# CANACCORD GENUITY WEALTH MANAGEMENT (USA) INC. X-17A-5 (2021-06-02) — Broker-dealer annual report - Company: CANACCORD GENUITY WEALTH MANAGEMENT (USA) INC. - Form: X-17A-5 - Filed: 2021-06-02 - Period: 2021-03-31 - Accession: 0000205307-21-000004 - CIK: 205307 - File #: 8-21025 - Material weakness: No - Auditor: Ernst & Young - Auditor location: Vancouver, A1 - Contact: Donald D. MacFayden - Phone: 416-687-5426 - Signed by: Donald D. MacFayden (CFO) Original filing: https://www.sec.gov/Archives/edgar/data/205307/000020530721000004/CGWMUSA033121SFC.pdf --- {0}------------------------------------------------ Statement of Financial Condition [Exprt:ssed in U.S. dollars] **Canaccord Gcnuity Wealth Management (USA) Inc.** March 3 I, 202 1 {1}------------------------------------------------ # **Report of independent registered public accounting firm** ### To the Shareholder and the Board of Directors of **Canaccord Genuity Wealth Management (USA) Inc.** #### **Opinion on the financial statement** We have audited the accompanying statement of financial condition of **Canaccord Genuity Wealth Management (USA) Inc.** [the "Company"] as of March 31 , 2021 , and the related notes [the "financial statement"]. In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company at March 31 , 2021, 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 the Company's 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 financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We have served as the Company's auditor since 2004. Toronto, Canada June 1, 2021 Chartered Professional Accountants Licensed Public Accountants ![](_page_1_Picture_11.jpeg) {2}------------------------------------------------ #### **Canaccord Genuity Wealth Management (USA) Inc.** # **STATEMENT OF FINANCIAL CONDITION** [Expressed in U.S. dollars] As at March 3 I | | 2021 | |------------------------------------------------|------------| | | \$ | | ASSETS | | | Current
Cash | J,850, 193 | | Deposit with clearing broker [110/e .Jj | 150,000 | | Rece ivable from clearing broker | 722,357 | | Due from atliliated companies /note 5) | 299,250 | | Prepaid expenses | 38,779 | | Total current assets | 5,060,579 | | Deterred tax assets | 4,475 | | | 5,065,054 | | | | | LIABILITIES AND STOCKHOLDER'S EQUITY | | | Current | | | Accounts payable | 759,400 | | Due to affili ated companies [110/e 5} | 994,636 | | Total current liabilities | 1,754,036 | | Contingencies and commitments [11ule 6} | | | Stockholder's equity | | | Capital stock | | | Authorized | | | 1,250 Class A common shares, without par value | | | Issued and outstanding | | | 702 Class A common shares | 175,500 | | Addi ti onal paid-up capital | 617,846 | | Retai ned ea rnings | 2,517,672 | | Total stockholder's equity | 3,311 ,018 | | | 5,065,054 | *See* ucco11111w1yi11g 110/es {3}------------------------------------------------ # **I. INCORPORATION AND CORPORATE ACTIVITIES** Canaccord Genuity Wealth Management (USA) Inc. [the ··Company") is an introducing broker/dealer registered with the Securities and Exchange Commission ['"SEC") and is a member of the Financial Industry Regulatoiy Authority ["'FINRA"] and the Securities In vestor Protection Corporation. The Company's primary source of revenue is commission income relating to securities trade execution for U.S. resident clients. The Company clears all transactions with and for clients through Pershing LLC. Accordingly, the Company does not handle nor hold any c lient monies and securities or perform custodial functions relating to client accounts. ### **2. SIGNIFICANT ACCOUNTING POLICIES** This tinancial statement have been prepared in accordance with accounting principles generally accepted in the United States. The significant accounting policies are as follows: # **Use of estimates** The preparation of the linancial statement in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as at the date of the finan cial statement. Actual results could differ from those estimates. ### **Income taxes** The Company is included in the consolidated federal income tax return tiled by Canaccord Adams financial Group Inc. The Company's effective federal and state income tax rate of 29.09% for the year is based on calculations pursuant to the tax sharing arrangement amongst the U.S. consolidated group members, and is payable via the intercompany accounts through periodic cash settlements. The federa l income taxes are calcul ated as i fthe Company ti led a separate federal income tax return . The tax sharing arrangement among the companies within the U.S. consolidated group provides that prolitable entities such as the Company pay through the intercompany accounts the Company's separate federal income tax liability, to other members of the U.S. consolidated group. The Company joins in the tiling of combined state returns with other members of the U.S. consolidated group. The amount of current taxes payable is recognized as at the date of the linancial statement, utilizing currently enacted tax rates and laws. The Company has adopted Financial Accounting Standards Board [·'FASB"] Accounting Standards Codification l"ASC"] 740- 10, *Acco11111i11g fo r /11c:0111e Tmes,* which requires the Company to recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company's linancial statement or tax returns using the liability method. Under this method, deferred tax li abiliti es and assets are determined based on the temporary differences between the linancial statement and tax bases of assets and liabilities using enacted tax rates and laws in effoct in the year in which the differences are expected to reverse. # **Translation of foreign currencies** The functional currency of the Company is the U.S. dollar. Monetary assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate in eftect as at the reporting date. Non-monetary assets and liabi lities denominated in foreign currencies arc translated into U.S. dollars at historical rates. ### **Fair value measurements** {4}------------------------------------------------ FASB ASC 820, *Fair Value Meas11re111e111.1· wul Disclosures,* de lines fair value, establishes a framework for measuring fair value, and establishes a fair value hierarchy that prioriti zes the inputs to valuation techniques. 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 measun:ment elate. A fair value measurement assumes that the transaction to sell the asset or transler the liability occurs in the principal market liJr 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 specitied by FASl3 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 I inputs are quoted prices [unadjusted] in active markets for identical assets or liabiliti es the Company has the ability to access. Level 2 inputs are inputs [other than quoted prices included within Level I] that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability and rely 011 management 's own assumptions about the assumptions that market pa11icipants would use in pricing the asset or liability. The unobservable inputs are developed based on the best information available in the circumstances and may include the Company's own data. ### **3. FINANCIAL INSTRUMENTS** The Company's financial instruments include cash, deposit with clearing broker, due 10 affiliated companies and accounts payable. It is management's opinion that the Company is not exposed to significant interest rate, currency or cred it default risks arising from these financial instruments. ### **Credit risk** The Company's exposure lo credit risk arises from the possibility that a counterparty to a transaction might fail to perform under its contractual commitment, resulting in a financial loss to the Company. The risk is maintained by the Company's overall credit risk management framework, including monitoring credit exposures, limiting transactions with specific counterparties and assessing the creditworthiness or counterparties. ### **Market risk** Market risk is the risk that the fair value or lim111cial instruments will lluctuate because of changes in market prices. The Company believes that any exposure to risk is in the normal course of business and does 110 1 antic ipate any significant loss lo such risk. ### **Interest rate risk** Interest rate risk arises from the possibility that changes in interest rates will a fleet the fair value or lt1ture cash llows or linancial instruments held by the Company. The Company believes that any exposure to risk is in the normal course of busi ness and does not anticipate any significant loss to such risk. {5}------------------------------------------------ # **4. DEPOSIT WITH CLEARING BROKER** Under the terms of the fully disclosed clearing agree111ent with Pershing LLC, the Company is required to maintain a clearing deposit. The clearing deposit was \$ 150,000 at March 31, 2021. # **5. RELATED PARTY TRANSACTIONS** As at March 3 I, 202 1, \$299,250 was owing fro111 CGC for revenues incurred by CGC on behalfof the Company. lncluclecl in clue to aftiliatecl companies are amounts of \$993,662 owing to Canaccord Adams Financial Group Inc. for use of its tax losses in the current and precedi ng years. There are no repayment terms or interest on the a111ou11ts owing. # **6. CONTINGENCIES AND COMMITMENTS** The Company applies the provisions or ASC 460, *G11ur,111tor's Acco11111i11g and Disclosure Req11ire111e11ts* Jiw *G11am111ees, i11c/11di11g Indirect G11aru111ees* 1!/ *lmlebtei/1,ess* tfl *Others,* which provides accounting and disclosure require111e11ts for certain guarantees. The Company has agreed to inclemnily Pershing LLC, the clearing broker, fi.1r losses that it may sustain from the customer accounts introduced by the Company. At March 3 1, 202 1, the total a111ount ofcusto111er balances maintained by its clearing broker subject to such inclemnitication was nil. In accordance with applicable 111argi11 lending practices, customer balances are typically collateralizecl by customer securities or suppo11ecl by other types of recourse provisions. The Company has not accrued for contingencies as at year-encl. # 7. **REGULATORY NET CAPITAL REQUIREMENT** As a registered introducing broker-dealer, the Company is subject to the net capital rule of the SEC [Rule I 5c3-I]. Rule I 5c3-I requires that the Company maintain a regulatory net capital equal to the greater of 6 2/3% of aggregate indebtedness, as cletinecl, or \$50,000. At March 3 1, 202 1, the Company had net capital of \$2,968,514 which was \$2,85 1,578 in excess of the required net capital of \$50,000. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.