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J - COMMITMENTS, CONTINGENCIES AND OTHER | 12 Months Ended
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Dec. 31, 2014
J - COMMITMENTS, CONTINGENCIES AND OTHER |
| (1) | 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 customer 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 are unable to fulfill their contractual obligations. There were no material losses for unsettled customer transactions in 2014, 2013 or 2012. Credit risk represents the potential loss that would occur if counterparties fail to perform pursuant to the terms of their obligations. The Company is subject to credit risk to the extent a custodian or broker with whom it conducts business is unable to fulfill contractual obligations.
| (2) | In 2012, Siebert was named as one of the defendants in a class action pending in the United States District Court, Southern District of New York. The complaint was brought on behalf of a class of purchasers in a public offering by Lehman Brothers Holdings, Inc. of $1,500,000,000 of 6.75% Subordinated Notes due 2017 (the “Notes”) as to Siebert and certain smaller issuances of other securities. The complaint asserted that Siebert and other underwriters of the Notes violated Section 11 of The Securities Act of 1933 in that relevant offering materials were false and misleading. Siebert had agreed to purchase $15 million of the Notes and $462,953 of the other securities as an underwriter in the offerings. Siebert and the plaintiffs’ class agreed to resolve all claims against Siebert in consideration of a $1 million payment by Siebert which was accrued and
| charged to expense in 2011 and paid in 2012. In the prior year certain plaintiffs did not agree to a settlement or purchased securities which were not covered by the settlement. In 2013, all such claims were either dismissed or settled for an amount that was not material.
| Siebert is party to certain claims, suits and complaints arising in the ordinary course of business. In the opinion of management, all such claims, suits and complaints are without merit, or involve amounts which would not have a significant effect on the financial position or results of operations of the Company.
(3) | In July 2014, the Company entered into a settlement agreement in regards to a dispute with a former employee, in which the former employee sought, among other things, damages arising from his separation from the Company. The Company asserted counter claims in the arbitration. Pursuant to the settlement, the Company paid $4,300,000 to the former employee, and the claims and counterclaims have been dismissed and released. The accompanying 2014 statement of operations reflects a charge to give effect to the settlement.
(4) | The Company rents discount retail brokerage and other office space under long-term operating leases expiring in various periods through 2017. These leases call for base rent plus escalations for taxes and operating expenses.
| Future minimum base rental payments under these operating leases are as follows:
Year Ending December 31, |  | Amount |
2015 |  |  | 615,000 |
2016 |  |  | 482,000 |
2017 |  |  | 80,000 |
|  | $ | 1,177,000 |
| Rent expense, including escalations for operating costs, amounted to approximately $788,000, $1,046,000 and $907,000 for the years ended December 31, 2014, 2013 and 2012, respectively. Rent is being charged to expense over the entire lease term on a straight-line basis.
(5) | Siebert sponsors a defined contribution retirement plan under Section 401(k) of the Internal Revenue Code that covers substantially all employees. Participant contributions to the plan are voluntary and are subject to certain limitations. Siebert may also make discretionary contributions to the plan. No contributions were made by Siebert in 2014, 2013 and 2012.
(6) | Siebert is party to a Secured Demand Note Collateral Agreement with SBS which obligates Siebert to lend SBS, on a subordinated basis, up to $1,200,000. The secured demand note payable held by SBS and a related $1,200,000 receivable due from SBS are included in investments in and advances to equity investees in the accompanying consolidated statement of financial condition. Amounts that Siebert is obligated to lend under this arrangement are collateralized by cash equivalents of $1,532,000. Any amounts loaned will bear interest at 4% per annum and are repayable on August 31, 2015.
(7) | During 2012, commission income earned from one customer accounted for approximately 12% of total revenue.
Siebert, Brandford, Shank Financial LLC and Subsidiary |
J - COMMITMENTS, CONTINGENCIES AND OTHER | SBS rents office space under long-term operating leases expiring through 2020. These leases call for base rent plus escalations for property taxes and other operating expenses. Future minimum base rent under these operating leases as of December 31, 2014 are as follows:
Year Ending |  |  |  |
December 31, |  | Amount |
2015 |  |  | 1,043,000 |
2016 |  |  | 886,000 |
2017 |  |  | 639,000 |
2018 |  |  | 627,000 |
2019 |  |  | 587,000 |
Thereafter |  |  | 185,000 |
|  | $ | 3,967,000 |
Rent expense, including taxes and operating expenses for 2014, 2013 and 2012 amounted to $1,186,967, $1,088,755, and $1,052,908 respectively. In prior years, SBS purchased leasehold improvements of approximately $620,000 which were reimbursed by the landlord. SBS recorded such reimbursement as a credit to deferred rent liability, which is being recognized as a reduction of rental expense on a straight-line basis over the term of the lease. Rent expense is being charged to operations on a straight-line basis resulting in a deferred rent liability which, including the reimbursement discussed above amounted to $549,287 at December 31, 2014 and $622,075 at December 31, 2013.

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