EXHIBIT 10.7


                   LADENBURG THALMANN FINANCIAL SERVICES INC.
                               590 Madison Avenue
                            New York, New York 10022



Gentlemen:

         This letter shall serve to amend ("Amendment No. 1") the Investor
Rights Agreement ("Agreement"), dated as of February 8, 2001, among Ladenburg
Thalmann Financial Services Inc. (f/k/a GBI Capital Management Corp.)
("Corporation"), New Valley Corporation, New Valley Capital Corporation (f/k/a
Ladenburg, Thalmann Group Inc.), Berliner Effektengesellschaft AG, Frost-Nevada,
Limited Partnership and The Principals (capitalized terms used herein that are
defined in the Agreement shall have the same meanings herein as in the
Agreement).

         1.       The term "Warrants" shall have the following meaning in the
Agreement, as amended hereby:

                  "Warrants" means, collectively, the Warrants issued by the
         Corporation to New Valley and Lender in connection with the separate
         loans made by each party to the Corporation as of August 31, 2001."

         2.       The definition of "Registrable Securities" is hereby amended
to read as follows:

                  "Registrable Securities" means only (i) the shares of Common
         Stock issued or issuable to the Sellers under the Stock Purchase
         Agreement, (ii) shares of Common Stock issuable upon conversion of the
         Notes, (iii) shares of Common Stock issuable upon exercise of the
         Warrants and (iv) any additional shares of Common Stock by way of a
         dividend, stock split or other distribution in respect of such shares,
         and shall not include any other securities of the Corporation acquired
         by or issued to the parties hereto. As to any particular Registrable
         Securities, once issued such securities shall cease to be Registrable
         Securities when (i) a registration statement with respect to the sale
         of such securities shall have become effective under the 1933 Act and
         such securities shall have been disposed of in accordance with such
         registration statement, (ii) they shall have been distributed to the
         public pursuant to Rule 144 or (iii) they shall have ceased to be
         outstanding."

         3.       The first sentence of Section 3(a)(i) of the Agreement is
hereby amended to read as follows:

                  "(i) Grant of Right. As soon as practicable after August 31,
         2001, the Corporation shall file, and use commercially reasonable
         efforts to cause to be declared effective by the Commission, a
         registration statement (the "Required Registration Statement") to
         register the Registrable Securities owned by the Sellers and the Lender
         (the "Holders") for resale pursuant to the 1933 Act."

         4.       The parties hereby agree that, for purposes of Section 3(a)(i)
of the Agreement, the Corporation has used commercially reasonable efforts to
file, and cause to be declared effective, the Required Registration Statement as
it was required to prior to this Amendment No. 1. Accordingly, the parties agree
that no claim shall be made against the Corporation arguing any failure on the
Corporation's part to satisfy its obligations under Section 3 of the Agreement
prior to this Amendment No. 1.







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         5.       The parties agree that, because David Thalheim has held the
shares owned by him that are covered by the Agreement for more than two years,
and at the present time, and for the past 90 days, has not been an affiliate of
the Corporation, Mr. Thalheim may sell his shares in the open market pursuant to
Rule 144(k). Accordingly, the parties agree that, as soon as practicable
hereafter, an opinion from Graubard Miller shall be issued to American Stock
Transfer & Trust Company, transfer agent for the Corporation's common stock,
authorizing the removal of all legends from Mr. Thalheim's stock certificate.

Dated as of August 31, 2001

                                  LADENBURG THALMANN FINANCIAL SERVICES INC.


                                       /s/ Victor M. Rivas
                                  By:________________________________
                                      Name:  Victor M. Rivas
                                      Title: CEO

AGREED:

NEW VALLEY CORPORATION

      /s/ Richard J. Lampen
By: ________________________________
      Name:  Richard J. Lampen
      Title: Executive Vice President

NEW VALLEY CAPITAL CORPORATION (f/k/a Ladenburg, Thalmann Group Inc.)

      /s/ Richard J. Lampen
By: ________________________________
      Name:  Richard J. Lampen
      Title: Executive Vice President

BERLINER EFFEKTENGESELLSCHAFT AG

      /s/ Holger Timm
By: ________________________________
      Name:  Holger Timm
      Title: CEO


FROST-NEVADA, LIMITED PARTNERSHIP

      /s/ David Moskowitz
By: ________________________________
      Name:  David Moskowitz
      Title: President of Frost-Nevada Corporation, General Partner





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PRINCIPALS:


/s/ Richard J. Rosenstock
-----------------------------------
Richard J. Rosenstock

/s/ Mark Zeitchick
-----------------------------------
Mark Zeitchick

/s/ Vincent A. Mangone
-----------------------------------
Vincent A. Mangone

/s/ David Thalheim
-----------------------------------
David Thalheim