SIEB 10-K & 10-Q changes, risk factors and insider trading

We have entered into a license agreement with the Muriel Siebert Estate / Foundation under which we have a license to use the “Muriel Siebert” and “Siebert” name until December 2026. In the event that the license agreement is terminated, or if the license agreement is not renewed or extended beyond 2026, we may be required to change our name and cease using the name. Any of these events could disrupt our recognition in the marketplace and otherwise harm our business.

On April 27, 2023, Siebert entered into a Stock Purchase Agreement (the “First Tranche Stock Purchase Agreement”) with Kakaopay Corporation (“Kakaopay”), a company established under the Laws of the Republic of Korea, pursuant to which Siebert issued to Kakaopay 8,075,607 shares of Siebert’s common stock, whichcurrently representedrepresents at the time of issuance 19.9%20% of the outstanding equity securities of Siebert on a fully diluted basis.Siebert. The First Tranche closed on May 18, 2023 and, in connection therewith, we entered into a Registration Rights and Lock-Up Agreement, dated as of May 19, 2023 (the “Registration Rights Agreement”), with Kakaopay. In accordance with the Registration Rights Agreement and the Settlement Agreement (as defined below), we filed a registration statement with the SEC registering these shares for resale. The The number of shares of common stock could be significant in relation to our currently outstanding common stock and the historical trading volume of our common stock. The sale by Kakaopay of all or a significant portion of the shares of common stock could have a material adverse adverse effect on the market price of our common stock. In addition, the perception in the public markets that Kakaopay might sell all or a portion of the shares of common stock could also, in and of itself, have a material adverse effect on the market price of our common stock.

Some competitors in the discount brokerage business offer services which we may not offer. In addition, some competitors have continued to offer flatzero ratecommission execution fees that are lower than some of our published rates. Industry-wide changes in trading practices are expected to cause continuing pressure on fees earned by discount brokers for the sale of order flow. Continued or increased competition from ultra-low costs, flat-fee brokers and broader service offerings from other discount brokers could limit our growth or lead to a decline in our customer base which would adversely affect our business, results of operations and financial condition. Further, if we are not able to update or adapt our products and services to take advantage of the latest technologies and standards, or are otherwise unable to offer services to mobile and desktop computing platforms to a growing self-directed investor market, it could have a material adverse effect on our ability to compete.

We are primarily a financial services company and provide a wide variety of financial services to our clients. We operate in business lines such as retail brokerage, investment advisory, insurance, and technology development through our wholly-owned and majority-owned subsidiaries. We also operate a smaller Media, Entertainment, and Sports segment that provides talent management and related services. This segment represents a limited portion of our overall operations, and its results may vary based on the timing of projects and broader industry conditions.

The difference in our simulated incremental increases and decreases in the market interest rates as of December 31, 20242025 compared to 2023 2024 is primarily due to an increase in the proportion of segregated cash to segregated securities and a decrease in the proportion of margin debit balances to cash credit balances.securities.

SomeWe have ofmade theseinvestments in technology investmentsdevelopment projects collectively termed as Siebert’s Retail Platform. Technology development includeprojects such as the development of a Siebert mobile trading application, online platform for ourSiebert’s retail customer base and corporate servicesservice clients,clients have been placed into service asduring wellthe asyear upgradesended December 31, 2025 and several projects are anticipated to ourgo technologicallive in 2026. In 2025, we made a minority equity investment in and operationalentered infrastructureinto a strategic partnership with FusionIQ, a provider of engagement solutions and data analytics for wealth management firms, to supporthelp with these platformstechnology initiatives and futurenew growth.product offerings. We believe that these ongoing investments in technology and partnerships will be keyimportant toin meeting the needs of our retail customers,retail, correspondent clearing, and corporate services customers and supporting our expansion as well as expand into new markets and demographics.

Commissions and fees for the year ended December 31, 20242025 were $9,615,000$8,941,000 and increaseddecreased by $2,339,000$674,000 from the corresponding corresponding period in the prior year, primarily due to strong market conditions.

Interest, marketing and distribution fees for the year ended December 31, 20242025 were $32,407,000$27,624,000 and increased decreased by $2,830,000$4,783,000 from the corresponding period in the prior year primarily due to ana increasedecline in interest income received on U.S. government securities and bank deposits.rates.

Principal transactions and proprietary trading for the year ended December 31, 20242025 were $14,616,000$17,479,000 and increased by $1,522,000 $2,863,000 from the corresponding period in the prior year, primarily due to market conditions and the factorsgain discussedon below.our Investment in Equity Security.

Market making for the year ended December 31, 20242025 was $2,255,000$2,196,000 and increaseddecreased by $951,000$59,000 from the corresponding period in the prior year, primarily due to strong equity markets.year.

Stock borrow / stock loan for the year ended December 31, 20242025 was $19,249,000$29,034,000 and increased by $3,077,000 $9,785,000 from the corresponding period in the prior year, primarily due to a growth in stock locate services.services and securities lending businesses.

Other income for the year ended December 31, 20242025 was $3,390,000$4,835,000 and increased by $1,227,000$1,445,000 from the corresponding period in the prior year, primarily due to feesnew relatedrevenue tofrom anour increasemedia, insports maintenanceand feesentertainment during the current year.segment.

Employee compensation and benefits for the year ended December 31, 20242025 were $43,999,000$58,475,000 and increased by $12,063,000 $14,476,000 from the corresponding period in the prior year, primarily due to an increase in commission payouts as well as additional personnel related to technology initiatives, expansion into investment banking and executiveservicing active compensation.trader customers, and other new business lines.

Clearing fees, including execution costs for the year ended December 31, 20242025 were $1,607,000$2,149,000 and decreasedincreased by $65,000$542,000 from the corresponding period period in the prior year.year, primarily due to increased market activity.

Technology and communications expenses for the year ended December 31, 20242025 were $3,940,000$5,255,000 and increased by $576,000$1,315,000 from the corresponding period in the prior year, primarily due to additional software costs and an expansion of technological infrastructure.

Other general and administrative expenses for the year ended December 31, 20242025 were $4,488,000$6,946,000 and increased by $78,000$2,458,000 from the corresponding period in the prior year.year primarily due to the start-up cost and expansion of new business lines.

Data processing expenses for the year ended December 31, 20242025 were $3,200,000$3,989,000 and decreasedincreased by $36,000 $789,000 from the corresponding period in the prior year.year, primarily due to expansion of technology infrastructure.

Rent and occupancy expenses for the year ended December 31, 20242025 were $1,631,000$1,855,000 and decreasedincreased by $242,000 $224,000 from the corresponding period in the prior year, primarily due to a discontinued rent expense related to the temporaryexpansion Miamiinto office.new office space.

Professional fees for the year ended December 31, 20242025 were $5,578,000$6,033,000 and increased by $1,119,000$455,000 from the corresponding period in the prior year, primarily due to an increase in legalaccounting and accountinglegal fees offset by a decrease in consulting services.fees.

AdvertisingDepreciation and promotionamortization expenses for the year ended December 31, 20242025 were $348,000$2,399,000 and increased by $193,000 $1,019,000 from the corresponding period in the prior year, primarily due to an increase in amortization for the technology projects placed in marketing initiatives in 2024.service.

TransactionInterest expense termination costs for the year ended December 31, 20242025 was $0$452,000 and decreasedincreased by $5,943,000$190,000 from the corresponding period in the prior year dueprimarily related to costs associated with the termination ofagreement thewith Kakaopay transaction in 2023.2024. Refer to Note 6 – Kakopay Transaction for further information.

The provision for income taxes for the year ended December 31, 20242025 was $4,165,000$445,000 and increaseddecreased by $750,000$3,720,000 from the corresponding period in the prior year. The change from the corresponding period in the prior year is primarily due to increaseda profitabilitydecrease in pre-tax earnings year over year. Refer to Note 1716 – Income Taxes for additional detail.

The net income attributable to noncontrolling interests for the year ended December 31, 2025 was $0 and decreased by $17,000 from the corresponding period in the prior year due to lower income in RISE. As further discussed in Note 2 – Summary of Significant Accounting Policies, we consolidate RISE’s financial results into our consolidated financial statements and reflect the portion of RISE that was previously not held by Siebert as a noncontrolling interests in our consolidated financial statements. TheAs net income attributable to noncontrolling interests for the year endedof December 31, 20242025, RISE was $17,000, and decreasedwholly-owned by $1,000 from the corresponding period in the prior year.Siebert.

Assets as of December 31, 2024 2025 were $519,668,000$759,042,000 and decreasedincreased by $282,132,000$239,374,000 from December 31, 2023, 2024, primarily due to a decreasean increase in securities borrowed and cash and securities segregated, partially offset by ana increasedecrease in cash and cash equivalents.equivalents and cash and securities segregated for regulatory purposes.

Liabilities as of December 31, 20242025 were $434,576,000$669,882,000 and decreasedincreased by $296,515,000$235,306,000 from December 31, 2023, 2024, primarily due to a decreasean increase in securities loaned and payables to customers.

As of December 31, 2024,2025, a significant portion of our assets were liquid in nature, providing us with flexibility in financing our business. A significant portion of our assets not held by customers or used for stock borrow / stock loan consisted primarily of cash and cash equivalents, equivalents, and securities owned, at fair value, which are marked-to-market daily, and receivables from and deposits with broker-dealers and clearing organizations.

EWB Credit Agreement

On August 15, 2024, we entered into the EWB Credit Agreement with East West Bank providing a $20 million revolving credit facility, which offers substantial financial flexibility to support our strategic initiatives.facility. This credit facility allows the Companyus to fund acquisitions, execute stock buybacks, and meet general corporate needs up to $10 million, ensuring access to capital for both growth and operational purposes. The two-yearmaturity termdate of the EWB Credit Agreement,Agreement combinedis withJuly a29, competitive2027. The interest rate structure that is tied to either the one-month Term SOFR plus 3.15% or a minimum of 7.50%, provides a stable and predictable financing source. The personal guarantees provided by key executives,7.50%. John J. Gebbia and Gloria E. Gebbia, and their trust, provided personal guarantees related to this agreement which further strengthen the Company’sour borrowing position and help secure favorable terms. As of December 31, 2025, $5 million was outstanding related to the above EWB Credit Agreement. The interest expense for this credit line was $41,000 and $0 for the years ended December 31, 2025 and 2024, respectively. The interest rate was 7.5% for this credit facility during the year ended December 31, 2025. The Company did not use this credit facility during the year ended December 31, 2024.

Effective November 22, 2025, MSCO renewed the BMO Credit Agreement with BMO Harris until November 20, 2026. Borrowings under the BMO Credit Agreement will will bear interest on the outstanding daily balance at a rate of interest per annum equal 2.5% plus the greater of: (a) Term SOFR for such such day plus 0.11448% and (b) Federal Funds Target Range – Upper Limit and (c) 0.25%. The annual commitment fee is equal to one half half of one percent (0.50%) of the average daily unused portion of the commitment of $20,000,000. The BMO Credit Agreement contains customary affirmative covenants and negative covenants and requires MSCO to maintain minimum total regulatory capital of $45,000,000, excess net capital capital of 20,000,000, assets to total regulatory capital ratio of not more than 5.0 to 1.0, and a minimum liquidity ratio of not less than 1.0. We were in compliance with the requirements of the BMO Credit Agreement as of December 31, 2025.

In the threesecond monthsquarter ended March 31,of 2026, loss per share was $0.05,$0.01, compared to earningsloss per share of $0.22$0.12 in the prior-yearsecond period.quarter of 2025. In the firstsecond quarter of 2026, our revenues were $23.5$31.2 million and operating loss before taxes was $2.9$0.5 million, compared to revenues of $28.9$14.9 million and operating income loss of $10.5$5.8 million in the prior-yearsecond period.quarter of 2025.

During the three months ended MarchJune 31,30, 2026, werevenues increased primarily due to higher activity in our stock borrow / stock loan business, increased investment banking fees, and higher commission revenue. These increases were partially offset by continued to investinvestments in the expansion of our business lines and supporting infrastructure, which contributed to higher personnel expenses, commission and payout expenses, technology costs, advertising and promotion expense,expenses, and costs associated with the growth of expenses associated with music production, artist development, marketing, distribution, and related operations.operations, Theseas increaseswell wereas partiallya offsetsettlement bycharge higherassociated revenues from stock borrow / stock loan activities and investment banking fees, andwith the impairmentresolution expensesof detailedan inarbitration the sections below.matter. The year-over-year comparison was also significantly impacted by investment-related losses recognized in the $9.2second quarter of 2025. During that period, we recognized approximately $6.8 million of realized and unrealized gainlosses recognizedon duringan theequity threesecurity monthsinvestment endedacquired Marchthrough 31,a 2025.private Seeplacement in a company that subsequently completed an initial public offering. Refer to “Investment in Equity Security,” “Segments,” and “Statements of Operations and Financial ConditionSecurity” below for furtheradditional discussion of the significant factors affecting our results.detail.

There was significant volatility in the price of the shares, and in the three months ended March 31, 2025, we recorded an unrealized gain of approximately $9.2 million as the price per share price closed at $85.31 on March 31, 2025. AfterIn June 2025, after the lifting of contractual sale restrictions, we sold the majority of our Investment in Equity Security for an average price of $19.00 per share.share Weand recognized a nettotal gain of $2.4 million relatedfor to this investment following the salesix months ended June 30, 2025. However, we recognized a total realized and unrealized loss of $6.8 million for the three months ended June 30, 2025, which drove our position.operating loss for the prior-year quarter.

In the first quarter of 2026, we made a strategic investment in Arqitech. Arqitech is an institutional-grade, non-custodial digital asset infrastructure platform that provides on-chain settlement, cross-chain execution, and decentralized financial technology solutions for regulated financial institution to support its broader technology and digital asset initiatives. As part of the investment, we received repayment of $2.0 million of debt in July 2026. We believe this investment provides exposure to institutional-grade digital asset infrastructure and anticipates it will support future growth and strategic opportunities.

On March 4, 2026, we entered into an agreement with a multimedia news platform operator for $1 million for a media partnership designed to support marketing and promotional initiatives related to our products and services. The partnership is intended to expand our market reach, increase brand awareness, and provide additional exposure to existing and prospective customers through multimedia content and promotional channels.

- 2929 - --2929-- Results in the Financial Services segment for the three and six months ended June 30, 2026, were impacted by continued growth in certain business lines, including stock borrow / stock loan and investment banking, which were more thanpartially offset by lowerhigher interest-relatedoperating revenueexpenses related to higher commission and payout expenses, additional personnel supporting expanded business activities and new business lines, and higher operatingmarketing expenses.and advertising costs as well as a settlement charge associated with the resolution of an arbitration matter.

Other than the above, the primary factors impacting results in the Financial Services segment for the three and six months ended June 30, 2026, included the following:

Results in the Media, Sports and Entertainment segment were impacted by continued investment in the growth of the Company’s music production, marketing, distribution, artist development, and related operations. The segment did not contribute positively to operating results during the three and six months ended MarchJune 31,30, 2026 or MarchJune 31,30, 2025, which management believes is consistent with the development stage of the business.

-3131-- The primary factors impacting results in the Media, Sports and Entertainment segment for the three and six month ended June 30, 2026, included the following:

-A 3030 - - A portion of the segment’s costs are fixed or semi-fixed in nature, including personnel, administrative support, and certain infrastructure costs associated with building the segment’s operating platform. Other costs, including distribution and manufacturing-related expenses, artist development, content production, marketing, promotion, and commission payout expenses associated with NIL-related revenues, may vary based on the number of artists, releases, campaigns, NIL arrangements, and related business development activities during a given period. As a result, expenses may be incurred in advance of, or at a higher rate than, revenue recognized from recorded music sales, streaming, licensing, servicing, NIL-related activities, and other related operations.

The Media, Sports and Entertainment segment remains in an early-stage development phase and continued to incur costs related to artist development, content production, marketing, personnel, and infrastructure. During the three months ended March 31, 2026, management updated its forecast for the segment based on current operating performance, the status of artist/talent contracts, and expected revenue-generating opportunities. The updated forecast reflected higher costs and a slower path to profitability than previously anticipated. As a result, we recorded a non-cash goodwill impairment charge of approximately $330,000 related to the Media, Sports and Entertainment reporting unit.unit in the three months ended March 31, 2026. The impairment analysis included significant assumptions related to revenue growth, timing of artist/talent contract activity, artist-development and production costs, marketing spend, personnel and infrastructure costs, expected timing of profitability, and the discount rate.

The following table presents simulated changes to net interest revenue over the next 12 months beginning as of MarchJune 31,30, 2026 and December 31, 2025, of a gradual increase or decrease in market interest rates relative to prevailing market rates at the end of each reporting period:

The difference in our simulated incremental increases and decreases in the market interest rates as of MarchJune 31,30, 2026 compared to December 31, 2025 is primarily due to differences in the proportion of segregated cash to segregated securities and differences in the proportion of margin debit balances to cash credit balances.

We have made investments in technology development projects collectively termed as Siebert’s Retail Platform. Technology development projects suchprojects, asincluding enhancements to the online platform forserving Siebert’s retail customer base and corporate serviceservices clientsclients, have been placed into service during 20252025, and several additional projects are anticipated to go live in 2026. In 2025, we made a minority equity investmentinvestments in and entered into a strategic partnershippartnerships with FusionIQ, a provider of engagement solutionsFusionIQ and data analytics for wealth management firms,Arqitech to helpsupport with these technology initiatives and newenhance our product offerings. Through these relationships, we are expanding our digital wealth management capabilities, developing new client-facing solutions, and leveraging advanced technology to improve operational efficiency and the overall customer experience. We believe these ongoing investments in technologytechnology, strategic partnerships, and partnershipsplatform development will be important in meeting the evolving needs of our retail, correspondent clearing, and corporate services customers and supporting our expansion into new markets and demographics.demographics In February 2026, RISE entered into a clearing agreement with Green Pier, an indirect wholly owned subsidiary of FMR. The agreement was executed to support RISE’s strategic objectives through collaboration with Green Pier’s clearing infrastructure and technology platform. We believe the relationship enhances RISE’s operational capabilities and scalability and supports the execution of its broker-dealer activities.

Statements of Operations for the Three and Six Months Ended MarchJune 31,30, 2026 and 2025

-Stock 3232 - - Stock borrow / stock loan revenue for the three and six months ended MarchJune 31,30, 2026 was $6,831,000$10.8 million and $17.6 million, respectively, and increased by $1,994,000$3.3 million and $5.3 million, respectively, from the corresponding period periods in the prior year, primarily due to growth in stock locate services and securities lending businesses.activities.

Advisory Interest, marketing and distribution fees for the three and six months ended MarchJune 31,30, 2026 were $1,010,000$6.2 million and increased$12.1 million, respectively, and decreased by $262,000$0.7 million and $1.8 million, respectively, from the corresponding periodperiods in the prior year, primarily due to growthlower ininterest platform assets.rates.

Other incomeCommissions and fees for the three and six months ended MarchJune 31,30, 2026 waswere $1,384,000$2.7 million and $5.0 million, respectively, and increased by $610,000$0.6 million and $0.9 million, respectively, from the corresponding periodperiods in the prior year, primarily due to newincreased revenuecustomer fromtrading musicactivity and sportshigher operations.commission-generating transactions.

Employee compensation and benefits for the three and six months ended MarchJune 31,30, 2026 were $16,172,000$19.2 million and $35.4 million, respectively, and increased by $4,250,000$5.8 million and $10.1 million, respectively, from the corresponding period periods in the prior year, primarily due to an increase inhigher commission payouts asdriven wellby asincreased commission revenue and additional personnel relatedsupporting toexpanded business activities and new business lines.

Clearing fees, including execution costscosts, for the three and six months ended MarchJune 31,30, 2026 were $597,000$0.9 million and $1.5 million, respectively, and increased by $143,000$0.4 million and $0.6 million, respectively, from the corresponding periodperiods in the prior year, primarily due to clearing fees associated with the arrangement with Green Pier.Pier arrangement.

Technology and communications expenses for the three and six months ended MarchJune 31,30, 2026 were $1,805,000$1.9 million and $3.7 million, respectively, and increased by $700,000$0.9 million and $1.6 million, respectively, from the corresponding period periods in the prior year, primarily due to ancontinued expansioninvestments ofin technologicaltechnology infrastructure.infrastructure, platform enhancements, and statement printing services.

Other general and administrative expenses for the three and six months ended MarchJune 31,30, 2026 were $1,733,000$2.1 million and $3.8 million, respectively, and increased by $224,000$0.2 million and $0.4 million, respectively, from the corresponding period periods in the prior yearyear, primarily due to the expansion of business lines.operations.

Data processing expenses for the three and six months ended MarchJune 31,30, 2026 were $1,286,000$1.8 million and $3.0 million, respectively, and increased by $337,000$0.6 million and $0.9 million, respectively, from the corresponding period periods in the prior year, primarily due to expansion of technology infrastructure.

Rent and occupancy expenses for the three and six months ended MarchJune 31,30, 2026 were $454,000$0.5 million and decreased$1.0 million, respectively, both of which increased by $13,000$0.1 frommillion compared to the corresponding period periods in the prior year.

Professional fees for the three and six months ended MarchJune 31,30, 2026 were $1,698,000$2.1 million and $3.8 million, respectively, and increased by $339,000$0.6 million and $0.9 million, respectively, from the corresponding periodperiods in the prior year year, primarily due to higher legal fees.and consulting costs.

Depreciation and amortization expenses for the three and six months ended MarchJune 31,30, 2026 were $690,000$0.7 million and $1.4 million, respectively. Expenses were unchanged for the three-month period and increased by $275,000$0.3 frommillion for the six-month period compared with the corresponding period periods in the prior year,year. primarily due to anThe increase in the six-month period was primarily attributable to additional amortization forrelated to technology projects.development projects placed into service.