# NEUBERGER BERMAN BD LLC X-17A-5 (2023-02-27) — Broker-dealer annual report - Company: NEUBERGER BERMAN BD LLC - Form: X-17A-5 - Filed: 2023-02-27 - Period: 2022-12-31 - Accession: 0000071110-23-000002 - CIK: 71110 - File #: 8-01068 - Type: Broker-dealer - Material weakness: No - Auditor: KPMG - Auditor location: New York, NY - Contact: Michael Chinni - Phone: 212-476-5916 - Signed by: Michael Chinni (Chief Financial Officer) Original filing: https://www.sec.gov/Archives/edgar/data/71110/000007111023000002/2022NBBDBSOnlySEC.pdf --- {0}------------------------------------------------ Statement of Financial Condition December 31, 2022 (With Report of Independent Registered Public Accounting Firm Thereon) {1}------------------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 OMB APPROVAL OMB Number: Expires: Estimated average burden hours per response: SEC FILE NUMBER # ANNUAL REPORTS FORM X-17A-5 PART III 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 \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ AND ENDING \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ MM/DD/YY MM/DD/YY A. REGISTRANT IDENTIFICATION # NAME OF FIRM: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ TYPE OF REGISTRANT (check all applicable boxes): Broker-dealer Security-based swap dealer Major security-based swap participant Check here if respondent is also an OTC derivatives dealer ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) # \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ | | (No. and Street) | | | | |------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|-----------------|------------|--| | | _____________________________________________________________________________________ | | (Zip Code) | | | (City) | (State) | | | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | | _____________________________________________________________________________________ | | | | | (Name) | (Area Code – Telephone Number) | (Email Address) | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | | _____________________________________________________________________________________
(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 be covered by the 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 CFR 240.17a-5(e)(1)(ii), if applicable. Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. {2}------------------------------------------------ | Michael Chinni | swear (or affirm) that, to the best of my knowledge and belief, the | | |--------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|-------| | tinancial report pertaining to the firm of Neuberger Berman BD LLC | | as of | | 12/31 | 2022 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 account classified solem | | - - - - - - - - - - - - - - {3}------------------------------------------------ ![](_page_3_Picture_0.jpeg) KPMG LLP 345 Park Avenue New York, NY 10154-0102 #### Report of Independent Registered Public Accounting Firm To the Member and Management Neuberger Berman BD LLC: #### Opinion on the Financial Statement We have audited the accompanying statement of financial condition of Neuberger Berman BD LLC (the Company) as of December 31, 2022, and the related notes (collectively, the financial statement). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company as of December 31, 2022, in conformity with U.S. generally accepted accounting principles. #### Basis for Opinion This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statement, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion. We have served as the Company's auditor since 2009. New York, New York February 24, 2023 {4}------------------------------------------------ Statement of Financial Condition Year Ended December 31, 2022 (In thousands) | Assets | | |----------------------------------------|--------------| | Cash and cash equivalents | \$
17,990 | | Segregated cash | 100 | | Investments | 3,904 | | Receivables: | | | Clearing broker-dealer | 150 | | Due from affiliates | 257 | | Other receivables | 52 | | Total assets | \$
22,453 | | Liabilities and member's capital | | | Liabilities | | | Broker-dealers | \$
4,787 | | Due to affiliates | 1,179 | | Accounts payable and accrued expenses | 949 | | | 6,915 | | | | | Member's capital | 15,538 | | Total liabilities and member's capital | \$
22,453 | See accompanying notes to the Financial Statements. {5}------------------------------------------------ Notes to Statement of Financial Condition December 31, 2022 (Dollars in thousands, except where noted) # (1) Organization and Description of Business Neuberger Berman BD LLC, a Delaware limited liability company (NBBD or the Company), is an indirect wholly owned subsidiary of Neuberger Berman Group LLC, a Delaware limited liability company (NB Group), which is a majority owned subsidiary of NBSH Acquisition, LLC, a Delaware limited liability company (NBSH). Neuberger Berman Investment Advisers LLC (NBIA) is the sole member of the Company. NBBD is a registered broker-dealer with the Securities and Exchange Commission and a registered introducing broker with the National Futures Association. NBBD is engaged principally in providing distribution services to registered mutual funds that are part of the Neuberger Berman mutual funds complex (Mutual Funds) and acts as broker to NBIA clients as a placement agent for the sale of third-party private funds. NBBD also introduces certain NBIA clients' securities transactions on a fully disclosed basis through National Financial Services LLC (NFS) for execution and settlement. NFS also serves as custodian for certain NBIA clients. # (2) Significant Accounting Policies # (a) Basis of Presentation The statement of financial condition has been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) as set forth in the Financial Accounting Standards Board's (FASB) Accounting Standards Codification (ASC). The preparation of the statement of financial condition requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the statement of financial condition. Although these estimates and assumptions are based on the best available information, actual results could differ from those estimates. # (b) Cash and Cash Equivalents Cash and cash equivalents consist of cash held at Citibank, N.A. and other liquid investments that are payable on demand. At December 31, 2022, the Company held money market mutual fund investments of \$18.0 million and \$0.1 million as cash with Citibank, N.A. # (c) Segregated Cash At December 31, 2022, cash of \$0.1 million was segregated in a special reserve bank account for the exclusive benefit of customers. Such amounts are not available for the creditors of the Company. {6}------------------------------------------------ Notes to Statement of Financial Condition December 31, 2022 (Dollars in thousands, except where noted) # (d) Investments Investments held by the Company are carried at market or fair value. Investments in money market funds are valued using the year end quoted net asset value per share. # (e) Fair Value of Investments The Company follows GAAP with respect to fair value measurements, which among other things, requires enhanced disclosure about investments that are measured and reported at fair value. Fair value of a financial instrument is the amount at which the Company believes the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. GAAP establishes a hierarchal disclosure framework, which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. In accordance with GAAP, investments measured and reported at fair value are classified and disclosed based on the observability of inputs used in the determination of fair values in one of the following categories: Level 1 – Quoted prices are available in active markets for identical investments as of the reporting date. The types of investments included in Level 1 are, among other things, money market funds and listed equities. As required by GAAP, the Company does not adjust the quoted price for these investments, even in situations where the Company holds a large position and the sale of such position would likely deviate from the quoted price. Level 2 – Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Investments that are generally included in this category include fixed income securities. Level 3 – Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment. The inputs used in the determination of fair value require significant management judgment or estimation. Shares in privately held companies and certain loans and bonds are examples of investments that would be included in this category. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input used to determine the fair value measurement in its entirety requires judgment and includes factors specific to the investment. {7}------------------------------------------------ Notes to Statement of Financial Condition December 31, 2022 (Dollars in thousands, except where noted) # (f) Securities Transactions Securities transactions are recorded on a trade date basis. Securities owned and securities sold, not yet purchased are valued at fair value. # (3) Fair Value Measurements Financial assets and financial liabilities measured at fair value on a recurring basis using the fair value hierarchy levels at December 31, 2022 were as follows: | | | December 31, 2022 | | | | | |---------------------|---------|-------------------|---------|---------|-------|--------| | | Level 1 | | Level 2 | Level 3 | Total | | | Financial Assets: | | | | | | | | Cash equivalents | \$ | 17,900 | - | - | \$ | 17,900 | | Domestic equities | | 2,320 | - | - | | 2,320 | | Foreign equities | | 1,568 | - | - | | 1,568 | | Private investments | | - | - | 16 | | 16 | | | \$ | 21,788 | - | 16 | \$ | 21,804 | Level 3 assets measured at fair value for the year ended December 31, 2022, totaled \$16 thousand. There were no sales or transfers related to level 3 assets for the year ended December 31, 2022. The following is a description of the valuation methodologies used for the Company's investments measured at fair value on a recurring basis, as well as the general classification of those investments pursuant to the valuation hierarchy: Cash equivalents – Cash equivalents consist of excess cash invested in various money market mutual funds that are valued based on published net asset values and are included in Level 1 of the valuation hierarchy. Equities – Equity investments include foreign equity securities. Equity securities generally are valued using unadjusted quoted market prices and are included in Level 1 of the valuation hierarchy. Warrants – Warrants are generally valued using broker quotes or pricing services based on similar instruments in active markets and are included in Level 2 of the valuation hierarchy. Private investments – Private investments include preferred shares for which prices are provided by transactions known to the Company, and output from a third-party financial model. Based on the factors used to determine fair value, these investments are included in Level 3 of the valuation hierarchy. {8}------------------------------------------------ Notes to Statement of Financial Condition December 31, 2022 (Dollars in thousands, except where noted) # (4) Related Party Transactions Investments include \$1.6 million invested in sponsored strategies at December 31, 2022. NBBD has entered into an agreement where it sells certain distribution fees receivable to NBIA, without recourse to the Company. The distribution fees receivable are sold at carrying value and in 2022, NBBD sold \$19.6 million of distribution fees receivable to NBIA. As of December 31, 2022, there was a balance of \$0.3 million that was not sold due to timing of accruals, which is reflected on the Statement of Financial Condition under Due from affiliates. At December 31, 2022, NBBD owed NB Group \$1.2 million which is reflected on the Statement of Financial Condition under Due to affiliates. # (5) Commitments and Contingencies #### Litigation and Contingencies Currently the Company is not involved in any judicial, regulatory and arbitration proceedings concerning matters arising in connection with the conduct of its business. The Company will recognize liabilities for contingencies if there is an exposure that, when analyzed, indicates it is both probable that a liability will be incurred and the amount of such liability can be reasonably estimated. When a range of probable liabilities can be estimated, the Company will accrue the amount it determines it will most likely incur. If the amount is not determinable, the Company will accrue the minimum of the range of probable loss. # (6) Capital Requirements As a registered broker-dealer and member of the Financial Industry Regulatory Authority, Inc., the Company is subject to the Securities Exchange Commission's (SEC) Uniform Net Capital Rule 15c3-1. The Company is also a member of the National Futures Association and is subject to the Commodity Futures Trading Commission's (CFTC) Rule 1.17. Under these rules, the Company is required to maintain minimum net capital, as defined, of not less than the greater of; a) 2% of aggregate debit items arising from customer transactions; b) \$45 thousand under CFTC Rule 1.17, or c) \$250 thousand under SEC Rule 15c3-1. As of December 31, 2022, the Company had no aggregate debt items and therefore, the minimum net capital of \$250 thousand is applicable. The Company has elected to compute its net capital under the alternative method permitted by the rule. As of December 31, 2022, the Company had net capital of approximately \$13.0 million, which exceeded the minimum net capital requirement by approximately \$12.8 million. Based on applicable regulatory requirements, the Company may not withdraw equity capital if its net capital falls below certain specified levels, as defined. # (7) Risks #### Credit risk The Company maintains its cash balances at one financial institution but does not consider itself at risk in this regard. The Company is subject to credit risk to the extent any financial institution with which it conducts business is unable to fulfill contractual obligations on its behalf. Management monitors the financial condition of this financial institution and does not anticipate any losses on these balances. The {9}------------------------------------------------ Notes to Statement of Financial Condition December 31, 2022 (Dollars in thousands, except where noted) Company's investment securities are principally common stock. The credit and/or market risk associated with these holdings can be directly impacted by factors that affect this industry such as volatile equity and credit markets and actions of regulatory authorities. #### Covid-19 The Company continues to monitor developments related to COVID-19 (Novel Coronavirus). While numerous governmental restrictions designed to contain the spread and impact of COVID-19 have been retracted, the extent to which the pandemic may continue to evolve and have long-term, adverse implications for the global economy and our business, operations and financial results remain uncertain. #### Regulatory risk As is typical of most U.S. Securities and Exchange Commission "SEC" registered broker-dealers, the Company receives both routine and non-routine regulatory inquiries relating to its business, and is involved in various claims and lawsuits from time to time. The SEC, FINRA, other Self Regulatory Organizations "SROs" and certain other regulatory bodies promulgate and enforce numerous rules and regulations that impact the Company's business. As a registered broker-dealer, the Company is subject, on an ongoing basis, to compliance examinations and inquiries by regulators. # (8) Subsequent Events The Company's management has evaluated events occurring after the date of the statement of financial condition (subsequent events) through the date the statement of financial condition was available to be issued. All subsequent events requiring recognition have been incorporated into the statement of financial condition. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.