Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2021 | Aug. 10, 2021 | |
Document And Entity Information | ||
Entity Central Index Key | 0000065596 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2021 | |
Entity File Number | 0-5703 | |
Entity Registrant Name | Siebert Financial Corp | |
Entity Incorporation State or Country Code | NY | |
Entity Tax Identification Number | 11-1796714 | |
Entity Address, Address Line One | 535 Fifth Avenue | |
Entity Address, Address Line Two | 4th Floor | |
Entity Address, City or Town | NY | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10017 | |
City Area Code | 212 | |
Local Phone Number | 644-2400 | |
Title of 12(b) Security | Common Stock - $0.01 par value | |
Trading Symbol | SIEB | |
Name of Exchange on which Security is Registered | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 31,283,364 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Current assets | ||
Cash and cash equivalents | $ 2,332,000 | $ 3,632,000 |
Cash and securities segregated for regulatory purposes | 348,689,000 | 324,924,000 |
Receivables from customers | 84,850,000 | 95,358,000 |
Receivables from broker-dealers and clearing organizations | 9,290,000 | 15,815,000 |
Other receivables | 2,298,000 | 1,692,000 |
Prepaid service contract - current | 709,000 | 809,000 |
Prepaid expenses and other assets | 1,284,000 | 2,095,000 |
Securities borrowed | 638,169,000 | 905,785,000 |
Securities owned, at fair value | 4,275,000 | 2,623,000 |
Total Current assets | 1,091,896,000 | 1,352,733,000 |
Deposits with broker-dealers and clearing organizations | 9,828,000 | 7,209,000 |
Prepaid service contract - non-current | 650,000 | 1,004,000 |
Furniture, equipment and leasehold improvements, net | 746,000 | 762,000 |
Software, net | 1,021,000 | 1,334,000 |
Lease right-of-use assets | 3,246,000 | 2,290,000 |
Investments, cost | 2,231,000 | |
Deferred tax assets | 4,584,000 | 4,857,000 |
Intangible assets, net | 727,000 | 809,000 |
Goodwill | 1,989,000 | 1,989,000 |
Total Assets | 1,116,918,000 | 1,372,987,000 |
Current liabilities | ||
Payables to customers | 391,874,000 | 380,524,000 |
Payables to non-customers | 12,065,000 | 11,570,000 |
Drafts payable | 1,274,000 | 4,021,000 |
Payables to broker-dealers and clearing organizations | 6,834,000 | 1,810,000 |
Accounts payable and accrued liabilities | 3,925,000 | 3,777,000 |
Securities loaned | 643,645,000 | 920,811,000 |
Securities sold, not yet purchased, at fair value | 49,000 | 21,000 |
Taxes payable | 1,270,000 | |
Notes payable - related party | 5,200,000 | 5,200,000 |
Current portion of lease liabilities | 1,350,000 | 1,314,000 |
Current portion of long-term debt | 998,000 | 998,000 |
Total Current liabilities | 1,068,484,000 | 1,330,046,000 |
Lease liabilities, less current portion | 2,204,000 | 1,298,000 |
Long-term debt, less current portion | 3,159,000 | 3,657,000 |
Total Liabilities | 1,073,847,000 | 1,335,001,000 |
Commitments and Contingencies | ||
Stockholders' equity | ||
Common stock, $.01 par value; 100 million shares authorized; 31,283,364 and 30,953,710 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively | 312,000 | 309,000 |
Additional paid-in capital | 23,146,000 | 21,768,000 |
Retained earnings | 19,613,000 | 15,909,000 |
Total Stockholders' equity | 43,071,000 | 37,986,000 |
Total Liabilities and stockholders' equity | $ 1,116,918,000 | $ 1,372,987,000 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Parenthetical) - $ / shares | Jun. 30, 2021 | Dec. 31, 2020 |
Stockholder's equity: | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, authorized shares | 100,000,000 | 100,000,000 |
Common stock, issued shares | 31,283,364 | 30,953,710 |
Common stock, outstanding shares | 31,283,364 | 30,953,710 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Revenue | ||||
Commissions and fees | $ 4,325,000 | $ 4,887,000 | $ 11,333,000 | $ 10,470,000 |
Interest, marketing and distribution fees | 3,623,000 | 3,034,000 | 7,082,000 | 7,659,000 |
Principal transactions | 4,107,000 | 2,581,000 | 8,355,000 | 5,784,000 |
Market making | 1,758,000 | 615,000 | 3,372,000 | 1,085,000 |
Stock borrow / stock loan | 2,240,000 | 771,000 | 4,087,000 | 1,215,000 |
Advisory fees | 403,000 | 243,000 | 759,000 | 505,000 |
Other income | 337,000 | 488,000 | 729,000 | 702,000 |
Total Revenue | 16,793,000 | 12,619,000 | 35,717,000 | 27,420,000 |
Expenses | ||||
Employee compensation and benefits | 8,745,000 | 6,614,000 | 17,911,000 | 13,905,000 |
Clearing fees, including execution costs | 1,289,000 | 1,339,000 | 3,142,000 | 2,637,000 |
Technology and communications | 1,100,000 | 953,000 | 2,341,000 | 1,934,000 |
Other general and administrative | 1,188,000 | 401,000 | 1,958,000 | 1,255,000 |
Data processing | 695,000 | 754,000 | 1,492,000 | 1,603,000 |
Rent and occupancy | 470,000 | 698,000 | 1,040,000 | 1,425,000 |
Professional fees | 577,000 | 744,000 | 1,192,000 | 1,399,000 |
Depreciation and amortization | 374,000 | 377,000 | 766,000 | 825,000 |
Referral fees | 353,000 | 162,000 | 760,000 | 273,000 |
Interest expense | 89,000 | 88,000 | 192,000 | 164,000 |
Total Expenses | 14,880,000 | 12,130,000 | 30,794,000 | 25,420,000 |
Income before provision for income taxes | 1,913,000 | 489,000 | 4,923,000 | 2,000,000 |
Provision for income taxes | 484,000 | (10,000) | 1,219,000 | 525,000 |
Net income | $ 1,429,000 | $ 499,000 | $ 3,704,000 | $ 1,475,000 |
Net income per share of common stock Basic and diluted | $ 0.05 | $ 0.02 | $ 0.12 | $ 0.05 |
Weighted average shares outstanding Basic and diluted | 31,283,364 | 30,587,794 | 31,228,725 | 30,521,878 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($) | Number of Shares Issued $.01 Par Value [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance at Dec. 31, 2019 | $ 271,000 | $ 7,641,000 | $ 12,869,000 | $ 20,781,000 |
Beginning balance, shares at Dec. 31, 2019 | 27,157,188 | |||
Shares issued for OpenHand purchase | $ 33,000 | 12,256,000 | 65,000 | 12,354,000 |
Shares issued for OpenHand purchase, shares | 3,302,616 | |||
Net income | 976,000 | 976,000 | ||
Ending balance at Mar. 31, 2020 | $ 304,000 | 19,897,000 | 13,910,000 | 34,111,000 |
Ending balance, shares at Mar. 31, 2020 | 30,459,804 | |||
Beginning balance at Dec. 31, 2019 | $ 271,000 | 7,641,000 | 12,869,000 | 20,781,000 |
Beginning balance, shares at Dec. 31, 2019 | 27,157,188 | |||
Net income | 1,475,000 | |||
Ending balance at Jun. 30, 2020 | $ 306,000 | 21,022,000 | 14,409,000 | 35,737,000 |
Ending balance, shares at Jun. 30, 2020 | 30,653,710 | |||
Beginning balance at Mar. 31, 2020 | $ 304,000 | 19,897,000 | 13,910,000 | 34,111,000 |
Beginning balance, shares at Mar. 31, 2020 | 30,459,804 | |||
Shares issued for payment of professional services | $ 2,000 | 1,125,000 | 1,127,000 | |
Shares issued for payment of professional services, shares | 193,906 | |||
Net income | 499,000 | 499,000 | ||
Ending balance at Jun. 30, 2020 | $ 306,000 | 21,022,000 | 14,409,000 | 35,737,000 |
Ending balance, shares at Jun. 30, 2020 | 30,653,710 | |||
Beginning balance at Dec. 31, 2020 | $ 309,000 | 21,768,000 | 15,909,000 | 37,986,000 |
Beginning balance, shares at Dec. 31, 2020 | 30,953,710 | |||
Shares issued for OpenHand purchase | $ 3,000 | 1,378,000 | 1,381,000 | |
Shares issued for OpenHand purchase, shares | 329,654 | |||
Net income | 2,275,000 | 2,275,000 | ||
Ending balance at Mar. 31, 2021 | $ 312,000 | 23,146,000 | 18,184,000 | 41,642,000 |
Ending balance, shares at Mar. 31, 2021 | 31,283,364 | |||
Beginning balance at Dec. 31, 2020 | $ 309,000 | 21,768,000 | 15,909,000 | 37,986,000 |
Beginning balance, shares at Dec. 31, 2020 | 30,953,710 | |||
Net income | 3,704,000 | |||
Ending balance at Jun. 30, 2021 | $ 312,000 | 23,146,000 | 19,613,000 | 43,071,000 |
Ending balance, shares at Jun. 30, 2021 | 31,283,364 | |||
Beginning balance at Mar. 31, 2021 | $ 312,000 | 23,146,000 | 18,184,000 | 41,642,000 |
Beginning balance, shares at Mar. 31, 2021 | 31,283,364 | |||
Net income | 1,429,000 | 1,429,000 | ||
Ending balance at Jun. 30, 2021 | $ 312,000 | $ 23,146,000 | $ 19,613,000 | $ 43,071,000 |
Ending balance, shares at Jun. 30, 2021 | 31,283,364 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Cash Flows From Operating Activities | ||
Net income | $ 3,704,000 | $ 1,475,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Deferred income tax expense | 273,000 | 233,000 |
Depreciation and amortization | 766,000 | 825,000 |
Changes in | ||
Receivables from customers | 10,508,000 | 5,953,000 |
Receivables from and deposits with broker-dealers and clearing organizations | 3,906,000 | (856,000) |
Securities borrowed | 267,616,000 | 26,277,000 |
Securities owned, at fair value | (1,652,000) | 644,000 |
Prepaid expenses and other assets | 205,000 | 58,000 |
Prepaid service contract | 454,000 | (972,000) |
Payables to customers | 11,350,000 | 6,007,000 |
Payables to non-customers | 495,000 | (344,000) |
Drafts payable | (2,747,000) | (859,000) |
Payables to broker-dealers and clearing organizations | 5,024,000 | 3,059,000 |
Accounts payable and accrued liabilities | 147,000 | 157,000 |
Securities loaned | (277,166,000) | (10,996,000) |
Securities sold, not yet purchased, at fair value | 28,000 | (99,000) |
Interest payable | 20,000 | |
Lease liabilities | (14,000) | (77,000) |
Taxes payable | 1,270,000 | 39,000 |
Net cash provided by operating activities | 24,167,000 | 30,544,000 |
Cash Flows From Investing Activities | ||
Purchase of OpenHand common stock | (850,000) | |
Purchase of furniture, equipment, and leasehold improvements | (198,000) | |
Purchase of software | (156,000) | (276,000) |
Net cash used in investing activities | (1,204,000) | (276,000) |
Cash Flows From Financing Activities | ||
Repayments of long-term debt | (498,000) | |
Net cash used in financing activities | (498,000) | |
Net change in cash and cash equivalents, and cash and securities segregated for regulatory purposes | 22,465,000 | 30,268,000 |
Cash and cash equivalents, and cash and securities segregated for regulatory purposes - beginning of year | 328,556,000 | 229,594,000 |
Cash and cash equivalents, and cash and securities segregated for regulatory purposes - end of period | 351,021,000 | 259,862,000 |
Cash and cash equivalents - end of period | 2,332,000 | 4,179,000 |
Cash and securities segregated for regulatory purposes - end of period | 348,689,000 | 255,683,000 |
Cash and cash equivalents, and cash and securities segregated for regulatory purposes - end of period | 351,021,000 | 259,862,000 |
Supplemental cash flow information | ||
Cash paid during the period for income taxes | 97,000 | 130,000 |
Cash paid during the period for interest | 192,000 | 150,000 |
Non-cash investing and financing activities | ||
Shares issued for OpenHand purchase | 1,381,000 | |
Shares issued for payment of professional services | $ 1,127,000 |
Organization and Basis of Prese
Organization and Basis of Presentation | 6 Months Ended |
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | 1. Organization and Basis of Presentation Organization Overview Siebert Financial Corp., a New York corporation, incorporated in 1934, is a holding company that conducts the following lines of business through its wholly-owned subsidiaries: • Retail brokerage business through Muriel Siebert & Co., Inc. (“MSCO”), a Delaware corporation and broker-dealer registered with the SEC • Investment advisory services through Siebert AdvisorNXT, Inc. (“SNXT”), a New York corporation registered with the SEC as a Registered Investment Adviser (“RIA”) under the Investment Advisers Act of 1940, as amended • Insurance services through Park Wilshire Companies, Inc. (“PW”), a Texas corporation and licensed insurance agency • Robo-advisory technology development through Siebert Technologies, LLC (“STCH”), a Nevada limited liability company • Prime brokerage services through WPS Prime Services, LLC (“WPS”), a Delaware limited liability company and a broker-dealer registered with the SEC • StockCross Digital Solutions, Ltd. (“STXD”), an inactive subsidiary headquartered in Bermuda For purposes of this Quarterly Report on Form 10-Q, the terms “Siebert,” “Company,” “we,” “us,” and “our” refer to Siebert Financial Corp., MSCO, SNXT, PW, STCH, WPS, and STXD collectively, unless the context otherwise requires. The Company is headquartered in New York, NY, with primary operations in New Jersey, Florida, and California. The Company has 15+ branch offices throughout the U.S. and clients around the world. The Company’s SEC filings are available through the Company’s website at www.siebert.com, where investors can obtain copies of the Company’s public filings free of charge. The Company’s common stock, par value $.01 per share, trades on the Nasdaq Capital Market under the symbol “SIEB.” The Company primarily operates in the securities brokerage and asset management industry and has no other reportable segments. All of the Company's revenues for the three and six months ended June 30, 2021 and 2020 were derived from its operations in the U.S. As of June 30, 2021, the Company is comprised of a single operating segment based on the factors related to management’s decision-making framework as well as management evaluating performance and allocating resources based on assessments of the Company from a consolidated perspective. Acquisition of StockCross On January 25, 2019, the Company purchased approximately 15% of the outstanding shares of StockCross Financial Services, Inc. (“StockCross”). Subsequently, the Company acquired the remaining 85% of StockCross’ outstanding shares in exchange for 3,298,774 shares of the Company’s common stock. Effective January 1, 2020, StockCross was merged with and into MSCO, and as of January 1, 2020, all clearing and other services provided by StockCross were performed by MSCO. Prior to and as of the date of the Company’s acquisition of StockCross, the Company and StockCross were entities under common control of Gloria E. Gebbia, the Company’s principal stockholder, and members of her immediate family (collectively, the “Gebbia Family”). The acquisition represented a change in reporting entity. COVID-19 The challenges posed by the COVID-19 pandemic on the global economy increased significantly starting in the first quarter of 2020. COVID-19 spread across the globe during 2020 and impacted economic activity worldwide. In response to COVID-19, national and local governments around the world instituted certain measures, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews, shelter-in-place orders and recommendations to practice social distancing. The primary financial impact on the Company from the COVID-19 pandemic for the three months ended June 30, 2021 was lower interest revenue resulting from lower benchmark interest rates. -6- The Company is actively monitoring the impact of COVID-19 on its business, financial condition, liquidity, operations, employees, clients and business partners. Based on management’s assessment as of June 30, 2021, the ultimate impact of COVID-19 on the Company’s business, results of operations, financial condition and cash flows is dependent on future developments, including the duration of the pandemic and the related length of its impact on the global economy, which are uncertain and cannot be predicted at this time. Refer to Part I, Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Report for additional detail on COVID-19 and its impact on the Company. Basis of Presentation The accompanying condensed consolidated financial statements (“financial statements”) of the Company have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete annual financial statements. In the opinion of management, the financial statements contain all adjustments (consisting of normal recurring entries) necessary to fairly present such interim results. Interim results are not necessarily indicative of the results of operations which may be expected for a full year or any subsequent period. These financial statements should be read in conjunction with the financial statements and notes thereto in the Company’s 2020 Form 10-K. The financial statements include the accounts of Siebert and its wholly-owned subsidiaries and upon consolidation, all intercompany balances and transactions are eliminated. The U.S. dollar is the functional currency of the Company and numbers are rounded for presentation purposes. Significant Accounting Policies The Company’s significant accounting policies are included in Note 2 – Summary of Significant Accounting Policies in the Company’s 2020 Form 10-K, and any updates as of June 30, 2021 are listed below. Investments, Cost Accounting Standards Update (“ASU”) 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, generally requires entities to measure equity investments (other than equity method investments, controlling financial interests that result in consolidation of the investee and certain other investments) at fair value and recognize any changes in fair value in net income. However, entities will be able to elect a measurement alternative for equity investments that do not have readily determinable fair values and do not qualify for the practical expedient in ASC 820 to estimate fair value using the net asset value (NAV) per share. Pursuant to ASU 2016-01, the Company has made an accounting policy election to measure equity securities without readily determinable fair value at cost, less any impairment, adjusted for any changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Other than the updates described above, there have been no material changes to the Company’s significant accounting policies. |
New Accounting Standards
New Accounting Standards | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
New Accounting Standards | 2. New Accounting Standards Accounting Standards Adopted in Fiscal 2021 ASU 2020-01 ASU 2019 12 -7- Accounting Standards Not Yet Adopted ASU 2016 13 - Management has evaluated other recently issued accounting standards and does not believe that any of these standards will have a significant impact on the Company’s financial statements and related disclosures as of June 30, 2021. |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2021 | |
Acquisitions Abstract | |
Acquisitions | 3. Acquisitions StockCross Overview of Acquisition Established in 1971, StockCross was one of the largest privately-owned brokerage firms in the nation and its operations consisted primarily of market making, fixed-income products distribution, online or broker-assisted equity trading, securities lending, and equity stock plan services. Prior to being acquired by the Company, StockCross and the Company were affiliated entities through common ownership and had various related party transactions. In January 2019, the Company acquired approximately 15% ownership of StockCross. Effective January 1, 2020, the Company acquired the remaining 85% of StockCross’ outstanding shares and StockCross was merged with and into MSCO. The purchase price paid was approximately $29,750,000 or 3,298,774 shares of the Company’s common stock which was issued in connection with the acquisition. The acquisition of StockCross added incremental business lines, revenue streams, cost synergies and additional experienced management team members to MSCO. Accounting for Acquisition Prior to and as of the date of the acquisition, the Company and StockCross were entities under common control of the Gebbia Family. As such, the acquisition was accounted for as a transaction between entities under common control. The acquisition represented a change in reporting entity. As such, upon the closing of the acquisition, the net assets of the Company were combined with those of StockCross at their historical carrying amounts and no goodwill was recorded as part of the transaction. The Company acquired various assets and liabilities from StockCross which were recorded at their historical carrying amounts and summarized below: -8- Historical Carrying Value Assets acquired Cash and cash equivalents $ 1,588,000 Cash and securities segregated for regulatory purposes 224,814,000 Receivables from customers 86,331,000 Receivables from broker-dealers and clearing organizations 3,105,000 Other receivables 627,000 Prepaid expenses and other assets 346,000 Securities borrowed 193,529,000 Securities owned, at fair value 3,018,000 Furniture, equipment and leasehold improvements, net 19,000 Lease right-of-use assets 1,141,000 Deferred tax assets 407,000 Total Assets acquired 514,925,000 Liabilities assumed Payables to customers 308,091,000 Payables to non-customers 9,151,000 Drafts payable 2,834,000 Payables to broker-dealers and clearing organizations 1,406,000 Accounts payable and accrued liabilities 963,000 Securities loaned 170,443,000 Securities sold, not yet purchased, at fair value 28,000 Notes payable – related party 5,000,000 Lease liabilities 1,295,000 Total Liabilities assumed 499,211,000 Net Assets acquired $ 15,714,000 |
Receivables From, Payables To,
Receivables From, Payables To, and Deposits With Broker-Dealers and Clearing Organizations | 6 Months Ended |
Jun. 30, 2021 | |
Due to and from Broker-Dealers and Clearing Organizations [Abstract] | |
Receivables From, Payables To, and Deposits With Broker-Dealers and Clearing Organizations | 4. Receivables From, Payables To, and Deposits With Broker-Dealers and Clearing Organizations Amounts receivable from, payables to, and deposits with broker-dealers and clearing organizations consisted of the following as of the periods indicated: As of June 30, 2021 As of December 31, 2020 Receivables from and deposits with broker-dealers and clearing organizations DTCC / OCC / NSCC $ 13,844,000 $ 17,841,000 Goldman Sachs 2,729,000 2,430,000 Pershing Capital 1,104,000 1,266,000 NFS 1,064,000 1,061,000 Securities fail-to-deliver 347,000 379,000 Globalshares 30,000 46,000 Total Receivables from and deposits with broker-dealers and clearing organizations $ 19,118,000 $ 23,023,000 Payables to broker-dealers and clearing organizations Securities fail-to-receive $ 6,789,000 $ 1,810,000 Payables to broker dealers 45,000 — Total Payables to broker-dealers and clearing organizations $ 6,834,000 $ 1,810,000 Under the DTCC shareholders’ agreement, MSCO is required to participate in the DTCC common stock mandatory purchase. As of June 30, 2021 and December 31, 2020, MSCO had shares of DTCC common stock valued at approximately $905,000 and $937,000, respectively, which are included within the line item “Deposits with broker-dealers and clearing organizations” on the statements of financial condition. |
Prepaid Service Contract
Prepaid Service Contract | 6 Months Ended |
Jun. 30, 2021 | |
Prepaid Service Contract | |
Prepaid Service Contract | 5. Prepaid Service Contract On April 21, 2020, the Company entered into a Master Services Agreement (“MSA”), with InvestCloud, Inc. (“InvestCloud”). Pursuant to the MSA, InvestCloud agreed to provide the Company with the InvestCloud Platform, a new client and back end interface and related functionalities for the Company’s key operations. The Company agreed to pay InvestCloud as consideration therefore during the initial three-year term an annual license fee of $600,000 as well as an upfront professional service fee of $1.0 million for one-time configuration, installation and customization of the software. Following the initial three-year term, the MSA will automatically renew for additional one-year terms unless terminated by the Company upon 120 days’ notice. In connection with the MSA, InvestCloud entered into a side letter agreement with the Company pursuant to which InvestCloud acquired 193,906 shares of the Company’s restricted common stock (the “Shares”) at a per share price of $5.81 (the Company’s share price as of the close of May 12, 2020) for a total of $1.1 million for professional services, which approximates the cost of services to be provided, to integrate the InvestCloud Platform into the Company’s existing systems. The Shares were issued to InvestCloud on May 12, 2020 without registration under the Securities Act of 1933 in reliance upon the exemption provided in Section 4(a)(2) and or Regulation D thereunder. The Company initially recorded a prepaid asset equal to the $2.1 million of the total professional services related to the development work to be performed by InvestCloud, which is within the line item “Prepaid service contract” on the statements of financial condition. The Company amortizes this asset over the 3-year term of the contract, a period during which the arrangement is noncancelable. The license fees related to the Company’s use of the InvestCloud Platform are prepaid three months in advance and are within the line item “Prepaid service contract” on the statements of financial condition. These prepaid license fees are amortized over the three-month term. The amortization for all the prepaid assets related to InvestCloud is within the line item “Technology and Communications” on the statements of income. The expense related to share-based payments to InvestCloud for professional services was $94,000 and $31,000 for the three months ended June 30, 2021, and 2020, respectively. The expense related to share-based payments to InvestCloud for professional services was $188,000 and $31,000 for the six months ended June 30, 2021, and 2020, respectively. The total cost related to InvestCloud was $277,000 and $109,000 for the three months ended June 30, 2021, and 2020, respectively. The total cost related to InvestCloud was $604,000 and $109,000 for the six months ended June 30, 2021, and 2020, respectively. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 6. Fair Value Measurements Overview ASC 820 defines fair value, establishes a framework for measuring fair value, and establishes a hierarchy of fair value inputs. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. Valuation techniques that are consistent with the market, income, or cost approach, as specified by ASC 820, are used to measure fair value. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels: Level 1 - Quoted prices (unadjusted) in active markets for an identical asset or liability that the Company can assess at the measurement date. Level 2 - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 - Unobservable inputs for the asset or liability. The availability of observable inputs can vary from security to security and is affected by a variety of factors, such as the type of security, the liquidity of markets, and other characteristics particular to the security. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. As such, the degree of judgment exercised in determining fair value is greatest for instruments categorized in level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement. -10- Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that the Company believes market participants would use in pricing the asset or liability at the measurement date. A description of the valuation techniques applied to the Company’s major categories of assets and liabilities measured at fair value on a recurring basis is as follows: U.S. government securities: Corporate bonds and convertible preferred stock: Equity securities: Certificates of deposit: Unit investment trusts: Fair Value Hierarchy Tables The following tables present the Company's fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of the periods presented. As of June 30, 2021 Level 1 Level 2 Level 3 Total Assets Securities owned, at fair value U.S. government securities* $ 2,015,000 $ — $ — $ 2,015,000 Certificates of deposit — 91,000 — 91,000 Corporate bonds — 15,000 — 15,000 Equity securities 1,098,000 1,056,000 — 2,154,000 Total Securities owned, at fair value $ 3,113,000 $ 1,162,000 $ — $ 4,275,000 Liabilities Securities sold, not yet purchased, at fair value Equity securities $ — $ 27,000 $ — $ 27,000 Unit investment trusts — 22,000 — 22,000 Total Securities sold, not yet purchased, at fair value $ — $ 49,000 $ — $ 49,000 -11- As of December 31, 2020 Level 1 Level 2 Level 3 Total Assets Securities owned, at fair value U.S. government securities* $ 2,029,000 $ — $ — $ 2,029,000 Certificates of deposit — 91,000 — 91,000 Corporate bonds — 24,000 — 24,000 Equity securities 345,000 134,000 — 479,000 Total Securities owned, at fair value $ 2,374,000 $ 249,000 $ — $ 2,623,000 Liabilities Securities sold, not yet purchased, at fair value Equity securities $ — $ 21,000 $ — $ 21,000 Total Securities sold, not yet purchased, at fair value $ — $ 21,000 $ — $ 21,000 *As of June 30, 2021 and December 31, 2020, these U.S. government securities mature on 08/31/21 The following represents financial instruments in which the ending balances as of June 30, 2021 and December 31, 2020 are not carried at fair value on the statements of financial condition: Receivables and other assets Securities borrowed and securities loaned Payables Notes payable – related party: Line of credit Investments, cost |
Leases
Leases | 6 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
Leases | 7. Leases As of June 30, 2021, the Company rents office space under operating leases expiring in 2021 through 2026, and the Company has no financing leases. The leases call for base rent plus escalations as well as other operating expenses. The following table represents the Company’s lease right-of-use assets and lease liabilities on the statements of financial condition. The Company elected not to include short-term leases (i.e., leases with initial terms of twelve months or less), or equipment leases (deemed immaterial) on the statements of financial condition. As of June 30, 2021, the Company does not believe that any of the renewal options under the existing leases are reasonably certain to be exercised; however, the Company will continue to assess and monitor the lease renewal options on an ongoing basis. -12- As of June 30, 2021 As of December 31, 2020 Assets Lease right-of-use assets $ 3,246,000 $ 2,290,000 Liabilities Lease liabilities $ 3,554,000 $ 2,612,000 The calculated amounts of the lease right-of-use assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company leases some miscellaneous office equipment, but they are immaterial and therefore the Company records the costs associated with this office equipment on the statements of income rather than capitalizing them as lease right-of-use assets. The Company determined a discount rate of 5.0% would approximate the Company’s cost to obtain financing given its size, growth, and risk profile. Lease Term and Discount Rate As of June 30, 2021 As of December 31, 2020 Weighted average remaining lease term – operating leases (in years) 3.2 2.2 Weighted average discount rate – operating leases 5.0 % 5.0 % The following table represents lease costs and other lease information. The Company has elected the practical expedient to not separate lease and non-lease components, and as such, the variable lease cost primarily represents variable payments such as common area maintenance and utilities which are usually determined by the leased square footage in proportion to the overall office building. Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Operating lease cost $ 410,000 $ 575,000 $ 898,000 $ 1,146,000 Short-term lease cost 23,000 24,000 44,000 63,000 Variable lease cost 37,000 99,000 98,000 216,000 Sublease income — — — — Total Rent and occupancy $ 470,000 $ 698,000 $ 1,040,000 $ 1,425,000 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 338,000 $ 617,000 $ 894,000 $ 1,231,000 Lease right-of-use assets obtained in exchange for new lease liabilities Operating leases $ 487,000 $ 160,000 $ 1,875,000 $ 2,075,000 Lease Commitments Future annual minimum payments for operating leases with initial terms of greater than one year as of June 30, 2021 were as follows: Year Amount 2021 $ 798,000 2022 1,287,000 2023 940,000 2024 399,000 2025 325,000 Thereafter 139,000 Remaining balance of lease payments 3,888,000 Less: difference between undiscounted cash flows and discounted cash flows 334,000 Lease liabilities $ 3,554,000 -13- As of June 30, 2021, the Company extended its Horsham branch office lease for a term of 3 years. The total commitment of the extension is approximately $128,000, and the lease will commence on August 1, 2021. |
Investments, Cost
Investments, Cost | 6 Months Ended |
Jun. 30, 2021 | |
Investments Cost | |
Investments, Cost | 8. Investments, Cost OpenHand Holdings, Inc. Pursuant to a stock purchase agreement dated as of January 31, 2021, the Company acquired an interest of 5% of OpenHand Holdings, Inc. ("OpenHand") common stock for consideration of a total of $2,231,000 consisting of $850,000 in cash and 329,654 restricted shares of the Company’s common stock valued at $1,381,000 or $4.19 per share. The value of the restricted stock was determined using the thirty-day trading average. The Company agreed to register the shares issued to OpenHand by filing a selling shareholder registration statement. OpenHand is a subscription-based brokerage platform that will provide zero-commission trading for equity and option transactions and credit its members daily with rebates of revenues generated by the clients, less operational expenses. The Company will be the exclusive broker-dealer for all OpenHand account services and will benefit from their cloud-based technology which uses Amazon Web Services. Through this strategic, operational, regulatory, and technological partnership, OpenHand and the Company’s clients will benefit from numerous financial and operational efficiencies. The Company also received an option to purchase an additional 7.5% of OpenHand for approximately $4.5 million, based upon a $60 million valuation of OpenHand. This option expires 18 months after the launch of the OpenHand platform. No value was attributed to the option because it is not a derivative and there were no transaction costs associated with this option as of June 30, 2021. As of June 30, 2021 and December 31, 2020, the carrying value of the Company’s investment in OpenHand was $2,231,000 and $0, respectively. The investment does not have a readily determinable fair value since OpenHand is a private company and its shares are not publicly traded. The Company made an accounting policy election to measure this investment at cost less any impairment. As of June 30, 2021, there were no unrealized gains or losses on this investment. In addition, management concluded that there have been no impairments as there were no identified events or changes in circumstances during the reporting period that could have a significant adverse effect on the original valuation of the investment. |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Net | 6 Months Ended |
Jun. 30, 2021 | |
Goodwill And Intangible Assets Net | |
Goodwill and Intangible Assets, Net | 9. Goodwill and Intangible Assets, Net Goodwill As of June 30, 2021 and December 31, 2020, the Company’s carrying amount of goodwill was $1,989,000, all of which came from the Company’s acquisition of WPS. Intangible Assets, Net As a result of the Company’s acquisition of WPS, the Company acquired intangible assets consisting of WPS’s customer relationships and trade name, the fair values of which were $987,000 and $70,000, respectively, as of the acquisition date. Pursuant to the Company’s agreement with the original owners of WPS, the Company agreed to discontinue using the name of Weeden Prime Services, LLC and filed to change it to WPS Prime Services, LLC in May 2020. The Company amortizes its acquired intangible assets over their useful lives, and as of June 30, 2021, the WPS trade name has been fully amortized. Impairment As of June 30, 2021, management concluded that there have been no impairments to the carrying value of the Company’s goodwill and other tangible and intangible assets. |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | 10. Long-Term Debt Line of Credit with East West Bank Overview On July 22, 2020, the Company entered into a Loan and Security Agreement with East West Bank. In accordance with the terms of this agreement, the Company has the ability to borrow term loans in an aggregate principal amount not to exceed $10 million during the two-year period after July 22, 2020. The Company’s obligations under the agreement are secured by a lien on all of the -14- Company’s cash, dividends, stocks and other monies and property from time to time received or receivable in exchange for the Company’s equity interests in and any other rights to payment from the Company’s subsidiaries; any deposit accounts into which the foregoing is deposited and all substitutions, products, proceeds (cash and non-cash) arising out of any of the foregoing. Each term loan will have a term of four years, beginning when the draw is made. The repayment schedule will utilize a five-year (60 month) amortization period, with a balloon on the remaining amount due at the end of four years. Term loans made pursuant to the agreement shall bear interest at the prime rate as reported by the Wall Street Journal, provided that the minimum interest rate on any term loan will not be less than 3.25%. In addition to the foregoing, on the date that each term loan is made, the Company shall pay to the lender an origination fee equal to 0.25% of the principal amount of such term loan. Pursuant to the loan agreement, the Company paid all lender expenses in connection with the loan agreement. This agreement contains certain financial and non-financial covenants. The financial covenants are that the Company must maintain a debt service coverage ratio of 1.35 to 1, an effective tangible net worth of a minimum of $25 million, and MSCO must maintain a net capital ratio that is not less than 10% of aggregate debit items. Certain other non-financial covenants include that the Company must promptly notify East West Bank of the creation or acquisition of any subsidiary that at any time owns assets with a value of $100,000 or greater. As of June 30, 2021 and the date of the filing of this Report, the Company was in compliance with all of its covenants related to this agreement. In addition, the Company’s obligations under the agreement are guaranteed pursuant to a guarantee agreement by and among, John J. Gebbia, individually, and as a co-trustee of the John and Gloria Living Trust, U/D/T December 8, 1994, and Gloria E. Gebbia, individually and as a co-trustee of the Trust. As of June 30, 2021, the Company has drawn down a $5.0 million term loan under this agreement and has an outstanding balance of $4.2 million. The Company has an additional $5.0 million remaining to draw down from this line of credit. Remaining Payments Future annual minimum payments for the line of credit with East West Bank as of June 30, 2021 were as follows: Amount 2021 $ 500,000 2022 998,000 2023 998,000 2024 1,661,000 Total $ 4,157,000 The interest expense related to this line of credit was $36,000 and $73,000 for the three and six months ended June 30, 2021. The effective interest rate related to this line of credit was 3.25% for the three and six months ended June 30, 2021. |
Notes Payable - Related Party
Notes Payable - Related Party | 6 Months Ended |
Jun. 30, 2021 | |
Notes Payable [Abstract] | |
Notes Payable - Related Party | 11. Notes Payable - Related Party As of June 30, 2021, the Company had various notes payable to Gloria E. Gebbia, the Company’s principal stockholder, the details of which are presented below: Description Issuance Date Face Amount Unpaid Principal Amount 4.00% due September 30, 2021 May 31, 2021 $ 2,200,000 $ 2,200,000 4.00% due November 30, 2021** November 30, 2020 3,000,000 3,000,000 Total Notes payable – related party $ 5,200,000 $ 5,200,000 -15- As of December 31, 2020, the Company had various notes payable to Gloria E. Gebbia, the Company’s principal stockholder, the details of which are presented below: Description Issuance Date Face Amount Unpaid Principal Amount 4.00% due May 31, 2021* December 1, 2020 $ 2,200,000 $ 2,200,000 4.00% due November 30, 2021** November 30, 2020 3,000,000 3,000,000 Total Notes payable – related party $ 5,200,000 $ 5,200,000 *On May 31, 2021, this note payable was renewed with a maturity of September 30, 2021. **This note payable is subordinated to MSCO and is subordinated to the claims of general creditors, approved by FINRA, and is included in MSCO’s calculation of net capital and the capital requirements under FINRA and SEC regulations. The Company’s interest expense for these notes for the three months ended June 30, 2021 and 2020 was $52,000 and $86,000, respectively. The Company’s interest expense for these notes for the six months ended June 30, 2021 and 2020 was $104,000 and $146,000, respectively. The Company’s interest payable related to these notes was $0 as of June 30, 2021 and December 31, 2020. |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | 12. Revenue Recognition Overview of Revenue The primary sources of revenue for the Company are as follows: Commissions and Fees The Company earns commission revenue for executing trades for clients in individual equities, options, insurance products, futures, fixed income securities, as well as certain third-party mutual funds and ETFs. Commission revenue associated with combined trade execution and clearing services, as well as trade execution services on a standalone basis, is recognized at a point in time on the trade date when the performance obligation is satisfied. The performance obligation is satisfied on the trade date because that is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon, and the risks and rewards of ownership have been transferred to / from the customer. Principal Transactions Principal transactions primarily represent riskless transactions in which the Company, after executing a solicited order, buys or sells securities as principal and at the same time buys or sells the securities with a markup or markdown to satisfy the order. Principal transactions are recognized at a point in time on the trade date when the performance obligation is satisfied. The performance obligation is satisfied on the trade date because that is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon, and the risks and rewards of ownership have been transferred to / from the customer. Market Making Market making revenue is generated from the buying and selling of securities. Market making transactions are recorded on a trade-date basis as the securities transactions occur. The performance obligation is satisfied on the trade date because that is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon, and the risks and rewards of ownership have been transferred to / from the counterparty. Securities owned are recorded at fair market value at the end of the reporting period. Stock Borrow / Stock Loan The Company borrows securities on behalf of retail clients to facilitate short trading, loans excess margin and fully-paid securities from client accounts, facilitates borrow and loan contracts for broker-dealer counterparties, and provides stock locate services to broker-dealer counterparties. The Company recognizes all self-clearing revenues net of operating expenses related to stock borrow / stock loan. Stock borrow / stock loan also includes any revenues generated from the Company’s fully paid lending programs on a self-clearing or introducing basis. The Company does not utilize stock borrow / stock loan activities for the purpose of financing transactions. The performance obligation is satisfied on the contract date because that is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon, and the risks and rewards of ownership have been transferred to / from the counterparty. -16- For the three months ended June 30, 2021, stock borrow / stock loan revenue was $2,240,000 ($7,021,000 gross revenue less $4,781,000 expenses). For the three months ended June 30, 2020, stock borrow / stock loan revenue was $771,000 ($2,008,000 gross revenue minus $1,237,000 expenses). For the six months ended June 30, 2021, stock borrow / stock loan revenue was $4,087,000 ($11,851,000 gross revenue less $7,764,000 expenses). For the six months ended June 30, 2020, stock borrow / stock loan revenue was $1,215,000 ($3,671,000 gross revenue minus $2,456,000 expenses). Advisory Fees The Company earns advisory fees associated with managing client assets. The performance obligation related to this revenue stream is satisfied over time; however, the advisory fees are variable as they are charged as a percentage of the client’s total asset value, which is determined at the end of the quarter. Interest, Marketing and Distribution Fees The Company earns interest from clients’ accounts, net of payments to clients’ accounts, and on the Company’s bank balances. Interest income also includes interest payouts from introducing relationships related to short interest, net of charges. The Company also earns margin interest which is the net interest charged to customers for holding financed margin positions. Marketing and distribution fees consist of 12b-1 fees which are trailing payments from money market funds. Interest, marketing and distribution fees are recorded as earned. For the periods presented, the Company combined revenue from interest income and revenue from margin interest, marketing and distribution fees as these revenue streams are similar in nature. These revenue streams were historically disaggregated; however, the Company has combined these revenue streams to most accurately present the statements of income. Other Income Other income represents fees generated from correspondent clearing fees, corporate services client fees, payment for order flow, and transactional fees generated from client accounts. Transactional fees are recorded concurrently with the related activity. Other income is recorded as earned. Categorization of Revenue The following table presents the Company’s major revenue categories and when each category is recognized: Three Months Ended June 30, Six Months Ended June 30, Revenue Category 2021 2020 2021 2020 Timing of Recognition Trading Execution and Clearing Services Commissions and fees $ 4,325,000 $ 4,887,000 $ 11,333,000 $ 10,470,000 Recorded on trade date Principal transactions 4,107,000 2,581,000 8,355,000 5,784,000 Recorded on trade date Market making 1,758,000 615,000 3,372,000 1,085,000 Recorded on trade date Stock borrow / stock loan 2,240,000 771,000 4,087,000 1,215,000 Recorded as earned Advisory fees 403,000 243,000 759,000 505,000 Recorded as earned Total Trading Execution and Clearing Services 12,833,000 9,097,000 27,906,000 19,059,000 Other Income Interest, marketing and distribution fees Interest 1,163,000 909,000 2,317,000 2,240,000 Recorded as earned Margin interest 2,296,000 1,829,000 4,448,000 4,335,000 Recorded as earned 12b-1 fees 164,000 296,000 317,000 1,084,000 Recorded as earned Total Interest, marketing and distribution fees 3,623,000 3,034,000 7,082,000 7,659,000 Other income 337,000 488,000 729,000 702,000 Recorded as earned Total Revenue $ 16,793,000 $ 12,619,000 $ 35,717,000 $ 27,420,000 -17- The following table presents each revenue category and its related performance obligation: Revenue Stream Performance Obligation Commissions and fees, Principal transactions, Market making, Stock borrow / stock loan, Advisory fees Provide financial services to customers and counterparties Interest, marketing and distribution fees, Other income n / a Soft Dollar Arrangement For certain clients of WPS, the Company has soft dollar and commission sharing arrangements with customers that fall both within, and outside of, the safe harbor provisions of Rule 28(e) of the Securities Exchange Act of 1934 ("Rule 28(e)"), as amended. These soft dollar arrangements were determined to be a separate performance obligation that should be allocated a portion of the transaction price. Under these arrangements, the Company charges additional dollars on customer trades and uses these fees to pay third parties for research, brokerage services, market data, and related expenses (“research services”) on behalf of clients. The Company is an agent in these arrangements, as it does not control the research services before they are transferred to the customer. As such, the revenue from these agreements are recognized net of cost in the line item “Commissions and fees” on the statements of income. The Company paid client expenses of approximately $103,000 and $134,000 for the three months ended June 30, 2021 and 2020, respectively. The Company paid client expenses of approximately $330,000 and $352,000 for the six months ended June 30, 2021 and 2020, respectively. The Company had an outstanding receivable and payable of approximately $34,000 and $225,000, respectively, as of June 30, 2021. The receivable and payable related to soft dollar arrangements are in the line items “Other receivables” and “Accounts payable and accrued liabilities,” respectively, on the statements of financial condition. As of June 30, 2021 and December 31, 2020, no allowance for uncollectible commissions was necessary as the Company believes all commissions receivable will be realized. Other Items For the three and six months ended June 30, 2021 and 2020, there were no costs capitalized related to obtaining or fulfilling a contract with a customer, and thus the Company has no balances for contract assets or contract liabilities. The Company concludes that its revenue streams have the same underlying economic factors, and as such, no disaggregation of revenue is required. |
Referral Fees
Referral Fees | 6 Months Ended |
Jun. 30, 2021 | |
Referral Fees | |
Referral Fees | 13. Referral Fees In relation to WPS, the Company has agreements with various third parties to share commissions and pay fees as defined in the respective agreements. These expenses were approximately $353,000 and $162,000 for the three months ended June 30, 2021 and 2020, which are presented in the line item “Referral fees” on the statements of income. These expenses were approximately $760,000 and $273,000 for the six months ended June 30, 2021 and 2020, respectively. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 14. Income Taxes The Company’s provision for income taxes consists of federal and state taxes, as applicable, in amounts necessary to align the Company’s year-to-date tax provision with the effective rate that it expects to achieve for the full year. Each quarter the Company updates its estimate of the annual effective tax rate and records cumulative adjustments as necessary. As of June 30, 2021, the Company has concluded that its deferred tax assets are realizable on a more-likely-than-not basis with the exception of certain federal net operating losses that are expected to expire unutilized and certain state net operating losses. On March 11, 2021, the American Rescue Plan Act of 2021 (“American Rescue Plan”) was signed into law to provide additional relief in connection with the ongoing COVID-19 pandemic. The American Rescue Plan includes, among other things, provisions relating to PPP loan expansion, defined pension contributions, excessive employee remuneration, and the repeal of the election to allocate interest expense on a worldwide basis. Under ASC 740, the effects of new legislation are recognized upon enactment. The enactment of the American Rescue Plan did not impact the Company’s income tax provision. For the three and six months ended June 30, 2021, the Company recorded an income tax provision of $484,000 and $1,219,000 respectively. The effective tax rate for the three and six months ended June 30, 2021 was both 25%. The effective tax rate differs from the statutory rate of 21% primarily related to certain permanent tax differences and state and local taxes. -18- For the three months ended June 30, 2020, the Company recorded an income tax benefit of $10,000 on pre-tax book income of $489,000. The effective tax rate for the three months ended June 30, 2020 was (2)%. The Company recorded an income tax benefit of $94,000 primarily related to certain return to provision adjustments as the Company finalized the filing of its 2019 federal and material state and local taxes during the period ended June 30, 2020. For the six months ended June 30, 2020, the Company recorded an income tax provision of $525,000 on pre-tax book income of $2,000,000. The effective tax rate for the six months ended June 30, 2020 was 26%. The effective tax rate differs from the statutory rate of 21% primarily related to certain permanent tax differences and state and local taxes. The Company recorded a discrete tax expense of $152,000 primarily related to an adjustment of certain deferred tax assets and the impact of finalizing the 2019 federal and material state and local taxes during the period ended June 30, 2020. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 15. Earnings Per Share Basic earnings per share is calculated by dividing net income by the weighted average of the number of outstanding common shares during the period. The Company had net income of $1,429,000 and $499,000 for the three months ended June 30, 2021 and 2020, respectively. The Company had net income of $3,704,000 and $1,475,000 for the six months ended June 30, 2021 and 2020, respectively. |
Capital Requirements
Capital Requirements | 6 Months Ended |
Jun. 30, 2021 | |
Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract] | |
Capital Requirements | 16. Capital Requirements MSCO Net Capital MSCO is subject to the Uniform Net Capital Rules of the SEC (Rule 15c3-1) of the Securities Exchange Act of 1934. Under the alternate method permitted by this rule, net capital, as defined, shall not be less than the lower of $1 million or 2% of aggregate debit items arising from customer transactions. As of June 30, 2021, MSCO’s net capital was $31.6 million, which was approximately $29.5 million in excess of its required net capital of $2.1 million, and its percentage of aggregate debit balances to net capital was 30.6%. As of December 31, 2020, MSCO’s net capital was $27.5 million, which was approximately $25.2 million in excess of its required net capital of $2.3 million, and its percentage of aggregate debit balances to net capital was 24.3%. Effective upon the Company’s acquisition of StockCross on January 1, 2020, the capital of MSCO and StockCross was combined. Special Reserve Account MSCO is subject to Customer Protection Rule 15c3-3 which requires segregation of funds in a special reserve account for the exclusive benefit of customers. As of June 30, 2021, MSCO had cash deposits of $348.7 million in the special reserve accounts which was $16 million in excess of the deposit requirement of $332.7 million. After adjustments for deposit(s) and / or withdrawal(s) made on July 1, 2021, MSCO had $1.5 million in excess of the deposit requirement. As of December 31, 2020, MSCO had cash deposits of $324.9 million in the special reserve accounts which was $5.0 million in excess of the deposit requirement of $319.9 million. After adjustments for deposit(s) and / or withdrawal(s) made on January 2, 2021, MSCO had $1.0 million in excess of the deposit requirement. Effective upon the Company’s acquisition of StockCross on January 1, 2020, the requirements and special reserve accounts of MSCO and StockCross were combined. WPS Net Capital WPS, as a member of FINRA, is subject to the SEC Uniform Net Capital Rule 15c3-1. This rule requires the maintenance of minimum net capital and that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1 and that equity capital may not be withdrawn, or cash dividends paid if the resulting net capital ratio would exceed 10 to 1. WPS is also subject to the CFTC's minimum financial requirements which require that WPS maintain net capital, as defined, equal to the greater of its requirements under Regulation 1.17 under the Commodity Exchange Act or Rule 15c3-1. As of June 30, 2021, WPS’s net capital was approximately $2.8 million which was $2.5 million in excess of its minimum requirement of $250,000 under 15c3-1. As of December 31, 2020, WPS’s net capital was approximately $3.9 million which was $3.7 million in excess of its minimum requirement of $250,000 under 15c3-1. |
Financial Instruments with Off-
Financial Instruments with Off-Balance Sheet Risk | 6 Months Ended |
Jun. 30, 2021 | |
Financial Instruments With Off-balance-sheet Risk And Concentrations Of Credit Risk | |
Financial Instruments with Off-Balance Sheet Risk | 17. Financial Instruments with Off-Balance Sheet Risk The Company enters into various transactions to meet the needs of customers, conduct trading activities, and manage market risks and is, therefore, subject to varying degrees of market and credit risk. In the normal course of business, the Company's customer activities involve the execution, settlement, and financing of various customer securities transactions. These activities may expose the Company to off-balance sheet risk in the event the customer or other broker is unable to fulfill its contracted obligations and the Company has to purchase or sell the financial instrument underlying the contract at a loss. The Company's customer securities activities are transacted on either a cash or margin basis. In margin transactions, the Company extends credit to its customers, subject to various regulatory and internal margin requirements, collateralized by cash and securities in the customers' accounts. In connection with these activities, the Company executes and clears customer transactions involving the sale of securities not yet purchased, substantially all of which are transacted on a margin basis subject to individual exchange regulations. As of June 30, 2021, the Company had margin loans extended to its customers of approximately $1.1 billion. Such transactions may expose the Company to off-balance sheet risk in the event margin requirements are not sufficient to fully cover losses that customers may incur. In the event the customer fails to satisfy obligations, the Company may be required to purchase or sell financial instruments at prevailing market prices to fulfill the customer's obligations. The Company seeks to control the risks associated with its customer activities by requiring customers to maintain margin collateral in compliance with various regulatory and internal guidelines which meet or exceed regulatory requirements. The Company monitors required margin levels daily and pursuant to such guidelines, requires customers to deposit additional collateral or to reduce positions when necessary. The Company's customer financing and securities settlement activities may require the Company to pledge customer securities as collateral in support of various secured financing sources such as bank loans and securities loaned. In the event the counterparty is unable to meet its contractual obligation to return customer securities pledged as collateral, the Company may be exposed to the risk of acquiring the securities at prevailing market prices in order to satisfy its customer obligations. The Company seeks to mitigate this risk by monitoring the market value of securities pledged on a daily basis and by requiring adjustments of collateral levels in the event of excess market exposure. In addition, the Company establishes credit limits for such activities and continuously monitors compliance. The Company’s securities lending transactions are subject to master netting agreements with other broker-dealers; however, amounts are presented gross in the statements of financial condition. The Company further mitigates risk by using a program with a clearing organization which guarantees the return of cash to the Company as well as using industry standard software to ensure daily changes to market value are continuously updated and any changes to collateralization are immediately covered. There were no material losses for unsettled customer transactions for the three and six months ended June 30, 2021 and 2020. |
Commitments, Contingencies and
Commitments, Contingencies and Other | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments, Contingencies and Other | 18. Commitments, Contingencies, and Other Legal and Regulatory Matters The Company is party to certain claims, suits and complaints arising in the ordinary course of business. On July 14, 2021, StockCross entered into a Letter of Acceptance, Waiver, and Consent with FINRA in connection with alleged excessive trading and suitability violations by a registered representative of StockCross in a customer’s account, supervisory failures to comply with supervisory requirements relating to certain equity and options and stock lending transactions, and certain record keeping requirements. These activities occurred prior to the Company’s acquisition of StockCross on January 1, 2020. Pursuant to the consent, MSCO agreed to a censure, pay a fine of $250,000, and made an undertaking to retain an independent consultant to conduct a comprehensive review of MSCO’s compliance with suitability rules in connection with solicited equity and options transactions, as well as possession-or-control requirements in connection with the firm’s stock loan business. On July 9, 2021, StockCross entered into a Consent Order with the California Department of Financial Protection and Innovation in connection with alleged supervisory failures relating to the sale of Unit Investment Trusts to six customers. Pursuant to the Consent Order, StockCross agreed to desist and refrain from violations of California law relating to supervision by broker-dealers, to make a payment of $100,000 to the California Department of Financial Protection and Innovation for administrative costs, and to offer rescission of commissions of approximately $315,000 in aggregate to the six customers. -20- The foregoing matters were related to activities that occurred prior to the Company’s acquisition of StockCross and will be resolved by the end of the third quarter of 2021. The foregoing matters will not have a material adverse effect on the Company's results of operations or its financial position. For the three and six months ended June 30, 2021, the Company booked an accrual of $250,000 for the FINRA fine and an accrual of $100,000 for the California administrative costs, which are both within the line item “Other general and administrative” in the statements of operations. As of June 30, 2021, all other legal matters are without merit or involve amounts which would not have a material impact on the Company’s results of operations or its financial position. Overnight Financing The Company has an available line of credit for short term overnight demand borrowing of up to $15 million with BMO Harris Bank as of June 30, 2021. As of June 30, 2021, the Company had no outstanding loan balance with BMO Harris Bank and there are no commitment fees or other restrictions on line of credit. As of December 31, 2020, in addition to the $15 million line of credit with BMO Harris Bank, MSCO had a $15 million line of credit with Texas Capital Bank, which MSCO did not renew as of June 30, 2021. The removal of this line of credit did not impact MSCO’s ability to meet its liquidity requirements. MSCO utilizes customer or firm securities as a pledge for short-term borrowing needs. The interest expense for these credit lines was $1,000 and $2,000 for the three months ended June 30, 2021 and 2020, respectively. The interest expense for these credit lines was $15,000 and $18,000 for the six months ended June 30, 2021 and 2020, respectively. There were no fees associated with these credit lines for the three and six months ended June 30, 2021 and 2020. General Contingencies In the normal course of its business, the Company indemnifies and guarantees certain service providers against specified potential losses in connection with their acting as an agent of, or providing services to, the Company. The maximum potential amount of future payments that the Company could be required to make under these indemnifications cannot be estimated. However, the Company believes that it is unlikely it will have to make material payments under these arrangements and has not recorded any contingent liability in the financial statements for these indemnifications. The Company provides representations and warranties to counterparties in connection with a variety of commercial transactions and occasionally indemnifies them against potential losses caused by the breach of those representations and warranties. The Company may also provide standard indemnifications to some counterparties to protect them in the event additional taxes are owed or payments are withheld, due either to a change in or adverse application of certain tax laws. These indemnifications generally are standard contractual terms and are entered into in the normal course of business. The maximum potential amount of future payments that the Company could be required to make under these indemnifications cannot be estimated. However, the Company believes that it is unlikely it will have to make material payments under these arrangements and has not recorded any contingent liability in the financial statements for these indemnifications. The Company is self-insured with respect to employee health claims. The Company maintains stop-loss insurance for certain risks and has a health claim reinsurance limit capped at approximately $65,000 per employee as of June 30, 2021. The estimated liability for self-insurance claims is initially recorded in the year in which the event of loss occurs and may be subsequently adjusted based upon new information and cost estimates. Reserves for losses represent estimates of reported losses and estimates of incurred but not reported losses based on past and current experience. Actual claims paid and settled may differ, perhaps significantly, from the provision for losses. This adds uncertainty to the estimated reserves for losses. Accordingly, it is at least possible that the ultimate settlement of losses may vary significantly from the amounts included in the financial statements. As part of this plan, the Company recognized expenses of $359,000 and $340,000 for the three months ended June 30, 2021 and 2020, respectively. As part of this plan, the Company recognized expenses of $650,000 and $550,000 for the six months ended June 30, 2021 and 2020, respectively. The Company had an accrual of $88,000 as of June 30, 2021, which represents the historical estimate of future claims to be recognized for claims incurred during the period. The Company believes that its present insurance coverage and reserves are sufficient to cover currently estimated exposures, but there can be no assurance that the Company will not incur liabilities in excess of recorded reserves or in excess of its insurance limits. |
Related Party Disclosures
Related Party Disclosures | 6 Months Ended |
Jun. 30, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Disclosures | 19. Related Party Disclosures StockCross Prior to being acquired by the Company, StockCross and the Company were affiliated entities through common ownership and had various related party transactions. In January 2019, the Company acquired approximately 15% ownership of StockCross. Effective January 1, 2020, the Company acquired the remaining 85% of StockCross’ outstanding shares and StockCross was merged with and into MSCO. The purchase price paid was approximately $29,750,000 or 3,298,774 shares of the Company’s common stock which was issued in connection with the acquisition. Upon the closing of the transaction on January 1, 2020, all receivables and payables between the Company and StockCross were eliminated upon consolidation. Kennedy Cabot Acquisition, LLC Kennedy Cabot Acquisition, LLC (“KCA”) is an affiliate of the Company and is under common ownership with the Company. To gain efficiencies and economies of scale with billing and administrative functions, KCA serves as a paymaster for the Company for payroll and related functions, the entirety of which KCA passes through to the subsidiaries of the Company proportionally. In addition, KCA has purchased the naming rights of the Company for the Company to use. KCA sponsors a 401(k) profit sharing plan which covers substantially all of the Company’s employees. Employee contributions to the plan are at the discretion of eligible employees. There were no contributions by the Company or KCA to the plan for the three and six months ended June 30, 2021 and 2020. In January 2020, MSCO sold approximately $288,000 worth of a private equity security to KCA at cost. For the three and six months ended June 30, 2021 and 2020, KCA has earned no profit for providing any services to the Company as KCA passes through any revenue or expenses to the Company’s subsidiaries. Park Wilshire Companies, Inc. PW brokers the insurance policies for related parties. Revenue for PW from related parties was $7,000 for both the three months ended June 30, 2021 and 2020. Revenue for PW from related parties was $56,000 and $44,000 for the six months ended June 30, 2021 and 2020, respectively. Gloria E. Gebbia and John J. Gebbia The Company has entered into various debt agreements with Gloria E. Gebbia, the Company’s principal stockholder. Refer to Note 11 – Notes Payable - Related Party for additional detail. In addition, the Company’s obligations under its agreement with East West Bank are guaranteed pursuant to a guarantee agreement by and among, John J. Gebbia, individually, and as a co-trustee of the John and Gloria Living Trust, U/D/T December 8, 1994, and Gloria E. Gebbia, individually and as a co-trustee of the Trust. Refer to Note 10 – Long-Term Debt for additional detail. Gloria E. Gebbia has extended loans to certain Company employees for the purchase of the Company’s shares. These transactions have not materially impacted the Company’s financial statements. Gebbia Sullivan County Land Trust The Company operates on a month-to-month lease agreement for its branch office in Omaha, Nebraska with the Gebbia Sullivan County Land Trust, the trustee of which is a member of the Gebbia Family. For both the three months ended June 30, 2021 and 2020, rent expense was $15,000 for this branch office. For both the six months ended June 30, 2021 and 2020, rent expense was $30,000 for this branch office. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | 20. Subsequent Events The Company has evaluated events that have occurred subsequent to June 30, 2021 and through August 16, 2021, the date of the filing of this Report. On July 28, 2021, the Company’s Board of Directors approved the Siebert Financial Corp. 2021 Equity Incentive Plan which will be submitted for shareholder approval at the upcoming 2021 Annual Meeting of Shareholders. In addition, on August 6, 2021, the Company’s Board of Directors approved a 401(k) matching program for employees of the Company. Other than the events described above, there have been no material subsequent events that occurred during such period that would require disclosure in this Report or would be required to be recognized in the financial statements as of June 30, 2021. |
Organization and Basis of Pre_2
Organization and Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements (“financial statements”) of the Company have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete annual financial statements. In the opinion of management, the financial statements contain all adjustments (consisting of normal recurring entries) necessary to fairly present such interim results. Interim results are not necessarily indicative of the results of operations which may be expected for a full year or any subsequent period. These financial statements should be read in conjunction with the financial statements and notes thereto in the Company’s 2020 Form 10-K. The financial statements include the accounts of Siebert and its wholly-owned subsidiaries and upon consolidation, all intercompany balances and transactions are eliminated. The U.S. dollar is the functional currency of the Company and numbers are rounded for presentation purposes. Significant Accounting Policies The Company’s significant accounting policies are included in Note 2 – Summary of Significant Accounting Policies in the Company’s 2020 Form 10-K, and any updates as of June 30, 2021 are listed below. |
Investments, Cost | Investments, Cost Accounting Standards Update (“ASU”) 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, generally requires entities to measure equity investments (other than equity method investments, controlling financial interests that result in consolidation of the investee and certain other investments) at fair value and recognize any changes in fair value in net income. However, entities will be able to elect a measurement alternative for equity investments that do not have readily determinable fair values and do not qualify for the practical expedient in ASC 820 to estimate fair value using the net asset value (NAV) per share. Pursuant to ASU 2016-01, the Company has made an accounting policy election to measure equity securities without readily determinable fair value at cost, less any impairment, adjusted for any changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Business Combinations [Abstract] | |
Schedule of Assets Acquired and Liabilities Assumed | The Company acquired various assets and liabilities from StockCross which were recorded at their historical carrying amounts and summarized below: -8- Historical Carrying Value Assets acquired Cash and cash equivalents $ 1,588,000 Cash and securities segregated for regulatory purposes 224,814,000 Receivables from customers 86,331,000 Receivables from broker-dealers and clearing organizations 3,105,000 Other receivables 627,000 Prepaid expenses and other assets 346,000 Securities borrowed 193,529,000 Securities owned, at fair value 3,018,000 Furniture, equipment and leasehold improvements, net 19,000 Lease right-of-use assets 1,141,000 Deferred tax assets 407,000 Total Assets acquired 514,925,000 Liabilities assumed Payables to customers 308,091,000 Payables to non-customers 9,151,000 Drafts payable 2,834,000 Payables to broker-dealers and clearing organizations 1,406,000 Accounts payable and accrued liabilities 963,000 Securities loaned 170,443,000 Securities sold, not yet purchased, at fair value 28,000 Notes payable – related party 5,000,000 Lease liabilities 1,295,000 Total Liabilities assumed 499,211,000 Net Assets acquired $ 15,714,000 |
Receivables From, Payables To_2
Receivables From, Payables To, and Deposits With Broker-Dealers and Clearing Organizations (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Due to and from Broker-Dealers and Clearing Organizations [Abstract] | |
Schedule of Amounts receivable from / payable to clearing brokers dealers, related parties and other organization | Amounts receivable from, payables to, and deposits with broker-dealers and clearing organizations consisted of the following as of the periods indicated: As of June 30, 2021 As of December 31, 2020 Receivables from and deposits with broker-dealers and clearing organizations DTCC / OCC / NSCC $ 13,844,000 $ 17,841,000 Goldman Sachs 2,729,000 2,430,000 Pershing Capital 1,104,000 1,266,000 NFS 1,064,000 1,061,000 Securities fail-to-deliver 347,000 379,000 Globalshares 30,000 46,000 Total Receivables from and deposits with broker-dealers and clearing organizations $ 19,118,000 $ 23,023,000 Payables to broker-dealers and clearing organizations Securities fail-to-receive $ 6,789,000 $ 1,810,000 Payables to broker dealers 45,000 — Total Payables to broker-dealers and clearing organizations $ 6,834,000 $ 1,810,000 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Hierarchy for Assets and Liabilities Measured at Fair Value | The following tables present the Company's fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of the periods presented. As of June 30, 2021 Level 1 Level 2 Level 3 Total Assets Securities owned, at fair value U.S. government securities* $ 2,015,000 $ — $ — $ 2,015,000 Certificates of deposit — 91,000 — 91,000 Corporate bonds — 15,000 — 15,000 Equity securities 1,098,000 1,056,000 — 2,154,000 Total Securities owned, at fair value $ 3,113,000 $ 1,162,000 $ — $ 4,275,000 Liabilities Securities sold, not yet purchased, at fair value Equity securities $ — $ 27,000 $ — $ 27,000 Unit investment trusts — 22,000 — 22,000 Total Securities sold, not yet purchased, at fair value $ — $ 49,000 $ — $ 49,000 -11- As of December 31, 2020 Level 1 Level 2 Level 3 Total Assets Securities owned, at fair value U.S. government securities* $ 2,029,000 $ — $ — $ 2,029,000 Certificates of deposit — 91,000 — 91,000 Corporate bonds — 24,000 — 24,000 Equity securities 345,000 134,000 — 479,000 Total Securities owned, at fair value $ 2,374,000 $ 249,000 $ — $ 2,623,000 Liabilities Securities sold, not yet purchased, at fair value Equity securities $ — $ 21,000 $ — $ 21,000 Total Securities sold, not yet purchased, at fair value $ — $ 21,000 $ — $ 21,000 *As of June 30, 2021 and December 31, 2020, these U.S. government securities mature on 08/31/21 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
Schedule of Supplemental Balance Sheet Information Related to Leases | As of June 30, 2021, the Company does not believe that any of the renewal options under the existing leases are reasonably certain to be exercised; however, the Company will continue to assess and monitor the lease renewal options on an ongoing basis. -12- As of June 30, 2021 As of December 31, 2020 Assets Lease right-of-use assets $ 3,246,000 $ 2,290,000 Liabilities Lease liabilities $ 3,554,000 $ 2,612,000 |
Schedule of Additional Information Related to Leases | The calculated amounts of the lease right-of-use assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company leases some miscellaneous office equipment, but they are immaterial and therefore the Company records the costs associated with this office equipment on the statements of income rather than capitalizing them as lease right-of-use assets. The Company determined a discount rate of 5.0% would approximate the Company’s cost to obtain financing given its size, growth, and risk profile. Lease Term and Discount Rate As of June 30, 2021 As of December 31, 2020 Weighted average remaining lease term – operating leases (in years) 3.2 2.2 Weighted average discount rate – operating leases 5.0 % 5.0 % |
Schedule of Lease Costs and Other Lease Information | The following table represents lease costs and other lease information. The Company has elected the practical expedient to not separate lease and non-lease components, and as such, the variable lease cost primarily represents variable payments such as common area maintenance and utilities which are usually determined by the leased square footage in proportion to the overall office building. Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Operating lease cost $ 410,000 $ 575,000 $ 898,000 $ 1,146,000 Short-term lease cost 23,000 24,000 44,000 63,000 Variable lease cost 37,000 99,000 98,000 216,000 Sublease income — — — — Total Rent and occupancy $ 470,000 $ 698,000 $ 1,040,000 $ 1,425,000 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 338,000 $ 617,000 $ 894,000 $ 1,231,000 Lease right-of-use assets obtained in exchange for new lease liabilities Operating leases $ 487,000 $ 160,000 $ 1,875,000 $ 2,075,000 |
Schedule of Future Minimum Base Rental Payment | Future annual minimum payments for operating leases with initial terms of greater than one year as of June 30, 2021 were as follows: Year Amount 2021 $ 798,000 2022 1,287,000 2023 940,000 2024 399,000 2025 325,000 Thereafter 139,000 Remaining balance of lease payments 3,888,000 Less: difference between undiscounted cash flows and discounted cash flows 334,000 Lease liabilities $ 3,554,000 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Future Minimum Payments for Line of Creditt | Future annual minimum payments for the line of credit with East West Bank as of June 30, 2021 were as follows: Amount 2021 $ 500,000 2022 998,000 2023 998,000 2024 1,661,000 Total $ 4,157,000 |
Notes Payable - Related Party (
Notes Payable - Related Party (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Notes Payable [Abstract] | |
Schedule of Notes Payable | As of June 30, 2021, the Company had various notes payable to Gloria E. Gebbia, the Company’s principal stockholder, the details of which are presented below: Description Issuance Date Face Amount Unpaid Principal Amount 4.00% due September 30, 2021 May 31, 2021 $ 2,200,000 $ 2,200,000 4.00% due November 30, 2021** November 30, 2020 3,000,000 3,000,000 Total Notes payable – related party $ 5,200,000 $ 5,200,000 -15- As of December 31, 2020, the Company had various notes payable to Gloria E. Gebbia, the Company’s principal stockholder, the details of which are presented below: Description Issuance Date Face Amount Unpaid Principal Amount 4.00% due May 31, 2021* December 1, 2020 $ 2,200,000 $ 2,200,000 4.00% due November 30, 2021** November 30, 2020 3,000,000 3,000,000 Total Notes payable – related party $ 5,200,000 $ 5,200,000 *On May 31, 2021, this note payable was renewed with a maturity of September 30, 2021. **This note payable is subordinated to MSCO and is subordinated to the claims of general creditors, approved by FINRA, and is included in MSCO’s calculation of net capital and the capital requirements under FINRA and SEC regulations. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Major Revenue Categories | The following table presents the Company’s major revenue categories and when each category is recognized: Three Months Ended June 30, Six Months Ended June 30, Revenue Category 2021 2020 2021 2020 Timing of Recognition Trading Execution and Clearing Services Commissions and fees $ 4,325,000 $ 4,887,000 $ 11,333,000 $ 10,470,000 Recorded on trade date Principal transactions 4,107,000 2,581,000 8,355,000 5,784,000 Recorded on trade date Market making 1,758,000 615,000 3,372,000 1,085,000 Recorded on trade date Stock borrow / stock loan 2,240,000 771,000 4,087,000 1,215,000 Recorded as earned Advisory fees 403,000 243,000 759,000 505,000 Recorded as earned Total Trading Execution and Clearing Services 12,833,000 9,097,000 27,906,000 19,059,000 Other Income Interest, marketing and distribution fees Interest 1,163,000 909,000 2,317,000 2,240,000 Recorded as earned Margin interest 2,296,000 1,829,000 4,448,000 4,335,000 Recorded as earned 12b-1 fees 164,000 296,000 317,000 1,084,000 Recorded as earned Total Interest, marketing and distribution fees 3,623,000 3,034,000 7,082,000 7,659,000 Other income 337,000 488,000 729,000 702,000 Recorded as earned Total Revenue $ 16,793,000 $ 12,619,000 $ 35,717,000 $ 27,420,000 |
Schedule of Performance Obligation | The following table presents each revenue category and its related performance obligation: Revenue Stream Performance Obligation Commissions and fees, Principal transactions, Market making, Stock borrow / stock loan, Advisory fees Provide financial services to customers and counterparties Interest, marketing and distribution fees, Other income n / a |
Organization and Basis of Pre_3
Organization and Basis of Presentation (Details) - $ / shares | 1 Months Ended | ||
Jan. 25, 2019 | Jun. 30, 2021 | Dec. 31, 2020 | |
Business Acquisition [Line Items] | |||
Common stock, par value | $ 0.01 | $ 0.01 | |
StockCross [Member] | |||
Business Acquisition [Line Items] | |||
Equity method investment in StockCross | 15.00% | ||
Percentage of remaining interest in StockCross purchased | 85.00% | ||
Issuance of common stock in StockCross acquisition | 3,298,774 |
Acquisitions (Narrative) (Detai
Acquisitions (Narrative) (Details) - USD ($) | 1 Months Ended | |
Jan. 31, 2019 | Jan. 02, 2020 | |
When StockCross Merged with MSCO [Member] | ||
Business Acquisition [Line Items] | ||
Ownership percentage acquired | 85.00% | |
StockCross [Member] | ||
Business Acquisition [Line Items] | ||
Ownership percentage acquired | 15.00% | 85.00% |
Purchase price | $ 29,750,000 | |
Purchase price in shares as restricted stock | 3,298,774 |
Acquisitions (Schedule of Asset
Acquisitions (Schedule of Assets Acquired and Liabilities Assumed) (Details) - StockCross [Member] | Dec. 31, 2019USD ($) |
Assets acquired | |
Cash and cash equivalents | $ 1,588,000 |
Cash and securities segregated for regulatory purposes | 224,814,000 |
Receivables from customers | 86,331,000 |
Receivables from broker-dealers and clearing organizations | 3,105,000 |
Other receivables | 627,000 |
Prepaid expenses and other assets | 346,000 |
Securities borrowed | 193,529,000 |
Securities owned, at fair value | 3,018,000 |
Furniture, equipment and leasehold improvements, net | 19,000 |
Lease right-of-use assets | 1,141,000 |
Deferred tax assets | 407,000 |
Total Assets acquired | 514,925,000 |
Liabilities assumed | |
Payables to customers | 308,091,000 |
Payables to non-customers | 9,151,000 |
Drafts payable | 2,834,000 |
Payables to broker-dealers and clearing organizations | 1,406,000 |
Accounts payable and accrued liabilities | 963,000 |
Securities loaned | 170,443,000 |
Securities sold, not yet purchased, at fair value | 28,000 |
Notes payable - related party | 5,000,000 |
Lease liabilities | 1,295,000 |
Total Liabilities assumed | 499,211,000 |
Net Assets acquired | $ 15,714,000 |
Receivables From, Payables To_3
Receivables From, Payables To, and Deposits With Broker-Dealers and Clearing Organizations (Narrative) (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Common stock value | $ 312,000 | $ 309,000 |
MSCO shares of DTCC [Member] | ||
Common stock value | $ 905,000 | $ 937,000 |
Receivables From, Payables To_4
Receivables From, Payables To, and Deposits With Broker-Dealers and Clearing Organizations (Schedule of Receivable) (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Receivables from and deposits with broker-dealers and clearing organizations | ||
DTCC / OCC / NSCC | $ 13,844,000 | $ 17,841,000 |
Goldman Sachs | 2,729,000 | 2,430,000 |
Pershing Capital | 1,104,000 | 1,266,000 |
NFS | 1,064,000 | 1,061,000 |
Securities fail-to-deliver | 347,000 | 379,000 |
Globalshares | 30,000 | 46,000 |
Total Receivables from and deposits with broker-dealers and clearing organizations | 19,118,000 | 23,023,000 |
Payables to broker-dealers and clearing organizations | ||
Securities fail-to-receive | 6,789,000 | 1,810,000 |
Payables to broker dealers | 45,000 | |
Total Payables to broker-dealers and clearing organizations | $ 6,834,000 | $ 1,810,000 |
Prepaid Service Contract (Detai
Prepaid Service Contract (Details) - USD ($) | Apr. 21, 2020 | Apr. 21, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 |
Capitalized Contract Cost [Line Items] | |||||||
Prepaid asset - non-current | $ 650,000 | $ 650,000 | $ 1,004,000 | ||||
InvestCloud, Inc [Member] | Restricted Stock [Member] | |||||||
Capitalized Contract Cost [Line Items] | |||||||
Restricted common stock issued to InvestCloud | 193,906 | ||||||
InvestCloud, Inc [Member] | Restricted Stock [Member] | |||||||
Capitalized Contract Cost [Line Items] | |||||||
Per share price | $ 5.81 | $ 5.81 | |||||
License Fee [Member] | InvestCloud, Inc [Member] | |||||||
Capitalized Contract Cost [Line Items] | |||||||
Initial term of license | 3 years | ||||||
Annual license fee | $ 600,000 | ||||||
Amortization period of prepaid licensing fees | 3 months | ||||||
Upfront Professional Service Fee [Member] | InvestCloud, Inc [Member] | |||||||
Capitalized Contract Cost [Line Items] | |||||||
Consideration paid | 1,000,000 | ||||||
Professional Services [Member] | InvestCloud, Inc [Member] | |||||||
Capitalized Contract Cost [Line Items] | |||||||
Value of restricted common stock issued to InvestCloud | $ 1,100,000 | ||||||
Prepaid asset - non-current | $ 2,100,000 | $ 2,100,000 | |||||
Amortization period of professional services prepaid assets | 3 years | ||||||
Expense related to share-based payments | 94,000 | $ 31,000 | 188,000 | $ 31,000 | |||
Professional services and total cost | $ 277,000 | $ 109,000 | $ 604,000 | $ 109,000 |
Fair Value Measurements (Schedu
Fair Value Measurements (Schedule of Fair Value Hierarchy for Assets and Liabilities Measured at Fair Value) (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 | |
Assets | |||
Securities owned, at fair value | $ 4,275,000 | $ 2,623,000 | |
Liabilities | |||
Securities sold, not yet purchased, at fair value | 49,000 | 21,000 | |
Equity Securities [Member] | |||
Assets | |||
Securities owned, at fair value | 2,154,000 | 479,000 | |
Liabilities | |||
Securities sold, not yet purchased, at fair value | 27,000 | 21,000 | |
Level 1 [Member] | |||
Assets | |||
Securities owned, at fair value | 3,113,000 | 2,374,000 | |
Liabilities | |||
Securities sold, not yet purchased, at fair value | |||
Level 1 [Member] | Equity Securities [Member] | |||
Assets | |||
Securities owned, at fair value | 1,098,000 | 345,000 | |
Liabilities | |||
Securities sold, not yet purchased, at fair value | |||
Level 2 [Member] | |||
Assets | |||
Securities owned, at fair value | 1,162,000 | 249,000 | |
Liabilities | |||
Securities sold, not yet purchased, at fair value | 49,000 | 21,000 | |
Level 2 [Member] | Equity Securities [Member] | |||
Assets | |||
Securities owned, at fair value | 1,056,000 | 134,000 | |
Liabilities | |||
Securities sold, not yet purchased, at fair value | 27,000 | 21,000 | |
Level 3 [Member] | |||
Assets | |||
Securities owned, at fair value | |||
Liabilities | |||
Securities sold, not yet purchased, at fair value | |||
Level 3 [Member] | Equity Securities [Member] | |||
Assets | |||
Securities owned, at fair value | |||
Liabilities | |||
Securities sold, not yet purchased, at fair value | |||
U.S. government securities [Member] | |||
Assets | |||
Securities owned, at fair value | [1] | 2,015,000 | 2,029,000 |
U.S. government securities [Member] | Level 1 [Member] | |||
Assets | |||
Securities owned, at fair value | [1] | 2,015,000 | 2,029,000 |
U.S. government securities [Member] | Level 2 [Member] | |||
Assets | |||
Securities owned, at fair value | [1] | ||
U.S. government securities [Member] | Level 3 [Member] | |||
Assets | |||
Securities owned, at fair value | [1] | ||
Certificates of Deposit [Member] | |||
Assets | |||
Securities owned, at fair value | 91,000 | 91,000 | |
Certificates of Deposit [Member] | Level 1 [Member] | |||
Assets | |||
Securities owned, at fair value | |||
Certificates of Deposit [Member] | Level 2 [Member] | |||
Assets | |||
Securities owned, at fair value | 91,000 | 91,000 | |
Certificates of Deposit [Member] | Level 3 [Member] | |||
Assets | |||
Securities owned, at fair value | |||
Corporate bonds [Member] | |||
Assets | |||
Securities owned, at fair value | 15,000 | 24,000 | |
Corporate bonds [Member] | Level 1 [Member] | |||
Assets | |||
Securities owned, at fair value | |||
Corporate bonds [Member] | Level 2 [Member] | |||
Assets | |||
Securities owned, at fair value | 15,000 | 24,000 | |
Corporate bonds [Member] | Level 3 [Member] | |||
Assets | |||
Securities owned, at fair value | |||
Unit investment trust [Member] | |||
Liabilities | |||
Securities sold, not yet purchased, at fair value | 22,000 | ||
Unit investment trust [Member] | Level 1 [Member] | |||
Liabilities | |||
Securities sold, not yet purchased, at fair value | |||
Unit investment trust [Member] | Level 2 [Member] | |||
Liabilities | |||
Securities sold, not yet purchased, at fair value | 22,000 | ||
Unit investment trust [Member] | Level 3 [Member] | |||
Liabilities | |||
Securities sold, not yet purchased, at fair value | |||
[1] | As of June 30, 2021 and December 31, 2020, these U.S. government securities mature on 08/31/21 |
Leases (Narrative) (Details)
Leases (Narrative) (Details) | Jun. 30, 2021USD ($) |
Lessee Disclosure [Abstract] | |
Commitment of lease | $ 128,000 |
Lease term | 3 years |
Leases (Schedule of Supplementa
Leases (Schedule of Supplemental Balance Sheet Information Related to Leases) (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Assets | ||
Lease right-of-use assets | $ 3,246,000 | $ 2,290,000 |
Liabilities | ||
Lease liabilities | $ 3,554,000 | $ 2,612,000 |
Leases (Schedule of Additional
Leases (Schedule of Additional Information Related to Leases) (Details) | Jun. 30, 2021 | Dec. 31, 2020 |
Lessee Disclosure [Abstract] | ||
Weighted average remaining lease term - operating leases (in years) | 3 years 2 months 12 days | 2 years 2 months 12 days |
Weighted average discount rate - operating leases | 5.00% | 5.00% |
Leases (Schedule of Lease Costs
Leases (Schedule of Lease Costs and Other Lease Information) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Operating lease | ||||
Operating lease cost | $ 410,000 | $ 575,000 | $ 898,000 | $ 1,146,000 |
Short-term lease cost | 23,000 | 24,000 | 44,000 | 63,000 |
Variable lease cost | 37,000 | 99,000 | 98,000 | 216,000 |
Sublease income | ||||
Total Rent and occupancy | 470,000 | 698,000 | 1,040,000 | 1,425,000 |
Cash paid for amounts included in the measurement of lease liabilities | ||||
Operating cash flows from operating leases | 338,000 | 617,000 | 894,000 | 1,231,000 |
Lease right-of-use assets obtained in exchange for new lease liabilities | ||||
Operating leases | $ 487,000 | $ 160,000 | $ 1,875,000 | $ 2,075,000 |
Leases (Schedule of Future Mini
Leases (Schedule of Future Minimum Base Rental Payment) (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Leases [Abstract] | ||
2021 | $ 798,000 | |
2022 | 1,287,000 | |
2023 | 940,000 | |
2024 | 399,000 | |
2025 | 325,000 | |
Thereafter | 139,000 | |
Remaining balance of lease payments | 3,888,000 | |
Less: difference between undiscounted cash flows and discounted cash flows | 334,000 | |
Lease liabilities | $ 3,554,000 | $ 2,612,000 |
Investments, Cost (Details)
Investments, Cost (Details) - USD ($) | 1 Months Ended | 6 Months Ended | ||
Jan. 31, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Payment in cash | $ 850,000 | |||
Investment | 2,231,000 | |||
OpenHand Holdings, Inc. [Member] | ||||
Ownership percentage acquired | 5.00% | |||
Total consideration | $ 2,231,000 | |||
Payment in cash | $ 850,000 | |||
Investment | $ 2,231,000 | $ 0 | ||
OpenHand Holdings, Inc. [Member] | Option to purchase additional [Member] | ||||
Ownership percentage available to acquire | 7.50% | |||
Total consideration | $ 4,500,000 | |||
Valuation of OpenHand | $ 60,000,000 | |||
Expiry period of option | 18 months | |||
OpenHand Holdings, Inc. [Member] | Restricted Stock [Member] | ||||
Shares issued in acquisition | 329,654 | |||
Shares issued in acquisition, value | $ 1,381,000 | |||
Share price | $ 4.19 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets, Net (Narrative) (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill | $ 1,989,000 | $ 1,989,000 |
Customer Relationships [Member] | WPS [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets - initial value | 987,000 | |
Trade Names [Member] | WPS [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets - initial value | $ 70,000 |
Long-Term Debt (Details)
Long-Term Debt (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Jul. 22, 2020USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | |
Debt Instrument [Line Items] | |||||
Interest expense | $ 52,000 | $ 86,000 | $ 104,000 | $ 146,000 | |
Line of Credit [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest expense | $ 36,000 | $ 73,000 | |||
Interest rate | 3.25% | 3.25% | |||
Loan and Security Agreement [Member] | East West Bank [Member] | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity under term loan | $ 10,000,000 | ||||
Loan term | 2 years | ||||
Repayment term | 4 years | ||||
Term loan interest rate description | Term loans made pursuant to the agreement shall bear interest at the prime rate as reported by the Wall Street Journal, provided that the minimum interest rate on any term loan will not be less than 3.25%. | ||||
Origination fee | 0.25% | ||||
Debt coverage ratio | 1.35 | ||||
Amount of tangible net worth minimum | $ 25,000,000 | ||||
Net capital ratio | 10.00% | ||||
Covenants description | Certain other non-financial covenants include that the Company must promptly notify East West Bank of the creation or acquisition of any subsidiary that at any time owns assets with a value of $100,000 or greater. | ||||
Term Loan [Member] | |||||
Debt Instrument [Line Items] | |||||
Outstanding balance on long-term debt | $ 4,200,000 | $ 4,200,000 | |||
Initial borrowing amount | 5,000,000 | 5,000,000 | |||
Remaining available line of credit | $ 5,000,000 | $ 5,000,000 |
Long-Term Debt (Schedule of Fut
Long-Term Debt (Schedule of Future Minimum Payments for Line of Creditt) (Details) | Jun. 30, 2021USD ($) |
Debt Disclosure [Abstract] | |
2021 | $ 500,000 |
2022 | 998,000 |
2023 | 998,000 |
2024 | 1,661,000 |
Total | $ 4,157,000 |
Notes Payable - Related Party_2
Notes Payable - Related Party (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Notes Payable [Abstract] | |||||
Interest expense | $ 52,000 | $ 86,000 | $ 104,000 | $ 146,000 | |
Interest payable | $ 0 | $ 0 | $ 0 |
Notes Payable - Related Party_3
Notes Payable - Related Party (Schedule of Notes Payable) (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | ||
4.00% due September 30, 2021 [Member] | |||
Short-term Debt [Line Items] | |||
Issuance Date | May 31, 2021 | ||
Notes payable - related party | $ 2,200,000 | ||
Unpaid Principal Amount | $ 2,200,000 | ||
4% due November 30, 2021 [Member] | |||
Short-term Debt [Line Items] | |||
Issuance Date | [1] | Nov. 30, 2020 | Nov. 30, 2020 |
Notes payable - related party | [1] | $ 3,000,000 | $ 3,000,000 |
Unpaid Principal Amount | [1] | 3,000,000 | $ 3,000,000 |
4.00% due May 31, 2021 [Member] | |||
Short-term Debt [Line Items] | |||
Issuance Date | [2] | Dec. 1, 2020 | |
Notes payable - related party | [2] | $ 2,200,000 | |
Unpaid Principal Amount | [2] | 2,200,000 | |
Related Party Debt [Member] | |||
Short-term Debt [Line Items] | |||
Notes payable - related party | 5,200,000 | 5,200,000 | |
Unpaid Principal Amount | $ 5,200,000 | $ 5,200,000 | |
[1] | This note payable is subordinated to MSCO and is subordinated to the claims of general creditors, approved by FINRA, and is included in MSCO’s calculation of net capital and the capital requirements under FINRA and SEC regulations. | ||
[2] | On May 31, 2021, this note payable was renewed with a maturity of September 30, 2021. |
Revenue Recognition (Narrative)
Revenue Recognition (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | ||||
Stock borrow / stock loan | $ 2,240,000 | $ 771,000 | $ 4,087,000 | $ 1,215,000 |
Gross revenue from stock borrow/ Stock loan | 7,021,000 | 2,008,000 | 11,851,000 | 3,671,000 |
Expenses from stock borrow/stock loan | 4,781,000 | 1,237,000 | 7,764,000 | 2,456,000 |
Client expenses | 103,000 | $ 134,000 | 330,000 | $ 352,000 |
Other receivables | 34,000 | 34,000 | ||
Accounts payable and accrued liabilities | $ 225,000 | $ 225,000 |
Revenue Recognition (Schedule o
Revenue Recognition (Schedule of Major Revenue Categories) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Trading Execution and Clearing Services | ||||
Commissions and fees | $ 4,325,000 | $ 4,887,000 | $ 11,333,000 | $ 10,470,000 |
Principal transactions | 4,107,000 | 2,581,000 | 8,355,000 | 5,784,000 |
Market making | 1,758,000 | 615,000 | 3,372,000 | 1,085,000 |
Stock borrow / stock loan | 2,240,000 | 771,000 | 4,087,000 | 1,215,000 |
Advisory fees | 403,000 | 243,000 | 759,000 | 505,000 |
Total Trading Execution and Clearing Services | 12,833,000 | 9,097,000 | 27,906,000 | 19,059,000 |
Other Income | ||||
Interest | 1,163,000 | 909,000 | 2,317,000 | 2,240,000 |
Margin interest | 2,296,000 | 1,829,000 | 4,448,000 | 4,335,000 |
12b-1 fees | 164,000 | 296,000 | 317,000 | 1,084,000 |
Total Interest, marketing and distribution fees | 3,623,000 | 3,034,000 | 7,082,000 | 7,659,000 |
Other income | 337,000 | 488,000 | 729,000 | 702,000 |
Total Revenue | $ 16,793,000 | $ 12,619,000 | $ 35,717,000 | $ 27,420,000 |
Revenue Recognition (Schedule_2
Revenue Recognition (Schedule of Performance Obligation) (Details) | 6 Months Ended |
Jun. 30, 2021 | |
One [Member] | |
Revenue Stream | Commissions and fees, Principal transactions, Market making, Stock borrow / stock loan, Advisory fees |
Performance Obligation | Provide financial services to customers and counterparties |
Two [Member] | |
Revenue Stream | Interest, marketing and distribution fees, Other income |
Performance Obligation | n / a |
Referral Fees (Details)
Referral Fees (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Referral Fees | ||||
Referral fees | $ 353,000 | $ 162,000 | $ 760,000 | $ 273,000 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Provision (benefit) for (from) income taxes | $ 484,000 | $ (10,000) | $ 1,219,000 | $ 525,000 |
Income before provision for income taxes | $ 1,913,000 | $ 489,000 | $ 4,923,000 | $ 2,000,000 |
Effective tax rate | 25.00% | (2.00%) | 25.00% | 26.00% |
Statutory tax rate | 21.00% | 21.00% | 21.00% | |
Tax Year 2019 [Member] | ||||
Provision (benefit) for (from) income taxes | $ 94,000 | |||
Discrete tax expense | $ 152,000 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Earnings Per Share [Abstract] | ||||||
Net Income | $ 1,429,000 | $ 2,275,000 | $ 499,000 | $ 976,000 | $ 3,704,000 | $ 1,475,000 |
Capital Requirements (Details)
Capital Requirements (Details) - USD ($) | Jul. 02, 2021 | Jun. 30, 2021 | Jan. 02, 2021 | Dec. 31, 2020 |
MSCO [Member] | ||||
Net capital | $ 31,600,000 | $ 27,500,000 | ||
Minimum net capital required | 2,100,000 | 2,300,000 | ||
Net capital in excess of minimum requirement | $ 29,500,000 | $ 25,200,000 | ||
Percentage of aggregate debit balance to net capital | 30.60% | 24.30% | ||
Cash deposits | $ 348,700,000 | $ 324,900,000 | ||
Minimum cash deposits required | 332,700,000 | 319,900,000 | ||
Cash deposits in excess of minimum requirement | 16,000,000 | 5,000,000 | ||
MSCO [Member] | Subsequent Event [Member] | ||||
Cash deposits in excess of minimum requirement | $ 1,500,000 | |||
StockCross [Member] | ||||
Cash deposits in excess of minimum requirement | $ 1,000,000 | |||
WPS [Member] | ||||
Net capital | 2,800,000 | 3,900,000 | ||
Minimum net capital required | 250,000 | 250,000 | ||
Net capital in excess of minimum requirement | $ 2,500,000 | $ 3,700,000 |
Financial Instruments with Of_2
Financial Instruments with Off-Balance Sheet Risk (Narrative) (Details) $ in Billions | Jun. 30, 2021USD ($) |
Financial Instruments With Off-balance-sheet Risk And Concentrations Of Credit Risk | |
Margin loans extended | $ 1.1 |
Commitments, Contingencies an_2
Commitments, Contingencies and Other (Narrative) (Details) - USD ($) | Jul. 14, 2021 | Jul. 09, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 |
Health claim reinsurance limit per employee | $ 65,000 | $ 65,000 | |||||
Expense for self-insurance claims | 359,000 | $ 340,000 | 650,000 | $ 550,000 | |||
Accrual for self-insurance claims | 88,000 | 88,000 | |||||
Interest expense | 52,000 | 86,000 | 104,000 | 146,000 | |||
Other general and administrative expense | 1,188,000 | 401,000 | 1,958,000 | 1,255,000 | |||
BMO Harris Bank and Texas Capital Bank [Member] | |||||||
Available lines of credit | 15,000,000 | 15,000,000 | |||||
Interest expense | 1,000 | $ 2,000 | 15,000 | $ 18,000 | |||
BMO Harris Bank [Member] | MSCO [Member] | |||||||
Line of credit | 15,000,000 | 15,000,000 | $ 15,000,000 | ||||
Texas Capital Bank [Member] | MSCO [Member] | |||||||
Line of credit | $ 15,000,000 | ||||||
Accrual of FINRA [Member] | |||||||
Other general and administrative expense | $ 250,000 | ||||||
Accrual of California administrative costs [Member] | |||||||
Other general and administrative expense | $ 100,000 | ||||||
Supervisory Requirements [Member] | StockCross [Member] | California Department of Financial Protection and Innovation [Member] | Subsequent Event [Member] | |||||||
Payment of administrative costs | $ 100,000 | ||||||
Offer of rescission of commissions | $ 315,000 | ||||||
FINRA Requirements [Member] | MSCO [Member] | Subsequent Event [Member] | |||||||
Aggregate amount in legal matters | $ 250,000 |
Related Party Disclosures (Deta
Related Party Disclosures (Details) - USD ($) | Jan. 02, 2020 | Jan. 31, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Jan. 31, 2019 |
MSCO [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Sale of private equity security | $ 288,000 | ||||||
PW [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Related party revenues | $ 7,000 | $ 7,000 | $ 56,000 | $ 44,000 | |||
Gebbia Sullivan County Land Trust [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Office rent | $ 15,000 | $ 15,000 | $ 30,000 | $ 30,000 | |||
StockCross [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Percentage of entity acquired | 85.00% | 15.00% | |||||
Purchase price | $ 29,750,000 | ||||||
StockCross Shareholders [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Issue of stock under acquisition | 3,298,774 | ||||||
Purchase price | $ 29,750,000 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 1 Months Ended | 6 Months Ended | |
Jan. 31, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | |
Subsequent Event [Line Items] | |||
Payment in cash | $ 850,000 | ||
OpenHand Holdings, Inc. [Member] | |||
Subsequent Event [Line Items] | |||
Payment in cash | $ 850,000 | ||
Ownership percentage acquired | 5.00% | ||
OpenHand Holdings, Inc. [Member] | Restricted Stock [Member] | |||
Subsequent Event [Line Items] | |||
Shares issued in acquisition | 329,654 | ||
OpenHand Holdings, Inc. [Member] | Option to purchase additional [Member] | |||
Subsequent Event [Line Items] | |||
Expiry period of option | 18 months | ||
Valuation of OpenHand | $ 60,000,000 |