SIEBERT FINANCIAL CORP (SIEB)

ITEM 7. MANAGEMENT’S DISCUSSIONS AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The
following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial
statements and the related notes included in Part II, Item 8 - Financial Statements and Supplementary Data of this Report. In addition
to our historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans,
estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that
could cause or contribute to these differences include those discussed below and elsewhere in this Report, particularly in Part I, Item
1A - Risk Factors.

Overview

We
are a financial services company and provide a wide variety of financial services to our clients. We operate in business lines such as
retail brokerage, investment advisory, insurance, and technology development through our wholly-owned and majority-owned subsidiaries.

Results
in the businesses in which we operate are highly correlated to general economic conditions and, more specifically, to the direction of
the U.S. equity and fixed-income markets. Market volatility, overall market conditions, interest rates, economic, political, and regulatory
trends, and industry competition are among the factors which could affect us, and which are unpredictable and beyond our control. These
factors affect the financial decisions made by market participants who include investors and competitors, impacting their level of participation
in the financial markets. In addition, in periods of reduced financial market activity, profitability is likely to be adversely affected
because certain expenses remain relatively fixed, including salaries and related costs, as well as portions of communications costs and
occupancy expenses. Accordingly, earnings for any period should not be considered representative of earnings to be expected for any other
period.

Financial Overview

In
2024, earnings per share were $0.33, compared to earnings per share of $0.21 in 2023. In 2024, our net revenues were $83.9 million and
net income was $13.3 million, compared to net revenues of $71.5 million and net income of $7.8 million in 2023.

Financial
highlights as of December 31, 2024:

Trends and Key Factors
Affecting our Operations

Market Risk

Market
risk is our risk of loss resulting from the impact of changes in market prices on our trading inventory and investment positions. We have
exposure to market risk primarily through our broker-dealer trading operations. Through our broker-dealer subsidiary, we trade debt obligations
and equity securities and maintain trading inventories to ensure availability of securities to facilitate client transactions. Inventory
levels may fluctuate daily as a result of client demand. Our primary market risks relate to interest rates and equity prices. Equity risk
results from changes in prices of equity securities, affecting the value of the equity securities and other instruments that derive their
value from a particular stock.

We
may enter into underwriting commitments and, as a result, we may be subject to market risk on any unsold securities issued in the offerings
to which we are committed. Risk exposure is controlled by limiting our participation, the transaction size, or through the syndication
process.

Interest Rates

We are exposed to market risk
from changes in interest rates. Such changes in interest rates primarily impact revenue from interest, marketing, and distribution fees.
We primarily earn interest, marketing and distribution fees from margin interest charged on clients’ margin balances, interest on
cash and securities segregated for regulatory purposes, and distribution fees from money market mutual funds in clients’ accounts.
Securities segregated for regulatory purposes consist solely of U.S. government securities. If prices of U.S. government securities within
our portfolio decline, we anticipate the impact to be temporary as we intend to hold these securities to maturity. We seek to mitigate
this risk by managing the average maturities of our U.S. government securities portfolio and setting risk parameters for securities owned,
at fair value.

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The following table presents
simulated changes to net interest revenue over the next 12 months beginning December 31, 2024 and 2023 of a gradual increase or decrease
in market interest rates relative to prevailing market rates at the end of each reporting period:

The difference in our simulated
incremental increases and decreases in the market interest rates as of December 31, 2024 compared to 2023 is primarily due to an increase
in the proportion of segregated cash to segregated securities and a decrease in the proportion of margin debit balances to cash credit
balances.

Technology Initiatives

At the end of 2023, we hired
new technology personnel, changed our primary software development vendor, and made investments in technology development.

Some of these technology investments
include the development of a Siebert mobile trading application, online platform for our retail customer base and corporate services clients,
as well as upgrades to our technological and operational infrastructure to support these platforms and future growth. We believe that
these ongoing investments in technology will be key to meeting the needs of our retail customers, correspondent clearing, corporate services
as well as expand into new markets and demographics.

Client Account and Activity Metrics

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

Client Account Metrics – Retail Customers

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Consolidated Statements of Operations and Financial
Condition

Consolidated Statements of Operations for
the Years Ended December 31, 2024 and 2023

Revenue

Commissions and fees for the
year ended December 31, 2024 were $9,615,000 and increased by $2,339,000 from the corresponding
period in the prior year, primarily due to strong market conditions.

Interest, marketing and distribution
fees for the year ended December 31, 2024 were $32,407,000 and increased by $2,830,000 from the
corresponding period in the prior year primarily due to an increase in interest income received on U.S. government securities and
bank deposits.

Principal transactions and
proprietary trading for the year ended December 31, 2024 were $14,616,000 and increased by $1,522,000
from the corresponding period in the prior year, primarily due to the factors discussed below.

The
increase in realized and unrealized gain on primarily riskless principal transactions was primarily due to market conditions. The decrease
in unrealized gain on our portfolio of U.S. government securities was due to the maturity of certain U.S. government securities and a
decrease in investment in U.S. government securities based on market yields and cash needs.

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

Market making for the year
ended December 31, 2024 was $2,255,000 and increased by $951,000 from the corresponding period in
the prior year, primarily due to strong equity markets.

Stock borrow / stock loan
for the year ended December 31, 2024 was $19,249,000 and increased by $3,077,000 from the corresponding
period in the prior year, primarily due to a growth in stock locate services.

Advisory fees for the year
ended December 31, 2024 were $2,369,000 and increased by $441,000 from the corresponding period
in the prior year, primarily due to growth in platform assets.

Other income for the year
ended December 31, 2024 was $3,390,000 and increased by $1,227,000 from the corresponding period
in the prior year, primarily due to fees related to an increase in maintenance fees during the current year.

Operating Expenses

Employee compensation and
benefits for the year ended December 31, 2024 were $43,999,000 and increased by $12,063,000 from
the corresponding period in the prior year, primarily due to an increase in commission payouts
and executive compensation.

Clearing
fees, including execution costs for the year ended December 31, 2024 were $1,607,000 and decreased by $65,000 from the corresponding period
in the prior year.

Technology and communications
expenses for the year ended December 31, 2024 were $3,940,000 and increased by $576,000 from the
corresponding period in the prior year, primarily due to an expansion of technological infrastructure.

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Other general and administrative
expenses for the year ended December 31, 2024 were $4,488,000 and increased by $78,000 from the
corresponding period in the prior year.

Data processing expenses for
the year ended December 31, 2024 were $3,200,000 and decreased by $36,000 from the corresponding
period in the prior year.

Rent and occupancy expenses
for the year ended December 31, 2024 were $1,631,000 and decreased by $242,000 from the corresponding
period in the prior year, primarily due to a discontinued rent expense related to the temporary Miami office.

Professional fees for the
year ended December 31, 2024 were $5,578,000 and increased by $1,119,000 from the corresponding
period in the prior year, primarily due to an increase in legal and accounting fees offset by a decrease in consulting services.

Depreciation and amortization
expenses for the year ended December 31, 2024 were $1,380,000 and decreased by $640,000 from the
corresponding period in the prior year, primarily due to the write off of development related
to integration of a technology platform that occurred in the prior year.

Interest expense for the year
ended December 31, 2024 was $262,000 and decreased by $1,000 from the corresponding period in the
prior year.

Advertising
and promotion expenses for the year ended December 31, 2024 were $348,000 and increased by $193,000 from the corresponding period in the
prior year, primarily due to an increase in marketing initiatives in 2024.

Non-Operating
Income (Loss)

The earnings of equity method
investment in related party for the year ended December 31, 2024 was $0 and decreased by $111,000
from the corresponding period in the prior year, primarily due to the exit of our investment in Tigress in the third quarter of 2023.

The
impairment of investments for the year ended December 31, 2024 was $0 and decrease by $1,035,000 from the corresponding period in the
prior year, primarily due to the impairment of our investment in a technology provider of a trading platform and the impairment of our
investment in Tigress occurring in 2023.

Transaction termination costs
for the year ended December 31, 2024 was $0 and decreased by $5,943,000 from the corresponding period in the prior year due to costs associated
with the termination of the Kakaopay transaction in 2023.

Provision For (Benefit From) Income Taxes

The provision for income taxes
for the year ended December 31, 2024 was $4,165,000 and increased by $750,000 from the corresponding period in the prior year. The change
from the corresponding period in the prior year is primarily due to increased profitability year over year. Refer to Note 17 – Income
Taxes for additional detail.

Net Income (Loss)
Attributable to Noncontrolling Interests

As
further discussed in Note 2 – Summary of Significant Accounting Policies, we consolidate RISE’s financial results into our
consolidated financial statements and reflect the portion of RISE not held by Siebert as
a noncontrolling interests in our consolidated financial statements. The
net income attributable to noncontrolling interests for the year ended December 31, 2024 was $17,000, and decreased by $1,000 from the
corresponding period in the prior year.

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Consolidated Statements of Financial Condition
as of December 31, 2024 and 2023

Assets

Assets as of December 31,
2024 were $519,668,000 and decreased by $282,132,000 from December 31, 2023, primarily due to a
decrease in securities borrowed and cash and securities segregated, partially offset by an increase in cash and cash equivalents.

Liabilities

Liabilities as of December
31, 2024 were $434,576,000 and decreased by $296,515,000 from December 31, 2023, primarily due to
a decrease in securities loaned and payables to customers.

Liquidity and Capital Resources

Overview

As
of December 31, 2024, a significant portion of our assets were liquid in nature, providing us with flexibility in financing our business.
A significant portion of our assets not held by customers or used for stock borrow / stock loan consisted primarily of cash and cash equivalents,
securities owned, at fair value, which are marked-to-market daily, and receivables from and deposits with broker-dealers and clearing
organizations.

We
expect to use our available cash, cash equivalents, and potential future borrowings under our debt agreements and potential issuance of
new debt or equity, to support and invest in our core business, including investing in new ways to serve our customers, potentially seeking
strategic acquisitions to leverage existing capabilities, and for general capital needs (including capital, deposit, and collateral requirements
imposed by regulators and SROs).

Based
on our current level of operations, we believe our available cash, available lines of credit, overall access to capital markets, and cash
provided by operations will be adequate to meet our current liquidity needs for the foreseeable future. As of the date of this Report,
other than the items detailed in the section below, there are no known or material events that would require us to use large amounts of
our liquid assets to cover expenses.

Kakaopay

The
net capital infusion from Kakaopay to Siebert from the First Tranche was approximately $14.8 million after the issuance cost. This capital
is currently being used to enhance our regulatory capital and is primarily invested in U.S. government securities and is in the line item
“Securities owned, at fair value” in the consolidated statements of financial condition. Refer to Note 6 – Kakaopay
Transaction for further detail.

Cash and Cash Equivalents

Our
cash and cash equivalents were $32.6 million and $5.7 million as of December 31, 2024 and 2023, respectively.

Credit Agreement

On
August 15, 2024, we entered into the Credit Agreement with East West Bank providing a $20 million revolving credit facility, which offers
substantial financial flexibility to support our strategic initiatives. This credit facility allows the Company to fund acquisitions,
execute stock buybacks, and meet general corporate needs up to $10 million, ensuring access to capital for both growth and operational
purposes. The two-year term of the Credit Agreement, combined with a competitive interest rate structure that is tied to either the one-month
Term SOFR plus 3.15% or a minimum of 7.50%, provides a stable and predictable financing source. The personal guarantees provided by key
executives, John J. Gebbia and Gloria E. Gebbia, and their trust, further strengthen the Company’s borrowing position and help secure
favorable terms.

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BMO Credit Agreement

On
November 22, 2024, MSCO entered into a Credit Agreement (the “BMO Credit Agreement”) with BMO Harris Bank (“BMO Harris”).
The BMO Credit Agreement provides for a revolving credit facility of up to $20,000,000. We may use any borrowings under the BMO Credit
Agreement to finance NSCC Deposit Requirements (other than an Adequate Assurance Deposit) and withdrawals from a Reserve Account. As part
of the agreement, we entered into a Parent Guaranty agreement guaranteeing repayment of any debt issued to MSCO.

Borrowings under the BMO Credit Agreement will
bear interest on the outstanding daily balance at a rate of interest per annum equal 2.5% plus the greater of: (a) Term SOFR for such
day plus 0.11448% and (b) Federal Funds Target Range – Upper Limit and (c) 0.25%. The annual commitment fee is equal to one half
of one percent (0.50%) of the average daily unused portion of the commitment of $20,000,000. The BMO Credit Agreement contains customary
affirmative covenants and negative covenants and requires MSCO maintain minimum total regulatory capital of $45,000,000, excess net capital
of 20,000,000, assets to total regulatory capital ratio of not more than 5.0 to 1.0, and a minimum liquidity ratio of not less than 1.0.

We satisfied its condition precedent to deliver
a legal option to BMO Harris on December 18, 2024.

Debt Agreements

We
have $4.2 million outstanding on our mortgage with East West Bank and an unutilized line of credit for short term overnight demand borrowing
of up to $25 million with BMO Harris as of December 31, 2024. As of December 31, 2024, we were in compliance with all covenants related
to our debt agreements.

Cash Requirements

The
following table summarizes our short and long-term material cash requirements as of December 31, 2024.

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

MSCO
is subject to the Uniform Net Capital Rules of the SEC (Rule 15c3-1) and the Customer Protection Rule (15c3-3) of the Exchange Act and
maintains capital and segregated cash reserves in excess of regulatory requirements. Requirements under these regulations may vary; however,
MSCO has adequate reserves and contingency funding plans in place to sufficiently meet any regulatory requirements. In addition to net
capital requirements, as a self-clearing broker-dealer, MSCO is subject to cash deposit and collateral requirements with clearing houses,
such as the DTCC and OCC, which may fluctuate significantly from time to time based upon the nature and size of clients’ trading
activity and market volatility. RISE, as a member of FINRA, is subject to the SEC Uniform Net Capital Rule 15c3-1 and the corresponding
regulatory capital requirements.

MSCO can transfer funds to
Siebert as long as it maintains its liquidity and regulatory capital requirements. RISE can transfer funds to its shareholders, of which
Siebert is entitled to its proportional ownership interest, as long as RISE maintains its liquidity and regulatory capital requirements.
For the years ended December 31, 2024 and 2023, MSCO and RISE had sufficient net capital to meet their respective liquidity and regulatory
capital requirements. Refer to Note 18 – Capital Requirements for more detail on our capital requirements.

Cash Flows

Cash provided by and used
in operating activities consisted of net income (loss) adjusted for certain non-cash items. Net operating assets and liabilities at any
specific point in time are subject to many variables, including variability in customer activity, the timing of cash receipts and payments,
and vendor payment terms. The total changes in our consolidated statements of cash flows, especially our operating cash flow, are not
necessarily indicative of the ongoing results of our business as we have customer assets and liabilities on our consolidated statements
of financial condition.

For the year ended December
31, 2024, cash used in operating activities increased by $14.9 million compared to 2023, which was primarily driven by the inclusion of
cash and securities segregated for regulatory purposes, which were previously not presented in the operating section. The increase was
further impacted by the outflows related to the Kakao settlement and contract termination payments, as well as a decrease in payables
to customers and securities loaned. These outflows were partially offset by inflows from securities borrowed, receivables from customers,
and other working capital adjustments.

For the year ended December
31, 2024, cash used in investing activities increased by $3.5 million compared to 2023, which was primarily driven by the acquisition
of GE as well as certain development projects related to our Retail Platform in 2024.

For the year ended December
31, 2024, we had a cash outflow of $0.1 million from financing activities, compared to a net cash inflow of $13.0 million in 2023, which
was primarily driven by the issuance of the Company’s common stock related to the transaction with Kakaopay in 2023. Refer to Note
6 – Kakaopay Transaction for additional detail.

Long Term Contracts

Effective
August 1, 2021, MSCO entered into an amendment to its clearing agreement with NFS that, among other things, extends the term of their
arrangement for an additional four-year period commencing on August 1, 2021 and ending July 31, 2025. As part of this agreement, we received
a one-time business development credit of $3 million, and NFS will pay us four annual credits of $100,000 over the term of the agreement.
The amendment also provides for an early termination fee; however, as of December 31, 2024, we do not expect to terminate the contract
with NFS before the end of the contract term. Refer to Note 16 – Deferred Contract Incentive and Note 21 – Commitments, Contingencies
and Other for additional detail.

Effective
June 2023, MSCO entered into an amendment to its service agreement with Broadridge Securities Processing Solutions, LLC that, among other
things, extends the term of their arrangement for a five-year period ending June 2028, with an option to terminate after three years.
The total minimum expense for this arrangement is estimated at approximately $1.2 million over the duration of the contract.

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Off-Balance Sheet Arrangements

We
enter into various transactions to meet the needs of customers, conduct trading activities, and manage market risks and are, therefore,
subject to varying degrees of market and credit risk. In the normal course of business, our customer activities involve the execution,
settlement, and financing of various customer securities transactions. These activities may expose us to off-balance sheet risk in the
event the customer or other broker is unable to fulfill their contracted obligations and we are forced to purchase or sell the financial
instrument underlying the contract at a loss. There were no material losses for unsettled customer transactions for the years ended December
31, 2024 and 2023. Refer to Note 19 – Financial Instruments with Off-Balance Sheet Risk for additional detail.

Uncertain Tax Positions

We account for uncertain tax positions in accordance with the authoritative
guidance issued under FASB ASC Subtopic 740-10, which addresses the determination of whether tax benefits claimed or expected to be claimed
on a tax return should be recorded in the consolidated financial statements. We may recognize the tax benefit from an uncertain tax position
only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical
merits of the position. The tax benefits recognized in the consolidated financial statements from such position should be measured based
on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. FASB ASC Subtopic
740-10 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure requirements

We recognize interest and
penalties related to unrecognized tax benefits on the provision for income taxes line in the statements of operations. Accrued interest
and penalties would be included on the related tax liability line in the statements of financial condition.

As of both December 31, 2024
and 2023, the Company recorded an uncertain tax position of $1,354,000 and $1,405,000, respectively, related to various tax matters, which
is included in the line item “Taxes payable” in the statements of financial condition.

Critical Accounting Policies and Estimates

We generally follow accounting
policies standard in the brokerage industry and believe that our policies appropriately reflect our financial position and results of
operations. Our management team makes significant estimates that affect the reported amounts of assets, liabilities, and expenses, and
the related disclosure of contingent assets and liabilities included in the consolidated financial statements. The estimates relate primarily
to expense items in the normal course of business as to which we receive no confirmations, invoices, or other documentation, at the time
the books are closed for a period. We use our best judgment, based on our knowledge of expenses incurred, to estimate the amount of such
expenses. We are not aware of any material differences between the estimates used in closing our books for the periods presented and the
actual amounts of expenses incurred when we subsequently receive the actual confirmations, invoices or other documentation.

Our consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.
GAAP”). The preparation of our consolidated financial statements requires us to make judgments and estimates that may have a significant
impact on our financial results. We believe that the critical accounting policies listed below are particularly subject to management’s
judgments and estimates and could materially affect our results of operations and financial position. Refer to Note 2 – Summary
of Significant Accounting Policies for additional detail on our significant accounting policies.

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

We account for income taxes
under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the consolidated financial statements.
Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the consolidated
financial statements and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences
are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period
that includes the enactment date.

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We recognize deferred tax
assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider
all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable
income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize deferred taxes in
the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would
reduce the provision for income taxes.

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

We recognize interest and
penalties related to unrecognized tax benefits on the provision for income taxes line in the consolidated statements of operations. Accrued
interest and penalties would be included on the related tax liability line in the consolidated statements of financial condition.

Disregarded entities and income tax treatment

Starting in 2024, both MSCO
and SNXT are single member limited liability companies that will be treated as disregarded entities for tax purposes. As such, both MSCO
and SNXT will no longer be subject to direct taxation and will be disregarded by the relevant tax authorities. The guidance in Accounting
Standards Update 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes specifies that an entity is not required
to allocate income tax provision to a legal entity that is both not subject to tax and disregarded by the taxing authority, but an entity
may elect to do so. MSCO and SNXT are not making the available election to allocate income taxes. Accordingly, on a prospective basis,
MSCO and SNXT will no longer record current or deferred income taxes.

Recent Accounting Pronouncements

Refer
to Note 2 – Summary of Significant Accounting Policies for information regarding new Accounting
Standards Updates (“ASU”s) issued by the FASB.

ITEM 7. MANAGEMENT’S DISCUSSIONS AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The
following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial
statements and the related notes included in Part II, Item 8 - Financial Statements and Supplementary Data of this Report. In addition
to our historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans,
estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that
could cause or contribute to these differences include those discussed below and elsewhere in this Report, particularly in Part I, Item
1A - Risk Factors.

Overview

We
are a financial services company and provide a wide variety of financial services to our clients. We operate in business lines such as
retail brokerage, investment advisory, insurance, and technology development through our wholly-owned and majority-owned subsidiaries.

Results
in the businesses in which we operate are highly correlated to general economic conditions and, more specifically, to the direction of
the U.S. equity and fixed-income markets. Market volatility, overall market conditions, interest rates, economic, political, and regulatory
trends, and industry competition are among the factors which could affect us and which are unpredictable and beyond our control. These
factors affect the financial decisions made by market participants who include investors and competitors, impacting their level of participation
in the financial markets. In addition, in periods of reduced financial market activity, profitability is likely to be adversely affected
because certain expenses remain relatively fixed, including salaries and related costs, as well as portions of communications costs and
occupancy expenses. Accordingly, earnings for any period should not be considered representative of earnings to be expected for any other
period.

Trends and Key Factors
Affecting our Operations

Interest Rates

We are exposed to market risk
from changes in interest rates. Such changes in interest rates primarily impact revenue from interest, marketing, and distribution fees.
We primarily earn interest, marketing and distribution fees from margin interest charged on clients’ margin balances, interest on
cash and securities segregated for regulatory purposes, and distribution fees from money market mutual funds in clients’ accounts.
Securities segregated for regulatory purposes consist solely of U.S. government securities. If prices of U.S. government securities within
our portfolio decline, we anticipate the impact to be temporary as we intend to hold these securities to maturity. We seek to mitigate
this risk by managing the average maturities of our U.S. government securities portfolio and setting risk parameters for securities owned,
at fair value.

Technology Initiatives

During 2022 and 2023 we terminated
agreements with prior technology vendors that were primarily developing our Retail Platform, refer to Note 7 - Prepaid Service Contract
and Note 10 – Software, Net for further detail. During 2023, we reassessed our technology needs and strategic direction and hired
new technology personnel, changed our primary software development vendor, and made additional investments in technology development related
to our Retail Platform and additional technology services for our customers.

We believe these changes will
be key to creating a Retail Platform and additional technology services for the next generation of retail customers, correspondent clearing,
as well as the overall growth of our business. The termination of agreements with our prior technology vendors had minimal impact on our
current operations.

Recent
Developments

Transaction
with Kakaopay

On
April 27, 2023, we entered into the First Tranche Stock Purchase Agreement with Kakaopay, a company established under the Laws of the
Republic of Korea, pursuant to which we issued to Kakaopay 8,075,607 shares of our common stock at a per share price of Two Dollars Fifteen
Cents ($2.15), which represented at the time of issuance 19.9% of our outstanding equity securities on a fully diluted basis (the “First
Tranche”). Concurrent with the execution of the First Tranche Stock Purchase Agreement, Siebert and Kakaopay entered into a Stock
Purchase Agreement (the “Second Tranche Stock Purchase Agreement”), pursuant to which we agreed to issue to Kakaopay additional
shares at a per share price of Two Dollars Thirty Five Cents ($2.35), that would have resulted in Kakaopay owning 51% of the outstanding
equity securities of Siebert on a fully diluted basis.

Siebert 2023 Form-10K 20

The
First Tranche closed on May 18, 2023 and, in connection therewith, we entered into the Registration Rights Agreement and a Stockholders’
Agreement (the “Original Stockholders’ Agreement”) with Kakaopay.

On
December 19, 2023, we entered into a Termination and Settlement Agreement (the “Settlement Agreement”) with Kakaopay, Kakaopay
Securities Corp. (“Kakaopay Securities”), MSCO and certain Gebbia parties named therein. Under the Settlement Agreement, the
parties mutually agreed to terminate the Second Tranche Stock Purchase Agreement. The parties terminated the Second Tranche Stock Purchase
Agreement after reaching a compromise regarding their disagreement over, among other things, the occurrence of a “Purchaser Material
Adverse Effect” in the Second Tranche Stock Purchase Agreement, and the ability of the closing conditions in the Second Tranche
Stock Purchase Agreement to be satisfied. Certain related agreements were also terminated, including the Foreign Broker-Dealer Fee Sharing
Agreement, dated April 27, 2023, between MSCO and Kakaopay Securities, and the Support and Restrictive Covenant Agreements by certain
Gebbia stockholders, each dated April 27, 2023. The parties also agreed (i) to amend and restate the Original Stockholders’ Agreement
as described below, (ii) that Siebert will pay Kakaopay a fee of $5 million (payable in ten quarterly installments beginning on March
29, 2024) and (iii) to customary releases. Kakaopay continues to own the 8,075,607 shares of our common stock that it purchased from Siebert
in May 2023, and Kakaopay agreed to certain standstill restrictions with respect to its ownership of our common stock, subject to certain
conditions.

In
connection with the foregoing, on December 19, 2023, we entered into an Amended and Restated Stockholders’ Agreement (the “A&R
Stockholders’ Agreement”) with Kakaopay, certain stockholders listed on Schedule I thereto and John J. Gebbia (in his individual
capacity and as representative of the Gebbia Stockholders (as defined therein)) to amend and restate the Original Stockholders’
Agreement.

Under
the A&R Stockholders’ Agreement, Kakaopay is entitled to nominate one director to our board of directors (the “Board”)
and the Gebbia Stockholders are entitled to designate six directors to the Board, in each case, subject to certain conditions. Kakaopay
and each Gebbia Stockholder agreed to vote all shares of common stock held by such stockholder to elect directors nominated by Kakaopay
and Gebbia Stockholders.

The
A&R Stockholders’ Agreement also, among other things, provides that certain specified events, including certain significant
merger and acquisition transactions and related party transactions, stock exchange delistings, amendments to organizational documents
that materially and disproportionally prejudice Kakaopay and certain equity issuances, will require the prior written consent of two-thirds
of the Board, including at least one Kakaopay director and one Gebbia director. The A&R Stockholders’ Agreement also provides
Siebert and the non-transferring party a right of first refusal if Kakaopay or any of the Gebbia Stockholders desires to accept a bona
fide offer to transfer all or any portion of its or their shares, subject to certain exceptions, and includes tag-along rights in favor
of Kakaopay and the Gebbia Stockholders. The A&R Stockholders’ Agreement will terminate at such time as either the Gebbia Stockholders,
in the aggregate, or Kakaopay, hold less than five percent of the issued and outstanding Common Stock on a fully-diluted basis.

We
incurred $5,943,000 associated with the termination of the transaction with Kakaopay which is recorded in the line item “Transaction
termination costs” in the consolidated statements of operations. This amount consisted of the $5,000,000 fee to Kakaopay (payable
in ten quarterly installments beginning on March 29, 2024) adjusted for the present value of the payments, as well as legal and other
consulting costs associated with the transaction of approximately $1,481,000.

RISE

RISE
was an institutional brokerage for which all its revenue producing customers transitioned to other prime service providers by the first
quarter of 2022. Net revenue from customers that have transitioned to other prime service providers was approximately $0.3 million for
the year ended December 31, 2022. During 2022, there were various transactions involving the ownership of RISE. Refer to Note 3 –
Transactions with Tigress and Hedge Connection and Note 4 – RISE for additional detail.

As
part of this transition, Siebert had an agreement with JonesTrading Institutional Service, LLC (“JonesTrading”) whereby JonesTrading
pays RISE a percentage of the net revenue produced by certain historical clients of RISE less any related expenses. For the years ended
December 31, 2023 and 2022, this agreement resulted in income of $265,000 and $137,000, respectively, which is recorded in the line item
“Other income” in the consolidated statements of operations.

As
a result of the transactions described in Note 3 – Transactions with Tigress and Hedge Connection, Siebert’s ownership in
RISE increased to 68% and, therefore, Siebert continued to consolidate RISE from October 18, 2022 through December 31, 2022. There have
been no further transactions completed by Siebert related to RISE’s membership interests for the year ended December 31, 2023.

Siebert 2023 Form-10K 21

Transactions with
Tigress and Hedge Connection

On November 16, 2021, we purchased
24% of the outstanding membership interests in Tigress, a disabled and woman-owned financial services firm, in exchange for 24% of RISE
and shares of Siebert common stock. On January 21, 2022, we purchased 20% of Hedge Connection, a woman-owned fintech company, and an option
to acquire the remaining interest in Hedge Connection in exchange for consideration of $600,000 and 3.33% of RISE.

As part of these transactions,
Tigress’ founder, Cynthia DiBartolo, continued as CEO of Tigress, and assumed the position as CEO of RISE. Gloria E. Gebbia, one
of Siebert’s and RISE’s directors, assumed the position of Chief Impact Officer at RISE. Ms. DiBartolo was appointed to Siebert’s
and RISE’s Board of Directors and Ms. Gebbia was appointed to Tigress’ Board of Directors. In addition, Lisa
Vioni, founder of Hedge Connection, provided RISE with the right to appoint one director to the Board of Directors of Hedge Connection,
and Ms. Vioni was appointed to the Board of Directors of RISE as well as to the position of President of RISE Prime – Capital Introduction,
a division of RISE.

Based upon the strategic direction
of these ventures, management of the respective businesses decided to unwind the original transactions with Siebert, RISE, Hedge Connection
and Tigress. As a result, we exchanged our 7% ownership of Tigress for all of Tigress’ ownership of RISE. We also entered into an
agreement with Hedge Connection whereby we re-conveyed 20% of the common stock of Hedge Connection and the related option to acquire 100%
of Hedge Connection in exchange for 3.17% of RISE and the cancellation of Siebert’s note payable to Hedge Connection.

As
part of these agreements, Ms. DiBartolo and Ms. Vioni resigned from their respective positions within Siebert and RISE. Gloria E. Gebbia
also resigned from her position within Tigress.

The
financial impact of the transaction with Hedge Connection was a one-time loss of $719,000 for the year ended December 31, 2022, which
is in the line item “Loss on sale of equity method investment in related party” on the consolidated statements of operations.
The Company recognized impairment charges of its investment in Tigress of approximately $185,000 and $4,015,000 during the years ended
December 31, 2023 and 2022, respectively, which are in the line item “Impairment of investments” on the consolidated statements
of operations. Refer to Note 3 – Transactions with Tigress and Hedge Connection for further detail on the terms and accounting treatment
of these transactions.

Client Account and Activity Metrics

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

Client Account Metrics – Retail Customers

Account Growth Initiatives

During 2023, our management
team engaged in several account growth initiatives that led to significant growth in our retail customer accounts from 2022. The primary
drivers of this growth were related to a partnership with NFS as well as new retail accounts from corporate services.

Siebert 2023 Form-10K 22

Consolidated Statements of Operations and Financial
Condition

Consolidated Statements of Operations for
the Years Ended December 31, 2023 and 2022

Revenue

Commissions and fees for the
year ended December 31, 2023 were $7,541,000 and increased by $201,000 from the corresponding period
in the prior year, primarily due to market conditions.

Interest, marketing and distribution
fees for the year ended December 31, 2023 were $29,577,000 and increased by $12,343,000 from the
corresponding period in the prior year primarily due to rising interest rates that resulted in an increase in margin interest income and
interest income received on U.S. government securities and bank deposits.

Principal transactions and
proprietary trading for the year ended December 31, 2023 were $13,094,000 and increased by $9,351,000
from the corresponding period in the prior year, primarily due to the factors discussed below.

The
increase in realized and unrealized gain on primarily riskless principal transactions was primarily due to market conditions. The increase
in unrealized gain on our portfolio of U.S. government securities was due to the following. We invested in 1-year treasury bills and 2-year
treasury notes in order to enhance our yield on excess 15c3-3 deposits. During 2022, there was an increase in U.S. government securities
yields, which created an unrealized loss on our U.S. government securities portfolio. In 2023, we recorded the reversal of the unrealized
loss resulting in a realized and unrealized gain due to the securities coming closer to maturity, the latest maturity being April 2025.
We continually invest in U.S. government securities based on market yields and cash needs.

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

Market making for the year
ended December 31, 2023 was $1,304,000 and decreased by $1,139,000 from the corresponding period
in the prior year, primarily due to market conditions.

Stock borrow / stock loan
for the year ended December 31, 2023 was $16,172,000 and increased by $1,654,000 from the corresponding
period in the prior year, primarily due to the growth of stock locate and securities lending businesses.

Advisory fees for the year
ended December 31, 2023 were $1,928,000 and increased by $66,000 from the corresponding period in
the prior year.

Other income for the year
ended December 31, 2023 was $1,898,000 and decreased by $1,064,000 from the corresponding period
in the prior year, primarily due to the termination of consulting fee income from a technology vendor.

Operating Expenses

Employee compensation and
benefits for the year ended December 31, 2023 were $31,936,000 and increased by $3,202,000 from
the corresponding period in the prior year, primarily due to an increase in commission payouts and incentive compensation.

Clearing
fees, including execution costs for the year ended December 31, 2023 were $1,672,000 and decreased by $471,000 from the corresponding
period in the prior year, primarily due to the elimination of RISE clearing and execution charges.

Technology and communications
expenses for the year ended December 31, 2023 were $3,364,000 and decreased by $1,107,000 from the
corresponding period in the prior year, primarily due to a decrease in technology costs related to RISE as well as a decrease in costs
related to an agreement with a technology vendor that was terminated in 2022.

Other general and administrative
expenses for the year ended December 31, 2023 were $4,410,000 and increased by $400,000 from the
corresponding period in the prior year, primarily due to an increase in travel expenses as well as expense primarily related to the Miami
office building.

Siebert 2023 Form-10K 23

Data processing expenses for
the year ended December 31, 2023 were $3,236,000 and increased by $67,000 from the corresponding
period in the prior year.

Rent and occupancy expenses
for the year ended December 31, 2023 were $1,873,000 and decreased by $82,000 from the corresponding
period in the prior year, primarily due to the elimination of certain leases in 2023.

Professional fees for the
year ended December 31, 2023 were $4,459,000 and increased by $1,257,000 from the corresponding
period in the prior year, primarily due to an increase in board of director compensation, executive officer compensation, as well as other
consulting costs.

Depreciation and amortization
expenses for the year ended December 31, 2023 were $2,020,000 and increased by $1,025,000 from the
corresponding period in the prior year, primarily due to the write-off of certain technology assets in 2023.

Interest expense for the year
ended December 31, 2023 was $263,000 and decreased by $177,000 from the corresponding period in
the prior year, primarily due to the elimination in interest related to notes payable at the end of 2022.

Advertising
and promotion expenses for the year ended December 31, 2023 were $155,000 and decreased by $388,000 from the corresponding period in the
prior year, primarily due to a decrease in promotional costs for various marketing initiatives.

Non-Operating
Income (Loss)

The earnings of equity method
investment in related party for the year ended December 31, 2023 was $111,000 and increased by $107,000
from the corresponding period in the prior year, primarily due to an increase in our proportional income from our investment in Tigress.

The
impairment of investments for the year ended December 31, 2023 was a loss of $1,035,000 and decreased by $2,980,000 from the corresponding
period in the prior year, primarily due to the impairment of our investment in Tigress occurring in 2022, partially offset by the impairment
in 2023 of our investment in a technology provider of a trading platform (“Trading Technology Provider”).

Loss on sale of equity method
investment in related party for the year ended December 31, 2023 was $0 and decreased by $719,000 from the corresponding period in the
prior year due to our loss on the transactions between Siebert, RISE, Hedge Connection and Tigress in 2022.

Transaction termination costs
for the year ended December 31, 2023 was $5,943,000 and increased by $5,943,000 from the corresponding period in the prior year due to
costs associated with the termination of the Kakaopay transaction.

Provision For (Benefit From) Income Taxes

The provision for income taxes
for the year ended December 31, 2023 was $3,415,000 and increased from the benefit for income taxes by $4,715,000 from the corresponding
period in the prior year. The change from the corresponding period in the prior year is primarily due to substantial increase in pre-tax
earnings for the year ended December 31, 2023. Refer to Note 18 – Income Taxes for additional detail.

Net Income (Loss)
Attributable to Noncontrolling Interests

As
further discussed in Note 2 – Summary of Significant Accounting Policies, we consolidate RISE’s financial results into our
consolidated financial statements and reflect the portion of RISE not held by Siebert as
a noncontrolling interests in our consolidated financial statements. The
net income attributable to noncontrolling interests for the year ended December 31, 2023 was $18,000, and increased by $1,018,000 from
the corresponding period in the prior year, primarily due to expenses in RISE in 2022 associated with the exiting of the prime brokerage
business.

Siebert 2023 Form-10K 24

Consolidated Statements of Financial Condition
as of December 31, 2023 and 2022

Assets

Assets as of December 31,
2023 were $801,800,000 and increased by $73,752,000 from December 31, 2022, primarily due to an
increase in securities borrowed, receivables from customers, and securities owned, at fair value, partially offset by a decrease in cash
and cash equivalents.

Liabilities

Liabilities as of December
31, 2023 were $731,091,000 and increased by $52,963,000 from December 31, 2022, primarily due to
an increase in securities loaned partially offset by a decrease in payables to customers and payables to non-customers.

Liquidity and Capital Resources

Overview

We
expect to use our available cash, cash equivalents, and potential future borrowings under our debt agreements and potential issuance of
new debt or equity, to support and invest in our core business, including investing in new ways to serve our customers, potentially seeking
strategic acquisitions to leverage existing capabilities, and for general capital needs (including capital, deposit, and collateral requirements
imposed by regulators and SROs). Based on our current level of operations, we believe our available cash, available lines of credit, overall
access to capital markets, and cash provided by operations will be adequate to meet our current liquidity needs for the foreseeable future.
As of the date of this Report, there are no known or material events that would require us to use large amounts of our liquid assets to
cover expenses.

Kakaopay

The
net capital infusion from Kakaopay to Siebert from the First Tranche was approximately $14.8 million after the issuance cost. This capital
is currently being used to enhance our regulatory capital, and is primarily invested in U.S. government securities and is in the line
item “Securities owned, at fair value” on the consolidated statements of financial condition.

Cash and Cash Equivalents

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

Debt Agreements

We
have a $4.3 million mortgage with East West Bank and an unutilized line of credit for short term overnight demand borrowing of up to $25
million with BMO Harris as of December 31, 2023. For the year ended December 31, 2023, we paid off our $2.7 million loan outstanding with
East West Bank. As of December 31, 2023, we were in compliance with all covenants related to our debt agreements.

Cash Requirements

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

Siebert 2023 Form-10K 25

Shelf Registration
Statement

On
February 18, 2022, we filed a shelf registration statement on Form S-3 that was declared effective on March 2, 2022 by the SEC for the
potential offering, issuance and sale by us of up to $100.0 million of our common stock, preferred stock, warrants to purchase our common
stock and/or preferred stock, units consisting of all or some of these securities and subscription rights to purchase all or some of these
securities. However, since we filed this Report after its scheduled due date, we no longer satisfy the eligibility requirements for use
of registration statements on Form S-3, which requires that we file in a timely manner all reports required to be filed during the prior
twelve calendar months. As a result, we have suspended use of the shelf registration statement.

At the Market Offering

On
May 27, 2022, we entered into a Capital on DemandTM Sales Agreement with JonesTrading as agent, pursuant to which we may offer
and sell, from time to time through JonesTrading, shares of our common stock having an aggregate offering amount of up to $9.6 million
under our shelf registration statement on Form S-3. For the years ended December 31, 2023 and 2022, we did not sell any shares pursuant
to this Sales Agreement. Refer to Note 21 – Commitments, Contingencies and Other for additional detail. As noted above, since we
filed this Report after its scheduled due date, we no longer satisfy the eligibility requirements for use of registration statements on
Form S-3. As a result, we have suspended use of the shelf registration statement and we are not able to access the At the Market program
as of the date of this Report.

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

MSCO
is subject to the Uniform Net Capital Rules of the SEC (Rule 15c3-1) and the Customer Protection Rule (15c3-3) of the Exchange Act and
maintains capital and segregated cash reserves in excess of regulatory requirements. Requirements under these regulations may vary; however,
MSCO has adequate reserves and contingency funding plans in place to sufficiently meet any regulatory requirements. In addition to net
capital requirements, as a self-clearing broker-dealer, MSCO is subject to cash deposit and collateral requirements with clearing houses,
such as the DTCC and OCC, which may fluctuate significantly from time to time based upon the nature and size of clients’ trading
activity and market volatility. RISE, as a member of FINRA, is subject to the SEC Uniform Net Capital Rule 15c3-1 and the corresponding
regulatory capital requirements.

MSCO can transfer funds to
Siebert as long as it maintains its liquidity and regulatory capital requirements. RISE can transfer funds to its shareholders, of which
Siebert is entitled to its proportional ownership interest, as long as RISE maintains its liquidity and regulatory capital requirements.
For the years ended December 31, 2023 and 2022, MSCO and RISE had sufficient net capital to meet their respective liquidity and regulatory
capital requirements. Refer to Note 19 – Capital Requirements for more detail on our capital requirements.

Cash Flows

Cash provided by and used
in operating activities consisted of net income (loss) adjusted for certain non-cash items. Net operating assets and liabilities at any
specific point in time are subject to many variables, including variability in customer activity, the timing of cash receipts and payments,
and vendor payment terms. The total changes in our consolidated statements of cash flows, especially our operating cash flow, are not
necessarily indicative of the ongoing results of our business as we have customer assets and liabilities on our consolidated statements
of financial condition.

For the year ended December
31, 2023, cash used in operating activities increased by $5.7 million compared to 2022, which was primarily driven by an increase in working
capital partially offset by an increase in net income. The net change of receivables and payables from / to customers, receivables and
payables from / to non-customers, and securities borrowed and securities loaned between the periods offset each other.

For the year ended December
31, 2023, cash used in investing activities increased by $0.7 million compared to 2022, which was primarily driven by the build out of
the Miami office building as well as investment in our Retail Platform and other technology initiatives in 2023.

For the year ended December
31, 2023, cash flows provided by financing activities increased by $17.3 million compared to 2022, which was primarily driven by the issuance
of the Company’s common stock related to the transaction with Kakaopay. Refer to Note 5 – Kakaopay Transaction for additional
detail.

Siebert 2023 Form-10K 26

Long Term Contracts

Effective
August 1, 2021, MSCO entered into an amendment to its clearing agreement with NFS that, among other things, extends the term of their
arrangement for an additional four-year period commencing on August 1, 2021 and ending July 31, 2025. As part of this agreement, we received
a one-time business development credit of $3 million, and NFS will pay us four annual credits of $100,000 over the term of the agreement.
The amendment also provides for an early termination fee; however, as of December 31, 2023, we do not expect to terminate the contract
with NFS before the end of the contract term. Refer to Note 16 – Deferred Contract Incentive and Note 21 – Commitments, Contingencies
and Other for additional detail.

Effective
June 2023, MSCO entered into an amendment to its service agreement with Broadridge Securities Processing Solutions, LLC that, among other
things, extends the term of their arrangement for a five-year period ending June 2028, with an option to terminate after three years.
The total minimum expense for this arrangement is estimated at approximately $1.2 million over the duration of the contract.

Off-Balance Sheet Arrangements

We
enter into various transactions to meet the needs of customers, conduct trading activities, and manage market risks and are, therefore,
subject to varying degrees of market and credit risk. In the normal course of business, our customer activities involve the execution,
settlement, and financing of various customer securities transactions. These activities may expose us to off-balance sheet risk in the
event the customer or other broker is unable to fulfill their contracted obligations and we are forced to purchase or sell the financial
instrument underlying the contract at a loss. There were no material losses for unsettled customer transactions for the years ended December
31, 2023 and 2022. Refer to Note 20 – Financial Instruments with Off-Balance Sheet Risk for additional detail.

Transaction with J2
Financial Technology

On
January 18, 2024, Siebert Technologies, LLC (“STCH”) entered into a Purchase Agreement (the “Purchase Agreement”)
with J2 Financial Technology, Inc., d/b/a “Guild”, a Delaware corporation.

Under
the Purchase Agreement, STCH purchased a mobile self-directed trading app for the total purchase price of $385,000. The purchase price
consisted of 200,000 restricted shares of our common stock (priced at the historical 30-day moving average as of January 18, 2024) worth
approximately $350,000 and $35,000 cash.

Critical Accounting Policies and Estimates

We generally follow accounting
policies standard in the brokerage industry and believe that our policies appropriately reflect our financial position and results of
operations. Our management team makes significant estimates that affect the reported amounts of assets, liabilities, and expenses, and
the related disclosure of contingent assets and liabilities included in the consolidated financial statements. The estimates relate primarily
to expense items in the normal course of business as to which we receive no confirmations, invoices, or other documentation, at the time
the books are closed for a period. We use our best judgment, based on our knowledge of expenses incurred, to estimate the amount of such
expenses. We are not aware of any material differences between the estimates used in closing our books for the periods presented and the
actual amounts of expenses incurred when we subsequently receive the actual confirmations, invoices or other documentation.

Our consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.
GAAP”). The preparation of our consolidated financial statements requires us to make judgments and estimates that may have a significant
impact on our financial results. We believe that the critical accounting policies listed below are particularly subject to management’s
judgments and estimates and could materially affect our results of operations and financial position. Refer to Note 2 – Summary
of Significant Accounting Policies for additional detail on our significant accounting policies.

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

We account for income taxes
under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the consolidated financial statements.
Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the consolidated
financial statements and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences
are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period
that includes the enactment date.

Siebert 2023 Form-10K 27

We recognize deferred tax
assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider
all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable
income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize deferred taxes in
the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would
reduce the provision for income taxes.

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

We recognize interest and
penalties related to unrecognized tax benefits on the provision for income taxes line on the consolidated statements of operations. Accrued
interest and penalties would be included on the related tax liability line on the consolidated statements of financial condition.

Goodwill and other intangible assets

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

The
valuation of goodwill and acquired intangible assets requires significant judgment and estimates by management. For example, the valuation
of certain intangible assets required management’s estimates of future earnings and cash flows as well as judgment in determining
market approaches. The useful life of the finite lived intangible assets was determined based on management’s estimate of the period over
which those intangible assets were expected to provide economic benefit. Management applies judgment in conducting impairment testing
for goodwill and intangible assets, including estimates of fair value based on the income or market approach and estimates required to
determine the useful lives of finite lived intangible assets.

We
test goodwill and all intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable, or at least annually. If our estimates of fair value change due to future events differing significantly from the
forecasts used to determine fair value or there are changes in our business or other factors, we will assess the amount of impairment
and recognize it in our consolidated financial statements during that reporting period.

We
also evaluate the useful life of finite lived intangible assets on an annual basis to determine if events or trends warrant a change in
estimate of the useful life. Changes in the estimated useful lives of finite lived intangible assets could result in the recognition of
an impairment or a change in the remaining life of these assets.

We
have concluded that as of December 31, 2023 and 2022, there has been no impairment to the carrying value of Siebert’s goodwill;
however, there has been an impairment to the carrying value of our investment in the Trading Technology Provider and our equity method
investment in Tigress for the years ended December 31, 2023 and 2022, which is included in line item “Impairment of investments”
on the consolidated statements of operations.

Refer
to Note 2 – Summary of Significant Accounting Policies, Note 3 – Transactions
with Tigress and Hedge Connection, and Note 13 – Investments, Cost for additional detail.

Siebert 2023 Form-10K 28

Accruals for contingent liabilities

Accruals
for contingent liabilities related to legal and regulatory claims as well as employee healthcare expenses under our self-insured plan
reflect an estimate of probable losses. In making such estimates for legal and regulatory claims, we consider many factors, including
the progress of the matter, prior experience and the experience of others in similar matters, available defenses, insurance coverage,
indemnification provisions and the advice of legal counsel and other experts. In making such estimates for employee healthcare expenses,
we consider many factors, including trends of our health insurance expenses and our insurance reserve limits. We believe that our present
insurance coverage and reserves are sufficient to cover currently estimated exposures, but there can be no assurance that we will not
incur liabilities in excess of recorded reserves or in excess of our insurance limits. Significant judgment is required in making these
estimates, and the actual cost may be materially different than the estimated costs. Refer to Note 21 – Commitments,
Contingencies and Other for additional detail.

New Accounting Standards

In
December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, “Improvements to Income Tax Disclosures”
(“ASU 2023-09”). The ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments
in the ASU address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income
taxes paid information. ASU 2023-09 will be effective for us for annual periods beginning after December 15, 2024, though early adoption
is permitted. We are still evaluating the presentational effect that ASU 2023-09 will have on our consolidated financial statements, but
we expect considerable changes to our income tax footnote.

Refer
to Note 2 – Summary of Significant Accounting Policies for additional information regarding
new Accounting Standards Updates (“ASU”s) issued by the Financial Accounting Standards Board (“FASB”).

ITEM 7. MANAGEMENT’S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included in Part II, Item 8 - Financial Statements and Supplementary Data of this Annual Report on Form 10-K. In addition to our historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in Part I, Item 1A - Risk Factors.

Overview

We are a financial services company and provide a wide variety of financial services to our clients. We operate in business lines such as retail brokerage, investment advisory, insurance, and technology development through our wholly-owned and majority-owned subsidiaries.

Results in the businesses in which we operate are highly correlated to general economic conditions and, more specifically, to the direction of the U.S. equity and fixed-income markets. Market volatility, overall market conditions, interest rates, economic, political, and regulatory trends, and industry competition are among the factors which could affect us and which are unpredictable and beyond our control. These factors affect the financial decisions made by market participants who include investors and competitors, impacting their level of participation in the financial markets. In addition, in periods of reduced financial market activity, profitability is likely to be adversely affected because certain expenses remain relatively fixed, including salaries and related costs, as well as portions of communications costs and occupancy expenses. Accordingly, earnings for any period should not be considered representative of earnings to be expected for any other period.

Transactions with Tigress and Hedge Connection

On November 16, 2021, we purchased 24% of the outstanding membership interests in Tigress, a disabled and woman-owned financial services firm, in exchange for 24% of RISE and shares of Siebert common stock. On January 21, 2022, we purchased 20% of Hedge Connection, a woman-owned fintech company, and an option to acquire the remaining interest in Hedge Connection in exchange for consideration of $600,000 and 3.33% of RISE.As of the date of this Report, Siebert is currently evaluating the terms upon which it will transfer its remaining ownership of Tigress to Gloria E. Gebbia pursuant to the Reorganization Agreement. Refer to Note 3 – Transactions with Tigress and Hedge Connection for further detail on the terms and accounting treatment of these transactions.

Siebert 2022 Form-10K 23

As part of these transactions, Tigress’ founder, Cynthia DiBartolo, continued as CEO of Tigress, and assumed the position as CEO of RISE. Gloria E. Gebbia, one of Siebert’s and RISE’s directors, assumed the position of Chief Impact Officer at RISE. Ms. DiBartolo was appointed to Siebert’s and RISE’s Board of Directors and Ms. Gebbia was appointed to Tigress’ Board of Directors. In addition, Lisa Vioni, founder of Hedge Connection, provided RISE with the right to appoint one director to the Board of Directors of Hedge Connection, and Ms. Vioni was appointed to the Board of Directors of RISE as well as to the position of President of RISE Prime – Capital Introduction, a division of RISE.

Based upon the strategic direction of these ventures, management of the respective businesses decided to unwind the original transactions with Siebert, RISE, Hedge Connection and Tigress. As a result, we exchanged our 7% ownership of Tigress for all of Tigress’ ownership of RISE. We also entered into an agreement with Hedge Connection whereby we re-conveyed 20% of the common stock of Hedge Connection and the related option to acquire 100% of Hedge Connection in exchange for 3.17% of RISE and the cancellation of Siebert’s note payable to Hedge Connection.

As part of these agreements, Ms. DiBartolo and Ms. Vioni resigned from their respective positions within Siebert and RISE.

The financial impact of these transactions with Tigress and Hedge Connection was a one-time loss of approximately $4.7M for the year ended December 31, 2022, of which $4.0M was due to an impairment of our investment in Tigress. These expenses are recorded in the line items “Impairment of equity method investment in related party” and “Loss on sale of equity method investment in related parties” in the statements of operations.

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

Termination of Clearing Arrangements with GSCO and Pershing

On August 30, 2021, Goldman Sachs & Co. LLC (“GSCO”) notified RISE that its clearing arrangement with RISE will be terminated. Due to the termination of RISE’s clearing arrangement with GSCO, substantially all the revenue producing customers of RISE have transitioned to other prime service providers. Revenue and pre-tax income from customers that have transitioned to other prime service providers was approximately $12.6 million and $1.8 million, respectively, for the year ended December 31, 2021.

As of December 31, 2022, we were in the process of terminating our clearing relationships with GSCO and Pershing LLC (“Pershing”). As of the date of this Report, we are no longer doing active business with these clearing vendors, and anticipate the full termination of these relationships by the end of the first quarter of 2023.

Interest Rates

We are exposed to market risk from changes in interest rates. Such changes in interest rates primarily impact revenue from interest, marketing, and distribution fees. We primarily earn interest, marketing and distribution fees from margin interest charged on clients’ margin balances, interest on cash and securities segregated for regulatory purposes, and distribution fees from money market mutual funds in clients’ accounts. Securities segregated for regulatory purposes consist solely of U.S. government securities. If prices of U.S. government securities within our portfolio decline, we anticipate the impact to be temporary as we intend to hold these securities to maturity. We seek to mitigate this risk by managing the average maturities of our U.S. government securities portfolio and setting risk parameters for securities owned, at fair value.

Technology Partner

In third quarter of 2022, we reassessed our technology needs and entered into a software license agreement with a different technology provider for the development of a new retail trading platform which will replace our current platforms and resulted in the termination of our original technology relationship. We believe this new technology provider will be key to creating a platform for the next generation of retail customers and the termination of our original technology relationship had minimal impact on our current operations. Refer to Note 6 – Prepaid Service Contract for further detail on the accounting and financial impact of the termination of our original technology relationship.

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Client Account and Activity Metrics

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

Client Account Metrics – Retail and Institutional Customer Net Worth

Client Account Metrics – Retail Customers

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Retail customer net worth represents the total value of securities and cash in the retail customer accounts after deducting margin debits

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Retail customer margin debit balances represents credit extended to our customers to finance their purchases against current positions

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Retail customer credit balances represents client cash held in brokerage accounts

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

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Retail customer accounts represents the number of retail customers

Client Account Metrics – Institutional Customers

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

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Client Activity Metrics – Retail Customers

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Total retail trades represents retail trades that generate commissions

Statements of Operations and Financial Condition

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

Revenue

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

Interest, marketing and distribution fees for the year ended December 31, 2022 were $17,234,000 and increased by $4,337,000 from the corresponding period in the prior year, primarily due to a rising interest rate environment which increased margin interest, 12b-1 money market fees, as well as interest on U.S. treasuries and cash deposits within MSCO of an aggregate of $7.5 million, partially offset by the loss of interest income from institutional customers in RISE of $3.2 million.

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

The decrease in realized and unrealized gain on primarily riskless principal transactions was primarily due to weaker market conditions in 2022 within this business line. The increase in unrealized loss on our portfolio of U.S. government securities was due to the following.

Siebert 2022 Form-10K 26

In 2022 Siebert invested in treasury bill and treasury notes which are primarily in the line item “Cash and securities segregated for regulatory purposes” on the statements of financial condition, in order to enhance its yield on its excess 15c3-3 deposits. During 2022, there was an increase in U.S. government securities yields, which created an unrealized loss of approximately $3.9 million on our government securities portfolio for the year ended December 31, 2022. The aggregate unrealized loss of on the portfolio will be returned over the duration of the government securities, at a point no later than the maturity of the securities, the latest maturity being August 2024.

We intend to hold these securities to maturity and as such, the aggregate unrealized loss of approximately $3.9 million on the portfolio as of December 31, 2022 will be returned over the duration of the government securities, at a point no later than the maturity of the securities. The maturities of the government securities are primarily in 2023 and the latest maturity is August 2024. If the value of our portfolio of government securities declines further, we will incur further unrealized losses; however, we anticipate this loss to be temporary as we intend to hold these securities to maturity. The portfolio of U.S. government securities represents less than half of the total value of our cash and securities segregated for regulatory purposes, and we believe that the level invested reduces the risk of having to liquidate the securities prior to maturity.

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

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

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

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

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

Operating Expenses

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

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

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

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

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

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

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

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

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

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

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

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

Earnings of Equity Method Investment in Related Parties

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

Impairment of Equity Method Investment in Related Party

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

Loss on Sale of Equity Method Investment in Related Parties

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

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Provision For (Benefit From) Income Taxes

The benefit from income taxes for the year ended December 31, 2022 was $1,300,000 and decreased from the provision for income taxes by $3,021,000 from the corresponding period in the prior year. Refer to Note 19 – Income Taxes for further detail.

Net Loss Attributable to Noncontrolling Interests

As further discussed in Note 1 – Organization and Basis of Presentation, we consolidate RISE’s financial results into our financial statements and reflect the portion of RISE not held by Siebert as a noncontrolling interests in our financial statements. The net loss attributable to noncontrolling interests for the year ended December 31, 2022 was $1,000,000, and increased by $970,000 from the corresponding period in the prior year due to an increase in RISE’s net loss for 2022 and Siebert’s ownership of RISE.

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

Assets

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

Liabilities

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

Liquidity and Capital Resources

Overview

We expect to use our available cash, cash equivalents, and potential future borrowings under our debt agreements and potential issuance of new debt or equity, to support and invest in our core business, including investing in new ways to serve our customers, potentially seeking strategic acquisitions to leverage existing capabilities, and for general capital needs (including capital, deposit, and collateral requirements imposed by regulators and SROs). Based on our current level of operations, we believe our available cash, available lines of credit, overall access to capital markets, and cash provided by operations will be adequate to meet our current liquidity needs for the foreseeable future. As of the date of this Report, there are no known or material events that would require us to use large amounts of our liquid assets to cover expenses.

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Cash and Cash Equivalents

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

Debt Agreements

We have a $4.4 million mortgage and a $2.7 million loan outstanding with East West Bank, and an unutilized line of credit for short term overnight demand borrowing of up to $25 million with BMO Harris as of December 31, 2022. The ability to borrow an additional $5.0 million on our loan with East West Bank expired on July 22, 2022; however, we do not believe this will impact our ability to fund our operations. As of December 31, 2022, we were in compliance with all covenants related to our debt agreements.

Cash Requirements

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

On December 30, 2021, we purchased the Miami office building and are building out this space to be one of our primary operating centers. The total estimated cost for the build out is $1.5 million, with $338,000 financed through a commitment with East West Bank and the remainder being cash. As of December 31, 2022, we have incurred approximately $1.0 million out of the $1.5 million of the build out costs.

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Shelf Registration Statement

On February 18, 2022, we filed a shelf registration statement on Form S-3 that was declared effective on March 2, 2022 by the SEC for the potential offering, issuance and sale by us of up to $100.0 million of our common stock, preferred stock, warrants to purchase our common stock and/or preferred stock, units consisting of all or some of these securities and subscription rights to purchase all or some of these securities. The registration statement was filed in reliance on General Instruction I.B.6 of Form S-3, which imposes a limitation on the maximum amount of securities that we may sell pursuant to the registration statement during any twelve-month period. Assuming we remain subject to General Instruction I.B.6, at the time we sell securities pursuant to the registration statement, the amount of securities to be sold plus the amount of any securities we have sold during the prior twelve months in reliance on Instruction I.B.6 may not exceed one-third of the aggregate market value of our outstanding common stock held by non-affiliates as of a day during the 60 days immediately preceding such sale as computed in accordance with Instruction I.B.6. Whether we sell securities under the registration statement will depend on a number of factors, including the market conditions at that time, our cash position at that time and the availability and terms of alternative sources of capital.

At the Market Offering

On May 27, 2022, we entered into a Capital on DemandTM Sales Agreement with JonesTrading as agent, pursuant to which we may offer and sell, from time to time through JonesTrading, shares of our common stock having an aggregate offering amount of up to $9.6 million under our shelf registration statement on Form S-3. For the year ended December 31, 2022, we did not sell any shares pursuant to this Sales Agreement. Refer to Note 22 – Commitments, Contingencies, and Other for additional detail.

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

MSCO is subject to the Uniform Net Capital Rules of the SEC (Rule 15c3-1) and the Customer Protection Rule (15c3-3) of the Exchange Act and maintains capital and segregated cash reserves in excess of regulatory requirements. Requirements under these regulations may vary; however, MSCO has adequate reserves and contingency funding plans in place to sufficiently meet any regulatory requirements. In addition to net capital requirements, as a self-clearing broker-dealer, MSCO is subject to cash deposit and collateral requirements with clearing houses, such as the DTCC and OCC, which may fluctuate significantly from time to time based upon the nature and size of clients’ trading activity and market volatility. RISE, as a member of FINRA, is subject to the SEC Uniform Net Capital Rule 15c3-1 and the corresponding regulatory capital requirements.

MSCO can transfer funds to Siebert as long as it maintains its liquidity and regulatory capital requirements. RISE can transfer funds to its shareholders, of which Siebert is entitled to its proportional ownership interest, as long as RISE maintains its liquidity and regulatory capital requirements. For the years ended December 31, 2022 and 2021, MSCO and RISE had sufficient net capital to meet their respective liquidity and regulatory capital requirements. Refer to Note 20 – Capital Requirements for more detail on our capital requirements.

Siebert 2022 Form-10K 31

Cash Flows

Cash provided by and used in operating activities consisted of net income (loss) adjusted for certain non-cash items. Net operating assets and liabilities at any specific point in time are subject to many variables, including variability in customer activity, the timing of cash receipts and payments, and vendor payment terms. The total changes in our statements of cash flows, especially our operating cash flow, are not necessarily indicative of the ongoing results of our business as we have customer assets and liabilities on our statements of financial condition.

For the year ended December 31, 2022, we had negative operating cash flow due to the net effect of the change in payables to customers and receivables from customers. Other items within operating cash flow mostly offset each other, most notably our net loss and the adjustment from the impairment of equity method investment in related party. We had investing cash outflows primarily from the build out of the Miami office building and development work related to our new retail trading platform and other technology initiatives. We had financing cash outflows due to the repayment of the notes payable - related party to Gloria E. Gebbia and Hedge Connection, as well as the repayment of our loan with East West Bank.

For the year ended December 31, 2021, we had positive operating cash flow. We had investing cash outflows related to the purchase of the Miami office building, equity of OpenHand, software assets and miscellaneous office facilities. We had financing cash inflow related to the mortgage from East West Bank to finance part of the purchase of the Miami office building as well as an incremental note payable from Gloria E. Gebbia.

Long Term Contracts

Contract with NFS

Effective August 1, 2021, MSCO entered into an amendment to its clearing agreement with NFS that, among other things, extends the term of their arrangement for an additional four-year period commencing on August 1, 2021 and ending July 31, 2025. As part of this agreement, we received a one-time business development credit of $3 million, and NFS will pay us four annual credits of $100,000 over the term of the agreement. The amendment also provides for an early termination fee; however, as of December 31, 2022, we do not expect to terminate the contract with NFS before the end of the contract term. Refer to Note 15 – Deferred Contract Incentive and Note 22 – Commitments, Contingencies and Other for additional detail.

Off-Balance Sheet Arrangements

We enter into various transactions to meet the needs of customers, conduct trading activities, and manage market risks and are, therefore, subject to varying degrees of market and credit risk. In the normal course of business, our customer activities involve the execution, settlement, and financing of various customer securities transactions. These activities may expose us to off-balance sheet risk in the event the customer or other broker is unable to fulfill their contracted obligations and we are forced to purchase or sell the financial instrument underlying the contract at a loss. There were no material losses for unsettled customer transactions for the years ended December 31, 2022 and 2021. Refer to Note 21 – Financial Instruments with Off-Balance Sheet Risk for additional detail.

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Critical Accounting Policies and Estimates

We generally follow accounting policies standard in the brokerage industry and believe that our policies appropriately reflect our financial position and results of operations. Our management team makes significant estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities included in the consolidated financial statements. The estimates relate primarily to revenue and expense items in the normal course of business as to which we receive no confirmations, invoices, or other documentation, at the time the books are closed for a period. We use our best judgment, based on our knowledge of revenue transactions and expenses incurred, to estimate the amount of such revenue and expenses. We are not aware of any material differences between the estimates used in closing our books for the last five years and the actual amounts of revenue and expenses incurred when we subsequently receive the actual confirmations, invoices or other documentation.

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of our consolidated financial statements requires us to make judgments and estimates that may have a significant impact on our financial results. We believe that the critical accounting policies listed below are particularly subject to management's judgments and estimates and could materially affect our results of operations and financial position. Refer to Note 2 – Summary of Significant Accounting Policies for additional detail on our significant accounting policies.

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

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize deferred taxes in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

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

We recognize interest and penalties related to unrecognized tax benefits on the provision for income taxes line in the statements of operations. Accrued interest and penalties would be included on the related tax liability line in the statements of financial condition.

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Goodwill and other intangible assets

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

The valuation of goodwill and acquired intangible assets requires significant judgment and estimates by management. For example, the valuation of certain intangible assets required management’s estimates of future earnings and cash flows as well as judgment in determining market approaches. The useful life of the finite lived intangible assets was determined based on management's estimate of the period over which those intangible assets were expected to provide economic benefit. Management applies judgment in conducting impairment testing for goodwill and intangible assets, including estimates of fair value based on the income or market approach and estimates required to determine the useful lives of finite lived intangible assets.

We test goodwill and all intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, or at least annually. If our estimates of fair value change due to future events differing significantly from the forecasts used to determine fair value or there are changes in our business or other factors, we will assess the amount of impairment and recognize it in our financial statements during that reporting period.

We also evaluate the useful life of finite lived intangible assets on an annual basis to determine if events or trends warrant a change in estimate of the useful life. Changes in the estimated useful lives of finite lived intangible assets could result in the recognition of an impairment or a change in the remaining life of these assets.

We have concluded that as of December 31, 2022 and 2021, there has been no impairment to the carrying value of Siebert’s goodwill; however, there has been an impairment of $4,015,000 to the carrying value of our equity method investment in Tigress for the year ended December 31, 2022, and an impairment of $699,000 to the RISE customer relationships intangible asset for the year ended December 31, 2021 due to the termination of GSCO’s clearing arrangement with RISE.

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

Accruals for contingent liabilities

Accruals for contingent liabilities related to legal and regulatory claims as well as employee healthcare expenses under our self-insured plan reflect an estimate of probable losses. In making such estimates for legal and regulatory claims, we consider many factors, including the progress of the matter, prior experience and the experience of others in similar matters, available defenses, insurance coverage, indemnification provisions and the advice of legal counsel and other experts. In making such estimates for employee healthcare expenses, we consider many factors, including trends of our health insurance expenses and our insurance reserve limits. We believe that our present insurance coverage and reserves are sufficient to cover currently estimated exposures, but there can be no assurance that we will not incur liabilities in excess of recorded reserves or in excess of our insurance limits. Significant judgment is required in making these estimates, and the actual cost may be materially different than the estimated costs. Refer to Note 22 – Commitments, Contingencies and Other for additional detail.

Variable Interest Entities

We evaluate whether an entity is a VIE and determine if the primary beneficiary status is appropriate on a quarterly basis. We consolidate a VIE for which we are the primary beneficiary. When assessing the determination of the primary beneficiary, we consider all relevant facts and circumstances, including factors such as the power to direct the activities of the VIE that most significantly impact its economic performance, the obligation to absorb the losses and/or the right to receive the expected returns of the VIE. Through this evaluation, as of December 31, 2022, we determined that RISE is a VIE and we are the primary beneficiary, primarily due to Siebert’s power to direct the activities of RISE that most significantly impact its economic performance. Additionally, Siebert may be obligated to fund RISE’s operations at an amount that is disproportional to its ownership percentage.

New Accounting Standards

Refer to Note 2 - Summary of Significant Accounting Policies for additional information regarding new Accounting Standards Updates (“ASU”s) issued by the Financial Accounting Standards Board (“FASB”).

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ITEM 7. MANAGEMENT’S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included in Part II, Item 8 - Financial Statements and Supplementary Data of this Annual Report on Form 10-K. In addition to our historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in Part I, Item 1A - Risk Factors.

Overview

We are a financial services company and provide a wide variety of financial services to our clients. We operate in the following business lines through our wholly-owned and majority-owned subsidiaries:

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Retail brokerage business through Muriel Siebert & Co., Inc. (“MSCO”), a Delaware corporation and broker-dealer registered with the Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934 (“Exchange Act”) and the Commodity Exchange Act of 1936, and member of the Financial Industry Regulatory Authority (“FINRA”), the New York Stock Exchange (“NYSE”), the Securities Investor Protection Corporation (“SIPC”), and the National Futures Association (“NFA”). MSCO engages in the business of providing brokerage services for retail customers and trading securities for its own account.

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Investment advisory services through Siebert AdvisorNXT, Inc. (“SNXT”), a New York corporation registered with the SEC as a Registered Investment Adviser (“RIA”) under the Investment Advisers Act of 1940. SNXT engages in providing investment advisory services to retail and high net worth clients.

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Insurance services through Park Wilshire Companies, Inc. (“PW”), a Texas corporation and licensed insurance agency. PW provides insurance agency services to retail and institutional accounts.

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Robo-advisory technology development through Siebert Technologies, LLC (“STCH”), a Nevada limited liability company.

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Prime brokerage services through RISE Financial Services, LLC (“RISE”), formerly known as WPS Prime Services, LLC (“WPS”), a Delaware limited liability company and a broker-dealer registered with the SEC and NFA. RISE is a woman-owned and operated financial services firm that offers a comprehensive suite of prime brokerage services aligned with the growing mission-driven Environmental Social and Governance (“ESG”) initiatives of institutional investors.

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StockCross Digital Solutions, Ltd. (“STXD”), an inactive subsidiary headquartered in Bermuda.

Results in the businesses in which we operate are highly correlated to general economic conditions and, more specifically, to the direction of the U.S. equity and fixed-income markets. Market volatility, overall market conditions, interest rates, economic, political, and regulatory trends, and industry competition are among the factors which could affect us and which are unpredictable and beyond our control. These factors affect the financial decisions made by market participants who include investors and competitors, impacting their level of participation in the financial markets. In addition, in periods of reduced financial market activity, profitability is likely to be adversely affected because certain expenses remain relatively fixed, including salaries and related costs, as well as portions of communications costs and occupancy expenses. Accordingly, earnings for any period should not be considered representative of earnings to be expected for any other period.

COVID-19

Impact

Overview

The World Health Organization declared the spread of COVID-19 a worldwide pandemic in March 2020. The COVID‑19 pandemic has adversely impacted the economic environment, leading to lower interest rates across the curve and heightened volatility in the financial markets. We are actively monitoring the impact of COVID-19 and the possible effects of the roll-out of various vaccines on our business, financial condition, liquidity, operations, employees, clients and business partners.

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Financial Impact

In the first quarter of 2020, the Federal Reserve cut the federal funds target overnight rate to near zero. This decline in interest rates led to a decrease in our revenue from interest, marketing and distribution fees, and may continue to have a negative impact on these revenue streams in the near future.

The primary financial impact on Siebert from the COVID-19 pandemic for both the year ended December 31, 2021 and 2020 was lower interest revenue resulting from lower benchmark interest rates beginning in the first quarter of 2020.

Management Response

Operations

In response to the pandemic and for the protection of our employees, clients and business partners, we implemented remote work arrangements for nearly 100% of our employees, restricted business travel and temporarily closed some of our branch offices. With our ability to meet a vast majority of our clients' needs through our technology-based platforms and services, these arrangements did not materially affect our ability to maintain our business operations. As of the date of this Report we have reopened all of our branch offices.

Expense Reduction

As of the date of this Report, we are actively involved in contract negotiations with key vendors to reduce many of our fixed costs. In addition, we successfully transitioned certain branch offices out of legacy office space into more cost-efficient locations resulting in savings related to rent and occupancy expense. We do not believe any of the changes described above will have a negative impact on the operations or financials of our business.

Liquidity and Capital Resources

The situation surrounding COVID-19 has not materially impacted our liquidity position or future outlook as we have been able to meet all obligations and believe we will be able to do so in the foreseeable future.

Conclusion

We note that the ultimate impact of COVID-19 on our business, results of operations, financial condition and cash flows is dependent on future developments, including the duration of the pandemic and the possible effects of the roll-out of various vaccines, which are uncertain and cannot be predicted at this time. We are currently monitoring the COVID-19 situation and will continue to respond to meet the demands of our clients as well as protect our employees.

Significant Events

Purchase of Office Building in Miami

On December 30, 2021, we acquired a commercial office building and associated property located at 653 Collins Ave, Miami Beach, FL (“Miami office building”) for approximately $6.8 million. The Miami office building contains approximately 12,000 square feet of office space and will be used as one of our primary operating centers.

Transaction with Tigress Holdings, LLC

On November 16, 2021, we entered into an agreement with Tigress, a Delaware limited liability company. As part of the agreement, (i) Tigress transferred to us limited liability company membership interests representing twenty-four percent (24%) of the outstanding membership interests in Tigress; and (ii) we transferred to Tigress limited liability company membership interests representing twenty-four percent (24%) of the outstanding membership interests of RISE and 1,449,525 shares of Siebert common stock. For the year ended December 31, 2021, we recognized $172,000 from our equity method investment in Tigress, which is within the line item titled, “Earnings of equity method investment in related party” on the statements of income.

Tigress Financial Partners is a disabled and woman-owned financial services firm providing institutional and high net worth investors with expertise in investment banking, capital markets, research, corporate advisory and global trade execution services, asset management and global wealth management. Tigress Financial Partners serves as a strategic diversity partner to corporate issuers, bookrunners, hedge funds and private equity firms.

Siebert 2021 Form-10K 22

Relaunch of RISE Financial Services, LLC

As part of the transaction with Tigress, WPS Prime Services, LLC was renamed to RISE Financial Services, LLC, and Tigress’ founder, Cynthia DiBartolo, will continue as CEO of Tigress, and assumed the position as CEO of RISE. Gloria E. Gebbia, one of Siebert’s and RISE’s directors, assumed the position of Chief Impact Officer at RISE. Ms. DiBartolo was appointed to Siebert’s and RISE’s Board of Directors and Ms. Gebbia was appointed to Tigress’ Board of Directors.

RISE relaunched its business as a woman-owned and operated prime brokerage with a specific emphasis on aligning the mission-driven initiatives with the technological needs of institutional customers.

While we believe our expertise and industry relationships will enable us to execute our new strategic direction, our business plan for RISE is new and untested, and it is uncertain whether our efforts will attract the prime brokerage customers and revenue necessary to compete in a new market for prime customers. Any failure to adapt to these evolving trends may reduce our revenue or operating margins and could have a material adverse effect on our business, results of operations and financial condition.

Arrangements with JonesTrading and Goldman Sachs

On August 30, 2021, Goldman Sachs & Co. LLC ("GSCO") notified RISE that its clearing arrangement with RISE will be terminated.

Due to the termination of RISE’s clearing arrangement with GSCO, substantially all the revenue producing customers of RISE have transitioned to other prime service providers. Revenue from customers that have transitioned to other prime service providers was approximately $12.6 million and $13.9 million for the year ended December 31, 2021 and 2020, respectively. Pre-tax income from these customers was approximately $1.8 million and $1.3 million for the year ended December 31, 2021, and 2020, respectively.

As a result of this development, we recorded a full impairment of the RISE customer relationships intangible asset of $699,000 and RISE collected its clearing deposit from GSCO of approximately $2 million as of December 31, 2021. In addition, RISE’s institutional customer assets under management were significantly reduced in the year ended December 31, 2021.

On October 7, 2021, RISE signed an agreement with JonesTrading Institutional Services, LLC (“JonesTrading”) to transfer certain customers of RISE to JonesTrading. In exchange, JonesTrading agreed to pay RISE a percentage of the net revenue produced by those clients less any related expenses. The percentage paid to RISE related to this agreement will decline every year and the arrangement will end in October 2024. For the year ended December 31, 2021, this agreement resulted in a net expense of $22,000 as RISE was in the process of transitioning certain customers to JonesTrading. We do not anticipate the revenue related to this agreement will offset the reduction in revenue from customers that have transitioned to other prime service providers.

Contract with NFS

Effective August 1, 2021, MSCO entered into an amendment to its clearing agreement with NFS that, among other things, extends the term of their arrangement for an additional four-year period commencing on August 1, 2021 and ending July 31, 2025. As part of this agreement, we received a one-time business development credit of $3 million, and NFS will pay us four annual credits of $100,000, which are recorded within the line item “Deferred contract incentive” on the statements of financial condition. The business development credit and annual credits will be recognized as contra expense over four years and one year, respectively, in the line item “Clearing fees, including execution costs” on the statements of income. These credits reduced our expenses for clearing fees, including executions, by $354,000 for the year ended December 31, 2021, and we anticipate an annual expense reduction of approximately $850,000 for the years thereafter through the end of the agreement.

OpenHand

On January 31, 2021, we entered into a stock purchase agreement with OpenHand Holdings, Inc. (“OpenHand”) whereby we acquired an interest of 5% of OpenHand common stock for consideration of a total of $2,231,000 consisting of $850,000 in cash and 329,654 restricted shares of our common stock valued at $1,381,000 or $4.19 per share. We intended to develop a subscription-based brokerage platform with OpenHand, providing zero-commission trading for equity and option transactions and crediting its members daily with rebates of revenues generated by the clients, less operational expenses.

The value of our restricted stock was determined using the thirty-day trading average. We agreed to register the shares issued to OpenHand by filing a selling shareholder registration statement. We also received an option to purchase an additional 7.5% of OpenHand for approximately $4.5 million, based upon a $60 million valuation of OpenHand. This option expires 18 months after the launch of the OpenHand platform.

Siebert 2021 Form-10K 23

On August 18, 2021, we agreed with OpenHand to terminate our working relationship. In connection therewith, Siebert and OpenHand amended and restated their January 31, 2021 stock purchase agreement to provide that we would pay $850,000 in cash in exchange for 2% of the outstanding common stock of OpenHand as of January 31, 2021, and receive a 15-month option to purchase an additional 2% of the outstanding common stock of OpenHand at an exercise price equal to a company valuation of $42.5 million. The parties agreed to rescind OpenHand’s purchase of the 329,654 restricted shares of our common stock.

StockCross Acquisition

Overview

Established in 1971, StockCross was one of the largest privately-owned brokerage firms in the nation and its operations consisted primarily of market making, fixed-income products distribution, online and broker-assisted equity trading, securities lending, and equity stock plan services.

In January 2019, we acquired approximately 15% ownership of StockCross. Effective January 1, 2020, we acquired the remaining 85% of StockCross’ outstanding shares in exchange for 3,298,774 shares of our common stock, and StockCross was merged with and into MSCO. As of January 1, 2020, the business and operations of StockCross became part of MSCO, and all clearing and other services provided by StockCross were performed by MSCO.

StockCross Highlights

We have completed the merger of StockCross into MSCO and the acquired business lines have added new revenue streams and supplemented existing ones within MSCO. In addition, the nature of StockCross’ self-clearing business line requires the presentation of various assets and corresponding liabilities on the statements of financial condition.

Operationally, the merger resulted in the expansion of our client services areas and provided additional resources for the combined client base without any material loss of clients during the transition. Further, at the time of acquisition, StockCross added approximately $1.5 billion in retail customer net worth and approximately 30,000 retail accounts to Siebert.

Effective March 16, 2021, MSCO received approval to become an IRA nonbank custodian and trustee. MSCO successfully completed the custodian conversion from StockCross, and MSCO continues to offer IRA services to its clients.

Client Account and Activity Metrics

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

Client Account Metrics – Total Assets Under Management

•

Total assets under management represents the total of our retail and institutional customer net worth

Client Account Metrics – Retail Customers

•

Retail customer net worth represents the total value of securities and cash in the retail customer accounts after deducting margin debits

Siebert 2021 Form-10K 24

•

Retail customer margin debit balances represents credit extended to our customers to finance their purchases against current positions

•

Retail customer credit balances represents client cash held in brokerage accounts

•

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

•

Retail customer accounts represents the number of retail customers

Client Account Metrics – Institutional Customers

•

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

Siebert 2021 Form-10K 25

Client Activity Metrics

•

Total retail trades represent client trades through our subsidiary MSCO

Statements of Income and Financial Condition

Overview

The following table sets forth metrics we use in analyzing our financial performance for the periods indicated:

Statements of Income for the Year Ended December 31, 2021 and 2020

Revenue

Commissions and fees for the year ended December 31, 2021 were $18,252,000 and decreased by $1,927,000 from the corresponding period in the prior year, primarily due to a loss in institutional customers due to the termination of GSCO’s clearing agreement with RISE.

Interest, marketing and distribution fees for the year ended December 31, 2021 were $12,897,000 and decreased by $1,298,000 from the corresponding period in the prior year, primarily due to the reduction of 12b-1 fees from money market funds and lower interest received on bank deposits from our retail customers of an aggregate of approximately $2 million. This decrease was partially offset by an increase of approximately $0.7 million in interest revenue from institutional customers that have since transitioned to other prime brokerages.

Principal transactions for the year ended December 31, 2021 were $15,647,000 and increased by $3,797,000 from the corresponding period in the prior year, primarily due to strong market conditions during 2021.

Market making for the year ended December 31, 2021 was $5,897,000 and increased by $3,855,000 from the corresponding period in the prior year, primarily due to favorable market conditions during 2021.

Siebert 2021 Form-10K 26

Stock borrow / stock loan for the year ended December 31, 2021 was $11,864,000 and increased by $7,819,000 from the corresponding period in the prior year, primarily due to the addition of key personnel, expansion of our stock locate revenues, and additional securities lending and locate counterparty relationships. The increase in this business line was a significant component of the increase in our income before provision for income taxes for the year ended December 31, 2021 from the corresponding period in the prior year.

Advisory fees for the year ended December 31, 2021 were $1,668,000 and increased by $526,000 from the corresponding period in the prior year, primarily due to overall expansion of the advisory business line and favorable market conditions.

Other income for the year ended December 31, 2021 was $1,282,000 and decreased by $137,000 from the corresponding period in the prior year, primarily due to a reduction in foreign exchange volumes and a decrease in institutional custody fees.

Operating Expenses

Employee compensation and benefits for the year ended December 31, 2021 were $36,424,000 and increased by $7,922,000 from the corresponding period in the prior year, primarily due to increased commission payouts corresponding to the increase in principal transactions, market making, and stock borrow / stock loan revenue in 2021. This increase was partially offset by a decrease in commissions payouts from RISE related to the loss of institutional customers.

Clearing fees, including execution costs for the year ended December 31, 2021 were $4,817,000 and decreased by $290,000 from the corresponding period in the prior year, primarily due to the recognition of the business development credit and annual credits from NFS as contra expense in 2021.

Technology and communications expenses for the year ended December 31, 2021 were $4,762,000 and increased by $140,000 from the corresponding period in the prior year, primarily due to an increase in software licenses and technology support services.

Other general and administrative expenses for the year ended December 31, 2021 were $3,686,000 and increased by $1,322,000 from the corresponding period in the prior year, primarily due to an increase in regulatory fees and exchange fees related to incremental trading volumes and counterparties, as well as an increase in office expenses and insurance cost.

Data processing expenses for the year ended December 31, 2021 were $2,849,000 and increased by $52,000 from the corresponding period in the prior year, primarily due to an increase in our service bureau costs.

Rent and occupancy expenses for the year ended December 31, 2021 were $1,930,000 and decreased by $837,000 from the corresponding period in the prior year, primarily due to a decrease in rent from our transition out of legacy office space into more cost-efficient locations as well as the termination of certain leases within RISE.

Professional fees for the year ended December 31, 2021 were $2,695,000 and decreased by $169,000 from the corresponding period in the prior year, primarily due to a decrease in legal fees.

Depreciation and amortization expenses for the year ended December 31, 2021 were $1,445,000 and decreased by $121,000 from the corresponding period in the prior year, primarily due to the full impairment of the RISE customer relationships intangible asset in August 2021.

Referral fees for the year ended December 31, 2021 were $1,213,000 and increased by $475,000 from the corresponding period in the prior year, primarily due to RISE entering into a referral fee arrangement with a significant customer in 2021.

Impairment loss for the year ended December 31, 2021 was $699,000 and increased by $699,000 from the corresponding period in the prior year, primarily due to the impairment of the RISE customer relationships intangible asset due to the termination of RISE’s clearing arrangement with GSCO.

Interest expense for the year ended December 31, 2021 was $361,000 and increased by $12,000 from the corresponding period in the prior year, primarily due to a full year of interest on the line of credit with East West Bank in 2021, partially offset by a reduction in notes payable related party in 2021.

Advertising expense for the year ended December 31, 2021 was $44,000 and increased by $44,000 from the corresponding period in the prior year, due to an increase in various promotional expenses.

Earnings of Equity Method Investment in Related Party

Earnings of equity method investment in related party for the year ended December 31, 2021 was $172,000 and increased by $172,000 from the corresponding period in the prior year, due to the Company recognizing its proportional earnings from Tigress for 2021.

Siebert 2021 Form-10K 27

Provision For Income Taxes

Provision for income taxes for the year ended December 31, 2021 was $1,721,000 and increased by $1,500,000 from the corresponding period in the prior year. Refer to Note 19 – “Income Taxes” for additional detail.

Net Loss Attributable to Noncontrolling Interests

We are the majority owner of RISE, as such, operate and control all of the business and affairs of RISE and consolidate RISE’s financial results into our financial statements. As of December 31, 2021, we held approximately 76% ownership interest in RISE, and Tigress held 24% ownership interest in RISE. We reflect Tigress’ ownership of RISE as a noncontrolling interest in our financial statements. The net loss attributable to noncontrolling interests for the two months and the year ended December 31, 2021 was $30,000, and increased by $30,000 from the corresponding period in the prior year.

Statements of Financial Condition as of December 31, 2021 and 2020

Assets

Assets as of December 31, 2021 were $1,404,235,000 and increased by $31,248,000 from December 31, 2020, primarily due to an increase in securities borrowed. In addition, there was an increase in property related to the purchase of the Miami office building and our equity method investment in Tigress; however, these were substantially offset by a decrease in receivables from customers and receivables from broker-dealers and clearing organizations.

Liabilities

Liabilities as of December 31, 2021 were $1,353,729,000 and increased by $18,728,000 from December 31, 2020, primarily due to an increase in securities loaned, debt from the mortgage with East West Bank, as well as the deferred contract incentive from NFS.

Liquidity and Capital Resources

Overview

In terms of the overall performance of the business in relation to liquidity, for the periods presented, we have had strong operating cash flows despite lower interest rates and the effects of COVID-19. We also have had sufficient cash flows to meet liquidity needs and believe our ability to generate cash flows will continue into the foreseeable future.

As of December 31, 2021, we had a variety of sources of borrowing capability such as a short-term overnight demand borrowing with BMO Harris Bank, notes payable to Gloria E. Gebbia, and a line of credit and a mortgage with East West Bank.

The indicators of our liquidity are cash and cash equivalents, and as of the date of this Report, there are no known or material events that would require us to use large amounts of our liquid assets to cover expenses. As of December 31, 2021, we had a sufficient amount of remaining availability on our various credit lines to facilitate incremental capital needs.

We believe that our operating cash flows, cash and cash equivalents, borrowing capacity, and overall access to capital markets are sufficient to fund our operating, investing and financing requirements for the next twelve months.

Shelf Registration Statement

On February 18, 2022, we filed a shelf registration statement on Form S-3 that was declared effective on March 2, 2022 by the SEC for the potential offering, issuance and sale by us of up to $100.0 million of our Common Stock, preferred stock, warrants to purchase our Common Stock and/or preferred stock, units consisting of all or some of these securities and subscription rights to purchase all or some of these securities. The registration statement was filed in reliance on General Instruction I.B.6 of Form S-3, which imposes a limitation on the maximum amount of securities that we may sell pursuant to the registration statement during any twelve-month period. Assuming we remain subject to General Instruction I.B.6, at the time we sell securities pursuant to the registration statement, the amount of securities to be sold plus the amount of any securities we have sold during the prior twelve months in reliance on Instruction I.B.6 may not exceed one-third of the aggregate market value of our outstanding Common Stock held by non-affiliates as of a day during the 60 days immediately preceding such sale as computed in accordance with Instruction I.B.6. Whether we sell securities under the registration statement will depend on a number of factors, including the market conditions at that time, our cash position at that time and the availability and terms of alternative sources of capital.

Siebert 2021 Form-10K 28

Cash and Cash Equivalents

Our cash and cash equivalents are unrestricted and are used primarily to fund our working capital needs. Our cash and cash equivalents as of December 31, 2021 and 2020 were approximately $3.8 million and $3.6 million, respectively.

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

MSCO is subject to the Uniform Net Capital Rules of the SEC (Rule 15c3-1) and the Customer Protection Rule (15c3-3) of the Securities Exchange Act of 1934 and maintains capital and segregated cash reserves in excess of regulatory requirements. Requirements under these regulations may vary; however, MSCO has adequate reserves and continency funding plans in place to sufficiently meet any regulatory requirements. In addition to net capital requirements, as a self-clearing broker-dealer, MSCO is subject to cash deposit and collateral requirements with clearing houses, such as the DTCC and the Options Clearing Corporation, which may fluctuate significantly from time to time based upon the nature and size of clients’ trading activity and market volatility.

RISE, as a member of FINRA, is subject to the SEC Uniform Net Capital Rule 15c3-1. This rule requires the maintenance of minimum net capital and that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1 and that equity capital may not be withdrawn, or cash dividends paid if the resulting net capital ratio would exceed 10 to 1. RISE is also subject to the CFTC's minimum financial requirements which require that RISE maintain net capital, as defined, equal to the greater of its requirements under Regulation 1.17 under the Commodity Exchange Act or Rule 15c3-1.

MSCO can transfer funds to Siebert as long as it maintains its liquidity and regulatory capital requirements. RISE can transfer funds to its shareholders, of which Siebert is entitled to its proportional ownership interest, as long as RISE maintains its liquidity and regulatory capital requirements. For the year ended December 31, 2021 and 2020, MSCO and RISE had sufficient net capital to meet their respective liquidity and regulatory capital requirements. Refer to Note 20 – “Capital Requirements” for more detail on our capital requirements.

Sources of Liquidity

Mortgage with East West Bank

On December 30, 2021, we entered into a mortgage with East West Bank for approximately $4 million to finance part of the purchase of the Miami office building.

Our obligations under the mortgage are secured by a lien on the Miami office building and the term of the loan is ten years. The repayment schedule will utilize a 30-year amortization period, with a balloon on the remaining amount due at the end of ten years. The agreement contains certain financial and non-financial covenants, and as of December 31, 2021, we have an unused commitment of $338,000 with East West Bank which we intend to use for the build out of the Miami office building. Refer to Note 13 – “Long-Term Debt” for additional detail on this agreement.

Future remaining annual minimum principal payments for the mortgage with East West Bank as of December 31, 2021 were as follows:

Siebert 2021 Form-10K 29

Line of Credit with East West Bank

On July 22, 2020, we entered into a loan and security agreement with East West Bank. In accordance with the terms of this agreement, we have the ability to borrow term loans in an aggregate principal amount not to exceed $10 million during the two-year period after July 22, 2020. The agreement contains certain financial and non-financial covenants, and our obligation under the agreement is guaranteed pursuant to a guarantee agreement by and among, John J. Gebbia, Gloria E. Gebbia and a trust for which they are mutually co-trustees.

As of December 31, 2021, we have drawn down a $5.0 million term loan under this agreement which has an outstanding balance of $3.7 million. We have an additional $5.0 million remaining to draw down from this line of credit. Both lending agreements with East West Bank are considered senior debt facilities. Refer to Note 13 – “Long-Term Debt” for additional detail on this agreement.

Future remaining annual minimum principal payments for the line of credit with East West Bank as of December 31, 2021 were as follows:

Notes Payable – Related Party

As of December 31, 2021 and 2020, we had $7 million and $5.2 million, respectively, in notes payable to Gloria E. Gebbia. As of December 31, 2021, these notes payable have maturity dates in 2022 and we have sufficient liquidity to meet all maturities of these notes. Refer to Note 14 – “Notes Payable - Related Party” for additional detail.

Overnight Financing

As of December 31, 2021, we had an available line of credit for short term overnight demand borrowing of up to $15 million with BMO Harris Bank. As of December 31, 2020, we had $15 million line of credit with BMO Harris Bank and a $15 million line of credit with Texas Capital Bank, the latter of which was not renewed as of December 31, 2021. The removal of this line of credit was the result of Texas Capital Bank exiting the business line and did not impact our ability to meet liquidity requirements.

As of December 31, 2021, we had no outstanding loan balance and there were no commitment fees or other restrictions on this line of credit. MSCO utilizes customer or firm securities as a pledge for short-term borrowing needs.

Statements of Cash Flows

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

For the year ended December 31, 2021, we had positive operating cash flow. We had investing cash outflows related to the purchase of the Miami office building, equity of OpenHand, software assets and miscellaneous office facilities. We had financing cash inflow related to the mortgage from East West Bank to finance part of the purchase of the Miami office building as well as an incremental notes payable from Gloria E. Gebbia.

For the year ended December 31, 2020, we had positive operating cash flow and a minor investing cash outflow related to software development. We had a financing cash inflow for the line of credit secured with East West Bank and for the shares issued for employee stock purchases, which was partially offset by a financing cash outflow for the maturation of a portion of the notes payable from Gloria E. Gebbia.

Our cash and cash equivalents as of December 31, 2021 were approximately $3.8 million and increased from the same period in the prior year. There is an estimated $700,000 in build out costs for the Miami office building that will be incurred in 2022, of which approximately 50% will be financed by East West Bank. We believe we will have sufficient cash flows to fund our operations for the foreseeable future.

Siebert 2021 Form-10K 30

Leases

As of December 31, 2021, the remaining balance of our lease payments for 2022 for operating leases with initial terms of greater than one year was $1.3 million. The remaining balance of the lease payments for these leases after 2022 was $1.8 million. Refer to Note 9 – “Leases” for more detail on our lease arrangements and corresponding disclosures.

Off-Balance Sheet Arrangements

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

In the normal course of business, our customer activities involve the execution, settlement, and financing of various customer securities transactions. These activities may expose us to off-balance sheet risk in the event the customer or other broker is unable to fulfill its contracted obligations and we are forced to purchase or sell the financial instrument underlying the contract at a loss.

Our customer securities activities are transacted on either a cash or margin basis. In margin transactions, we extend credit to our customers, subject to various regulatory and internal margin requirements, collateralized by cash and securities in the customers' accounts. In connection with these activities, we execute and clear customer transactions involving the sale of securities not yet purchased, substantially all of which are transacted on a margin basis subject to individual exchange regulations. As of December 31, 2021, we had margin loans extended to customers of approximately $0.6 billion, of which $84.2 million is within the line item “Receivables from customers” on the statements of financial condition.

Such transactions may expose us to off-balance sheet risk in the event margin requirements are not sufficient to fully cover losses that customers may incur. In the event the customer fails to satisfy obligations, we may be required to purchase or sell financial instruments at prevailing market prices to fulfill the customer's obligations.

We seek to control the risks associated with our customer activities by requiring customers to maintain margin collateral in compliance with various regulatory requirements and internal guidelines which meet or exceed regulatory requirements. We monitor required margin levels daily and pursuant to such guidelines, require customers to deposit additional collateral or to reduce positions when necessary.

Our customer financing and securities settlement activities may require us to pledge customer securities as collateral in support of various secured financing sources such as bank loans and securities loaned. In the event the counterparty is unable to meet its contractual obligation to return customer securities pledged as collateral, we may be exposed to the risk of acquiring the securities at prevailing market prices in order to satisfy customer obligations. We seek to mitigate this risk by monitoring the market value of securities pledged on a daily basis and by requiring adjustments of collateral levels in the event of excess market exposure. In addition, we establish credit limits for such activities and continuously monitor compliance.

Our securities lending transactions are subject to master netting agreements with other broker-dealers; however, amounts are presented gross in the statements of financial condition. We further mitigate risk by using a program with a clearing organization which guarantees the return of cash to us as well as using industry standard software to ensure daily changes to market value are continuously updated and any changes to collateralization are immediately covered.

There were no material losses for unsettled customer transactions for the year ended December 31, 2021 and 2020.

Uncertain Tax Positions

We account for uncertain tax positions in accordance with the authoritative guidance issued under ASC 740-10, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. We may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. ASC 740-10 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure requirements.

Siebert 2021 Form-10K 31

As of December 31, 2021, we recorded an uncertain tax position of $2,418,000 related to various tax matters. As of December 31, 2020, we recorded an uncertain tax position of $1,105,000 related primarily to our 2017 to 2019 amended tax returns, as the anticipated tax refunds exceed the amount that meets the more-likely-than-not recognition threshold.

We recognize interest and penalties related to unrecognized tax benefits on the provision for income taxes line item in the statements of income. Accrued interest and penalties would be included on the related tax liability line in the statements of financial condition.

Long Term Contracts

Contract with NFS

Effective August 1, 2021, MSCO entered into an amendment to its clearing agreement with NFS that, among other things, extends the term of their arrangement for an additional four-year period commencing on August 1, 2021 and ending July 31, 2025. As part of this agreement, we received a one-time business development credit of $3 million, and NFS will pay us four annual credits of $100,000 over the term of the agreement. The amendment also provides for an early termination fee; however, as of December 31, 2021, we do not expect to terminate the contract with NFS before the end of the contract term. Refer to Note 15 – “Deferred Contract Incentive” and Note 22 – “Commitments, Contingencies and Other” for additional detail.

Prepaid Service Contract

We entered into an agreement with InvestCloud for development work related to our online platform. As part of this agreement, we have an obligation to pay for the license fees associated with the InvestCloud Platform for a three-year term. Refer to Note 5 – “Prepaid Service Contract” for additional detail.

Related Party Disclosures

During the course of business, we enter into various agreements and transactions with related parties. Refer to Note 24 – “Related Party Disclosures” for additional detail.

Fair Value Measurements

We have securities that are valued using the fair value framework under ASC 820 within our assets and liabilities as of December 31, 2021 and 2020. The majority of these assets are level 1 U.S. government securities and equity securities and level 2 equity securities in the line item “Securities owned, at fair value” on the statements of financial condition. The liabilities consist of relatively small amounts of level 2 equity securities in the line item “Securities sold, not yet purchased, at fair value.” Refer to Note 6 – “Fair Value Measurements” for additional detail.

Impairment

We have concluded as of December 31, 2021 that there has been no impairment to the carrying value of Siebert’s goodwill and tangible assets. However, due to the termination of RISE’s clearing arrangement with GSCO, substantially all of the revenue producing customers of RISE have transitioned to other prime service providers. The forecasted revenue associated with RISE’s historical customer base was determined to be minimal. As such, we determined that the RISE customer relationships intangible asset was fully impaired, resulting in an impairment loss of $699,000 for the year ended December 31, 2021. Refer to Note 12 – “Goodwill and Intangible Assets, Net” for additional information.

Segment

We concluded as of December 31, 2021, Siebert is comprised of a single operating segment based on the factors related to management’s decision-making framework as well as management evaluating performance and allocating resources based on assessments of Siebert from a consolidated perspective.

Subsequent Events

From January 31, 2022 to the date of this Report, RISE issued and Siebert sold membership interests in RISE to certain employees, directors, and affiliates of RISE and Siebert. This amount represented, as of the date of this Report, an aggregate of 7% of the total issued and outstanding membership interests in RISE.

Siebert 2021 Form-10K 32

Transaction with Hedge Connection

On January 21, 2022, RISE entered into an agreement with Hedge Connection, Inc. (“Hedge Connection”), a Florida corporation and a woman-owned fintech company founded by Lisa Vioni that provides capital introduction software solutions for the prime brokerage industry.

Pursuant to the agreement, Hedge Connection transferred to RISE common stock representing twenty percent (20%) of the outstanding post-closing issued and outstanding capitalization in Hedge Connection and an option from Ms. Vioni to acquire 100% of the remaining interest in Hedge Connection at fair value market at the time of the option exercise, provided such valuation of Hedge Connection is not less than $5 million for a consideration of $1,000,000. This consideration is to be paid in three cash installments over 180 days totaling $600,000 as well as approximately 3.33% of the issued and outstanding membership interests of RISE.

In addition, RISE acquired a technology license agreement from Hedge Connection to use its capital introduction software, Fintroz, for an annual license fee of $250,000, Ms. Vioni provided RISE with the right to appoint one director to the Board of Directors of Hedge Connection, and Ms. Vioni was appointed to the Board of Directors of RISE as well as to the position of President of RISE Prime – Capital Introduction, a division of RISE.

Shelf Registration Statement

On February 18, 2022, Siebert filed a shelf registration statement on Form S-3 with the SEC, File No. 333-262895, pursuant to General Instruction I.B.6 to Form S-3 (the “Baby Shelf Rule”), that was declared effective on March 2, 2022 (the “Registration Statement”). Siebert may from time to time sell any combination of the securities described in the Registration Statement in one or more offerings up to an aggregate offering price of $100.0 million; provided, however, at the time Siebert sells securities pursuant to the Registration Statement, the amount of securities to be sold plus the amount of any securities it has sold during the prior twelve months in reliance on General Instruction I.B.6 may not exceed one-third of the aggregate market value of Siebert’s outstanding Common Stock held by non-affiliates as of a day during the 60 days immediately preceding such sale as computed in accordance with Instruction I.B.6 while Siebert remains subject to the Baby Shelf Rule.

Other Items

On September 17, 2021, Siebert’s shareholders approved the Siebert Financial Corp. 2021 Equity Incentive Plan (the “Plan”) at Siebert’s 2021 Annual Meeting of Shareholders. The Plan provides for the grant of stock options, restricted stock, and other equity awards of Siebert’s common stock to employees, officers, consultants, directors, affiliates, and other service providers of Siebert. There are 3 million shares reserved under the Plan, and Siebert issued no securities under the Plan for the year ended December 31, 2021.

Legal and Regulatory Matters

We are party to certain claims, suits and complaints arising in the ordinary course of business. All of the below legal matters are related to activities related to operations of StockCross Financial Services, Inc. (“StockCross”), prior to our acquisition of StockCross on January 1, 2020.

On July 14, 2021, StockCross entered into a Letter of Acceptance, Waiver, and Consent with FINRA in connection with alleged excessive trading and suitability violations by a registered representative of StockCross in a customer’s account, supervisory failures to comply with supervisory requirements relating to certain equity and options and stock lending transactions, and certain record keeping requirements. Pursuant to the consent, we agreed to a censure, pay a fine of $250,000, and made an undertaking to retain an independent consultant to conduct a comprehensive review of our compliance with suitability rules in connection with solicited equity and options transactions, as well as possession-or-control requirements in connection with the firm’s stock loan business. As of December 31, 2021, this legal matter has been resolved and we paid $250,000 for the year ended December 31, 2021, which is within the line item “Other general and administrative” in the statement of income.

On July 9, 2021, StockCross entered into a Consent Order with the California Department of Financial Protection and Innovation in connection with alleged supervisory failures relating to the sale of Unit Investment Trusts to six customers. Pursuant to the consent order, we agreed to desist and refrain from violations of California law relating to supervision by broker-dealers, to make a payment of $100,000 to the California Department of Financial Protection and Innovation for administrative costs, and to offer restitution of commissions of approximately $315,000 in aggregate to the six customers. We paid $100,000 for the year ended December 31, 2021 related to this legal matter, which is within the line item “Other general and administrative” in the statements of income. As of December 31, 2021, this legal matter has been resolved and the six customers rejected the offer of restitutions.

For activity related to operations of StockCross prior to our acquisition of StockCross, FINRA’s Division of Enforcement is currently investigating UIT transactions that were executed by StockCross that the enforcement staff believes were terminated early. We believe that many of these transactions were UIT transactions that were the subject of our prior settlements with the Commonwealth of Massachusetts and the State of California. All of these transactions occurred prior to our acquisition of StockCross on January 1, 2020. Management cannot at this time assess either the duration or the likely outcome or consequences of the FINRA investigation. Nevertheless, FINRA has the authority to impose sanctions on us or require that it make offers of restitution to other customers who FINRA believes incurred sales charges in early liquidations of UITs. No assurances can be given that a mutual settlement with FINRA regarding the investigation can be reached or that any amount paid in settlement will not be material.

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As of December 31, 2021, all other legal matters are without merit or involve amounts which would not have a material impact on our results of operations or financial position.

New Accounting Standards

We have determined that all accounting standards and policies adopted in the year ended December 31, 2021 did not have a material impact on our financial statements. Refer to Note 2 – “Summary of Significant Accounting Policies” for additional detail.

Critical Accounting Policies

Overview

We generally follow accounting policies standard in the brokerage industry and believe that our policies appropriately reflect our financial position and results of operations. Our management team makes significant estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities included in the consolidated financial statements. The estimates relate primarily to revenue and expense items in the normal course of business as to which we receive no confirmations, invoices, or other documentation, at the time the books are closed for a period. We use our best judgment, based on our knowledge of revenue transactions and expenses incurred, to estimate the amount of such revenue and expenses. We are not aware of any material differences between the estimates used in closing our books for the last five years and the actual amounts of revenue and expenses incurred when we subsequently receive the actual confirmations, invoices or other documentation.

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of our consolidated financial statements requires us to make judgments and estimates that may have a significant impact on our financial results. We believe that the following areas are particularly subject to management's judgments and estimates and could materially affect our results of operations and financial position. Refer to Note 2 – “Summary of Significant Accounting Policies” for additional detail on our significant accounting policies.

Revenue recognition

We have appropriate revenue recognition policies for each our revenue streams. Refer to Note 16 – “Revenue Recognition” for additional detail on our revenue recognition policies.

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

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize deferred taxes in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

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

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We recognize interest and penalties related to unrecognized tax benefits on the provision for income taxes line in the statements of income. Accrued interest and penalties would be included on the related tax liability line in the statements of financial condition.

Goodwill and other intangible assets

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

The valuation of goodwill and acquired intangible assets requires significant judgment and estimates by management. For example, the valuation of certain intangible assets required management’s estimates of future earnings and cash flows as well as judgment in determining market approaches. The useful life of the finite lived intangible assets was determined based on management's estimate of the period over which those intangible assets were expected to provide economic benefit. Management applies judgment in conducting impairment testing for goodwill and intangible assets, including estimates of fair value based on the income or market approach and estimates required to determine the useful lives of finite lived intangible assets.

We test goodwill and all intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, or at least annually. If our estimates of fair value change due to future events differing significantly from the forecasts used to determine fair value or there are changes in our business or other factors, we will assess the amount of impairment and recognize it in our financial statements during that reporting period.

We also evaluate the useful life of finite lived intangible assets on an annual basis to determine if events or trends warrant a change in estimate of the useful life. Changes in the estimated useful lives of finite lived intangible assets could result in the recognition of an impairment or a change in the remaining life of these assets.

We have concluded that as of December 31, 2021, there has been no impairment to the carrying value of Siebert’s goodwill; however, there has been an impairment of $699,000 to the RISE customer relationships intangible asset for the year ended December 31, 2021 due to the termination of GSCO’s clearing arrangement with RISE.

Refer to Note 2 – “Summary of Significant Accounting Policies” and Note 12 – “Goodwill and Intangible Assets, Net” for additional detail.

Accruals for contingent liabilities

Accruals for contingent liabilities related to legal and regulatory claims as well as employee healthcare expenses under our self-insured plan reflect an estimate of probable losses. In making such estimates for legal and regulatory claims, we consider many factors, including the progress of the matter, prior experience and the experience of others in similar matters, available defenses, insurance coverage, indemnification provisions and the advice of legal counsel and other experts. In making such estimates for employee healthcare expenses, we consider many factors, including trends of our health insurance expenses and our insurance reserve limits. We believe that our present insurance coverage and reserves are sufficient to cover currently estimated exposures, but there can be no assurance that we will not incur liabilities in excess of recorded reserves or in excess of our insurance limits. Significant judgment is required in making these estimates, and the actual cost may be materially different than the estimated costs. Refer to Note 22 – “Commitments, Contingencies and Other” for additional detail.

Allowance for credit losses

Management adopted CECL for Siebert which changed the methodology for estimating the allowance for credit losses from an incurred loss model to current expected loss model. Management applied quantitative and qualitative assessments in determining the risk characteristics and pooling different assets that are carried at amortized cost. Management applied the collateral maintenance practical expedient for the secured receivables and fully reserved the unsecured assets that are greater than 90 days past due. Adoption of CECL did not have a material impact on the financial statements due to the existing credit management policies and short-term nature of the assets.

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