# LINCOLN FINANCIAL DISTRIBUTORS, INC. X-17A-5 (2022-02-28) — Broker-dealer annual report
- Company: LINCOLN FINANCIAL DISTRIBUTORS, INC.
- Form: X-17A-5
- Filed: 2022-02-28
- Period: 2021-12-31
- Accession: 0000019033-22-000001
- CIK: 19033
- File #: 8-13431
- Type: Broker-dealer
- Material weakness: No
- Auditor: Exempt from Auditor Requirement
- Auditor location: NA, PA
- Contact: Amanda Garon
- Phone: 6032265616
- Email: carl.pawsat@lfg.com
- Website: lfg.com
- Signed by: Carl R Pawsat (AVP, Financial and Operations Principal)
Original filing: https://www.sec.gov/Archives/edgar/data/19033/000001903322000001/2021lfdpublic1.pdf
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## STATEMENT OF FINANCIAL CONDITION
Lincoln Financial Distributors, Inc. Year Ended December 31, 2021 With Duly Authorized Officer Affirmation
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UNITED STATES securities and exchange commission Washington, D.C. 20549
| OMB APPROVAL |
|--------------------------|
| OMB Number: 3235-0123 |
| Expires: Oct. 31, 2023 |
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| hours per response: 12 |
| ANNUAL REPORTS |
|----------------|
| FORM X-17A-5 |
| PART III |
sec file number 8-13431
| FACING PAGE |
|-----------------------------------------------------------------------------------------------------------|
| Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 |
| FILING FOR THE PERIOD BEGINNING 01/01/21 | | AND ENDING 12/31/21 | |
|--------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------|--------------------------------------------|
| | MM/DD/YY | | MM/DD/YY |
| | A. REGISTRANT IDENTIFICATION | | |
| | NAME OF FIRM: Lincoln Financial Distributors, Inc. | | |
| TYPE OF REGISTRANT (check all applicable boxes): | Z Broker-dealer
Check here if respondent is also an OTC derivatives dealer | | |
| | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | |
| 130 N. Radnor - Chester Road | | | |
| | (No. and Street) | | |
| Radnor | PA | | 19087 |
| (City) | (State) | | (Zip Code) |
| | PERSON TO CONTACT WITH REGARD TO THIS FILING | | |
| Carl R. Pawsat | (606) 407-3406 | | carl.pawsat@lfg.com |
| (Name) | (Area Code - Telephone Number) | (Email Address) | |
| | B. ACCOUNTANT IDENTIFICATION | | |
| | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing *
Lincon Financial Distributor, no: claims exemplor l. See Duy Authorized Office Affimation pursuant to Rule 17a-5(e)(2) under the Securities Exchange Ad of 1934 | | |
| | (Name - if individual, state last, first, and middle name) | | |
| | | | |
| (Address) | (City) | (State) | (Zip Code) |
| | | | |
| (Date of Registration with PCAOB)(if applicable) | | | (PCAOB Registration Number, if applicable) |
| | FOR OFFICIAL USE ONLY | | |
| | * Claims for exemption from the requirement that the annual reports of an independent public | | |
| | accountant must be supported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 | | |
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#### OATH OR AFFIRMATION
| Carl R. Pawsat | , swear (or affirm) that, to the best of my knowledge and belief, the | | | | |
|-----------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| | financial report pertaining to the firm of Lincoln Financial Distributors, Inc.
as of | | | | |
| December 31 | 2 021 , is true and correct. I further swear (or affirm) that neither the company nor any | | | | |
| | partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely | | | | |
| as that of a customer. | | | | | |
| | LORI C KNIBB
Notary Public, North Carolina | | | | |
| | Signature:
Guilford County | | | | |
| | and a
My Commission Expires
2/2002 | | | | |
| | Title: | | | | |
| | AVP, Financial and Operations Principal | | | | |
| C | | | | | |
| Notary Public | | | | | |
| | | | | | |
| This filing ** contains (check all applicable boxes): | | | | | |
| 2 (a) Statement of financial condition. | | | | | |
| | 2 (b) Notes to consolidated statement of financial condition. | | | | |
| {c} Statement of income (loss) or, if there is other comprehensive income in the period(s) presented, a statement of | | | | | |
| | comprehensive income (as defined in § 210.1-02 of Regulation S-X). | | | | |
| [ (d) Statement of cash flows. | | | | | |
| [ (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. | | | | | |
| | [ (f) Statement of changes in liabilities subordinated to claims of creditors. | | | | |
| [ (g) Notes to consolidated financial statements. | | | | | |
| | [ h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable. | | | | |
| | [i) Computation of tangible net worth under 17 CFR 240.18a-2. | | | | |
| | Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. | | | | |
| (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or | | | | | |
| Exhibit A to 17 CFR 240.18a-4, as applicable. | | | | | |
- [ (I) Computation for Determination of PAB Requirements under Exhibit A to § 240.15c3-3.
- □ (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3.
- □ (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.15c3-3(p)(2) or 17 CFR 240.18a-4, as applicable.
- [] (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capible net worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-2, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences exist.
- [ (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition.
- Z (q) Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable.
- [ (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
- [ (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
- [ (t) Independent public accountant's report based on an examination of the statement of financial condition.
- □ (u) Independent public accountant's report based on an examination of the financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable.
- □ (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
- □ (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
- | (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-1e or 17 CFR 240.17a-12, as applicable.
- □ (y) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k).
- □ (z) Other: \_
\*\*To request confidential treatment of certain portions of this filing, see 17 CFR 240.170-5(e)(3) or 17 CFR 240.18c-7(d)(2), as applicable.
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Statement of Financial Condition
Year Ended December 31, 2021
# Contents
| Duly Authorized Officer Affirmation | |
|-----------------------------------------------|--|
| Statement of Financial Condition | |
| Notes to the Statement of Financial Condition | |
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# Statement of Financial Condition
(in thousands)
| | December 31, | | |
|-------------------------------------------------|-----------------|---------|--|
| | | | |
| | 2021 | | |
| Assets | | | |
| Cash and invested cash | ಕಿ | 3,904 | |
| Commissions and fees receivable | | 33,168 | |
| Due from affiliates | | 171 | |
| Other assets | | 563 | |
| Total assets | 37,806 | | |
| Liabilities and stockholder's equity | | | |
| Liabilities: | | | |
| Due to affiliates | 33,144 | | |
| Other liabilities | | 77 | |
| Total liabilities | 33,221 | | |
| Stockholder's equity: | | | |
| Common stock - \$25 par value; 10,000 shares | | | |
| authorized; 8,000 shares issued and outstanding | | 200 | |
| Additional paid-in capital | | 12,632 | |
| Accumulated deficit | | (8,247) | |
| Total stockholder's equity | | 4,585 | |
| Total liabilities and stockholder's equity | ਦਿੱਤੇ
37,806 | | |
See accompanying notes
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# Notes to the Statement of Financial Condition (in thousands) December 31, 2021
## 1. Nature of Operations, Basis of Presentation, Summary of Significant Accounting Policies and New Accounting Standards
#### Nature of Operations
Lincoln Financial Distributors, Inc. ("LFD" or the "Company," which also may be referred to as "we," "our" or "us") is a registered broker-dealer that is engaged in the business of wholesaling and marketing financial services products, such as mutual funds, variable life insurance, and variable annuities through financial intermediaries, such as stock brokerage firms, banks, and independent insurance agencies. LFD also receives commissions from affiliated insurance companies via intercompany transfers. LFD does not solicit or sell products directly to the general public. LFD is licensed to engage in broker-dealer activity throughout the United States. LFD is a wholly owned subsidiary of The Lincoln National Life Insurance Company ("LNL"), which is a wholly owned subsidiary of Lincoln National Corporation ("LNC").
#### Basis of Presentation
The accompanying financial statements are prepared in accordance with United States of America generally accepted accounting principles ("GAAP"). Certain GAAP policies, which are summartzed below, significantly affect the determination of financial position, results of operations and cash flows. Additionally, uncertainties, including those associated with the COVID-19 pandemic, may impact our estimates and the determination of financial condition, results of operations and cash flows.
The Company and other affiliated entities that provide services to the Company are under common ownership and management control. The existence of this control could result in the Companys financial position being significantly different from those that would have been obtained if the Company were autonomous.
The Company operates in one reportable segment given the similarities of all the products and services provided.
### Summary of Significant Accounting Policies
#### Accounting Estimates and Assumptions
The preparation of the statement of financial conformity with GAAP requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the statement of financial condition. Those estimates are inherently subject to change and actual results could differ from those estimates.
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# Notes to the Statement of Financial Condition (continued)
## 1. Nature of Operations, Basis of Presentation, Summary of Significant Accounting Policies and New Accounting Standards (continued)
## Cash and Invested Cash
Cash and invested cash is carried at cost and includes all highly liquid investments purchased with an original maturity of three months or less.
### Income Taxes
LNC files a U.S. consolidated income tax return that includes all eligible subsidiaries, including LFD and LNL. Pursuant to an intercompany tax-sharing agreement with LNL, LFD provides for income taxes on a separate return filing basis. The tax-sharing agreement also provides that LFD will receive benefit for net operating losses, capital losses, and tax credits, which may not be usable on a separate return basis to the extent such items may be utilized in the consolidated federal income tax returns of LNC.
Deferred income taxes are recognized, based on enacted rates, when assets and liabilities have different values for financial statement and tax reporting purposes. A valuation allowance is recorded to the extent required. Considerable judgment and the use of estimates are required in determining whether a valuation allowance is necessary and, if so, the amount of such valuation allowance. See Note 3 for additional information
### Adoption of New Accounting Standards
All new Accounting Standards Updates issued by the Financial Accounting Standards Board ("FASB") were assessed and determined to be ether not applicable or insignificant in presentation or amount.
## 2. Income Taxes
LFD had no federal income tax, tax liability, deferred taxes, and uncertain tax positions for year ended December 31, 2021.
The LNC consolidated group is subject to examination by U.S. federal, state, local and non-U.S. income authorities. With few exceptions for limited scope review, the Company is no longer subject to U.S. federal examinations for years before 2018. In the first quarter 2021 the Internal Revenue Service (IRS) commenced an examination of the Company's refund claims for 2014 and 2015 that is anticipated to be completed by the end of 2022.
We recognize interest and penalties accrued, if any, related to unrecognized tax benefits as a component of tax expense. For the year ended December 31, 2021, we recognized no interest and
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# Notes to the Statement of Financial Condition (continued)
penalty related to uncertain tax positions. There was no accrued interest and penalty expense related to the unrecognized tax benefits as of December 31, 2021.
## 3. Agreements and Transactions with Affiliates
In order to be compliant with the Financial Industry Authority ("FINRA") rules regarding proper expense recognition and expense-sharing agreements, LFD has entered into various costsharing agreements with affiliates. Amounts due from affiliates primarily represent amounts due to LFD for the settlement of general and administrative expenses, and fees, as stipulated in the Master Services Agreement. Amounts due to affiliates primarily represent amounts due to LNL related to separate account 12b-1 fees as well as intercompany cost and tax-sharing agreements.
### 4. Contingencies
### Regulatory and Litigation Matters
Regulatory bodies, such as the Securities and Exchange Commission ("SEC") and FINRA, regularly make inquiries and conduct examinations or investigations concerning our compliance with, among other things, securities laws and laws governing the activities of broker-dealers and registered investment advisers. While LFD is involved in various pending or threatened legal proceedings arising from the conduct of business either in the ordinary course or otherwise, such legal expenses are a part of our affiliate cost-sharing agreements. Based on information currently known by management, management does not believe any such charges are likely to have a material adverse effect on LFD's financial condition.
## 5. Net Capital Requirements
LFD operates under the alternative standard provisions of the SEC Uniform Net Capital Rule (Rule 15c3-1), which requires the minimum net capital to be the greater of \$250,000 or 2% of aggregate debit items computed in accordance with the SEC Customer Protection Rule (Rule 15c3-3) reserve requirements. Our operations do not include the physical handling of securities or the maintenance of open customer accounts; therefore, there are no reserve provisions pursuant to Rule 15c3-3. Accordingly, our minimum net capital requirement is \$250.
| | | December 31,
2021 | |
|------------------------------------------------|----|----------------------|--|
| Minimum net capital requirement
Net capital | ಿನ | 250
3,786 | |
| Excess net capital | | 3,536 | |
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# Notes to the Statement of Financial Condition (continued)
## 6. Subsequent Events
The Company has evaluated subsequent events for recognition and disclosure through the date the statement of financial condition was issued.
Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.