere in, this Prospectus.

6
<PAGE> 8

USE OF PROCEEDS

The net proceeds to be received by the Company from the sale of the shares
of Common Stock offered hereby (estimated to be $189,375 if all the shares are
sold and after deducting expenses payable by the Company estimated to be
approximately $45,000 will be used by the Company for general corporate
purposes. Pending any specific application of the net proceeds, the net proceeds
will be added to working capital and invested in short-term interest-bearing
obligations.

DIVIDEND POLICY

Subject to statutory and regulatory constraints, prevailing financial
conditions and future earnings, the Company may pay cash dividends on its Common
Stock. In considering whether to pay such dividends, the Company's Board of
Directors will review the earnings of the Company, its capital requirements, its
economic forecasts and such other factors as are deemed relevant. Some portion
of the Company's earnings will be retained to provide capital for the operation
and expansion of its business.

If the Company determines to pay a dividend, Ms. Siebert, as the majority
shareholder of the Company, may from time to time waive her rights to receive
cash dividends to be declared by the Company.

PRICE RANGE OF COMMON STOCK

The Common Stock commenced trading in the Nasdaq SmallCap Market under the
symbol "SIEB" on November 12, 1996. The high and low bid and asked prices of the
Common Stock reported by the Nasdaq SmallCap Market during the period from
November 12, 1996 to January 15, 1997 were $9.00 and $12.375, respectively. The
closing sale price of the Common Stock in the Nasdaq SmallCap Market on January
15, 1997 was $9.375 per share. As of January 15, 1997, there were approximately
420 holders of record of the Common Stock.

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<PAGE> 9

CAPITALIZATION

The following table sets forth the capitalization of the Company at
December 16, 1996 and as adjusted to reflect the net proceeds from the sale of
the 25,000 shares of Common Stock offered by the Company. See "Use of Proceeds."

<TABLE>
<CAPTION>
PRO FORMA(1) AS ADJUSTED
------------ -----------
(IN THOUSANDS)
<S> <C> <C>
Subordinated debt to shareholder................................... $ 3,000 $ 3,000
------- -------
Common Stock, par value $.01,49,000,000 shares authorized,
5,235,897 shares issued and outstanding at September 30, 1996 and
5,260,897 shares issued and outstanding, as adjusted............. 52 53
Additional paid-in capital......................................... 7,672 7,860
Retained earnings.................................................. -0- -0-
------- -------
Total shareholders' equity....................................... 7,724 7,913
------- -------
Total capitalization............................................. $ 10,724 $10,913
======= =======
</TABLE>

- ---------------
(1) The pro forma capitalization of the Company is derived from the Unaudited
Pro Forma Condensed Consolidated Balance Sheet at September 30, 1996 and
gives additional effect to salary and a Subchapter S distribution paid to
Ms. Siebert of $2,975,000 on October 31, 1996, its resulting tax effect and
her reinvestment of $500,000 (substantially the balance remaining after Ms.
Siebert's federal, state and city income taxes on her entire salary and
Subchapter S taxable income for the period from January 1, 1996 through the
date of the Merger with JMI) on that date as subordinated debt. See
"Unaudited Pro Forma Condensed Consolidated Balance Sheet."

8
<PAGE> 10

SELECTED FINANCIAL DATA

The selected consolidated financial data set forth below for the three
years ended December 31, 1995 has been derived from the Company's audited
financial statements. Such information should be read in conjunction with, and
is qualified in its entirety by, the financial statements and notes thereto
appearing elsewhere in this Prospectus. The selected financial data set forth
below for the nine months ended September 30, 1996 and 1995 has been derived
from the Company's unaudited financial statements which in the opinion of
management reflect all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of interim data.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------------------------ -------------------------
1995 1994 1993 1992 1991 1996 1995
----------- ----------- ----------- ----------- ---------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Income statement data:
Revenues:
Commissions................ $15,645,334 $12,128,797 $14,349,051 $ 9,874,853 $6,143,399 $15,049,674 $11,355,866
Trading profits............ 2,608,078 3,215,288 3,133,722 1,378,293 1,636,848 645,345 2,020,579
Interest and dividends..... 1,389,612 462,618 261,198 234,770 194,429 498,060 716,077
Investment banking......... 1,396,967 1,536,030 2,462,309 2,435,734 873,703 1,880,730 1,012,365
---------- ---------- ---------- ---------- --------- ---------- ----------
Total revenues......... 21,039,991 17,342,733 20,206,280 13,923,650 8,848,379 18,073,809 15,104,887
---------- ---------- ---------- ---------- --------- ---------- ----------
Expenses:
Salaries, commissions and
employee benefits(1)..... 8,586,116 6,132,899 8,999,567 4,844,544 3,023,262 4,759,256 3,766,584
Clearing fees, including
floor brokerage.......... 4,249,050 3,967,558 4,473,740 3,017,085 2,201,056 3,431,071 3,338,289
Advertising and
promotion................ 2,485,426 2,299,030 2,171,858 1,838,707 874,172 2,700,392 1,616,849
Communications............. 1,119,189 1,001,957 896,986 590,034 476,523 968,164 806,913
Interest................... 568,326 602,759 323,876 290,185 237,297 212,368 424,426
Rent and occupancy......... 326,089 323,123 323,235 200,976 156,492 271,436 260,394
Other general and
administrative........... 2,461,122 2,458,237 1,932,143 1,930,238 1,384,882 1,478,063 1,368,247
---------- ---------- ---------- ---------- --------- ---------- ----------
Total expenses......... 19,795,318 16,785,563 19,121,405 12,711,769 8,353,684 13,820,750 11,581,702
---------- ---------- ---------- ---------- --------- ---------- ----------
Net income -- historical....... 1,244,673 557,170 1,084,875 1,211,881 494,695 4,253,059 3,253,185
Pro forma provision for income
taxes(2)..................... 548,000 245,000 477,000 533,000 218,000 1,871,000 1,550,000
---------- ---------- ---------- ---------- --------- ---------- ----------
PRO FORMA NET INCOME........... $ 696,673 $ 312,170 $ 607,875 $ 678,881 $ 276,695 $ 2,382,059 $ 1,973,185
========== ========== ========== ========== ========= ========== ==========
Pro forma earnings per share... $ .13 $ .06 $ .12 $ .13 $ .05 $ .45 $ .38
========== ========== ========== ========== ========= ========== ==========
Weighted average common shares
deemed outstanding........... 5,235,897 5,235,897 5,235,897 5,235,897 5,235,897 5,235,897 5,235,897
========== ========== ========== ========== ========= ========== ==========
Balance Sheet data (at
period-end):
Total assets................. $16,291,195 $ 9,372,230 $12,161,104 $ 4,784,663 $3,078,678 $16,644,011
Total liabilities excluding
subordinated debt.......... 9,154,065 3,479,773 6,825,817 1,530,795 1,036,691 4,753,822
Subordinated debt to
shareholder................ 2,000,000 2,000,000 2,000,000 1,000,000 1,000,000 2,500,000
Stockholder's equity......... 5,137,130 3,892,457 3,335,287 2,253,868 1,041,987 9,390,189
</TABLE>

- ---------------
(1) Salaries, commissions and employee benefits includes $2,975,000, $1,215,000,
$3,958,000, $1,450,000 and $650,000 for 1995 through 1991 of S Corporation
compensation of Muriel Siebert in excess of the amounts that would have been
paid had her new base salary arrangement of $150,000 been in effect.

(2) The pro forma provision for income taxes represents income taxes which would
have been provided had Siebert operated as a C Corporation.

9
<PAGE> 11

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion should be read in conjunction with "Selected Financial
Data" and the Company's financial statements and notes thereto contained
elsewhere in this Prospectus.

BUSINESS ENVIRONMENT

Market conditions during the first nine months of 1996 reflected a
continuation of the 1995 bull market characterized by record volume and record
high market levels. Declines in market volumes or increases in interest rates
could limit Siebert's growth or even lead to a decline in Siebert's customer
base which would adversely affect its results of operations.

Also during 1996, competition has continued to intensify both among all
classes of brokerage firms and within the discount brokerage business as well as
from new firms not previously in the discount business announcing plans to
become significantly involved. Other firms, traditionally discount execution
firms primarily, have announced their intention to broaden their offerings to
include advice and investment management. Since 1994, some firms have offered
low flat rate execution fees that are difficult for any conventional discount
firm to meet. Many of the flat fee brokers, however, impose charges for services
such as mailing, transfers and handling exchanges which Siebert does not and
also direct their execution to captive market makers. Increased competition,
broader service offerings or the prevalence of a flat fee environment could also
limit Siebert's growth or even lead to a decline in Siebert's customer base
which would adversely affect its results of operations.

CURRENT DEVELOPMENTS

For the nine months ended September 30, 1996, commission and fee income and
investment banking revenues continued to experience strong and record growth.
Equity trading activities, however, continued to lag the growth in the balance
of the firm. Siebert's equity trading activities are dependent on one trader,
the loss of whose services could adversely affect its results of operations.

Although year to date commission revenue through September 30 is 33% ahead
of the same period last year, commission revenue growth slowed significantly in
the third quarter of 1996 compared to the prior year. Commissions for the third
quarter of 1996 were $1.6 million or 28% less than the second quarter of 1996
and 6% less than the third quarter of 1995. While this result reflects, in part,
very strong quarters to which the third quarter of 1996 is being compared, it
also suggests that the sales commission growth on a year to date basis may not
be representative of results for the full year.

New products and services introduced include Siebert OnLine in the first
quarter of 1996 and PerformanceFax(TM) and Siebert Real-Time List Execution
System in the second quarter of 1996.

Siebert has opened retail discount brokerage offices in Morristown, New
Jersey and Palm Beach and Surfside (Bal Harbour), Florida and is relocating its
office in Los Angeles.

In October 1996, Siebert formed the Siebert Brandford Shank Division of
Siebert to add to the former activities of Siebert's tax exempt underwriting
department the activities of 26 municipal investment banking professionals who
were previously employed by the 13th largest tax exempt underwriting firm in the
country. As soon as all licenses and consents are obtained, the Siebert
Brandford Shank Division will be separately incorporated and Napoleon Brandford
and Suzanne F. Shank will be entitled to 51% of the net profits while Siebert
will be entitled to the balance. The group is expected to make Siebert a more
significant factor in the tax exempt underwriting area. This is expected to
enhance Siebert's government and institutional relationships as well as the
breadth of product that can be made available to retail clients. In addition to
Siebert's existing offices in New York and Los Angeles, the new Division has
opened offices in San Francisco and Seattle and is paying rent on an interim
basis while negotiating to open or assume the leases for additional offices in
Houston, Dallas, Chicago and Detroit.

10
<PAGE> 12

As a result of the new office expenses and the additional compensation
expenses, Siebert's overhead expense has increased significantly. There can be
no assurance that Siebert will generate sufficient additional revenue to cover
such expense which could have a material adverse effect upon the Company.

During the second quarter of 1996, the firm reached an agreement with its
clearing firm whereby the clearing firm would guarantee the availability of up
to 14 trading positions and related telephone and computer equipment for the use
of Siebert personnel in the event Siebert's main trading facility was
unavailable for any reason. Furthermore, the 14 trading positions would be
supported by the clearing agent's internal licensed representatives.

RESULTS OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1995

Total revenues for the first nine months of 1996 were approximately $18.1
million, an increase of approximately $3.0 million or 20% over the first nine
months of 1995. Revenues increased in all categories except equity trading
profits and interest and dividends.

Commissions and fees increased by approximately $3.7 million or 33% to
approximately $15.0 million due to the continued bull market and increased
spending for advertising and promotion to attract additional clients. In
addition, under a new clearing agreement which was phased in during the second
quarter of 1995, Siebert receives commission income on client investments in
certain mutual and money market funds.

Equity trading profits decreased $1.4 million or 68% to $645,000 due to a
lack of liquidity and substantially reduced volatility in markets in which the
firm trades, particularly in the second quarter, thus limiting trading and
arbitrage opportunities compared to the prior period.

Interest and dividends decreased $218,000 or 30% to $498,000 due to
decreases in long trading positions and in trading strategies which generated
greater dividend income in 1995 over the corresponding period in 1996.

Investment banking income increased $868,000 or 86% to $1.9 million due to
increased participation in both equity and tax exempt underwritings over the
prior year period. This resulted from the Capital Markets division allocating
additional resources to the development of both types of business.

Total costs and expenses for the first nine months of 1996 were $13.8
million, an increase of $2.2 million or 19% over the first nine months of 1995.
Costs increased in all categories except interest.

Compensation and benefit costs increased $993,000 or 26% to $4.8 million
due to provisions for bonus payments and to increases in staffing to cover the
trading and service needs of the retail commission business. Increased
management, staff and incentive bonus payments and accruals were up
approximately $375,000 reflecting volume, improved performance and firm
profitability. The balance of the increase relates primarily to an increase in
average head count of 67 for the nine months ended September 30, 1995 to an
average head count of 95 for the nine months ended September 30, 1996. This
increase is primarily related to the increase in retail commission business.

Clearing and brokerage fees increased $93,000 or 2.8% to $3.4 million. Such
costs increased substantially less than commission volume due to the effect of a
new clearing cost structure that became effective in the second quarter of 1995.

Advertising and promotion expense increased $1.0 million or 67% to $2.7
million due to increased branch and service promotion (for example, the opening
of a Naples office and the introduction of "Siebert OnLine") and increased
advertising and promotion to differentiate Siebert from other firms in an
increasingly competitive environment.

Communications expense increased $161,000 or 20% to $968,000 as the client
base and volume increased and more services were offered directly on-line.

11
<PAGE> 13

Interest expense decreased $212,000 or 50% to $212,000 primarily due to
decreased use of equity trading strategies that involve large short positions.
Dividend charges against short positions are included as part of interest
expense.

Rent and occupancy costs increased $11,000 or 4.2% to $271,000 principally
due to opening a new branch in Naples, Florida in December 1995.

Other general and administrative expenses increased $110,000 or 8% to $1.5
million due to increased recruiting costs and postage and printing expense to
meet the needs of an expanding customer base, increased legal expenses in
resolving satisfactorily various regulatory issues, increased personnel
registration expenses due to the increased number of personnel registered in
multiple states and increased travel expenses in seeking additional tax exempt
underwriting and financial advisory business. The balance of the increase was
due generally to increases in a wide variety of expenses with the increase in
both volume and personnel.

Siebert's pro forma provision for income taxes increased $321,000, or 21%,
to $1.9 million and pro forma net income increased $409,000, or 21%, to $2.4
million. Both are based on proportional increases in pre-tax income.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

Total revenues for 1995 were $21.0 million an increase of $3.7 million or
21% over 1994. Commission and fee income and interest and dividend revenues
increased and trading and investment banking revenues declined.

Commission and fee income increased $3.5 million or 29% to $15.6 million
due to the continued bull market and increased spending for advertising to
attract additional clients.

Trading profits declined $607,000 or 19% to $2.6 million due to a lack of
liquidity and substantially reduced volatility in the firm's markets during the
second half of the year thus limiting the trading and arbitrage opportunities
present in the first half of the year and in the prior period.

Interest and dividends increased $927,000 or 200% to $1.4 million due to
increases in long trading positions and in trading strategies which generated
greater dividend income.

Investment banking decreased $139,000 or 9.1% to $1.4 million due to
reduced underwriting volume generally in municipal markets and a shift from
negotiated underwriting transactions to competitively bid transactions which are
relatively less profitable for participants.

Total costs and expenses for 1995 were $19.8 million, an increase of $3.0
million or 18% over 1994. All categories of costs increased except interest
expense.

Compensation and benefit costs increased $2.5 million or 40% to $8.6
million due to an increase in Subchapter-S compensation to Ms. Siebert of $1.76
million, an increase in contractual incentive bonus compensation of $355,000 and
an increase in the bonus provision for other staff and executives of $365,000.

Clearing and brokerage fees increased $282,000 or 7.1% to $4.2 million.
Such costs increased substantially less than commission volume due to the effect
of a new clearing cost structure that became effective in the second quarter of
1995.

Advertising and promotion expense increased $186,000 or 8.1% to $2.5
million primarily in increased advertising to differentiate Siebert from other
firms in an increasingly competitive environment.

Communications expense increased $117,000 or 12% to $1.1 million due to
increased market volume, increased use of "800" number service resulting from
national television advertising and increased use of Siebert's market phone
service for orders as well as customer inquiries. Also as a result of increased
volume, the cost of quote services increased $58,000 or 14%.

Interest expense declined $34,000 or 5.7% to $568,000 primarily due to the
decreased use of equity trading strategies that involve large short positions.
Dividend charges against short positions are included as part of interest
expense.

12
<PAGE> 14

Rent and occupancy costs increased $3,000 or 0.9% to $326,000 primarily
from cost escalation provisions in existing leases.

Siebert's pro forma provision for income taxes increased $303,000 or 124%
to $548,000 and pro forma net income for 1995 was $697,000, an increase of
$385,000 or 123% over 1994, both proportional to a similar increase in pre-tax
income.

YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993

Total revenues for 1994 were $17.3 million, a decrease of $2.9 million or
14% compared to 1993. Commissions and fees and investment banking revenues
declined. Trading and interest income increased, but to a much lesser extent.

Commissions and fees were $12.1 million, a decrease of $2.2 million or 16%
compared to 1993. Principal factors were a general decline in overall stock
market volume and activity and increased competition in the discount brokerage
industry, particularly from a class of new flat fee discount brokers.

Trading profits increased $82,000 or 2.6% to $3.2 million due to the
continued success of firm trading strategies suited to relatively liquid and
volatile markets.

Interest and dividends increased $201,000 or 77% to $463,000, due to
increases in long trading positions and in trading strategies which generated
greater dividend income in 1994 compared to 1993.

Investment banking decreased $926,000 or 38% to $1.5 million, due primarily
to a reduction of approximately $500,000 in taxable fixed income syndicate
income which had been significant in 1993. This was due to market conditions,
the termination of certain Resolution Trust Company and FannieMae underwriting
programs and the loss of a key employee. The municipal bond area principally
accounted for the remaining decline due to a softening in the municipal bond
market.

Total costs and expenses for 1994 were $16.8 million, a decrease of $2.3
million or 12% compared to 1993. Compensation and benefits and clearing costs
accounted principally for the decrease, with some offsetting increases in other
categories.

Compensation and benefits decreased $2.9 million or 32% to $6.1 million.
Ms. Siebert's Subchapter-S Corp. compensation declined $2.7 million in 1994
compared to 1993 and a reduction in staff and in the executive bonus provision
accounted for the balance, in each case due to reduced firm profitability.

Clearing and brokerage fees decreased $506,000 or 11% to $4.0 million due
to a decrease in the retail commission business. The decrease was less than the
percentage decrease in commissions because the 1994 mix of commissions had a
shift toward listed securities in 1994 which incur floor brokerage costs not
applicable to OTC trades.

Advertising and promotion expense increased $127,000 or 5.9% to $2.3
million. The increased expenditures represented a campaign to minimize the
effects of reduced market volume by capturing increased market share. Due to
reduced municipal market activity, contributions, included as promotional
expense, decreased approximately $560,000. Expenditures for other advertising
and promotional costs increased approximately $685,000 over the prior year.

Communications expense increased $105,000 or 12% to $1.0 million. Although
commission volume declined, the firm's emphasis on customer service resulted in
more service-oriented representatives providing a wider range of services,
specifically including substantially more quote services.

Interest expense increased $279,000 or 86% to $602,000 due to the trading
strategies involving large short positions which incur dividend charges.
Dividend charges against short positions are included as part of interest
expense.

Rent and occupancy costs remained the same at $323,000.

Other general and administrative expenses increased $526,000 or 27% to $2.5
million, principally due to legal defense fees and expenses with two actions
involving former employees; both cases were settled.

13
<PAGE> 15

Siebert's pro forma provision for income taxes decreased $232,000 or 49% to
$245,000 and pro forma net income decreased $296,000 or 49% to $312,000, both
proportional to a similar decrease in pre-tax income.

YEAR ENDED DECEMBER 31, 1993 COMPARED TO YEAR ENDED DECEMBER 31, 1992

Total revenues for 1993 were $20.2 million, an increase of $6.3 million or
45% over 1992. All categories of revenue increased, although commissions and
fees and trading were the principal contributors to the increase.

Commissions and fees increased $4.5 million or 45% to $14.3 million, due
primarily to an aggressive price-based advertising campaign coupled with a broad
increase in market level and activity.

Trading profits increased $1.8 million or 127% to $3.1 million, due to
successful trading strategies and significantly higher volume and volatility in
the markets in which the firm was active.

Interest and dividends increased $26,000 or 11% to $261,000 resulting from
larger long positions in firm trading activities.

Investment banking increased $27,000 or 1.1% to $2.46 million.

Total costs and expenses for 1993 were $19.1 million, an increase of $6.4
million or 50% over 1992.

Compensation and benefits increased $4.2 million or 86% to $9.0 million.
Ms. Siebert's Subchapter-S Corp. compensation increased $2.5 million on improved
firm profitability. The staff and executive bonus provision increased $625,000.
The balance, approximately $1.1 million, is principally due to the increase in
retail and investment banking head count.

Clearing and brokerage fees increased $1.5 million or 48% to $4.5 million
due primarily to the increase in commission income.

Advertising and promotion expense increased $333,000 or 18% to $2.2 million
primarily due to increased business with participants in certain of Siebert's
advertising and promotional activities.

Communications expense increased $307,000 or 52% to $897,000 due
principally to the increase in commission business coupled with a shift to
increased use of incoming "800" lines which are promoted in national
advertising.

Interest expense increased $34,000 or 12% to $324,000 due to the use of
trading strategies involving larger carrying charges caused by larger trading
positions.

Rent and occupancy costs increased $122,000 or 60% to $323,000 primarily
due to moving to new and larger facilities at 885 Third Avenue in New York City
in May 1993.

Other general and administrative expenses increased $2,000 or 0.1% to
$1.932 million.

Siebert's pro forma provision for income taxes decreased $56,000 or 11% to
$477,000 and pro forma net income decreased $71,000 or 11% to $608,000, both
proportional to a similar decrease in pre-tax income.

LIQUIDITY AND CAPITAL RESOURCES

Siebert's assets are highly liquid, consisting generally of cash, money
market funds and securities freely salable in the open market. Siebert's total
assets at September 30, 1996 were $16.6 million, of which $2.5 million took the
form of a secured demand note. $16.2 million or 97.5% of total assets were
highly liquid.

Siebert is subject to the net capital requirements of the Commission, the
NYSE and other regulatory authorities. At September 30, 1996, Siebert's net
capital was $10.3 million, $10.0 million in excess of its minimum capital
requirement of $250,000.

14
<PAGE> 16

RISK MANAGEMENT

The principal credit risk to which Siebert is exposed on a regular basis is
to customers who fail to pay for their purchases or who fail to maintain the
minimum required collateral for amounts borrowed against securities positions.

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 allowing certain
transactions. When transactions occur outside normal guidelines, such accounts
are monitored closely until their payment obligation is completed; if the
customer does not meet the commitment, steps are taken to close out the purchase
and minimize any losses.

Siebert has a risk unit specifically responsible for monitoring all
customer positions for the maintenance of required collateral. The unit also
monitors accounts that may be concentrated unduly in one or more securities
whereby a significant decline in the value of a particular concentrated security
could reduce the value of the account's collateral below the account's loan
obligation.

Siebert has not had significant credit losses in the last five years.

15
<PAGE> 17

BUSINESS

GENERAL

The Company is a holding company which conducts all of its business
activities through its wholly-owned subsidiary, Siebert, in the retail discount
brokerage and investment banking business. Muriel Siebert, the first woman
member of the New York Stock Exchange, is the President and owns 97.5% of the
stock of the Company.

Siebert provides discount brokerage services and related services to more
than 80,000 investor accounts. Siebert's focus in its discount brokerage
business is to serve retail clients who seek a wide selection of quality
investment services at commissions that are substantially lower than those of
full-commission firms and competitive with the leading national discounters.
Through the Capital Markets division, the firm offers institutional clients
equity execution services on an agency basis and equity, fixed income and
municipal underwriting and investment banking services. The firm is a
participant in the secondary markets for Municipal and U.S. Treasury securities.
The Capital Markets division trades listed bond funds and certain other
securities for its own account. The proprietary trading business is strictly
segregated from that of the agency business executed on behalf of institutional
clients.

The Company believes that it is the largest Woman-Owned Business Enterprise
("WBE") in the capital markets business in the country through Siebert and the
largest Minority and Women's Business Enterprise ("MWBE") in the tax exempt
underwriting area in the country through its Siebert Brandford Shank Division.

The Company is the successor by merger to J. Michaels, Inc., a corporation
incorporated on April 9, 1934 in the State of New York. Siebert was incorporated
on June 13, 1969 under the laws of the State of Delaware. The principal
executive offices of the Company and Siebert are located at 885 Third Avenue,
17th Floor, New York, New York 10022.

THE RETAIL DISCOUNT BROKERAGE BUSINESS

DISCOUNT BROKERAGE AND RELATED SERVICES. The Commission eliminated fixed
commission rates on securities transactions on May 1, 1975, a date that would
later come to be known as "May Day", spawning the discount brokerage industry;
that very day, on the opening bell, Siebert executed its first discounted
commission trade. The firm has been a member of The New York Stock Exchange,
Inc. (the "NYSE") longer than any other discount broker.

Siebert provides discount brokerage and related services to more than
80,000 investor accounts. Siebert's focus in its discount brokerage business is
to serve retail clients who seek a wide selection of quality investment services
at commissions that are substantially lower than those of full-commission firms
and competitive with the national discounters.

Siebert clears securities transactions on a fully-disclosed basis through
National Financial Services Corp. ("NFSC"), a wholly owned subsidiary of
Fidelity Investments, as its clearing agent for all transactions. NFSC, with
over $4 billion in assets, adds state-of-the-art technology as well as
back-office experience to the operations of Siebert supplementing Siebert's
in-house systems.

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 quick and easy access to account information.
The firm provides its customers with information via toll-free 800 service
direct to its representatives between 7:30 a.m. and 7:30 p.m. Eastern Time.
Through its MarketPhone(TM) Voice Response service and its Siebert OnLine
software, 24 hour access is available to customers. Siebert's exclusive

16
<PAGE> 18

PerformanceFax(TM) P&L analysis service provides by facsimile profit and loss
account information before the market opens each morning.

INDEPENDENT RETAIL EXECUTION SERVICES. Siebert is independent of the
Over-the-Counter ("OTC") and "Third" market makers and consequently offers what
is believed to be the best possible trade executions for customers. Siebert does
not make markets in securities, nor does it position against customer orders.
Many of the firm's listed orders are routed to the primary exchange for
execution. This allows the customer the opportunity for price improvement when
trading directly on the NYSE. Through a new program called NYSE Prime*, Siebert
has the ability to document to customers all price improvements received on
orders executed on the NYSE when orders are filled at better than the National
Best Bid/Offer.

The firm's OTC orders are executed through a network of unaffiliated Nasdaq
market makers with no single market maker executing all trades. This allows
Siebert to fill its customer orders by choosing the market maker it deems best
in each particular stock quickly and efficiently in all market conditions.
Additionally, the firm offers customers execution services through the
SelectNet* and Instinet* systems. These systems are not generally offered by
other discounters. Siebert believes that its OTC executions afford its customers
the best possible opportunity for consistent price improvement. Siebert does not
execute OTC trades through affiliated market makers.

Siebert executes trades of fixed income securities through its Capital
Markets division. Representatives of Siebert's Capital Markets division assists
clients in buying, selling or shopping for competitive yields of fixed income
securities, including municipal bonds, corporate bonds, U.S. Treasuries,
mortgage-backed securities, Government Sponsored Enterprises, Unit Investment
Trusts ("UITs") or Certificates of Deposit ("CDs"). See "Business -- Capital
Markets Division."

RETAIL CUSTOMER SERVICE. Siebert 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. The customer
service department is located in its home office in New York City. The
department is staffed and supervised by securities professionals qualified to
address all of the clients' needs. Each representative is equipped with powerful
workstations running multiple software programs simultaneously for quick
response to customer inquiries. The workstations display real-time quotes,
market information, up-to-date equity and margin balances, positions and account
history.

PRODUCTS AND SERVICES. Siebert offers retail customers a variety of
products and services designed to assist them with their investment needs and
allow them the convenience of maintaining a single brokerage account for
simplicity and security. The firm backs up its order execution service with a
no-hassle service guarantee that states, "If you are dissatisfied with a trade
for any reason, that trade is commission free."

Siebert's products and services include the Siebert Asset Management
account featuring no-fee, no minimum check writing; a dividend reinvestment
program that allows for the automatic reinvestment of cash dividends as well as
capital gains distribution; retirement accounts that are free of fees if the
account maintains assets of at least $10,000; $100 million in account protection
per account consisting of $500,000 in standard insurance and $99.5 million in
additional protection, at no charge; free safekeeping services; and the Siebert
Syndicate Hotline, Siebert's exclusive municipal bond syndicate notification
program.

ELECTRONIC SERVICES. Siebert provides customers with electronic delivery
of services through a variety of means, as discussed below. Siebert believes,
however, that the electronic delivery services, while cost efficient, do not
offer a customer the ultimate in flexibility. Siebert believes a combination of
electronic services and personalized telephonic service maintains customer
loyalty and best serves the needs of most customers. To that end, all of the
services of the firm are supported by trained licensed securities professionals.

- ---------------

* NYSE Prime is a service mark of the New York Stock Exchange, Inc.; SelectNet
is a trademark of Nasdaq; Instinet is a trademark of Reuters.

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<PAGE> 19

Siebert OnLine -- the firm's popular PC software, runs on Windows 3.1* and
Windows95* through a secure private connection. It features easy installation
and intuitive operations but its design lends itself to the active trader as
well. With the click of a mouse, investors can check their account status, get
real-time quotes and place orders to trade securities 24 hours a day.

Siebert MarketPhone(R) -- allows customers to trade at their convenience
through touch-tone phones and to check balances and executions and receive
real-time quotes, free. The service also permits automatic transfer to a live
broker or the use of the fax-on-demand feature to select an investment report to
be delivered to a fax machine within 90 seconds through the firm's Research by
Fax(R) service.

PerformanceFax(TM) -- allows customers to receive a comprehensive profit
and loss analysis of their portfolios faxed each morning before the market
opens. Alternatively, the customer can select from weekly and monthly schedules
for receipt of PerformanceFax(TM) reports.

Siebert FundExchange(R) -- The FundExchange(R) Mutual Fund service provides
customers with access to approximately 4,500 mutual funds, including 1,000
no-load funds, about 340 of which have no-transaction fees.

Siebert is currently developing and will offer during the next year new
products and services including the following:

- On-line statement imaging system -- Electronic imaging of customer
statements will be displayed directly on the screen of Siebert
representatives for fast accurate reconciliation of customer accounts.

- Upgrade of Siebert OnLine software, Version 3.0 -- The upgrade includes
links to news, charting, market digest statistics, option chain look-up,
historical transaction storage and other significant improvements.

- PerformanceFax(TM) enhancements -- New reports will become available to
customers.

- No annual fee VISA(R)** credit card -- Will allow customers to make
purchases with a Siebert VISA credit card.

- Internet Access -- Siebert's new home page will feature trade execution
and confirmation, account information, real-time quotes, market news and
charts as well as upcoming Siebert events and other news items.

- Enhanced MarketPhone(R) telephone brokerage service -- Features will
include quotes on mutual funds and Canadian securities; the ability to
purchase mutual funds; a new upgraded menu system; and additional access
ports.

- Siebert Fax on Demand service -- Customers will be able to call toll free
from any touch tone telephone and select from a list of reports that will
be faxed 24 hours a day.

- News and trade execution alert service via PC, beeper and
fax -- Customers will be able to keep abreast of the market whether at
home or traveling using the firm's alert service.

- VIP Premiere Statement -- The statements will offer a more sophisticated
view of the brokerage account information including a new account
valuation section, an asset allocation pie chart, a new improved activity
section, and a more detailed income summary section.

- A Charitable Common Fund account that will allow customers to contribute
appreciated securities and designate the beneficiaries of income and
principal without incurring capital gains taxes on the appreciation.

- ---------------

* Windows 3.1 and Windows95 are trademarks of the Microsoft Corporation.

** VISA is a registered trademark of VISA International.

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<PAGE> 20

RETAIL NEW ACCOUNTS. Siebert maintains a separate New Accounts department
to familiarize each customer with Siebert's array of services, policies and
procedures. The department assists in the development of new business received
through the firm's print and broadcast advertising as well as its referral
programs. Additionally, requests to upgrade services such as option and margin
approval are handled by this department.

The Retail New Accounts department assesses the credit worthiness of
customers and monitors control procedures for each new customer. These
procedures include the use of a combination of nationally recognized fraud
prevention services and internal controls developed and maintained by Siebert.
Management feels that these procedures minimize Siebert's exposure to customers'
fraudulent activities.

The New Accounts department staff also assist customers in document
management and compliance with regulatory requirements.

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 NFSC, the firm's clearing agent, which also serves
as Trustee for such accounts. IRA, SEPP IRA and KEOGH accounts can be invested,
and 401(k) plans will in the near future be able to be invested, in a wide array
of mutual funds, stocks, bonds and other investments all through one
consolidated account. Cash balances in these accounts are swept daily to the
money market fund chosen by the customer. Retirement accounts in excess of
$10,000 in assets are free of maintenance fees. Retirement accounts also enjoy
free dividend reinvestment in more than 6,000 publicly traded securities
allowing customers to automatically reinvest cash dividends and capital gains
distributions for additional shares of the same security.

CUSTOMER FINANCING. Customers' securities transactions are effected on
either a cash or margin basis. Generally, a customer buying securities in a
cash-only brokerage account is required to make payment by the settlement date,
currently three business days after the trade is executed. However, for
purchases of certain types of securities, such as options, a customer must have
a cash or a money market fund balance in his or her account sufficient to pay
for the trade prior to its execution. When selling securities, a customer is
required to deliver the securities, and is entitled to receive the proceeds, on
the settlement date. In an account authorized for margin trading, Siebert
arranges for the clearing agent to lend its customer a portion of the market
value of certain securities up to the limit imposed by the Federal Reserve
Board, which for most equity securities is initially 50%. Such loans are
collateralized by the securities in the customer's account. Short sales of
securities represent sales of borrowed securities and create an obligation to
purchase the securities at a later date. Customers 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 a customer to engage in transactions, Siebert assumes the
risk of its customer's failure to meet his or her obligations and in the event
of adverse changes in the market value of the securities positions in his or her
account. Both Siebert and its clearing agent reserve the right to set margin
requirements higher than those established by the Federal Reserve Board.

Pursuant to its clearing agreement, Siebert participates in its clearing
agent's income from financing Siebert customers' transactions. See also
"Management's Discussion and Analysis of Results of Operations and Financial
Condition."

OFFICES. Siebert currently maintains seven retail discount brokerage
offices. See "Business -- Properties." Customers can visit the offices to obtain
market information, place orders, open accounts, deliver and receive checks and
securities, and obtain related customer services in person. Nevertheless, most
of Siebert's activities are conducted by telephone and mail.

The New York office remains open Monday through Friday from 7:30 a.m. to
7:30 p.m., Eastern Time, daily, while branch offices remain open from 9 a.m. to
5 p.m., Eastern Time, daily to service customers in person and by telephone.

INFORMATION SYSTEMS. Siebert's operations rely heavily on its information
processing and communications systems. Siebert's system for processing a
securities transaction is automated. Registered representatives

19
<PAGE> 21

equipped with online computer terminals can access customer account information,
obtain securities prices and related information and enter and confirm orders
online.

To support its customer service delivery systems, as well as other
applications such as clearing functions, account administration, record keeping
and direct customer access to investment information, Siebert maintains a
computer network in New York. Through its clearing agent, Siebert's computers
are also linked to the major registered United States securities exchanges, the
National Securities Clearing Corporation and The Depository Trust Company.
Failure of Siebert's information processing or communication systems for a
significant period of time could limit its ability to process its large volume
of transactions accurately and rapidly. This could cause Siebert to be unable to
satisfy its obligations to customers and other securities firms, and could
result in regulatory violations. External events, such as an earthquake or power
failure, loss of external information feeds, such as security price information,
as well as internal malfunctions, such as those that could occur during the
implementation of system modifications, could render part of all or such systems
inoperative.

To enhance the reliability of the system and integrity of data, Siebert
maintains carefully monitored backup and recovery functions. These include
logging of all critical files intra-day, duplication and storage of all critical
data outside of its central computer site each evening, and maintenance of
facilities for backup and communications located in facilities provided by NFSC,
its clearing agent, at the World Financial Center.

CAPITAL MARKETS DIVISION

In 1991, Siebert formalized its commitment to its institutional customer
base by creating the Siebert Capital Markets division (the "Capital Markets
Division"). This group has served as a co-manager, selling group member or
underwriter on a full spectrum of new issue offerings by municipalities,
corporations and federal agencies. The Division has been involved in issues from
New York to California. In addition, the Division's distribution system is
extensive. The firm has an active retail account base in excess of 80,000
accounts, and an institutional account base which numbers approximately 600
accounts.

The Company believes that it is the largest WBE in the capital markets
business in the country through Siebert and the largest MWBE in the tax exempt
underwriting area in the country through its Siebert Brandford Shank Division.

The two principal areas of the Capital Market Division are Investment
Banking and Institutional Equity Execution Services.

INVESTMENT BANKING. Siebert offers investment banking services to
corporate and municipal clients through its Capital Markets Division which
participates in public offerings of equity and debt securities with
institutional and individual investors.

Siebert has participated as an underwriter for taxable and tax-exempt debt
raising capital for many types of issuers including states, counties, cities,
transportation authorities, sewer and water authorities and housing and
education agencies. Since it began underwriting in 1989, the firm has co-managed
over $61.6 billion in municipal debt. Investment Banking revenues from the
underwriting of taxable and tax-exempt debt and fees from financial advisor and
remarketing activities are set forth in the table "Selected Financial Data."

Siebert has participated as an underwriter in several of the largest common
stock offerings that have come to market, including Conrail, Allstate, PacTel
Corporation, Estee Lauder and Lucent Technologies. To date, the firm has
participated as an underwriter in over 105 offerings including corporate debt
issuance totaling over $3.6 billion.

20
<PAGE> 22

The principal sources of revenue of the Capital Markets Division are
underwriting profits and management fees derived from underwriting. Certain
risks are involved in the underwriting of securities. Underwriting syndicates
agree to purchase securities at a discount from the initial public offering
price. If the securities must be sold below the syndicate cost, an underwriter
is exposed to losses on the securities that it has committed to purchase. In the
last several years, investment banking firms have increasingly underwritten
corporate and municipal offerings with fewer syndicate participants or, in some
cases, without an underwriting syndicate. In such cases, the underwriter assumes
a larger part or all of the risk of an underwriting transaction. Under Federal
securities laws, other laws and court decisions, an underwriter is exposed to
substantial potential liability for material misstatements or omissions of fact
in the prospectus used to describe the securities being offered. While municipal
securities are exempt from the registration requirements of the Securities Act,
underwriters of municipal securities nevertheless are exposed to substantial
potential liability in connection with material misstatements or omissions of
fact in the offering documents prepared in connection with offerings of such
securities.

INSTITUTIONAL EQUITY EXECUTION SERVICES. The firm emphasizes personalized
service, professional order handling and client satisfaction to approximately
400 institutional accounts. It utilizes up to 15 independent floor brokers that
use an extensive network linked via direct "ring down" circuits. Each broker is
strategically located on a major exchange, which allows Siebert to execute
orders in all market environments. Utilizing its clearing arrangement, Siebert
expects to provide foreign execution and clearing services to institutional
customers by the end of 1996. Although the firm from time to time positions
stocks, options or futures, it does not execute customer orders against such
positions because Siebert believes its client's interest in a transaction should
always be placed above any other interest. The firm's institutional client list
includes some of the largest pension funds, investment managers and banks across
the country. The firm trades an average of 668,000 shares daily for
institutional investors and for its own account.

INSTITUTIONAL BASKET TRADING TECHNOLOGY. The Capital Markets Division has
recently completed the design and commenced operation of the exclusive Siebert
Real-Time List Execution System ("SRLX"). SRLX is designed exclusively for
institutional customers who employ the use of basket trading strategies in their
portfolio management.

SRLX enables the Capital Markets Division to simultaneously manage an array
of baskets for multiple clients while providing real-time analysis. SRLX can be
integrated into an existing local area network. It is built with the latest 32
bit technology to take advantage of today's Pentium-based PC's running Microsoft
Windows95*or Windows NT*. Data integrity is assured through a private digital T1
line with built-in network redundancy.

SRLX is built for institutional customers with features designed to add
significant value to their trading capabilities. SRLX features include: Written
almost entirely in VB native code by in-house staff for reliability and speed;
sophisticated graphical interface allowing exceptional control and monitoring;
real-time order entry, reporting and messaging from the inter-market trading
network; real-time basket analysis including average pricing and liquidity;
multiple basket management from a single window; account allocation and end-
of-day report uploading; customized client reports; active intervention for
large blocks or inactive stocks; and built-in automatic fail-safe and recovery
system.

ADVERTISING, MARKETING AND PROMOTION

Siebert develops and maintains its retail customer base through printed
advertising in financial publications, broadcast commercials over national and
local cable TV channels as well as promotional efforts and public appearances by
Ms. Siebert. Additionally, a significant portion of the firm's new business is
developed directly from referrals by satisfied customers.

- ---------------

* Pentium is a trademark of the Intel Corporation; Microsoft Windows95 and
Windows NT are a trademarks of the Microsoft Corporation.

21
<PAGE> 23

The Capital Markets Division maintains a practice of announcing in advance
that it will contribute a portion of the net commission revenues it derives from
sales of negotiated new issue equity, municipal and government bonds to
charitable organizations. Once the Siebert Brandford Shank division is
profitable, Siebert will likely follow a similar practice. Siebert is certified
as a WBE with numerous states, agencies and authorities. Siebert is the only
"WBE" which offers both retail and institutional product distribution
capabilities. It is also the largest "WBE" with significant minority
participation. Although it has been a member of the New York Stock Exchange
since 1967, new business opportunities have become available to it based upon
its status as a "WBE." See "Business -- Regulation."

Many of the firm's competitors expend substantial funds in advertising and
direct solicitation of prospects and customers to increase their share of the
market.

COMPETITION

Siebert encounters significant competition from full-commission and
discount brokerage firms, as well as from financial institutions, mutual fund
sponsors and other organizations many of which are significantly larger and
better capitalized than Siebert. The general financial success of the securities
industry over the past several years has strengthened existing competitors.
Siebert believes that such success will continue to attract additional
competitors such as banks, insurance companies, providers of online financial
and information services, and others as they expand their product lines. Many of
these competitors are larger, more diversified, have greater capital resources,
and offer a wider range of services and financial products than Siebert. Siebert
competes with a wide variety of vendors of financial services for the same
customers. Siebert believes that the main competitive advantages are quality of
execution and service, responsiveness, price of services and products offered,
and the breadth of product line.

Among Siebert's principal retail competitors are Charles Schwab, Quick and
Reilly, Fidelity Investments, Waterhouse Securities, Jack White & Co. and
Kennedy Cabot. Siebert charges commissions lower than some other discount
brokers including Charles Schwab, Quick & Reilly and Fidelity Investments. In
investment banking, Siebert's principal competitors for business include both
national and regional firms, some of whom have resources substantially greater
than Siebert's.

REGULATION

The securities industry in the United States is subject to extensive
regulation under both Federal and state laws. The Commission is the Federal
agency charged with administration of the Federal securities laws. Siebert is
registered as a broker-dealer with the Commission, the NYSE and the National
Association of Securities Dealers ("NASD"). Much of the regulation of
broker-dealers has been delegated to self-regulatory organizations, principally
the NASD and the national securities exchanges such as the NYSE which is
Siebert's primary regulator with respect to financial and operational
compliance. These self-regulatory organizations adopt rules (subject to approval
by the Commission) governing the industry and conduct periodic examinations of
broker-dealers. Securities firms are also subject to regulation by state
securities authorities in the states in which they do business. Siebert was
registered as a broker-dealer in 48 states, the District of Columbia and Puerto
Rico as of September 30, 1996.

The principal purpose of regulations and discipline of broker-dealers is
the protection of customers and the securities markets, rather than protection
of creditors and stockholders of broker-dealers. The regulations to which
broker-dealers are subject cover all aspects of the securities business,
including training of personnel, sales methods, trading practices among
broker-dealers, uses and safekeeping of customers' funds and securities, capital
structure of securities firms, record keeping, fee arrangements, disclosure to
clients, and the conduct of directors, officers and employees. Additional
legislation, changes in rules promulgated by the Commission and by
self-regulatory organizations or changes in the interpretation or enforcement of
existing laws and rules may directly affect the method of operation and
profitability of broker-dealers and investment advisers. The Commission,
self-regulatory organizations and state securities authorities may conduct
administrative proceedings which can result in censure, fine, cease and desist
orders, or suspension or expulsion of a

22
<PAGE> 24

broker-dealer or an investment adviser, its officers, or employees. Neither the
Company nor Siebert has been the subject of such administrative proceedings.

As a registered broker-dealer and NASD member organization, Siebert is
required by Federal law to belong to the Securities Investor Protection
Corporation ("SIPC"), which provides, in the event of the liquidation of a
broker-dealer, protection for securities held in customer accounts held by the
firm of up to $500,000 per customer, subject to a limitation of $100,000 on
claims for cash balances. SIPC is funded through assessments on registered
broker-dealers. In addition, Siebert, through its clearing agent, has purchased
from private insurers additional account protection of up to $99.5 million per
customer, as defined, for customer securities positions only. Stocks, bonds,
mutual funds and money market funds are considered securities and are protected
on a share basis for the purposes of SIPC protection and the additional
protection (i.e., protected securities may either be replaced or converted into
an equivalent market value as of the date a SIPC trustee is appointed). Neither
SIPC protection nor the additional protection applies to fluctuations in the
market value of securities.

Siebert is also authorized by the Municipal Securities Rulemaking Board to
effect transactions in municipal securities on behalf of its customers and has
obtained certain additional registrations with the Commission and state
regulatory agencies necessary to permit it to engage in certain other activities
incidental to its brokerage business.

Margin lending arranged by Siebert is subject to the margin rules of the
Board of Governors of the Federal Reserve System and the NYSE. Under such rules,
broker-dealers are limited in the amount they may lend in connection with
certain purchases and short sales of securities and are also required to impose
certain maintenance requirements on the amount of securities and cash held in
margin accounts. In addition, those rules and rules of the Chicago Board Options
Exchange govern the amount of margin customers must provide and maintain in
writing uncovered options.

In the recent election, voters in the State of California approved
Proposition 209, a proposed statewide constitutional amendment by initiative,
and the Governor issued an executive order requiring state officials to
immediately implement the initiative. Proposition 209 bans preferential
treatment for women and minorities in state programs. Under Proposition 209,
state agencies have been ordered to end all quotas or set asides. A number of
lawsuits were filed challenging the constitutionality of the proposition under
the Fourteenth Amendment and the equal protection clause and a court in San
Francisco has issued an injunction blocking the implementation of the
proposition. It is unclear at this point whether the proposition will be
implemented or what the impact of the proposition will be on the new business
opportunities that may have become available to Siebert in California based upon
its status as a "WBE." See "Business -- Advertising, Marketing and Promotion."

NET CAPITAL REQUIREMENTS; NET CAPITAL

As a registered broker-dealer, Siebert is subject to the Uniform Net
Capital Rule (Rule 15c3-1) promulgated by the Commission (the "Net Capital
Rule"), which has also been adopted through incorporation by reference in NYSE
Rule 325. Siebert is a member firm of the NYSE and the NASD. The Net Capital
Rule specifies minimum net capital requirements for all registered
broker-dealers and is designed to measure financial integrity and liquidity.
Failure to maintain the required net capital may subject a firm to suspension or
expulsion by the NYSE and the NASD, certain punitive actions by the Commission
and other regulatory bodies and, ultimately, may require a firm's liquidation.

"Net capital" is defined as net worth (assets minus liabilities), plus
qualifying subordinated borrowings, less certain deductions that result from
excluding assets that are not readily convertible into cash and from
conservatively valuing certain other assets. These deductions include charges
(haircuts) that discount the value of firm security positions to reflect the
possibility of adverse changes in market value prior to disposition.

The Net Capital Rule requires notice of equity capital withdrawals to be
provided to the Commission prior to and subsequent to withdrawals exceeding
certain sizes. Such rule prohibits withdrawals that would reduce a
broker-dealer's net capital to an amount less than 25% of its deductions
required by the Net Capital

23
<PAGE> 25

Rule as to its security positions. The Net Capital Rule also allows the
Commission, under limited circumstances, to restrict a broker-dealer from
withdrawing equity capital for up to 20 business days.

The firm falls within the provisions of Regulation 240.15c3-1(a)(1)(ii)
promulgated by the Commission. Siebert has elected to use the alternative
method, permitted by the rule, which requires that Siebert maintain minimum net
capital, as defined, equal to the greater of $250,000 or 2 percent of aggregate
debit balances arising from customer transactions, as defined. (The net capital
rule of the NYSE also provides that equity capital may not be withdrawn or cash
dividends paid if resulting net capital would be less than 5 percent of
aggregate debits.) At December 31, 1995 and 1994 and at September 30, 1996,
Siebert had net capital of $4.6 million, $4.5 million and $10.3 million,
respectively, and net capital requirements of $250,000 under Regulation
240.15c3-1(a)(1)(ii). Siebert is not subject to Commission Rule 15c3-3 and
claims exemption from the reserve requirement under Section 15c3-3(k)(2)(ii).
The firm maintains net capital in excess of the Commission Rule 17a-11
requirement.

EMPLOYEES

As of September 30, 1996, Siebert had approximately 83 employees, four of
whom were corporate officers. In October 1996, 26 investment banking
professionals joined the Siebert Brandford Shank Division of Siebert. None of
the employees are represented by a union, and Siebert believes that its
relations with its employees are good.

24
<PAGE> 26

PROPERTIES

Siebert operates its business out of the following nine offices:

<TABLE>
<CAPTION>
APPROXIMATE
OFFICE AREA IN EXPIRATION DATE
LOCATION SQUARE FEET OF CURRENT LEASE RENEWAL TERMS
-------------------------------- --------------- ----------------- -------------------
<S> <C> <C> <C>

885 Third Ave................... 7,828 SF 7/15/97 5 year option
Suite 1720
New York, NY 10022
2020 Avenue of the Stars........ 846 SF n/a Month-to-month

Concourse Level
Suite C216
Los Angeles, CA 90067

220 Sansome Street.............. 3,250 SF 2/28/00 None
15th Floor
San Francisco, CA 94104
(Investment Banking only)

4400 North Federal Highway...... 1,038 SF 2/28/02 None
Suite 106D
Boca Raton, FL 33431

400 Fifth Avenue South.......... 1,008 SF 4/22/99 None
Suite 100
Naples, FL 33940

230-238 Royal Palm Way.......... 629 SF 10/31/97 1 year option
Suite 408-410
Palm Beach, FL 33480

9569 Harding Avenue............. 1,150 SF 9/30/98 None
Surfside, FL 33154

66 South Street................. 1,341 SF 8/31/06 None
Morristown, NJ 07960

2 Union Square.................. 325 SF 4/30/97 2 one year options
601 Union Street
Seattle, WA 98101
(Investment Banking only)
</TABLE>

In addition to Siebert's existing offices in New York, Los Angeles, San
Francisco and Seattle, the Siebert Brandford Shank Division of Siebert is paying
rent on an interim basis while negotiating to open or assume the leases for
additional offices in Houston, Dallas, Chicago and Detroit.

The Company believes that its properties are in good condition and are
suitable and adequate for the Company's business operations.

LEGAL PROCEEDINGS

Siebert is involved in various routine lawsuits of a nature which is deemed
customary and incidental to its business. In the opinion of management, the
ultimate disposition of such actions will not have a material adverse effect on
its financial position or results of operations.

25
<PAGE> 27

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The directors and executive officers of the Company are:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------ ---- ------------------------------------------------------------
<S> <C> <C>
Muriel F. Siebert....... 64 Chair, President and Director
Nicholas P. Dermigny.... 38 Executive Vice President, Chief Operating Officer and
Director
T. K. Flatley........... 56 Executive Vice President and Chief Financial and
Administrative Officer
Daniel Iesu............. 37 Secretary and Controller
Jane H. Macon........... 50 Director
Monte E. Wetzler........ 60 Director
</TABLE>

Certain information furnished to the Company by each director and executive
officer is set forth below.

Muriel F. Siebert has been Chair, President and a director of Siebert since
1967 and the Company since November 8, 1996. The first woman member of the New
York Stock Exchange on December 28, 1967, Ms. Siebert served as Superintendent
of Banks of the State of New York from 1977 to 1982. She is a director of the
New York State Business Council, the National Women's Business Council, the
International Women's Forum and the Boy Scouts of Greater New York.

Nicholas P. Dermigny has been Executive Vice President and Chief Operating
Officer of Siebert since joining the firm in 1989. Prior to 1993, he was
responsible for the retail discount division. Mr. Dermigny became an officer and
director of the Company on November 8, 1996.

T. K. Flatley has been Executive Vice President and Chief Financial and
Administrative Officer of Siebert since April 1996 and of the Company since
November 8, 1996. From May 1993 until April 1996, he was engaged independently
as a consultant in the investment banking and brokerage business except for the
period from November 1993 to November 1994 when he was Chief Financial and
Administrative Officer of Ryan, Beck & Co., Inc., an investment banking and
brokerage firm in New Jersey. From 1990 until 1993, he was President and Chief
Executive Officer of Motivated Security Services, a security services firm based
in New Jersey. Mr. Flatley is a Certified Public Accountant.

Daniel Iesu has been Secretary of Siebert since October 1996 and of the
Company since November 8, 1996. He has been Controller of Siebert since 1989.

Jane H. Macon is a partner with the law firm of Fulbright & Jaworski
L.L.P., San Antonio, Texas. Ms. Macon has been associated with the firm since
1983. Ms. Macon became a director of the Company on November 8, 1996.

Monte E. Wetzler is a partner with the New York law firm of Brown Raysman
Millstein Felder & Steiner, LLP and chairman of its corporate department. From
1988 until October 31, 1996, Mr. Wetzler was a partner with the New York law
firm of Whitman Breed Abbott & Morgan, chairman of its corporate department and
a member of its executive committee. Mr. Wetzler became a director of the
Company on November 8, 1996.

The Board of Directors has standing Audit and Compensation Committees
consisting of Ms. Macon and Mr. Wetzler with Ms. Siebert serving as a non-voting
member.

Directors are elected by the shareholders at each annual meeting or, in the
case of a vacancy, appointed by the directors then in office, to serve until the
next annual meeting or until their successors are elected and qualified.
Pursuant to the Company's bylaws, its officers are chosen annually by the Board
of Directors and hold office until their respective successors are chosen and
qualified.

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<PAGE> 28

EXECUTIVE COMPENSATION OF THE COMPANY

The following table sets forth certain information with respect to
compensation awarded to, earned by or paid to (a) the Company's Chief Executive
Officer and (b) each of the four most highly compensated executive officers of
the Company as of the 1995 year end (other than the Chief Executive Officer)
whose total annual salary and bonus exceeded $100,000, in each case for the
preceding three fiscal years (collectively, the "Named Executives"). In 1995,
there were only two such persons.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)
- ------------------------------------------------------------- ---- ---------- ----------
<S> <C> <C> <C>
Muriel F. Siebert............................................ 1995 $ 108,000 $3,017,000
Chair and President 1994 108,000 1,257,000
1993 108,000 4,000,000
Nicholas P. Dermigny......................................... 1995 125,000 175,000
Executive Vice President 1994 73,000 121,900
and Chief Operating Officer 1993 73,000 156,000
</TABLE>

27
<PAGE> 29

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information with respect to
beneficial ownership of the Common Stock as of January 17, 1997. This
information includes beneficial ownership by each person (or group of affiliated
persons) who is known to the Company to own beneficially more than 5% of the
Common Stock, by each of the Company's directors and executive officers and by
all directors and executive officers as a group. The persons named in the table
have sole voting and investment power with respect to all shares of Common stock
shown as beneficially owned by them.

<TABLE>
<CAPTION>
NAME SHARES PERCENTAGE(1)
- -------------------------------------------------------------------- ---------- -------------
<S> <C> <C>
Muriel F. Siebert................................................... 5,105,000 97.5%(2)
885 Third Avenue, Suite 1720
New York, New York 10022
Nicholas P. Dermigny................................................ 0 *
T. K. Flatley....................................................... 0 *
Daniel Iesu......................................................... 0 *
Jane H. Macon....................................................... 0 *
Monte E. Wetzler.................................................... 0 *
Directors and executive officers as a group (6 persons)............. 5,105,000 97.5%
</TABLE>

- ---------------
* Less than 1%

(1) Percentages computed on the basis of 5,235,897 shares of Common Stock
outstanding as of January 17, 1997 in accordance with Rule 13d-3 promulgated
under the Exchange Act.

(2) Includes 50,000 shares of Common Stock owned by the Muriel F. Siebert
Foundation, Inc. as to which shares Ms. Siebert has voting and investment
power.

28
<PAGE> 30

DESCRIPTION OF CAPITAL STOCK

The following general summary of the material terms of the capital stock of
the Company does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the pertinent portions of the Company's
Certificate of Incorporation.

GENERAL

The authorized capital stock of the Company consists of 49,000,000 shares
of common stock, par value $.01 per share (the "Common Stock"). As of January
17, 1997, there were 5,235,897 shares of the Common Stock outstanding. Of this
number, 5,105,000 shares of Common Stock, or 97.5%, were owned by Muriel F.
Siebert.

COMMON STOCK

General. There are no redemption or sinking fund provisions applicable to
the shares of Common Stock and such shares are not entitled to any preemptive
rights.

Voting. Each holder of Common Stock is entitled to one vote for each share
registered in the holder's name on the books of the Company. Since none of the
shares of Common Stock have cumulative voting rights, the holders of more than
50% of the shares can elect all the directors of the Company if they so chose
and, in that event, the holders of the remaining shares will not be able to
elect any directors.

Dividends. The holders of Common Stock are entitled to receive such
dividends as may be declared from time to time by the Board of Directors of the
Company from the assets of the Company which are legally available therefor.

Liquidation. Upon the liquidation, dissolution or winding-up of the
Company, holders of Common Stock are entitled to receive, pro rate, after the
prior rights of creditors have been satisfied, all the remaining assets of the
Company available for distribution.

Transfer Agent and Registrar. American Stock Transfer & Trust Company is
the transfer agent and registrar for the Common Stock.

29
<PAGE> 31

PLAN OF DISTRIBUTION

The Company is offering to holders of record of its Common Stock
outstanding as of the Record Date that number of shares of Common Stock which
will permit such shareholder to round up to the nearest 100 shares any holdings
of an odd amount for $9.375 per share (the "Purchase Price"). The offer will be
evidenced by nontransferable Purchase Certificates. An aggregate of up to
approximately 25,000 shares of Common Stock will be sold pursuant to this
offering if all of the Company's shareholders take advantage of the offer.

No fractional shares or cash in lieu thereof will be issued or paid. No
Purchase Certificate may be divided in such a way as to permit the holder to
receive a greater number of shares than the number to which such Purchase
Certificate entitles its holder, except that a depositary, bank, trust company
and securities broker or dealer holding shares of Common Stock on the Record
Date for more than one beneficial owner may by delivering a written request by
5:00 p.m., New York City time, on day, February , 1997 and, upon proper
showing to American Stock Transfer & Trust Company (the "Purchase Agent"),
exchange its Purchase Certificate to obtain a Purchase Certificate for the
number of shares to which all such beneficial owners in the aggregate would have
been entitled had each been a Holder on the Record Date.

EXPIRATION DATE

This offer will expire at 5:00 p.m., New York City time, on the Expiration
Date. After the Expiration Date, the offer will be null and void. The Company
will not be obligated to honor any purported purchase of shares received by the
Purchase Agent after the Expiration Date, regardless of when the documents
relating to such exercise were sent.

PURCHASE OF SHARES

The offered shares may be purchased by delivering to American Stock
Transfer & Trust Company, as the Purchase Agent, on or prior to 5:00 p.m., New
York City time, on the Expiration Date, the properly completed and executed
Purchase Certificate evidencing such offer, together with payment in full of the
Purchase Price. Such payment in full must be by (a) check or bank draft drawn
upon a U.S. bank or postal, telegraphic or express money order payable to
American Stock Transfer & Trust Company, as Purchase Agent, or (b) wire transfer
of funds to the account maintained by the Purchase Agent for such purpose at the
Chase Manhattan Bank, Account No. ; ABA No. . The Purchase
Price will be deemed to have been received by the Purchase Agent only upon (i)
clearance of any uncertified check, (ii) receipt by the Purchase Agent of any
certified check or bank draft drawn upon a U.S. bank or any postal, telegraphic
or express money order or (iii) receipt of good funds in the Purchase Agent's
account designated above. If paying by uncertified personal check, please note
that the funds paid thereby may take at least five business days to clear.
Accordingly, holders who wish to pay the Purchase Price by means of uncertified
person check are urged to make payment sufficiently in advance of the Expiration
Date to ensure that such payment is received and clears by such date and are
urged to consider payment by means of certified or cashier's check, money order
or wire transfer of funds. Certificates representing shares of Common Stock
purchased pursuant to this offer will be delivered to Holders as soon as
practicable after the receipt of payment in full of the Purchase Price as set
forth above.

The address to which Purchase Certificates and payment of the Purchase
Price should be delivered is:

AMERICAN STOCK TRANSFER & TRUST COMPANY

<TABLE>
<S> <C>
By Mail: By Hand:
American Stock Transfer & Trust Company American Stock Transfer & Trust Company
40 Wall Street, 46th Floor 40 Wall Street, 46th Floor
New York, New York 10005 New York, New York 10005
</TABLE>

To Confirm Receipt and

For General Information:

(212) 936-5100

(718) 921-8200

30
<PAGE> 32

Holders who hold shares of Common Stock for the account of others, such as
brokers, trustees or depositaries for securities, should notify the respective
beneficial owners of such shares as soon as possible to ascertain such
beneficial owners' intentions and to obtain instructions with respect to this
offering. If the beneficial owner so instructs, the record holder of such shares
should complete Purchase Certificates and submit them to the Purchase Agent with
the proper payment. In addition, beneficial owners of Common Stock held through
such a holder should contact the holder and request the holder to effect
transactions in accordance with the beneficial owner's instructions.

The instructions accompanying the Purchase Certificates should be read
carefully and followed in detail. DO NOT SEND PURCHASE CERTIFICATES TO THE
COMPANY.

THE METHOD OF DELIVERY OF PURCHASE CERTIFICATES AND PAYMENT OF THE PURCHASE
PRICE TO THE PURCHASE AGENT WILL BE AT THE ELECTION AND RIGHT OF THE HOLDERS,
BUT IF SENT BY MAIL IT IS RECOMMENDED THAT SUCH CERTIFICATES AND PAYMENTS BE
SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, AND
THAT A SUFFICIENT NUMBER OF DAYS BE ALLOWED TO ENSURE DELIVERY TO THE PURCHASE
AGENT AND CLEARANCE OF PAYMENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE. BECAUSE UNCERTIFIED PERSONAL CHECKS MAY TAKE AT LEAST FIVE
BUSINESS DAYS TO CLEAR, YOU ARE STRONGLY URGED TO PAY, OR ARRANGE FOR PAYMENT,
BY MEANS OF CERTIFIED OR CASHIER'S CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS.

All questions concerning the timeliness, validity, form and eligibility of
any purchase of shares pursuant to this offer will be determined by the Company,
whose determination will be final and binding. The Company in its sole
discretion may waive any defect or irregularity, or permit a defect or
irregularity to be corrected within such time as it may determine, or reject the
purported purchase of any shares. Acceptances will not be deemed to have been
received or accepted until all irregularities have been waived or cured within
such time as the Company determines in its sole discretion. Neither the Company
nor the Purchase Agent will be under any duty to give notification of any defect
or irregularity in connection with the submission of Purchase Certificates or
incur any liability for failure to give such notification.

NO REVOCATION OR TRANSFER

ONCE A HOLDER HAS ELECTED TO ACCEPT THIS OFFER, SUCH ACCEPTANCE MAY NOT BE
REVOKED. This offer is not transferable.

TRADING

The outstanding shares of Common Stock are traded in the Nasdaq SmallCap
Market. The Company has applied for listing the shares offered hereby in the
Nasdaq SmallCap Market.

FOREIGN AND CERTAIN OTHER SHAREHOLDERS

Purchase Certificates will not be mailed to Holders whose addresses are
outside the United States but will be held by the Purchase Agent for their
account. To purchase the shares offered, such Holders must notify the Purchase
Agent on or prior to the Expiration Date.

DESCRIPTION OF COMMON STOCK

For a description of the Common Stock, see "Description of Capital Stock."

31
<PAGE> 33

PURCHASE AGENT

The Company has appointed American Stock Transfer & Trust Company as
Purchase Agent for the offering. The Purchase Agent's address, which is the
address to which the Purchase Certificates and payment of the Purchase Price
should be delivered, is:

AMERICAN STOCK TRANSFER & TRUST COMPANY

<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand:
American Stock Transfer & (718) 234-5001 American Stock Transfer &
Trust Company Trust Company
40 Wall Street, 46th Floor 40 Wall Street, 46th Floor
New York, New York 10005 New York, New York 10005
</TABLE>

To Confirm Receipt and
For General Information:
(212) 936-5100
(718) 921-8200

The Company will pay the fees and expenses of the Purchase Agent, and has also
agreed to indemnify the Purchase Agent from any liability which it may incur in
connection with this offering. The Company has been informed by the Purchase
Agent that it is a bank within the meaning of Section 3(a)(6) of the Exchange
Act.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby is being passed
upon for the Company by Brown Raysman Millstein Felder & Steiner, LLP, New York,
New York.

EXPERTS

The statements of financial condition of Muriel Siebert & Co., Inc. as of
December 31, 1995 and December 31, 1994, and the related statements of income,
retained earnings and cash flows for each of the years in the three-year period
ended December 31, 1995 included in this Prospectus and elsewhere in the
Registration Statement have been audited by Richard A. Eisner & Company, LLP,
independent auditors, as indicated in their report with respect thereto, and are
included herein in reliance upon such report given upon authority of said firm
as experts in accounting and auditing.

32
<PAGE> 34

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Muriel Siebert & Co., Inc.
Report of Independent Auditors...................................................... F-2
Statements of Financial Condition at December 31, 1995 and 1994 and September 30,
1996 (unaudited)................................................................. F-3
Statements of Income for each of the years in the three-year period ended December
31, 1995 and for the nine months ended September 30, 1996 and 1995 (unaudited)... F-4
Statements of Retained Earnings for each of the years in the three-year period ended
December 31, 1995 and the nine months ended September 30, 1996 (unaudited)....... F-5
Statements of Cash Flows for each of the years in the three-year period ended
December 31, 1995 and the nine months ended September 30, 1996 and 1995
(unaudited)...................................................................... F-6
Notes to Financial Statements....................................................... F-7

Siebert Financial Corp.
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 1996... F-12
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the nine
months ended September 30, 1996.................................................. F-14
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year
ended December 31, 1995.......................................................... F-15
</TABLE>

F-1
<PAGE> 35

REPORT OF INDEPENDENT AUDITORS

Board of Directors
Muriel Siebert & Co., Inc.

We have audited the accompanying statements of financial condition of
Muriel Siebert & Co., Inc. as of December 31, 1995 and December 31, 1994, and
the related statements of income, retained earnings and cash flows for each of
the years in the three-year period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Muriel Siebert & Co., Inc.
as of December 31, 1995 and December 31, 1994, and the results of its operations
and its cash flows for each of the years in the three-year period ended December
31, 1995, in conformity with generally accepted accounting principles.

RICHARD A. EISNER & COMPANY, LLP

New York, New York
February 9, 1996

April 24, 1996 as to
Note G

F-2
<PAGE> 36

MURIEL SIEBERT & CO., INC.

STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ SEPTEMBER 30,
1995 1994 1996
----------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents................................ $ 164,071 $ 367,372 $ 2,860,519
Securities owned, at market value........................ 13,746,931 5,740,354 7,919,926
Receivable from brokers and dealers...................... 2,914,819 3,435,367
Secured demand note receivable from shareholder.......... 2,000,000 2,000,000
Property and equipment, net.............................. 238,864 210,453 229,809
Prepaids and other....................................... 141,329 139,232 198,390
----------- ---------- -----------
TOTAL.......................................... $16,291,195 $9,372,230 $ 16,644,011
=========== ========== ===========

LIABILITIES AND SHAREHOLDER'S EQUITY
Payable to brokers and dealers........................... $ 5,236,346
Accounts payable and accrued liabilities................. 3,339,229 $1,906,289 $ 3,369,116
Securities sold, not yet purchased, at market value...... 578,490 1,573,484 1,384,706
----------- ---------- -----------
Total.......................................... 9,154,065 3,479,773 4,753,822
----------- ---------- -----------
Commitment and contingencies
Liability to shareholder subordinated to claims of
general creditors...................................... 2,000,000 2,000,000 2,500,000
----------- ---------- -----------
Shareholder's equity:
Common stock, voting, $1 par value; authorized 1,000
shares; issued 743.................................. 743 743 743
Additional paid-in capital............................. 59,133 59,133 59,133
Retained earnings...................................... 5,101,777 3,857,104 9,354,836
Less 94 shares of treasury stock, at cost.............. (24,523) (24,523) (24,523)
----------- ---------- -----------
Total shareholder's equity..................... 5,137,130 3,892,457 9,390,189
----------- ---------- -----------
Total subordinated liability and shareholder's
equity....................................... 7,137,130 5,892,457 11,890,189
----------- ---------- -----------
TOTAL.......................................... $16,291,195 $9,372,230 $ 16,644,011
=========== ========== ===========
</TABLE>

The accompanying notes to financial statements are an integral part hereof.

F-3
<PAGE> 37

MURIEL SIEBERT & CO., INC.

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------- -------------------------
1995 1994 1993 1996 1995
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Commissions................... $15,645,334 $12,128,797 $14,349,051 $15,049,674 $11,355,866
Trading profits............... 2,608,078 3,215,288 3,133,722 645,345 2,020,579
Interest and dividends........ 1,389,612 462,618 261,198 498,060 716,077
Investment banking............ 1,396,967 1,536,030 2,462,309 1,880,730 1,012,365
----------- ----------- ----------- ----------- -----------
Total revenues............. 21,039,991 17,342,733 20,206,280 18,073,809 15,104,887
----------- ----------- ----------- ----------- -----------
Expenses:
Salaries, commissions and
employee benefits.......... 8,586,116 6,132,899 8,999,567 4,759,256 3,766,584
Clearing fees, including floor
brokerage.................. 4,249,050 3,967,558 4,473,740 3,431,071 3,338,289
Advertising and promotion..... 2,485,426 2,299,030 2,171,858 2,700,392 1,616,849
Communications................ 1,119,189 1,001,957 896,986 968,164 806,913
Interest...................... 568,326 602,759 323,876 212,368 424,426
Rent and occupancy............ 326,089 323,123 323,235 271,436 260,394
Other general and
administrative............. 2,461,122 2,458,237 1,932,143 1,478,063 1,368,247
----------- ----------- ----------- ----------- -----------
Total expenses............. 19,795,318 16,785,563 19,121,405 13,820,750 11,581,702
----------- ----------- ----------- ----------- -----------
NET INCOME -- HISTORICAL........ 1,244,673 557,170 1,084,875 4,253,059 3,523,185
Pro forma provision for income
taxes......................... 548,000 245,000 477,000 1,871,000 1,550,000
----------- ----------- ----------- ----------- -----------
PRO FORMA NET INCOME............ $ 696,673 $ 312,172 $ 607,875 $ 2,382,059 $ 1,973,185
=========== =========== =========== =========== ===========
Pro forma earning per common
share......................... $ .13 $ .06 $ .12 $ .45 $ .38
=========== =========== =========== =========== ===========
Weighted average common shares
outstanding................... 5,235,897 5,235,897 5,235,897 5,235,897 5,235,897
=========== =========== =========== =========== ===========
</TABLE>

The accompanying notes to financial statements are an integral part hereof.

F-4
<PAGE> 38

MURIEL SIEBERT & CO., INC.

STATEMENTS OF RETAINED EARNINGS

<TABLE>
<S> <C>
Balance -- January 1, 1993....................................................... $2,218,516
Net income....................................................................... 1,084,875
Distribution..................................................................... (3,457)
----------
Balance -- December 31, 1993..................................................... 3,299,934
Net income....................................................................... 557,170
----------
Balance -- December 31, 1994..................................................... 3,857,104
Net income....................................................................... 1,244,673
----------
Balance -- December 31, 1995..................................................... 5,101,777
Net income -- nine months ended September 30, 1996 (unaudited)................... 4,253,059
----------
BALANCE -- SEPTEMBER 30, 1996 (UNAUDITED)........................................ $9,354,836
==========
</TABLE>

The accompanying notes to financial statements are an integral part hereof.

F-5
<PAGE> 39

MURIEL SIEBERT & CO., INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------- -------------------------
1995 1994 1993 1996 1995
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income.................................. $ 1,244,673 $ 557,170 $ 1,084,875 $ 4,253,059 $ 3,523,185
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization............ 67,360 55,668 21,267 59,775 49,648
Changes in operating assets and
liabilities:
Decrease (increase) in prepaids and
other............................... (2,097) 137,781 (202,522) (57,061) (94,737)
Net decrease (increase) in securities
owned, at market value.............. (8,006,577) 382,928 (6,099,871) 5,827,005 (8,077,415)
(Decrease) increase in receivable
from/payable to brokers and
dealers............................. 8,151,165 2,309,964 (863,913) (8,671,713) 4,951,257
(Decrease) increase in accounts payable
and accrued liabilities............. 1,432,940 (70,391) 450,635 29,887 1,123,213
Net increase (decrease) in securities
sold, not yet purchased, at market
value............................... (994,994) (3,275,653) 4,844,387 806,216 (108,890)
----------- ----------- ----------- ----------- -----------
Net cash provided by (used in)
operating activities.............. 1,892,470 97,467 (765,142) 2,247,168 1,366,261
----------- ----------- ----------- ----------- -----------
Cash flows from investing activities:
Purchase of property and equipment.......... (95,771) (48,587) (238,801) (50,720) (77,491)
----------- ----------- ----------- ----------- -----------
Cash flows from financing activities:
Subordinated loan borrowings from
shareholder.............................. 225,000 1,000,000 500,000
Repayment of subordinated loan to
shareholder.............................. (2,000,000)
Distribution to shareholder................. (3,457)
----------- ----------- ----------- -----------
Net cash (used in) provided by
financing activities.............. (2,000,000) 225,000 996,543 500,000
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS................................. (203,301) 273,880 (7,400) 2,696,448 1,288,770
Cash and cash equivalents -- beginning of
period...................................... 367,372 93,492 100,892 164,071 367,372
----------- ----------- ----------- ----------- -----------
CASH AND CASH EQUIVALENTS -- END OF PERIOD.... $ 164,071 $ 367,372 $ 93,492 $ 2,860,519 $ 1,656,142
=========== =========== =========== =========== ===========
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest................................. $ 568,326 $ 602,759 $ 323,876 $ 212,368 $ 424,426
Franchise taxes.......................... 126,342 83,680 253,845 33,938 100,320
</TABLE>

Supplemental information on noncash financing activities:
During 1995, the shareholder issued a secured demand note to Muriel Siebert &
Co., Inc. and Muriel Siebert & Co., Inc. issued a subordinated note to the
shareholder, both in the amount of $2,000,000.
During 1994, a loan to the shareholder was offset by subordinated liabilities.

The accompanying notes to financial statements are an integral part hereof.

F-6
<PAGE> 40

MURIEL SIEBERT & CO., INC.

NOTES TO FINANCIAL STATEMENTS
(UNAUDITED WITH RESPECT TO SEPTEMBER 30, 1996 AND THE
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996)

(NOTE A) -- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

(1) Organization:

Muriel Siebert & Co., Inc. ("Siebert") engages in the business of providing
discount brokerage services for customers, investment banking and trading
securities for its own account.

(2) Security transactions:

Prior to 1996, security transactions, commissions, revenues and expenses
were recorded on a settlement date basis, generally the third day following the
transaction for securities and the next day for options. Revenues and related
expenses on a trade date basis were not materially different. Effective January
1, 1996, security transactions, commissions, revenues and expenses are recorded
on a trade date basis.

Siebert clears all its security transactions through an unaffiliated
clearing firm on a fully disclosed basis. Accordingly, Siebert does not hold
funds or securities for or owe funds or securities to its customers. Those
functions are performed by the clearing firm. Based on its balance sheet, the
clearing firm had regulatory net capital as defined in Commission Rule 15c3-1 in
excess of $250 million.

(3) Income taxes:

The historical financial statements do not include a provision for federal
taxes, since Siebert elected to be treated as an S Corporation under Section
1362 of the Internal Revenue Code. Accumulated S Corporation earnings of
approximately $9,354,000 at September 30, 1996 may be distributed to the
shareholder without further tax consequences, subject to regulatory approval.

A pro forma provision for income taxes has been presented which represents
income taxes which would have been provided had Siebert operated as a C
Corporation.

(4) Property and equipment:

Property and equipment is stated at cost and depreciation is calculated
using the straight-line method over the lives of the assets, generally five
years. Leasehold improvements are amortized over the period of the lease.

(5) Cash equivalents:

For purposes of reporting cash flows, cash equivalents include money market
funds.

(6) Advertising costs:

Advertising costs are expensed as incurred.

(7) Use of estimates:

The financial statements have been prepared by management in conformity
with generally accepted accounting principles which require the use of
estimates.

(8) Reclassifications:

Certain reclassifications have been made to the 1993 and 1994 financial
statements to conform to the 1995 presentation.

F-7
<PAGE> 41

MURIEL SIEBERT & CO., INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED WITH RESPECT TO SEPTEMBER 30, 1996 AND THE
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996)

(9) Interim financial statements:

The accompanying financial statements as at September 30, 1996 and for the
nine months ended September 30, 1996 and September 30, 1995 are unaudited but,
in the opinion of management of Siebert, reflect all adjustments (consisting
only of normal and recurring adjustments) necessary for a fair presentation.
Those adjustments do not include an allocation of the year end S Corporation
earnings as additional compensation to its shareholder in accordance with its
tax minimization strategy. The results of operations for the nine-month period
are not necessarily indicative of the results that may be expected for the full
year ending December 31, 1996.

(10) Pro forma earnings per common share:

The Company has reflected in its calculation of earnings per share the
5,235,897 shares of common stock of the Surviving Company, including 5,105,000
shares issued in exchange for all the outstanding common stock of MSCMG (See
Note G -- Merger Agreement), as if such shares were deemed outstanding at the
beginning of the respective periods presented.

(NOTE B) -- COMMITMENT AND CONTINGENCIES:

Siebert rents office space in New York, Boca Raton, Florida and Naples,
Florida under long-term operating leases which expire on May 5, 1998, January
31, 1997 and April 22, 1999, respectively. These leases call for base rent plus
escalations for taxes and operating expenses.

Future minimum rental payments for base rent plus operating expenses under
these operating leases are as follows:

<TABLE>
<CAPTION>
YEAR AMOUNT
------------------------------------------------------------------ --------
<S> <C>
1996.............................................................. $290,000
1997.............................................................. 273,000
1998.............................................................. 106,000
1999.............................................................. 8,000
--------
$677,000
========
</TABLE>

Siebert also leases office space in Los Angeles on a month-to-month basis
for approximately $1,600 per month.

Rent expense, including share of operating costs and escalations, amounted
to $289,000, $309,264 and $301,509 for the years ended December 31, 1995, 1994
and 1993, respectively. Payments due under the New York lease are being expensed
over the entire lease term on a straight-line basis. Amounts expensed but not
paid at December 31, 1995 was $18,000; amounts paid but not expensed at December
31, 1994 was $19,601.

Siebert is party to certain claims, suits and complaints arising in the
ordinary course of business. In the opinion of management, all such claims,
suits and complaints are without merit, or involve amounts which would not have
a significant effect on the financial position of Siebert.

Siebert sponsors a defined contribution retirement plan under Section
401(k) of the Internal Revenue Code that covers substantially all employees.
Participant contributions to the plan are voluntary and are subject to certain
limitations. Siebert may also make discretionary contributions to the plan. No
contributions were made by Siebert in 1995, 1994 and 1993 and for the nine-month
periods ended September 30, 1996 and 1995.

F-8
<PAGE> 42

MURIEL SIEBERT & CO., INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED WITH RESPECT TO SEPTEMBER 30, 1996 AND THE
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996)

(NOTE C) -- LIABILITY TO SHAREHOLDER SUBORDINATED TO CLAIMS OF GENERAL CREDITORS
AND SECURED DEMAND NOTE RECEIVABLE FROM SHAREHOLDER:

The subordinated liabilities consist of the following:

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------- AS OF
1995 1994 SEPTEMBER 30, 1996
---------- ---------- ------------------
<S> <C> <C> <C>
Subordinated note, due December 31, 1998, interest
payable at 4% per annum......................... $2,000,000 $2,000,000
Subordinated notes, due on demand................. $ 200,000
Subordinated notes, due December 31, 1996,
interest payable at three percentage points over
the Citibank, N.A. prime rate................... 575,000
Subordinated note due December 31, 1996, interest
payable at 8% per annum......................... 1,000,000
Subordinated note due December 31, 1997, interest
payable at 8% per annum......................... 225,000
Subordinated note due January 31, 1999, interest
payable at 8%................................... 500,000
---------- ---------- ----------
Total................................... $2,000,000 $2,000,000 $2,500,000
========== ========== ==========
</TABLE>

The long-term borrowings under subordination agreements will be
automatically renewed for a period of one year if notice of demand for payment
is not given thirteen months prior to maturity.

The subordinated borrowing is covered by an agreement approved by the New
York Stock Exchange and is thus available in computing net capital under the
Securities and Exchange Commission's Uniform Net Capital Rule. To the extent
that such borrowings are required for Siebert's continued compliance with
minimum net capital requirements, they may not be repaid.

Interest paid on subordinated borrowings was $160,000, $160,000 and
$120,000 for the years ended 1995, 1994 and 1993 and $87,501 and $119,997 for
the nine months ended September 30, 1996 and 1995, respectively.

During 1994, secured demand notes in the aggregate of $225,000 due from the
sole shareholder and the related subordinated liabilities in the same amount
were canceled; the underlying collateral was returned to the shareholder.
Concurrently, the shareholder loaned $225,000 in cash to Siebert and Siebert
issued a new subordinated note.

The secured demand note receivable from shareholder of $2,000,000 at
September 30, 1996 and at December 31, 1995 is collateralized by marketable
securities with a market value of $2,309,000 and $2,394,000, respectively.

F-9
<PAGE> 43

MURIEL SIEBERT & CO., INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED WITH RESPECT TO SEPTEMBER 30, 1996 AND THE
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996)

(NOTE D) -- PROPERTY AND EQUIPMENT -- NET:

Property and equipment consist of the following:

<TABLE>
<CAPTION>
AS AT DECEMBER 31,
---------------------- AS AT
1995 1994 SEPTEMBER 30, 1996
--------- -------- ------------------
<S> <C> <C> <C>
Leasehold improvements...................... $ 36,305 $ 35,810 $ 36,305
Furniture and fixtures...................... 38,612 28,779 38,612
Equipment................................... 306,819 221,376 349,013
-------- -------- --------
381,736 285,965 423,930
Less accumulated depreciation and
amortization.............................. (142,872) (75,512) (194,121)
-------- -------- --------
Total............................. $ 238,864 $210,453 $ 229,809
======== ======== ========
</TABLE>

Depreciation and amortization expense for the years ended December 31,
1995, 1994 and 1993 amounted to $67,360, $55,668 and $21,267, respectively. For
the nine months ended September 30, 1996 and September 30, 1995 depreciation and
amortization expense amounted to $59,775 and $46,648, respectively.

(NOTE E) -- NET CAPITAL:

Siebert is subject to the Securities and Exchange Commission's Uniform Net
Capital Rule (Rule 15c3-1), which requires the maintenance of minimum net
capital. Siebert has elected to use the alternative method, permitted by the
rule, which requires that Siebert maintain minimum net capital, as defined,
equal to the greater of $250,000 or 2 percent of aggregate debit balances
arising from customer transactions, as defined. (The net capital rule of the New
York Stock Exchange also provides that equity capital may not be withdrawn or
cash dividends paid if resulting net capital would be less than 5 percent of
aggregate debits.) At December 31, 1995 and 1994 and at September 30, 1996,
Siebert had net capital of $4,606,280, $4,465,314 and $10,294,872, respectively,
and net capital requirements of $250,000. Siebert claims exemption from the
reserve requirement under Section 15c3-3(k)(2)(ii).

(NOTE F) -- FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONCENTRATIONS
OF CREDIT RISK:

In the normal course of business, Siebert enters into transactions in
various financial instruments with off-balance sheet risk. This risk includes
both market and credit risk, which may be in excess of the amounts recognized in
the statement of financial condition.

Retail customer transactions are cleared through National Financial
Services Corp. ("NFSC") on a fully disclosed basis. In the event that customers
are unable to fulfill their contractual obligations, NFSC may charge Siebert for
any loss incurred in connection with the purchase or sale of securities at
prevailing market prices to satisfy customers' obligations. Siebert regularly
monitors the activity in its customer accounts for compliance with its margin
requirements.

Siebert records customer transactions on a settlement date basis, which is
generally three business days after trade date. Siebert is therefore exposed to
the risk of loss on unsettled transactions in the event customers and other
counterparties are unable to fulfill contractual obligations. Securities
transactions entered into as of December 31, 1995 settled with no adverse effect
on Siebert's statement of financial condition.

Siebert's equity in accounts held by NFSC, consisting of securities owned
and securities sold, not yet purchased, collateralize the margin amounts due to
NFSC.

F-10
<PAGE> 44

MURIEL SIEBERT & CO., INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED WITH RESPECT TO SEPTEMBER 30, 1996 AND THE
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996)

(NOTE G) -- MERGER AGREEMENT:

On April 24, 1996 Muriel Siebert Capital Markets Group, Inc. ("MSCMG"), a
corporation with 1,500 common shares outstanding, signed a definitive Plan and
Agreement of Merger (the "Merger Agreement") with J. Michaels, Inc. ("JMI")
providing for the merger (the "Merger") of MSCMG with and into JMI. Shortly
before the effective time of the Merger, Muriel Siebert will contribute 1,000
common shares, being 100% of the shares outstanding, of Siebert to MSCMG. The
Merger Agreement provides that JMI will liquidate all its assets, other than the
shares of Siebert, and distribute the proceeds to the pre-Merger stockholders of
JMI who will, by virtue of the merger, collectively retain a 2 1/2% interest in
the surviving company (the "Surviving Company") which will be renamed Siebert
Financial Corp.

(NOTE H) -- SUBSEQUENT EVENT:

On October 31, 1996, the Company paid salary and a Subchapter S
distribution to its shareholder of $2,975,000 who reinvested $500,000 as a
subordinated note. The note is due on October 31, 1999 with interest payable at
8% per annum. The note will be automatically renewed for a period of one year if
notice of demand for payment is not given thirteen months prior to maturity.

F-11
<PAGE> 45

SIEBERT FINANCIAL CORP.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

AS OF SEPTEMBER 30, 1996
(IN THOUSANDS)

On April 24, 1996 Muriel Siebert & Co., Inc. ("Siebert"), Muriel Siebert
Capital Markets Group, Inc. ("MSCMG") and J. Michaels, Inc. ("JMI") signed an
agreement whereby MSCMG would exchange all of its outstanding shares for
5,105,000 (post one-for-seven reverse split) newly issued shares of JMI, which
will change its name to Siebert Financial Corp. Immediately prior to the merger
Muriel Siebert, the sole shareholder of Siebert, will contribute all of its
outstanding shares to MSCMG.

The following unaudited pro forma condensed consolidated balance sheet
gives effect to the following transactions as if they had occurred on September
30, 1996: (1) the contribution to capital of accumulated S Corporation earnings,
(2) the reduction of par value per share from $1.00 to $.01, and (3) the
issuance by JMI of 5,105,000 shares of its common stock in exchange for all the
outstanding common stock of MSCMG. The unaudited pro forma consolidated
condensed balance sheet should be read in conjunction with the unaudited pro
forma consolidated statement of operations and the audited historical financial
statements of Siebert appearing elsewhere herein and are not necessarily
indicative of the results that would have been attained had the transactions
been completed at September 30, 1996.

<TABLE>
<CAPTION>
SIEBERT ADJUSTMENTS PRO FORMA(C)
------- ----------- ------------
<S> <C> <C> <C>
ASSETS
Cash and equivalents................................... $ 2,861 $ 2,861
Securities owned, at market............................ 7,920 7,920
Receivables from brokers and dealers................... 3,435 3,435
Secured demand note from shareholder................... 2,000 2,000
Property and equipment, net............................ 230 230
Other assets........................................... 198 198
------- ------------
TOTAL........................................ $16,644 $ 16,644
======= ==========
LIABILITIES
Accounts payable and accruals.......................... $ 3,369 $ 3,369
Securities sold not yet purchased, at market value..... 1,385 1,385
------- ------------
4,754 4,754
------- ------------
Subordinated debt to shareholder....................... 2,500 2,500
------- ------------
SHAREHOLDER'S EQUITY
Common stock........................................... 1 (a) $ 51 52
Additional paid-in capital............................. 59 (a) (75) 9,338
(b) 9,354 0
Retained earnings...................................... 9,354 (b) (9,354)
Treasury stock......................................... (24)(a) 24 0
------- ------------
9,390 9,390
------- ------------
TOTAL........................................ $16,644 $ 16,644
======= ==========
</TABLE>

F-12
<PAGE> 46

- ---------------
Notes to pro forma consolidated balance sheet:

(a) To record the par value and additional paid-in capital of 5,235,897 (post
one-for-seven reverse split) shares of common stock of the merged company
including 5,105,000 shares issued in exchange for all the outstanding common
stock of MSCMG (parent of Siebert); to eliminate Siebert common stock,
additional paid-in capital and treasury stock.

(b) To record transfer to capital of the deemed distribution of $9,354,000 of
accumulated S Corporation earnings by Ms. Siebert.

(c) Does not give effect to salary and a Subchapter S distribution paid to Ms.
Siebert of $2,975,000 on October 31, 1996, its resulting tax effect and her
reinvestment of $500,000 on that date as subordinated debt.

F-13
<PAGE> 47

SIEBERT FINANCIAL CORP.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS)

On April 24, 1996 Muriel Siebert & Co., Inc. ("Siebert"), Muriel Siebert
Capital Markets Group., Inc. ("MSCMG") and J. Michaels, Inc. ("JMI") signed an
agreement whereby MSCMG would exchange all of its outstanding shares for
5,105,000 (post one-for-seven reverse split) newly issued shares of JMI, which
will change its name to Siebert Financial Corp. Immediately prior to the merger
Muriel Siebert, the sole shareholder of Siebert, will contribute all of its
outstanding shares to MSCMG.

The following unaudited pro forma condensed consolidated statement of
operations of Siebert Financial Corp. (formerly Siebert) gives effect to: (1)
the provision for federal, state, and city income tax at normally expected
rates, and (2) the issuance by JMI of 5,105,000 shares of its common stock in
exchange for all the outstanding common stock of MSCMG. The unaudited pro forma
financial statement should be read in conjunction with the audited historical
financial statements of Siebert appearing elsewhere herein and are not
necessarily indicative of the results of operations of the merged company.

<TABLE>
<CAPTION>
SIEBERT ADJUSTMENTS PRO FORMA
------- ----------- ---------
<S> <C> <C> <C>
Revenues................................................. $18,074 $18,074
------- ---------
Expenses:
Salaries and commissions(2)............................ 4,760 4,760
Clearing costs......................................... 3,431 3,431
Other.................................................. 5,630 5,630
------- ---------
13,821 13,821
------- ---------
Income before tax........................................ 4,253 4,253
Income tax............................................... (1) $ 1,871 1,871
------- ---------
NET INCOME............................................... $ 4,253 $ 2,382
======= ========
Pro forma earnings per share based on 5,235,897 common
shares outstanding..................................... $ 0.45
========
</TABLE>

- ---------------
Notes to unaudited pro forma consolidated condensed statement of operations:

(1) To provide for income tax at the normally expected rate of 44%.

(2) Ms. Siebert's compensation approximates the amount set forth in her new base
salary arrangement.

F-14
<PAGE> 48

SIEBERT FINANCIAL CORP.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS)

The following unaudited pro forma condensed consolidated statement of
operations of Siebert Financial Corp. (formerly Siebert) gives effect to: (1)
the adjustment of Ms. Siebert's salary for the year to the amount provided for
in her new base salary arrangement of $150,000 effective at the time of the
Merger, (2) the provision for federal, state, and city income tax at normally
expected rates, and (3) the issuance of JMI of 5,105,000 shares of its common
stock in exchange for all the outstanding common stock of MSCMG. The unaudited
pro forma financial statement should be read in conjunction with the audited
historical financial statements of Siebert appearing elsewhere herein and are
not necessarily indicative of the results of operations of the surviving
company.

<TABLE>
<CAPTION>
SIEBERT ADJUSTMENTS PRO FORMA
------- ----------- ------------
<S> <C> <C> <C>
Revenues............................................... $21,040 $ 21,040
------- ------------
Expenses:
Salaries and commissions............................. 8,586(1) $(2,975) 5,611
Clearing costs....................................... 4,249 4,249
Other................................................ 6,959 6,959
------- ------------
19,794 16,819
------- ------------
Income before tax...................................... 1,246 4,221
Income tax............................................. (2) 1,857 1,857
------- ------------
NET INCOME............................................. $ 1,246 $ 2,364
======= ==========
Pro forma earnings per share based on 5,235,897 common
shares outstanding................................... $ 0.45
==========
</TABLE>

- ---------------
Notes to unaudited pro forma consolidated condensed statement of operations:

(1) To adjust Ms. Siebert's salary to the amount set forth in her new base
salary arrangement.

(2) To provide for income tax at the normally expected rate of 44%.

F-15
<PAGE> 49

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the expenses in connection with the sale of
the Common Stock offered hereby, other than underwriting discounts and
commissions. The amount of such expenses are as follows:

<TABLE>
<S> <C>
SEC registration fee..................................................... $ 91
NASDAQ listing fee....................................................... 2,000
Printing and engraving expenses.......................................... 5,000*
Legal fees and expenses.................................................. 22,000*
Accounting fees and expenses............................................. 12,000*
Blue Sky fees and expenses............................................... 3,000*
Miscellaneous............................................................ 909*
-------
Total.......................................................... $45,000*
=======
</TABLE>

- ---------------

* Estimated

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

1. The Business Corporation Law of the State of New York provides the
following with respect to the indemnification of directors, officers and
employees:

SEC.722. AUTHORIZATION FOR INDEMNIFICATION OF DIRECTORS AND OFFICERS

(a) A corporation may indemnify any person made, or threatened to be made,
a party to an action or proceeding (other than one by or in the right of the
corporation to procure a judgment in its favor), whether civil or criminal,
including an action by or in the right of any other corporation of any type or
kind, domestic or foreign, or any partnership, joint venture, trust, employee
benefit plan or other enterprise, which any director or officer of the
corporation served in any capacity at the request of the corporation, by reason
of the fact that he, his testator or intestate, was a director or officer of the
corporation, or serve such other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise in any capacity, against judgments,
fines, amounts paid in settlement and reasonable expenses, including attorneys'
fees actually and necessarily incurred as a result of such action or proceeding,
or any appeal therein, if such director or officer acted, in good faith, for a
purpose which he reasonably believed to be in, or, in the case of service for
any other corporation or any partnership, joint venture, trust, employee benefit
plan or other enterprise, not opposed to, the best interests of the corporation
and, in criminal actions or proceedings, in addition, had no reasonable cause to
believe that his conduct was unlawful.

(b) The termination of any such civil or criminal action or proceeding by
judgment, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not in itself create a presumption that any such director or
officer did not act, in good faith, for a purpose which he reasonably believed
to be in, or, in the case of service for any other corporation or any
partnership, joint venture, trust, employee benefit plan or other enterprise,
not opposed to, the best interests of the corporation or that he had reasonable
cause to believe that his conduct was unlawful.

(c) A corporation may indemnify any person made, or threatened to be made,
a party to an action by or in the right of the corporation to procure a judgment
in its favor by reason of the fact he, his testator or intestate, is or was a
director or officer of the corporation, or is or was serving at the request of
the corporation as a director or officer of any other corporation of any type or
kind, domestic, foreign, of any partnership, joint venture, trust, employee
benefit plan or other enterprise, against amounts paid in settlement and
reasonable expenses, including attorneys' fees, actually and necessarily
incurred by him in connection with the defense or settlement of such action, or
in connection with an appeal therein, if such director or officer acted, in good

II-1
<PAGE> 50

faith, for a purpose which he reasonably believed to be in, or, in the case of
service for any other corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise, not opposed to, the best interests of
the corporation, except that no indemnification under this paragraph shall be
made in respect of (1) a threatened action, or a pending action which is settled
or otherwise disposed of, or (2) any claim, issue or matter as to which such
person shall have been adjudged to be liable to the corporation, unless and only
to the extent that the court in which the action was brought, or, if no action
was brought, any court of competent jurisdiction, determines upon application
that, in view of all the circumstances of the case, the person is fairly and
reasonably entitled to indemnity for such portion of the settlement amount and
expenses as the court deems proper.

(d) For the purpose of this section, a corporation shall be deemed to have
requested a person to serve an employee benefit plan where the performance by
such person of his duties to the corporation also imposes duties on, or
otherwise involves services by, such person to the plan or participants or
beneficiaries of the plan; excise taxes assessed on a person with respect to an
employee benefit plan pursuant to applicable law shall be considered fines; and
action taken or omitted by a person with respect to an employee benefit plan in
the performance of such person's duties for a purpose reasonably believed by
such person to be in the interest of the participants and beneficiaries of the
plan shall be deemed to be for a purpose which is not opposed to the best
interests of the corporation.

SECTION 723. PAYMENT OF INDEMNIFICATION OTHER THAN BY COURT AWARD

(a) A person who has been successful, on the merits or otherwise, in the
defense of a civil or criminal action or proceeding of the character described
in section 722 shall be entitled to indemnification as authorized in such
section.

(b) Except as provided in paragraph (a), any indemnification under section
722 or otherwise permitted by section 721, unless ordered by a court under
section 724 (Indemnification of directors and officers by a court), shall be
made by the corporation, only if authorized in the specific case:

(1) By the board acting by a quorum consisting of directors who are
not parties to such action or proceeding upon a finding that the director
or officer has met the standard of conduct set forth in section 722 or
established pursuant to section 721, as the case may be, or,

(2) If a quorum under subparagraph (1) is not obtainable or, even if
obtainable, a quorum of disinterested directors so directs;

(A) By the board upon the opinion in writing of independent legal
counsel that indemnification is proper in the circumstances because the
applicable standard of conduct set forth in such sections has been met
by such director or officer, or

(B) By the shareholders upon a finding that the director or officer
has met the applicable standard of conduct set forth in such sections.

(c) Expenses incurred in defending a civil or criminal action or proceeding
may be paid by the corporation in advance of the final disposition of such
action or proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount as, and to the extent, required by
paragraph (a) of section 725.

SECTION 724. INDEMNIFICATION OF DIRECTORS AND OFFICERS BY A COURT

(a) Notwithstanding the failure of a corporation to provide
indemnification, and despite any contrary resolution of the board of the
shareholders in the specific case under section 723 (Payment of indemnification
other than by court award), indemnification shall be awarded by a court to the
extent authorized under Section 722 (Authorization for indemnification of
directors and officers), and paragraph (a) of section 723. Application therefor
may be made, in every case, either:

(1) In the civil action or proceeding in which the expenses were
incurred or other amounts were paid, or

II-2
<PAGE> 51

(2) To the supreme court in a separate proceeding, in which case the
application shall set forth the disposition of any previous application
made to any court for the same or similar relief and also reasonable cause
for the failure to make application for such relief in the action or
proceeding in which the expenses were incurred or other amounts were paid.

(b) The application shall be made in such manner and form as may be
required by the applicable rules of court or, in the absence thereof, by
direction of a court to which it is made. Such application shall be upon notice
to the corporation. The court may also direct that notice be given at the
expense of the corporation to the shareholders and such other persons as it may
designate in such manner as it may require.

(c) Where indemnification is sought by judicial action, the court may allow
a person such reasonable expenses, including attorneys' fees, during the
pendency of the litigation as are necessary in connection with his defense
therein, if the court shall find that the defendant has by his pleadings or
during the course of the litigation raised genuine issues of fact or law.

SECTION 725. OTHER PROVISIONS AFFECTING INDEMNIFICATION OF DIRECTORS AND
OFFICERS

(a) All expenses incurred in defending a civil or criminal action or
proceeding which are advanced by the corporation under paragraph (c) of section
723 (Payment of indemnification other than by court award) or allowed by a court
under paragraph (c) of section 724 (Indemnification of directors and officers by
a court) shall be repaid in case the person receiving such advancement or
allowance is ultimately found, under the procedure set forth in this article,
not to be entitled to indemnification or, where indemnification is granted, to
the extent the expenses so advanced by the corporation or allowed by the court
exceed the indemnification to which he is entitled.

(b) No indemnification, advancement or allowance shall be made under this
article in any circumstance where it appears:

(1) That the indemnification would be inconsistent with the law of the
jurisdiction of incorporation of a foreign corporation which prohibits or
otherwise limits such indemnification;

(2) That the indemnification would be inconsistent with a provision of
the certificate of incorporation, a by-law, a resolution of the board or of
the shareholders, an agreement or other proper corporate action, in effect
at the time of accrual of the alleged cause of action asserted in the
threatened or pending action or proceeding in which the expenses were
incurred or other amounts were paid, which prohibits or otherwise limits
indemnification; or

(3) If there has been a settlement approved by the court, that the
indemnification would be inconsistent with any condition with respect to
indemnification expressly imposed by the court in approving the settlement.

(c) If any expenses or other amounts are paid by way of indemnification,
otherwise than by court order or action by the shareholders, the corporation
shall, not later than the next annual meeting of shareholders unless such
meeting is held within three months from the date of such payment and, in any
event, within fifteen months from the date of such payment, mail to its
shareholders of record at the time entitled to vote for the election of
directors a statement specifying the persons paid, the amounts paid, and the
nature and status at the time of such payment of the litigation or threatened
litigation.

(d) If any action with respect to indemnification of directors and officer
is taken by way of amendment of the by-laws, resolution of directors, or by
agreement, then the corporation shall, not later than the next annual meeting of
shareholders, unless such meeting is held within three months from the date of
such action, and, in any event, within fifteen months from the date of such
action, mail to its shareholders of record at the time entitled to vote for the
election of directors a statement specifying the action taken.

(e) Any notification required to be made pursuant to the foregoing
paragraph (c) or (d) of this section by any domestic mutual insurer shall be
satisfied by compliance with the corresponding provisions of section one
thousand two hundred sixteen of the insurance law.

II-3
<PAGE> 52

(f) The provisions of this article relating to indemnification of directors
and officers and insurance therefor shall apply to domestic corporations and
foreign corporations doing business in this state, except as provided in section
1320 (Exemption from certain provisions).

SECTION 726. INSURANCE FOR INDEMNIFICATION OF DIRECTORS AND OFFICERS

(a) Subject to paragraph (b), a corporation shall have power to purchase
and maintain insurance:

(1) To indemnify the corporation for any obligation which it incurs as
a result of the indemnification of directors and officers under the
provisions of this article, and

(2) To indemnify directors and officers in instances in which they may
be indemnified by the corporation under the provisions of this article, and

(3) To indemnify directors and officers in instances in which they may
not otherwise be indemnified by the corporation under the provisions of
this article provided by the contract of insurance covering such directors
and officers provides, in a manner acceptable to the superintendent of
insurance, for a retention amount and for co-insurance.

(b) No insurance under paragraph (a) may provide for any payment, other
than cost of defense, to or on behalf of any director or officer:

(1) if a judgment or other final adjudication adverse to the insured
director or officer establishes that his acts of active and deliberate
dishonesty were material to the cause of action so adjudicated, or that he
personally gained in fact a financial profit or other advantage to which he
was not legally entitled, or

(2) in relation to any risk the insurance of which is prohibited under
the insurance law of this state.

(c) Insurance under any or all subparagraphs of paragraph (a) may be
included in a single contract or supplement thereto. Retrospective rated
contracts are prohibited.

(d) The corporation shall, within the time and to the persons provided in
paragraph (c) of section 725 (Other provisions affecting indemnification of
directors or officers), mail a statement in respect of any insurance it has
purchased or renewed under this section, specifying the insurance carrier, date
of contract, cost of the insurance, corporate positions insured, and a statement
explaining all sums, not previously reported in a statement to shareholders,
paid under any indemnification insurance contract.

(e) This section is the public policy of this state to spread the risk of
corporate management, notwithstanding any other general or special law of this
state or of any other jurisdiction, including the federal government.

2. The Certificate of Incorporation of the Company contains provisions
governing indemnification.

3. Section 7.04 of the By-laws of the Company provides, as follows:

"The Corporation shall indemnify any person, made a party
to an action by or in the right of the Corporation to procure
a judgment in its favor, by reason of the fact that he, his
testator or intestate, is or was a director or officer of the
Corporation, against the reasonable expenses, including
attorneys' fees, actually and necessarily incurred by him in
connection with the defense of such action, or in connection
with an appeal therein, except in relation to matters as to
which such director or officer is adjudged to have breached
his duty to the Corporation under Section 717 of the Business
Corporation Law of the State of New York, as now in effect or
as amended from time to time, to the maximum extent that is
permitted by and is consistent with the law".

"The Corporation shall indemnify any person, made, or
threatened to be made, a party to an action or proceeding
other than one by or in the right of the Corporation to
procure a judgment in its favor, whether civil or criminal,
including an action by or in

II-4
<PAGE> 53

the right of any other corporation of any type or kind,
domestic or foreign, which any director or officer of the
Corporation served in any capacity at the request of the
Corporation, by reason of the fact that he, his testator or
intestate, was a director or officer of the Corporation or
served such other corporation in any capacity, against
judgments, fines, amounts paid in settlement and reasonable
expenses, including attorneys' fees actually and necessarily
incurred as a result of such action or proceeding, or any
appeal therein, if such director or officer acted, in good
faith, for a purpose which he reasonably believed to be in the
best interests of the Corporation and, in criminal actions or
proceedings, in addition, had no reasonable cause to believe
that his conduct was unlawful, to the maximum extent that is
permitted by and is consistent with the law. The termination
of any such civil or criminal action or proceeding by
judgment, settlement, conviction or upon a plea of nolo
contendere, or its equivalent, shall not in itself create a
presumption that any such director or officer did not act, in
good faith, for a purpose which he reasonably believed to be
in the best interests of the Corporation or that he had
reasonable cause to believe that his conduct was unlawful".

"Any indemnification by the Company pursuant hereto shall
be made only in the manner and to the extent authorized by
applicable law, and any such indemnification shall not be
deemed exclusive of any other rights to which those seeking
indemnification may otherwise be entitled".

The Company has insurance to indemnify its directors against liabilities
incurred as a result of serving in such capacity.

ITEM 15. SALE OF UNREGISTERED SECURITIES.

Inapplicable.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES.

(a) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------------------------------------------------------------------
<S> <C> <C>
3(a) -- Certificate of Incorporation of the Company (incorporated by reference to previous
filings by J. Michaels, Inc.).
3(b) -- By-laws of the Company (incorporated by reference to previous filings by J.
Michaels, Inc.).
5 -- Opinion of Brown Raysman Millstein Felder & Steiner LLP as to the legality of the
securities being registered.*
22 -- List of Subsidiaries of the Company.
24(a) -- Consent of Richard A. Eisner & Company, LLP.
24(b) -- Consent of Brown Raysman Millstein Felder & Steiner, LLP (included in their
opinion set forth as Exhibit 5 to this Registration Statement).*
</TABLE>

- ---------------

* Previously filed.

(b) Financial Statement Schedules:

Schedules have been omitted because either they are not required or are not
applicable or because the required information has been included elsewhere in
the financial statements or notes thereto.

ITEM 17. UNDERTAKINGS.

(a) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

II-5
<PAGE> 54

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;

provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offering
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

* * * *

(i) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification is against public policy
as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

II-6
<PAGE> 55

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company has duly caused this Amendment No. 1 to Registration Statement on Form
S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of New York, State of New York, on the 20th day of January, 1997.

SIEBERT FINANCIAL CORP.

By: /s/ MURIEL F. SIEBERT
------------------------------------
Muriel F. Siebert
Chair and President

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to Registration Statement on Form S-1 has been signed below
by the following persons, in the capacities indicated, on January 20, 1997.

<TABLE>
<CAPTION>
NAME TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
/s/ MURIEL F. SIEBERT Chair, President and Director (principal
- --------------------------------------------- executive officer)
Muriel F. Siebert

/s/ NICHOLAS P. DERMIGNY* Executive Vice President, Chief Operating
- --------------------------------------------- Officer and Director
Nicholas P. Dermigny

/s/ T. K. FLATLEY* Executive Vice President and Chief Financial
- --------------------------------------------- and Administrative Officer (principal
T. K. Flatley financial and accounting officer)

Director
- ---------------------------------------------
Jane H. Macon

/s/ MONTE E. WETZLER* Director
- ---------------------------------------------
Monte E. Wetzler
</TABLE>

Muriel F. Siebert, pursuant to a Power of Attorney executed by each of the
directors and officers noted above and filed with the Securities and Exchange
Commission, by signing his name hereto, does hereby sign and execute this
Amendment No. 1 to Registration Statement on Form S-1 on behalf of each of the
persons noted above, in the capacities indicated.

/s/ MURIEL F. SIEBERT

--------------------------------------

Muriel F. Siebert

II-7
<PAGE> 56

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT PAGE
- ------ ----------------------------------------------------------------------------- ----
<S> <C> <C> <C>
3(a) -- Certificate of Incorporation of the Company (incorporated by reference to
previous filings by J. Michaels, Inc.).......................................
3(b) -- By-laws of the Company (incorporated by reference to previous filings by
J. Michaels, Inc.)...........................................................
5 -- Opinion of Brown Raysman Millstein Felder & Steiner LLP as to the legality of
the securities being registered.*............................................
22 -- List of Subsidiaries of the Company..........................................
24(a) -- Consent of Richard A. Eisner & Company, LLP..................................
24(b) -- Consent of Brown Raysman Millstein Felder & Steiner, LLP (included in their
opinion set forth as Exhibit 5 to this Registration Statement).*.............
</TABLE>

- ---------------

* Previously filed.

<PAGE> 1

EXHIBIT 22

SUBSIDIARIES OF THE REGISTRANT

Muriel Siebert & Co., Inc. Delaware
Siebert Brandford Shank & Co., Inc. Delaware

<PAGE> 1

EXHIBIT 24(A)

CONSENT OF INDEPENDENT AUDITORS

We consent to the inclusion in this Registration Statement on Form S-1 of
our report dated February 9, 1996 (April 24, 1996 as to Note G) on our audits of
Muriel Siebert & Co., Inc. (Siebert Financial Corp.'s wholly-owned subsidiary
through which it conducted all of its business activities) as at December 31,
1995 and December 31, 1994 and for each of the years in the three-year period
ended December 31, 1995. We also consent to the reference to our firm under the
caption "Experts."

RICHARD A. EISNER & COMPANY, LLP

New York, New York

January 17, 1997