Nevertheless, Rowe apologised for any hurt unintentionally caused and amended and republished the cartoon to remove the cloth cap and change Mr Frydenberg's nose.
Mr Alhadeff said a significant number of Jewish community members had contacted him over the weekend over the cartoon, which he said played into both overt and sub-conscious bias against Jews.
He said there was concern that the cartoon conveyed the message that Jewish people did not care about black lives, which was at odds with their historical support for the civil rights movements both in the US and Australia, including by future NSW Chief Justice James Spigelman's role as an organiser of the 1965 Freedom Ride. In addition, even though unintended, the cartoon conveyed a number of anti-Jewish stereotypes.
Mr Alhadeff said he held several "constructive and cordial" discussions with the Financial Review's editor-in-chief, Michael Stutchbury, over the "unfortunate and damaging" cartoon.
"We acknowledge and appreciate the way the Financial Review, its editor-in-chief and the cartoonist dealt with this issue quickly and upfront," he said.
"That was greatly appreciated, as was the direct owning of where the message went awry in the depiction of one of the principal characters."
Mr Alhadeff did not take issue that the newspaper had republished an amended version of the cartoon.
"The important point is that the offensive cartoon was quickly removed and a thoughtful, detailed explanation was offered," he said, referring to the prominence this received in being published on page two of Tuesday's newspaper.
"The fact that a new version of the cartoon was inserted was certainly not an issue."
Executive Council of Australian Jewry co-chief executive Alex Ryvchin, who raised his concerns directly with Rowe on Twitter, said the cartoon controversy was a "cautionary tale to exercise greater care when depicting people of an ethnic minority".
"There was considerable outrage ... which reflects the feeling there was something sinister but at the same time I'm very satisfied that the cartoonist and editor-in-chief offered a clarification and my point of view that concludes the matter," he said.
Australia/Israel and Jewish Affairs Council executive director Colin Rubenstein said: "I appreciated the constructive conversations I had with Michael Stutchbury and welcome the amended cartoon and the considered explanation and apology that went with that".
Speaking on Sky News on Monday evening, Mr Frydenberg said he understood why people were sensitive about the cartoon.
"David Rowe is a brilliant cartoonist and I know the people at the AFR certainly didn't mean any harm by what they've have seen in terms of the reaction to that cartoon," he said.
"I've seen David Rowe's explanation, I accept that. We move on but at the same time I can see why some people felt very strongly about it."
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Jewish leaders accept AFR explanation - The Australian Financial Review
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