# CANACCORD GENUITY WEALTH MANAGEMENT (USA) INC. X-17A-5 (2023-05-31) — Broker-dealer annual report - Company: CANACCORD GENUITY WEALTH MANAGEMENT (USA) INC. - Form: X-17A-5 - Filed: 2023-05-31 - Period: 2023-03-31 - Accession: 0000205307-23-000004 - CIK: 205307 - File #: 8-21025 - Type: Broker-dealer - Material weakness: No - Auditor: Ernst & Young - Auditor location: Vancouver, A1 - Contact: Don MacFayden - Phone: 604-671-5416 - Signed by: Don MacFayden (CFO) Original filing: https://www.sec.gov/Archives/edgar/data/205307/000020530723000004/CGWMUSAFS.pdf --- {0}------------------------------------------------ | OMB APPROVAL | |---------------------------| | OMB Number: 3235-0123 | | Expires: Oct. 31, 2023 | | Estimated average burden | | 12
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Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 | | | | | |---------------------------------------------------------------------------------------------------------------------------------|--------------------------------|---------------------|--------------------------------------------|--| | filing for the period beginning 04/01/22 | | AND ENDING 03/31/23 | | | | | MM/DD/YY | | MM/DD/YY | | | | A. REGISTRANT IDENTIFICATION | | | | | NAME OF FIRM: Canaccord Genuity Wealth Management (USA) Inc. | | | | | | TYPE OF REGISTRANT (check all applicable boxes):
Broker-dealer
Check here if respondent is also an OTC derivatives dealer | C Security-based swap dealer | | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | | | 2200 - 609 Granville Street | | | | | | | (No. and Street) | | | | | Vancouver | BC | | V7Y 1H2 | | | (City) | (State) | | (Zip Code) | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | dmactayden @
Donald D. MacFayden 416-687-5426 | | | | | | (Name) | (Area Code - Telephone Number) | (Email Address) | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing*
Ernst & Young | | | | | | (Name - if individual, state last, first, and middle name) | | | | | | 1133 Melville Street | Vancouver | BC | V6E 4F5 | | | (Address) | (City) | (State)
#1263 | (Zip Code) | | | (Date of Registration with PCAOB)(if applicable) | | | (PCAOB Registration Number, if applicable) | | | * Claims for exemption from the requirement that the annual reports of an independent public | FOR OFFICIAL USE ONLY | | | | {1}------------------------------------------------ | St
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e | | | |---------------------------------------------|--|--| - - - - - - - - - - - - - - - - - - - - - - - - - - - {2}------------------------------------------------ Financial Statements and Supplemental Information [Expressed in U.S. dollars] # **Canaccord Genuity Wealth Management (USA) Inc.** March 31, 2023 With Report of Independent Registered Public Accounting Firm [Confidential Pursuant to Rule 17a-5(e)(3)] {3}------------------------------------------------ # **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 statements** We have audited the accompanying statement of financial condition of **Canaccord Genuity Wealth Management (USA) Inc.** [the "Company"] as of March 31, 2023, the related statements of comprehensive income, changes in stockholder's equity and cash flows for the year then ended, and the related notes [collectively referred to as the "financial statements"]. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2023, and the results of its operations and its cash flows for the year then ended in conformity with U.S. generally accepted accounting principles. #### **Basis for opinion** These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) [the "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 statements are 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 statements, 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 statements. 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 statements. We believe that our audit provides a reasonable basis for our opinion. #### **Supplemental information** The accompanying information contained in Schedules I, II and III has been subjected to audit procedures performed in conjunction with the audit of the Company's financial statements. Such information is the responsibility of the Company's management. Our audit procedures included determining whether the information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information. In forming our opinion on the information, we evaluated whether such information, including its form and content, is presented in conformity with Rule 17a-5 under the *Securities Exchange Act of 1934*. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole. We have served as the Company's auditor since 2004. Toronto, Canada May 30, 2023 ![](_page_3_Picture_13.jpeg) {4}------------------------------------------------ #### **STATEMENT OF FINANCIAL CONDITION** [Expressed in U.S. dollars] As at March 31 | | 2023 | |------------------------------------------------|-----------| | | \$ | | ASSETS
Current | | | Cash | 5,493,568 | | Deposit with clearing broker [note 4] | 150,000 | | Receivable from clearing broker | 473,032 | | Other securities | 7,107 | | Prepaid expenses | 48,456 | | Total current assets | 6,172,163 | | Deferred tax assets | 4,475 | | | 6,176,638 | | | | | LIABILITIES AND STOCKHOLDER'S EQUITY | | | Current | | | Accounts payable | 361,275 | | Due to affiliated companies [note 5] | 1,487,485 | | Total current liabilities | 1,848,760 | | Contingencies and commitments [note 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 | | Additional paid-up capital | 617,846 | | Retained earnings | 3,534,532 | | Total stockholder's equity | 4,327,878 | | | 6,176,638 | *See accompanying notes* {5}------------------------------------------------ #### **STATEMENT OF COMPREHENSIVE INCOME** [Expressed in U.S. dollars] Year ended March 31 | | 2023 | |--------------------------------|-----------| | | \$ | | REVENUES | | | Commissions | 3,622,291 | | Interest | 125,822 | | Other | 41,067 | | | 3,789,180 | | EXPENSES | | | Commissions | 2,051,614 | | Clearing | 11,253 | | Communication and printing | 51,058 | | Regulatory fees | 128,474 | | Administrative costs [note 5] | 404,581 | | Professional fees [note 5] | 368,743 | | Other | 454,053 | | | 3,469,776 | | Income before income taxes | 319,404 | | Provisions for
income taxes | | | Current | 96,907 | | Net income for the year | 222,497 | *See accompanying notes* {6}------------------------------------------------ #### **STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY** [Expressed in U.S. dollars] Year ended March 31 | | Class A
common shares | | Additional
paid-up
capital | Retained
earnings | Total | |-------------------------|--------------------------|---------|----------------------------------|----------------------|-----------| | | #
\$
\$ | | \$ | \$ | | | Balance, March 31, 2022 | 702 | 175,500 | 617,846 | 3,312,035 | 4,105,381 | | Net income for the year | - | - | - | 222,497 | 222,497 | | Balance, March 31, 2023 | 702 | 175,500 | 617,846 | 3,534,532 | 4,327,878 | {7}------------------------------------------------ #### **STATEMENT OF CASH FLOWS** [Expressed in U.S. dollars] Year ended March 31 | | 2023 | |------------------------------------------------|-----------| | | \$ | | OPERATING ACTIVITIES | | | Net income for the year | 222,497 | | Decrease in receivable
from clearing broker | 44,219 | | Decrease in other securities | 3,569 | | Decrease in due from affiliated companies | 82,299 | | Increase in prepaid expenses | (4,760) | | Increase in due to affiliated companies | 69,985 | | Increase in accounts payable | 16,716 | | Cash used in
operating activities | 434,525 | | Net increase in cash during the year | 434,525 | | Cash, beginning of year | 5,059,043 | | Cash, end of year | 5,493,568 | | Supplemental cash flow information | | | Interest received | 100,540 | | | | {8}------------------------------------------------ # **NOTES TO FINANCIAL STATEMENTS** [Expressed in U.S. dollars] March 31, 2023 ## **1. 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 Regulatory Authority ["FINRA"] and the Securities Investor 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 client monies and securities or perform custodial functions relating to client accounts. ## **2. SIGNIFICANT ACCOUNTING POLICIES** These financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The significant accounting policies are as follows: #### **Securities transactions and commissions** Commission income and expenses from customers' securities transactions are recorded on a tradedate basis. #### **Revenue recognition** Commission revenue consists of revenue generated through commission-based brokerage services and is recognized on a trade-date basis. Interest income consists of interest earned on cash deposited in bank accounts and on a deposit held with Pershing LLC and is recognized on an accrual basis. Other revenue includes foreign exchange gains or losses and administrative fee revenue. #### **Use of estimates** The preparation of financial statements 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 financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. {9}------------------------------------------------ # **NOTES TO FINANCIAL STATEMENTS** [Expressed in U.S. dollars] March 31, 2023 #### **Income taxes** The Company is included in the consolidated federal income tax return filed by Canaccord Adams Financial Group Inc. The Company's effective federal and state income tax rate of 30.34% 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 federal income taxes are calculated as if the Company filed a separate federal income tax return. The tax sharing arrangement among the companies within the U.S. consolidated group provides that profitable 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 filing 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 financial statements, utilizing currently enacted tax rates and laws. The Company has adopted Financial Accounting Standards Board ["FASB"] Accounting Standards Codification ["ASC"] 740-10, *Accounting for Income Taxes*, 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 financial statements or tax returns using the liability method. Under this method, deferred tax liabilities and assets are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates and laws in effect 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 effect as at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies are translated into U.S. dollars at historical rates. Revenue and expenses are translated at the average exchange rate prevailing during the period. Foreign currency transaction gains and losses are included in income in the period in which they occur. #### **Fair value measurements** FASB ASC 820, *Fair Value Measurements and Disclosures*, defines fair value, establishes a framework for measuring fair value, and establishes a fair value hierarchy that prioritizes 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 measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most {10}------------------------------------------------ ## **NOTES TO FINANCIAL STATEMENTS** [Expressed in U.S. dollars] March 31, 2023 advantageous market. Valuation techniques that are consistent with the market, income or cost approach, as specified by FASB 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 1 inputs are quoted prices [unadjusted] in active markets for identical assets or liabilities the Company has the ability to access. Level 2 inputs are inputs [other than quoted prices included within Level 1] 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 on management's own assumptions about the assumptions that market participants 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, receivable from clearing broker, other securities, due to affiliated companies and accounts payable. It is management's opinion that the Company is not exposed to significant interest rate, currency or credit default risks arising from these financial instruments. #### **Credit risk** The Company's exposure to 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 of counterparties. #### **Market risk** Market risk is the risk that the fair value of financial instruments will fluctuate because of changes in market prices. The Company believes that any exposure to risk is in the normal course of business and does not anticipate any significant loss to such risk. {11}------------------------------------------------ # **NOTES TO FINANCIAL STATEMENTS** [Expressed in U.S. dollars] March 31, 2023 #### **Interest rate risk** Interest rate risk arises from the possibility that changes in interest rates will affect the fair value or future cash flows of financial instruments held by the Company. The Company believes that any exposure to risk is in the normal course of business and does not anticipate any significant loss to such risk. #### **4. DEPOSIT WITH CLEARING BROKER** Under the terms of the fully disclosed clearing agreement with Pershing LLC, the Company is required to maintain a clearing deposit. The clearing deposit was \$150,000 at March 31, 2023. #### **5. RELATED PARTY TRANSACTIONS** The Company incurred \$404,581 in administrative costs during the year ended March 31, 2023 for services provided by Canaccord Genuity Corp. ["CGC"]. The Company incurred \$530,968 in administrative costs and professional fees during the year ended March 31, 2023 for services provided by Canaccord Genuity LLC. ["CG LLC"]. Included in due to affiliated companies are amounts of \$1,423,748 owing to Canaccord Adams Financial Group Inc. (CAFGI) for use of its tax losses in the current and preceding years. There are no repayment terms or interest on the amounts owing. Included in due to affiliated companies and administrative costs are amounts of \$29,602 owing to CG LLC for use of professional services provided by the operations and executive team. Included in due to affiliated companies are amounts of \$34,135 owing to CGC for expenses incurred by CGC on behalf of the Company. #### **6. CONTINGENCIES AND COMMITMENTS** The Company applies the provisions of ASC 460, *Guarantor's Accounting and Disclosure Requirements for Guarantees, including Indirect Guarantees of Indebtedness of Others*, which {12}------------------------------------------------ ## **NOTES TO FINANCIAL STATEMENTS** [Expressed in U.S. dollars] March 31, 2023 provides accounting and disclosure requirements for certain guarantees. The Company has agreed to indemnify Pershing LLC, the clearing broker, for losses that it may sustain from the customer accounts introduced by the Company. At March 31, 2023, the total amount of customer balances maintained by its clearing broker subject to such indemnification was nil. In accordance with applicable margin lending practices, customer balances are typically collateralized by customer securities or supported by other types of recourse provisions. The Company has not accrued for contingencies as at year-end. As a registered broker-dealer, the Company is subject to certain rules, regulations, and other regulatory requirements specific to the broker-dealer business and, as such, the Company operates within a regulatory framework involving certain governmental agencies and organizations. As a regulated entity and in the normal course, the Company is subject to periodic reviews and examinations by those agencies and organizations. The Company maintains policies and procedures designed to ensure compliance with these rules, regulations and requirements, but, in the event that a regulatory authority determines that there was a failure by the Company to follow or comply with certain procedures or a regulatory requirement or there is a deficiency in the Company's records or reports or some other compliance or financial failure then the Company may agree to pay a fine or penalty or agree to certain other sanctions, or, alternatively, a regulatory authority may impose a fine, penalty or other sanction. If such circumstances arise, the Company records a provision for any matter where a payment is considered probable and can be reasonably estimated. In connection with this regulatory oversight, certain compliance matters arising from a regulatory review and examination have been referred to enforcement for further review. The Company expects that the underlying matters will be resolved in the ordinary course and does not expect that such matters will have a material impact on its financial condition or results of operations. An estimate for a settlement of the matters has been recorded as of March 31, 2023, based on management's judgment. However, the Company may be required to make a payment that is more than the amount recorded. An actual estimate of any such excess cannot be made at this time. Adjustments will be recorded in subsequent periods if further information becomes available that changes the estimate. #### **7. REGULATORY NET CAPITAL REQUIREMENT** As a registered introducing broker-dealer, the Company is subject to the net capital rule of the SEC [Rule 15c3-1]. Rule 15c3-1 requires that the Company maintain a regulatory net capital equal to the greater of 6 2/3% of aggregate indebtedness, as defined, or \$50,000. At March 31, 2023, the Company had net capital of \$4,274,947 which was \$4,151,695 in excess of the required net capital of \$123,252. {13}------------------------------------------------ **Supplemental Information** {14}------------------------------------------------ # **COMPUTATION OF NET CAPITAL UNDER RULE 15c3-1 OF THE SECURITIES AND EXCHANGE COMMISSION** [Expressed in U.S. dollars] As at March 31 | | 2022
\$ | |------------------------------------------------------------------------|------------| | Total stockholder's equity | 4,327,878 | | Deductions and/or charges | | | Total non-allowable assets | (52,931) | | Other | - | | Net capital | 4,274,947 | | [a] Minimum
net capital required (6 2/3% of aggregate indebtedness) | 123,252 | | [b] Minimum dollar requirement | 50,000 | | Minimum net capital (greater of a and b) | 123,252 | | Excess net capital | 4,151,695 | #### **Note:** There are no material differences between the amounts presented above and the amounts presented in the Company's March 31, 2023 amended unaudited FOCUS Part II A Report filed on May 31, 2023. | Total non-allowable assets | | |----------------------------------------------------------------------------|-----------| | Prepaid expenses | 48,456 | | Due from affiliated companies | - | | Deferred tax assets | 4,475 | | | 52,931 | | Computation of aggregate indebtedness | | | Total allowable liabilities from statement of financial condition | 1,848,760 | | Total aggregate indebtedness | 1,848,760 | | Percentage of total aggregate indebtedness to net capital | 43.25% | | Percentage of debt-equity total computed in accordance with Rule 15c3-1(d) | 0% | {15}------------------------------------------------ ## **Canaccord Genuity Wealth Management (USA) Inc. Schedule II** # **STATEMENT REGARDING RULE 15c3-3 OF THE SECURITIES AND EXCHANGE COMMISSION** Year ended March 31, 2023 The Company is exempt from the computation of reserve requirements under paragraph (k) [Section (k)(2)(ii)] of Rule 15c3-3 of the Securities Exchange Act of 1934. {16}------------------------------------------------ # **STATEMENT REGARDING RULE 15c3-3 OF THE SECURITIES AND EXCHANGE COMMISSION** Year ended March 31, 2023 The Company is exempt from the possession or control requirements under paragraph (k) [Section (k)(2)(ii)] of Rule 15c3-3 of the Securities Exchange Act of 1934. {17}------------------------------------------------ # **Report of independent registered public accounting firm** #### The Board of Directors and Management of **Canaccord Genuity Wealth Management (USA) Inc.** We have reviewed management's statements, included in the accompanying Canaccord Genuity Wealth Management (USA) Inc. Exemption Report, in which [1] **Canaccord Genuity Wealth Management (USA) Inc.** [the "Company"] identified the following provisions of 17 C.F.R. § 15c3-3(k) under which the Company claimed an exemption from 17 C.F.R. § 240.15c3-3 (k) (2) (ii) [the "exemption provisions"] and [2] the Company stated that it met the identified exemption provisions in 17 C.F.R. § 240.15c3-3(k) throughout the most recent fiscal year ended March 31, 2023, except as described in its exemption report. Management is responsible for compliance with the exemption provisions and its statements. Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included inquiries and other required procedures to obtain evidence about the Company's compliance with the exemption provisions. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's statements. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to management's statements referred to above for them to be fairly stated, in all material respects, based on the provisions set forth in paragraph (k)(2)(ii) of Rule 15c3-3 under the *Securities Exchange Act of 1934*. This report is intended solely for the information and use of the Board of Directors, management, the SEC, the Financial Industry Regulatory Authority, other regulatory agencies that rely on Rule 17a-5 under the *Securities Exchange Act of 1934* in their regulation of registered brokers and dealers, and other recipients specified by Rule 17a-5(d)(6) and is not intended to be and should not be used by anyone other than these specified parties. Toronto, Canada May 30, 2023 ![](_page_17_Picture_9.jpeg) {18}------------------------------------------------ ## **Canaccord Genuity Wealth Management (USA) Inc. Exemption Report** Canaccord Genuity Wealth Management (USA) Inc. (the 'Company') is a registered broker-dealer subject to the Rule 17a-5 promulgated by Securities and Exchange Commission (17 C.F.R. §240.17a-5, "Reports to be made by certain broker and dealers"). This Exemption Report was prepared as required by 17 C.F.R. §240.17a-5(d)(1) and (4). To the best of its knowledge and belied, the Company state the following: - (1) The Company claimed an exemption from 17 C.F.R. §240.15c3-3 under the following provisions of 17 C.F.R §240.15c3-3 (k): (2) (ii) - (2) The Company met the identified exemption provisions in 17 C.F.R §240.15c3-3(k) throughout the most recent fiscal year except as described below. 04/01/2022 - One certificate representing 1,880,822 common shares of a publicly traded company with a value of \$ 205,010 US dollars was received in our Vancouver office after the FedEx cut-off. The certificate was sent via FedEx courier to Pershing the following business day April 4,2022. 04/13/2023 – One certificate representing 11,055 common shares of a publicly traded company with a value of \$ 6,997.815 US dollars was received in our Vancouver office and held overnight pending Relationship Manager for CPUA Vancouver. 04/19/2022 - One certificate representing 62,694 common shares of a publicly traded company with a value of \$5,805.50 US dollars was received in our Vancouver office after the FedEx cut-off. The certificate was sent via FedEx courier to Pershing the following day April 20,2022. 4/21/2022 - One certificate representing 100,000 common shares of a publicly traded company with a value of \$ 65,000 US dollars was received in our Vancouver office at 2:30pm PST after the FedEx cut-off. The certificate was sent via FedEx courier to Pershing the following day April 22,2022 04/26/2022 – One certificate representing 800,000 common shares of publicly traded company with a value of \$ 304,000 US dollars was received our Vancouver office after the FedEx cut-off and returned to the client address on file the next business April 27,2023 because Pershing does not accept subscription receipts. 05/18/2022 - Two certificates representing 45,938 common shares of a publicly traded company with a value of \$87,282.220 US dollars were received in our Vancouver office after the FedEx cut-off. The certificates were sent via FedEx courier to Pershing the following business day May 19,2022 {19}------------------------------------------------ 05/30/2022 - Five certificates representing 121,054 common shares of a publicly traded company with a value of \$27,261 US dollars were received in our Vancouver office at 1:36 pm PST. The certificates were sent via FedEx courier to Pershing that following day May 31,2022 06/01/2022 – Five certificates representing 840,000 common shares of a publicly traded company with a value of \$26,000 US dollars were received in our Vancouver office at 1:36 pm PST and the client account was not opened at that time, and was not opened until 8:26 am PST the following day. The certificates were sent via FedEx courier to Pershing that day June 2,2022 06/02/2022 – Two certificates representing 75,000 common shares of a publicly traded company with a value of \$32,487.50 US dollars were received in our Vancouver office at 1:31 pm PST after the FedEx cut-off. The certificate was sent via FedEx courier to Pershing the following day Jun 3,2022 06/03/2022 – One certificate representing 1,224,547 common shares of a publicly traded company with a value of \$ 37,736 US dollars was received in our Vancouver office at 1:34 pm PST after the FedEx cut-off. The certificate was sent via FedEx courier to Pershing the following day June 6,2022 06/08/2022 – Five certificates representing 4,573,334 common shares of a publicly traded company with a value of \$ 114,333.35 US dollars were received in our Vancouver office at 1:33 pm PST after the FedEx cut-off. The certificates were sent via FedEx courier to Pershing the following day June 9,2022 06/15/2022 – Two certificates representing 187,500 common shares of a publicly traded company with a value of \$ 32,250 US dollars were received in our Vancouver office at 1:33 pm PST after the FedEx cut-off. The certificates were sent via FedEx courier to Pershing the following day June 16,2022 06/17/2022 – Two certificates representing 2,278,394 common shares of a publicly traded company with a value of \$ 911,357.60 US dollars were received in our Vancouver office after the FedEx cut-off. The certificate was sent via FedEx courier to Pershing the following day Jun 20,2022 06/20/2022 – One certificate representing 11,055 common shares of a publicly traded company with a value of \$ 5,969 US dollars was received in our Vancouver office after the FedEx cut-off. The certificate was sent via FedEx courier to Pershing the following day June 21,2022 {20}------------------------------------------------ 07/25/2022 – One certificate representing 120,000 common shares of a publicly traded company with a value of \$ 146,280 US dollars was received in our Vancouver office after the FedEx cut-off. The certificate was sent via FedEx courier to Pershing the following day July 26,2022 08/09/2022 - Three certificates representing 96,073 common shares of a publicly traded company with a value of \$ 28,341.54 US dollars were received in our Vancouver office after the FedEx cut-off. The certificates were sent via FedEx courier to Pershing the following day August 10,2022 08/11/2022 - One certificate representing 89,285 common shares of a publicly traded company with a value of \$ 33,481 US dollars was received in our Vancouver office at 1:33pm PST after the FedEx cut-off. The certificate was sent via FedEx courier to Pershing the following day August 12,2022 08/15/2022 - One certificate representing 3,632 common shares of a publicly traded company with a value of \$ 944,320 US dollars was received in our Vancouver office by the registered rep after the FedEx cut-off. The certificate was sent via FedEx courier to Pershing the following day August 16,2022 08/16/2022 - One certificate representing 1,000 common shares of publicly traded company with a value of \$ 7,530 US dollars was received our Vancouver office after the FedEx cut-off and returned to the client address on file the next business August 17,2022 because Pershing does not accept subscription receipts. 08/22/2022 - One certificate representing 11,037 common shares of a publicly traded company with a value of \$ 31,345 US dollars was received in our Vancouver office and returned the next business due to No Trust account available on the Pershing system and pending IA to provide client accurate physical address. 08/25/2022 - Two certificates representing 25,000 common shares of a publicly traded company with a value of \$ 106,250 US dollars were received our Vancouver office from the mailroom at 11:43 am PST and not identified/processed in time FedEx cut-off. The certificates were sent via FedEx courier to Pershing the following business day August 26,2022 09/09/2022 - Two certificates representing 1,493,000 common shares of a publicly traded company with a value of \$597.2 US dollars were received in our Vancouver office after the FedEx cut-off. The certificates were sent via FedEx courier to Pershing the following business day September 12,2022 {21}------------------------------------------------ 11/03/2022 - Two certificates representing 150,000 common shares of a publicly traded company with a value of \$ 60,000 US dollars were received in our Vancouver office and returned to the issuer pending Issuer address and contact name from the Registered Rep that was received the next business day, so the certificates were sent via FedEx courier to Issuer on November 4,2022. 11/21/2022 – One certificate representing 400,000 common shares of a publicly traded company with a value of \$ 152,000 US dollars was sent via FedEx courier to Pershing the following day November 22,2022 due to missed by securities staff 11/22/2022 - One certificate representing 1,401,752 common shares of a publicly traded company with a value of \$ 287,359.16 US dollars was received in our Vancouver office after the FedEx cut-off. The certificate was sent via FedEx courier to Pershing the following day November 23,2022 01/16/2023 - Four certificates representing 1,081,550 common shares of a publicly traded company with a value of \$60,000 US dollars were received in our Vancouver office by Messenger after the FedEx cut-off. The certificates were sent via FedEx courier to Pershing the following business day January 17,2023 01/26/2023 – One certificate representing 100,000 common shares of a publicly traded company with a value of \$53,000 US dollars was sent via FedEx courier to Pershing the following day January 27,2023 due to being short staffed as staff was sick with COVID-19. 01/30/2023 - Twelve certificates representing 1,213,900 common shares of a publicly traded company with a value of \$ 990,000 US dollars were dropped off by the Registered rep/assistant after the FedEx cut-off. The certificates were sent via FedEx courier to Pershing the following business day January 31,2023 02/3/2023 – Three certificates representing 12,037,037 common shares of a publicly traded company with a value of \$ 17,185 US dollars were received in our Calgary office after the FedEx cut-off. The certificates were sent via FedEx courier to Pershing the following business day February 6,2023 02/13/2023 - One certificate representing 25,000 common shares of a publicly traded company with a value of \$ 4,500 US dollars was received in our Vancouver office by Messenger after the FedEx cut-off. The certificate was sent via FedEx courier to Pershing the following day February 14,2023 02/16/2023 - One certificate representing 51,300 common shares of a publicly traded company with a value of \$ 105,165 US dollars was received in our Vancouver office by {22}------------------------------------------------ Messenger after the FedEx cut-off. The certificate was sent via FedEx courier to Pershing the following day February 17,2023 02/17/2023 – Three certificates representing 1,811,037 common shares of a publicly traded company with a value of \$ 158,000 US dollars were received our Vancouver office by Messenger after the FedEx cut-off. The certificates were sent via FedEx courier to Pershing the following business day February 21,2023. 02/27/2023 - One certificate representing 50,000 common shares of a publicly traded company with a value of \$10,325 US dollars was received in our Vancouver office at 1:34pm PST after the FedEx cut-off. The certificate was returned to Computershare the following day due to registration correction on February 28,2023 2/28/2023 - Two certificates representing 1,076,372 common shares of a publicly traded company with a value of \$ 563,000 US dollars were received in our Vancouver office by Messenger after the FedEx cut-off. The certificates were sent via FedEx courier to Pershing the following business day March 1,2023 03/08/2023 - Two certificates representing 350,000 common shares of a publicly traded company with a value of \$ 364,000 US dollars were received in our Vancouver office from the mailroom at 1:30 pm PST. The certificates were sent via FedEx courier to Pershing the following business day March 9,2023 03/14/2023 One certificate representing 500,000 common shares of a publicly traded company with a value of \$ 36,500 US dollars was received in our Vancouver office by Messenger after the FedEx cut-off. The certificate was sent via FedEx courier to Pershing the following day March 15,2023 03/29/2023 - Four certificates representing 57,049 common shares of a publicly traded company with a value of \$ 37,085.85 US dollars were received in our Vancouver office by Messenger after the FedEx cut-off. The certificates were sent via FedEx courier to Pershing the following business day March 30,2023 ## **Canaccord Genuity Wealth Management (USA) Inc.** I, Donald D. MacFayden, affirm that, to my best knowledge and belief, this Exemption Report is true and correct. By: Title: Chief Financial Officer May 30, 2023 {23}------------------------------------------------ # **Report of independent registered public accounting firm on applying agreed-upon procedures** #### To the Board of Directors and Management of **Canaccord Genuity Wealth Management (USA) Inc.** We have performed the procedures included in Rule 17a-5(e)(4) under the *Securities Exchange Act of 1934* and in the Securities Investor Protection Corporation ["SIPC"] Series 600 Rules, which are enumerated below on the accompanying General Assessment Reconciliation ["Form SIPC-7"] for the year ended March 31, 2023. Management of **Canaccord Genuity Wealth Management (USA) Inc.** ["Company"] is responsible for its Form SIPC-7 and for its compliance with the applicable instructions on Form SIPC-7. Management of the Company has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of assisting you and SIPC in evaluating the Company's compliance with the applicable instructions on Form SIPC-7 for the year ended March 31, 2023. Additionally, SIPC has agreed to and acknowledged that the procedures performed are appropriate for their intended purpose. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes. The sufficiency of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures we performed and our findings are as follows: 1. Compared the assessment payments made in accordance with the General Assessment Payment Form [Form SIPC-6] and applied to the General Assessment calculation on Form SIPC-7 with respective cash disbursement record entries of the Company. No findings were found as a result of applying the procedure. 2. Compared the amounts reported in the audited financial statements required by SEC Rule 17a-5 with the amounts reported in Form SIPC-7 for the fiscal year ended March 31, 2023. No findings were found as a result of applying the procedure. 3. Compared any adjustments reported in Form SIPC-7 with supporting schedules and working papers supporting the adjustments. No findings were found as a result of applying the procedure. 4. Recalculated the arithmetical accuracy of the calculations reflected in Form SIPC-7 and in the schedules and working papers supporting the adjustments. No findings were found as a result of applying the procedure. ![](_page_23_Picture_13.jpeg) {24}------------------------------------------------ We were engaged by the Company to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the *American Institute of Certified Public Accountants* and in accordance with the standards of the Public Company Accounting Oversight Board (United States). An agreed-upon procedures engagement involves the practitioner performing specific procedures that the engaging party has agreed to and acknowledged to be appropriate for the purpose of the engagement and reporting on findings based on the procedures performed. We were not engaged to and did not conduct an examination or a review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the Company's Form SIPC-7 and for its compliance with the applicable instructions on Form SIPC-7 for the year ended March 31, 2023. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement. This report is intended solely for the information and use of the specified parties listed above and is not intended to be, and should not be, used by anyone other than these specified parties. Toronto, Canada May 30, 2023 ![](_page_24_Picture_6.jpeg) {25}------------------------------------------------ Statement of Financial Condition [Expressed in U.S. dollars] **Canaccord Genuity Wealth Management (USA) Inc.** March 31, 2023 {26}------------------------------------------------ # **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, 2023, 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, 2023, 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 May 30, 2023 ![](_page_26_Picture_11.jpeg) {27}------------------------------------------------ #### **STATEMENT OF FINANCIAL CONDITION** [Expressed in U.S. dollars] As at March 31 | | 2023 | |-------------------------------------------------|-----------| | | \$ | | ASSETS | | | Current | | | Cash | 5,493,568 | | Deposit with clearing broker [note 4] | 150,000 | | Receivable from clearing broker | 473,032 | | Other securities | 7,107 | | Prepaid expenses | 48,456 | | Total current assets | 6,172,163 | | Deferred tax assets | 4,475 | | | 6,176,638 | | | | | LIABILITIES AND STOCKHOLDER'S EQUITY
Current | | | Accounts payable | 361,275 | | Due to affiliated companies [note 5] | 1,487,485 | | Total current liabilities | 1,848,760 | | Contingencies and commitments [note 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 | | Additional paid-up capital | 617,846 | | Retained earnings | 3,534,532 | | Total stockholder's equity | 4,327,878 | | | 6,176,638 | *See accompanying notes* {28}------------------------------------------------ ## **1. 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 Regulatory Authority ["FINRA"] and the Securities Investor 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 client monies and securities or perform custodial functions relating to client accounts. ## **2. SIGNIFICANT ACCOUNTING POLICIES** These financial statements 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 financial statements 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 financial statement. Actual results could differ from those estimates. #### **Income taxes** The Company is included in the consolidated federal income tax return filed by Canaccord Adams Financial Group Inc. The Company's effective federal and state income tax rate of 30.34% 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 federal income taxes are calculated as if the Company filed a separate federal income tax return. The tax sharing arrangement among the companies within the U.S. consolidated group provides that profitable 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 filing 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 financial statement, utilizing currently enacted tax rates and laws. The Company has adopted Financial Accounting Standards Board ["FASB"] Accounting Standards Codification ["ASC"] 740-10, *Accounting for Income Taxes*, 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 financial statement or tax returns using the liability method. Under this method, deferred tax liabilities and assets are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates and laws in effect 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 effect as at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies are translated into U.S. dollars at historical rates. {29}------------------------------------------------ #### **Fair value measurements** FASB ASC 820, *Fair Value Measurements and Disclosures*, defines fair value, establishes a framework for measuring fair value, and establishes a fair value hierarchy that prioritizes 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 measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for 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 specified by FASB 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 1 inputs are quoted prices [unadjusted] in active markets for identical assets or liabilities the Company has the ability to access. Level 2 inputs are inputs [other than quoted prices included within Level 1] 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 on management's own assumptions about the assumptions that market participants 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, receivable from clearing broker, other securities, due from affiliated companies, due to affiliated companies and accounts payable. It is management's opinion that the Company is not exposed to significant interest rate, currency or credit default risks arising from these financial instruments. ## **Credit risk** The Company's exposure to 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 of counterparties. ## **Market risk** Market risk is the risk that the fair value of financial instruments will fluctuate because of changes in market prices. The Company believes that any exposure to risk is in the normal course of business and does not anticipate any significant loss to such risk. #### **Interest rate risk** Interest rate risk arises from the possibility that changes in interest rates will affect the fair value or future cash flows of financial instruments held by the Company. The Company believes that any exposure to risk is in the normal course of business and does not anticipate any significant loss to such risk. {30}------------------------------------------------ ## **4. DEPOSIT WITH CLEARING BROKER** Under the terms of the fully disclosed clearing agreement with Pershing LLC, the Company is required to maintain a clearing deposit. The clearing deposit was \$150,000 at March 31, 2023. ## **5. RELATED PARTY TRANSACTIONS** As at March 31, 2023, \$34,135 was owing from CGC for revenues incurred by CGC on behalf of the Company. Included in due to affiliated companies are amounts of \$1,423,748 owing to Canaccord Adams Financial Group Inc. (CAFGI) for use of its tax losses in the current and preceding years. There are no repayment terms or interest on the amounts owing. Included in due to affiliated companies and administrative costs are amounts of \$29,602 owing to CG LLC for use of professional services provided by the operations and executive team. ## **6. CONTINGENCIES AND COMMITMENTS** The Company applies the provisions of ASC 460, *Guarantor's Accounting and Disclosure Requirements for Guarantees, including Indirect Guarantees of Indebtedness of Others*, which provides accounting and disclosure requirements for certain guarantees. The Company has agreed to indemnify Pershing LLC, the clearing broker, for losses that it may sustain from the customer accounts introduced by the Company. At March 31, 2023, the total amount of customer balances maintained by its clearing broker subject to such indemnification was nil. In accordance with applicable margin lending practices, customer balances are typically collateralized by customer securities or supported by other types of recourse provisions. The Company has not accrued for contingencies as at year-end. As a registered broker-dealer, the Company is subject to certain rules, regulations, and other regulatory requirements specific to the broker-dealer business and, as such, the Company operates within a regulatory framework involving certain governmental agencies and organizations. As a regulated entity and in the normal course, the Company is subject to periodic reviews and examinations by those agencies and organizations. The Company maintains policies and procedures designed to ensure compliance with these rules, regulations and requirements, but, in the event that a regulatory authority determines that there was a failure by the Company to follow or comply with certain procedures or a regulatory requirement or there is a deficiency in the Company's records or reports or some other compliance or financial failure then the Company may agree to pay a fine or penalty or agree to certain other sanctions, or, alternatively, a regulatory authority may impose a fine, penalty or other sanction. If such circumstances arise, the Company records a provision for any matter where a payment is considered probable and can be reasonably estimated. In connection with this regulatory oversight, certain compliance matters arising from a regulatory review and examination have been referred to enforcement for further review. The Company expects that the underlying matters will be resolved in the ordinary course and does not expect that such matters will have a material impact on its financial condition or results of operations. An estimate for a settlement of the matters has been recorded as of March 31, 2023, based on management's judgment. However, the Company may be required to make a payment that is more than the amount recorded. An actual estimate of any such excess cannot be made at this time. Adjustments will be recorded in subsequent periods if further information becomes available that changes the estimate. {31}------------------------------------------------ ## **7. REGULATORY NET CAPITAL REQUIREMENT** As a registered introducing broker-dealer, the Company is subject to the net capital rule of the SEC [Rule 15c3-1]. Rule 15c3-1 requires that the Company maintain a regulatory net capital equal to the greater of 6 2/3% of aggregate indebtedness, as defined, or \$50,000. At March 31, 2023, the Company had net capital of \$4,274,947 which was \$4,151,695 in excess of the required net capital of \$123,252. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.