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D - SUBORDINATED BORROWINGS AND SECURED DEMAND NOTE RECEIVABLE (Siebert, Brandford, Shank Financial LLC and Subsidiary)
 12 Months Ended
Dec. 31, 2014
Siebert, Brandford, Shank Financial LLC and Subsidiary
  
D - SUBORDINATED BORROWINGS AND SECURED DEMAND NOTE RECEIVABLE

The subordinated debt at December 31, consists of the following:

               
    2014   2013  
               
Payable to affiliate (a)   $ 1,200,000   $ 1,200,000  
Payable to clearing broker (b)   $ 4,000,000     —  
               
    $ 5,200,000   $ 1,200,000  

 

     
  (a) Consists of a Secured Demand Note Collateral Agreement payable to Siebert, an indirect member of the Company, bearing 4% interest and due August 31, 2015, at which time SBS is obligated to repay Siebert any amounts borrowed. Interest expense paid to Siebert in each of 2014, 2013 and 2012 amounted to $48,000.
     
    The secured demand note receivable of $1,200,000 is collateralized by cash equivalents of Siebert of approximately $1,544,000 at December 31, 2014. Interest earned on the collateral amounted to approximately $1,028, $1,500 and $2,900 in 2014, 2013 and 2012, respectively.
     
  (b) On December 9, 2014, SBS entered into a temporary subordinated loan agreement with National Financial Services, its clearing broker, in the amount of $4,000,000 bearing interest at the federal funds rate plus 6% and maturing January 22, 2015. The note was repaid on January 22, 2015. Interest expense accrued in 2014 amounted to approximately $16,000.
     
    The subordinated borrowings are available in computing net capital under the Securities and Exchange Commission’s (“SEC”) Uniform Net Capital Rule. To the extent that such borrowing is required for the Company’s continued compliance with minimum net capital requirements, it may not be repaid.
     
    On March 24, 2014, SBS entered into a temporary subordinated loan agreement with National Financial Services, its clearing broker, in the amount of $5,000,000 bearing interest at the federal funds rate plus 6% and maturing May 5, 2014. The note was repaid on May 5, 2014. Interest expense paid was $36,542.