EXHIBIT 99.1

                                  RISK FACTORS

      THE FOLLOWING RISK FACTORS SHOULD BE CAREFULLY CONSIDERED IN EVALUATING
OUR COMPANY AND OUR BUSINESS BECAUSE THEY HAVE A SIGNIFICANT IMPACT ON OUR
BUSINESS, OPERATING RESULTS, FINANCIAL CONDITION, AND CASH FLOWS. IF ANY OF
THESE RISKS ACTUALLY OCCURS, OUR BUSINESS, FINANCIAL CONDITION, OPERATING
RESULTS AND/OR CASH FLOWS COULD BE HARMED.

OUR REVENUES MAY DECREASE DUE TO CHANGES AFFECTING THE ECONOMY, SUCH AS
INCREASES IN INTEREST RATES OR INFLATION, OR CHANGES AFFECTING THE SECURITIES
MARKETS, SUCH AS DECREASED VOLUME OR LIQUIDITY.

      An adverse change affecting the economy or the securities markets could
result in a decline in market volume or liquidity. This would result in lower
revenues from our specialist and other activities. Historically, increases in
our revenues have resulted primarily from significant increases in the volume of
trading on the NYSE and favorable conditions in the securities markets. More
recently, however, the economy has begun to slow and financial markets have
become less prosperous in comparison to the past several years. If this causes a
decline in market volume, or if market liquidity becomes compromised, our
revenues could decline and our results of operations could be adversely
affected.

OUR RESULTS MAY FLUCTUATE SIGNIFICANTLY.

      Our revenues may fluctuate significantly based on factors relating to the
securities markets. These factors include:

      o     a decrease in trading volume on the NYSE and the AMEX;

      o     volatility in the equity securities markets; and

      o     changes in the value of our securities positions.

      Many elements of our cost structure do not decline if we experience
reductions in our revenues. As a result, if market conditions cause our revenues
to decline, we may be unable to adjust our cost structure on a timely basis and
we could suffer losses.

SUSTAINED DECLINES IN PRICE LEVELS OF SECURITIES COULD CAUSE US TO INCUR LOSSES.

      Adverse changes in the economy and the securities markets could lead to
lower price levels of securities. Sustained declines in these price levels may
result in:

      o     losses from declines in the market value of securities held in our
            accounts;

      o     the failure of buyers and sellers of securities to fulfill their
            settlement obligations; and

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      o     increases in claims and litigation.

RISKS ASSOCIATED WITH OUR TRADING TRANSACTIONS COULD RESULT IN TRADING LOSSES.

      A majority of our specialist-related revenues are derived from trading by
us as principal. We may incur trading losses relating to these activities since
each such trade primarily involves the purchase, sale or short sale of
securities for our own account. In any period, we may incur trading losses in a
significant number of our specialist stocks for a variety of reasons, including
price declines of our specialist stocks, lack of trading volume in our
specialist stocks and the required performance of our specialist obligations.
From time to time, we have large position concentrations in securities of a
single issuer or issuers engaged in a specific industry. In general, because our
inventory of securities is marked to market on a daily basis, any downward price
movement in these securities will result in a reduction of our revenues and
operating profits. We also operate a proprietary trading desk separately from
our specialist operations, which represented 0.5% of our total revenues in 2000
and 0.3% of our total revenues in 2001. We may incur trading losses as a result
of these trading activities.

      Although we have adopted risk management policies, we cannot be sure that
these policies have been formulated properly to identify or completely limit our
risks. Even if these policies are formulated properly, we cannot be sure that we
will successfully implement these policies. As a result, we may not be able to
manage our risks successfully or avoid trading losses.

SPECIALIST RULES MAY REQUIRE US TO MAKE UNPROFITABLE TRADES OR TO REFRAIN FROM
MAKING PROFITABLE TRADES.

      When we trade as principal, we attempt to derive a profit from the
difference between the prices at which we buy and sell securities. Our role as a
specialist, at times, requires us to make trades that adversely affect our
profitability. In addition, as a specialist, we are at times required to refrain
from trading for our own account in circumstances in which it may be to our
advantage to trade. For example, we may be obligated to act as a principal when
buyers or sellers outnumber each other. In those instances, we may take a
position counter to the market, buying or selling shares to support an orderly
market in the affected stocks. In order to perform these obligations, we hold
varying amounts of securities in inventory. In addition, specialists generally
may not trade for their own account when public buyers are meeting public
sellers in an orderly fashion and may not compete with public orders at the same
price. By having to support an orderly market, maintain inventory positions and
refrain from trading under some favorable conditions, we are subject to risk.
Additionally, the NYSE and the AMEX periodically amend their rules and may make
the rules governing our activities as a specialist more stringent or may
implement changes which could adversely affect our trading revenues.

WE DEPEND SIGNIFICANTLY ON REVENUES FROM OUR NYSE SPECIALIST ACTIVITIES WITH
RESPECT TO A SMALL GROUP OF LISTED COMPANIES, AND THE LOSS OF ANY OF THEM COULD
REDUCE OUR REVENUES.

      Historically, a relatively small number of listed companies have accounted
for a significant portion of our revenues from our NYSE specialist trading
activities. The loss of any

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of these listed companies could have an adverse effect on our revenues. For the
years ended December 31, 1999, 2000 and 2001, transactions in our 10 most
actively traded NYSE specialist stocks accounted for approximately 44.2%, 38.7%
and 28.2% of our total principal revenues, respectively. We cannot assure you
that we will be able to retain these or other listed companies. We can lose
these listed companies if they cease to be traded on the NYSE as a result of
being acquired or otherwise delisted. In addition, if the NYSE were to determine
that we have failed to fulfill our obligations as specialist for a listed
company, our registration as the specialist for that listed company could be
canceled or suspended.

WE DEPEND PRIMARILY ON OUR SPECIALIST ACTIVITIES, AND IF THEY FAIL TO GROW AS
ANTICIPATED, IT WOULD HARM OUR REVENUES.

      We derive the vast majority of our revenues from specialist activities. If
demand for our specialist services fails to grow, grows more slowly than we
currently anticipate or declines, our revenues would be adversely affected. We
expect our specialist activities to continue to account for the vast majority of
our revenues for the foreseeable future. Our future success will depend on:

      o     continued growth in the volume of trading and the number of listings
            on the NYSE and the AMEX;

      o     our ability to be chosen as the specialist for additional listing
            companies;

      o     our ability to respond to regulatory and technological changes; and

      o     our ability to respond to changing demands in the marketplace.

WE MAY HAVE DIFFICULTY SUCCESSFULLY MANAGING OUR GROWTH.

      Our business has grown significantly over the past five years, primarily
due to acquisitions we have made during this period. Our inability to
successfully and timely integrate the operations and personnel of the businesses
we have acquired could have an adverse effect on our business, financial
condition and/or operating results. If the benefits of these acquisitions do not
meet the expectations of investors or financial or industry analysts or if we do
not successfully manage our growth, the market price of our common stock may
decline. The growth of our business has increased the demands upon our
management and operations. This growth has required, and will continue to
require, us to increase our investment in management personnel, financial and
management systems and controls, and facilities. The scope of procedures for
assuring compliance with applicable rules and regulations has changed as the
size and complexity of our business has increased. In response, we have
implemented formal compliance procedures which are regularly updated. Our future
operating results will depend on our ability to continue:

      o     to improve our systems for operations, financial control, and
            communication and information management;

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      o     to refine our compliance procedures and enhance our compliance
            oversight;

      o     to maintain a relationship with the customers of the firms we
            recently acquired (i.e., the companies in whose stocks they made a
            market prior to the acquisitions), as well as our ability to
            maintain our customer base;

      o     to successfully integrate acquired firms' technologies; and

      o     to retain and incentivize our employees.

TRADING THROUGH SPECIALISTS COULD BE REPLACED BY ALTERNATIVE TRADING SYSTEMS
WHICH COULD REDUCE OUR REVENUE.

      Alternative trading systems could reduce the levels of trading of
NYSE-listed and AMEX-listed securities executed through specialists. This, in
turn, could have an adverse effect on our revenues. Over the past few years, a
number of alternative trading systems have developed or emerged which may
compete with specialists by increasing trading in NYSE-listed and AMEX-listed
securities off the NYSE and AMEX trading floors and in over-the-counter markets.
In the future, similar new systems may continue to be developed and placed in
operation.

WE HAVE SIGNIFICANT INDEBTEDNESS AND INTEREST PAYMENT OBLIGATIONS.

      As of December 31, 2001, we had outstanding total consolidated debt in the
principal amount of approximately $431.5 million. These calculations of debt
exclude subordinated liabilities related to contributed exchange memberships.
LaBranche & Co. LLC also has the ability to borrow $200.0 million under a
revolving credit facility with a U.S. commercial bank. We also may need to incur
additional debt in the future for working capital or to complete acquisitions,
even though our existing debt obligations impose some limits on our ability to
do so. Our significant level of debt could have important consequences,
including the following:

      o     our ability to obtain additional financing to fund our growth
            strategy, working capital, capital expenditures, debt service
            requirements or other purposes may be impaired;

      o     our ability to use operating cash flow in other areas of our
            business will be limited because we must dedicate a substantial
            portion of these funds to make principal and interest payments;

      o     we may be hindered from competing with other firms in our industry;
            and

      o     our amount of debt may limit our flexibility to adjust to changing
            market conditions, changes in our industry and economic downturns.

      Our ability to satisfy our debt obligations will depend upon our future
operating performance and our ability to obtain additional debt or equity
financing. Prevailing economic

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conditions and financial, business and other factors, many of which are beyond
our control, will affect our ability to make these payments. If in the future we
cannot generate sufficient cash from operations to meet our debt obligations, we
will need to refinance our debt obligations, obtain additional financing or sell
assets. We cannot be sure that our business will generate cash flow or that we
will be able to obtain funding sufficient to satisfy our debt service
requirements.

      Further, LaBranche & Co. LLC is a broker-dealer and a specialist regulated
by the SEC, the NYSE and the AMEX. Such regulations include strict rules
regarding capital requirements and approval for withdrawals of capital from, and
in some cases, other distributions by, a broker-dealer. These regulations could
prevent us from obtaining funds necessary to satisfy our obligations to pay
interest on or repay our indebtedness.

OUR ABILITY TO TAKE ACTIONS MAY BE RESTRICTED BY THE TERMS OF OUR INDEBTEDNESS.

      The covenants in our existing debt agreements, including LaBranche & Co.
LLC's credit agreement with a U.S. commercial bank, the note purchase agreements
relating to LaBranche & Co. LLC's senior subordinated indebtedness, the
indentures governing our senior notes and senior subordinated notes and any
future financing agreements, may adversely affect our ability to finance future
operations or capital needs or to engage in other business activities. These
covenants limit or restrict our ability and the ability of our subsidiaries to:

      o     incur additional debt;

      o     pay dividends and make distributions;

      o     repurchase our securities;

      o     make certain investments;

      o     create liens on our assets;

      o     transfer or sell assets;

      o     enter into transactions with affiliates;

      o     issue or sell stock of subsidiaries; or

      o     merge or consolidate.

      In addition, the credit agreement and the note purchase agreements also
require LaBranche & Co. LLC to comply with certain financial ratios. LaBranche &
Co. LLC's ability to comply with these ratios may be affected by events beyond
our or its control. If any of the covenants in the credit agreement, the note
purchase agreements or the indentures relating to our senior notes and senior
subordinated notes is breached, or if LaBranche & Co. LLC is unable to comply
with required financial ratios, it may be in default under the credit agreement
or the note purchase agreements and we may be in default under the indentures
relating to our senior notes

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and senior subordinated notes. A significant portion of our indebtedness then
may become immediately due and payable. We are not certain whether we would
have, or be able to obtain, sufficient funds to make these accelerated payments.
Compliance with the covenants is also a condition to borrowings under the credit
agreement.

WE ARE REQUIRED TO TAKE ACTIONS UPON THE OCCURRENCE OF A CHANGE OF CONTROL.

      Upon the occurrence of a change of control, we will be required to offer
to repurchase all of our outstanding senior notes and senior subordinated notes
at a price equal to 101% of their principal amount, together with accrued and
unpaid interest, if any, to the date of repurchase. Certain important corporate
events, such as leveraged recapitalizations that would increase our level of
indebtedness, would not constitute a change of control. If a change of control
were to occur, it is possible that we would not have sufficient funds to
repurchase our outstanding senior notes and senior subordinated notes or that
restrictions in LaBranche & Co. LLC's credit agreement, the note purchase
agreements relating to LaBranche & Co. LLC's senior subordinated indebtedness,
the indentures governing our senior notes and senior subordinated notes will not
allow such repurchases. Furthermore, a change of control will most likely
trigger a default under LaBranche & Co. LLC's credit agreement, the note
purchase agreements relating to LaBranche & Co. LLC's senior subordinated
indebtedness and the indentures governing our senior notes and senior
subordinated notes. To the extent we do not have sufficient funds to meet our
repurchase obligations and any other obligations in respect of the credit
agreement, the note purchase agreements and the indentures relating to our
senior notes and senior subordinated notes, we would necessarily seek
third-party financing. However, it is possible that we will not be able to
obtain such financing.

WE MAY HAVE INSUFFICIENT CAPITAL IN THE FUTURE AND MAY BE UNABLE TO SECURE
ADDITIONAL FINANCING WHEN WE NEED IT.

      Our business depends on the availability of adequate capital. We cannot be
sure that we will have sufficient capital in the future or that additional
financing will be available on a timely basis, or on terms favorable to us.
Historically, we have satisfied these needs with internally generated funds, our
bank credit facilities and the issuance of subordinated debt by our operating
subsidiaries and the issuance of senior notes, senior subordinated notes and
common stock. We currently anticipate that our available cash resources and
credit facilities will be sufficient to meet our anticipated working capital,
regulatory capital and capital expenditure requirements for the foreseeable
future. We may, however, need to raise additional funds to:

      o     increase the capital available to us for our inventory positions;

      o     support more rapid expansion;

      o     acquire complementary businesses; or

      o     respond to unanticipated capital requirements.

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      We may be required to obtain this additional financing on short notice as
a result of rapid, unanticipated developments, such as a steep market decline.

OUR SUCCESS DEPENDS ON OUR ABILITY TO ACCURATELY PROCESS AND RECORD OUR
TRANSACTIONS, AND ANY FAILURE TO DO SO COULD SUBJECT US TO LOSSES.

      Our specialist activities require us to accurately record and process a
very large number of transactions on a daily basis. Any failure or delay in
recording or processing transactions could cause substantial losses for brokers,
their customers and/or us and could subject us to claims for losses. We rely on
our staff to operate and maintain our information and communications systems
properly, and we depend on the integrity and performance of those systems. Our
recording and processing of trades is subject to human and processing errors.
Moreover, extraordinary trading volume or other events could cause our
information and communications systems to operate at an unacceptably low speed
or even fail. Any significant degradation or failure of our information systems
or any other systems in the trading process could cause us to fail to complete
transactions or could cause brokers who place trades through us to suffer delays
in trading.

RECENT TERRORIST ATTACKS HAVE CONTRIBUTED TO ECONOMIC INSTABILITY IN THE UNITED
STATES; CONTINUED TERRORIST ATTACKS, WAR OR OTHER CIVIL DISTURBANCES COULD LEAD
TO FURTHER ECONOMIC INSTABILITY AND DEPRESS OUR STOCK PRICE.

      On September 11, 2001, the United States was the target of terrorist
attacks of unprecedented scope, with the attacks in New York City particularly
affecting our operations. These attacks may cause long-term instability in the
global financial markets. This instability has resulted in a slowdown in the
employment sector as companies assess the impact of the attacks on their
operations and on their employment needs. The United States is also currently
conducting military operations in response to the terrorist attacks. These
attacks and the United States military campaign may lead to substantial armed
hostilities or to further acts of terrorism and civil disturbances in the United
States or elsewhere, which may contribute further to economic instability in the
United States and could have a material adverse effect on our business,
financial condition and operating results.

      In addition, our offices are located in close proximity to the terrorist
attacks on the World Trade Center on September 11, 2001. The aftermath of the
attacks on the World Trade Center and the resulting air-quality issues in our
building required us to close our operations and temporarily relocate our
offices. The NYSE also was forced to stop operating for four consecutive trading
days, which caused our operations to halt and could have compromised the
liquidity of that market during closure. If additional terrorist attacks occur
in close proximity to our offices, or upon our office buildings, the NYSE or the
AMEX, we could be forced to relocate for a longer period of time, or
permanently. Furthermore, additional terrorist attack in New York City, or on
our buildings, the NYSE or the AMEX, or additional armed hostilities within the
United States, could cause significant delays or stoppages in our business
activities, which would significantly harm our revenues and profits.

OUR INFORMATION OR COMMUNICATION SYSTEMS MAY FAIL AND INTERRUPT OUR BUSINESS.

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      Any information or communication systems failure or decrease in
information or communications systems performance that causes interruptions in
our operations could have an adverse effect on our business, financial condition
and/or operating results. Our systems may fail as a result of:

      o     hardware or software failure; or

      o     power or telecommunications failure.

      The September 11, 2001 terrorist attacks, particularly the attacks on the
World Trade Center, caused a temporary lapse in our information and
communications systems. It is possible that additional terrorist attacks may
occur in the future without warning and that such attacks could compromise or
disable our systems. Although we have established a back-up disaster recovery
center in New Jersey, it may not be effective in preventing an interruption of
our business. It is also possible that any future terrorist activities or an act
of war in retaliation against the current United States military campaign could
harm our operations and/or disaster recovery center, which could significantly
harm our business.

WE DEPEND ON THE NYSE, THE AMEX AND CLEARING AND DEPOSITORY INSTITUTIONS TO
EFFECT TRADES, AND THEIR FAILURE TO PERFORM COULD SUBJECT US TO LOSSES.

      We are dependent on the proper and timely function of complex information
and communications systems maintained and operated by or for the NYSE, the AMEX
and clearing and depository institutions. Failures or inadequate or slow
performance of any of those systems could adversely affect our ability to
operate and complete trades. The chances of such failures or inadequacies would
likely escalate if there are additional terrorist attacks in New York City, the
United States or elsewhere or if the current United States military campaign
becomes a widespread war. The failure to complete trades on a timely basis could
subject us to losses and claims for losses of brokers and their customers.

OUR FUTURE SUCCESS WILL DEPEND ON OUR ABILITY TO UPGRADE OUR INFORMATION AND
COMMUNICATIONS SYSTEMS, AND ANY FAILURE TO DO SO COULD HARM OUR BUSINESS AND
PROFITABILITY.

      The development of complex communications and new technologies, including
Internet-based technologies, may render our existing information and
communications systems outdated. In addition, our information and communications
systems must be compatible with those of the NYSE and the AMEX. As a result, if
the NYSE or the AMEX upgrades its systems, we will need to make corresponding
upgrades. Our future success will depend on our ability to respond to changing
technologies on a timely and cost-effective basis. We cannot be sure that we
will be successful in upgrading our information and communications systems on a
timely or cost-effective basis. Our failure to do so could have an adverse
effect on our business, financial condition and/or operating results.

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      The NYSE's ability to develop information and communications systems and
complex computer and other technology systems has been instrumental in its
recent growth and success. We are dependent on the continuing development of
technological advances by the NYSE and the AMEX, a process over which we have no
control. If the NYSE for any reason is unable to continue its recent history of
computer-related and other technological developments and advances, it could
have an adverse effect on the success of the NYSE, including its ability to
grow, to manage its trading volumes and to attract new listings. Any such
developments can be expected to adversely affect our operations, financial
condition and operating results.

IF WE LOSE THE SERVICES OF OUR KEY PERSONNEL OR CANNOT HIRE ADDITIONAL QUALIFIED
PERSONNEL, OUR BUSINESS WILL BE HARMED.

      Our future success depends on the continued service of key employees,
particularly Michael LaBranche, our Chairman, Chief Executive Officer and
President. The loss of the services of any of our key personnel or the inability
to identify, hire, train and retain other qualified personnel in the future
could have an adverse effect on our business, financial condition and/or
operating results. We have employment agreements with Mr. LaBranche and other
key employees. We also maintain "key person" life insurance policies on Mr.
LaBranche and other key employees. Competition for key personnel and other
highly qualified management, trading, compliance and technical personnel is
intense. We cannot assure you that we will be able to attract new or retain
currently employed highly qualified personnel in the future.

      In connection with our 1999 reorganization from partnership to corporate
form and initial public offering of our common stock, a number of our current
managing directors received substantial amounts of our common stock in exchange
for their partnership interests. Because the shares of common stock were
received in exchange for partnership interests, ownership of the shares is not
dependent upon the continued employment of those managing directors. In
addition, many of our employees who are not managing directors have received
grants of stock options and restricted stock units. The steps we have taken to
encourage the continued service of these individuals, who include key senior
personnel, may not be effective.

WE ARE SUBJECT TO INTENSE COMPETITION FOR NEW LISTINGS, AND OUR PROFITABILITY
WILL SUFFER IF WE DO NOT COMPETE EFFECTIVELY.

      We cannot be sure that we will be able to compete effectively with current
or future competitors. Our failure to compete effectively would have an adverse
effect on our profitability. We obtain all our new listings on the NYSE by going
through an allocation process. In this process, either a committee of the NYSE
or the listing company chooses the specialist. The competition for obtaining new
listing companies is intense. We expect competition to continue and intensify in
the future. Some of our competitors may have significantly greater financial and
other resources than we have and may have greater name recognition. These
competitors may be able to respond more quickly to new or evolving opportunities
and listing company requirements. They also may be able to undertake more
extensive promotional activities to attract new listing companies. In addition,
the specialist industry has recently been consolidating. The combined companies
resulting from this consolidation may have a stronger capital base.

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This trend has intensified the competition in our industry. Finally, the NYSE
retains the ability to name new specialist firms.

THE FAILURE BY US OR OUR EMPLOYEES TO COMPLY WITH APPLICABLE LAWS AND
REGULATIONS COULD RESULT IN SUBSTANTIAL FINES AND OTHER PENALTIES.

      The securities industry is subject to extensive regulation under both
federal and state laws. In addition, the SEC, the NYSE, the AMEX, other
self-regulatory organizations, commonly referred to as SROs, and state
securities commissions require strict compliance with their respective rules and
regulations. Failure to comply with any of these laws, rules or regulations
could result in serious adverse consequences. We and our officers and employees
may be subject in the future to claims arising from acts in contravention of
these laws, rules and regulations. An adverse ruling against us and/or our
officers and other employees as a result of any of these claims could result in
us and/or our officers and other employees being required to pay a substantial
fine or settlement. It could also result in the suspension or revocation of our
registration with the SEC as a broker-dealer or our suspension or expulsion as a
member firm of the NYSE and the AMEX. If this occurred, we would be unable to
operate our business. As a result of our recent acquisitions, the number of our
employees has increased significantly, and our lack of experience working with
these employees increases the risk that we will not detect or deter employee
misconduct.

THE REGULATORY ENVIRONMENT IN WHICH WE OPERATE MAY CHANGE, MAKING IT DIFFICULT
FOR US TO REMAIN IN COMPLIANCE.

      The regulatory environment in which we operate is subject to change which
we cannot predict. It may be difficult for us to comply with new or revised
legislation or regulations imposed by the SEC, other U.S. or foreign
governmental regulatory authorities and SROs, including the NYSE and the AMEX.
Failure to comply would have an adverse effect on our business, financial
condition and/or operating results. Changes in the interpretation or enforcement
of existing laws and rules by the SEC, these governmental authorities, SROs, the
NYSE and the AMEX also could have an adverse effect on our business, financial
condition and/or operating results.

FAILURE TO COMPLY WITH NET CAPITAL AND NET LIQUID ASSET REQUIREMENTS MAY RESULT
IN THE REVOCATION OF OUR REGISTRATION WITH THE SEC OR OUR EXPULSION FROM THE
NYSE AND/OR THE AMEX.

      The SEC, the NYSE, the AMEX and various other regulatory agencies have
stringent rules with respect to the maintenance of minimum levels of capital and
net liquid assets by securities brokers-dealers as well as specialist firms.
Effective October 30, 2000, the NYSE increased its minimum net liquid asset
requirements. LaBranche & Co. LLC currently is required to maintain minimum net
liquid assets of approximately $446.0 million. Failure to maintain the required
net capital and net liquid assets may subject us to suspension or revocation of
our SEC registration or suspension or expulsion by the NYSE and/or the AMEX. If
this occurred, we would be unable to operate our business. In addition, a change
in these rules, the imposition of new rules or any unusually large requirement
or charge against our regulatory capital could limit

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any of our operations that require the intensive use of capital. These rules
could also restrict our ability to withdraw capital from LaBranche & Co. LLC.
Any limitation on our ability to withdraw capital from LaBranche & Co. LLC could
limit our ability to pay cash dividends, repay debt and repurchase shares of our
outstanding stock. A substantial market decline, a significant operating loss or
any unusually large requirement or charge against regulatory capital could
adversely affect our ability to expand or even maintain our present levels of
business, which could have an adverse effect on our business, financial
condition and/or operating results.

EMPLOYEE MISCONDUCT IS DIFFICULT TO DETECT AND DETER AND COULD RESULT IN LOSSES.

      There have been a number of highly publicized cases involving fraud, stock
manipulation or other misconduct by employees in the financial services industry
in recent years, and we run the risk that employee misconduct could occur.
Misconduct by employees could include binding us to transactions that exceed
authorized limits or present unacceptable risks, or hiding from us unauthorized
or unsuccessful activities, which, in either case, may result in unknown and
unmanaged risks or losses. Employee misconduct could also involve the improper
use or disclosure of confidential information, which could result in regulatory
sanctions and serious reputational or financial harm. It is not always possible
to deter employee misconduct and the precautions we take to prevent and detect
this activity may not be effective in all cases.

WE ARE SUBJECT TO RISK RELATING TO LITIGATION AND POTENTIAL SECURITIES LAWS
LIABILITY.

      Many aspects of our business involve substantial risks of liability. A
specialist is exposed to substantial risks of liability under federal and state
securities laws, other federal and state laws and court decisions, as well as
rules and regulations promulgated by the SEC, the NYSE and the AMEX. We also are
subject to the risk of litigation and claims that may be without merit. We could
incur significant legal expenses in defending ourselves against such lawsuits or
claims. An adverse resolution of any future lawsuits or claims against us could
have an adverse effect on our business, financial condition and/or operating
results.

COUNTERPARTIES MAY FAIL TO PAY US.

      As a specialist in listed stocks, our securities transactions are
conducted as principal with broker-dealer counterparties located in the United
States. The NYSE, the AMEX and the clearing houses monitor the credit standing
of the counterparties with which we conduct business. However, we cannot assure
you that any of these counterparties will not default on their obligations. If
any do, our business, financial condition and/or operating results could be
adversely affected.

SOME OF OUR EXECUTIVE OFFICERS ARE IN A POSITION TO CONTROL MATTERS REQUIRING A
STOCKHOLDER VOTE.

      Certain of our managing directors, including the selling stockholders, who
currently own approximately 58.6% of our outstanding common stock have entered
into a stockholders' agreement under which they have agreed, among other things,
that their shares of our common stock will be voted, for as long as they own
their shares, as directed by a majority vote of

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Michael LaBranche, our Chairman, Chief Executive Officer and President, James G.
Gallagher and Alfred O. Hayward, Jr., each an executive officer and director.
Accordingly, these individuals have the ability to control all matters requiring
approval by our common stockholders. These matters include the election and
removal of directors and the approval of any merger, consolidation or sale of
all or substantially all of our assets. In addition, they are able to dictate
the management of our business and affairs. This concentration of ownership
could have the effect of delaying, deferring or preventing a change in control,
a merger or consolidation, a takeover or another business combination.

      In addition, in our acquisition of ROBB PECK McCOOEY Financial Services,
Inc., we issued an aggregate of 100,000 shares of our Series A preferred stock
to its former stockholders of which 71,386.086 shares are outstanding as of
March 14, 2002. The holders of our Series A preferred stock have the opportunity
to vote on certain matters that would affect their rights as holders of Series A
preferred stock, any issuance of our capital stock with rights greater than or
equal to theirs, and any proposal for our merger or consolidation, the sale of
more than 50% of our consolidated assets or any similar transaction. As of March
14, 2002, George E. Robb, Jr., one of our directors, and Robert M. Murphy, one
of our directors and the Chief Executive Officer of our LaBranche & Co. LLC
subsidiary, beneficially owned an aggregate of approximately 50.5% of our Series
A preferred stock. This concentration of ownership, therefore, also could have
the effect of delaying, deferring or preventing a change in control, a merger or
consolidation, a takeover or another business combination.

FUTURE SALES BY EXISTING STOCKHOLDERS COULD DEPRESS THE MARKET PRICE OF OUR
COMMON STOCK.

      If our stockholders sell substantial amounts of our common stock in the
public market, the market price of our common stock could fall. Such sales also
might make it more difficult for us to sell equity securities in the future at a
time and price that we deem appropriate. As of March 14, 2002, we had
outstanding 59,116,678 shares of common stock. Certain of our current and former
managing directors, who collectively own 34,411,343 shares of common stock, are
party to a stockholders' agreement. Under the stockholders' agreement, the
restricted shares held by our managing directors will be eligible for sale in
the public market as follows:

      o     11,287,115 shares beginning August 24, 2002;

      o     11,562,114 shares beginning August 24, 2003; and

      o     11,562,114 shares beginning August 24, 2004.

      If large amounts of these shares are sold within a short period of time,
the market price of our common stock would likely fall.

      In addition, our directors and executive officers have agreed not to
transfer their shares of our common stock for a period of 90 days after February
5, 2002. Following that date, subject to volume limitations under Rule 144,
these directors and officers would be able to publicly sell substantial amounts
of our common stock and thereby may depress the market price for our common
stock.

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UNCERTAINTIES ASSOCIATED WITH OUR ACQUISITIONS MAY CAUSE US TO LOSE KEY
PERSONNEL.

      Our current and prospective employees may experience uncertainty about
their future roles with us due to the integration of our newly-acquired
employees and businesses into ours. This uncertainty may adversely affect our
ability to attract and retain key personnel, which would adversely affect our
business and results of operations.