# PACIFIC SELECT DISTRIBUTORS, LLC X-17A-5 (2025-02-26) — Broker-dealer annual report - Company: PACIFIC SELECT DISTRIBUTORS, LLC - Form: X-17A-5 - Filed: 2025-02-26 - Period: 2024-12-31 - Accession: 0000075473-25-000001 - CIK: 75473 - File #: 8-15264 - Type: Broker-dealer - Material weakness: No - Auditor: Deloitte & Touche LLP - Auditor location: Costa Mesa, CA - Contact: Trevor Smith - Phone: 949-219-6745 - Website: deloitte.com - Signed by: Trevor Smith (Assistant Vice President, PFO, POO) Original filing: https://www.sec.gov/Archives/edgar/data/75473/000007547325000001/PSD_Public_FY2024.pdf --- {0}------------------------------------------------ # **PACIFIC SELECT DISTRIBUTORS, LLC (SEC I.D. No. 8�15264)** Statement of Financial Condition as of December 31, 2024 and Report of Independent Registered Public Accounting Firm Filed pursuant to Rule 17a-5(e)(3) Under the Securities Exchange Act of 1934. As a Public Document. {1}------------------------------------------------ # a Deloitte & Touche LLP 695 Town Center Drive ( Suite 1000 Costa Mesa, CA 92626 USA Tel: 714 436 7100 Fax: 714 436 7200 ### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Managing Memberand the Board of Directors of Pacific Select Distributors, LLC ### Opinion on the Financial Statement We have audited the accompanying statementoffinancial condition of Pacific Select Distributors, LLC (the "Company") as of December 31, 2024, and the related notes (collectively referred to as the "financial statement"). In our opinion, the financial statement presentsfairly, in all material respects, the financial position of the Company as of December31, 2024, in conformity with accounting principles generally accepted in the United States of America. ### Basis for Opinion The financial statementis 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 Companyin 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 statementis free of material misstatement, whether due to error or fraud. Our audit included performing proceduresto assess the risks of material misstatementof the financial statement, whether due to error or fraud, and performing procedures that respond to thoserisks. 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 of the financial statement provides a reasonable basis for our opinion. Tahettt 4-Tede UF February 25, 2025 We have served as the Company's auditor since 1987. {2}------------------------------------------------ ### Pacific Select Distributors, LLC # STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2024 | Pacific Select Distributors, LLC | | |-----------------------------------------------------------------------------------------------------|------------------------------| | STATEMENT
CONDITION
FINANCIAL
OF
DECEMBER | | | 2024
31, | | | ASSETS
Cash
and
cash
equivalents | \$
44,989,049 | | at
Fixed
maturity securities owned,
fair value
Commissions
and
fees
receivable | 20,506,474
14,239,300 | | Commission
advances
Taxes
receivable | 938,060
7,323 | | tax asset
Deferred
Other
assets | 149,434
182,196 | | TOTAL
ASSETS | \$51,011,836 | | AND
MEMBER'S
EQUITY
LIABILITIES | | | Liabilities:
Payableto
affiliates, net | 16,223,927 | | Accounts
and
payable
accruedliabilities
Total Liabilities | 819,335
17,043,262 | | (Note8)
Commitments
and
contingencies | | | Member's
Equity: | | | Member's
capital
Accumulated
deficit | 291,794,526
(257,825,952) | | Total Member's
Equity | 33,968,574 | | AND
MEMBER'S
TOTALLIABILITIES
EQUITY | \$51,011,836 | See Notes to Financial Statement {3}------------------------------------------------ ### Pacific Select Distributors, LLC # NOTES TO FINANCIAL STATEMENT ### ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES ### ORGANIZATION AND DESCRIPTION OF BUSINESS Pacific Select Distributors, LLC (PSD or the Company)is a broker-dealer registered with the Securities and Exchange Commission (SEC) and a memberof the Financial Industry Regulatory Authority. PSD is a wholly owned subsidiary of Pacific Life Insurance Company(Pacific Life), a Nebraska domiciled stocklife insurance company.Pacific LifeCorp, a Delaware stock holding company, owns 100% ofPacific Life. Pacific Mutual Holding Company (PMHC)is a Nebraska mutualholding company that owns 100% of Pacific LifeCorp. Pacific Life, Pacific LifeCorp, and PMHC are referred to as the Parent Companies. PSDprimarily serves as the distributor of registered investment-related products and services, principally variablelife and variable annuity contracts (Variable Products) issued by Pacific Life and its wholly ownedlife insurance subsidiary, Pacific Life & Annuity Company (PL&A). Pacific Select Fund (PSF) and unaffiliated Variable Insurance Trusts (VITs) are the investment vehicles provided to the Company's variable life insurance policyholders and variable annuity contract owners. PSD offers limited retail broker-dealer services that include selling Variable Products issued by Pacific Life and PL&A to customers advised by third-party fiduciaries such as trust companies and registered investment advisers. With respect to these sales, PSDacts as the broker-dealerof record for theinitial sale, but does not receive commissions or any form of consideration that would indicate a potential revenue stream. PSD provides wholesaling and marketing selling services on behalfof the Aristotle Funds Series Trust (Aristotle Funds). PSDhasincurred operating losses and is dependent on the support from Pacific Life for its operations. PSD has a commitmentfrom Pacific Life for additional capital funding, as may be required, for at least one yearfrom the date of issuanceofthesefinancial statements. ### BASIS OF PRESENTATION The accompanying financial statement of PSD has been prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) and in the format prescribed by Rule 17a-5 under the Securities ExchangeActof 1934 for brokers and dealers in securities. The preparation offinancial statements in conformity with U.S. GAAP requires management to makeestimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets andliabilities as of the date of the financial statements . Actual results could differ fram those estimates. The Company has evaluated events subsequent to December31, 2024 through the date the financial statements were available to be issued and has concluded that no events have occurred that require adjustments to these financial statements. ### FIXED MATURITY SECURITIES OWNED Fixed maturity securities owned are reported at fair value. See Notes 2 and 3 for information on PSD's fair value measurements and disclosure. {4}------------------------------------------------ ### CASH AND CASH EQUIVALENTS Cash and cash equivalents include all short-term, highly liquid investments with a maturity of three months or less from purchase date. Cash equivalents consist primarily of money market securities, which are classified as level1 in the fair value hierarchy. ### COMMISSIONS AND FEES RECEIVABLE Commissionsandfees receivable primarily represent commissionsand fees due to PSD from the sale offinancial products. ### COMMISSION ADVANCES Commission advancesrepresent prepaid commissions to brokersfor the sale of insurance contracts. ### PAYABLE TO AFFILIATES, NET PSDand Pacific Life enterintotri-party selling agreements with selling broker-dealers that state, amongotherthings,that commissions payable to the selling broker-dealer are payable by Pacific Life through PSD. Payableto affiliates, net, primarily represents commissions payable to Pacific Life in connection with these agreements, net of commissionsand other receivables due from Pacific Life. ### INCOME TAXES PSDis included in the consolidated Federal income tax returns of PMHC. PSDis allocated an income tax expenseor benefit based principally on the effect of including its operations in the consolidated and combined returns in accordance with a tax allocation agreementwith its Parent Companies. For example, PSD will be reimbursed for tax benefits expected to be utilized in PMHC's current year consolidated tax returns. Deferred income tax assets and liabilities are recognized for the future tax consequencesattributable to differences between the financial statement carrying amountsof existing assets andliabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable incomein the years the differences are expected to be recovered or settled. Additional discussion of income taxesis included in Note 4. ### RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS The FASBrecently adopted Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280) - Improvementsto Reportable SegmentDisclosures (ASU 2023-07). PSD's adoption of the new standard impactedfinancial statement disclosures only and did not affect the Company's financial position or results of operations. The Chief Executive Officer acts as the Company's Chief Operating Decision Maker (CODM), who usestotal revenues, expenses, and net capital to evaluate the results of the business and to manage the Company. The CODMhasconcluded that PSD operates asa single operating segment basedon the fact that the CODM managesthe businessactivities using information of the Company as a whole. ### FUTURE ADOPTION OF ACCOUNTING PRONOUNCEMENTS In 2023, the FASB issued improvements to income tax disclosures, ASU 2023-09. The objective of this guidanceis to enhancethe transparency and decision usefulness of income tax disclosures through improvements primarily related to the rate reconciliation and income taxes paid information. The new guidanceis effective for annual periods beginning after December 15, 2025, Managementis currently evaluating the impact of this ASU in these Financial Statements. ### INVESTMENTS At December 31, 2024, fixed maturity securities owned consisted primarily of corporate bondsheld at fair value. The fair value of PSD's fixed maturity securities owned was \$20,506,474 as of December31, 2024. {5}------------------------------------------------ ### FAIR VALUE OF FINANCIAL INSTRUMENTS The Codification's Fair Value Measurements and Disclosures Topic establishes a hierarchythatprioritizes the inputs of valuation methods used to measureestimated fair value. The determination offair value requires the use of observable market data whenavailable. The hierarchy consists of the following three levels that are prioritized based on observable and unobservable inputs. - Level 1 Unadjusted quoted prices for identical instruments in active markets. Level 1 financial instruments would include securities that are traded in an active exchange market. - Level 2 Observable inputs otherthan Level 1 prices, such as quotedprices for similar instruments in active markets; quotedpricesforidentical or similar instrumentsin inactive markets; and model-derived valuations for whichall significant inputs are observable marketdata. - Level 3 Valuations derived from valuation techniques in which one or moresignificant inputs are not market observable. All of PSD's fixed maturity securities ownedare carried at fair value and are classified as Level 2 within the fair value hierarchy. ### FAIR VALUE MEASUREMENTS The Cadification's Fair Value Measurements and Disclosures Topic definesfair value as the price that would be received to sell the asset or paid to transferthe liability at the measurement date. This "exit price" notion is a market-based measurement that requires a focus on the value that marketparticipants would assign for an assetorliability. The fair valuesofall fixed maturity securities owned were determinedby prices obtained from third-party pricing service. Managementanalyzes and evaluates prices received from independentthird parties and determines whether they are reasonable estimatesoffair value. Management's analysis mayinclude, but is notlimited to, review ofthird-party pricing methodologies and inputs, analysis of recent trades, comparison to prices received from otherthird parties, and development of internal models utilizing observable market data of comparable securities. The fair value of PSD's fixed maturity securities owned was not measuredat lower than quotedprices. The carrying values of cash and cash equivalents, receivables, and payables approximate fair value due to the short-term nature of these instruments. ### INCOME TAXES As of December 31, 2024, PSD's deferred tax asset was \$149,434, which consisted primarily of a deferred tax benefit related to cumulative mark-to-market unrealized trading losses on fixed maturity securities owned. PSD doesnot have any net operatingloss,capitalloss, or tax credit carryforwards. PSD did not record or release any unrecognized tax benefits during the year and does not expect material changestoits unrecognized tax benefits for the twelve month period following the reporting date. PSDis included in the consolidated Federal income tax returns of PMHC. PMHCfiles income tax returns in U.S. Federal and various state jurisdictions. PMHCis under continuous audit by the Internal Revenue Service (IRS) andis audited periodically by somestate taxing authorities. The IRS is currently examining PMHC's tax returns for the years ended December31, 2013 through 2022. PSD does not expectthe current Federal or any state audits to result in any material assessments. {6}------------------------------------------------ ### NET CAPITAL REQUIREMENT PSD is subject to the SEC Uniform Net Capital Rule (Rule 153-1), which requires the maintenance of minimum netcapital. PSDhaselected to use the alternative method, which requires PSDto maintain net capital equal to the greater of \$250,000 or 2% of aggregate debit items, as defined. As of December 31, 2024, PSD's net capital was \$24,806,704, which exceededits required minimum. ### RESERVE AND POSSESSION OR CONTROL REQUIREMENTS FOR BROKERS AND DEALERS PURSUANT TO RULE 153-3 PSDis exempt from the provisions of Rule 15c3-3, paragraph k(1), under the Securities Exchange Act of 1934,from filing the Computation for Determination of Reserve Requirementfor Brokers and Dealers and the Information Relating to the Possession or Control Requirements for Brokers and Dealers as PSD doesnotcarry customers' securities accounts and does not receive or hold customers' securities. Operating under such exemption, PSD is not required to prepare a Determination of Reserve Requirements for Brokers or Dealers or Information Relating to the Possession or Control Requirements for Brokers and Dealers. ## TRANSACTIONSWITH AFFILIATES A Service Plan adopted by PSF, an investment vehicle provided to Pacific Life's and PL&A's Variable Product owners, is in effect wherebythe fund pays PSD,asdistributor of the fund, a service fee for services rendered to shareholders of the fund or their variable contract owners. These services mayinclude, but are notlimited to: providing electronic, telephonic, and technological servicing support in connection with existing investments in the fund; answering questions regarding the fund, the portfolios, its portfolio managers and/orother service providers; payment of compensation to broker-dealers, including PSDitself, and otherfinancialinstitutions and organizations whichassist in providing any of the services; and other services as described in the Service Plan. In addition, a Distribution and Service Plan adopted by PSF, in accordance with Rule 12b-1 under the 1940 Act, is in effect whereby the fund pays PSD,asdistributorof the fund, a distribution fee and a service fee. The distribution fee may be used by the Distributor for any activities or expensesprimarily intended to result in the sale of the fund or variable contract, which may include, but are notlimited to: compensation to, and expenses(including overhead expenses)of, financial consultants or other employeesof the Distributororofselling group members who engagein distribution of the fund; printing of prospectuses and reports other thanfor existing contract owners; advertising; and the preparation, printing and distribution of salesliterature. The service fee may be usedbytheDistributorfor the types of services provided under the Service Plan discussed above. Pacific Life and PL&A provided PSD with certain distribution, shareholder, investment and administrative services. PSDofferslimited retail broker-dealerservices that include selling variable annuities issued by Pacific Life (see Note 1). See Note 1 regarding the tax allocation agreement between PSD and its Parent Companies. ### COMMITMENTS AND CONTINGENCIES ### LITIGATION Fram time to time, PSD maybe subjectto legal proceedings,claims andlitigation in the ordinary course of business. PSD doesnot expect that the ultimate costs to resolve any such matters that mayarise will have a material adverse effectonits financial position. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.