# R.M. STARK & CO., INC. X-17A-5/A (2019-12-06) — Broker-dealer annual report - Company: R.M. STARK & CO., INC. - Form: X-17A-5/A - Filed: 2019-12-06 - Period: 2019-09-30 - Accession: 0000226001-19-000006 - CIK: 226001 - File #: 8-22543 - Material weakness: No - Auditor: Assurance Dimensions - Auditor location: Coconut Creek, FL - Contact: Gary Stark - Phone: 5612433815 - Signed by: Gary Stark (President) Original filing: https://www.sec.gov/Archives/edgar/data/226001/000022600119000006/rmstark19_audit_long.pdf --- {0}------------------------------------------------ ![](_page_0_Picture_0.jpeg) **Financial Statements and Report of Independent Registered Public Accounting Firm Pursuant to Rule 17a-5** **September 30, 2019** {1}------------------------------------------------ UNITEDSTATES SECURITIES ANDEXCHANGE COMMISSION Washington, D.C. 20549 OMB APPROVAL OMB Number: 3235-0123 August 31, 2020 Expires: Estimated average burden hours per response .. . . . . . 12.00 # ANNUAL AUDITED REPORT FORM X-17A-5 PART III SEC FILE NUMBER 8-22543 FACING PAGE Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder | | CONSULTITIONS TYPE C TRAC OF T C L MITH TENIL T LA
AND ENDING 09/30/19 | | | | |----------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------|---------|--------------------------------|--| | REPORT FOR THE PERIOD BEGINNING 10/01/18 | MM/DD/YY | | MM/DD/YY | | | | A. REGISTRANT IDENTIFICATION | | | | | NAME OF BROKER-DEALER: R.M. Stark & Co., Inc | | | OFFICIAL USE ONLY | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | FIRM I.D. NO. | | | 730 South Federal Highway | (No. and Street) | | | | | Lake Worth | FL | | 33460 | | | (City) | (State) | | (Zip Code) | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
Gary Stark 561-243-3815 | | | | | | | | | (Area Code - Telephone Number) | | | | B. ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | | Assurance Dimensions | | | | | | | (Name - if individual, state last, first, middle name) | | | | | 5489 Wiles Rd, Unit 303 | Coconut Creek | ﻠ | 33073 | | | (Address) | (City) | (State) | (Zip Code) | | | CHECK ONE: | | | | | | Certified Public Accountant | | | | | | Public Accountant | | | | | | Accountant not resident in United States or any of its possessions. | | | | | | | | | | | | | FOR OFFICIAL USE ONLY | | | | | | | | | | | | | | | | \*Claims for exemption from the requirement that the annual report be covered by the opinion of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis for the exemption. See Section 240.17a-5(e)(2) > Potential 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}------------------------------------------------ #### OATH OR AFFIRMATION | T. Gary Stark | | swear (or affirm) that, to the best of | |-------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------|--------------------------------------------------------| | | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of | | | R.M. Stark & Co., Inc | | વટે | | of September 30 | 2019 | are true and correct. I further swear (or affirm) that | | | neither the company nor any partner, principal officer or director has any proprietary interest in any account | | | classified solely as that of a customer, except as follows: | | | MARY JANE AUMAIS Y COMMISSION # GG 094017 EXPIRES: July 27, 2021 nded Thru Notary Public Underwriters Signature Title Notary Public This report \*\* contains (check all applicable boxes): - (a) Facing Page. - V (b) Statement of Financial Condition. - (c) (c) Statement of Income (Loss) or, if there is other comprehensive income in the period(s) presented, a Statement of Comprehensive Income (as defined in §210.1-02 of Regulation S-X). - (d) Statement of Changes in Financial Condition. - (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital. - (f) Statement of Changes in Liabilities Subordinated to Claims of Creditors. - (g) Computation of Net Capital. - (b) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3. - (i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3. - (j) A Reconciliation, including appropriate explanation of Net Capital Under Rule 15c3-1 and the Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3. - (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of consolidation. - (1) An Oath or Affirmation. - (m) A copy of the SIPC Supplemental Report. - (n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit. \*\* For conditions of confidential treatment of certain portions of this filing, see section 240.17a-5(e)(3). {3}------------------------------------------------ # **R.M. STARK & CO., INC.** ## **TABLE OF CONTENTS** | | Page | |----------------------------------------------------------------------------------------------------------------|------| | Report of Independent Registered Public Accounting Firm | 1 | | Financial Statements: | | | Statement of Financial Condition | 2 | | Statement of Income | 3 | | Statement of Changes in Shareholder's
Equity | 4 | | Statement of Cash Flows | 5 | | Notes to Financial Statements | 6-11 | | Supplementary Information: | | | Computation of Net Capital Per Uniform Net Capital Rule 15c3-1 | 13 | | Exemption Report | 14 | | Report of Independent Registered Public Accounting Firm-
Exemption Report Review | 15 | | Independent Accountant's Agreed-Upon Procedures Report on Schedule of Assessment and
Payments (Form SIPC-7) | 16 | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholder of R.M. Stark & Co., Inc .: #### Opinion on the Financial Statements We have audited the accompanying statement of financial condition of R.M. Stark & Co., Inc. as of September 30, 2019, the related statements of operations, changes in shareholder's equity and cash flows for the year then ended, and the related notes and schedules (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of R.M. Stark & Co., Inc. as of September 30, 2019, and the results of its operations and its cash flows for then ended in conformity with accounting principles generally accepted in the United States of America. #### Basis for Opinion These financial statements are the responsibility of R.M. Stark & Co., Inc.'s management. Our responsibility is to express an opinion on R.M. Stark & Co., Inc.'s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board ("PCAOB") and are required to be independent with respect to R.M. Stark & Co, Inc. 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 of 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 isks. Such procedures included examining, on a test bass, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating 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. #### Supplementary Information The Computation of Net Capital Pursuant to SEC Rule 15c3-1 and exemption report, has been subjected to audit procedures performed in conjunction with the audit of R.M. Stark & Co., Inc.'s financial statements. The supplementary information is the responsibility of R.M. Stark & Co., Inc.'s management. Our audit procedures included determining whether the supplementary information reconciles to the financial statements of the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplementary information. In forming our opinion on the supplementary information, we evaluated whether the supplementary including its form and content, is presented in conformity with 17 C.F.R. §240.17a-5. In our opinion, the Computation of Net Capital Pursuant to SEC Rule 15c3-1 and exemption report, is fairly stated, in all material respects, in relation to the financial statements as a whole. surance ( Jimensions We have served as R.M. Stark & Co., Inc.'s auditor since July 2019. Coconut Creek, Florida November 27, 2019 ASSURANCE DIMENSIONS CERTIFIED PUBLIC ACCOUNTANTS & ASSOCIATES TAMPA BAY: 4920 W Cypress Street, Suite 102 | Tampa, FL 33607 | Office: 813.443.5048 | Fax: 813.443.5053 JACKSONVILLE: 4350 Pablo Professional Court | Jacksonville, FL 32224 | Office: 904.349.3442 | Fax: 904.296.0054 ORLANDO: 1800 Pembrook Drive, Suite 300 | Orlando, FL 32810 | Office: 888.410.2323 | Fax: 813.443.5053 SOUTH FLORIDA: 5489 Wiles Road, Unit 303 | Coconut Creek, FL 33073 | Office: 754.205.6417 | Fax: 754.205. 6519 www.assurancedimensions.com {5}------------------------------------------------ ## **R.M. STARK & CO., INC** STATEMENT OF FINANCIAL CONDITION AS OF SEPTEMBER 30, 2019 | ASSETS | | |----------------------------------------------------------------------|-----------------| | Cash | \$
875 | | Receivable from broker/dealers | 283,107 | | Securities owned, at fair market value | 961,528 | | Prepaid expense and other | 1,096 | | | | | TOTAL ASSETS | \$
1,246,606 | | | | | LIABILITIES AND
SHAREHOLDER'S
EQUITY | | | LIABILITIES | | | Accounts payable, accrued expenses
and other liabilities | \$
75,146 | | Commissions payable | 232,537 | | TOTAL LIABILITIES | \$
307,683 | | SHAREHOLDER'S
EQUITY | | | Common Stock, no par value, authorized 2,000,000, 875 shares issued, | 81,145 | | Retained Earnings | 857,778 | | TOTAL SHAREHOLDER'S EQUITY | 938,923 | | TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY | \$
1,246,606 | {6}------------------------------------------------ ## **R.M. STARK & CO., INC** ## STATEMENT OF INCOME YEAR ENDED SEPTEMBER 30, 2019 | REVENUES | | |-------------------------------------|-----------------| | | | | Commissions | \$
2,657,334 | | Interest and dividends | 112,435 | | Proprietary trading gain/loss | 421,329 | | Other | 160,553 | | Total Revenue | 3,351,651 | | OPERATING EXPENSES | | | Clearing and execution charges | \$
128,385 | | Commissions | 2,162,628 | | Compensation and related benefits | 641,842 | | Occupancy and equipment rental | 99,689 | | General and administrative expenses | 481,557 | | Total expenses | 3,514,101 | | NET
LOSS | \$
(162,450) | {7}------------------------------------------------ # **R.M. STARK & CO., INC** ## STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY YEAR ENDED SEPTEMBER 30, 2019 | | Common
Shares | Common
Stock | Retained
Earnings | Total | |--------------------------------------|------------------|-----------------|----------------------|--------------| | Balance-
Beginning of
the Year | 875 | \$ 81,145 | \$ 1,020,228 | \$1,101,373 | | Net Loss | | | (162,450) | \$ (162,450) | | Shareholder's Equity
End of Year | 875 | \$ 81,145 | \$ 857,778 | \$ 938,923 | {8}------------------------------------------------ # **R.M. STARK & CO., INC** STATEMENT OF CASH FLOWS YEAR ENDED SEPTEMBER 30, 2019 | CASH FLOWS FROM OPERATING ACTIVITIES: | | |-------------------------------------------------------------------------|-----------------| | Net Loss | \$
(162,480) | | Adjustments: | | | Unrealized gain on
securities owned | 138,065 | | Bad Debt expense | 44,089 | | Increase
in receivable from Clearing Organization | (61,864) | | Increase
in prepaid expenses and other assets | (793) | | Decrease
in Brokers Payable | (835) | | Increase
in Accounts Payable, accrued expenses and other liabilities | 44,361 | | Total adjustments | (163,023) | | Net cash provided by operating activities | 543 | | NET INCREASE
IN CASH | 543 | | CASH
BALANCE
–
BEGINNING OF YEAR | \$
332 | | CASH BALANCE –
END OF YEAR | 875 | {9}------------------------------------------------ ## **NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES** *Organization* – R.M. Stark & Co., Inc. (the "Company"), a wholly-owned subsidiary of RMST Holding Company, Inc. (the "Parent"), was incorporated in the state of Florida on September 29, 1988. The Company is registered with the Securities and Exchange Commission and is a member of the Financial Industry Regulatory Authority (FINRA). The Company's principal business activity is the sale of securities. *Basis of Presentation* - The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). *Securities Transactions* - Securities transactions of the Company, including commission revenue and related expense, are recorded on a trade date basis, which is the same business day as the transaction date. *Concentrations of Credit Risk* - The Company is engaged in various trading and brokerage activities in which the counterparties primarily include broker/dealers, banks, other financial institutions and the Company's own customers. In the event the counterparties do not fulfill their obligations, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the counterparty or issuer of the instrument. It is the Company's policy to review, as necessary, the credit standing of each counterparty. In addition, most of the Company's cash is on deposit at one financial institution and the balance at times may exceed the federally insured limit. The Company believes it is not exposed to any significant credit risk to cash. *Estimates* - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. *Receivables* - The Company reviews the receivables for collectability on a regular basis. The allowance for doubtful accounts reflects management's best estimate of probable losses determined principally on the basis of historical experience. The allowance for doubtful accounts was \$0 at September 30, 2019. A bad debt expense of \$44,089 was recorded for the incorrect treatment of 12b1 fees as a receivable. {10}------------------------------------------------ *Note 1 Cont.* #### *Revenue Recognition* The Company adopted Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers on October 1, 2018, the date the guidance became effective for us. The Company adopted the guidance using the modified retrospective method (i.e. applied prospectively effective October 1, 2018), which had no impact on the Company's opening retained earnings. Further, the Company determined that there was no material impact to the Company's recognition of revenue upon adoption of Topic 606. All revenues are recorded in accordance with ASC 606, which is recognized when: (i) a contract with a client has been identified, (ii) the performance obligation(s) in the contract have been identified, (iii) the transaction price has been determined, (iv) the transaction price has been allocated to each performance obligation in the contract, and (v) the Company has satisfied the applicable performance obligation over time / point in time. We have completed the process of evaluating the effect of the adoption and determined there were no material changes required to our reported revenues as a result of the adoption. The Company principally earns revenue (commissions) from brokerage activities, which are recognized on a trade date basis. Investment banking income includes fees earned for financial advisory and placement services. Financial advisory fees revenues are earned throughout the term of the financial advisory agreement. Fees for placement services are recognized when the placement is completed, and the collection of the fee is reasonably determined. Margin interest is earned monthly based upon customer margin balances. Proprietary securities transactions in trades are recorded on the trade date, as if they had settled. Profit and loss arising from all securities and commodities transactions entered into for the account and risk of the Company are recorded on the trade date basis. The net trading gain/loss is recorded under revenue in accordance with ASC Topic 940, "Financial Services-Brokers and Dealers" since it is not within scope of the new revenue recognition guidance ASC 606 "Revenue from Contracts with Customers". Revenues are not concentrated in any region of the country or with any individual or group. The firm's commissions are primarily derived from a combination of a limited number of retail accounts and institutional execution services. ### *Recent Accounting Pronouncements* The Company adopts all applicable, new accounting pronouncements as of the specified effective dates. In February 2016, the FASB issued new guidance related to the accounting for leases (ASU 2016-02). The new guidance requires the recognition of assets and liabilities on the balance sheet related to the rights and obligations created by lease agreements with terms greater than twelve months, regardless of whether they are classified as finance or operating leases. {11}------------------------------------------------ *Note 1 Cont.* Consistent with current guidance, the recognition, measurement and presentation of expenses and cash flows arising from a lease will primarily depend upon its classification as a finance or operating lease. The new guidance requires new disclosures to help financial statement users better understand the amount, timing and cash flows arising from leases. The new guidance, including subsequent amendments, is first effective for our fiscal year beginning on October 1, 2019. Although permitted, we do not plan to early adopt. Upon adoption, we will use a modified retrospective approach, with a cumulative effect adjustment to opening retained earnings. Our implementation efforts include reviewing existing leases and service contracts, which may include embedded leases. Based on our preliminary analysis, the Company expects to record a right of use asset and liability of \$77,400. ## **NOTE 2. FAIR VALUE MEASUREMENT** FASB ASC 820 defines fair value, creates a framework for measuring fair value, and establishes a fair value hierarchy which 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. {12}------------------------------------------------ #### *Note 2 cont.* | | | Fair Value
as of
September | | | |------------------------|----------|----------------------------------|---------|---------| | Description | 30, 2019 | | Level 1 | | | Equities | \$ | 325,203 | \$ | 325,203 | | Exchange-Traded | | | | | | Products | | 517,868 | | 517,868 | | Fixed income | | 1,024 | | 1,024 | | Mutual Funds | | 117,433 | | 117,433 | | Total Securities owned | \$ | 961,528 | \$ | 961,528 | All broker/dealer receivables, accounts payable and accrued expenses have been valued at net realizable value. No valuation techniques have been applied to all other assets and liabilities included in the statement of financial condition. Due to the nature of these items, all have been recorded at their historical values. ## **NOTE 3. INCOME TAXES** Both the Company and its Parent have elected S Corporation status for federal income tax purposes. Income taxes are therefore the responsibility of the individual shareholders of the Parent. The Company accounts for any potential interest or penalties related to possible future liabilities for unrecognized income tax benefits as other expense. The Company is no longer subject to examination by tax authorities for federal, state or local income taxes for periods before 2016. #### **NOTE 4. OFF- BALANCE-SHEET RISK AND CLEARING AGREEMENT** The Company enters into various transactions involving derivatives and other off-balance sheet financial instruments. These financial instruments include listed options. These derivative financial instruments are used to meet the needs of customers, conduct investment activities and manage risks and are, therefore, subject to varying degrees of market and credit risk. Derivative transactions are entered into for trading purposes or to economically hedge other positions or transactions. All investments are level 1 and therefore no longer owned by R.M Stark as of September 30, 2019. As a writer (seller) of options, the Company and its customers receive a premium in exchange for giving the counterparty the right to buy or sell the security at a future date at a contracted price. The contractual or notional amount related to these financial instruments reflects the volume and activity and does not reflect the amount of risk. {13}------------------------------------------------ *Note 4 Cont.* The credit risk for options is limited to the unrealized market valuation gains recorded in the statement of financial condition. Market risk is substantially dependent upon the value of the underlying financial instruments and is affected by market forces such as volatility and changes in interest and foreign exchange rates. In addition, the Company and its customers sell securities that they do not currently own and will therefore be obligated to purchase such securities at a future date. The Company records these obligations in the financial statements at market values of the related securities and will incur a loss if the market value of the securities increases subsequent to the financial statement date. In order to facilitate the aforementioned transactions, as well as other transactions, the Company maintains an agreement with another broker/dealer (Clearing Broker/dealer) whereby the Company forwards (introduces) customer securities transactions to the Clearing Broker/dealer, fully disclosing the customer name and other information. The processing and, if applicable, any financing pertaining to the introduced securities transactions are performed by the Clearing Broker/dealer. The customer account is therefore maintained and recorded in the books and records of the Clearing Broker/dealer on the Company's behalf. In consideration for introducing customers to the Clearing Broker/dealer, the Company receives commissions and other consideration, less the processing and other charges of the Clearing Broker/dealer. As part of the terms of the agreement between the Company and the Clearing Broker/dealer, the Company is held responsible for any losses arising when the customers introduced by the Company to the Clearing Broker/dealer fail to meet their contractual commitments pertaining to the purchase, sale and possible financing of securities transactions. The Company may therefore be exposed to off-balance-sheet risk in the event the customer is unable to fulfill its contracted obligations and it is necessary for the Clearing Broker/dealer to purchase or sell the securities at a loss. The Company's exposure to risk would consist of the amount of the loss realized and any additional expenses incurred pertaining to the transaction or other customer activity. The initial term of the aforementioned agreement was three years, which began in September 2003. Under terms of the agreement the Company is required to maintain \$100,000 deposit with Clearing Broker/dealer and is prohibited from using other Clearing Broker/dealers for securities transactions unless written consent is given by the Clearing Broker/dealer. Also included in the agreement are monthly minimum and termination charges. {14}------------------------------------------------ ## **NOTE 5. NET CAPITAL REQUIREMENTS** As a registered broker/dealer and member of FINRA, the Company is subject to the Uniform Net Capital Rule, which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 1500%. At September 30, 2019, the Company's net capital and required net capital were \$793,700 and \$100,000 respectively. The ratio of aggregate indebtedness to net capital was 39%. The Company originally filed its year-end FOCUS IIA showing an ending net capital of \$793,700. ## **NOTE 6. OTHER COMMITMENTS** Operating Leases - Minimum annual rentals under a lease for office space, expiring September 30, 2019, exclusive of additional payments which may be required for certain increases in operating and maintenance costs will be \$25,800 for the year ending September 30, 2020. Rent expense under this operating lease was \$99,504 for the year ended September 30, 2019. #### **NOTE 7. 401 (k) Plan** The Company adopted a deferred compensation plan commonly referred to as a profitsharing plan with provisions under IRS code section 401(k) whereby employees may contribute up to 75% of their compensation within specified legal limits. In addition, the Company will match 50% of employee contributions up to 6% of their compensation. The plan covers substantially all employees age 19 years or older. The Company changed the plan year to a calendar year end. Company contributions to the plan for the year ended September 30, 2019 were \$20,229. #### **NOTE 8. RELATED PARTIES** Stark Financial Advisers, Inc. is an affiliate of R.M. Stark & Co., Inc. In some cases, the firms share common clients. Certain joint clients with assets custodian at Pershing enter into wrap-fee relationships where one fee covers both the execution costs that are paid to R.M. Stark and Co., and management fees that are paid to Stark Financial Advisers. Wrapfees are typically charged against the assets held at Pershing and then credited to R.M. Stark. R.M. Stark then pays Stark Financial Advisers the portion of the fees deemed to be management fees. During the year ended September 30, 2019, the Company paid \$186,903 of their portion of the management fees. {15}------------------------------------------------ ## **NOTE 9. CONTINGENCIES** The Company, from time to time, is involved in certain claims and arbitrations incidental to its business operations. The Company actively investigates these matters and takes the appropriate steps to defend itself against these claims. The Company has not accrued any amounts related to these claims at September 30, 2019. Roberta O'Grady v. R.M. Stark & Co., Inc., Thomas J. Marino, Individually and Capstone Financial Group, LLC, et al. FINRA Case No. 19-00968. O'Grady alleges that she invested approximately \$300,000 with Marino and his personal company Capstone Financial while Marino was registered with R.M. Stark & Co., Inc. ("RMST"). The gist of her claim is that RMST failed to supervise Marino while he was "selling away" and receiving O'Grady's funds. Discovery has not supported her allegations and the claim is being vigorously defended. Nicholas A. Owoyemi v. Financial Industry Regulatory Authority, R.M. Stark & Co., Inc., Chase Investments Services Corporation and Merrimac Corporate Securities, Inc. New York Supreme Court Case 2019/2019. In violation of FINRA Rules, Owoyemi, a former broker with RMST and the other named firms, initiated a state court action (as opposed to a FINRA arbitration) alleging defamation by reason of the disclosures made on his U5. The suit is totally without merit. RMST has filed an answer and Motion to Compel Arbitration. Other firms are also filing Motions to Dismiss. RMST intends to initiate a FINRA arbitration against Owoyemi for harassment prior to a ruling on Defendants' motions. {16}------------------------------------------------ **SUPPLEMENTARY INFORMATION** {17}------------------------------------------------ ## **R.M. STARK & CO., INC** COMPUTATION OF NET CAPITAL PER UNIFORM NET CAPITAL RULE 15c3-1 SEPTEMBER 30, 2019 | Computation of Net Capital | | |--------------------------------------------------------------------------|---------------| | | | | Total shareholder's equity | \$
938,923 | | DEDUCTIONS | | | Nonallowable assets | (1,096) | | Haircuts on securities owned | (144,127) | | NET CAPITAL | 793,700 | | COMPUTATION OF BASIC NET CAPITAL REQUIREMENT | | | Minimum net capital requirement (6 2/3% of total aggregate indebtedness) | 20,050 | | MINIMUM NET CAPITAL REQUIREMENT | 100,000 | | NET CAPITAL
REQUIREMENT | 100,000 | | EXCESS NET CAPITAL | \$
693,700 | | COMPUTATION OF AGGREGATE INDEBTNESS
Total liabilities | 307,683 | | PERCENTAGE OF AGGREGATE INDEBTNESS TO NET CAPITAL | 39% | ## **Reconciliation:** Net Capital, per unaudited September 30, 2019 FOCUS report \$837,789 Audit Adjustments (\$44,090) Net Capital, per September 30, 2019 audited report \$793,699 {18}------------------------------------------------ R.M. Stark & Co., Inc FULL-SERVICE INVESTMENT BROKERS Member FINRA, SIPC, MSRB #### EXEMPTION REPORT SEC Rule 17a-5(d)(4) November 27, 2019 The information below is designed to meet the Exemption Report criteria pursuant to SEC Rule 17a-5(d)(4): - · R.M. Stark & Co., Inc. is a broker/dealer registered with the SEC and FINRA. - · R.M. Stark & Co., Inc. claimed an exemption under paragraph (k)(2)(ii) of Rule 15c3-3 for the year ended September 30, 2019. - · R.M. Stark & Co., Inc. is exempt from the provisions of Rule 15c3-3 because it meets conditions set forth in paragraph (k)(2)(ii) of the rule, of which, the identity of the specific conditions are as follows: - o The provisions of the Customer Protection rule shall not be applicable to a broker or dealer who, as an introducing broker or dealer, clears all transactions with and for customers on a fully disclosed basis with a clearing broker or dealer, and who promptly transmits all customer funds and securities to the clearing broker or dealer which carries all of the accounts of such customers and maintains and preserves such books and records pertaining thereto pursuant to the requirements of Rule 17a-3 and rule 17a-4, as are customarily made and kept by a clearing broker or dealer. - · R.M. Stark & Co., Inc. has met the identified exemption provisions in paragraph (k)(2)(ii) of Rule 15c3-3 throughout the year ended September 30, 2019 without exception. - · R.M. Stark & Co., Inc. has not recorded any exceptions to the exemption provision in paragraph (k)(2)(ii) of Rule 15c3-3 for the year ended September 30, 2019. The above statements are true and correct to the best of my and the Firm's knowledge. | Signature: | | | |-----------------|---------|------------------| | Name and Title: | 10ARVEY | RESUDENS
STAR | | | | | {19}------------------------------------------------ ![](_page_19_Picture_0.jpeg) # ASSURANCEDIMENSIONS #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - EXEMPTION REPORT REVIEW #### To the Board of Directors and Shareholder of R.M. Stark & Co., Inc .: We have reviewed management's statements, included in the accompanying Exemption Report requred by SEC Rule 17a-5, in which (1) R.M. Stark & Co., Inc. identified the following provisions of 17 C.F.R. §15c3-3(k) under which R.M. Stark & Co., Inc. claimed an exemption from 17 C.F.R. (240.15c3-3: under the provision (k)(2)(u) "Customer Protection-Reserves and Custody of Securities" (the "exemption") and (2) R.M. Stark & Co., Inc. stated that it has met the identified exempton provisions throughout the most recent fiscal year without exception. R.M. Stark & Co., Inc.'s management is responsible for compliance with the exemptions and its statements. Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingy, included inquires and other requred procedures to obtain evidence about R.M. Stark & Co., Inc.'s compliance with the exemptions. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on managements. 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 managements statements referred to above for them to be farly stated, in all material respects, based on the provisions set forth in Section (8)(2)(2)(2)(2)(2)(2)(2)(2)(2)(2)(2)(2)(2)(2)(2)(2)(2)(2 "Customer Protection-Reserves and Custody of Securities" of Rule 15c3-3 under the Securities Exchange Act of 1934. ssurance | Jimension Assurance Dimensions, Inc. Certified Public Accountants November 27, 2019 #### ASSURANCE DIMENSIONS CERTIFIED PUBLIC ACCOUNTANTS & ASSOCIATES TAMPA BAY: 4920 W Cypress Street, Suite 102 | Tampa, FL 33607 | Office: 813.443.5048 | Fax: 813.443.5053 JACKSONVILLE: 4350 Pablo Professional Court | Jacksonville, FL 32224 | Office: 904.349.3442 | Fax: 904.296.0054 ORLANDO: 1800 Pembrook Drive, Suite 300 | Orlando, FL 32810 | Office: 888.410.2323 | Fax: 813.443.5053 SOUTH FLORIDA: 5489 Wiles Road, Unit 303 | Coconut Creek, FL 33073 | Office: 754.205.6417 | Fax: 754.205. 6519 www.assurancedimensions.com {20}------------------------------------------------ ![](_page_20_Picture_0.jpeg) # ASSURANCEDIMENSIONS #### INDEPENDENT ACCOUNTANT'S AGREED-UPON PROCEDURES REPORT ON SCHEDULE OF ASSESSMENT AND PAYMENTS (FORM SIPC-7) #### Board of Directors and Stockholder of R.M. Stark & Co., Inc., In accordance with Rule 17a-5(e)(4) under the Securities Exchange Act of 1934, we have performed the procedures enumerated below with respect to the accompanying Schedule of Assessment and Payments (Porm SIPC-7) to the Securities Investor Protection (SIPC) for the year ended August 31, 2019, which were agreed to by R.M. Stark & Co., Inc. ("the Compan"), and the Securities and Exchange Commission, Financial Industry Regulatory Authority, Inc., SIPC, and any Other Designated Examining Authority, solely to assist you and the other specified parties in evaluating the Compliance with the applicable instructions of Form SIPC-7. R.M. Stark & Co., Inc.'s management is responsible for its complance with those requirements. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the Amencan Institute of Certified Public Accountants. 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 listed assessment payments in Form SIPC-7 with respective cash disbursement records entries, noting no differences; - 2) Compared the amounts reported on the audited Form X-17A-5 for the year ended September 30, 2019, as applicable, with the amounts reported in Form SIPC-7 for the year ended September 30, 2019, noting no differences; - 3) Compared any adjustments reported in Form SIPC-7 with supporting schedules and working papers, traal balance, ledgers of accounting activity, SIPIC 6 and bank statements noting no differences; - 4) Proved the anthmetical accuracy of the calculations reflected in Form SIPC-7 and in the related schedules and working papers, as described in #3, supporting the adjustments noting no differences; and - 5) Compared the amount of payment applied to the current assessment with the Form SIPC-7 on which it was originally computed, noting no material differences. We were not engaged to, and did not conduct an examination, the objective of which would be the expression of an opinion on complance. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report is intended solery for the information and use of the specified partes Issted above and is not intended to be and should not be used by anyone other than these specified parties. ssurance ( Jimensions Assurance Dimensions, Inc. Certified Public Accountants November 27, 2019 #### ASSURANCE DIMENSIONS CERTIFIED PUBLIC ACCOUNTANTS & ASSOCIATES TAMPA BAY: 4920 W Cypress Street, Suite 102 | Tampa, FL 33607 | Office: 813.443.5048 | Fax: 813.443.5053 JACKSONVILLE: 4350 Pablo Professional Court | Jacksonville, FL 32224 | Office: 904.349.3442 | Fax: 904.296.0054 ORLANDO: 1800 Pembrook Drive, Suite 300 | Orlando, FL 32810 | Office: 888.410.2323 | Fax: 813.443.5053 SOUTH FLORIDA: 5489 Wiles Road, Unit 303 | Coconut Creek, FL 33073 | Office: 754.205.6417 | Fax: 754.205.6519 www.assurancedimensions.com Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.