Filed Pursuant to Rule 424(b)(4)
PROSPECTUS
600,000 Shares
Siebert Financial Corp.
Common Stock
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Six of our shareholders, as listed in this prospectus, are offering and
selling an aggregate of 600,000 shares of our common stock under this
prospectus. The selling shareholders acquired their shares of our common stock
in a private transaction in connection with our acquisition of Andrew Peck
Associates, Inc. All of the shares of our common stock covered by this
prospectus are being sold by the selling shareholders. We will not receive any
part of the proceeds from the sale of these shares.
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The selling shareholders may offer their shares of our common stock
through public or private transactions, on or off the United States exchanges,
at prevailing market prices, or at privately negotiated prices. The selling
shareholders will pay the commission expenses and brokerage fees for the sale of
these shares.
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Our common stock trades on the Nasdaq SmallCap Market under the ticker
symbol "SIEB." On June 15, 1999, the closing sale price of one share of our
common stock was $20.25.
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Investing in our common stock involves certain risks. See "Risk
Factors," which begin on page 5 of this prospectus.
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Neither the Securities and Exchange Commission nor any state securities
commission has determined whether this prospectus is truthful or complete. Nor
have they made, nor will they make, any determination as to whether anyone
should buy these securities. Any representation to the contrary is a criminal
offense.
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The date of this Prospectus is July 9, 1999
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TABLE OF CONTENTS
Page
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WHERE YOU CAN FIND MORE INFORMATION ....................................... 3
THE COMPANY ............................................................... 4
RECENT DEVELOPMENTS ....................................................... 4
RISK FACTORS .............................................................. 5
FORWARD LOOKING STATEMENTS ................................................ 15
USE OF PROCEEDS ........................................................... 15
DIVIDEND POLICY ........................................................... 15
PRICE RANGE OF COMMON STOCK ............................................... 16
SELLING SHAREHOLDERS ...................................................... 17
PLAN OF DISTRIBUTION ...................................................... 18
LEGAL MATTERS ............................................................. 18
EXPERTS ................................................................... 18
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from the SEC's website at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until the selling shareholders sell all their
shares of our common stock. This prospectus is part of a registration statement
we filed with the SEC (Registration No. 333- ).
(1) Our Current Report on Form 8-K filed on June 14, 1999.
(2) Our Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999.
(3) Our Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1998.
(4) The description of our capital stock contained in
Amendment No. 4 to our Registration Statement on Form
S-1 filed on July 30, 1998.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Siebert Financial Corp.
885 Third Avenue, New York, New York 10022
Attention: Shareholder Relations
(Tel. No. (212) 644-2400)
"We," "us" and "our," when used in this prospectus, refer to Siebert
Financial Corp. Our Web site address is The information on our Web site is not a
part of this prospectus. You should rely only on the information incorporated by
reference or provided in this prospectus or any supplement. We have not
authorized anyone else to provide you with different information. The
shareholders selling under this prospectus will not make an offer of these
shares in any state where the offer is not permitted. You should not assume that
the information in this prospectus or any supplement to this prospectus is
accurate as of any date other than the date on the front of these documents.
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THE COMPANY
We are a holding company and conduct all of our business activities in
the retail discount brokerage and investment banking business through our
wholly-owned subsidiary, Muriel Siebert & Co., Inc. Muriel Siebert, the first
woman member of the New York Stock Exchange, is our Chair and President and owns
approximately 87.3% of our outstanding common stock.
We provide services to our customers through two main divisions.
Through our Retail division, we provide discount brokerage and related services
to more than 70,000 retail investor accounts. Through our Capital Markets
division, we offer institutional clients equity execution services on an agency
basis, as well as equity, fixed income and municipal underwriting, and
investment banking services. In addition, our Capital Markets division
participates in the secondary markets for Municipal and U.S. Treasury securities
and also trades listed closed-end bond funds and certain other securities for
our own account. This proprietary trading business is strictly segregated from
that of the agency business executed on behalf of institutional clients.
RECENT DEVELOPMENTS
On January 15, 1999, we completed a rights offering in which existing
shareholders received the right to purchase one share of our common stock at
$7.50 for each share of our common stock owned of record as of July 29, 1998.
Approximately 961,000 shares of our common stock were issued pursuant to this
rights offering, generating net proceeds to us of approximately $7,000,000,
after the payment of offering expenses of approximately $250,000.
In January 1999, we unveiled our new interactive palm-top service that
allows our clients to make equity trades, receive confirmations, get real-time
quotes and alerts, access account data, send and receive e-mail and more - all
without a phone or computer. Using the newest wireless two-way interactive
beeper technology, this beeper-sized, 4.9-ounce battery-operated device can be
programmed to provide instant account updates and quotes.
On May 28, 1999, we consummated our acquisition of Andrew Peck
Associates, Inc. Under the agreement relating to the merger, Andrew Peck
Associates was merged with and into Muriel Siebert & Co. and the separate
existence of Andrew Peck Associates ceased. Each share of common stock of Andrew
Peck Associates outstanding was converted into the right to receive shares of
our common stock at a specified exchange ratio, resulting in the issuance of
600,000 shares of our common stock. It is these 600,000 shares issued in the
merger that are the subject of this prospectus.
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Andrew Peck Associates is a discount brokerage firm headquartered in
Jersey City, New Jersey. All of the principals and employees of Andrew Peck
Associates joined Muriel Siebert & Co. following the merger. The merger was
structured as a tax-free transaction for federal income tax purposes and will be
accounted for as a pooling of interests.
RISK FACTORS
Before you invest in our common stock, you should be aware that there
are various risks, including those described below. You should consider
carefully these risk factors together with all of the other information included
in this prospectus before you decide to purchase shares of our stock.
OUR BUSINESS IS SUBJECT TO SIGNIFICANT RISKS AND OUR OPERATING RESULTS MAY
FLUCTUATE, ADVERSELY AFFECTING THE PRICE OF OUR COMMON STOCK.
The business in which we operate is, by its nature, subject to
significant risks and uncertainties, many of which are exacerbated in volatile
or illiquid securities markets, including:
o the risk of trading losses,
o losses resulting from the ownership or underwriting of
securities,
o counterparty failure to meet commitments,
o customer, employee and issuer fraud,
o errors and misconduct,
o failures relating to the processing of securities
transactions, and
o litigation.
In addition, the securities business in general is affected by many
factors, including:
o economic and political conditions,
o broad trends in business and finance,
o legislation and regulation affecting the national and
international business and financial communities,
o currency values,
o inflation,
o market conditions,
o the availability and cost of short-term or long-term funding
and capital,
o the credit capacity or perceived creditworthiness of the
securities industry in the marketplace, and
o the level and volatility of interest rates.
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The varied risks associated with our business and the securities
business in general, could adversely affect our commission and other revenues.
This potential reduction in revenues or a loss resulting from our underwriting
or ownership of securities could have a material adverse effect on our results
of operations and financial condition. In addition, as a result of these risks,
our revenues and operating results may be subject to significant fluctuations
from quarter to quarter and from year to year.
LOWER PRICE LEVELS IN THE SECURITIES MARKETS MAY REDUCE OUR PROFITABILITY,
ADVERSELY AFFECTING THE PRICE OF OUR COMMON STOCK.
Lower price levels in the securities markets may result in reduced
volumes of securities transactions, with a consequent reduction in our
commission revenues. Lower price levels of securities may also result in the
decline in value of the securities we hold in trading, investment and
underwriting positions. In periods of low volume, our profitability can be
adversely affected also because some of our expenses remain relatively fixed. In
addition, 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 our having difficulty selling the
securities we hold. Lower price levels in the securities markets, if prolonged,
may also lower our revenues from investment banking and other activities.
THERE IS INTENSE COMPETITION IN THE DISCOUNT BROKERAGE INDUSTRY, PARTICULARLY IN
THE ONLINE BROKERAGE INDUSTRY.
We encounter significant competition from full-commission and discount
brokerage firms, as well as from financial institutions, mutual fund sponsors
and other organizations. Many of these competitors are significantly larger,
have greater capital resources, and offer a wider range of services and
financial products than us. Our municipal bond underwriting subsidiary 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 our competitors. We believe that the success of
industry participants will continue to attract additional competitors such as
banks, insurance companies, providers of online financial and information
services, and others as they expand their service offerings.
During recent years, competition has continued to intensify among all
classes of brokerage firms and within the discount brokerage business. Some
firms, traditionally discount execution firms, have broadened their service
offerings to include investment advice and investment management. More recently,
a number of traditional "full service" brokerage firms recently have entered the
discount brokerage market by permitting their customers to place trades over the
Internet at a greatly reduce commission cost. Since 1994, some firms have
offered low, flat rate execution fees that are difficult for any conventional
discount firm to match. Industry-wide changes in trading practices are expected
to cause continuing pressure on fees earned by discount brokers for the sale of
order flow. Some firms are offering their services over the Internet and have
devoted more resources to and have more elaborate Web sites than ours. Continued
competition from ultra low cost, flat fee brokers, combined with the broader
service offerings of other discount brokers could limit our growth or even lead
to a decline in our customer base. This would adversely effect our business,
financial condition and operating results.
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OUR COMMISSION PER CUSTOMER TRADE IS TRENDING DOWN.
Our commission per customer trade is trending down as the number of
trades executed electronically increases.(1) Customers who trade electronically
typically are charged a lower commission than customers who place trades through
our trading desk employees. For the year ended December 31, 1998, electronic
trades accounted for an average of 25% of all Siebert trades. This trend has
continued during 1999, with electronic trading accounting for approximately 36%
of all trades during the quarter ended March 31, 1999, and approached 45% during
April 1999.
WE DEPEND ON OUR ABILITY TO ATTRACT AND RETAIN KEY PERSONNEL.
Although we have been offering Internet trading since 1997, we have had
only limited experience in this area compared to some other companies in the
industry. Our ability to develop our Internet business and enhance our business
through the Internet may depend on our ability to attract and retain management
personnel with Internet experience. We cannot assure you that we will be able to
attract, hire and retain qualified personnel. In particular, our success is
dependent on our founder, Muriel F. Siebert, and the loss of her services would
adversely affect us.
OUR CUSTOMERS MAY FAIL TO PAY US.
The principal credit risk to which we are exposed on a regular basis is
that our customers may fail to pay for their purchases or fail to maintain the
minimum required collateral for amounts borrowed against securities positions
maintained by them. We have established policies with respect to maximum
purchase commitments for new customers or customers with inadequate collateral
to support a requested purchase. However, our managers have some flexibility in
the allowance of certain transactions. When transactions occur outside normal
guidelines, these accounts are monitored until their payment obligation is
completed. If the customer does not meet the commitment, we take steps to close
out the position in an attempt to minimize losses.
We have personnel specifically responsible for monitoring all customer
positions for the maintenance of required collateral. These personnel also
monitor accounts that may be concentrated unduly in one or more securities
whereby a significant decline in the value of a particular security could reduce
the value of the account's collateral below the account's loan obligation. While
we have not had significant credit losses in the last five years, we cannot
assure you that the policies and procedures we have established will be adequate
to prevent a significant credit loss.
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(1) Electronic trading includes our: SiebertNet, MarketPhone, Siebert
OnLine and MobileBroker(TM) services.
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WE FACE RISKS RELATED TO OUR INVESTMENT BANKING ACTIVITIES.
Certain risks are involved in the underwriting of securities.
Underwriting syndicates agree to purchase securities at a discount from the
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 increasingly have
underwritten corporate and municipal offerings with fewer syndicate participants
or, in some cases, without an underwriting syndicate. In these 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 for
material misstatements or omissions of fact in the offering documents prepared
in for these offerings.
WE FACE RISKS RELATED TO OUR TRADING ACTIVITIES.
Our Capital Markets division underwriting and trading activities
involve the purchase, sale or short sale of securities as a principal, which
means that we own the securities ourselves rather than merely acting as a broker
for a buyer and seller. These activities involve the risk of changes in the
market prices of these securities and of decreases in the liquidity of the
securities markets, which could limit our ability to resell securities purchased
or to repurchase securities sold short. In addition, these activities subject
our capital to significant risks that counter parties will fail to perform their
obligations. From time to time, we establish short positions during the course
of our trading activities. It is a characteristic of short positions that any
loss sustained on closing out the position may exceed the liability related to
the position as shown on our financial statements.
AN INCREASE IN VOLUME ON OUR SYSTEMS OR OTHER EVENTS COULD CAUSE THEM TO
MALFUNCTION.
We presently receive and process up to 45% of our trade orders
electronically. This method of trading is heavily dependent on the integrity of
the electronic systems supporting it. While we have never experienced a
significant failure of our trading systems, heavy stress placed on our systems
during peak trading times could cause our systems to operate at unacceptably low
speeds or fail altogether. Any significant degradation or failure of our systems
or the systems of third parties involved in the trading process (e.g., online
and Internet service providers, record keeping and data processing functions
performed by third parties, and third-party software such as Internet browsers),
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even for a short time, could cause customers to suffer delays in trading. These
delays could cause substantial losses for customers and could subject us to
claims from these customers for losses. We cannot assure you that our network
structure will operate appropriately in the event of a subsystem, component or
software failure. In addition, we cannot assure you that we will be able to
prevent an extended systems failure in the event of a power or
telecommunications failure, an earthquake, fire or any act of God. Any systems
failure that causes interruptions in our operations could have a material
adverse effect on our business, financial condition and operating results.
WE RELY ON INFORMATION PROCESSING AND COMMUNICATIONS SYSTEMS TO PROCESS AND
RECORD OUR TRANSACTIONS.
Our operations rely heavily on information processing and
communications systems. Our system for processing securities transactions is
highly automated. Registered representatives equipped with online computer
terminals can access customer account information, obtain securities prices and
related information and enter and confirm orders online.
To support our customer service delivery systems, as well as other
applications such as clearing functions, account administration, record keeping
and direct customer access to investment information, we maintain a computer
network in New York City. Through our clearing agent, our computers are also
linked to the major registered U.S. securities exchanges, the National
Securities Clearing Corporation and The Depository Trust Company. Failure of the
information processing or communications systems for a significant period of
time could limit our ability to process a large volume of transactions
accurately and rapidly. This could cause us to be unable to satisfy our
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 or all of these
systems inoperative.
WE MAY NOT BE ABLE TO KEEP UP PACE WITH CONTINUING CHANGES IN TECHNOLOGY.
Our market is characterized by rapidly changing technology. To be
successful, we must adapt to this rapidly changing environment by continually
improving the performance, features and reliability of our services. We could
incur substantial costs if we need to modify our services or infrastructure or
adapt our technology to respond to these changes. A delay or failure to address
technological advances and developments or an increase in costs resulting from
these changes could have a material and adverse effect on our business,
financial condition and results.
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OUR SUCCESS DEPENDS IN PART ON ACCEPTANCE OF INTERNET-BASED BROKERAGE AND
CONTINUED GROWTH IN USE OF THE INTERNET.
Adoption of online commerce, particularly by those individuals who
historically have relied on traditional means of commerce, will require a broad
acceptance of new and substantially different methods of conducting business.
Moreover, our brokerage services over the Internet involve a relatively new
approach to securities trading and, as a result, increased marketing and sales
efforts may be necessary to educate prospective customers regarding the uses and
benefits of our brokerage services and products. In addition, our business,
financial condition and results of operations could be materially and adversely
affected if Internet usage in general does not continue to grow significantly.
Internet usage may be inhibited for a number of reasons, such as:
o inadequate network infrastructure,
o security concerns,
o inconsistent quality of service, and
o inability to provide cost-effective, high-speed service.
THE ENACTMENT OF NEW LAWS OR CHANGES IN GOVERNMENT REGULATIONS RELATING TO THE
INTERNET COULD MATERIALLY AND ADVERSELY AFFECT OUR BUSINESS.
Due to the increasing popularity of the Internet, it is possible that
laws or regulations may be adopted regarding the Internet, any of which could
materially and adversely affect our business. These laws may relate to issues
such as user privacy, pricing, taxation and the characteristics and quality of
products and services. For example, the Telecommunications Act of 1996 sought to
prohibit the transmission of certain types of information and content over the
Web. The Federal Communications Commission recently decided that a Web user's
calls to gain access to the Internet are interstate communications and therefore
subject to federal jurisdiction. This could result in an increase in the cost of
transmitting data over the Internet. The applicability to the Internet of
existing laws in various jurisdictions governing issues like property ownership,
libel and personal privacy is ambiguous and may take years to resolve. Due to
the global nature of the Internet, it is possible that the U.S., state
governments or foreign countries might attempt to adopt new laws, regulate our
services or levy sales or other taxes on our activities. We might
unintentionally violate these laws or any new laws that are enacted in the
future. Any of these developments could have a material and adverse effect on
our business, financial condition and operating results.
SECURITY CONCERNS COULD HINDER INTERNET-BASED COMMERCE AND OUR BUSINESS.
The security and privacy concerns of existing and potential users of
our services may inhibit the growth of online commerce generally, and online
brokerage trading in particular, which could have a material adverse effect on
our business, financial condition and operating results. We rely on encryption
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and authentication technology to provide the security and authentication
necessary to effect secure transmission of confidential information. We cannot
assure you that advances in computer capabilities, new discoveries in the field
of cryptography or other events or developments will not result in a compromise
or breach of the algorithms used by us to protect customer transaction data. If
any compromise of our security were to occur, it could have a material adverse
effect on our business, financial condition and operating results.
WE MAY NOT BE ABLE TO MAINTAIN EXCLUSIVE RIGHTS TO WEB DOMAIN NAMES RELATING TO
OUR BRAND, WHICH MAY DECREASE THE VALUE OF OUR BRAND.
We currently hold one Web domain name relating to our brand,
"www.siebertnet.com". Currently, the acquisition and maintenance of domain names
is regulated by governmental agencies and their designees. The regulation of
domain names in the U.S. is expected to change in the near future. These changes
could include the introduction of additional top level domains, which could
cause confusion among Web users trying to locate our site. Furthermore, the
relationship between regulations governing domain names and laws protecting
trademarks and similar proprietary rights is unclear. We may be unable to
prevent third parties from acquiring domain names that are similar to or
otherwise decrease the value of our brand.
THERE ARE RISKS ASSOCIATED WITH MINORITY AND WOMEN-OWNED BUSINESS PROGRAMS.
Minority and women-owned business programs generally operate under the
authority of state and local governments or their related agencies. Changes in
laws or policies of governments or agencies affecting these programs may
adversely affect our participation in municipal bond and equity underwritings,
as well as our execution of institutional equity transactions. We believe that,
irrespective of the legal requirements, as long as there is a "sensitivity to
diversity and competitive equality," opportunities will be available for
qualified minority and women-owned businesses, especially in those locales that
have a significant minority population.
OUR PRINCIPAL SHAREHOLDER MAY CONTROL US MANY KEY DECISIONS.
Muriel F. Siebert owns or controls approximately 87.3% of our
outstanding common stock. Ms. Siebert will have the power to elect our entire
Board of Directors and, except as otherwise provided by law or in our
certificate of incorporation or by-laws, to approve any action requiring
shareholder approval.
WE ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATION.
The securities industry in the United States is subject to extensive
regulation under both Federal and state laws. We are registered as a
broker-dealer with the SEC, the New York Stock Exchange and the National
Association of Securities Dealers. Much of the regulation of broker-dealers has
been delegated to self-regulatory organizations, principally the NASD and
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national securities exchanges such as the NYSE, which is our primary regulator
for financial and operational compliance. These self-regulatory organizations
adopt rules (subject to approval by the SEC) 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. We are registered as a broker-dealer in 48 states, the District of
Columbia and Puerto Rico.
The principal purpose of regulation of broker-dealers is the protection
of customers and the securities markets, rather than protection of creditors and
shareholders of broker-dealers. The regulations to which broker-dealers are
subject cover all aspects of the securities business, including:
o training of personnel,
o sales methods,
o trading practices among broker-dealers,
o uses and safekeeping of customers' funds and securities,
o capital structure of securities firms,
o record keeping,
o fee arrangements,
o disclosure to clients, and
o the conduct of directors, officers and employees.
Additional legislation, changes in rules promulgated by the SEC 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. The SEC, self-regulatory organizations and
state securities and other authorities may conduct administrative proceedings
which can result in censure, fine, cease and desist orders or suspension or
expulsion of a broker-dealer, its officers or its employees. We have not been
the subject of any such administrative proceedings.
As a registered broker-dealer and NASD member organization, we are
required by Federal law to belong to the Securities Investor Protection
Corporation, or SIPC. In the event of the liquidation of a broker-dealer, the
SIPC provides 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. The SIPC is funded through assessments on registered
broker-dealers. In addition, through our clearing agent, we have purchased from
private insurers additional account protection of up to $99.5 million per
customer, 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. Neither
SIPC protection nor the additional protection applies to fluctuations in the
market value of securities.
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We are also authorized by the Municipal Securities Rulemaking Board to
effect transactions in municipal securities on behalf of our customers and have
obtained additional registrations with the SEC and state regulatory agencies
necessary to permit us to engage in certain other activities incidental to our
brokerage business.
Margin lending arranged by us is subject to the margin rules of the
Board of Governors of the Federal Reserve System and the NYSE. Under these
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
maintenance requirements on the amount of securities and cash held in margin
accounts. In addition, these rules, as well as rules of the Chicago Board
Options Exchange, govern the amount of margin customers must provide and
maintain in writing uncovered options.
In 1996, 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. 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 us in
California based upon our status as a WBE.
WE ARE SUBJECT TO NET CAPITAL REQUIREMENTS.
As a registered broker-dealer, we are subject to the SEC's Uniform Net
Capital Rule (Rule 15c3-1). 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 regulatory
net capital may subject a firm to suspension or expulsion by the NYSE and the
NASD, certain punitive actions by the SEC and other regulatory bodies, and
ultimately may require a firm's liquidation.
Regulatory 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 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 SEC prior to and subsequent to withdrawals exceeding certain
sizes. The Net Capital Rule also allows the SEC, under limited circumstances, to
restrict a broker-dealer from withdrawing equity capital for up to 20 business
days.
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We fall within the provisions of Rule 240.15c3-1(a)(1)(ii) promulgated
by the SEC. We have elected to use the alternative method, permitted by the
rule, which requires that we maintain minimum net capital, as defined by the
rule, equal to the greater of $250,000 or 2% of aggregate debit balances arising
from customer transactions, as defined by the rule. 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 % of aggregate debits. At
March 31, 1999, we had net capital of $12.1 million and net capital requirements
of $250,000 under Regulation 240.15c3-1(a)(ii). We maintain net capital in
excess of the SEC Rule 17a-11 requirement.
THERE MAY BE NO PUBLIC MARKET FOR OUR COMMON STOCK.
Until November 1996, there was no public market for our common stock.
In addition, only 2,900,553 shares, or 12.7%, of our outstanding common stock
are currently held by the public. Although our common stock is traded in the
Nasdaq SmallCap Market, there can be no assurance that an active public market
will continue.
FUTURE SALES BY EXISTING SHAREHOLDERS COULD DEPRESS THE MARKET PRICE OF OUR
COMMON STOCK.
There are be approximately 22,800,553 shares of our common stock
outstanding, 19,900,000 of which are owned or controlled by Muriel F. Siebert.
In addition, directors and employees having options to purchase an aggregate of
approximately 109,960 shares of our common stock currently are exercisable. Sale
of a substantial number of shares of common stock in the public market, whether
by the selling shareholders whose shares are covered by this prospectus, Ms.
Siebert or our other shareholders, could adversely affect the prevailing market
price of our common stock. This could also make it more difficult for us to
raise funds through future offerings of our common stock.
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FORWARD LOOKING STATEMENTS
Some of the information in this prospectus contains forward-looking
statements. These statements may be found under "Risk Factors" and "Dividend
Policy." Forward-looking statements typically are identified by use of terms
such as "may," "will," "expect," "anticipate," "estimate" and similar words,
although some forward-looking statements are expressed differently. You should
be aware that our actual results could differ materially from those contained in
the forward-looking statements due to a number of factors, including the
volatile nature of the business in which we operate, lower price levels of
securities, intense competition, risks related to electronic commerce and the
Internet, customer credit risks and risks related to our investment banking
activities. You should also consider carefully the statements under "Risk
Factors" and other sections of this prospectus, which address additional factors
that could cause our actual results to differ from those set forth in the
forward-looking statements.
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares of our common
stock being sold by the selling shareholders pursuant to this prospectus.
DIVIDEND POLICY
To date, we have established a practice of paying quarterly cash
dividends to our shareholders. During 1997, 1998 and 1999, we paid the following
dividends on our common stock:
DECLARATION DATE AMOUNT PER SHARE
December 22, 1997 .............................. $ 0.225
March 16, 1998 ................................. $ 0.225
June 23, 1998 .................................. $ 0.03
September 25, 1998 ............................. $ 0.03
December 30, 1998 .............................. $ 0.04
March 30, 1999 ................................. $ 0.04
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<PAGE>
Muriel F. Siebert, as our majority shareholder, waived her right to
receive the cash dividends described above and has indicated that she intends to
waive her right to receive future cash dividends declared through 1999, if any.
We may continue to pay cash dividends on our common stock, subject to:
o statutory, regulatory and contractual constraints,
o prevailing financial conditions, and
o future earnings.
In considering whether to pay dividends, our Board of Directors will
review our earnings, our capital requirements, our economic forecasts and such
other factors as are deemed relevant. Some portion of our earnings will be
retained to provide capital for the operation and expansion of our business. We
cannot assure you that we will declare or pay any dividends in the future.
PRICE RANGE OF COMMON STOCK
Our common stock trades on the Nasdaq SmallCap Market under the symbol
"SIEB." The high and low sales prices of our common stock reported by the Nasdaq
SmallCap Market during the following periods were:
High Low
First Quarter - 1997 ........................ $ 3.09 $ 2.31
Second Quarter - 1997 ....................... $ 2.38 $ 2.31
Third Quarter - 1997 ........................ $ 2.75 $ 1.31
Fourth Quarter - 1997 ....................... $ 2.25 $ 1.88
First Quarter - 1998 ........................ $ 12.06 $ 2.42
Second Quarter - 1998 ....................... $ 19.00 $ 7.38
Third Quarter - 1998 ........................ $ 13.50 $ 5.75
Fourth Quarter - 1998 ....................... $ 19.00 $ 5.75
First Quarter - 1999 ........................ $ 70.63 $ 8.50
The closing price of our common stock on the Nasdaq SmallCap Market on
June 15, 1999 was $20.25 per share and there were 183 shareholders of record.
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<PAGE>
SELLING SHAREHOLDERS
The following table sets forth information as of June 15, 1999, except
as otherwise noted, with respect to the number of shares of our common stock
beneficially owned or to be acquired by each of the selling shareholders and
assumes that all shares subject to vesting schedules and conditions have vested.
No selling shareholder owns more than one percent of our outstanding common
stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES
OF COMMON STOCK NUMBER OF SHARES OF COMMON STOCK
BENEFICIALLY OWNED OF COMMON STOCK BENEFICIALLY OWNED
SELLING SHAREHOLDER PRIOR TO OFFERING BEING REGISTERED AFTER OFFERING (1)
- ------------------- ----------------- ---------------- ------------------
<S> <C> <C> <C>
Joseph Costello 107,062 107,062 0
Angelo Guerriero 107,062 107,062 0
James Horgan 107,062 107,062 0
Gene R. McHam 64,690 64,690 0
Matthew Shalloo 107,062 107,062 0
Peter Sosnowski 107,062 107,062 0
</TABLE>
- -----------
(1) Assumes that all shares offered by each selling shareholder are sold in
this offering.
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<PAGE>
PLAN OF DISTRIBUTION
The selling shareholders may offer their shares at various times in one
or more transactions on the Nasdaq SmallCap Market, in special offerings,
exchange distributions, secondary distributions, negotiated transactions, or a
combination of these methods. They may sell at market prices at the time of
sale, at prices related to the market price or at negotiated prices. The selling
shareholders may use broker-dealers to sell their shares. If this happens,
broker-dealers will either receive discounts or commissions from the selling
shareholders, or they will receive commissions from purchasers of shares for
whom they acted as agents.
LEGAL MATTERS
The validity of the shares of our common stock offered hereby will be
passed upon for Siebert Financial Corp. by Fulbright & Jaworski L.L.P., New
York, New York.
EXPERTS
The consolidated financial statements incorporated by reference in this
prospectus have been audited by Richard A. Eisner & Company, LLP, independent
auditors, to the extent and for the periods set forth in their reports
incorporated by reference herein and are included in reliance upon such report
given upon the authority of such firm as experts in auditing and accounting.
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