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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington,
D.C. 20549



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Form
10-K

(Mark One)

xANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2006

oTRANSITION REPORT UNDER SECTION 13 OR
15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to __________

Commission file number 0-5703



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Siebert
Financial Corp.(Exact name
of registrant as specified in its charter)

|                                         |                    
|---------------------------------------- | -------------------
|                                        
|                                         |                    
|New York                                 | 11-1796714         
|(State or other jurisdiction of          | (I.R.S. Employer   
|incorporation or organization)           | Identification No.)
|                                         |                    
|885 Third Avenue, New York, New York     | 10022              
|(Address of principal executive offices) | (Zip Code)         
|                                         |                    

(212) 644-2400
Registrants telephone number



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Securities registered under Section 12(b) of the Exchange Act:

|                      |                                            
|--------------------- | -------------------------------------------
|Title
  of each class | Name
  of each exchange on which registered
|NONE                  | NONE                                       
|                      |                                            

Securities registered under Section 12(g) of the Exchange Act:

COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of class)

Indicate by checkmark if the
registrant is a well know seasoned issuer, as defined in Rule 405 of the
Securities Act. YES o   NO x

Indicate by checkmark if the
registrant is not required to file reports pursuant to Section 13 or Section
15(d) of the Act. YES o    NO x

Indicate by checkmark
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 o

Indicate by checkmark if
disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by checkmark
whether the registrant is a large accelerated filer, an accelerated filer or a
non-accelerated filer. (See definition of accelerated filer and large
accelerated filer in Rule 12b-2 of the Exchange Act). Large accelerated filer o Accelerated filer o Non-accelerated filer x

Indicate by checkmark
whether the registrant is a shell company (as defined in Rule
12b-2). YES o  NO x

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The
number of shares of the Registrants outstanding Common Stock, as of March 12,
2007, was 22,204,832 shares. The aggregate market value of the Common Stock
held by non-affiliates of the registrant (based upon the last sale price of the
Common Stock reported on the Nasdaq Stock Market as of the last business day of
the registrants most recently completed second fiscal quarter (June 30, 2006),
was $4,859,474.

Documents
Incorporated by Reference: Proxy Statement to be filed pursuant to Regulation
14A of the Exchange Act on or before April 30, 2007, incorporated by reference
into Part III.

Special Note Regarding Forward-Looking Statements

Statements
in this Annual Report on Form 10-K, as well as oral statements that may be made
by the Company or by officers, directors or employees of the Company 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 historical
results or from any future expressed or implied by such forward looking
statements, including without limitation: changes in general economic and market
conditions; changes and prospects for changes in interest rates; 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 greater discounts 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 promotion;
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.

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PART I

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|Item 1. | BUSINESS

General

Siebert
Financial Corp. (the Company) is a holding company that conducts its retail
discount brokerage and investment banking business through its wholly-owned
subsidiary, Muriel Siebert & Co., Inc., a Delaware corporation (Siebert).
Muriel Siebert, the first woman member of the New York Stock Exchange, is our
Chairwoman and President and owns approximately 90% of our outstanding common
stock, par value $.01 per share (the Common Stock).

Our
principal offices are located at 885 Third Avenue, New York, New York 10022,
and its phone number is (212) 644-2400. Our Internet address is
www.siebertnet.com. Our SEC filings are available through our website, where
you are able to obtain copies of the Companys public filings free of charge.
Our Common Stock trades on the Nasdaq Global Market under the symbol SIEB.

Business Overview

Sieberts
principal activity is providing Internet and traditional discount brokerage and
related services to retail investors and, through its wholly owned subsidiary,
Siebert Womans Financial Network, Inc (WFN), engages in providing products,
services and information all uniquely devoted to womans financial needs.
Through its Capital Markets division, Siebert also offers institutional clients
equity execution services on an agency basis, as well as equity and fixed
income underwriting and investment banking services. We believe that we are the
largest Woman-Owned Business Enterprise (WBE) in the capital markets business
in the country. In addition, Siebert, Brandford, Shank & Co., LLC (SBS),
a company in which Siebert holds a 49% ownership interest, is the largest
Minority and Womens Business Enterprise (MWBE) in the tax-exempt
underwriting business in the country.

The Retail Division

Discount Brokerage and Related
Services.
Siebert became a discount broker on May 1, 1975, a date that would later come
to be known as May Day. Siebert believes that it has been in business and a
member of The New York Stock Exchange, Inc. (the NYSE) longer than any other
discount broker. In 1998, Siebert began to offer its customers access to their
accounts through SiebertNet, its Internet website. Sieberts focus in its
discount brokerage business is to serve retail clients seeking a wide selection
of quality investment services, including trading through a broker on the
telephone, through a wireless device or via the Internet, at commissions that
are substantially lower than those of full-commission firms and competitive
with the national discount brokerage firms. Siebert clears its securities
transactions on a fully disclosed basis through National Financial Services
Corp. (NFS), a wholly owned subsidiary of Fidelity Investments.

Siebert
serves investors who make their own investment decisions. Siebert seeks to
assist its customers in their investment decisions by offering a number of
value added services, including easy access to account information. Sieberts
representatives are available to assist customers with information via
toll-free 800 service Monday through Friday between 7:30 a.m. and 7:30 p.m.
Eastern Time. Through its SiebertNet, Mobile Broker, inter-active voice
recognition and Siebert MarketPhone services, 24-hour access is available to customers.

Independent Retail Execution
Services.
Siebert offers what it believes to be the best possible trade executions for
customers. Siebert does not make markets in securities, nor does it take
positions against customer orders.

Sieberts
listed orders are routed in a manner intended to afford its customers the
opportunity for price improvement on all orders. Through a service called NYSE
Prime, Siebert also has the ability to document to customers all price
improvements received on orders executed on the NYSE when orders are filled at
better than the National Best Bid/Offer.

Sieberts
over the counter orders are executed through a network of Nasdaq market makers
with no single market maker executing all trades. The firm also offers
customers execution services through Nasdaqs SelectNet and Reuters Instinet
systems for an additional fee. These systems give customers access to all
Electronic Communication Networks listed on SelectNet and to Instinet before
and after regular market hours. Siebert believes that its over-the counter
executions afford its customers the best possible opportunity for consistent
price improvement.

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Customers
may also indicate online interest in buying or selling fixed income securities,
including municipal bonds, corporate bonds, mortgage-backed securities,
Government Sponsored Enterprises, Unit Investment Trusts or Certificates of
Deposit. These transactions are serviced by registered representatives.

Retail Customer Service.
Siebert believes
that superior customer service enhances its ability to compete with larger
discount brokerage firms and therefore provides retail customers, at no
additional charge, with personal service via toll-free access to dedicated
customer support personnel for all of its products and services. Customer
service personnel are located in each of Sieberts branch offices. Siebert
presently has retail offices in New York, New York, Jersey City, New Jersey,
Boca Raton, Surfside, Palm Beach and Naples, Florida and Beverly Hills,
California. Siebert uses a proprietary Customer Relationship Management System
that enables representatives, no matter where located, to view a customers
service requests and the response thereto. Eventually, it is intended that this
system will also allow customers to enter their requests directly into the
system and track the response. Sieberts telephone system permits the automatic
routing of calls to the next available agent having the appropriate skill set.

Retirement Accounts. Siebert
offers
customers a variety of self-directed retirement accounts for which it acts as
agent on all transactions. Custodial services are provided through an affiliate
of NFS, the firms clearing agent, which also serves as trustee for such
accounts. Each IRA, SEP IRA, ROTH IRA, 401(k) and KEOGH account can be invested
in mutual funds, stocks, bonds and other investments in a consolidated account.

Customer Financing. Customers
margin
accounts are carried through Sieberts clearing agent which lends customers a
portion of the market value of certain securities held in the customers
account. Margin loans are collateralized by these securities. Customers also
may sell securities short in a margin account, subject to minimum equity and
applicable margin requirements, and the availability of such securities to be
borrowed. In permitting customers to engage in margin, short sale or any
transaction, Siebert assumes the risk of its customers failure to meet their
obligations in the event of adverse changes in the market value of the
securities positions. Both Siebert and its clearing agents reserve the right to
set margin requirements higher than those established by the Federal Reserve
Board.

Siebert
has established policies with respect to maximum purchase commitments for new
customers or customers with inadequate collateral to support a requested
purchase. Managers have some flexibility in the allowance of certain
transactions. When transactions occur outside normal guidelines, accounts are
monitored closely until their payment obligation is completed; if the customer
does not meet the commitment, steps are taken to close out the position and
minimize any loss. Siebert has not had significant credit losses in the last five
years.

Information and Communications
Systems.
Sieberts operations rely heavily on information processing and communications
systems which are provided by Sieberts clearing agent. The system for
processing securities transactions is highly automated. Registered
representatives utilize personal computer workstations to access customer
account information, obtain securities prices and related information and enter
and confirm orders through dedicated lines to Sieberts clearing agents.

Siebert
maintains a computer network to support its customer service messaging systems,
as well as other applications such as record keeping and direct customer access
to marketing information. Through its clearing agents, Sieberts computers are
linked to the major registered United States securities exchanges, the National
Securities Clearing Corporation and The Depository Trust Company. Failure of
Sieberts redundant private lines local area networks or communication systems
for a significant period of time could limit the ability to process a large
volume of transactions accurately and rapidly. This could result in Siebert
being unable to satisfy its obligations to customers and other securities
firms, and in such an event could result in regulatory violations. External
events, such as an earthquake or massive power failure, loss of redundant
external information feeds, such as security price information, as well as
massive internal malfunctions, could render part or all of such systems
inoperative.

To
enhance the reliability of its systems and backup data, Siebert maintains
redundancies, backup plans and recovery functions including backup trading
facilities.

Sieberts
communications systems include a voice system that allows calls to be answered
by the next available agent having the appropriate skill set for the incoming
call. Data is delivered to branches over a multipoint

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Virtual
Private Network system. Call center software provides statistical reports, such
as time on hold, duration of calls and the number of calls handled by each
agent. The vendor of the communications system monitors these systems on a
twenty-four hour a day, seven day a week basis and can make software repairs
remotely.

Current Developments

Siebert
filed a lawsuit against Intuit Inc. (Intuit) in New York State Supreme Court
on September 17, 2003 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. The Court denied Intuits motion to dismiss Sieberts causes of action
for breach of fiduciary duty, breach of contractual obligations to pay shared
expenses, promissory estoppel, and breach of the implied covenant of good faith
and fair dealing. The Court granted Intuits motion to dismiss Sieberts causes
of action for breach of the express covenant of good faith and fair dealing,
misrepresentation and/or fraud, and its request for punitive damages. Intuit
has counterclaimed against Siebert, seeking not less than $6.6 million. Siebert
and Intuit have appealed from certain portions of the Courts decision and
Siebert has also moved for reargument of that decision regarding punitive
damages. In November 2005, Intuits counsel was disqualified by the Court from
representing Intuit in this action. The Courts Appellate Division reversed the
order of disqualification, but, thereafter, granted Sieberts motion for leave
to appeal to the Court of Appeals, New York highest court. All proceedings in
the action are stayed pending Sieberts appeal, which the Court of Appeals
heard in March 2007. The outcome of this matter cannot now be
predicted.

Siebert
terminated the fully disclosed clearing agreement (the Clearing Agreement)
with Pershing LLC (formerly the Pershing division of Donaldson, Lufkin &
Jenrette Securities Corporation) (Pershing) in 2003. Based on consultation
with counsel, Siebert believes that the $1,500,000 that it advanced to Pershing
in January 2003 should have been 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 and that the ultimate result of this matter will not
have a material adverse effect on result of operations or financial position.
Siebert in 2004 decided not to commence proceedings against Pershing and
charged off the $1,500,000 advance to Pershing. Siebert and Pershing in 2005
entered into a Limited Release Agreement under which Siebert received a release
from the $3 million disputed claims for unreimbursed fees and costs, and
Pershing was released from any liability to Siebert based upon the disputed
fees and costs, and Siebert paid a consideration to Pershing that had been
previously accrued by Siebert.

We
entered into an Operating Agreement, effective as of April 19, 2005 (the
Operating Agreement), with Suzanne Shank and Napolean Brandford III, the two
individual principals of SBS ( the Principals) of SBS Financial Products
Company LLC, a Delaware limited liability company (SBSFPC). Pursuant to the
terms of the Operating Agreement, the Company and each of the Principals made
an initial capital contribution of $400,000 in exchange for a 33.33% initial interest
in SBSFPC. SBSFPC engages in derivatives transactions related to the municipal
underwriting business. The Operating Agreement provides that profit and loss
will be shared 66.66% by the Principals and 33.33% by us.

On
May 15, 2000, our board of directors authorized the repurchase of up to
1,000,000 shares of our common stock. Shares will be purchased from time to
time, in our discretion, in the open market and in private transactions.
Through December 31, 2006, 999,500 shares have been purchased at an average
price of $4.51 per share. We intend to continue acquiring shares pursuant to
our stock repurchase program based upon the price of the stock and in
accordance with applicable rules and regulations.

The Capital Markets Division

In
1991, Siebert created its Capital Markets Group (SCM) division, which serves
as a co-manager, underwriting syndicate member, or selling group member on a
wide spectrum of securities offerings for corporations and Federal agencies.

Principal
activities of the Capital Markets Division are investment banking and
institutional equity execution services. In June 2004, Siebert expanded its SCM
Operations. SCM provides high-quality brokerage service to both institutional
investors and issuers of equity and fixed-income securities.

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During
1996, Siebert formed the Siebert, Brandford, Shank division of the investment
banking group to enhance the activities of Sieberts tax exempt underwriting.
The operations of the Siebert, Brandford, Shank division were moved on July 1,
1998, to a newly formed entity, SBS. Two individuals, Mr. Napoleon Brandford
and Ms. Suzanne F. Shank, own 51% of the equity and are entitled to 51% of the
net profits of SBS and Siebert is entitled to the balance. Through its
investment in SBS, Siebert has become a more significant factor in the tax
exempt underwriting area, and expects to enhance its government and
institutional relationships, as well as the breadth of products that can be
made available to retail clients. During 2006, SBS served as the lead manager
of over $3 billion of negotiated municipal new issues and served as a
co-manager in over $57 billion of negotiated municipal new issues.

Since
its inception, the Siebert, Brandford, Shank division and its successor SBS
have co-managed offerings of approximately $428 billion and lead managed
offerings of approximately $17 billion. Clients include the States of
California, Texas, Washington, Ohio and Michigan and the Cities of Chicago,
Detroit, Los Angeles, Houston, Dallas, Denver and St. Louis.

SBS
operates out of offices in San Francisco, New York, Seattle, Houston, Chicago,
Detroit, Los Angeles, Washington, DC, San Antonio, Anchorage, Miami and Dallas.

Certain
risks are involved in the underwriting of securities. Underwriting syndicates
agree to purchase securities at a discount from the initial public offering
price. An underwriter is exposed to losses on the securities that it has
committed to purchase if the securities must be sold below the cost to the
syndicate. In the last several years, investment banking firms have
increasingly underwritten corporate and municipal offerings with fewer
syndicate participants or, in some cases, without an underwriting syndicate. In
these cases, the underwriter assumes a larger part or all of the risk of an
underwriting transaction. Under Federal securities laws, other laws and court
decisions, an underwriter is exposed to substantial potential liability for
material misstatements or omissions of fact in the prospectus used to describe
the securities being offered.

Advertising, Marketing and Promotion

Siebert
develops and maintains its retail customer base through printed advertising in
financial publications, broadcast commercials over national and local cable TV
channels, as well as promotional efforts and public appearances by Ms. Siebert.
Additionally, a significant number of the firms new accounts are developed
directly from referrals by satisfied customers.

Competition

Siebert
encounters significant competition from full-commission, online and discount
brokerage firms, as well as from financial institutions, mutual fund sponsors
and other organizations, many of which are significantly larger and better
capitalized than Siebert. The reduced volume of trading starting in early 2001
is leading to consolidation in the industry in both the online and traditional
brokerage business. Siebert believes that additional competitors such as banks,
insurance companies, providers of online financial and information services and
others will continue to be attracted to the online brokerage industry as they
expand their product lines. Many of these competitors are larger, more
diversified, have greater capital resources, and offer a wider range of
services and financial products than Siebert. Some such firms are offering
their services over the Internet and have devoted more resources to and have
more elaborate websites than Siebert. Siebert competes with a wide variety of
vendors of financial services for the same customers. Siebert believes that its
main competitive advantages are high quality customer service, responsiveness,
cost and products offered, the breadth of product line and excellent
executions.

Regulation

The
securities industry in the United States is subject to extensive regulation
under both Federal and state laws. The Securities and Exchange Commission
(SEC) is the Federal agency charged with administration of the Federal
securities laws. Siebert is registered as a broker-dealer with the SEC, and is
a member of the New York Stock Exchange (NYSE) and the National Association
of Securities Dealers (NASD). Much of the regulation of broker-dealers has
been delegated to self-regulatory organizations, principally the NASD and
national securities exchanges such as the NYSE, which is Sieberts primary
regulator with respect to financial and operational

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compliance.
These self-regulatory organizations adopt rules (subject to approval by the
SEC) governing the industry and conduct periodic examinations of
broker-dealers. Securities firms are also subject to regulation by state
securities authorities in the states in which they do business. Siebert is
registered as a broker-dealer in 50 states, the District of Columbia and Puerto
Rico.

The
principal purpose of regulation and discipline of broker-dealers is the
protection of customers and the securities markets, rather than protection of
creditors and stockholders of broker-dealers. The regulations to which broker-dealers
are subject cover all aspects of the securities business, including training of
personnel, sales methods, trading practices among broker-dealers, uses and
safekeeping of customers funds and securities, capital structure of securities
firms, record keeping, fee arrangements, disclosure to clients, and the conduct
of directors, officers and employees. Additional legislation, changes in rules
promulgated by the SEC and by self-regulatory organizations or changes in the
interpretation or enforcement of existing laws and rules may directly affect
the method of operation and profitability of broker-dealers and investment
advisers. The SEC, self-regulatory organizations and state securities
authorities may conduct administrative proceedings which can result in censure,
fine, cease and desist orders or suspension or expulsion of a broker-dealer or
an investment adviser, its officers or its employees.

On
March 4, 2005, Siebert consented without admitting or denying guilt to a
$45,000 fine and censure by the NYSE due to findings of books-and-records,
financial, operational and supervisory deficiencies. This action was based on
technical record keeping and administrative deficiencies and there were no
complaints from and no losses to any Siebert customers. As the NYSE expressly
noted, Siebert had no prior disciplinary history in its 37 years in business.

As
a registered broker-dealer and NASD member organization, Siebert is required by
Federal law to belong to the Securities Investor Protection Corporation
(SIPC) which provides, in the event of the liquidation of a broker-dealer,
protection for securities held in customer accounts held by the firm of up to
$500,000 per customer, subject to a limitation of $100,000 on claims for cash
balances. The SIPC is funded through assessments on registered broker-dealers.
In addition, Siebert, through its clearing agent, has purchased from private
insurers additional account protection in the event of liquidation up to the
net asset value, as defined, of each account. Stocks, bonds, mutual funds and
money market funds are included at net asset value for purposes of SIPC
protection and the additional protection. Neither SIPC protection nor the
additional protection insures against fluctuations in the market value of
securities.

Siebert
is also authorized by the Municipal Securities Rulemaking Board to effect
transactions in municipal securities on behalf of its customers and has
obtained certain additional registrations with the SEC and state regulatory
agencies necessary to permit it to engage in certain other activities
incidental to its brokerage business.

Margin
lending arranged by Siebert is subject to the margin rules of the Board of
Governors of the Federal Reserve System and the NYSE. Under such rules,
broker-dealers are limited in the amount they may lend in connection with
certain purchases and short sales of securities and are also required to impose
certain maintenance requirements on the amount of securities and cash held in margin
accounts. In addition, those rules and rules of the Chicago Board Options
Exchange govern the amount of margin customers must provide and maintain in
writing uncovered options.

Net Capital Requirements

As
a registered broker-dealer, Siebert is subject to the SECs Uniform Net Capital
Rule (Rule 15c3-1) (the Net Capital Rule), which has also been adopted by the
NYSE. Siebert is a member firm of the NYSE and the NASD. The Net Capital Rule
specifies minimum net capital requirements for all registered broker-dealers
and is designed to measure financial integrity and liquidity. Failure to
maintain the required regulatory net capital may subject a firm to suspension
or expulsion by the NYSE and the NASD, certain punitive actions by the SEC and other
regulatory bodies and, ultimately, may require a firms liquidation.

Regulatory
net capital is defined as net worth (assets minus liabilities), plus qualifying
subordinated borrowings, less certain deductions that result from excluding
assets that are not readily convertible into cash and from conservatively
valuing certain other assets. These deductions include charges that discount
the value of security positions held by Siebert to reflect the possibility of
adverse changes in market value prior to disposition.

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The
Net Capital Rule requires notice of equity capital withdrawals to be provided
to the SEC prior to and subsequent to withdrawals exceeding certain sizes. The
Net Capital Rule also allows the SEC, under limited circumstances, to restrict
a broker-dealer from withdrawing equity capital for up to 20 business days. The
Net Capital Rule of the NYSE also provides that equity capital may not be drawn
or cash dividends paid if resulting net capital would be less than 5 percent of
aggregate debits.

Under
applicable regulations, Siebert is required to maintain regulatory net capital
of at least $250,000. At December 31, 2006 and 2005, Siebert had net capital of
$27.7 million and $25.6 million, respectively. Siebert claims exemption from
the reserve requirement under Section 15c3-3(k)(2)(ii).

Employees

As
of March 5, 2007, we had approximately 90 employees, six of whom were corporate
officers. None of our employees is represented by a union, and we believe that
relations with our employees are good.

|         |             
|-------- | ------------
|Item 1A. | RISK FACTORS

Securities market
volatility and other securities industry risk could adversely affect our
business

Our
principal business activities include discount retail broker-dealer operations,
as well as investment banking, institutional sales and other related business
lines. Like other businesses operating in the securities industry, our business
is directly affected by volatile trading markets, fluctuations in the volume of
market activity, economic and political conditions, upward and downward trends
in business and finance at large, legislation and regulation affecting the
national and international business and financial communities, currency values,
inflation, market conditions, the availability and cost of short-term or
long-term funding and capital, the credit capacity or perceived credit
worthiness of the securities industry in the marketplace and the level and
volatility of interest rates. We also face risks relating to trading losses,
losses resulting from the ownership or underwriting of securities, counterparty
failure to meet commitments, customer fraud, employee fraud, issuer fraud,
errors and misconduct, failures in connection with the processing of securities
transactions and litigation. The varied risks associated with our business and
the securities industry in general could adversely affect our commission and
other revenues. A reduction in our revenues or a loss resulting from our
underwriting or ownership of securities or sales or trading of securities could
have a material adverse effect on our business, results of operations and
financial condition. In addition, as a result of these risks, our revenues and
operating results may be subject to significant fluctuations from quarter to
quarter and from year to year.

Lower price levels
in the securities markets may reduce our profitability adversely affecting the
price of our common stock.

Lower
price levels of securities may result in (i) reduced volumes of securities,
options and futures transactions, with a consequent reduction in our commission
revenues, and (ii) losses from declines in the market value of securities we
held in investment and underwriting positions. In periods of low volume, our
levels of profitability are further adversely affected because certain of our
expenses remain relatively fixed. Sudden sharp declines in market values of
securities and the failure of issuers and counterparties to perform their
obligations can result in illiquid markets which, in turn, may result in our
having difficulty selling securities. Such negative market conditions, if
prolonged, may also lower our revenues from investment banking and other
activities. A reduction in our revenues from investment banking or other activities
could have a material adverse affect on our business, results of operations and
financial condition.

There is intense
competition in the discount brokerage industry.

Siebert
encounters significant competition from full-commission, online and other
discount brokerage firms, as well as from financial institutions, mutual fund
sponsors and other organizations many of which are significantly larger and
better capitalized than Siebert. Siebert equity investee, SBS, a municipal bond
underwriter, also encounters significant competition from firms engaged in the
municipal finance business. The general financial success of the securities
industry over the past several years and the price wars encountered and lower
commission rates in the discount brokerage business in general have
strengthened our existing competitors. Siebert believes that

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such changes
in the industry will continue to strengthen existing competitors and attract
additional competitors such as banks, insurance companies, providers of online
financial and information services, and others as they expand their product
lines. Many of these competitors are larger, more diversified, have greater
capital resources, and offer a wider range of services and financial products
than Siebert. Siebert competes with a wide variety of vendors of financial
services for the same customers. Siebert may not be able to compete effectively
with current or future competitors.

During
2006, competition continued to intensify both among all classes of brokerage
firms and within the discount brokerage business as well as from consolidation
in the discount brokerage industry. Some competitors in the discount brokerage
business offer services which we do not, including financial advice and
investment management. In the last two years, some competitors have continued
to offer lower flat rate execution fees that are difficult for any conventional
discount firm to meet. Industry-wide changes in trading practices are expected
to cause continuing pressure on fees earned by discount brokers for the sale of
order flow. Many of the flat fee brokers impose charges for services such as
mailing, transfers and handling exchanges which Siebert does not and also
direct their execution to captive market makers. Continued or increased
competition from ultra low cost, flat fee brokers and broader service offerings
from other discount brokers could limit our growth or lead to a decline in
Sieberts customer base which would adversely affect our business, results of
operations and financial condition.

We are subject to
extensive government regulation.

Our
business is subject to extensive regulation in the United States, at both the
Federal and state level. We are also subject to regulation by selfregulatory
organizations and other regulatory bodies in the Untied States, such as the
SEC, the NYSE, the NASD and the Municipal Securities Rulemaking Board (the
MSRB). We are registered as a broker-dealer in 50 states, the District of
Columbia and Puerto Rico. The regulations to which we are subject as a
broker-dealer cover all aspects of the securities business including: training
of personnel, sales methods, trading practices, uses and safe keeping of
customers funds and securities, capital structure, record keeping, fee
arrangements, disclosure and the conduct of directors, officers and employees.
Failure to comply with any of these laws, rules or regulations, which may be
subject to the uncertainties of interpretation, could result in civil
penalties, fines, suspension or expulsion and have a material adverse effect on
our business, results of operations and financial condition.

Siebert,
as a registered broker-dealer and NASD member organization, is required by
Federal law to belong to the Securities Investor Protection Corporation
(SIPC) which provides, in the event of the liquidation of a broker-dealer,
protection for securities held in customer accounts held by the firm of up to
$500,000 per customer, subject to a limitation of $100,000 on claims for cash
balances. SIPC is funded through assessments on registered broker-dealers. In
addition, Siebert, through its clearing agent, has purchased from private
insurers additional account protection in the event of liquidation up to the
net asset value, as defined, of each account. Stocks, bonds, mutual funds and
money market funds are included at net asset value for purposes of SIPC
protection and the additional protection. Neither SIPC protection nor the
additional protection insures against fluctuations in the market value of
securities.

Siebert
is also authorized by the MSRB to effect transactions in municipal securities
on behalf of its customers and has obtained certain additional registrations
with the SEC and state regulatory agencies necessary to permit it to engage in
certain other activities incidental to its brokerage business.

Margin
lending arranged by Siebert is subject to the margin rules of the Board of
Governors of the Federal Reserve System and the NYSE. Under such rules, broker-dealers
are limited in the amount they may lend in connection with certain purchases
and short sales of securities and are also required to impose certain
maintenance requirements on the amount of securities and cash held in margin
accounts. In addition, those rules and rules of the Chicago Board Options
Exchange govern the amount of margin customers must provide and maintain in
writing uncovered options.

The
laws, rules and regulations, as well as governmental policies and accounting
principles, governing our business and the financial services and banking
industries generally have changed significantly over recent years and are
expected to continue to do so. We cannot predict which changes in laws, rules,
regulations, governmental policies or accounting principles will be adopted.
Any changes in the laws, rules, regulations, governmental policies

-9-

---



or accounting
principles relating to our business could materially and adversely affect our
business, results of operations and financial condition.

We are subject to
net capital requirements.

The
SEC, the NYSE and various other securities and commodities exchanges and other
regulatory bodies in the United States have rules with respect to net capital
requirements which affect us. These rules have the effect of requiring that at
least a substantial portion of a broker-dealers assets be kept in cash of
highly liquid investments. Our compliance with the net capital requirements
could limit operations that require intensive use of capital, such as
underwriting or trading activities. These rules could also restrict our ability
to withdraw our capital, even in circumstances where we have more than the
minimum amount of required capital, which, in turn, could limit our ability to
implement growth strategies. In addition, a change in such rules, or the
imposition of new rules, affecting the scope, coverage, calculation or amount
to such net capital requirements, or a significant operating loss or any
unusually large charge against net capital, could have similar adverse effects.

Our customers may
fail to pay us.

A
principal credit risk to which we are exposed on a regular basis is that our
customers may fail to pay for their purchases or fail to maintain the minimum
required collateral for amounts borrowed against securities positions
maintained by them. We have established policies with respect to maximum
purchase commitments for new customers or customers with inadequate collateral
to support a requested purchase. However, our managers have some flexibility in
the allowance of certain transactions. When transactions occur outside normal
guidelines, these accounts are monitored until their payment obligation is
completed. If the customer does not meet the commitment, we take steps to close
out the position in an attempt to minimize losses.

We
have personnel specifically responsible for monitoring all customer positions
for the maintenance of required collateral. These personnel also monitor
accounts that may be concentrated in one or more securities whereby a
significant decline in the value of a particular security could reduce the
value of the accounts collateral below the accounts loan obligation. While we
have not had significant credit losses in the last five years, we cannot assure
you that the policies and procedures we have established will be adequate to
prevent a significant credit loss.

We face risks
relating to our investment banking activities.

Certain
risks are involved in the underwriting of securities. Investment banking and
underwriting syndicates agree to purchase securities at a discount from the
public offering price. If the securities must be sold below the syndicate cost,
an underwriter is exposed to losses on the securities that it has committed to
purchase. In the last several years, investment banking firms increasingly have
underwritten corporate and municipal offerings with fewer syndicate
participants or, in some cases, without an underwriting syndicate. In these
cases, the underwriter assumes a larger part or all of the risk of an
underwriting transaction.

Under
Federal securities laws, other laws and court decisions, an underwriter is
exposed to substantial potential liability for material misstatements or
omissions of fact in the prospectus used to describe the securities being
offered. While municipal securities are exempt from the registration
requirements of the Securities Act, underwriters of municipal securities are
exposed to substantial potential liability for material misstatements or
omissions of fact in the offering documents prepared for these offerings.

An increase in
volume on our systems or other events could cause them to malfunction.

We
presently receive and process up to 65% of our trade orders electronically.
This method of trading is heavily dependent on the integrity of the electronic
systems supporting it. While we have never experienced a significant failure of
our trading systems, heavy stress placed on our systems during peak trading
times could cause our systems to operate at unacceptably low speeds or fail
altogether. Any significant degradation or failure of our systems or the
systems of third parties involved in the trading process (e.g., online and
Internet service providers, record keeping and data processing functions
performed by third parties, and third party software), even for a short time,
could cause customers to suffer delays in trading. These delays could cause
substantial losses for customers and could subject us to claims from these customers
for losses. We cannot assure you that our network structure will operate
appropriately in the event of a subsystem, component or software failure. In
addition, we cannot assure you

-10-

---



that we will
be able to prevent an extended systems failure in the event of a power or
telecommunications failure, an earthquake, terrorist attack, fire or any act of
God. Any systems failure that causes interruptions in our operations could have
a material adverse effect on our business, financial condition and operating
results.

We rely on
information processing and communications systems to process and record our
transactions.

Our
operations rely heavily on information processing and communications systems.
Our system for processing securities transactions is highly automated.
Registered representatives equipped with online computer terminals can access
customer account information, obtain securities prices and related information
and enter and confirm orders online.

To
support our customer service delivery systems, as well as other applications
such as clearing functions, account administration, record keeping and direct
customer access to investment information, we maintain a computer network in
New York City. Through our clearing agent, our computers are also linked to the
major registered U.S. securities exchanges, the National Securities Clearing
Corporation and the Depository Trust Company. Failure of the information
processing or communications systems for a significant period of time could
limit our ability to process a large volume of transactions accurately and
rapidly. This could cause us to be unable to satisfy our obligations to
customers and other securities firms, and could result in regulatory
violations. External events, such as an earthquake, terrorist attack or power
failure, loss of external information feeds, such as security price
information, as well as internal malfunctions such as those that could occur
during the implementation of system modifications, could render part or all of
these systems inoperative.

We may not be able
to keep up pace with continuing changes in technology.

Our
market is characterized by rapidly changing technology. To be successful, we
must adapt to this rapidly changing environment by continually improving the
performance, features and reliability of our services. We could incur
substantial costs if we need to modify our services or infrastructure or adapt
our technology to respond to these changes. A delay or failure to address
technological advances and developments or an increase in costs resulting from
these changes could have a material and adverse effect on our business,
financial condition and results of operations.

We depend on our
ability to attract and retain key personnel.

Our
continued success is principally dependent on our founder, Muriel F. Siebert,
Chairwoman, Chief Executive Officer and President and our senior management. In
addition, the continued success of SBS may be dependent on the services of
Napoleon Brandford III and Suzanne Shank. The loss of the services of any of
these individuals could significantly harm our business, financial condition
and operating results.

Our principal
shareholder may control many key decisions.

Ms.
Muriel Siebert currently owns approximately 90% of our outstanding common
stock. Ms. Siebert will have the power to elect the entire Board of Directors
and, except as otherwise provided by law or our Certificate of Incorporation or
by-laws, to approve any action requiring shareholder approval without a
shareholders meeting.

There may be no
public market for our common stock.

Only
approximately 2,200,000 shares, or approximately 10% of our shares outstanding,
are currently held by the public. Although our common stock is traded in The
Nasdaq Global Market, their can be no assurance that an active public market
will continue.

|         |                          
|-------- | -------------------------
|Item 1B. | UNRESOLVED STAFF COMMENTS

None.

-11-

---



|        |           
|------- | ----------
|Item 2. | PROPERTIES

Siebert
currently maintains seven retail discount brokerage offices. Customers can
visit the offices to obtain market information, place orders, open accounts,
deliver and receive checks and securities, and obtain related customer services
in person. Nevertheless, most of Sieberts activities are conducted on the
Internet or by telephone and mail.

Siebert
operates its business out of the following seven leased offices:

|                                                                                                      |  |                                              |       |                                     |  |                  |  |  |      | 
|----------------------------------------------------------------------------------------------------- |  | -------------------------------------------- | ----- | ----------------------------------- |  | ---------------- |  |  | ---- | 
|Location                                                                                              |  | Approximate 
  Office Area in 
  Square Feet |       | Expiration Date of 
  Current Lease |  | Renewal 
  Terms | 
|                                                                                                      |  |                                              |       |                                     |  |                  | 
|                                                                                                      |  |                                              |       |                                     |  |                  |  |  |      | 
|Corporate
  Headquarters, Retail and Investment Banking Office 
  885 Third Ave.
  New York, NY 10022 |  |                                              | 7,828 |                                     |  | 1/14/11          |  |  | None | 
|                                                                                                      |  |                                              |       |                                     |  |                  |  |  |      | 
|Retail
  Offices                                                                                      |  |                                              |       |                                     |  |                  |  |  |      | 
|                                                                                                      |  |                                              |       |                                     |  |                  |  |  |      | 
|9693
  Wilshire Boulevard 
  Beverly Hills, CA 90212                                                  |  |                                              | 1,000 |                                     |  | 6/30/07          |  |  | None | 
|                                                                                                      |  |                                              |       |                                     |  |                  |  |  |      | 
|4400 North
  Federal Highway 
  Boca Raton, FL 33431                                                  |  |                                              | 2,438 |                                     |  | 5/31/09          |  |  | None | 
|                                                                                                      |  |                                              |       |                                     |  |                  |  |  |      | 
|111 Pavonia
  Avenue(1)Jersey City, NJ 07310                                                          |  |                                              | 7,768 |                                     |  | 6/30/09          |  |  | None | 
|                                                                                                      |  |                                              |       |                                     |  |                  |  |  |      | 
|400 Fifth
  Avenue  South 
  Naples, FL 33940                                                        |  |                                              | 1,008 |                                     |  | 4/30/08          |  |  | None | 
|                                                                                                      |  |                                              |       |                                     |  |                  |  |  |      | 
|240A South
  County Road 
  Palm Beach, FL 33480                                                      |  |                                              | 770   |                                     |  | 12/31/07         |  |  | None | 
|                                                                                                      |  |                                              |       |                                     |  |                  |  |  |      | 
|9569 Harding
  Avenue 
  Surfside, FL 33154                                                           |  |                                              | 1,150 |                                     |  | 4/30/07          |  |  | None | 

|    |                                                                                          
|--- | -----------------------------------------------------------------------------------------
|(1) | Certain of
  our administrative and back office functions are performed at this location.

We
believe that our properties are in good condition and are suitable for our
operations.

|        |                  
|------- | -----------------
|Item 3. | LEGAL PROCEEDINGS

See
Part I-Item 1 Business-Current Developments and Part I-Item 7 Managements
Discussion and Analysis of Financial Condition and Results of Operations with
respect to our 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.

In
addition, we are involved in various routine lawsuits of a nature we deem to be
customary and incidental to our business. In the opinion of our management, the
ultimate disposition of such actions will not have a material adverse effect on
our financial position or results of operations.

-12-

---



|        |                                                
|------- | -----------------------------------------------
|Item 4. | SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

No
matter was submitted to a vote of shareholders during the fourth quarter of the
fiscal year ended December 31, 2006.

PART II

|        |                                                                                                               
|------- | --------------------------------------------------------------------------------------------------------------
|Item 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
  AND ISSUER PURCHASES OF EQUITY SECURITIES

Our
common stock trades on the Nasdaq Stock Market under the symbol SIEB. The
high and low sales prices of our common stock reported by Nasdaq during the
following calendar quarters were:

|                                   |  |      |      |     |   |      | 
|---------------------------------- |  | ---- | ---- | --- | - | ---- | 
|                                   |  | High |      | Low |  
|                                   |  |      |      |     |  
|First
  Quarter - 2005             |  | $    | 3.95 |     | $ | 2.96 | 
|                                   |  |      |      |     |   |      | 
|Second
  Quarter - 2005            |  | $    | 4.50 |     | $ | 2.55 | 
|                                   |  |      |      |     |   |      | 
|Third
  Quarter - 2005             |  | $    | 3.85 |     | $ | 2.80 | 
|                                   |  |      |      |     |   |      | 
|Fourth
  Quarter - 2005            |  | $    | 3.05 |     | $ | 2.34 | 
|                                   |  |      |      |     |   |      | 
|First
  Quarter - 2006             |  | $    | 2.88 |     | $ | 2.39 | 
|                                   |  |      |      |     |   |      | 
|Second
  Quarter - 2006            |  | $    | 2.99 |     | $ | 2.35 | 
|                                   |  |      |      |     |   |      | 
|Third
  Quarter - 2006             |  | $    | 2.95 |     | $ | 2.35 | 
|                                   |  |      |      |     |   |      | 
|Fourth
  Quarter - 2006            |  | $    | 5.70 |     | $ | 2.75 | 
|                                   |  |      |      |     |   |      | 
|January 1,
  2007 - March 16, 2007 |  | $    | 4.50 |     | $ | 3.45 | 

On
March 13, 2007, the closing price of our common stock on the Nasdaq Stock
Market was $3.85 per share. There were 137 holders of record of our common
stock and more than 2,000 beneficial owners of our common stock on March 13,
2007.

Dividend Policy

On
August 9, 2006, the Board of Directors declared a dividend of eight cents per
share on our common stock, which was paid on August 30, 2006 to shareholders of
record at the close of business on August 21, 2006. The total amount paid on
this dividend declaration was $359,048. Ms. Muriel Siebert, the Chief Executive
Officer and majority shareholder waived the right to receive the dividend in
excess of the aggregate amount paid to other shareholders. Other shareholders
were paid dividends of $179,524.

We
did not pay cash dividends to our shareholders in 2005 or 2004. Our Board of
Directors periodically considers whether to declare dividends. In considering
whether to pay such dividends, our Board of Directors will review our earnings
capital requirements, economic forecasts and such other factors as are deemed
relevant. Some portion of our earnings will be retained to provide capital for
the operation and expansion of our business.

-13-

---



Issuer Purchase Of Equity Securities

On
May 15, 2000, our Board of Directors authorized a buy back of up to one million
shares of our common stock. Under this program, shares are purchased from time
to time, at our discretion, in the open market and in private transactions. The
following table sets forth information regarding our purchase of common stock
on a monthly basis during the fourth quarter of 2006:

|                |  |                                                      |  |                                |  |                                                                              |  |                                                                           |      |  |  |  |  |         |  |  |  |  |        |  | 
|--------------- |  | ---------------------------------------------------- |  | ------------------------------ |  | ---------------------------------------------------------------------------- |  | ------------------------------------------------------------------------- | ---- |  |  |  |  | ------- |  |  |  |  | ------ |  | 
|Period          |  | Total Number
  Of Shares
  Purchased
  During Period |  | Average Price
  Paid Per Share |  | Total Number of
  Shares Purchased as
  Part of Publicly
  Announced
  Plans |  | Maximum
  Number of Shares
  That May Yet Be
  Purchased Under
  The Plan |     
|                |  |                                                      |  |                                |  |                                                                              |  |                                                                           |     
|October 2006    |  |                                                      |  |                               |  |                                                                              |  |                                                                           |     |  |  |  |  | 933,401 |  |  |  |  | 66,599 |  | 
|November
  2006 |  |                                                      |  | 8,060                          |  |                                                                              |  | $                                                                         | 4.80 |  |  |  |  | 941,461 |  |  |  |  | 58,539 |  | 
|December
  2006 |  |                                                      |  | 58,039                         |  |                                                                              |  | $                                                                         | 4.85 |  |  |  |  | 999,500 |  |  |  |  | 500    |  | 
|                |  |                                                      |  |                                |  |                                                                              |  |                                                                           |      |  |  |  |  |         |  |  |  |  |        |  | 
|Total           |  |                                                      |  | 66,099                         |  |                                                                              |  | $                                                                         | 4.85 |  |  |  |  | 999,500 |  |  |  |  | 500    |  | 



---

Equity Compensation Plan Information

The following
table sets forth information as of December 31, 2006 with respect to our equity
compensation plans.

|                                                                |  |                                                                                                   |  |                                                                                         |  |                                                                                                                                                |  |   |      |  |  |  |  |           |  | 
|--------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ---- |  |  |  |  | --------- |  | 
|Plan Category                                                   |  | Number of Securities to be
  issued upon exercise of
  outstanding options,
  warrants and rights |  | Weighted-average
  exercise price of
  outstanding 
  options,
  warrants and 
  rights |  | Number of Securities
  remaining available for
  issuance under equity
  compensation plans
  (excluding securities
  reflected in column (a)) | 
|                                                                |  |                                                                                                   |  |                                                                                         |  |                                                                                                                                                | 
|                                                                |  | (a)                                                                                               |  | (b)                                                                                     |  | (c)                                                                                                                                            | 
|Equity compensation plans
  approved by security holders(1)     |  |                                                                                                   |  | 1,603,966                                                                               |  |                                                                                                                                                |  | $ | 4.28 |  |  |  |  | 2,027,915 |  | 
|                                                                |  |                                                                                                   |  |                                                                                         |  |                                                                                                                                                |  |   |      |  |  |  |  |           |  | 
|Equity compensation plans not approved by
  security holders(2) |  |                                                                                                   |  | 41,400                                                                                  |  |                                                                                                                                                |  |   |     |  |  |  |  | 18,600    |  | 
|                                                                |  |                                                                                                   |  |                                                                                         |  |                                                                                                                                                |  |   |      |  |  |  |  |           |  | 
|Total                                                           |  |                                                                                                   |  | 1,645,366                                                                               |  |                                                                                                                                                |  | $ | 4.28 |  |  |  |  | 2,046,515 |  | 



---

|    |                                                   
|--- | --------------------------------------------------
|(1) | Represents
  our 1997 Stock Option Plan.          
|    |                                                   
|(2) | Represents
  our 1998 Restricted Stock Award Plan.

Material Terms of the 1998 Restricted Stock
Award Plan

Our
1998 Restricted Stock Award Plan provides for awards to key employees of not
more than an aggregate of 60,000 shares of our common stock, subject to
adjustments for stock splits, stock dividends and other changes in our
capitalization, to be issued either immediately after the award or at a future
date. As of December 31, 2006, 41,400 shares of our common stock under the
Restricted Stock Award Plan had been awarded and were outstanding. As provided
in the plan and subject to restrictions, shares awarded may not be disposed of
by the recipients for a period of one year from the date of the award. Cash
dividends on shares awarded are held by us for the benefit of the recipients,
subject to the same restrictions as the award. These dividends, without
interest, are paid to the recipients upon lapse of the restrictions.

-14-

---



|                 |                                                                                                                                                                                                                                                                                                                   
|---------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Our Performance: | The graph
  below compares our performance from December 31, 2001 through December 31,
  2006, against the performance of the Nasdaq Market Index and a peer group.
  The peer group consists of A.B. Watley Group Inc., Ameritrade Holding
  Corporation, E*Trade Group, Inc. and The Charles Schwab Corporation.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
         Among Siebert Financial Corp., The NASDAQ Composite IndexAnd A Peer Group

(LINE GRAPH)

* $100 invested on 12/31/01 in stock or index-including reinvestment of dividends.Fiscal year
ending December 31.

-15-

---



|        |                                                 
|------- | ------------------------------------------------
|Item 6. | SELECTED FINANCIAL DATA                         
|        | (In
  thousands except share and per share data)

The Following Selected Financial Information
Should Be Read In Conjunction With Our Consolidated
Financial Statements And The Related Notes Thereto.



|                                                       |  |      |            |      |   |            |  |      |            |      |   |            |  |   |            |  
|------------------------------------------------------ |  | ---- | ---------- | ---- | - | ---------- |  | ---- | ---------- | ---- | - | ---------- |  | - | ---------- | -
|                                                       |  | 2006 |            | 2005 |   | 2004       |  | 2003 |            | 2002 |  
|                                                       |  |      |            |      |   |            |  |      |            |      |  
|Income statement data:                                 |  |      |            |      |   |            |  |      |            |      |   |            |  |   |            |  
|Total Revenues                                         |  | $    | 32,619     |      | $ | 31,172     |  | $    | 28,104     |      | $ | 24,696     |  | $ | 24,104     |  
|Net income (loss)                                      |  | $    | 3,425      |      | $ | 1,863      |  | $    | 533        |      | $ | 123        |  | $ | (1,633     | )
|                                                       |  |      |            |      |   |            |  |      |            |      |   |            |  |   |            |  
|Net income (loss) per share of common stock            |  |      |            |      |   |            |  |      |            |      |   |            |  |   |            |  
|Basic                                                  |  | $    | 0.15       |      | $ | 0.08       |  | $    | 0.02       |      | $ | 0.01       |  | $ | (0.07      | )
|Diluted                                                |  | $    | 0.15       |      | $ | 0.08       |  | $    | 0.02       |      | $ | 0.01       |  | $ | (0.07      | )
|                                                       |  |      |            |      |   |            |  |      |            |      |   |            |  |   |            |  
|Weighted average shares outstanding (basic)            |  |      | 22,129,566 |      |   | 22,093,369 |  |      | 22,113,228 |      |   | 22,305,369 |  |   | 22,403,990 |  
|Weighted average shares outstanding
  (diluted)        |  |      | 22,252,851 |      |   | 22,127,940 |  |      | 22,276,562 |      |   | 22,453,538 |  |   | 22,403,990 |  
|                                                       |  |      |            |      |   |            |  |      |            |      |   |            |  |   |            |  
|Statement of financial condition data (at
  year-end): |  |      |            |      |   |            |  |      |            |      |   |            |  |   |            |  
|                                                       |  |      |            |      |   |            |  |      |            |      |   |            |  |   |            |  
|Total assets                                           |  | $    | 46,869     |      | $ | 43,027     |  | $    | 41,560     |      | $ | 40,026     |  | $ | 40,451     |  
|Total liabilities excluding subordinated
  borrowings  |  | $    | 6,460      |      | $ | 5,975      |  | $    | 6,460      |      | $ | 4,891      |  | $ | 4,784      |  
|Stockholders equity                                   |  | $    | 40,409     |      | $ | 37,052     |  | $    | 35,100     |      | $ | 35,135     |  | $ | 35,667     |  

|        |                                                                                        
|------- | ---------------------------------------------------------------------------------------
|Item 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
  RESULTS OF OPERATIONS

This
discussion should be read in conjunction with our audited Consolidated
Financial Statements and the Notes thereto contained elsewhere in this Annual
Report.

The
market was stronger in 2006 due to steady interest rates and declining oil
prices although our customer trading activity was flat.

Competition
continued to intensify among all types of brokerage firms, including
established discount brokers and new firms entering the on-line brokerage
business. Electronic trading continues to account for an increasing amount of
trading activity, with some firms charging very low trading execution fees that
are difficult for any conventional discount firm to meet. Some of these
brokers, however, impose asset based charges for services such as mailing,
transfers and handling exchanges which we do not currently impose, and also
direct their orders to market makers where they have a financial interest.
Continued competition could limit our growth or even lead to a decline in our
customer base, which would adversely affect our results of operations.
Industry-wide changes in trading practices, such as the New York Stock
Exchanges Hybrid Market proposal and the increasing use of Electronic
Communications Networks, are expected to put continuing pressure on
commissions/fees earned by brokers while increasing volatility.

We
entered into an Operating Agreement, effective as of April 19, 2005 (the
Operating Agreement), with Suzanne Shank and Napolean Brandford III, the two
individual principals of SBS ( the Principals) of SBS Financial Products
Company LLC, a Delaware limited liability company (SBSFPC). Pursuant to the
terms of the Operating Agreement, the Company and each of the Principals made
an initial capital contribution of $400,000 in exchange for a 33.33% initial
interest in SBSFPC. SBSFPC engages in derivatives transactions related to the

-16-

---



municipal
underwriting business. The Operating Agreement provides that profit and loss
will be shared 66.66% by the Principals and 33.33% by us.

On
May 15, 2000, our Board of Directors authorized a buy back of up
to one million shares of our common stock. Under this program, shares are
purchased from time to time, at our discretion, in the open market and in
private transactions. Through March 14, 2007, 999,500 shares have been
purchased at an average price of $4.51 per share.

We,
like other securities firms, are directly affected by general economic and
market conditions including fluctuations in volume and prices of securities,
changes and the prospect of changes in interest rates, and demand for brokerage
and investment banking services, all of which can affect our profitability. In
addition, in periods of reduced financial market activity, profitability is
likely to be adversely affected because certain expenses remain relatively
fixed, including salaries and related costs, portions of communications costs
and occupancy expenses. Accordingly, earnings for any period should not be
considered representative of earnings to be expected for any other period.

Siebert filed
a lawsuit against Intuit Inc. (Intuit) in New York State Supreme Court on
September 17, 2003 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. The Court denied Intuits motion to dismiss Sieberts causes of action
for breach of fiduciary duty, breach of contractual obligations to pay shared
expenses, promissory estoppel, and breach of the implied covenant of good faith
and fair dealing. The Court granted Intuits motion to dismiss Sieberts causes
of action for breach of the express covenant of good faith and fair dealing,
misrepresentation and/or fraud, and its request for punitive damages. Intuit
has counterclaimed against Siebert, seeking not less than $6.6 million. Siebert
and Intuit have appealed from certain portions of the Courts decision and
Siebert has also moved for reargument of that decision regarding punitive damages.
In November 2005, Intuits counsel was disqualified by the Court from
representing Intuit in this action. The Courts Appellate Division reversed the
order of disqualification, but, thereafter, granted Sieberts motion for leave
to appeal to the Court of Appeals, New York highest court. All proceedings in
the action are stayed pending Sieberts appeal, which the Court of Appeals heard in March 2007. The outcome of this matter cannot now be
predicted.

Critical Accounting Policies

We generally
follow accounting policies standard in the brokerage industry and believe that
our policies appropriately reflect our financial position and results of
operations. Our management makes significant estimates that effect the reported amounts of assets,
liabilities, revenues and expenses and the related disclosure of contigent assets
and liabilities included in the financial statements.
The estimates relate primarily to revenue and expense items in
the normal course of business as to which we receive no confirmations,
invoices, or other documentation, at the time the books are closed for a
period. We use our best judgment, based on our knowledge of revenue
transactions and expenses incurred, to estimate the amount of such revenue and
expenses. We are not aware of any material differences between the estimates
used in closing our books for the last five years and the actual amounts of revenue
and expenses incurred when we subsequently receive the actual confirmations,
invoices or other documentation. Estimates are also used in determining the
useful lives of intangibles assets, and the fair market value of intangible
assets. Our management believes that its estimates are reasonable.

Results of Operations

Year Ended December
31, 2006 Compared To Year Ended December 31, 2005

Revenues.
Total revenues for 2006 were $32.6 million, an increase of $1.4 million, or
4.5%, from 2005. Commission and fee income decreased $558,000, or 2.2%, from
the prior year to $24.7 million primarily due to a decrease in commissions
generated by the commission recapture operations offset by increases in the
institutional trading operations as well as retail customer operations.

Investment
banking revenues decreased $668,000, or 28.2%, from the prior year to $1.7
million in 2006 due to our participating in fewer new issues in the equity
capital markets team.

-17-

---



Income
from our equity investment in Siebert, Brandford, Shank & Co., LLC, an
entity in which Siebert holds a 49% equity interest (SBS), for 2006 was $2.9
million compared to income of $1.7 million, an increase of $1.2 million or
74.3% from the same period in 2005. This increase was due to SBS participating
in more managed and co-managed transactions as well as an increase revenues
from trading. SBS serves as an underwriter for municipal bond offerings. Income
from our equity investment in SBS Financial Products Company, LLC, an entity in
which we hold a 33% equity interest (SBSFPC) for 2006, was $916,000 as
compared to income of $194,000, an increase of $722,000 or 372.2% from the same
period in 2005. This increase was due to an increase in the number and size of
the transactions and the mark to market of the positions. SBSFPC engages in
derivatives transactions related to the municipal underwriting business.

Trading
profits increased $52,000, or 7.4%, from the prior year to $754,000 primarily
due to increased trading in municipal, government and corporate bonds within
our riskless trading group and the mark to market of our investment.

Income
from interest and dividends increased $669,000, or 68.4%, from the prior year
to $1.7 million primarily due to higher interest rates and higher cash
balances.

Expenses.
Total expenses for 2006 were $26.7 million, a decrease of $1.3 million, or
4.5%, from the prior year.

Employee
compensation and benefit costs decreased $450,000, or 3.9%, from the prior year
to $11.0 million primarily due to a decrease in headcount in customer service
and new accounts departments, commission based on production and settlement of
employee related matters and termination of an executive officer in 2005.

Clearing
and floor brokerage fees decreased $92,000, or 1.7%, from the prior year to
$5.2 million primarily due to decreased volume relating to the commission
recapture business offset by an increase in fixed fees that are not related to
volume that are charged our clearing firm.

Professional
fees decreased $498,000, or 11.6% from the prior year to $3.8 million primarily
due to an decrease in legal fees relating to litigation with Intuit and
consulting fees relating to the commission recapture business.

Advertising
and promotion expense increased $44,000, or 5.0%, from the prior year to
$920,000 primarily due to the production and airing of television commercials
in the Florida region in the first quarter of 2006.

Communications
expense decreased $17,000, or 1.0%, from the prior year to $1.7 million from
actively pursuing alternative vendors and utilizing new technologies.

Occupancy
costs increased $93,000, or 8.8%, from the prior year to $1.2 million
principally due to the an increase in operating and utilities cost charged by
the landlord in our Jersey City, New Jersey branch as well as our branches in
the Florida region.

Other
general and administrative expenses decreased $327,000, or 10.0%, from the
prior year to $3.0 million primarily due to a decrease in depreciation and
amortization expenses, registration and exchange fees and costs relating to the
institutional direct access operations offset by increases in travel and
entertainment and office supplies.

Taxes.
The provision for income taxes increased by $1,134,000, or 84.0% from the prior
year to $2.5 million due to an increase in net income before tax to $5.9
million in 2006 from $3.2 million in 2005.

Year Ended December 31, 2005 Compared To Year
Ended December 31, 2004

Revenues. Total revenues for 2005 were $31.2
million,
an increase of $3.1 million, or 10.9%, from 2004. Commission and fee income
increased $1.5 million, or 6.2%, from the prior year to $25.3 million due to an
increase in commissions generated by the commission recapture, institutional
direct access and institutional trading operations as well as retail customer
accounts purchased from Wall Street Discount, Inc. in the second quarter 2004
offset by a decrease in retail customer commissions. The decrease in retail
customer commissions is due a decrease

-18-

---



in the average commission
charged per trade in 2005 from the previous year. The commission recapture,
institutional direct access and institutional trading operations began in the
third quarter 2004.

Investment
banking revenues increased $1 million, or 74.0%, from the prior year to $2.4
million in 2005 due to our participation in more new issues as a result of the
Capital Markets team that joined us in the third quarter of 2004.

Income
from Sieberts investment in Siebert, Brandford, Shank & Co., LLC (SBS),
an entity in which Siebert holds a 49% equity interest, for 2005 and 2004 was
$1.7 million. SBS serves as an underwriter for municipal bond offerings. Income
from our equity investment in SBS Financial Products Company, LLC, an entity in
which we hold a 33.33% equity interest (SBSFPC) for 2005 was $194,000. SBSFPC
operations began in the second quarter of 2005.

Trading
profits decreased $59,000, or 7.8%, from the prior year to $702,000 primarily
due to decreased trading in municipal, government and corporate bonds within
our riskless trading group.

Income
from interest and dividends increased $508,000, or 108.1%, from the prior year
to $978,000 primarily due to higher interest rates and higher cash balances.

Expenses. Total expenses for 2005 were $28.0
million,
an increase of $838,000, or 3.1%, from the prior year.

Employee
compensation and benefit costs increased $289,000, or 2.6%, from the prior year
to $11.4 million primarily due to the hiring of our General Counsel, the
expansion of our Capital Markets Group and the New York Stock Exchange Floor
Operation, settlement of employee related matters and health and other employee
benefits offset commissions based on production, headcount in customer service
and new accounts departments and termination of an executive officer.

Clearing
and floor brokerage fees increased $1.1 million, or 24.8%, from the prior year
to $5.3 million primarily due to increased volume of trade executions and a one
time commission rebate of $800,000 from our clearing firm in the first and
second quarter of 2004.

Professional fees increased $2.2 million, or 100.3% from the prior year to $4.3
million primarily due to an increase in legal fees
relating to litigation with Intuit and employee matters and consulting fees relating
 to the Company entering into the commission
recapture business in the third quarter of 2004, the acquisition of the customer
accounts of Wall Street Discount Corp., and
Sarbanes-Oxley.

Advertising
and promotion expense decreased $231,000, or 20.9%, from the prior year to
$876,000 primarily due to managements decision to spend less for advertising
and promotion.

Communications
expense decreased $603,000, or 25.9%, from the prior year to $1.7 million from
actively pursuing alternative vendors and utilizing new technologies.

Occupancy
costs decreased $14,000, or 1.3%, from the prior year to $1.1 million
principally due to the combining of our Boca Raton office with Your Discount
Broker, Inc.s Boca Raton office in the second quarter of 2004.

Other
general and administrative expenses decreased $282,000, or 7.9%, from the prior year to
$3.3 million primarily due to a
decrease in depreciation and amortization expenses, printing and postage costs
offset by an increase in placement and registration
fees.

Taxes. The provision for income taxes increased by
$900,000, or 200.0% from the prior year to $1.4 million due to an increase in
net income before tax to $3.2 million in 2005 from $983,000 in 2004.

Liquidity and
Capital Resources

Our
assets are highly liquid, consisting generally of cash, money market funds and
securities freely saleable in the open market. Our total assets at December 31,
2006 were $47 million, of which, $35.1 million, or 75%, were regarded by us as
highly liquid.

Siebert
is subject to the net capital requirements of the SEC, the NYSE and other
regulatory authorities. At December 31, 2006, Sieberts regulatory net capital
was $27.7 million, $27.5 million in excess of its minimum capital requirement
of $250,000. Siebert terminated the fully disclosed clearing agreement (the
Clearing Agreement) with Pershing LLC (formerly the Pershing division of
Donaldson, Lufkin & Jenrette Securities

-19-

---



Corporation)
(Pershing) in 2003. Based on consultation with counsel, Siebert believes that
the $1,500,000 that it advanced to Pershing in January 2003 should have been
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 and that the ultimate result of this matter will not have a material
adverse effect on result of operations or financial position. Siebert in 2004
decided not to commence proceedings against Pershing and charged off the
$1,500,000 advance to Pershing. Siebert and Pershing in 2005 entered into a
Limited Release Agreement under which Siebert received a release from the $3
million disputed claims for unreimbursed fees and costs, and Pershing was
released from any liability to Siebert based upon the disputed fees and costs,
and Siebert paid a consideration to Pershing that had been previously accrued
by Siebert.

Siebert
has entered into a Secured Demand Note Collateral Agreement with SBS under
which it is obligated to loan to SBS up to $1.2 million pursuant to a secured
promissory note on a subordinated basis. Amounts obligated to be loaned by
Siebert under the facility are reflected on our balance sheet as cash
equivalents - restricted. SBS pays Siebert interest on this amount at the rate
of 8% per annum. The facility expires on August 31, 2008 at which time SBS is
obligated to repay to Siebert any amounts borrowed by SBS thereunder.

Below is a table that presents our
obligations and commitments at December 31, 2006:

|                            |  |                         |           |                    |   |           |  |           |           |                        |   |         |  |   |   | 
|--------------------------- |  | ----------------------- | --------- | ------------------ | - | --------- |  | --------- | --------- | ---------------------- | - | ------- |  | - | - | 
|                            |  | Payment
  Due By Period |          
|                            |  |                         |           |                    |   |           |  |           |           |                        |  
|Contractual Obligations     |  | Total                   |           | Less Than
  1 Year |   | 1-3 Years |  | 3-5 Years |           | More Than
  Five Years |  
|Operating lease obligations |  | $                       | 3,440,000 |                    | $ | 950,000   |  | $         | 2,020,000 |                        | $ | 470,000 |  | $ | 0 | 

|         |                                                           
|-------- | ----------------------------------------------------------
|Item 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Financial Instruments Held For Trading
Purposes:

Through
Siebert, we maintain inventories in exchange-listed and Nasdaq equity
securities and municipal securities on both a long and short basis. We do
currently do not have long and short positions at December 31, 2006. The
Company does not engage in derivative transactions, have no interest in any
special purpose entity and have no liabilities, contingent or otherwise, for
the debt of another entity, except for Sieberts obligation under its Secured
Demand Note Collateral Agreement of $1.2 million executed in favor of SBS. SBS
pays Siebert interest on this amount at the rate of 8% per annum. Siebert
earned interest of $96,000 from SBS in each of the years that Sieberts
commitment has been outstanding.

Financial Instruments Held For Purposes Other
Than Trading:

Working
capital is generally temporarily invested in dollar denominated money market
funds and commercial paper. These investments are not subject to material
changes in value due to interest rate movements.

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 our
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 counterparties are unable to fulfill their contractual
obligations.

|        |                                            
|------- | -------------------------------------------
|Item 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See
financial statements and supplementary data required pursuant to this item
beginning on page F-1 of this Report on Form 10-K.

-20-

---



|        |                                                                                       
|------- | --------------------------------------------------------------------------------------
|Item 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURE

None.

|         |                        
|-------- | -----------------------
|Item 9A. | CONTROLS AND PROCEDURES

We
carried out an evaluation, under the supervision and with the participation of
management, including our President and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures as of the end of the period covered by this report pursuant to Rule
13a-15 of Securities Exchange of 1934, as amended. Based on that evaluation,
our management, including the President and Chief Financial Officer, concluded
that our disclosure controls and procedures are effective in timely alerting
them to material information relating to the Company that is required to be
included in our periodic filings with the Securities and Exchange Commission.

There
were no changes in our internal controls over financial reporting that occurred
during our most recent fiscal quarter that have materially affected, or are
reasonably likely to materially affect our internal controls over financial
reporting.

|         |                  
|-------- | -----------------
|Item 9B. | OTHER INFORMATION

None

PART III

|         |                                                       
|-------- | ------------------------------------------------------
|Item 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

| |     |                              
| | --- | -----------------------------
| | (a) | Identification
  of Directors

This
information is incorporated by reference from our definitive proxy statement to
be filed by the Company pursuant to Regulation 14A on or prior to April 30,
2007.

| |     |                                       
| | --- | --------------------------------------
| | (b) | Identification
  of Executive Officers

| |                        |  |     |  |                                                                
| | ---------------------- |  | --- |  | ---------------------------------------------------------------
| | Name                   |  | Age |  | Position                                                       
| |                        |  |     |  |                                                                
| |                        |  |     |  |                                                                
| | Muriel F.
  Siebert    |  | 74  |  | Chairwoman
  and President                                     
| |                        |  |     |  |                                                                
| | Ameen Esmail           |  | 48  |  | Executive
  Vice President and Director of Business Development
| |                        |  |     |  |                                                                
| | Joseph M.
  Ramos, Jr. |  | 48  |  | Executive
  Vice President and Chief Financial Officer         
| |                        |  |     |  |                                                                
| | Jeanne
  Rosendale     |  | 42  |  | Executive
  Vice President and General Counsel                 
| |                        |  |     |  |                                                                
| | Daniel Iesu            |  | 47  |  | Secretary                                                      

Certain
information regarding each executive officers business experience is set forth
below.

Muriel
F. Sieberthas been Chairwoman, President and a
director of Siebert since 1967 and the Company since November 8, 1996. Ms.
Siebert became the first woman member of the New York Stock Exchange on
December 28, 1967 and served as the first woman Superintendent of Banks of the
State of New York from 1977 to 1982. She is director of the New York State
Business Council and the Boy Scouts of Greater New York. She is the founder and
past president of the Womans Forum, a former member of the State of New York
Commission on Judicial Nomination and is on the executive committee of the
Economic Club of New York.

-21-

---



Ameen
Esmailhas been Executive Vice President and Director
of Business Development since July 3, 2003. From 1984 to 1996, Mr. Esmail
served as an Executive Vice President of Siebert. From 1996 to 2003, Mr. Esmail
worked as an independent consultant servicing the financial securities
industry. Mr. Esmail earned a MBA from New York Universitys Sterns Graduate
School of Business in 2000.

Joseph
M. Ramos, Jr.
has been Executive Vice President, Chief Financial Officer and Assistant
Secretary of Siebert since February 10, 2003. From May 1999 to February 2002,
Mr. Ramos served as Chief Financial Officer of A.B. Watley Group, Inc. From
November 1996 to May 1999, Mr. Ramos served as Chief Financial Officer of Nikko
Securities International, Inc. From September 1987 to March 1996, Mr. Ramos
worked at Cantor Fitzgerald and held various accounting and management
positions, the last as Chief Financial Officer of their registered
broker-dealer based in Los Angeles. From October 1982 to September 1987, Mr.
Ramos was an audit manager for Deloitte & Touche LLP, a public accounting
firm. Mr. Ramos is a Certified Public Accountant licensed in the State of New
York.

Jeanne
M. Rosendalehas been Executive Vice President,
General Counsel of Siebert since May 3, 2004. From February 2003 to April 2004,
Ms. Rosendale served as Global Director Compliance for Knight Equity Markets.
From 2001 through the end of 2002, Ms. Rosendale served as Managing Director,
General Counsel and Chief Compliance Officer for TD Securities (USA) Inc. Ms.
Rosendales background likewise includes senior level legal positions with
Citigroup and the law firm Weil Gotshal & Manges, LLP. Ms. Rosendale
received both her B.A. and J.D., with honors, from Fordham University. She is
active in various industry groups such as the SIA, the Bond Market Association,
the LSTA and ISDA.

Daniel
Iesuhas been Secretary of Siebert since October 1996
and the Company since November 8, 1996. He has been Controller of Siebert since
1989.

| |     |                                                    
| | --- | ---------------------------------------------------
| | (c) | Compliance
  with Section 16(a) of the Exchange Act

This
information is incorporated by reference from our definitive proxy statement to
be filed pursuant to Regulation 14A on or prior to April 30, 2007.

| |     |                 
| | --- | ----------------
| | (d) | Code of
  Ethics

We
have adopted a financial code of ethics that applies to our principal executive
officer, principal financial officer, principal accounting officer and all
other employees performing similar functions. This financial code of ethics is
posted on our website. The Internet address for our website is
http://www.siebertnet.com. We intend to satisfy the disclosure requirement
under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a
provision of this code of ethics by either filing a Form 8-K or posting such
information on our website, at the address and location specified above, within
four business days following the date of such amendment or waiver.

The
information required by this item not set forth herein is incorporated by
reference to our definitive proxy statement to be filed pursuant to Regulation
14A on or prior to April 30, 2007.

|         |                       
|-------- | ----------------------
|Item 11. | EXECUTIVE COMPENSATION

The
information required by this item is incorporated by reference from our
definitive proxy statement to be filed pursuant to Regulation 14A on or prior
to April 30, 2007.

-22-

---



|         |                                                                                                 
|-------- | ------------------------------------------------------------------------------------------------
|Item 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
  RELATED STOCKHOLDER MATTERS

The
information required by this item is incorporated by reference from our
definitive proxy statement to be filed pursuant to Regulation 14A on or prior
to April 30, 2007.

|         |                                                                            
|-------- | ---------------------------------------------------------------------------
|Item 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
  INDEPENDENCE

The
information required by this item is incorporated by reference from our
definitive proxy statement to be filed pursuant to Regulation 14A on or
prior to April 30, 2007.

|         |                                       
|-------- | --------------------------------------
|Item 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES

The
information required in this item is incorporated by reference from our
definitive proxy statement to be filed pursuant to Regulation 14A on or prior
to April 30, 2007.

PART IV

|         |                                           
|-------- | ------------------------------------------
|Item 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The
exhibits required by Item 601 of the Regulations S-K filed as part of, or
incorporated by reference in, this report are listed in the accompanying
Exhibit Index.

| |     |                                                            
| | --- | -----------------------------------------------------------
| | (a) | The
  following documents are filed as part of this report:
| |     |                                                            
| | 1.  | Financial
  Statements                                     

The
consolidated Financial statements for the year ended December 31, 2006 commence
on page F-1 of this report on Form 10-K.

| |    |                                
| | -- | -------------------------------
| | 2. | Financial
  Statement Schedules

None.

| |    |         
| | -- | --------
| | 3. | Exhibits

The exhibits
required by Item 601 of the Regulation S-K filed as part of, or incorporated by
reference in, this report are listed in the accompanying Exhibit Index.

-23-

---



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                                                                                                                    |  |     
|----------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                                    |  | Page
|                                                                                                                                    |  |     
|                                                                                                                                    |  |     
|SIEBERT
  FINANCIAL CORP.                                                                                                           |  |     
|                                                                                                                                    |  |     
|Report of
  Independent Registered Public Accounting Firm                                                                           |  | F-1 
|                                                                                                                                    |  |     
|Consolidated Statements of Financial Condition at
  December 31, 2006 and 2005                                                      |  | F-2 
|                                                                                                                                    |  |     
|Consolidated Statements of Income for each of the
  years in the three-year period ended December 31, 2006                          |  | F-3 
|                                                                                                                                    |  |     
|Consolidated Statements of Changes in
Stockholders
  Equity for each of the years in the three-year period ended December 31, 2006 |  | F-4 
|                                                                                                                                    |  |     
|Consolidated Statements of Cash Flows for each of the
  years in the three-year period ended December 31, 2006                      |  | F-5 
|                                                                                                                                    |  |     
|Notes to
  Consolidated Financial Statements                                                                                        |  | F-6 
|                                                                                                                                    |  |     
|SIEBERT,
  BRANDFORD, SHANK & CO., LLC                                                                                              |  |     
|                                                                                                                                    |  |     
|Report of Independent
  Registered Public Accounting Firm                                                                           |  | F-17
|                                                                                                                                    |  |     
|Statements
  of Financial Condition at December 31, 2006 and 2005                                                                   |  | F-18
|                                                                                                                                    |  |     
|Statements of Operations for each of the years in the
  three-year period ended December 31, 2006                                   |  | F-19
|                                                                                                                                    |  |     
|Statements of Changes in Members Capital for
each of
  the years in the three-year period ended December 31, 2006                  |  | F-20
|                                                                                                                                    |  |     
|Statements of Cash Flows for each of the years in the
  three-year period ended December 31, 2006                                   |  | F-21
|                                                                                                                                    |  |     
|Notes to
  Financial Statements                                                                                                     |  | F-22

---



REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

Board
of Directors and Stockholders 
Siebert Financial Corp.

We
have audited the accompanying consolidated statements of financial condition of
Siebert Financial Corp. and subsidiaries (the Company) as of
December 31, 2006 and 2005, and the related consolidated statements of
income, changes in stockholders equity and cash flows for each of the years in
the three-year period ended December 31, 2006. These financial statements
are the responsibility of the Companys management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In
our opinion, the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Siebert Financial
Corp. and subsidiaries as of December 31, 2006 and 2005, and the
consolidated results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 2006 in conformity with
U.S. generally accepted accounting principles.

Eisner
LLP

New
York, New York
March 30, 2007

F-1

---



SIEBERT FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

|                                                                                                                                                                                                                                      |  |              |            |      |   |            |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ---------- | ---- | - | ---------- | -
|                                                                                                                                                                                                                                      |  | December 31, |           
|                                                                                                                                                                                                                                      |  |              |           
|                                                                                                                                                                                                                                      |  | 2006         |            | 2005 |  
|                                                                                                                                                                                                                                      |  |              |            |      |  
|ASSETS                                                                                                                                                                                                                                |  |              |            |      |   |            |  
|                                                                                                                                                                                                                                      |  |              |            |      |   |            |  
|Cash and cash equivalents                                                                                                                                                                                                             |  | $            | 32,606,000 |      | $ | 30,980,000 |  
|Cash equivalents - restricted                                                                                                                                                                                                         |  |              | 1,300,000  |      |   | 1,300,000  |  
|Receivable from clearing broker                                                                                                                                                                                                       |  |              | 2,468,000  |      |   | 2,404,000  |  
|Furniture, equipment and leasehold
  improvements, net                                                                                                                                                                                |  |              | 510,000    |      |   | 828,000    |  
|Investments in and advances to affiliates                                                                                                                                                                                             |  |              | 6,765,000  |      |   | 4,428,000  |  
|Prepaid expenses and other assets                                                                                                                                                                                                     |  |              | 1,211,000  |      |   | 992,000    |  
|Intangibles, net                                                                                                                                                                                                                      |  |              | 1,182,000  |      |   | 1,494,000  |  
|Deferred taxes                                                                                                                                                                                                                        |  |              | 827,000    |      |   | 601,000    |  
|                                                                                                                                                                                                                                      |  |              |            |      |   |            |  
|                                                                                                                                                                                                                                      |  |              |            |      |   |            |  
|                                                                                                                                                                                                                                      |  | $            | 46,869,000 |      | $ | 43,027,000 |  
|                                                                                                                                                                                                                                      |  |              |            |      |   |            |  
|                                                                                                                                                                                                                                      |  |              |            |      |   |            |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                                  |  |              |            |      |   |            |  
|                                                                                                                                                                                                                                      |  |              |            |      |   |            |  
|Liabilities:                                                                                                                                                                                                                          |  |              |            |      |   |            |  
|                                                                                                                                                                                                                                      |  |              |            |      |   |            |  
|Accounts payable and accrued liabilities                                                                                                                                                                                              |  | $            | 6,460,000  |      | $ | 5,975,000  |  
|                                                                                                                                                                                                                                      |  |              |            |      |   |            |  
|                                                                                                                                                                                                                                      |  |              |            |      |   |            |  
|Commitments and contingent
  liabilities                                                                                                                                                                                              |  |              |            |      |   |            |  
|                                                                                                                                                                                                                                      |  |              |            |      |   |            |  
|Stockholders equity:                                                                                                                                                                                                                 |  |              |            |      |   |            |  
|Common stock, $.01 par value; 49,000,000
  shares authorized, 23,202,046 shares issued and 22,202,546 shares outstanding
  at December 31, 2006 and 23,039,402 shares issued and 22,122,968 shares
  outstanding at December 31, 2005 |  |              | 232,000    |      |   | 230,000    |  
|Additional paid-in capital                                                                                                                                                                                                            |  |              | 18,719,000 |      |   | 18,063,000 |  
|Retained earnings                                                                                                                                                                                                                     |  |              | 25,962,000 |      |   | 22,896,000 |  
|Less: 999,500 and 916,434 shares of
  treasury stock at cost at December 31, 2006 and 2005, respectively                                                                                                                              |  |              | (4,504,000 | )    |   | (4,137,000 | )
|                                                                                                                                                                                                                                      |  |              |            |      |   |            |  
|                                                                                                                                                                                                                                      |  |              |            |      |   |            |  
|                                                                                                                                                                                                                                      |  |              | 40,409,000 |      |   | 37,052,000 |  
|                                                                                                                                                                                                                                      |  |              |            |      |   |            |  
|                                                                                                                                                                                                                                      |  |              |            |      |   |            |  
|                                                                                                                                                                                                                                      |  | $            | 46,869,000 |      | $ | 43,027,000 |  
|                                                                                                                                                                                                                                      |  |              |            |      |   |            |  

See
notes to consolidated financial statements.

F-2

---



CONSOLIDATED STATEMENTS OF
INCOME

|                                                 |  |                         |            |      |   |            |  |   |            | 
|------------------------------------------------ |  | ----------------------- | ---------- | ---- | - | ---------- |  | - | ---------- | 
|                                                 |  | Year Ended December 31, |           
|                                                 |  |                         |           
|                                                 |  | 2006                    |            | 2005 |   | 2004       | 
|                                                 |  |                         |            |      |   |            | 
|Revenue:                                         |  |                         |            |      |   |            |  |   |            | 
|Commissions and fees                             |  | $                       | 24,713,000 |      | $ | 25,271,000 |  | $ | 23,798,000 | 
|Investment banking                               |  |                         | 1,704,000  |      |   | 2,372,000  |  |   | 1,363,000  | 
|Trading profits                                  |  |                         | 754,000    |      |   | 702,000    |  |   | 761,000    | 
|Income from equity investees                     |  |                         | 3,801,000  |      |   | 1,849,000  |  |   | 1,712,000  | 
|Interest and dividends                           |  |                         | 1,647,000  |      |   | 978,000    |  |   | 470,000    | 
|                                                 |  |                         |            |      |   |            |  |   |            | 
|                                                 |  |                         |            |      |   |            |  |   |            | 
|                                                 |  |                         | 32,619,000 |      |   | 31,172,000 |  |   | 28,104,000 | 
|                                                 |  |                         |            |      |   |            |  |   |            | 
|                                                 |  |                         |            |      |   |            |  |   |            | 
|Expenses:                                        |  |                         |            |      |   |            |  |   |            | 
|Employee compensation and benefits               |  |                         | 10,977,000 |      |   | 11,427,000 |  |   | 11,138,000 | 
|Clearing fees, including floor brokerage         |  |                         | 5,203,000  |      |   | 5,295,000  |  |   | 4,242,000  | 
|Professional fees                                |  |                         | 3,798,000  |      |   | 4,296,000  |  |   | 2,144,000  | 
|Advertising and promotion                        |  |                         | 920,000    |      |   | 876,000    |  |   | 1,107,000  | 
|Communications                                   |  |                         | 1,711,000  |      |   | 1,728,000  |  |   | 2,331,000  | 
|Occupancy                                        |  |                         | 1,146,000  |      |   | 1,053,000  |  |   | 1,067,000  | 
|Interest                                         |  |                         |            |      |   | 2,000      |  |   | 28,000     | 
|Write off of advance to clearing broker          |  |                         |            |      |   |            |  |   | 1,500,000  | 
|Other general and administrative                 |  |                         | 2,955,000  |      |   | 3,282,000  |  |   | 3,564,000  | 
|                                                 |  |                         |            |      |   |            |  |   |            | 
|                                                 |  |                         |            |      |   |            |  |   |            | 
|                                                 |  |                         | 26,710,000 |      |   | 27,959,000 |  |   | 27,121,000 | 
|                                                 |  |                         |            |      |   |            |  |   |            | 
|                                                 |  |                         |            |      |   |            |  |   |            | 
|Income
  before provision for income taxes       |  |                         | 5,909,000  |      |   | 3,213,000  |  |   | 983,000    | 
|Provision
  for income taxes                     |  |                         | 2,484,000  |      |   | 1,350,000  |  |   | 450,000    | 
|                                                 |  |                         |            |      |   |            |  |   |            | 
|                                                 |  |                         |            |      |   |            |  |   |            | 
|Net
  income                                     |  | $                       | 3,425,000  |      | $ | 1,863,000  |  | $ | 533,000    | 
|                                                 |  |                         |            |      |   |            |  |   |            | 
|                                                 |  |                         |            |      |   |            |  |   |            | 
|Net
  income per share of common stock - basic   |  | $                       | 0.15       |      | $ | 0.08       |  | $ | 0.02       | 
|Net
  income per share of common stock - diluted |  | $                       | 0.15       |      | $ | 0.08       |  | $ | 0.02       | 
|                                                 |  |                         |            |      |   |            |  |   |            | 
|Weighted
  average shares outstanding - basic    |  |                         | 22,129,566 |      |   | 22,093,369 |  |   | 22,113,228 | 
|Weighted
  average shares outstanding - diluted  |  |                         | 22,252,851 |      |   | 22,127,940 |  |   | 22,276,562 | 

See
notes to consolidated financial statements.

F-3

---



CONSOLIDATED STATEMENTS OF
CHANGES IN STOCKHOLDERS EQUITY

|                                                                           |  |                        |            |                   |   |                                   |  |                      |            |                        |   |            |   |       |         |  |   |            |   |   |            |  
|-------------------------------------------------------------------------- |  | ---------------------- | ---------- | ----------------- | - | --------------------------------- |  | -------------------- | ---------- | ---------------------- | - | ---------- | - | ----- | ------- |  | - | ---------- | - | - | ---------- | -
|                                                                           |  | Common Stock           |            | Treasury Stock    |  
|                                                                           |  |                        |            |                   |  
|                                                                           |  | Number 
  Of 
  Shares |            | $.01 Par 
  Value |   | Additional 
  Paid -In 
  Capital |  | Retained 
  Earnings |            | Number 
  Of 
  Shares |   | Amount     |   | Total |        
|                                                                           |  |                        |            |                   |   |                                   |  |                      |            |                        |   |            |   |       |        
|                                                                           |  |                        |            |                   |   |                                   |  |                      |            |                        |   |            |   |       |         |  |   |            |   |   |            |  
|Balance - January 1, 2004                                                  |  |                        | 22,983,917 |                   | $ | 229,000                           |  | $                    | 17,931,000 |                        | $ | 20,500,000 |   |       | 761,903 |  | $ | (3,525,000 | ) | $ | 35,135,000 |  
|Net income                                                                 |  |                        |            |                   |   |                                   |  |                      |            |                        |   | 533,000    |   |       |         |  |   |            |   |   | 533,000    |  
|Treasury share purchases                                                   |  |                        |            |                   |   |                                   |  |                      |            |                        |   |            |   |       | 139,713 |  |   | (568,000   | ) |   | (568,000   | )
|                                                                           |  |                        |            |                   |   |                                   |  |                      |            |                        |   |            |   |       |         |  |   |            |   |   |            |  
|                                                                           |  |                        |            |                   |   |                                   |  |                      |            |                        |   |            |   |       |         |  |   |            |   |   |            |  
|Balance - December 31, 2004                                                |  |                        | 22,983,917 |                   |   | 229,000                           |  |                      | 17,931,000 |                        |   | 21,033,000 |   |       | 901,616 |  |   | (4,093,000 | ) |   | 35,100,000 |  
|Net income                                                                 |  |                        |            |                   |   |                                   |  |                      |            |                        |   | 1,863,000  |   |       |         |  |   |            |   |   | 1,863,000  |  
|Treasury share purchases                                                   |  |                        |            |                   |   |                                   |  |                      |            |                        |   |            |   |       | 14,818  |  |   | (44,000    | ) |   | (44,000    | )
|Issuance of shares in connection with
  exercise of employee stock options |  |                        | 55,485     |                   |   | 1,000                             |  |                      | 132,000    |                        |   |            |   |       |         |  |   |            |   |   | 133,000    |  
|                                                                           |  |                        |            |                   |   |                                   |  |                      |            |                        |   |            |   |       |         |  |   |            |   |   |            |  
|                                                                           |  |                        |            |                   |   |                                   |  |                      |            |                        |   |            |   |       |         |  |   |            |   |   |            |  
|Balance - December 31, 2005                                                |  |                        | 23,039,402 |                   |   | 230,000                           |  |                      | 18,063,000 |                        |   | 22,896,000 |   |       | 916,434 |  |   | (4,137,000 | ) |   | 37,052,000 |  
|Net income                                                                 |  |                        |            |                   |   |                                   |  |                      |            |                        |   | 3,425,000  |   |       |         |  |   |            |   |   | 3,425,000  |  
|Treasury share purchases                                                   |  |                        |            |                   |   |                                   |  |                      |            |                        |   |            |   |       | 83,066  |  |   | (367,000   | ) |   | (367,000   | )
|Issuance of shares in connection with
  exercise of employee stock options |  |                        | 162,644    |                   |   | 2,000                             |  |                      | 447,000    |                        |   |            |   |       |         |  |   |            |   |   | 449,000    |  
|Dividend on common stock ($.08 per share)                                  |  |                        |            |                   |   |                                   |  |                      |            |                        |   | (359,000   | ) |       |         |  |   |            |   |   | (359,000   | )
|Tax benefit arising from exercise of
  employee stock options              |  |                        |            |                   |   |                                   |  |                      | 51,000     |                        |   |            |   |       |         |  |   |            |   |   | 51,000     |  
|Employee stock based compensation                                          |  |                        |            |                   |   |                                   |  |                      | 158,000    |                        |   |            |   |       |         |  |   |            |   |   | 158,000    |  
|                                                                           |  |                        |            |                   |   |                                   |  |                      |            |                        |   |            |   |       |         |  |   |            |   |   |            |  
|Balance - December 31, 2006                                                |  |                        | 23,202,046 |                   | $ | 232,000                           |  | $                    | 18,719,000 |                        | $ | 25,962,000 |   |       | 999,500 |  | $ | (4,504,000 | ) | $ | 40,409,000 |  
|                                                                           |  |                        |            |                   |   |                                   |  |                      |            |                        |   |            |   |       |         |  |   |            |   |   |            |  

See
notes to consolidated financial statements.

F-4

---



CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|----------------------------------------------------------------------------------- |  | ----------------------- | ---------- | ---- | - | ---------- | - | - | ---------- | -
|                                                                                    |  | Year Ended December 31, |           
|                                                                                    |  |                         |           
|                                                                                    |  | 2006                    |            | 2005 |   | 2004       |  
|                                                                                    |  |                         |            |      |   |            |  
|Cash Flows From Operating Activities:                                               |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Net income                                                                          |  | $                       | 3,425,000  |      | $ | 1,863,000  |   | $ | 533,000    |  
|Adjustments to reconcile net income to net
  cash provided by operating activities: |  |                         |            |      |   |            |   |   |            |  
|Depreciation and amortization                                                       |  |                         | 780,000    |      |   | 1,128,000  |   |   | 1,464,000  |  
|Income from equity investees                                                        |  |                         | (3,801,000 | )    |   | (1,849,000 | ) |   | (1,712,000 | )
|Distribution from equity investees                                                  |  |                         | 1,427,000  |      |   | 1,573,000  |   |   | 1,231,000  |  
|Deferred taxes                                                                      |  |                         | (226,000   | )    |   | (100,000   | ) |   | 52,000     |  
|Write-off of advance to clearing broker                                             |  |                         |            |      |   |            |   |   | 1,500,000  |  
|Employee
  stock based compensation                                                 |  |                         | 158,000    |      |   |            |   |   |            |  
|Changes in:                                                                         |  |                         |            |      |   |            |   |   |            |  
|Securities owned, at market value                                                   |  |                         |            |      |   |            |   |   | 1,226,000  |  
|Receivable from clearing broker                                                     |  |                         | (64,000    | )    |   | (33,000    | ) |   | (884,000   | )
|Prepaid expenses and other assets                                                   |  |                         | (219,000   | )    |   | 547,000    |   |   | 268,000    |  
|Securities sold, not yet purchased, at
  market value                               |  |                         |            |      |   |            |   |   | (6,000     | )
|Accounts payable and accrued liabilities                                            |  |                         | 485,000    |      |   | (485,000   | ) |   | 1,575,000  |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Net cash provided by
  operating activities                                         |  |                         | 1,965,000  |      |   | 2,644,000  |   |   | 5,247,000  |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Cash Flows From Investing
  Activities:                                             |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Purchase of intangibles                                                             |  |                         |            |      |   |            |   |   | (400,000   | )
|Purchase of furniture, equipment and
  leasehold  improvements                      |  |                         | (150,000   | )    |   | (128,000   | ) |   | (177,000   | )
|Collection (Payment) of advances made to
  equity investees                         |  |                         | 37,000     |      |   | (373,000   | ) |   | (86,000    | )
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Net cash used in investing
  activities                                             |  |                         | (113,000   | )    |   | (501,000   | ) |   | (663,000   | )
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Cash Flows From Financing
  Activities:                                             |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Dividend on common stock                                                            |  |                         | (359,000   | )    |   |            |   |   |            |  
|Purchase of treasury shares                                                         |  |                         | (367,000   | )    |   | (44,000    | ) |   | (568,000   | )
|Proceeds from exercise of options                                                   |  |                         | 449,000    |      |   | 133,000    |   |   |            |  
|Tax benefit of exercised employee stock
  options                                   |  |                         | 51,000     |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Net cash (used in)
  provided by financing activities                               |  |                         | (226,000   | )    |   | 89,000     |   |   | (568,000   | )
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Net increase in cash and cash equivalents                                           |  |                         | 1,626,000  |      |   | 2,232,000  |   |   | 4,016,000  |  
|Cash and cash equivalents - beginning of
  year                                     |  |                         | 30,980,000 |      |   | 28,748,000 |   |   | 24,732,000 |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Cash and cash equivalents
  - end of year                                           |  | $                       | 32,606,000 |      | $ | 30,980,000 |   | $ | 28,748,000 |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Supplemental Cash Flow
  Disclosures:                                               |  |                         |            |      |   |            |   |   |            |  
|Cash paid for:                                                                      |  |                         |            |      |   |            |   |   |            |  
|Interest                                                                            |  |                         |            |      | $ | 1,000      |   | $ | 28,000     |  
|Income taxes                                                                        |  | $                       | 2,444,000  |      | $ | 812,000    |   | $ | 741,000    |  

See
notes to consolidated financial statements.

F-5

---



SIEBERT FINANCIAL CORP. AND SUBSIDIARIES

NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

NOTE
A - SUMMARY
OF SIGNIFICANT
ACCOUNTING POLICIES

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[1] | Business:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Siebert
  Financial Corp. (Financial), through its wholly owned subsidiary, Muriel
  Siebert & Co., Inc. (Siebert), engages in the business of providing
  discount brokerage services for customers, investment banking services for
  institutional clients and trading securities for its own account, and,
  through its wholly owned subsidiary, Siebert Womens Financial Network, Inc.
  (WFN), engages in providing products, services and information all uniquely
  devoted to womens financial needs. All significant intercompany accounts and
  transactions have been eliminated. Financial, Siebert and WFN collectively are
  referred to herein as the Company.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The
  municipal bond investment banking business and related derivatives
  transactions is being conducted by Siebert Brandford Shank & Co., LLC
  (SBS), and SBS Financial Products Company, LLC (SBSFP), investees, which
  are accounted for by the equity method of accounting (see Note C). The equity
  method provides that Siebert record its share of the investees earnings or
  losses.                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|[2] | Securities Transactions:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Securities
  transactions trading profits, commission revenues and related clearing
  expenses are recorded on a trade date basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Siebert
  clears all its security transactions through two unaffiliated clearing firms
  on a fully disclosed basis. Accordingly, Siebert does not hold funds or
  securities for or owe funds or securities to its customers. Those functions
  are performed by the clearing firms, which are highly capitalized. Marketable
  securities are valued at market value. Interest is recorded on an accrual
  basis. Dividends are recorded on the ex-dividend date.                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|[3] | Income Taxes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The Company
  accounts for income taxes utilizing the asset and liability approach
  requiring the recognition of deferred tax assets and liabilities for the
  expected future tax consequences of temporary differences between the basis
  of assets and liabilities for financial reporting purposes and tax purposes.
  Financial files a consolidated federal income tax return, which includes
  Siebert and WFN.                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|[4] | Furniture, Equipment and Leasehold Improvements:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Property and
  equipment is stated at cost less accumulated depreciation. Depreciation is
  calculated using the straight-line method over the estimated useful lives of
  the assets, generally five years. Leasehold improvements are amortized over
  the shorter of the estimated useful life or period of the lease.                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|[5] | Cash Equivalents:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Cash
  equivalents consist of highly liquid investments purchased with original
  maturity of three months or less including money market funds and commercial
  paper.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|[6] | Advertising Costs:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Advertising
  costs are charged to expense as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|[7] | Use Of Estimates:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The
  preparation of financial statements in conformity with accounting principles
  generally accepted in the United States of America requires management to make
  estimates and assumptions that affect the reported amounts of assets and
  liabilities and disclosure of contingent assets and liabilities at the date
  of the financial                                                                                                                                                                                                                                                                                                                                          

F-6

---



| |                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------
| | statements
  and the reported amounts of revenues and expenses during the reporting
  period. Actual results could differ from those estimates.

NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[8]  | Earnings Per Share:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     | Basic
  earnings per share is calculated by dividing net income by the weighted
  average outstanding shares during the period. Diluted earnings per share is
  calculated by dividing net income by the number of shares outstanding under
  the basic calculation and adding all dilutive securities, which consist of
  options. The treasury stock method is used to reflect the dilutive effect of
  outstanding options, which, for 2006, 2005 and 2004 amounted to 123,285, 34,571 and 163,334 additional shares, respectively, added to the basic
  weighted average outstanding shares of 22,129,566, 22,093,369 and 22,113,228
  in 2006, 2005 and 2004, respectively, and in 2006, 2005 and 2004, 1,288,466, 1,683,675 and 1,412,500 common shares, respectively, issuable upon the exercise of options
were not included in the computation of diluted income per share as the effect would have been anti-dilutive.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|[9]  | Investment Banking:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     | Investment
  banking revenue includes gains and fees, net of syndicate expenses, arising
  from underwriting syndicates in which the Company participates. Investment
  banking management fees are recorded on the offering date, sales concessions
  on the settlement date and underwriting fees at the time the underwriting is
  completed and the income is reasonably determinable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|[10] | Cash Equivalents - Restricted:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     | Cash equivalents
  - restricted represents $1,300,000 of cash invested in a money market account
  which Siebert is obligated to lend to SBS on a subordinated basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     | Any
  outstanding amounts loaned bear interest at 8% per annum and are repayable on
  August 31, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|[11] | Stock-Based Compensation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     | In December
  2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123R
  Share-Based Payment (SFAS 123R), which requires all share-based payments
  to employees, including grants of employee stock options, to be recognized in
  the statement of operations as an operating expense, based on their fair
  values on grant date. Prior to the adoption of SFAS 123R the Company
  accounted for stock based compensation using the intrinsic value method. The
  Company adopted the provisions of SFAS No. 123R effective January 1, 2006,
  using the modified prospective transition method. Under the modified
  prospective method, non-cash compensation expense is recognized for the
  portion of outstanding stock option awards granted prior to the adoption of
  SFAS 123R for which service has not been rendered, and for any future stock
  option grants. Accordingly, periods prior to adoption have not been restated.
  The Company recognizes share-based compensation costs as compensation expense
  on a straight-line basis over the requisite service periods of awards which
  would normally be the vesting period of the options. As a result of adopting
  SFAS No. 123R, the Companys income before income tax and net income for the
  year ended December 31, 2006 was $158,000 and $93,000, lower than if it had
  continued to account for share-based compensation by the intrinsic value
  method. There was no effect on earnings per share. During 2006, 162,644 options were exercised with an intrinsic value
  of $123,000. Prior to the adoption of SFAS No. 123R, the Company presented
  cash flows resulting from the tax benefits of deductions from the exercise of
  stock options as operating cash flows in the Statement of Cash Flows. Since
  the adoption of SFAS No. 123R, cash flows resulting from the tax benefits of the
  tax deduction in excess of the compensation cost recognized for these options
  are classified as financing cash flows.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     | The
  following table illustrates the effect on net income and earnings per share
  if the fair value based method had been applied to the prior periods.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

F-7

---



NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)

| |                                                                                                                        |  |                                 |           |                                 |   |          |  
| | ---------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | --------- | ------------------------------- | - | -------- | -
| |                                                                                                                        |  | Year ended,
  December 31, 2005 |           | Year ended,
  December 31, 2004 |  
| |                                                                                                                        |  |                                 |           |                                 |  
| | Net income,
  as reported                                                                                              |  | $                               | 1,863,000 |                                 | $ | 533,000  |  
| | Stock-based
  employee compensation determined under the fair value-based method, prior to
  the adoption of SFAS 123R |  |                                 | (424,000  | )                               |   | (332,000 | )
| |                                                                                                                        |  |                                 |           |                                 |   |          |  
| | Pro forma
  net income                                                                                                 |  | $                               | 1,439,000 |                                 | $ | 201,000  |  
| |                                                                                                                        |  |                                 |           |                                 |   |          |  
| |                                                                                                                        |  |                                 |           |                                 |   |          |  
| | Net income per share  basic:                                                                                          |  |                                 |           |                                 |   |          |  
| |                                                                                                                        |  |                                 |           |                                 |   |          |  
| | As reported                                                                                                            |  | $                               | .08       |                                 | $ | .02      |  
| | Pro forma                                                                                                              |  | $                               | .07       |                                 | $ | .01      |  
| |                                                                                                                        |  |                                 |           |                                 |   |          |  
| | Net income per share  diluted:                                                                                        |  |                                 |           |                                 |   |          |  
| |                                                                                                                        |  |                                 |           |                                 |   |          |  
| | As reported                                                                                                            |  | $                               | .08       |                                 | $ | .02      |  
| | Pro forma                                                                                                              |  | $                               | .07       |                                 | $ | .01      |  

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[12] | Intangibles:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     | Purchased
  intangibles are principally being amortized using the straight-line method
  over estimated useful lives of three to five years (see Note E).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|[13] | Valuation of Long-Lived Assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     | The Company
  evaluates the recoverability of its long-lived assets and requires the
  recognition of impairment of long-lived assets in the event the net book
  value of these assets exceeds the estimated future undiscounted cash flows
  attributable to these assets. The Company assesses potential impairment to
  its long-lived assets when there is evidence that events or changes in
  circumstances have made recovery of the assets carrying value unlikely.
  Should impairment exist, the impairment loss would be measured based on the
  excess of the carrying value of the assets over the assets fair value.                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|[14] | New Accounting Standards:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     | In July
  2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty
  in Income Taxes  an Interpretation of FASB Statement 109 (FIN 48), which
  clarifies the accounting for uncertainty in tax positions. This Interpretation
  provides that the tax effects from an uncertain tax position can be
  recognized in our financial statements only if the position is more likely
  than not of being sustained on audit, based on the technical merits of the
  position. The provision of FIN 48 are effective as of the beginning of fiscal
  2007, with the cumulative effect of the change in accounting principle
  recorded as an adjustment to opening retained earnings. Management is
  currently evaluating the impact, if any, of FIN 48 on the Companys financial
  statements.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     | In September
  2006, the Securities and Exchange Commission (SEC) staff issued Staff
  Accounting Bulleting No.108, Considering the Effects of Prior Year
  Misstatements when Quantifying Misstatements in Current Year Financial
  Statements (SAB No.108). SAB No.108 was issued to provide consistency in
  how registrants quantify financial statement misstatements. SAB 108 is
  required to be applied in connection with the preparation of the Companys
  annual financial statement for the year ended December 31, 2006. The adoption
  of SAB No.108 did not have any impact on the Companys financial statements.                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     | In September
  2006, the Financial Accounting Standards Board issued SFAS No. 157 (SFAS
  157), Fair Value Measurements. SFAS 157 defines fair value and establishes
  a framework for measuring fair value. It also expands the disclosures about
  the use of fair value to measure assets and liabilities. SFAS 157 is
  effective beginning the first fiscal year that begins after November 15,
  2007. Management is currently evaluating the impact, if any, of the adoption
  of SFAS 157 on the Companys financial statements.                                                                                                                                                                                                                                                                        

F-8

---



NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | In
  February 2007, the FASB issued SFAS No. 159, The Fair Value Option
  for Financial Assets and Financial Liabilities. SFAS No. 159 permits
  entities to choose to measure many financial instruments and certain other
  items at fair value that are not currently required to be measured at fair value.
  SFAS No. 159 is effective for fiscal years beginning after
  November 15, 2007, with early adoption permitted provided the entity
  also elects to apply the provisions of SFAS No. 157. The Company is
  currently evaluating the impact of adopting SFAS No. 159 on its
  consolidated financial statements.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|[15] | Reclassification
   Certain previous years adjustments have been reclassified to conform with
  current year presentations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

NOTE B - INTUIT LAWSUIT

Siebert filed
a lawsuit against Intuit Inc. (Intuit) in New York State Supreme Court on
September 17, 2003 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. The Court denied Intuits motion to dismiss Sieberts causes of action
for breach of fiduciary duty, breach of contractual obligations to pay shared
expenses, promissory estoppel, and breach of the implied covenant of good faith
and fair dealing. The Court granted Intuits motion to dismiss Sieberts causes
of action for breach of the express covenant of good faith and fair dealing,
misrepresentation and/or fraud, and its request for punitive damages. Intuit
has counterclaimed against Siebert, seeking not less than $6.6 million. Siebert
and Intuit have appealed from certain portions of the Courts decision and
Siebert has also moved for reargument of that decision regarding punitive
damages. In November 2005, Intuits counsel was disqualified by the Court from
representing Intuit in this action. The Courts Appellate Division reversed the
order of disqualification, but, thereafter, granted Sieberts motion for leave
to appeal to the Court of Appeals, New Yorks highest court. All proceedings in
the action are stayed pending Sieberts appeal, which the Court of Appeals
heard in March 2007. The outcome of this matter cannot now be predicted.

NOTE C - INVESTMENT IN AFFILIATES

Investment in
and advances to, equity in income, of and distributions received from
affiliates as of and for the years ended December 31, 2006 and 2005 consisting
of the following:

|                               |  |     |           |        |   |           |  |   |           |  | 
|------------------------------ |  | --- | --------- | ------ | - | --------- |  | - | --------- |  | 
|December 31, 2006              |  | SBS |           | SBSFPC |   | TOTAL     | 
|                               |  |     |           |        |   |           | 
|                              
|Investment
  and advances      |  | $   | 5,307,000 |        | $ | 1,458,000 |  | $ | 6,765,000 | 
|                               |  |     |           |        |   |           |  |   |           | 
|Income from
  equity investees |  | $   | 2,885,000 |        | $ | 916,000   |  | $ | 3,801,000 | 
|                               |  |     |           |        |   |           |  |   |           | 
|Distributions                  |  | $   | 1,378,000 |        | $ | 49,000    |  | $ | 1,427,000 | 
|                               |  |     |           |        |   |           |  |   |           | 

|                               |  |     |           |        |   |         |  |   |           |  | 
|------------------------------ |  | --- | --------- | ------ | - | ------- |  | - | --------- |  | 
|December 31, 2005              |  | SBS |           | SBSFPC |   | TOTAL   | 
|                               |  |     |           |        |   |         | 
|                              
|Investment
  and advances      |  | $   | 3,840,000 |        | $ | 588,000 |  | $ | 4,428,000 | 
|                               |  |     |           |        |   |         |  |   |           | 
|Income from
  equity investees |  | $   | 1,656,000 |        | $ | 193,000 |  | $ | 1,849,000 | 
|                               |  |     |           |        |   |         |  |   |           | 
|Distributions                  |  | $   | 1,567,000 |        | $ | 6,000   |  | $ | 1,573,000 | 
|                               |  |     |           |        |   |         |  |   |           | 

Amounts
related to affiliates included in the accompanying financial statements for
2004 are attributable solely to SBS.

Siebert and
two individuals (the Principals) formed SBS to succeed to the tax-exempt
underwriting business of the Siebert Brandford Shank division of Siebert. The
agreements with the Principals provide that profits will be shared 51% to the
Principals and 49% to Siebert.

F-9

---



NOTE C - INVESTMENT IN AFFILIATES (CONTINUED)

Summarized
financial data of SBS is as follows:

|                                                                                              |  |      |            |      |   |            |  |   |            | 
|--------------------------------------------------------------------------------------------- |  | ---- | ---------- | ---- | - | ---------- |  | - | ---------- | 
|                                                                                              |  | 2006 |            | 2005 |   | 2004       | 
|                                                                                              |  |      |            |      |   |            | 
|                                                                                             
|Total assets including secured demand note
  of 1,200,000 in each year due from Siebert       |  | $    | 19,250,000 |      | $ | 14,166,000 |  | $ |            | 
|Total liabilities including subordinated
  liabilities $1,200,000 in each year due to Siebert |  |      | 8,556,000  |      |   | 6,547,000  |  |   |            | 
|Total members capital                                                                        |  |      | 10,694,000 |      |   | 7,619,000  |  |   | 7,444,000  | 
|Total revenue                                                                                 |  |      | 26,235,000 |      |   | 21,086,000 |  |   | 17,222,000 | 
|Net income                                                                                    |  |      | 5,888,000  |      |   | 3,377,000  |  |   | 3,494,000  | 
|Regulatory minimum net capital requirement                                                    |  |      | 490,000    |      |   | 356,000    |  |   |            | 

During each of
2006, 2005 and 2004 Siebert charged SBS $240,000 for rent and general and
administrative services, which Siebert believes approximates the cost of
furnishing such services. In addition, during each of the years 2006, 2005 and
2004, Siebert earned interest income of $96,000, $96,000 and $110,000, respectively from SBS
in connection with Sieberts obligation to make a subordinated loan for up to
$1,200,000 available to SBS and Siebert paid SBS interest earned on the
restricted cash equivalents of $67,000, $52,000 and $22,000. (See Note J)

Sieberts
share of undistributed earnings from SBS amounts to $4,848,000 and $3,341,000
at December 31, 2006 and 2005, 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 regulatory
net capital requirements.

Financial
entered into an Operating Agreement, effective as of April 19, 2005 (the Operating
Agreement), with the two individual principals of SBS (the Principals) for
the formation of SBSFPC. Pursuant to the terms of the Operating Agreement,
Financial and each of the Principals made an initial capital contribution of
$400,000 in exchange for a 33.33% initial interest in SBSFPC. SBSFPC engages in
derivatives transactions related to the municipal underwriting business. The
Operating Agreement provides that profit be shared 66.66% by the Principals and
33.33% by Financial.

Sieberts
share of undistributed earnings of SBSFPC amounts to $1,058,000 and $188,000 at
December 31, 2006 and December 31, 2005, respectively.

Summarized
financial data of SBSFPC is as follows:

| |                          |  |      |            |      |   |           | 
| | ------------------------ |  | ---- | ---------- | ---- | - | --------- | 
| |                          |  | 2006 |            | 2005 |  
| |                          |  |      |            |      |  
| |                          |  |      |            |      |   |           | 
| | Total assets             |  | $    | 49,209,000 |      | $ | 4,870,000 | 
| | Total
  liabilities      |  |      | 44,842,000 |      |   | 3,107,000 | 
| | Total
  members capital |  |      | 4,367,000  |      |   | 1,763,000 | 
| | Total
  revenue          |  |      | 5,495,000  |      |   | 1,185,000 | 
| | Net income               |  |      | 2,750,000  |      |   | 582,000   | 

F-10

---



Note D - Furniture, Equipment And Leasehold
Improvements, Net

Furniture,
equipment and leasehold improvements consist of the following:

|                                                 |  |                |            |      |   |            |  
|------------------------------------------------ |  | -------------- | ---------- | ---- | - | ---------- | -
|                                                 |  | December
  31, |           
|                                                 |  |                |           
|                                                 |  | 2006           |            | 2005 |  
|                                                 |  |                |            |      |  
|                                                 |  |                |            |      |   |            |  
|Equipment                                        |  | $              | 2,122,000  |      | $ | 2,251,000  |  
|Leasehold
  improvements                         |  |                | 162,000    |      |   | 207,000    |  
|Furniture
  and fixtures                         |  |                | 21,000     |      |   | 21,000     |  
|                                                 |  |                |            |      |   |            |  
|                                                 |  |                |            |      |   |            |  
|                                                 |  |                | 2,305,000  |      |   | 2,479,000  |  
|Less
  accumulated depreciation and amortization |  |                | (1,795,000 | )    |   | (1,651,000 | )
|                                                 |  |                |            |      |   |            |  
|                                                 |  |                |            |      |   |            |  
|                                                 |  | $              | 510,000    |      | $ | 828,000    |  
|                                                 |  |                |            |      |   |            |  

Depreciation
and amortization expense for the years ended December 31, 2006, 2005 and 2004
amounted to $468,000, $605,000 and $741,000, respectively.

Note E - Intangible Assets, Net

In several
transactions during September and October of 2000, WFN acquired the stock of
WFN Womens Financial Network, Inc. (WFNI) and HerDollar.com, Inc.,
respectively, companies in the development stage which had yet to commence
principal operations, had no significant revenue and had assets consisting
principally of websites, content and domain names, for aggregate consideration
of $2,310,000 including costs. The transactions have been accounted for as
purchases of assets consisting of domain name, website and content, and a
non-compete agreement

Note E - Intangible Assets, Net (Continued)

(the Acquired
Intangible Assets). Related deferred tax assets attributable to net operating
loss carryforwards of the acquired companies and deferred tax liabilities
attributable to the excess of the statement bases of the acquired assets over
their tax bases have been reflected in the accompanying consolidated financial
statements as an adjustment to the carrying amount of such intangibles (see
Note F).

Intangible
assets consist of the following:

|                                    |  |                           |           |                            |   |                           |  |                            |           |  |   |           | 
|----------------------------------- |  | ------------------------- | --------- | -------------------------- | - | ------------------------- |  | -------------------------- | --------- |  | - | --------- | 
|                                    |  | December 31, 2006         |           | December 31, 2005          |  
|                                    |  |                           |           |                            |  
|                                   
|                                    |  | Gross
  Carrying
  Amount |           | Accumulated
  Amortization |   | Gross
  Carrying
  Amount |  | Amortization
  Accumulated |          
|                                    |  |                           |           |                            |   |                           |  |                            |          
|                                   
|Amortizable
  assets:               |  |                           |           |                            |   |                           |  |                            |           |  |   |           | 
|Website,
  content and non-compete  |  | $                         | 2,350,000 |                            | $ | 2,350,000                 |  | $                          | 2,350,000 |  | $ | 2,350,000 | 
|Retail
  brokerage accounts         |  |                           | 2,588,000 |                            |   | 2,156,000                 |  |                            | 2,588,000 |  |   | 1,844,000 | 
|                                    |  |                           |           |                            |   |                           |  |                            |           |  |   |           | 
|                                    |  |                           |           |                            |   |                           |  |                            |           |  |   |           | 
|                                    |  | $                         | 4,938,000 |                            | $ | 4,506,000                 |  | $                          | 4,938,000 |  | $ | 4,194,000 | 
|                                    |  |                           |           |                            |   |                           |  |                            |           |  |   |           | 
|Unamortized
  intangible assets:    |  |                           |           |                            |   |                           |  |                            |           |  |   |           | 
|Domain name/intellectual
  property |  | $                         | 750,000   |                            |   |                           |  | $                          | 750,000   |  |   |           | 
|                                    |  |                           |           |                            |   |                           |  |                            |           |  |   |           | 
|                                    |  |                           |           |                            |   |                           |  |                            |           |  |   |           | 
|Amortization
  expense              |  |                           |           |                            | $ | 312,000                   |  |                            |           |  | $ | 523,000   | 
|                                    |  |                           |           |                            |   |                           |  |                            |           |  |   |           | 

Estimated
amortization expense is as follows:

|                             |  |   |         | 
|---------------------------- |  | - | ------- | 
|Year
  Ending
  December 31, |  |   |         | 
|                             |  |   |         | 
|2007                         |  | $ | 312,000 | 
|2008                         |  |   | 92,000  | 
|2009                         |  |   | 28,000  | 
|                             |  |   |         | 
|                             |  |   |         | 
|                             |  | $ | 432,000 | 
|                             |  |   |         | 

F-11

---



Note F - Income Taxes

Income tax
provision consists of the following:

|                                           |  |                           |           |      |   |           |   |   |         | 
|------------------------------------------ |  | ------------------------- | --------- | ---- | - | --------- | - | - | ------- | 
|                                           |  | Year Ended
  December 31, |          
|                                           |  |                           |          
|                                           |  | 2006                      |           | 2005 |   | 2004      |  
|                                           |  |                           |           |      |   |           |  
|                                           |  |                           |           |      |   |           |   |   |         | 
|Federal
  income tax provision (benefit):  |  |                           |           |      |   |           |   |   |         | 
|                                           |  |                           |           |      |   |           |   |   |         | 
|Current                                    |  | $                         | 2,049,000 |      | $ | 1,080,000 |   | $ | 253,000 | 
|Deferred                                   |  |                           | (183,000  | )    |   | (81,000   | ) |   | 42,000  | 
|                                           |  |                           |           |      |   |           |   |   |         | 
|                                           |  |                           |           |      |   |           |   |   |         | 
|                                           |  |                           | 1,866,000 |      |   | 999,000   |   |   | 295,000 | 
|                                           |  |                           |           |      |   |           |   |   |         | 
|                                           |  |                           |           |      |   |           |   |   |         | 
|State and
  local tax provision (benefit): |  |                           |           |      |   |           |   |   |         | 
|                                           |  |                           |           |      |   |           |   |   |         | 
|Current                                    |  |                           | 661,000   |      |   | 370,000   |   |   | 145,000 | 
|Deferred                                   |  |                           | (43,000   | )    |   | (19,000   | ) |   | 10,000  | 
|                                           |  |                           |           |      |   |           |   |   |         | 
|                                           |  |                           |           |      |   |           |   |   |         | 
|                                           |  |                           | 618,000   |      |   | 351,000   |   |   | 155,000 | 
|                                           |  |                           |           |      |   |           |   |   |         | 
|                                           |  |                           |           |      |   |           |   |   |         | 
|Total tax
  provision (benefit):           |  |                           |           |      |   |           |   |   |         | 
|Current                                    |  |                           | 2,710,000 |      |   | 1,450,000 |   |   | 398,000 | 
|Deferred                                   |  |                           | (226,000  | )    |   | (100,000  | ) |   | 52,000  | 
|                                           |  |                           |           |      |   |           |   |   |         | 
|                                           |  |                           |           |      |   |           |   |   |         | 
|                                           |  | $                         | 2,484,000 |      | $ | 1,350,000 |   | $ | 450,000 | 
|                                           |  |                           |           |      |   |           |   |   |         | 

A
reconciliation between the income tax provision and income taxes computed by
applying the statutory Federal income tax rate to income before taxes is as
follows:

|                                                                    |  |                           |           |      |   |            |  |   |         | 
|------------------------------------------------------------------- |  | ------------------------- | --------- | ---- | - | ---------- |  | - | ------- | 
|                                                                    |  | Year Ended
  December 31, |          
|                                                                    |  |                           |          
|                                                                    |  | 2006                      |           | 2005 |   | 2004       | 
|                                                                    |  |                           |           |      |   |            | 
|                                                                    |  |                           |           |      |   |            |  |   |         | 
|Expected
  income tax provision at statutory Federal tax rate (34%) |  | $                         | 2,009,000 |      | $ | 1,092,0000 |  | $ | 335,000 | 
|State and
  local taxes, net of Federal tax benefit                 |  |                           | 408,000   |      |   | 258,000    |  |   | 79,000  | 
|Permanent
  difference                                              |  |                           | 100,000   |      |   |            |  |   |         | 
|Other                                                               |  |                           | (33,000   | )    |   |            |  |   | 36,000  | 
|                                                                    |  |                           |           |      |   |            |  |   |         | 
|                                                                    |  |                           |           |      |   |            |  |   |         | 
|Income tax
  expense                                                |  | $                         | 2,484,000 |      | $ | 1,350,0000 |  | $ | 450,000 | 
|                                                                    |  |                           |           |      |   |            |  |   |         | 

Deferred
income taxes reflect the impact of temporary differences between the amounts of
assets and liabilities for financial reporting purposes and their tax basis.
The principal items giving rise to deferred tax assets (liabilities) are as
follows:

|                                                  |  |                |          |      |   |          |  
|------------------------------------------------- |  | -------------- | -------- | ---- | - | -------- | -
|                                                  |  | December
  31, |         
|                                                  |  |                |         
|                                                  |  | 2006           |          | 2005 |  
|                                                  |  |                |          |      |  
|                                                  |  |                |          |      |   |          |  
|Net
  operating losses                            |  | $              | 377,000  |      | $ | 402,000  |  
|Acquired
  Intangible assets                      |  |                | (315,000 | )    |   | (315,000 | )
|Furniture,
  equipment and leasehold improvements |  |                | 81,000   |      |   | (84,000  | )
|Unrealized
  gain - SBSFP                         |  |                |          |      |   | (40,000  | )
|Retail
  brokerage accounts                       |  |                | 684,000  |      |   | 638,000  |  
|                                                  |  |                |          |      |   |          |  
|                                                  |  |                |          |      |   |          |  
|                                                  |  | $              | 827,000  |      | $ | 601,000  |  
|                                                  |  |                |          |      |   |          |  

F-12

---



Management
believes that it is more likely than not that the deferred tax asset will be
realized, and therefore no valuation allowance has been provided.

Net operating
loss carryforwards of $897,000 at December 31, 2006, which are attributable to
WFN, expire through 2020. Utilization of such net operating loss carryforwards
is subject to annual limitations under Section 382 of the Internal Revenue
Code.

In 2006, the
Company reduced current taxes payable by $51,000, resulting from the
deductibility of the difference between the exercise price of nonqualifying
stock options granted by the Company and the market value of the stock on the
dates of exercise. The tax benefit was recorded as a credit to paid-in capital.

Note G - Stockholders Equity

Siebert is
subject to the SEC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 2 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
5% of aggregate debits. At December 31, 2006 and 2005, Siebert had net capital
of approximately $27,723,000 and $25,590,000, respectively, as compared with
net capital requirements of $250,000. Siebert claims exemption from the reserve
requirement under Section 15c3-3(k)(2)(ii).

The 1998
Restricted Stock Award Plan (the Award Plan), provides for awards of not more
than 60,000 shares of the Companys common stock, subject to adjustments for
stock splits, stock dividends and other changes in the Companys
capitalization, to key employees, to be issued either immediately after the
award or at a future date. As provided in the Award Plan and subject to
restrictions, shares awarded may not be disposed of by the recipients for a
period of one year from the date of the award. Cash dividends on shares awarded
are held by the Company for the benefit of the recipients and are paid upon
lapse of the restrictions. No awards were granted in 2006, 2005 and 2004. As of
December 31, 2006, 18,600 common shares are available for future awards under
the award plan.

On May 15,
2000, the Board of Directors of the Company authorized a buy back of up to one
million shares of common stock. Shares will be purchased from time to time in
the open market and in private transactions. Through December 31, 2006, 999,500
shares were purchased at an average price of $4.51.

On August 9,
2006, the Board of Directors declared a dividend of eight cents per share on
common stock of the Company, which was paid on August 30, 2006 to shareholders
of record at the close of business on August 21, 2006. The Chief Executive
Officer of the Company waived the right to receive the dividend in excess of
the aggregate amount paid to other shareholders which amounted to approximately
$180,000.

Note H - Options

The Companys
1997 Stock Option Plan, as amended, (the Plan) authorizes the grant of
options to purchase up to an aggregate of 4,200,000 shares, subject to
adjustment in certain circumstances. Both non-qualified options and options
intended to qualify as Incentive Stock Options under Section 422 of the
Internal Revenue Code, as amended, may be granted under the Plan. A Stock
Option Committee of the Board of Directors administers the Plan. The committee
has the authority to determine when options are granted, the term during which
an option may be exercised (provided no option has a term exceeding 10 years),
the exercise price and the exercise period. The exercise price shall generally
be not less than the fair market value on the date of grant. No option may be
granted under the Plan after December 2007. Generally, employee options vest
20% per year for five years and expire ten years from the date of grant. At
December 31, 2006, options for 2,027,915 shares of common stock are available
for grant under the Plan.

F-13

---



Note H  Options (Continued)

A summary of
the Companys stock option transaction for the three years ended December 31,
2006 is presented below:

|                                                 |     |        |           |                                       |   |        |  |                                       |           |        |   |                                       |  |  |           |   |   |      | 
|------------------------------------------------ | --- | ------ | --------- | ------------------------------------- | - | ------ |  | ------------------------------------- | --------- | ------ | - | ------------------------------------- |  |  | --------- | - | - | ---- | 
|                                                 |     | 2006   |           | 2005                                  |   | 2004   | 
|                                                 |     |        |           |                                       |   |        | 
|                                                 |     | Shares |           | Weighted
  Average
  Exercise
  Price |   | Shares |  | Weighted
  Average
  Exercise
  Price |           | Shares |   | Weighted
  Average
  Exercise
  Price | 
|                                                 |     |        |           |                                       |   |        |  |                                       |           |        |   |                                       | 
|                                                
|Outstanding - beginning of the year              |     |        | 1,768,610 |                                       | $ | 4.16   |  |                                       | 1,889,350 |        | $ | 4.11                                  |  |  | 1,803,930 |   | $ | 4.08 | 
|Granted                                          |     |        | 25,000    |                                       | $ | 2.75   |  |                                       | 200,000   |        | $ | 2.81                                  |  |  | 90,000    |   | $ | 4.60 | 
|Forfeited                                        |     |        | (27,000   | )                                     | $ | 4.03   |  |                                       | (265,255  | )      | $ | 3.13                                  |  |  | (4,580    | ) | $ | 3.85 | 
|Exercised                                        |     |        | (162,644  | )                                     | $ | 2.76   |  |                                       | (55,485   | )      | $ | 0.00                                  |  |  | 0         |   | $ | 0.00 | 
|                                                 |     |        |           |                                       |   |        |  |                                       |           |        |   |                                       |  |  |           |   |   |      | 
|                                                 |     |        |           |                                       |   |        |  |                                       |           |        |   |                                       |  |  |           |   |   |      | 
|Outstanding - end of year                        | (a) |        | 1,603,966 |                                       | $ | 4.16   |  |                                       | 1,768,610 |        | $ | 4.16                                  |  |  | 1,889,350 |   | $ | 4.11 | 
|                                                 |     |        |           |                                       |   |        |  |                                       |           |        |   |                                       |  |  |           |   |   |      | 
|                                                 |     |        |           |                                       |   |        |  |                                       |           |        |   |                                       |  |  |           |   |   |      | 
|Fully vested and expected to vest at year
  end  | (a) |        | 1,603,966 |                                       | $ | 4.16   |  |                                       |           |        |   |                                       |  |  |           |   |   |      | 
|                                                 |     |        |           |                                       |   |        |  |                                       |           |        |   |                                       |  |  |           |   |   |      | 
|                                                 |     |        |           |                                       |   |        |  |                                       |           |        |   |                                       |  |  |           |   |   |      | 
|Exercisable at end of year                       | (b) |        | 1,520,466 |                                       | $ | 4.32   |  |                                       | 1,613,410 |        | $ | 4.14                                  |  |  | 1,556,950 |   | $ | 4.06 | 
|                                                 |     |        |           |                                       |   |        |  |                                       |           |        |   |                                       |  |  |           |   |   |      | 
|                                                 |     |        |           |                                       |   |        |  |                                       |           |        |   |                                       |  |  |           |   |   |      | 
|Weighted average fair value of options
  granted |     |        |           |                                       | $ | 1.85   |  |                                       |           |        | $ | 1.42                                  |  |  |           |   | $ | 3.01 | 

(a)          
Weighted average remaining contractual terms of 4.6 years and aggregate intrinsic value of $353,000.

(b)          
Weighted average remaining contractual terms of 4.5 years and aggregate intrinsic value of $302,000.

As of December 31, 2006,  there was $167,000 of  unrecognized
compensation  costs related to unvested  options which is expected to be
recognized over a weighted-average period of 5 years.

The fair value of each option award is estimated on the date of
grant using the Black-Sholes option pricing model using the following
weighted-average assumptions for the three years ended December 31, 2006:

|                           |  |       |   |      |       |      |  |       |   | 
|-------------------------- |  | ----- | - | ---- | ----- | ---- |  | ----- | - | 
|                           |  | 2006  |   | 2005 |       | 2004 | 
|                           |  |       |   |      |       |      | 
|Dividend
  yield           |  | 0.00  | % |      | 0.00  | %    |  | 0.00  | % | 
|Expected
  volatility      |  | 50.40 | % |      | 53.00 | %    |  | 52.00 | % | 
|Risk-free
  interest rate  |  | 4.82  | % |      | 4.30  | %    |  | 3.71  | % | 
|Expected
  life (in years) |  | 7.5   |   |      | 5.00  |      |  | 7.78  |   | 

During 2006,
the Company took into consideration guidance contained in SFAS No. 123R and SAB
No. 107 when reviewing and developing assumptions for the 2006 grants. The
weighted average expected life for the 2006 grants of 7.5 years reflects the
alternative simplified method permitted by SAB No. 107, which defines the
expected life as the average of the contractual term of the options and the
weighted-average vesting period for all option tranches. Expected volatility
for the 2006 option grants is based on historical volatility over the expected term.

Note I - Financial Instruments With
Off-Balance Sheet Risk And Concentrations Of Credit Risk

In the normal course of
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 statement of financial
condition.

F-14

---



Retail
customer transactions are cleared through clearing brokers on a fully disclosed
basis. In the event that customers are unable to 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 customers obligations. Securities transactions entered into as of
December 31, 2006 settled with no adverse effect on Sieberts financial
condition. Siebert regularly monitors the activity in its customer accounts for
compliance with its margin requirements.

NOTE
J - COMMITMENTS AND CONTINGENT LIABILITIES

Siebert
terminated the fully disclosed clearing agreement (the Clearing Agreement)
with Pershing LLC (formerly the Pershing division of Donaldson, Lufkin &
Jenrette Securities Corporation) (Pershing) in 2003. Based on consultation
with counsel, Siebert believes that the $1,500,000 that it advanced to Pershing
in January 2003 should have been 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 in 2004
decided not to commence proceedings against Pershing and charged off the
$1,500,000 advance to Pershing. Siebert and Pershing in 2005 entered into a
Limited Release Agreement under which Siebert received a release from the $3
million disputed claims for unreimbursed fees and costs, and Pershing was
released from any liability to Siebert based upon the disputed fees and costs,
and Siebert paid a consideration to Pershing that had been previously accrued
by Siebert. Siebert believes the Pershing claims are without merit and that the
ultimate outcome of this matter will not have a material adverse effect on the
Companys results of operations or financial position.

The Company
rents discount retail brokerage and other office space under long-term
operating leases expiring in various periods through 2011. 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 |          
|                             |  |  |        |          
|                             |  |  |        |           | 
|2007                         |  |  |        | 950,000   | 
|2008                         |  |  |        | 900,000   | 
|2009                         |  |  |        | 650,000   | 
|2010                         |  |  |        | 470,000   | 
|2011                         |  |  |        | 470,000   | 
|                             |  |  |        |           | 
|                             |  |  |        |           | 
|                             |  |  | $      | 3,440,000 | 
|                             |  |  |        |           | 

Rent expense,
including escalations for operating costs, amounted to approximately
$1,071,000, $985,000 and $984,000 for the years ended December 31, 2006, 2005
and 2004, respectively. Rent is being charged to expense over the entire lease
term on a straight-line basis.

In addition to
the Pershing matter, 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. The Company believes that adequate provisions have
been made for such matters.

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 2006, 2005 and 2004.

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. Amounts that Siebert is
obligated to lend under this arrangement are reported as cash equivalents -
restricted, currently in the amount of $1,300,000. As of December 31, 2006, no
amount had been loaned to SBS.

F-15

---



NOTE
K  FAIR VALUE OF FINANCIAL
INSTRUMENTS

The carrying
amounts reflected in the consolidated statements of financial condition for
cash, cash equivalents, receivable from broker, accounts payable and accrued
liabilities approximate fair value due to the short term maturities of those
instruments.

NOTE
L - SUMMARIZED QUARTERLY FINANCIAL DATA
(UNAUDITED)

|                    |  |                 |           |                  |   |                 |  |                  |           |                 |   |                  |  |                 |           |                  |   |           |  |   |           |  |   |           | 
|------------------- |  | --------------- | --------- | ---------------- | - | --------------- |  | ---------------- | --------- | --------------- | - | ---------------- |  | --------------- | --------- | ---------------- | - | --------- |  | - | --------- |  | - | --------- | 
|                    |  | 2006            |           | 2005             |  
|                    |  |                 |           |                  |  
|                    |  | First
  Quarter |           | Second
  Quarter |   | Third
  Quarter |  | Fourth
  Quarter |           | First
  Quarter |   | Second
  Quarter |  | Third
  Quarter |           | Fourth
  Quarter |  
|                    |  |                 |           |                  |   |                 |  |                  |           |                 |   |                  |  |                 |           |                  |  
|Revenue             |  | $               | 7,830,000 |                  | $ | 8,856,000       |  | $                | 7,732,000 |                 | $ | 8,201,000        |  | $               | 7,226,000 |                  | $ | 7,996,000 |  | $ | 8,102,000 |  | $ | 7,848,000 | 
|Net income          |  | $               | 552,000   |                  | $ | 1,341,000       |  | $                | 897,000   |                 | $ | 635,000          |  | $               | 181,000   |                  | $ | 594,000   |  | $ | 542,000   |  | $ | 546,000   | 
|Earnings per share: |  |                 |           |                  |   |                 |  |                  |           |                 |   |                  |  |                 |           |                  |   |           |  |   |           |  |   |           | 
|Basic               |  | $               | 0.02      |                  | $ | 0.06            |  | $                | 0.04      |                 | $ | 0.03             |  | $               | 0.01      |                  | $ | 0.03      |  | $ | 0.02      |  | $ | 0.02      | 
|Diluted             |  | $               | 0.02      |                  | $ | 0.06            |  | $                | 0.04      |                 | $ | 0.03             |  | $               | 0.01      |                  | $ | 0.03      |  | $ | 0.02      |  | $ | 0.02      | 

F-16

---



REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

Board of Managers 
Siebert, Brandford, Shank & Co., L.L.C.
New York, New York

We have audited the
accompanying statements of financial condition of Siebert, Brandford, Shank
& Co., L.L.C. as of December 31, 2006 and 2005, and the related statements
of operations, changes in members capital, and cash flows for each of the
years in the three-year period ended December 31, 2006. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements.  An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the
financial statements referred to above present fairly, in all material
respects, the financial position of Siebert, Brandford, Shank & Co., L.L.C.
as of December 31, 2006 and 2005, and the results of its operations and its
cash flows for each of the years in the three-year period ended December 31,
2006 in conformity with U.S. generally accepted accounting principles.

New York, New York
February 26, 2007

F-17

---



SIEBERT, BRANDFORD, SHANK & CO., L.L.C.

Statements of Financial Condition

|                                                        |  |              |            |  |   |            | 
|------------------------------------------------------- |  | ------------ | ---------- |  | - | ---------- | 
|                                                        |  | December 31, |           
|                                                        |  |              |           
|                                                        |  |              | 2006       |  |   | 2005       | 
|                                                        |  |              |            |  |  
|                                                        |  |              |            |  |   |            | 
|ASSETS                                                  |  |              |            |  |   |            | 
|Cash and cash equivalents                               |  | $            | 9,916,728  |  | $ | 10,512,082 | 
|Securities owned, at market value                       |  |              |            |  |   | 580,145    | 
|Accounts receivable                                     |  |              | 1,311,516  |  |   | 1,020,294  | 
|Receivable from affiliate                               |  |              | 10,909     |  |   | 21,997     | 
|Receivable from broker                                  |  |              | 6,153,128  |  |   | 168,047    | 
|Secured demand note                                     |  |              | 1,200,000  |  |   | 1,200,000  | 
|Furniture and equipment and leasehold improvements,
net |  |              | 194,745    |  |   | 248,595    | 
|Other assets                                            |  |              | 462,636    |  |   | 414,736    | 
|                                                        |  |              |            |  |   |            | 
|                                                        |  |              |            |  |   |            | 
|                                                        |  | $            | 19,249,662 |  | $ | 14,165,896 | 
|                                                        |  |              |            |  |   |            | 
|                                                        |  |              |            |  |   |            | 
|LIABILITIES
  AND MEMBERS CAPITAL                      |  |              |            |  |   |            | 
|Liabilities:                                            |  |              |            |  |   |            | 
|Payable to affiliate                                    |  | $            | 55,556     |  | $ | 101,902    | 
|Accounts payable and accrued expenses                   |  |              | 7,300,510  |  |   | 5,245,204  | 
|                                                        |  |              |            |  |   |            | 
|                                                        |  |              |            |  |   |            | 
|                                                        |  |              | 7,356,066  |  |   | 5,347,106  | 
|                                                        |  |              |            |  |   |            | 
|Commitments and
  contingency                           |  |              |            |  |   |            | 
|                                                        |  |              |            |  |   |            | 
|Subordinated debt                                       |  |              | 1,200,000  |  |   | 1,200,000  | 
|                                                        |  |              |            |  |   |            | 
|Members capital                                        |  |              | 10,693,596 |  |   | 7,618,790  | 
|                                                        |  |              |            |  |   |            | 
|                                                        |  |              |            |  |   |            | 
|                                                        |  | $            | 19,249,662 |  | $ | 14,165,896 | 
|                                                        |  |              |            |  |   |            | 

See Notes to Financial Statements

F-18

---



SIEBERT, BRANDFORD, SHANK & CO., L.L.C.

Statements of Operations

|                                   |  |                         |            |      |   |            |  |   |            | 
|---------------------------------- |  | ----------------------- | ---------- | ---- | - | ---------- |  | - | ---------- | 
|                                   |  | Year Ended December 31, |           
|                                   |  |                         |           
|                                   |  | 2006                    |            | 2005 |   | 2004       | 
|                                   |  |                         |            |      |   |            | 
|                                   |  |                         |            |      |   |            |  |   |            | 
|Revenues:                          |  |                         |            |      |   |            |  |   |            | 
|Investment banking                 |  | $                       | 22,175,826 |      | $ | 18,085,786 |  | $ | 15,779,505 | 
|Trading profits                    |  |                         | 3,315,250  |      |   | 2,597,064  |  |   | 1,358,959  | 
|Interest and other                 |  |                         | 743,533    |      |   | 403,260    |  |   | 83,870     | 
|                                   |  |                         |            |      |   |            |  |   |            | 
|                                   |  |                         |            |      |   |            |  |   |            | 
|                                   |  |                         | 26,234,609 |      |   | 21,086,110 |  |   | 17,222,334 | 
|                                   |  |                         |            |      |   |            |  |   |            | 
|                                   |  |                         |            |      |   |            |  |   |            | 
|Expenses:                          |  |                         |            |      |   |            |  |   |            | 
|Employee compensation and benefits |  |                         | 15,563,860 |      |   | 12,890,686 |  |   | 9,963,888  | 
|Clearing fees                      |  |                         | 365,216    |      |   | 370,003    |  |   | 122,448    | 
|Communications                     |  |                         | 593,246    |      |   | 539,191    |  |   | 356,939    | 
|Occupancy                          |  |                         | 655,677    |      |   | 640,666    |  |   | 477,668    | 
|Professional fees                  |  |                         | 290,797    |      |   | 633,137    |  |   | 744,635    | 
|Interest                           |  |                         | 96,000     |      |   | 96,000     |  |   | 110,000    | 
|General and administrative         |  |                         | 2,781,986  |      |   | 2,539,257  |  |   | 1,952,983  | 
|                                   |  |                         |            |      |   |            |  |   |            | 
|                                   |  |                         |            |      |   |            |  |   |            | 
|                                   |  |                         | 20,346,782 |      |   | 17,708,940 |  |   | 13,728,561 | 
|                                   |  |                         |            |      |   |            |  |   |            | 
|                                   |  |                         |            |      |   |            |  |   |            | 
|Net income                         |  | $                       | 5,887,827  |      | $ | 3,377,170  |  | $ | 3,493,773  | 
|                                   |  |                         |            |      |   |            |  |   |            | 

See Notes to Financial Statements

F-19

---



SIEBERT, BRANDFORD, SHANK & CO., L.L.C.

Statements of Changes in Members Capital

|                              |  |   |            |  
|----------------------------- |  | - | ---------- | -
|Balance -
  January 1, 2004   |  | $ | 6,462,836  |  
|Distributions to members      |  |   | (2,512,219 | )
|Net income                    |  |   | 3,493,773  |  
|                              |  |   |            |  
|                              |  |   |            |  
|Balance -
  December 31, 2004 |  |   | 7,444,390  |  
|Distributions to members      |  |   | (3,202,770 | )
|Net income                    |  |   | 3,377,170  |  
|                              |  |   |            |  
|                              |  |   |            |  
|Balance -
  December 31, 2005 |  |   | 7,618,790  |  
|Distributions to members      |  |   | (2,813,021 | )
|Net income                    |  |   | 5,887,827  |  
|                              |  |   |            |  
|                              |  |   |            |  
|Balance -
  December 31, 2006 |  | $ | 10,693,596 |  
|                              |  |   |            |  

See Notes to Financial Statements

F-20

---



SIEBERT, BRANDFORD, SHANK & CO., L.L.C.

Statements of Cash Flows

|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|----------------------------------------------------------------------------------- |  | ----------------------- | ---------- | ---- | - | ---------- | - | - | ---------- | -
|                                                                                    |  | Year Ended December 31, |           
|                                                                                    |  |                         |           
|                                                                                    |  | 2006                    |            | 2005 |   | 2004       |  
|                                                                                    |  |                         |            |      |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Cash
  flows from operating activities:                                             |  |                         |            |      |   |            |   |   |            |  
|Net income                                                                          |  | $                       | 5,887,827  |      | $ | 3,377,170  |   | $ | 3,493,773  |  
|Adjustments to reconcile net income to net cash
provided by operating
  activities: |  |                         |            |      |   |            |   |   |            |  
|Depreciation and amortization                                                       |  |                         | 77,491     |      |   | 68,824     |   |   | 46,498     |  
|Changes in:                                                                         |  |                         |            |      |   |            |   |   |            |  
|Securities owned, at market value                                                   |  |                         | 580,145    |      |   | (570,134   | ) |   | 5,276      |  
|Accounts receivable                                                                 |  |                         | (291,222   | )    |   | 487,692    |   |   | (1,119,783 | )
|Receivable from broker                                                              |  |                         | (5,985,081 | )    |   | (160,569   | ) |   | (434       | )
|Other assets                                                                        |  |                         | (47,900    | )    |   | (71,305    | ) |   | (67,708    | )
|(Receivable from) payable to affiliate                                              |  |                         | (35,258    | )    |   | (45,983    | ) |   | 86,152     |  
|Accounts payable and accrued expenses                                               |  |                         | 2,055,305  |      |   | 1,689,829  |   |   | 1,085,165  |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Net
  cash provided by operating activities                                         |  |                         | 2,241,307  |      |   | 4,775,524  |   |   | 3,528,939  |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Cash flows used in investing activities:                                            |  |                         |            |      |   |            |   |   |            |  
|Purchase of property and equipment                                                  |  |                         | (23,640    | )    |   | (113,722   | ) |   | (121,346   | )
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Cash flows used in financing activities:                                            |  |                         |            |      |   |            |   |   |            |  
|Distributions to members                                                            |  |                         | (2,813,021 | )    |   | (3,202,770 | ) |   | (2,512,219 | )
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Net increase in cash and cash equivalents                                           |  |                         | (595,354   | )    |   | 1,459,032  |   |   | 895,374    |  
|Cash and cash equivalents - beginning of
year                                       |  |                         | 10,512,082 |      |   | 9,053,050  |   |   | 8,157,676  |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Cash and cash equivalents - end of year                                             |  | $                       | 9,916,728  |      | $ | 10,512,082 |   | $ | 9,053,050  |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|                                                                                    |  |                         |            |      |   |            |   |   |            |  
|Supplemental disclosures of cash flow information:                                  |  |                         |            |      |   |            |   |   |            |  
|Taxes paid                                                                          |  | $                       | 152,000    |      | $ | 120,000    |   | $ | 120,000    |  
|Interest paid                                                                       |  | $                       | 96,000     |      | $ | 96,000     |   | $ | 110,000    |  

See Notes to Financial Statements

F-21

---



SIEBERT, BRANDFORD, SHANK & CO., L.L.C.

Notes to Financial Statements
December 31, 2006

NOTEA -ORGANIZATION ANDSUMMARY OF SIGNIFICANTACCOUNTINGPOLICIES

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[1] | Organization and basis of
  presentation:                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Siebert,
  Brandford, Shank & Co., L.L.C. (SBS or the Company) was formed on
  March 10, 1997 to engage in the business of tax-exempt underwriting and
  related trading activities.  The
  Company qualifies as a Minority and Womens Owned Business Enterprise in
  certain municipalities.                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|[2] | Securities transactions:                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Securities
  transactions, commissions, revenues and expenses are recorded on a trade date
  basis.  Securities owned are valued at
  market value.                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Dividends
  are recorded on the ex-dividend date, and interest income and expense are
  recognized on an accrual basis.                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|[3] | Investment banking:                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Investment
  banking revenues include gains and fees, net of syndicate expenses, arising
  primarily from municipal bond offerings in which the Company acts as an
  underwriter or agent.  Investment
  banking management fees are recorded on offering date, sales concessions on
  settlement date, and underwriting fees at the time the underwriting is
  completed and the income is reasonably determinable.                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|[4] | Furniture, equipment and leasehold improvements, net:                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Furniture
  and equipment are stated at cost and depreciation is calculated using the
  straight-line method over the lives of the assets, generally five years.  Leasehold improvements are amortized over
  the period of the lease.                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|[5] | Cash equivalents:                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | For purposes
  of reporting cash flows, cash equivalents include money market funds.                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|[6] | Use of estimates:                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The
  preparation of financial statements in conformity with accounting principles
  generally accepted in the United States of America requires management to
  make estimates and assumptions that affect the reported amounts of assets and
  liabilities and disclosure of contingent assets and liabilities at the date
  of the financial statements and the reported amounts of revenues and expenses
  during the reporting period.  Actual
  results could differ from those estimates.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|[7] | Income taxes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The Company
  is not subject to federal income taxes.
  Instead, the members are required to include in their income tax
  returns their respective share of the Company's income.  The Company is subject to tax in certain
  state and local jurisdictions.                                                                                                                                                                                                                                   

F-22

---



NOTEA - ORGANIZATION ANDSUMMARY OFSIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[8] | New accounting
  pronouncement:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | In September
  2006, the Financial Accounting Standards Board issued SFAS No. 157 (SFAS
  157), Fair Value Measurements.
  SFAS 157 defines fair value and established a framework for measuring
  fair value.  It also expands the
  disclosures about the use of fair value to measure assets and
  liabilities.  SFAS 157 is effective
  the first fiscal year that begins after November 15, 2007.  Management is currently evaluating the
  impact, if any, of the adoption of SFAS 157 on the Company's financial
  statements.

NOTEB - SUBORDINATEDBORROWINGS ANDSECUREDDEMANDNOTERECEIVABLE

The subordinated debt at
December 31, 2006 and 2005 consists of a Secured Demand Note Collateral
Agreement payable to Siebert, in the amount of $1,200,000, bearing interest at
8% and due August 31, 2008.  Interest
expense paid to Siebert for each of the years ended 2006, 2005 and 2004 amounts
to $96,000, $96,000 and $110,000, respectively.

The subordinated borrowings
are available in computing net capital under the Securities and Exchange
Commissions (the 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.

The secured demand note
receivable of $1,200,000 is collateralized by cash equivalents of Siebert of
approximately $1,300,000 at December 31, 2006 and 2005.  Interest earned on the collateral amounted
to approximately $67,000, $52,000 and $22,000 in 2006, 2005 and 2004,
respectively.

NOTEC - FURNITURE,EQUIPMENT ANDLEASEHOLDIMPROVEMENTS, NET

Furniture and equipment
consist of the following:

|                                                 |  |      |          |      |   |          |  
|------------------------------------------------ |  | ---- | -------- | ---- | - | -------- | -
|                                                 |  | 2006 |          | 2005 |  
|                                                 |  |      |          |      |  
|                                                 |  |      |          |      |   |          |  
|Equipment                                        |  | $    | 437,684  |      | $ | 435,068  |  
|Furniture and fixtures                           |  |      | 170,492  |      |   | 149,468  |  
|                                                 |  |      |          |      |   |          |  
|                                                 |  |      |          |      |   |          |  
|                                                 |  |      | 608,176  |      |   | 584,536  |  
|Less accumulated depreciation
  and amortization |  |      | (413,431 | )    |   | (335,941 | )
|                                                 |  |      |          |      |   |          |  
|                                                 |  |      |          |      |   |          |  
|                                                 |  | $    | 194,745  |      | $ | 248,595  |  
|                                                 |  |      |          |      |   |          |  

NOTED - NETCAPITAL

The Company is subject to
the SECs Uniform Net Capital Rule 15c3-1, which requires the maintenance of
minimum net capital and requires that the ratio of aggregate indebtedness to
net capital, both as defined, shall not exceed 15 to 1.  At December 31, 2006 and 2005, the Company
had net capital of $10,965,000 and $7,841,000, respectively, which was
$10,474,000 and $7,485,000, respectively, in excess of its required net capital
and its ratio of aggregate indebtedness to net capital was .67 to 1 and .68 to
1, respectively.  The Company claims
exemption from the reserve requirements under Section 15c-3-3(k)(2)(ii).

F-23

---



NOTEE -COMMITMENTS AND CONTINGENCY

The Company rents office
space under long-term operating leases expiring through 2013.  These leases call for base rent plus
escalations for taxes and operating expenses.
Future minimum base rent under these operating leases are as follows:

|           |  |  |         |           | 
|---------- |  |  | ------- | --------- | 
|Year       |  |  | Amount  |          
|           |  |  |         |          
|           |  |  |         |           | 
|2007       |  |  | $       | 495,000   | 
|2008       |  |  |         | 407,000   | 
|2009       |  |  |         | 365,000   | 
|2010       |  |  |         | 201,000   | 
|2011       |  |  |         | 132,000   | 
|Thereafter |  |  | 297,000 |          
|           |  |  |         |          
|           |  |  |         |           | 
|           |  |  | $       | 1,897,000 | 
|           |  |  |         |           | 

Rent expense including taxes
and operating expenses for 2006, 2005 and 2004 amounted to $655,677, $640,666
and $477,668, respectively.

NOTEF - OTHER

During each of 2006, 2005
and 2004, the Company was charged $240,000 by Siebert for general and
administrative services.

F-24

---



SIGNATURES

In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant 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    
| |       | Chair and
  President  
| |       |                        
| | Date: | April 2,
  2007        

In accordance
with the Exchange Act, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.

|                           |  |                                                     |  |                
|-------------------------- |  | --------------------------------------------------- |  | ---------------
|Name                       |  | Title                                               |  | Date           
|                           |  |                                                     |  |                
|/s/ Muriel
  F. Siebert    |  | Chair,
  President and Director                     |  | April 2,
  2007
|                           |  |                                                     |  |                
|Muriel F.
  Siebert        |  | (principal
  executive officer)                     |  |                
|                           |  |                                                     |  |                
|/s/ Jeanne
  Rosendale     |  | Executive
  Vice President,                         |  | April 2,
  2007
|                           |  |                                                     |  |                
|Jeanne
  Rosendale         |  | and General
  Counsel                               |  |                
|                           |  |                                                     |  |                
|/s/ Joseph
  M. Ramos, Jr. |  | Chief
  Financial Officer                           |  | April 2,
  2007
|                           |  |                                                     |  |                
|Joseph M.
  Ramos, Jr.     |  | and
  Assistant Secretary(principal
  financial and |  |                
|                           |  | accounting
  officer)                               |  |                
|                           |  |                                                     |  |                
|/s/ Patricia
  L. Francy   |  | Director                                            |  | April 2,
  2007
|                           |  |                                                     |  |                
|Patricia L.
  Francy       |  |                                                     |  |                
|                           |  |                                                     |  |                
|/s/ Leonard
  M. Leiman    |  | Director                                            |  | April 2,
  2007
|                           |  |                                                     |  |                
|Leonard M.
  Leiman        |  |                                                     |  |                
|                           |  |                                                     |  |                
|/s/ Jane H.
  Macon        |  | Director                                            |  | April 2,
  2007
|                           |  |                                                     |  |                
|Jane H.
  Macon            |  |                                                     |  |                
|                           |  |                                                     |  |                
|/s/ Robert
  P. Mazzarella |  | Director                                            |  | April 2,
  2007
|                           |  |                                                     |  |                
|Robert P.
  Mazzarella     |  |                                                     |  |                
|                           |  |                                                     |  |                
|/s/ Nancy S.
  Peterson    |  | Director                                            |  | April 2,
  2007
|                           |  |                                                     |  |                
|Nancy S.
  Peterson        |  |                                                     |  |                

---



EXHIBIT INDEX

|            |       |                         |                                                                                                                                                                                                                                                                                                       
|----------- | ----- | ----------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |       | Description Of Document
|            |       |                        
|            | 2.1   |                         | Plan and
  Agreement of Merger between J. Michaels, Inc. (JMI) and Muriel Siebert
  Capital Markets Group, Inc. (MSCMG), dated as of April 24, 1996 (Merger
  Agreement) (incorporated by reference to Siebert Financial Corp.s Form 10-K
  for the fiscal year ended December 31, 1996)       
|            |       |                         |                                                                                                                                                                                                                                                                                                       
|            | 2.2   |                         | Amendment
  No. 1 to Merger Agreement, dated as of June 28, 1996 (incorporated by
  reference to Siebert Financial Corp.s Form 10-K for the fiscal year ended
  December 31, 1996)                                                                                                                   
|            |       |                         |                                                                                                                                                                                                                                                                                                       
|            | 2.3   |                         | Amendment
  No. 2 to Merger Agreement, dated as of September 30, 1996 (incorporated by
  reference to Siebert Financial Corp.s Form 10-K for the fiscal year ended
  December 31, 1996)                                                                                                              
|            |       |                         |                                                                                                                                                                                                                                                                                                       
|            | 2.4   |                         | Amendment
  No. 3 to Merger Agreement, dated as of November 7, 1996 (incorporated by
  reference to Siebert Financial Corp.s Form 10-K for the fiscal year ended
  December 31, 1996)                                                                                                                
|            |       |                         |                                                                                                                                                                                                                                                                                                       
|            | 3.1   |                         | Certificate
  of Incorporation of Siebert Financial Corp., formerly known as J. Michaels,
  Inc. originally filed on April 9, 1934, as amended and restated to date
  (incorporated by reference to Siebert Financial Corp.s Form 10-K for the
  fiscal year ended December 31, 1997)                
|            |       |                         |                                                                                                                                                                                                                                                                                                       
|            | 3.2   |                         | By-laws of
  Siebert Financial Corp. (incorporated by reference to Siebert Financial
  Corp.s Registration Statement on Form S-1 (File No. 333-49843) filed with
  the Securities and Exchange Commission on April 10, 1998)                                                                         
|            |       |                         |                                                                                                                                                                                                                                                                                                       
|            | 10.1  |                         | Siebert
  Financial Corp. 1998 Restricted Stock Award Plan (incorporated by reference
  to Siebert Financial Corp.s Form 10-K for the fiscal year ended December 31,
  1997)                                                                                                                         
|            |       |                         |                                                                                                                                                                                                                                                                                                       
|            | 10.2  |                         | 10(a)
  Siebert Financial Corp. 1997 Stock Option Plan (incorporated by reference to
  Siebert Financial Corp.s Form 10-K for the fiscal year ended December 31,
  1996)                                                                                                                             
|            |       |                         |                                                                                                                                                                                                                                                                                                       
|            | 10.4  |                         | LLC
  Operating Agreement, among Siebert, Brandford, Shank & Co., LLC, Muriel
  Siebert & Co., Inc., Napoleon Brandford III and Suzanne F. Shank, dated
  as of March 10, 1997 (incorporated by reference to Siebert Financial Corp.s
  Form 10-K for the fiscal year ended December 31, 1996)       
|            |       |                         |                                                                                                                                                                                                                                                                                                       
|            | 10.5  |                         | Services
  Agreement, between Siebert, Brandford, Shank & Co., LLC and Muriel
  Siebert & Co., Inc., dated as of March 10, 1997 (incorporated by
  reference to Siebert Financial Corp.s Form 10-K for the fiscal year ended
  December 31, 1996)                                                    
|            |       |                         |                                                                                                                                                                                                                                                                                                       
|            | 10.6  |                         | Siebert
  Financial Corp. 1998 Restricted Stock Award Plan (incorporated by reference
  to Siebert Financial Corp.s Form 10-K for the fiscal year ended December 31,
  1997)                                                                                                                         
|            |       |                         |                                                                                                                                                                                                                                                                                                       
|            | 10.7  |                         | Stock Option
  Agreement, dated March 11, 1997, between the Company and Patricia L. Francy
  (incorporated by reference to Siebert Financial Corp.s Registration
  Statement on Form S-8 (File No. 333-72939) filed with the Securities and
  Exchange Commission on February 25, 1999)              
|            |       |                         |                                                                                                                                                                                                                                                                                                       
|            | 10.8  |                         | Stock Option
  Agreement, dated March 11, 1997, between the Company and Jane H. Macon
  (incorporated by reference to Siebert Financial Corp.s Registration
  Statement on Form S-8 (File No. 333-72939) filed with the Securities and
  Exchange Commission on February 25, 1999)                   
|            |       |                         |                                                                                                                                                                                                                                                                                                       
|            | 10.9  |                         | Stock Option
  Agreement, dated March 11, 1997, between the Company and Monte E. Wetzler
  (incorporated by reference to Siebert Financial Corp.s Registration
  Statement on Form S-8 (File No. 333-72939) filed with the Securities and
  Exchange Commission on February 25, 1999)                
|            |       |                         |                                                                                                                                                                                                                                                                                                       
|            | 10.10 |                         | Employment
  Agreement, dated as of April 9, 1999, between the Company and Daniel Jacobson
  (incorporated by reference to Siebert Financial Corp.s Form 10-Q for the
  quarter ended September 30, 1999)                                                                                            
|            |       |                         |                                                                                                                                                                                                                                                                                                       
|            | 10.11 |                         | Strategic
  Alliance Agreement, dated as of April 29, 2002, by and between Intuit Inc,
  Muriel Siebert & Co., Inc. and Investment Solutions, Inc. (incorporated
  by reference to Siebert Financial Corp.s Form 10-Q for the quarter ended
  June 30, 2002.)                                        
|            |       |                         |                                                                                                                                                                                                                                                                                                       
|            | 10.12 |                         | Fully
  Disclosed Clearing Agreement, dated April 30, 2002, by and between the
  Pershing Division of Donaldson, Lufkin and Jenrette Securities Corporation
  and Muriel Siebert & Co., Inc. (incorporated by reference to Siebert
  Financial Corp.s Form 10-Q for the quarter ended June 30, 2002.)

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|            |       |                         |                                                                                                                                                                                                                                                                                                                                                  
|----------- | ----- | ----------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |       | Description Of Document
|            |       |                        
|            | 10.13 |                         | Operating
  Agreement of SBS Financial Products Company, LLC, dated effective as of April
  19, 2005, by and among Siebert Financial Corp., Napoleon Brandford III and
  Suzanne Shank. (incorporated by reference to Siebert Financial Corp.s
  Current Report on Form 8-K filed with the Securities and Exchange Commission
  on May 17, 2005)
|            |       |                         |                                                                                                                                                                                                                                                                                                                                                  
|            | 21    |                         | Subsidiaries
  of the registrant (incorporated by reference to Siebert Financial Corp.s
  Annual Report on Form 10-K for the year ended December 31, 2001)                                                                                                                                                                                      
|            |       |                         |                                                                                                                                                                                                                                                                                                                                                  
|            | 23    |                         | Consent of
  Independent Auditors                                                                                                                                                                                                                                                                                                                
|            |       |                         |                                                                                                                                                                                                                                                                                                                                                  
|            | 31.1  |                         | Certification
  of Muriel F. Siebert pursuant to Securities 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 Securities Exchange Act Rules 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                                                                                                                                                                                                                      

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