SIEBERT FINANCIAL CORP - Quarter Report: 2004 September (Form 10-Q)

a8701_10q

U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2004

[ ] Transition report under Section 13 or 15(d) of the Exchange Act

For the transition period from _____________ to _____________

Commission file number 0-5703

Siebert Financial Corp.
(Exact Name of Issuer as Specified in its Charter)

New York	11-1796714
(State or Other Jurisdiction of Incorporation)	(I.R.S. Employer Identification No.)

885 Third Avenue, New York, NY 10022
(Address of Principal Executive Offices)

(212) 644-2400
(Issuer’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes No X

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of October 28, 2004, there were 22,087,487 shares of Common Stock, par value $.01 per share, outstanding.

Unless the context otherwise requires, the “Company” shall mean Siebert Financial Corp. and its wholly owned subsidiaries and “Siebert” shall mean Muriel Siebert & Co., Inc., a wholly owned subsidiary of the Company.

Certain statements contained in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” below and elsewhere in this document, as well as oral statements that may be made by the Company or by its officers, directors or employees acting on the Company’s behalf, that are not statements of historical or current fact constitute “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward looking statements involve risks and uncertainties and known and unknown factors that could cause the actual results of the Company to be materially different from the historical results or from any future results expressed or implied by such forward looking statements, including, without limitation: changes in general economic and market conditions; fluctuations in volume and prices of securities; demand for brokerage and investment banking services; competition within and without the discount brokerage business, including the offer of broader services; competition from electronic discount brokerage firms offering lower rates on commissions than the Company; the prevalence of a flat fee environment; decline in participation in equity or municipal finance underwritings; limited trading opportunities; the method of placing trades by the Company’s customers; computer and telephone system failures; the level of spending by the Company on advertising and promotions; trading errors and the possibility of losses from customer non-payment of amounts due; other increases in expenses and changes in net capital or other regulatory requirements. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date when such statements were made or to reflect the occurrence of unanticipated events. An investment in the Company involves various risks, including those mentioned above and those which are detailed from time to time in the Company’s Securities and Exchange Commission filings.

Part I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Siebert Financial Corp. & Subsidiaries
Consolidated Statements of Financial Condition

	September 30,			December 31,
	2004			2003
	(Unaudited)

ASSETS
Cash and cash equivalents	$	27,758,000		$	24,732,000
Cash equivalents – restricted		1,300,000			1,300,000
Receivable from clearing brokers		1,950,000			1,487,000
Advance to clearing broker		1,500,000			1,500,000
Securities owned, at market value		-			1,226,000
Furniture, equipment and leasehold improvements, net		1,508,000			1,863,000
Investment in and advances to equity investee		3,580,000			3,212,000
Prepaid expenses and other assets		1,481,000			1,807,000
Intangibles, net		2,181,000			2,346,000
Deferred tax asset		638,000			553,000

	$	41,896,000		$	40,026,000


LIABILITIES AND STOCKHOLDERS’ EQUITY
Securities sold, not yet purchased, at market value		5,000			6,000
Accounts payable and accrued liabilities		6,248,000			4,885,000

		6,253,000			4,891,000

Commitments and contingent liabilities

Stockholders’ equity:
Common stock, $.01 par value; 49,000,000 shares authorized,
22,983,917 shares issued and 22,085,201 and 22,222,014 shares
outstanding at September 30, 2004 and December 31, 2003, respectively		229,000			229,000
Additional paid-in capital		17,931,000			17,931,000
Retained earnings		21,567,000			20,500,000
Less: 898,716 and 761,903 shares of treasury stock, at cost at September 30, 2004
and December 31, 2003, respectively		(4,084,000	)		(3,525,000	)

		35,643,000			35,135,000


	$	41,896,000		$	40,026,000

See notes to consolidated financial statements.

Siebert Financial Corp. & Subsidiaries
Consolidated Statements of Income
(Unaudited)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,

	2004			2003		2004		2003


Revenues:
Commissions and fees	$	5,526,000		$	5,256,000	$	16,971,000	$	14,643,000
Investment banking		508,000			213,000		951,000	931,000
Trading profits		161,000			213,000		593,000	617,000
Income from equity investee		850,000			241,000		1,532,000	1,704,000
Interest and dividends		122,000			85,000		302,000	328,000

		7,167,000		6,008,000			20,349,000	18,223,000


Expenses:
Employee compensation and benefits		2,517,000		2,025,000			7,809,000	6,454,000
Clearing fees, including floor brokerage		1,265,000		1,057,000			2,704,000	2,963,000
Advertising and promotion		196,000			300,000		894,000	963,000
Communications		490,000			605,000		1,778,000	2,096,000
Occupancy		267,000			277,000		802,000	842,000
Interest		25,000			-		25,000		1,000
Other general and administrative		1,680,000		1,569,000			4,442,000	4,815,000

		6,440,000		5,833,000			18,454,000	18,134,000


Income before income taxes		727,000			175,000		1,895,000		89,000

Provision for income taxes		305,000			60,000		828,000		22,000


Net income	$	422,000		$	115,000	$	1,067,000	$	67,000


Net income per share of common stock -
Basic and Diluted	$	.02		$	.01	$	.05		$-
Weighted average shares outstanding -
Basic	22,094,294		22,258,686				22,122,956	22,324,135
Weighted average shares outstanding -
Diluted	22,221,125		22,484,506				22,296,916	22,484,020

See notes to consolidated financial statements.

Siebert Financial Corp. & Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)

	Nine Months Ended
	September 30,

	2004			2003

Cash flows from operating activities:
Net income	$	1,067,000		$	67,000
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		1,151,000			1,314,000
Income from equity investee		(1,532,000	)		(1,704,000	)
Deferred taxes		(85,000	)		(34,000	)
Changes in:
Securities owned, at market value		1,226,000			1,301,000
Receivable from clearing brokers		(463,000	)		(510,000	)
Prepaid expenses and other assets		326,000			285,000
Securities sold, not yet purchased, at market value		(1,000	)
Accounts payable and accrued liabilities		1,363,000			166,000

Net cash provided by operating activities		3,052,000			885,000

Cash flows from investing activities:
Purchase of furniture, equipment and leasehold improvements		(231,000	)		(148,000	)
Return of deposit on equipment					241,000
Advance to clearing broker					(1,500,000	)
Purchase of customer accounts		(400,000	)		(1,100,000	)
Payment of advances by equity investee		(64,000	)		(40,000	)
Distribution from equity investee		1,228,000			1,443,000

Net cash provided by (used in) investing activities		533,000			(1,104,000	)

Cash flows from financing activities:
Proceeds from exercise of options					36,000
Repurchase of common stock		(559,000	)		(569,000	)

Net cash used in financing activities		(559,000	)		(533,000	)


Net increase (decrease) in cash and cash equivalents		3,026,000			(752,000	)

Cash and cash equivalents - beginning of period		24,732,000			22,498,000


Cash and cash equivalents - end of period	$	27,758,000		$	21,746,000

Supplemental cash flow disclosures:
Cash paid for:
Interest	$	25,000			$1,000
Income taxes	$	462,000		$	61,000

See notes to consolidated financial statements.

Siebert Financial Corp. & Subsidiaries
Notes to Consolidated Financial Statements
Nine Months Ended September 30, 2004 and 2003
(Unaudited)

1. Organization and Basis of Presentation:

The consolidated financial statements include the accounts of Siebert Financial Corp. (the “Company”) and its wholly owned subsidiaries Muriel Siebert & Co., Inc. (“Siebert”) and Siebert Women’s Financial Network, Inc. (“WFN”). All material intercompany balances have been eliminated. The statements are unaudited; however, in the opinion of management, all adjustments considered necessary to reflect fairly the Company’s financial position and results of operations, consisting of normal recurring adjustments, have been included.

The municipal bond investment banking business is being conducted by Siebert Brandford Shank & Co., LLC ("SBS"), an investee, which is accounted for by the equity method of accounting (see Note 8). The equity method provides that Siebert record its share of SBS's earnings or losses.

The accompanying consolidated financial statements do not include all of the information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles. Accordingly, the statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003. Because of the nature of the Company’s business, the results of any interim period are not necessarily indicative of results for a full year.

2. Stock-Based Compensation

Statement of Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based Compensation ("SFAS 123") as amended by SFAS No. 148, (Accounting for Stock-Based Compensation – Transition and Disclosure an amendment to SFAS 123), allows the fair value of stock-based compensation to be included in expense over the period earned; alternatively, if the fair value of stock-based compensation awards are not included in expense, SFAS 123 requires disclosure of net income (loss), on a pro forma basis, as if expense treatment had been applied. As permitted by SFAS 123, the Company continues to account for such compensation under Accounting Principles Board Opinion No. 25 ("APB 25"), Accounting for Stock Issued to Employees, and related interpretations, pursuant to which no compensation cost was recognized in connection with the issuance of stock options, as all options granted under the 1997 Stock Option Plan had an exercise price equal to or greater than the fair value of the underlying common stock on the date of grant. Had the Company elected to recognize compensation expense for the stock option plan, consistent with the method prescribed by SFAS 123, the Company's net income and net income per share for the three months and nine months ended September 30, 2004 and 2003 would have decreased the pro forma amounts as follows:

	Three Months						Nine Months
	Ended September 30,						Ended September 30,
	2004			2003			2004			2003


Net income, as reported	$	422,000		$	115,000		$	1,067,000		$	67,000
Stock-based employee compensation determined
under APB 25		-			-			-			-
Stock-based employee compensation determined
under the fair value based method, net of tax effect	(98,000		)	(74,000		)	(265,000		)		(682,000	)


Pro forma net income (loss)	$	324,000		$	41,000		$	802,000		$	(615,000	)


Net income (loss) per share - basic:

As reported	$	.02	$	.01	$	.05	$	-
Pro forma	$	.02	$	-	$	.04	$	(.03	)

Net income (loss) per share - diluted:

As reported	$	.02	$	.01	$	.05	$	-
Pro forma	$	.02	$	-	$	.04	$	(.03	)

3. Net Capital:

Siebert is subject to the Securities and Exchange Commission’s Uniform Net Capital Rule (Rule 15c3-1), which requires the maintenance of minimum net capital. Siebert has elected to use the alternative method, permitted by the rule, which requires that Siebert maintain minimum net capital, as defined, equal to the greater of $250,000 or two percent of aggregate debit balances arising from customer transactions, as defined. (The net capital rule of the New York Stock Exchange also provides that equity capital may not be withdrawn or cash dividends paid if resulting net capital would be less than five percent of aggregate debits.) As of September 30, 2004, Siebert had net capital of approximately $15,579,000 as compared with net capital requirements of $250,000.

4. Capital Transactions:

On May 15, 2000, the board of directors of the Company authorized a stock buy back program of up to one million common shares. Shares will be purchased from time to time in the open market and in private transactions. Through September 30, 2004, 898,716 shares have been purchased at an average price of $4.54 per share.

5. Option Grants:

During the nine months ended September 30, 2004, the Company’s Board of Directors granted options to one director and two employees of the Company to purchase an aggregate of 90,000 shares of the Company’s common stock at exercise prices ranging from $3.75 to $4.87 per share, in each case the fair market value on the dates of grant. The employee options granted during the period vest 20% per year for five years and expire ten years from the date of grant. The director’s option granted during the period, vests in six months and expires five years from the date of grant.

6. Intuit Lawsuit Update:

As previously disclosed, Siebert filed a lawsuit against Intuit, Inc. (“Intuit”), in New York State Supreme Court on September 17, 2003 (the “Intuit Lawsuit”), seeking not less than $11.1 million in compensatory damages and $33.3 million in punitive damages for claims relating to the Joint Brokerage Service (the “JBS”) conducted during the years ended December 31, 2003 and 2002 under the Strategic Alliance Agreement between Siebert and Intuit. A motion by Intuit to stay the lawsuit and require that the dispute be submitted to arbitration was denied in a decision of the Supreme Court dated January 7, 2004. Intuit’s motion to reargue the Court’s decision was denied by the Court in a decision dated June 7, 2004. Intuit appealed both decisions to the Appellate Division of the Supreme Court. In addition, on July 15, 2004, the Appellate Division of the Supreme Court granted Intuit’s motion for a stay of litigation pending its determination of Intuit’s appeal. By a unanimous decision and opinion dated October 28, 2004, the Appellate Division affirmed the lower Court's January 7, 2004 decision, denying Intuit's motion to compel arbitration and stay litigation. Although not mentioned in its opinion, the effect of the Appellate Division's decision is to ratify the Supreme Court's June 7, 2004 order. As a result of the Appellate Division's decision, the temporary stay of litigation pending Intuit's appeal should be vacated.

7. Account Purchases:

In February 2004, Siebert acquired certain retail discount brokerage accounts from Wall Street Discount Corp. These accounts were transferred to Siebert in April 2004. As of September 30, 2004, the purchase price of the customer accounts has been recorded in “Intangibles” and is being amortized over a five-year period.

8. Siebert Brandford Shank & Co., LLC:

Summarized financial data of SBS as of and for the nine months ended September 30, 2004 and 2003 is set forth below. Siebert holds a 49% ownership interest in SBS.

	2004		2003


Total assets	$	20,905,000	$	9,897,000
Total liabilities, including subordinated liabilities of $1,200,000	$	13,822,000	$	3,828,000
Total members’ capital	$	7,083,000	$	6,069,000
Total revenues	$	13,089,000	$	11,632,000
Net income	$	3,126,000	$	3,478,000

Siebert charged SBS $180,000 for the nine months ended September 30, 2004 for general and administrative services and rent, which Siebert believes approximates the cost of furnishing such services.

Siebert’s share of undistributed earnings from SBS amounted to $3,079,000 and $2,582,000 at September 30, 2004 and 2003, respectively. Such amounts may not be immediately available for distribution to Siebert for various reasons including the amount of SBS’s available cash, the provisions of the agreement between Siebert and the principals, and SBS’s continued compliance with its net capital and other regulatory requirements.

9. Commitments and Contingent Liabilities:

As previously disclosed, Siebert terminated the fully disclosed clearing agreement (the “Clearing Agreement”) with Pershing LLC (formerly the Pershing division of Donaldson, Lufkin & Jenrette Securities Corporation) (“Pershing”). Based on consultation with counsel, Siebert believes that the $1,500,000 that it advanced to Pershing in January 2003 should be returned and that Pershing may be liable for damages. Pershing has expressed its belief that it is entitled to retain the advance and receive a minimum of $3 million for its unreimbursed costs, a termination fee of $500,000 and $5 million for lost revenues. Siebert believes the Pershing claims are without merit. No proceeding has been instituted by either party. Accounts purchased by Siebert from other firms and the JBS accounts that transferred to Siebert in December 2003, which were cleared through Pershing, are now cleared through National Financial Services, LLC (NFS).

In August 2004, Siebert participated as an underwriter in the Google, Inc. initial public offering. To participate as an underwriter, the lead Investment Banks (the “Banks”) requested that each underwriter provide the Banks with a $25 million Letter of Credit on behalf of Siebert in favor of the Banks. To obtain the Letter of Credit, Siebert entered into a Temporary Subordinated Loan Agreement with NFS. On August 6, 2004, Siebert entered into a Letter of Credit for $25 million and terminated the Letter of Credit and paid the Temporary Subordinated Loan Agreement with NFS on September 15, 2004.

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

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion should be read in conjunction with the Company’s audited consolidated financial statements as of and for the year ended December 31, 2003 and the unaudited consolidated financial statements and the notes thereto contained elsewhere in this Quarterly Report.

Business Environment

The market was weak in the third quarter of 2004 due to the war on terrorism, geo-political uncertainties, rising interest rates, higher oil prices, nearly six weeks of hurricanes in the southeast and uncertainty relating to the upcoming presidential election all of which have created a lack of investor interest in investing in stocks. Competition in the brokerage industry remains intense and consolidation continues.

The Company, like other securities firms, is directly affected by general economic and market conditions including fluctuations in volume and prices of securities, changes and prospects for changes in interest rates and demand for brokerage and investment banking services, all of which can affect the Company’s relative profitability. In periods of reduced market activity, profitability is likely to be adversely affected because certain expenses, including salaries and related costs, portions of communications costs and occupancy expenses, remain relatively fixed. Earnings or loss for any period should not be considered representative of any other period.

Recent Developments

In June 2004, Siebert expanded its Capital Markets Group (SCM) and New York Stock Exchange (NYSE) Floor Operations. SCM provides brokerage service to both institutional investors and issuers of equity and fixed-income securities. The NYSE Floor Operation provides institutional investors with direct access to Siebert’s trading professionals on the NYSE floor.

On May 15, 2000, the board of directors of the Company authorized the repurchase of up to 1,000,000 shares of the Company’s common stock. Shares will be purchased from time to time, in the discretion of the Company, in the open market and in private transactions. Through September 30, 2004, 898,716 shares have been purchased at an average price of $4.54 per share. The Company intends to continue acquiring shares pursuant to its stock repurchase program based upon the price of the stock and in accordance with applicable rules and regulations.

Critical Accounting Policies

The Company follows accounting policies standard in the brokerage industry and believes that its policies appropriately reflect its financial position and results of operations. Management has identified the use of “Estimates” as its critical accounting policy. These estimates relate primarily to revenue and expense items in the normal course of business as to which the Company receives no confirmations, invoices, or other documentation at the time the books

are closed for a period. The Company uses its best judgment, based on its knowledge of these revenue transactions and expenses incurred, to estimate the amounts of such revenue and expense. The Company is not aware of any material differences between the estimates used in closing its books for the last five years and the actual amounts of revenue received and expenses incurred when the Company subsequently receives the actual confirmations, invoices or other documentation. Estimates are also used in determining the useful lives of tangible and intangible assets, and the fair market value of intangible assets. Management believes that its estimates are reasonable.

Results of Operations

The Company believes that its core business is performing relatively well, given the current difficult business environment for discount and online brokers. The Company had net income for the three and nine months ended September 30, 2004 of $422,000 and $1,067,000, respectively.

Three Months Ended September 30, 2004 Compared to Three Months Ended September 30, 2003

Total revenues for the three months ended September 30, 2004 were $7.2 million, an increase of $1,159,000 or 19.3% from the same period in 2003.

Commission and fee income for the three months ended September 30, 2004 was $5.5 million, an increase of $270,000 or 5.1% from the same period in 2003 due to higher margin debit balances maintained by the Company’s retail customer base for the same period in 2003.

Investment banking revenues for the three months ended September 30, 2004 were $508,000, an increase of $295,000 or 138.5% from the same period in 2003 due to an increase in activity in the new issue market and the addition of a new capital markets personnel.

Income from the Company’s equity investment in SBS, for the three months ended September 30, 2004 was $850,000 compared to income of $241,000, an increase of $609,000 or 252.7% from the same period in 2003. This increase was due to increased activity in the municipal bond market.

Trading profits were $161,000 for the three months ended September 30, 2004, a decrease of $52,000 or 24.4% over the same period in 2003 due to an overall decrease in trading margins.

Interest and dividends for the three months ended September 30, 2004 were $122,000, an increase of $37,000 or 43.5% from the same period in 2003 primarily due to interest earned on a $25 million subordinated loan obtained from the Company’s clearing firm that was required by an issuer to participate in its initial public offering.

Total expenses for the three months ended September 30, 2004 were $6.4 million, an increase of $607,000 or 10.4% from the same period in 2003.

Employee compensation and benefit costs for the three months ended September 30, 2004 were $2.5 million, an increase of $492,000 or 24.3% from the same period in 2003. This increase was primarily due to the hiring of the Company’s General Counsel, the expansion of the Company’s Capital Markets Group and New York Stock Exchange Floor Operation.

Clearing and floor brokerage costs for the three months ended September 30, 2004 were $1.3 million, an increase of $208,000 or 19.7% from the same period in 2003 primarily due to increased volume of trade executions.

Advertising and promotion expenses for the three months ended September 30, 2004 were $196,000, a decrease of $104,000 or 34.7% from the same period in 2003 primarily due to management’s decision to spend less for advertising and promotion.

Communications expense for the three months ended September 30, 2004, was $490,000, a decrease of $115,000 or 19.0% from the same period in 2003 due primarily due to management’s effort to control these costs.

Occupancy costs for the three months ended September 30, 2004 were $267,000, a decrease of $10,000 or 3.6% from the same period in 2003. This decrease was primarily due to the combining of the Company’s Boca Raton office with Your Discount Broker’s, Inc. (“YDB”) Boca Raton’s office in the second quarter of 2004.

Other general and administrative expenses were $1.7 million, an increase of $111,000 or 7.1% from the same period in 2003. This increase was primarily the result of costs relating to the Company entering into the commission recapture business in the third quarter of 2004 and the cost of leasing an additional seat on the New York Stock Exchange as the Company expanded the New York Stock Exchange Floor Operation. These increases were offset in part by the absence in 2004 of the $149,000 expenditures in 2003 for the development of products relating to the JBS.

For the three months ended September 30, 2004 and 2003, the Company recorded a provision for taxes of $305,000 and $60,000, respectively, due to the Company’s income before income tax of $727,000 and $175,000, respectively.

Nine Months Ended September 30, 2004 Compared to Nine Months Ended September 30, 2003

Total revenues for the nine months ended September 30, 2004 were $20.4 million, an increase of $2.1 million or 11.7% from the same period in 2003.

Commission and fee income for the nine months ended September 30, 2004 was $17.0 million, an increase of $2.3 million or 15.9% from the same period in 2003 due to higher trading volume and increased margin debit balances maintained by the Company’s retail customer base.

Investment banking revenues for the nine months ended September 30, 2004 were $951,000, an increase of $20,000 or 2.2% from the same period in 2003 due to more activity in the new issue market.

Income from the Company’s equity investment in SBS, for the nine months ended September 30, 2004 was $1,532,000 compared to income of $1,704,000, a decrease of $172,000 or 10.1% from the same period in 2003. This decrease was due to decreased activity in the municipal bond market in the first and second quarter of 2004.

Trading profits were $593,000 for the nine months ended September 30, 2004, a decrease of $24,000 or 3.9% over the same period in 2003 due to an overall decrease in trading margins.

Interest and dividends for the nine months ended September 30, 2004 were $302,000, a decrease of $26,000 or 7.9% from the same period in 2003 primarily due to lower interest rates and maturing of municipal bonds that provided higher yields.

Total expenses for the nine months ended September 30, 2004 were $18.5 million, an increase of $320,000 or 1.8% from the same period in 2003.

Employee compensation and benefit costs for the nine months ended September 30, 2004 were $7.8 million, an increase of $1,355,000 or 21.0% from the same period in 2003. This increase was primarily due to an increase in bonus accruals, the hiring of the Company’s General Counsel and the expansion of the Company’s Capital Markets Group and New York Stock Exchange Floor Operations.

Clearing and floor brokerage costs for the nine months ended September 30, 2004 were $2.7 million, a decrease of $259,000 or 8.7% from the same period in 2003 primarily due to increased volume of trade executions, offset by a one time commission rebate of $800,000 from the Company’s clearing firm.

Advertising and promotion expenses for the nine months ended September 30, 2004 were $894,000, a decrease of $69,000 or 7.2% from the same period in 2003 primarily due to management’s decision to spend less for advertising and promotion.

Communications expense for the nine months ended September 30, 2004, was $1.8 million, a decrease of $318,000 or 15.2% from the same period in 2003 due primarily management’s effort to control these costs.

Occupancy costs for the nine months ended September 30, 2004 were $802,000, a decrease of $40,000 or 4.8% from the same period in 2003. This decrease was primarily due to the closing of the YDB office in Aventura, Florida in 2003 and the combining of the Company’s Boca Raton office with YDB’s Boca Raton office into a larger branch, in the second quarter of 2004.

Other general and administrative expenses were $4.4 million, a decrease of $373,000 or 7.8% from the same period in 2003. This decrease was primarily due to the elimination of product development costs relating to the JBS offset by costs relating to the Company entering into the commission recapture business in the third quarter of 2004 and the cost of leasing an additional seat on the New York Stock Exchange as the Company expanded the New York Stock Exchange Floor Operation.

For the nine months ended September 30, 2004 and 2003, the Company recorded a provision for taxes of $828,000 and $22,000, respectively, due to the Company’s income before income tax of $1.9 million and $89,000, respectively.

Liquidity and Capital Resources

The Company’s assets are highly liquid, consisting generally of cash, money market funds and marketable securities. The Company’s total assets at September 30, 2004 were $41.9 million. As of that date, $29.7 million, or 71%, of total assets were regarded by the Company as highly liquid.

Siebert is subject to the net capital requirements of the SEC, the NYSE and other regulatory authorities. At September 30, 2004, Siebert’s regulatory net capital was $15.6 million, $15.3 million in excess of its minimum capital requirement of $250,000.

Siebert has entered into a Secured Demand Note Collateral Agreement with SBS under which it is obligated to lend to SBS up to $1.2 million pursuant to a secured promissory note on a subordinated basis. Amounts pledged by Siebert under the facility are reflected on the Company’s balance sheet as “cash equivalents – restricted”. SBS pays Siebert interest on this amount at the rate of 10% per annum. The facility expires on August 31, 2005, at which time SBS is obligated to repay to Siebert any amounts borrowed by SBS thereunder.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Working capital is generally temporarily invested in dollar denominated money market funds and overnight certificates of deposits. These investments are not subject to material changes in value due to interest rate movements. The Company also invests in certain short-term municipal bonds, the values of which may fluctuate during the period they are held by the Company.

In the normal course of its business, Siebert enters into transactions in various financial instruments with off-balance sheet risk. This risk includes both market and credit risk, which may be in excess of the amounts recognized in the Company’s financial statements. Retail customer transactions are cleared through clearing brokers on a fully disclosed basis. If customers do not fulfill their contractual obligations, the clearing broker may charge Siebert for any loss incurred in connection with the purchase or sale of securities at prevailing market prices to satisfy the customers’ obligations. Siebert regularly monitors the activity in its customer accounts for compliance with its margin requirements. Siebert is exposed to the risk of loss on unsettled customer transactions if customers and other counter parties are unable to fulfill their contractual obligations.

Item 4. Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of management, including the Company’s President and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report pursuant to Exchange Act Rule 13a-15 under the Securities Exchange Act of 1934. Based upon that evaluation, the President and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic Securities and Exchange Commission filings.

There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II - OTHER INFORMATION

Item 1. Legal Proceedings

See Part I-Item 1 “Notes to Consolidated Financial Statements-Intuit Lawsuit Update” with respect to the Company’s lawsuit against Intuit Inc which was filed in New York State Supreme Court, County of New York on September 17, 2003, alleging, among other things, Intuit’s breach of contractual obligations, breach of fiduciary duties and misrepresentation and/or fraud, all relating to the Joint Brokerage services conducted under the Strategic Alliance Agreement between Siebert and Intuit.

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds

Period	Total Number Of Shares Purchased	Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans(1)	Maximum Number of Shares That May Yet Be Purchased Under The Plan
July 2004 August 2004 September 2004 Total	- 3,014 8,900 11,914	- $3.30 $3.74 $3.63	886,802 889,816 898,716 898,716	113,198 110,184 101,284 101,284

(1) On May 15, 2000, the Board of Directors of the Company authorized a buy back of up to one million shares of the Company’s common stock. Under this program, shares are purchased from time to time, at the Company’s discretion, in the open market and in private transactions.

Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other Information

None

Item 6. Exhibits

Exhibits.

31.1 Certification of Muriel F. Siebert pursuant to Exchange Act Rules 13a-14 and 15d-14, as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification of Joseph M. Ramos, Jr. pursuant to Exchange Act Rule 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Certification of Muriel F. Siebert of Periodic Financial Report under Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification of Joseph M. Ramos, Jr. of Periodic Financial Report under Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SIEBERT FINANCIAL CORP.

By: /s/ Muriel F. Siebert
       Muriel F. Siebert
       Chairwoman and President
       (principal executive officer)

Dated: November 15, 2004

By: /s/ Joseph M. Ramos, Jr.
       Joseph M. Ramos, Jr.
       Executive Vice President and Chief Financial Officer
       (principal financial and accounting officer)

Dated: November 15, 2004