# MUTUAL SECURITIES, INC. X-17A-5 (2023-09-29) — Broker-dealer annual report - Company: MUTUAL SECURITIES, INC. - Form: X-17A-5 - Filed: 2023-09-29 - Period: 2023-06-30 - Accession: 0000710025-23-000003 - CIK: 710025 - File #: 8-28580 - Type: Broker-dealer - Material weakness: No - Auditor: Farber Hass Hurley LLP - Auditor location: Chatsworth, CA - Contact: Jared Kopp - Phone: 5853700543 - Email: form@slpc.org - Website: slpc.org - Signed by: Nick Damiani (Chief Administrative Officer) Original filing: https://www.sec.gov/Archives/edgar/data/710025/000071002523000003/audd.pdf --- {0}------------------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 0MB APPROVAL 0MB Number.3235-0123 Expires: Oct. 31, 2023 Estlmatcd average burden hours per response: 12 # **ANNUAL REPORTS FORM X-17 A-5 PART** Ill | SEC FILE NUMBER | |-----------------| | 8-28580 | FACING PAGE Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 FI LING FOR THE PERIOD BEGINNING **07/01 /22** MM/DD/YY AND ENDING **06/30/23** MM/DD/VY **A. REGIST~ANT IDENTIFICATION** NAME OF FIRM: MUTUAL SECURITIES, INC. OF CALIFORNIA OBA MUTUAL SECURITIES, INC. TYPE OF REGISTRANT (check all applicable boxes): GJ Broker-dealer D Security-based swap dealer D Major security-based swap participant 0 Check here If respondent is also an OTC derivatives dealer ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) # 807-A CAMARILLO SPRINGS ROAD | | (No. and Street) | | | |--------------------------------------------------|------------------------------------------------------------------------------------------------------------|---------------------------|--------------------------------------------| | CAMARILLO | CA | | 93012 | | (City) | (State) | | (Zip Code) | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | NICK DAMIANI | 805-764-67 40 | NICK DAMIANl@MUTW\L.GROUP | | | (Name) | (Al'ea Code-Telephone Number) | (Email Address) | | | | | | | | | 8. ACCOUNTANT IDENTIFICATION
INDEPENDENT PUBLIC ACCOUNTANT.whose reports are contained in this filing'" | | | | FARBER HASS HURLEY LLP | | | | | | IName - if Individual, st ate last, first, and middle name) | | | | 9301 OAKDALE AVE | CHATSWORTH | CA | 91311 | | (Address) | (Cfty) | (State) | (Zip CodEo) | | 10/22/2003 | | 223 | | | (Date of Registration with PCAOB)(if applicable} | | | (PCAOB Registration Number, if applicable) | • Clalms for exemption from the requi(ement that the annual reports be covered by the reports of a,, independent public accountant must be supported by a statement off-acts and circumstances relied on as the basis of the exemption. See 17 CfR 240.17a-5(e)(l)(ii}, If applicable. Persons who are to respond to the collection of Information contained In t his form are not required to respond unless the form displays a currently valid 0MB control number. {1}------------------------------------------------ #### **OATH OR AFFIRMATION** I, NICK DAMIANI swear (or affirm) that, to t he best of my knowledge and belief, the financial report pertaining to the firm of MUTUAL SECURITIES, INC. OF CALIFORNIA OBA MUTUAL SECURITIES, INC. as of 6/30 2~ Is true and correct. I f urther swear (or affirm) that neither the company nor any ~ partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classi·fied solely as that of a customer. Signature: Tit le: ~ ~ CHIEF ADMINISTRATIVE OFFICER & FINOP **~\,.,.~~~UJjLLf'.1:--======----=--t..il(see 4tf~ckc.cl** Notary Public **Ccili** *.PoM••* **Aol"'"'To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-S(e)(3) or 17 CFR 240.18a-7(d}(2), as applicable. {2}------------------------------------------------ | | CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT | |---------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | A notary public or other officer completing this certificate verifies only the identity Of the individual who signed the
document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. | | STATE OF CALIFORNIA | } | | | | | ------------------
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_____ | {3}------------------------------------------------ # **Report on Audit of Financial Statements and Supplementary Information** **June 30, 2023** This report is deemed CONFIDENTIAL in accordance with Rule I 7a-5(e)(3) W1der the Securities Exchange Act of 1934. A statement of financial condiLion, bound separately, has been filed with the Securities and Exchange Cornmiss.ion simullaneously herewith as a Public Document. {4}------------------------------------------------ # **Contents** As of and for the year ended June 30, 2023 Report of Independent Registered Public Accow1ting Firm **Financial Statements** Statement of Financial Condition Statement of Operations Statement of Changes in Subordinated Borrowings Statement of Changes in .Stockholders' Equity Statement of Cash Flows Notes to Financial Statements **Supplementary Information** Schedule 1- Computation ofNet Capital Under Rule 15c3-l of the Securities and Exchange Commiss.ion Schedule *Il* - Computation for Determination of C11stomer Account Reserve Under Rule l 5c3-3 of the Securities and Exchange Commission (Exemption) **Report of Independent Registered Public Accounting Firm Regarding Rule 15c3-3 Exemption Report** Exemption Report 2 3 4 5 6 7-12 13 14 15 16 {5}------------------------------------------------ ![](_page_5_Picture_0.jpeg) **rill Farber Hass Hurley LLP** Cerlified Public Accountants 9301 Oakdale Avenue, Suite 230 Chatsworth, CA 91311 www.fhhcpas.com Telephone: (818) 895-1943 Facsimile: (818)727-7700 #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Mutua **1** Securities lnc. #### **Opinion on the Financial Statements** We have audited the accompanying statement of financial condition of Mutual Securities Inc. as of June 30, 2023, the related statements of operations, changes in subordinated borrowings, changes in stockholders' equity, and cash flows for the year then ended, and the related notes (collectively referred to as the financial statements). In our opinjon, the financia l statements present fairly, in all material respects, the financial position of Mutual. Securities Inc. 11s of June 30, 2023, and the results of its operations and its cash flows for the year 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 Mutual Securities lnc. 's management. Our responsibility is to express an opinion on Mutual Securities Jnc.'s financial statements 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 Mutual Securities Inc. in accordance wjth tbe U.S. federal securities laws and Lhe applicable rules and regulations of the Securities and Exchange Commissio11 and the PCAOB. We conducted our audit in accordance with the standards of t·he PCAOB. Those standards requ.ire that we plan and perform the audit to obtain reasonable assurance about wbetber 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 perforn,1ing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financia l 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 ollr audit provides a reasonable basis for our opini.on. #### **Supplemental Information** The Schedule I, Computation of Net Capital Requirements Pmsuant to Rule 15c3-J, and Schedule 11, Computation For Determination Of Reserve Requirements and Information Relating to Possess.ion or Control Requirements for Brokers and Dealers Pursuant to Rule I 5c3-3, have been subjected to audit procedures perfom1ed in conjunction with the audit of Mutual Securities lnc. 's financ ial statements, The supplemental information is the responsibility of Mutual Securities fnc.'s ma11agement. Our audit procedures included detenn ining whether the supplemental infom,ation reconciles to the finru1cial statements or the underlying accounting and other records, as applicable, and perfom1ing procedures to test the completeness and accuracy of the information presented in the supplemental information. 1n fom1ing our opinion on the supplemental infonnation, we evaluated whether the supplemental information, i11cluding its form and content, is presented in confomtity w ith 17 C.F.R. §240.l 7a-5. ln our opinion, the supplemental information is fa irly stated, u, all material respects, in relation to the financia l statements as a whole. Farber Hass Hurley, LLP We have served as Mutuul Securities lnc.'s auditor since 20 18. Chatsworth, Califomia September 29, 2023 {6}------------------------------------------------ Statement of Financial Condition June 30, 2023 #### **ASSETS** | Cash | \$
1,546,859 | |----------------------------------------------------------------------------------------------------------|-----------------| | Deposits with clearing organizations | 200,000 | | Receivables from broker-deaJers and cleating organizations | 2,481,569 | | Furniture, equipment, and leasehold improvements, at cost,
less accumulated depreciation of \$180,824 | 8,047 | | Operating lease right-of-use assets | 374,402 | | Other assets | 197, I 09 | | TOTAL ASSETS | \$
4,807,986 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | LIABILITIES | | | Payables to broker-dealers and clearing organizations | \$
2,602,471 | | Accounts payable, accrued expenses, and other liabiJities | 519,905 | | Operating lease liability | 374,402 | | TOT AL LIABILITIES | 3496 778 | | STOCKHOLDERS' EQUITY | | | Common stock, no par value, l 00,000 shares authorized,
31,216 shares issued and outstanding | | | | 23,413 | | Admtional paid-in-capital | 142,726 | | Retained earnings | 1,145,069 | | | | | TOTAL STOCKHOLDERS' EQUITY | 1,311,208 | |--------------------------------------------|-----------------| | TOTAL LIABILITIES AND STOCKHOLDERS' EQIDTY | \$
4,807,986 | **Tbc accompanying notes are an integral part of these financial statements** {7}------------------------------------------------ Statement of Operations For the Year Ended June 30, 2023 | REVENUE: | | |-----------------------------------------------|----------------------| | Commissions | \$
24,3
10,864 | | Other income | 913,012 | | Total revenue | 25 223,876 | | | | | OPERATING EXPENSES: | | | Compensation and benefits | 2
1,898,805 | | Floor brokerage, exchange, and clearance fees | 580,465 | | Technology and communications | 147,294 | | Occupancy and equipment | 186,369 | | Professional fees | 1,239,564 | | Other expenses | 865,064 | | Total expenses | 24,917,561 | | NET INCOME | \$
306,315 | **The accompanying notes are an integral part of these financial statements** {8}------------------------------------------------ # Statement of Changes in Subordinated Borrowings For the Year Ended June 30, 2023 | Balance-July 1, 2022 | | \$ 250,000 | |-----------------------|----|------------| | Decreases: Repayments | | (250,000) | | Balance-June 30, 2023 | \$ | 0 | **The accompanying notes are an integral part of these fmancial statements** {9}------------------------------------------------ # Statement of Changes in Stockholders' Equity For the Year Ended June 30, 2023 | | Common Stock
Shares
Amount | | Additional
Paid-In
Capital | | Retained
Earnings | Total
Stockholders'
Equity | | | |----------------------------|----------------------------------|----|----------------------------------|----|----------------------|----------------------------------|-------------|-----------------| | Balance -
July 1, 2022 | 31,216 | \$ | 23,413 | \$ | 142,726 | \$ | 1,395,737 | \$
1,561,876 | | Distributions to Members | | | | | | | (556,983) | (556,983) | | Net income | | | | | | | 306,3
15 | 306,315 | | Balance -
June 30, 2023 | 31,216 | \$ | 23,413 | \$ | 142,726 | \$ | 1,145,069 | \$ l ,311,208 | **The accompanying notes are an integral part of these financial statements** {10}------------------------------------------------ # Statement of Cash Flows For the Year Ended June 30, 2023 | CASHFLOWS FROM OPERATING ACTIVITIES:
Net income | \$
306,315 | |-------------------------------------------------------------------------|-----------------| | | | | Adj ustmcnls to reconcile net income to net cash prnvided by | | | operating activities | | | Depreciation and amortization | 3,211 | | Changes in operating assets and liabilities: | | | Decrease in receivables from broker-dealers and clearing organizations | 21 4,867 | | Decrease in receivables from affiliate | 68,250 | | Decrease in operating lease right-of-use assets | 106,729 | | Increase in other assets | (31,159) | | Decrease in payables to broker-dealers and clearing organizations | (141,225) | | Increase in accounts payable, accrued expenses, and oth<:;r liabilities | 28,559 | | Decrease in operating lease liability | (106,729) | | NET CASH PROVIDED BY OPERA TING ACTIVITIES | 448,818 | | CASH FLOWS FROM FINANCING ACTNITIES: | | | Distributions to members | (556,983) | | Paydown of subordinated loans | (250,000) | | NET CASH USED IN FINANCING ACTIVITIES | (806,983) | | NET DECREASE [N CASH | (358,165) | | CASH AT BEGINNING OF YEAR | 1,905,024 | | CASH AT END OF YEAR | \$
1,546,859 | **The accompanying notes are an integral part of these financial statements** {11}------------------------------------------------ Notes to Financial Statements June 30, 2023 ## **1. Nature of Business** Mutual Securities, Inc. of California dba Mutual Securities, lnc. (the "Company") was incorporated in the State of California on February 4, 1982 under the name Brokers Office Management-Encino, lnc. and subsequently changed its name to Mutual Securities, Inc. of California on November 9, 1998. The Company is a registered broker-dealer in securities under the Securities and Exchange Act of 1934, a member of the Financial Industry Regulatory Authority ("FlNRA''), and Lhe Securities Investor Protection Corporation ("SIPC"). The Company is engaged in the business as a securities broker-dealer which provides several classes of services. The majority of its income is earned from the sale of variable life insurance policies and annuities. Income is also earned from agency commissions and equity transactions which include the sale of corporate debt, equity securities, options, U.S. Government and municipal securities to institutional and retail customers. Under its membership agreement with FINRA and pursuant to SEC Rule 15c3-3 (k)(2)(ii), the Company conducts business on a fully disclosed bnsis and does not execute or clear securities transactions for customers. The Company also relies on Footnote 74 of SEC Release 34-70073. Accordingly, the Company is exempt from the requirement of Rule l 5c3-3 under the Securities Exchange Act of 1934 pertaining to the possession or control of customer assets and reserve requirement. # **2. Summary of Significant Accounting Polkics** # **Basis of Presentation** These financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. # **Cash and Cash Equivalents** Cash consists of deposits with banks and highly liquid investments, with maturities of three months or less, that are not segregated and deposited for regulatory purposes. # **Receivable From and Payable To Clearing Organizations** The balances shown as receivable from and payable to clearing organizations represent amounts due in connection with the Company's normal transactions involving trading of securities. Management considers all receivables to be collectible, therefore no allowance for doubtful accounts has been recorded. #### **Furniture, Equipment, and Leasehold Improvements** Furniture, equipment, and leasehold improvements are recorded at cost and are depreciated over the estimated useful lives of the related assets, which range from five to fifteen years. Repair and maintenance costs are expensed as incuned. Leasehold improvements are depreciated over the shorter of the lease term or estimated useful life. Lmprovements which increase the \_productive value of assets are capitalized and depreciated over the remaining useful life of the related asset. ## **Right-of-Use Assets-Opcn1-ting Leases** The Company follows the Financial Accounting Standards Board ("F ASB'1) issued Accounting Standards Update("ASU") 2016-02, Leases (Topic 842), which requires lessees to recognize most leases on their {12}------------------------------------------------ balance sheets as aright-of-use asset with a corresponding lease liability. The Company does not recognize right of use assets and liabilities for leases with a tenn of 12 months or l.ess. ## **Revenue Recognition** ln accordance with F ASB ASC 606, Revenue from Contracts wHh Clliitomers, the Company follows a fivestep model to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, ( c) determine the transaction price, (d) allocate the transaction \_price to the perfonnance obligations in the contract, and (e) recogniz:e revenue when (or as) the entity satisfies the performance obligation. ## **Use of Estimates** The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounls 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 period. Accordingly, actual results could cliffer materially from those estimates. ## **Income Taxes** The Company has elected to be treated as an "S" Corporation under the provisions of the Internal Revenue Code and California state tax regulations. Under the provisions, the Company does not pay federal or state corporate income taxes on its taxable income. Instead, the stockholder is liable for individual income taxes on bis respective share of the Company's taxable income. Accordingly, no income tax provision has been retlected i.n the accompanying financial statements, except for the Pass-Through Entity Tax (PTET). During the year ended June 30, 2023, the Company elected to pay a PTBT for its members in the amount of \$56,983 pursuant to the California Pass-Through Entity Tax guidelines. The benefit of this payment was conferred to the Company's members in the form of a distribution. The Company recognizes and measures any unrecognized tax benefits in accordance with FASB ASC 740, Income Taxes. Under this guidance the Company assesses the likelihood, based on their technical merit, that tax positions will be sustained upon examination based upon the facts, circumstances, and information available at the end of each period. The measurement of unrecognized tax benefits is adjusted when new information becomes available, or when an event occurs that requires a change. The Company did not have material unrecognized tax benefits as of June 30, 2023, and does not expect this to change significantly over the next twelve months. The Company will recognize interest and penalties accrued on any wrrecognized tax benefits as a component of income tax expense. As of June 30, 2023, the Company has no accrued interest or penalties associated with w1certain tax positions. # **3. Deposit with Clearing Organization** The Company has a brokerage agreement with National Financial Services LLC ("Clearing Broker") to carry its account and the accounts of its clients as customers of the Clearing Broker. The Clearing Broker has custody of the Company's cash balances which serve as collateral for a11y amount due to the Clearing Broker as well as collateral for securities sold short or securities purchased on margin. Interest is paid monthly on these cash deposits at the av:erage overnight repurchase rate. The balance at June 30, 2023 was \$200,000. {13}------------------------------------------------ #### **4. Equipment, and Leasehold Improvements** | Furniture and fixtures | \$ 67,986 | |----------------------------------------------------|-------------| | Machinery and equipment | 59,729 | | Leasehold improvements | 61 ,156 | | Total cost of equipment and leasehold improvements | 188 871 | | Less: accumulated depreciation | (180,824) | | Equipment and leasehold improvements, net | \$
8,047 | As of June 30, 2023, equipment and leasehold improvements, net, consisted of the following: #### **5. Revenue .From Contracts With Customer\$** #### **Commissions** The Company buys and sells insurance and annuity products, mutual funds, and other equity and financial instruments on behalf of its customers. Each time a customer enters into a buy or sell transaction, the Company charges a commission. The Company also charges fees relating to the transactions executed on behalf of its customers. Commissions, foes, and related clearing expenses are recorded on the trade date (the date that the Company fills the trade order by finding and contracting with a counterparty and confirms the trade with the customer). The Company believes that the performance obligation is satisfied on the trade date because that is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon and the risks and rewards of 9wnership have been transferred to or from the customer. Sales of annuities, insurance products, and mutual funds include jnitial up-front (first year) commissions where the performance obligation is satisfied on the trade date as well as annual trailing commission payments for each product renewal and continued investment. Commissions on annuity, insurance products and mutual flmds are considered variable consideration. ASC Topic 606 requires that, at the time of th.e initial sale or investment, the Company mllst estimate the variable consideration (future renewal commissions) and determine the transaction price as the unconstrained net present value of expected future renewal commissions. Therefore, the transaction price for annuities, insurance products and mutual funds includes first year fixed commissions recognized for new sales as well as trailing commissions. The perfonnance obligation of trailing commissions is satisfied at product renewal and continued investment, which are estimated using the average value of trailing commissions received in the first month of the two previous quarters. The receivables on June 30, 2022, were \$2,245,562. #### **Disaggregated Revenue From Contracts With Customers** The following table presents revenue by major source | Variable annuities | \$
17,619,164 | |-------------------------------|------------------| | 12b-1 fees | 3,947,170 | | Brokerage commjssions | 1,626,464 | | Direct mutual funds | 1,013,218 | | Administrative and other fees | 1,017,860 | | | 25,,223,876 | {14}------------------------------------------------ ## **6. Related Party Transactions** On October l, 2009, the Company entered .into a lease agreement for office space with KCMA Investments, LLC ("KCMA") with which the Company has common ownership. For tbe year ended June 30, 2023, the Company recognized \$151,200 in occupancy expense to KCMA. See Note 12 for further information on the lease agreement. Mutual Advisors, LLC ("Mutual Advisors"), is affiliated with the Company through common control. The Company offers brokerage services to certain clients of Mutual Advisors, and either the clients or their investment adviser representatives are charged for such brokerage services. Effective .May I, 2022, the Company and Mutual Advisors, LLC, entered into an agreement whereby Mutual Advisors, LLC, reimburses salary expenses paid by the Company that pertain to Mutual Advisors, LLC. On January 1, 2023, the Company and Mutual Advisors, LLC, amended certain terms and provisions of the reimbursement agreement. On June 30, 2023, no receivable balance existed between Mutual Advisors, LLC and the Company. Total expenses reimbursed during the year for salaries and other costs were \$1,066,926. # 7. **401(k) Plan** The Company has a qualified 40 l(k) Plan (the "Plan") under IRC section 40l(a) covering substantia11y all of its employees. Employees are required to have attained the .age of 21 and to have completed one year of service in order to be eligible to participate in the Plan. The Plan provides that the employer may make matching contributions and/or annual discretionary contributions. For the year ended June 30, 2023, the Company Iecorded expenses of \$148,500 in matching contributions. #### **8. Financial Instruments** The Company maintains several bank accounts at financial institutions. These accounts are insured either by the Federal Deposit Insurance Commission ("FDIC") up to \$250,000 or the Securities Investor Protection Corporation ("SIPC") up to \$500,000. At times during the year ended June 30, 2023, casb balances beld in financial institutions were in excess of the FDIC and SIPC's insured limits. The Company hai; not experienced any losses in these accounts and management believes that it has placed its cash on deposit with financial institutions which are financially stable. The Company is engaged in various trading and brokerage aetivities in which counter-parties primarily include broker-dealers, banks, and other financial instiMions. In the event counterparties do not fulfill their obligations, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the counter-party or issuer of 1.he instrument. It is Lhe Company's policy to review, as necessaiy, the credit standing of each counter-party. #### *9.* **Concentration Risk** Commissions earned by the top five financial advisors represented approximarely 13.2% of the Company's revenues. #### **10. Commitments and Contingencies** #### **Leases** These assets and liabilities for operating leases are recognized on the commencement date based on lbe present value of remaining lease payments over the lease tenns using the implicit rate as the discount rate {15}------------------------------------------------ if it is readily determinable, otheiwise the Company will use its incremental borrowing rate as the discount rate. Short-term operating leases, which represents those leases having an initial term of 12 months or less, are not recorded on the Statement of Financial Condition. The Company is obligated under a lease for a twelve-month tem1 beginning September 1, 2020 with five (S) consecutive one year options to renew the lease for its office space in Camarillo, CA. Management compared the renewal rents with expected fair market rents for equivalent property under similar terms and conditions and determined it is reasonably certain the Company will exercise the renewal options and have included the five consecutive renewal options in the lease commitment. The discount rate used to compute the lease liability and right of use asset at the commencement date of the lease is 10.69%, which is the implicit rate. The implicit rate was computed using estimated market value data readily available to detennine the asset value, lease costs, and estimates the Company made of the residual asset value, based on historical average market value data readily available. Lease expense for its office space in Camarillo, CA was \$186,300 for the year ended June 30, 2023 and is included on the Statement of lncome under occupancy and equipment. The total of the commitment over the remaining lease terms at June 30, 2023 is as follows: Year Ending June 30, | 2024 | \$
139,892 | |-----------------------------------------------------|---------------------| | 202:5 | 139,892 | | 2026 | 139,892 | | 2027 | 23,315 | | thereafter | | | Total undiscounted lease payments
Less: interest | 442,991
(68,589) | | Total lease liabilities | \$
374 402 | ## **Litigation and Claims** The Company is involved in various litigation, judicial, regulatory, and arbitration proceedings concerning matters arising in connection with the conduct of its business. Management believes, based on ctmently available information, that the results of such proceedings in the aggregate will not have a material, adverse effect on the Company's financial condition. # **11. Subordinated Borrowings** The Company entered into two approved subordinated loan agreements ("the Notes") on September 28, 2021, with two stockholders ("tbe Lenders") of the Company. The Notes were for \$125,000 with each Lender for a total of \$250,000. The Notes carried a fixed rate or interest at 0.18% per annum, with principal and accrned interest due in full, on September 27, 2024 (three years) from the date of the loan agreements. In June 2023, the Company prepaid the Notes aud associated interest in full, in accordance with the terms of the agreements. These repayments were made with tbe requisite approval from FlNRA in adherence with regulatory and compliance standards. #### **12. Recurring Commission Expense Deductions** TI1e Company charges recm1ing monthly fees to registered representatives that are included in the 0omrnission statements and payments to the registered representatives for technology, administrative, and insurance costs. These recurring registered representative charges are recorded as a reduction to {16}------------------------------------------------ commission expense. These charges were in total approximately \$1,253,000 for the year ended June 30, 2023. # **13. Guarantees** FASB ASC 460; Guarantees, requires the Company to disclose information about its obligations under certain guarantee arrangements. F ASB ASC 460 effectively describes guarantees as contracts and indemnification agreements that contingently require a guarantor to make payments to U1e guaranteed party based on changes in an underlying (such as an interest or foreign exchange rate, security or commodity price, an index or the occurrence or nonoccurrence of a specified event) related to an asset, liability or equity security of a guaranteed party. This guidance aJso defines guarantees as con.tracts that contingently require the guarantor to make payments to the guaranteed party based on another entity's failw-c to perfonn w1der an agreement as well as indirect guarantees of the indebtedness of others. The Company issued no guarantees as of June 30, 2023, or during the year then ended. # **14. Net Capita] Requirements** The Company is subject to the Securities aud Exchange Commission Unifom1 Net Capital Rule (Rule l 5c3-l ), which requires the maintenance of minimwn net capital and requires that the ratio of aggregate indebtedness to net capital, boili as defined, shall not exceed 15 to 1. At June 30, 2023, ilie Company had net capital of \$1,068,707 which was \$860,548 in excess of its required net capital of \$208,159. The Company's ratio of aggregate fodebtedness to net capital was 2.92 to 1. # **15. Subsequent Events** The Company has performed an evaluation of events that have occuncd subsequent to June 30, 2023, and through issuance date ofthls report. Subsequent to the reporting period, the Company received funds from a legal settlement. The settlement amount was the result of the resolution of a legal dispute with an insurance carrier, and the funds were received after the financial statement cutoff date and recognized upon receipt. As a result, the impact of this legal settlement is not reflected in the current financial statements. The details regarding the nature of the dispute, the settlement tem1s, and the financial impact will be disclosed in the subsequent financial reporting period, in accordance with the applicable accounting standards and disclosure requirements. {17}------------------------------------------------ (Supplemental Information) Schedule I - Computation of Net Capital Under Rule 15c3-l of the Securities and Exchange Commission As of June 30, 2023 **SCHEDULE!** | TOTAL STOCKHOLDERS' EQUITY QUALIFIED FOR NET CAPITAL | \$ 1,311,208 | |-------------------------------------------------------------------------|--------------| | TOT AL CAPITAL AND ALLOW ABLE SUBORDlNATEl) BORROWINGS | 1,311,208 | | DEDUCTIONS AND NON-ALLOW ABLE ASSETS: | | | Non-allowable assets: | (227,582) | | NET CAPITAL BEFORE HAIRCUTS | 1,083,626 | | HAIRCUTS | | | Other Securities | (10,666) | | Undue Concentration | (4,253) | | Total | (14,919) | | NET CAPITAL | 1,068,707 | | AGGREGATE INDEBTEDNESS: | 3,122,376 | | COMPUTATION OF BASIC NET CAPITAL REQUJREMENT | | | Minimum net capital required, based on 6 2/3% of aggregate indebtedness | 208,159 | | Minimum dollar net capital requirement | 100,000 | | Excess Net Capital | 860,548 | | Percentage of aggregate indebtedness to net cap.ital | 292.16% | There are no material differences between the audited computation of net capital. computed above and the corresponding schedule included i11 the Company's amended June 30, 2023 Part HA FOCUS filing {18}------------------------------------------------ (Supplemental Information) Computation for Detennination of the Reserve Requirements and Information Relating to Possession or Control Requirements for Brokers and Dealers Pursuant to Rule 15c3-3 For the Year Ended June 30, 2023 #### **SCHEDULE II** The company is exempt fro1:n the provisions of Rule J 5c3-3 under the Securities Exchange Act of 1934 as of June 30, 2023 in accordance with Rule 15c3-3(k)(2)(ii). The Company also relies on Footnote 74 of SEC Release 34-70073 {19}------------------------------------------------ ![](_page_19_Picture_0.jpeg) **II Farber Hass Hurley LLP** Certified Pubhc Accountants 9301 Oakdale Avenue, Suite 230 Chatsworth, CA 91311 www.fhl1cpas.com Telephone; (818) 895-1943 Facsimile: (818) 727-7700 ## REPORT OF INDEPENDENTREG[STERED PUBLJC ACCOUNTING FIRM ON APPL YING AGREED-UPON PROCEDURES To the Board of Directors and Stockholders of Mutual Securiti.es Inc. We have performed the procedures included in Rule 17 a-5( e )( 4) under the Securities Excbang~ Act of I 934 and in the Securities Investor Protection Corporation (SIPC) Series 600 Rules, which are enumerated below on the accompanying General Assessment Reconciliation (Form SlPC-7) for the year ended June 30, 2023. Management of Mutual Securities 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 June 30, 2023. Additionally, SIPC has agreed to and acknowledged that the procedures perfotmed 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 detenniniug 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 pl:lrpose for which this report has been l'equested or for any other purpose. The procedures we perfonned and our findings are as follows: - I) Compared the listed assessment payments in Form SlPC-7 with respective cash disbursement records entries, noting no differences; - 2) Compared the Total Revenue amounts reported on the Annual Audited Report Form X-17 A-5 Part llI for the year ended June 30, 2023 with the Total Revenue amount r eported in Form STPC-7 for the year ended June 30, 2023, noting no differences; - 3) Compared any adjustments reported in Form SIPC-7 with supporting schedules and working papers, noting no differences; - 4) Recalculated the arithmetical accuracy of the calculations reflected in Form SIPC-7 and in the related schedules and working papers supporting the adjustments, noting no differences; and - 5) Compared the amount of any overpayment applied to the current assessment with the Form SIPC-7 on which it was origina.lly computed, noting no differences-. 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 AICPA and in accordance with the standards of the Public Company Accounting Oversight Board (United States). We were not engaged to and did not conduct an examination or a review engagement, the objective of wliich would be the expl'ession 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 June 30, 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 meeL our other ethical responsibiJjties in accordance with the relevant ethical requirei11ents related to our agreed-upon procedures engagement. This report is intended solely for the information and use of the Company and SIPC and is not intended to be and should not be used by anyone other than these specified parties. Farber Hass Hurley LLP Chatsworth, California September 29, 2023 {20}------------------------------------------------ ![](_page_20_Picture_0.jpeg) September 20, 2023 ## **Mutual Securities,** Inc. **Exemption Report pursuant** to **SEC Rule** 17a-5(d) **For the fiscal year ending J'unc 30, 2023** We, as members of management of Mutual Securities, Inc. (the "Company"), are responsible for compliance with the annual reporting req\_uirements under Rule Rule l 7a-5 promulgated by the Securities and Exchange Commission ( 17 C.F.R. §240.1 ?a-5, "Reports to be made by certain broke.rs and dealers"). Those requirements compel a broker or deaJer to file annual reports with the Securities Exchange Commission ("SEC") and the broker or dealer's designated examining authority ("DEA). Pursuant to that requirement, 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 belief, the Company states the following: (1) The Company claims exemption from 17 C.F.R. § 240.15c3-3 under the provision ofl 7 C.F.R. §240. l 5c3-3 (k)(2)(ii). (2) The Company has met the identified exemption provisions in paragraph (k)(2)(ii) of Rule 15c3-3 throughout the most recent fiscal year ended June 30, 2023, with the exceptions below: | Check Amount | Received Date | Deposit Date | Note | |--------------|---------------|--------------|------------| | \$70,000 | 3/2/2023 | 3/8/2023 | Mail delay | | \$100,000 | 11/29/2022 | 12/9/2023 | Mail delay | (3) The Company is also filing this Exemption Report because the Company's other business activities contemplated by Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.l 7a-5 are limited to effecting securities transactions via subscriptions on a subscription way basis where the funds are payable to the issuer or its agent and not lo the Company, and the Company (1) did not directly or i.nd.irectly receive, hold, or otherwise owe funds or securities for or to customers, (other than money or other consideration received and promptly transmitted in compliance with paragraph (a) or (b)(2) of Rule 15c2-4 and/or funds received at1d promptly transmitted for effecting transactions via subscriptions on a subscription way basis where the funds are payable to the issuer or its agent and not to the Company); (2) did not carry accounts of or for customers; and (3) did not carry PAB accounts (as defined in Rule 15c3-3) throughout the most recent fiscal year without exception. Nick Damiani Chief Administrative Officer {21}------------------------------------------------ ![](_page_21_Picture_0.jpeg) **R Farber Hass Hurley** LLP Certified Pul)flc Accountants 9301 Oakdale Avenue, Sl1ite 230 Chalsworlh, CA 91311 www.fhhcpas.com Telephone: **(818)** 895-1943 Facsimile: (818) 727-7700 # REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Mutual Securities Inc. We have reviewed management's statements, included in the accompanying Exemption Report purst1ant to SEC Rule I 7a-5(d), in which (I) Mutual Securities Inc. ("Company'1) 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 the Company met the identified exemption provisions throughout June 30, 2023, the most recent fiscal year except as described in its exemption report. Tbe Company is also filing this Exemption Report because the Company's other business activities contemplated by Footnote 74 of the SEC Release No. 34-70073 adopting amendn1ents to 17 C.F.R. § 240.17a-5 are limited to effecting securities transactions via subscriptions on a subscription way basis where the funds are payable to the issuer or its agent and not to the Company. In addition, the Company did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers, other than money or other consideration received and promptly transmitted in compliance with paragraph (a) or (6)(2) of Rule 15c2-4 and/or funds received and promptly transmitted for effecting h'ansactions via subscriptions on a subscription way basis where the funds are payable to the issuer or its agent and not to the Company; did not carry accounts of or for custom(;!rs; and did not carry PAB accounts (as defined in Rule l 5c3-3) throughout the most recent fiscal year without exception. The Company's 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 substanliaUy less in scope than aD examination, the objective of which is the expression of an opinion on management1s statements. Accordingly, we do not express such an opinion. Based on our review, we arc 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 A<.::t of l 934 and the Company's other business activities contemplated by Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240. l 7a-5, and related SEC Staff Frequently Asked Questions. Farber Hass Hurley LLP Chatsworth, California September 29, 2023 {22}------------------------------------------------ | SIPC-7 | | |----------------|--| | (36-REV 12/18) | | # SECURITI ES INVESTOR PROTECTION CORPORATION Mail Code: 8967 P.O. Box 7247 Philadelphia, PA 19170-0001 General Assessment Reconciliation **SIPC-7** (36-RE V 12/18) For the II seal year ended **0 6/30/2 023** (Read carefully. the lnslructlons In your Working Copy belore completing (his Form) # **TO BE FILED BY ALL SIPC MEMBERS WITH FISCAL YEAR ENDINGS** 1. Name of Member, address, Designated Examining Authority, 1934 Act registration no. and month in which fisca l year ends for purposes of the audit requlrernent of SEC Rule 1 ?a-5: | | | 128580 FINRA JUN
MUTUAL SECURITIES INC
PO BOX 2864
CAMARILLO, CA 9301
1-2864 | 7 | Note: II any of ttie information shown on the
mailing label requires correction, please e-mail
any corrections 10 form@sipc.org and so
indicate on the form filed. | |-------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | | L | _J | Name and telephone number of person to
contact respecting this lorm.
NICK DAMIANI 805-764-6740 | | 2. A. | | General Assessment (item -2e from page -2) | | | | | | B. Less payment made with SIPC -6 filed (exclude Interest)
05/08/2023 | | ( 312 | | | | Dale Paid
C. Less prior overpayment applied | | | | | D. | Assessment balance du e or (overpayment) | | 693 | | | | __
E. Interest computed on late payment (see instruction E) for | days at 20% per annu.m | | | | | F. T.otal assessment balance and Interest due (or overpayment carried forward) | | | | | | ~
□
□
:
th
e
x
G. PAYMENT
bo
✓
693
Ch eck mail
ed
P
O.
Box
Funds Wired
to
AC
V
Total (must be same as F above) | ______ | __
_
_ | | | | \$( _
_
H. Overpayment carried forward | | ______
_ | | | | 3. Subsidiaries (S) <1 nd preoecessors (Pl included in this lorm (give name and 1934 Act registration number): | | | | | | The SIPC member submitting this fo rm and the | | | person by whom it is executed represent thereby that all Information contained herein is true, correct and complete. (A11tho1ized Slana1u1e) Dated the 25 day of\_J\_U\_L\_Y \_\_\_ , 20 **2 3**. # CHIEF ADMINISTRATIVE OFFICER MUTUAL SECURITIES INC (TIiie) This form and the assessmen t payment is due 60 days alter the end ot the fiscal year. Retain the Working Copy ot th is form tor a period ot not less than 6 years, the l a'test 2 years In an easily accessible place. | 3: | ~ Dates: | Postmarked | Received | Reviewed | | |------------|------------------|-------------------------------|----------|--------------------------|--------------------------| | U.I
1-U | | > Caloulatlons __
_ | | __
Documentation
_ | ___
_
Forward Copy | | a:
0 | c:> Exceptions : | | | | | | | | en Disposition ol exceptions: | | | | {23}------------------------------------------------ # **DETERMINATION OF "SIPC NET OPERATING REVENUES" ANO GENERAL ASSESSMENT** Amounts for the fiscal period b egl n n in g \_07\_10\_112\_02\_2 \_\_\_ \_ and ending\_..,,\_.,,\_ .. \_, \_\_\_ \_ | Item No,
2a. Total revenue (FOCUS Line 12/Part !IA Line 9, Code 4030) | Eliminate cents
\$ 25,223,877 | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------| | 2b. Additions :
(1) Total revenues from the securities business of subsidiaries (except foreign subsrd iafies) and
predecessors not Included above. | | | (2) Net loss from principal transaclions in securities in trading accounts. | | | (3) Net loss from principal 1r~nsactions in commodities in trading accou nts. | | | (4) Interest and dividend expense deducted In determining Item 2a. | | | (5) Net loss from management of or participation In the underwriting or distribution of securities. | | | (6) Expenses other than advertising, printing, registration tees and legal lees deducled in determining net
profit !rom management of or parliclpalion In underwri ting or distribution of securities. | | | (7) Net loss from securities in Investment accounts. | | | Total additions | | | 2c. Deductions:
(1) Revenues Imm the dislribution or sh~res ol a registered open end Investment company or uni I
investment trust, from the sale ol variable annuities, from the business of insurance, from investment
advisory services rendered to registered investment companies or insurance company separate
accounts, and from transactions in security futures products. | 22,971,381 | | (2) Revenues from commodity transactions. | | | (3) Commissions, floor brokerage and clearance paid 10 other SIPC members in connection with
securities transa'ctlons. | 856,136 | | (4) Reimbursements for postage In connection with proxy sollcitat'ion. | | | (5) Net gain from securities in investment accounts. | | | (6) 100% ol commissions and markups earned from transactions in {i) certillcates of deposit and
(ii) Treasury bills, bankers acceptances or comme rcial paper that mature nine months or less
from Issuance dale. | | | (7) Direct expenses of prin ting advertising and legal fees incu rred ln connection with other revenue
related lo the securities business (revsnue defined by Section 16(9)(L) of the Act). | 52,272 | | (8) Other revenue not related either directly or Indirectly to !he securities business.
(See Instruction C): | | | (Deductions in excess ol \$100,000 require documentation) | | | (9) (i) Total interest and dividend expense (FOCUS Line 22/PART IIA Line 13,
10 030
Code 4075 plus line 2b(4) above) but not In excess
\$ __ ,________
of total interest and dividend income.
_ | | | _______
(ii) 40% ol margin interest earned on customers securities
\$
_
accounts (40% of FOCUS line 5, Code 3960). | | | Enter th.e greater of line (i) or (ii) | 10,030 | | Total deductions | 23,889,819 | | 2d. SIPC Nel Operating Revenues | | | 2e. General Assessment @ .0015 | | | | (lo page 1, line 2.A.) | {24}------------------------------------------------ # **SIPC-7 Instructions** This lorm Is to be tiled by all members ol lhe Securities Investor Protection Corporation whose fiscal years end In 2011 and annually thereafter. The lorm together with the payment Is dµe no later than 60 days alter the end of the fiscal year, or after membership termination. Amounts reported herein must be readily reconcilable with the member's records and the Securities and Exchange Commission Rule 17a-5 report filed. Questions pertaining to this form should be directed to SIPC via e-mail at lorm@sipc.org or by telephoning 202-371-8300. A. For the purposes of this form, the term "SIPC Net Operating Revenues" shall mean gross revenues from the securities business as defined In or pursuant to the applicable sections of the Securities Investor Protection Act of 1970 ("Act") and Article 6 ot SIPC's bylaws (see page 4), less item 2c(9) on page 2. B. Gross revenues of subsidiaries, except lore ign subsidiaries, are required to be included in SIPC Net Operating Revenues on a consolidated basis except for a subsidiary tiling separately as explained hereinafter. II a subsidiary was required to file a Ru le 17a-5 annual audited statement oi Income separately and Is also a SIPC member, then such subsidiary must itself tile StPC-7, pay the assessment, and should not be consolidated in your SIPC-7. SIPC Net Operating Revenues of a predecessor member which are not included In Item 2a, were not reporled separately and the SIPC assessments we re not paid thereon by such predecessor, shall be Included In item 2b{1). C. Your General Assessment sh ould be computed as follows: - (1) I ioe 2a For the applicable period enter total revenue based upon amounts reported in your Rule 17a-5 Annual Audited Statement of Income prepared in conformity with generally accepted accounting principles applicable to securities brokers and de~lers. or ii exempted from that ru le, use X-17A-5 (FOCUS Report) Line 12, Cod e 4030. - (2) Adf11slments The purpose of the adjustments on page 2 is to determine StPC Net Operating Revenues. - (a) Additions Lines 2b(1) through 2b(7) assure that assessable Income and gain items of SIPC Net Operating Revenues are totaled, unreduced by any losses {e.g., if a net loss was incurred for the period from all transactions in trading account securl1ies, that net loss does not reduce other assessable revenues). Thus, line 2b(4) would Include all short dividend and interest payments Including those incurred in reverse conversion accounts, rebates on stock loan positions and repo Interest which have been netted in determining line 2(a). - (b) Deductions Llne 2c(t) through line 2c{9} are either provided for in the statue, as In deduction 2c(1), or are allowed to arrive at an assessment base cons isting ol net operating revenues from the securities business. For ex ample, line 2c(9) allows for a deduction of either the total of interest and dividend expense {not to exceed interest and dividend income), as reported on FOCUS line 22/PART IIA line 13 (Code 4075), plus line 2b(4) or 40¾ of Interest earned on customers' securities accounts (40% of FOCUS Line 5 Code 3960). Be certain to complete both tine (I) and (Ii), entering the greater ol the two in the lar right column. Dividends paid to shareholders are not considered "Expense" and thus are not to be included In the deduction. Likewise, interest and dividends paid to partners pursuant to the partnership agreements would also not be deducted. If the amount reported on line 2c (8) aggregates to \$100,000 or greater, supporting documentation must accompany the form that identifies these deductions. Examples of support information include; contractual agreements. prospectuses, and limited partnership documentation. - {I) Determine your SIPC Net Operating Revenues, item 2d, by adding to Item 2a, the total of Item 2b, and deducting the total of item 2c. - (ii) Multiply SIPC Net Operating Revenues by the appl icable rate. Enter the resulting amount in item 2e and on line 2A oi page 1. - (Iii) Enter on line 28 the assessment due as reflected on the SIPC-6 previously filed. - {iv) Subtract line 2B and 2C from line 2A and enter the difference on line 20. This is the balance due for the period . - (v) Enter interest computed on late payment (if applicable) on line 2E. - (vi) Enter the total due on line 2F and the payment of the amount due on line 2G. - (vii) En ter overpayment carried forward (if any) on line 2H. D. Any SIPC member which Is also a bank (as defined in the Securities Exchange Act ol 1934) may exclude from SIPC Net Operating Revenues dividends and interest received on securities in its Investment accounts to the extent that it can demonstrate to SIPC's satisfaction that such securities are held, and such dividends and Interest are received, solely in connection with its operations as a bank and not in connection with its operations as a broker, dealer or member of a national securities exchange. Any member wh o excludes lrom SIPC Net Operating Revenues any dividends or Interest pursuant to the preceding sentence shall Ille with this form a supplementary statement setting forth the amount so excluded and proof of its entitlement to such exclusion. E. Interest an Assessments If all or any part oi assessment payable under Section 4 ol the Act has not been postmarked within 15 days after the due elate thereof, the member shall pay, in addition to the amount of the assessment, Interest at the rate of 20% per annum on the unpaid portion of the assessment for each day it has been overdue. F. Securities and Exchange Commission Rule 17a-5(e) (4) requires those who are not exempted from the audit requirement of the rule and whose gross revenues are in excess of \$500,000 to Ille a supplemental independent public accountants report covering this SIPC-7 no later than 60 days alter their fiscal year ends. Ma ll this completed form to SIPC together wit h a check for the amount due, made payable to SIPC, using the enclosed return PO BOX envelope, pay via ACH Debit Authorization through SIPC's ACH system at www.sl pc.org/for-members/assessments or **wire** the payment to: On the wire Identify the name of the firm and Its SEC Registration 8-# and label It as "for assessment." Please fax a copy of the assessment form to (202)-223-1 679 or e-mail a copy to form@slpc.org on the same day as the wire. {25}------------------------------------------------ # **From Section 16(9) of the Act:** The term •gross revenues from the securities business" means the sum of (but without dupllcation)- (A) commissions earned In connection with transactions in securities effected for customers as agent (net of commissions paid to other brokers and dealers in c.onnectlon with such transactions) and markups with respect to purchases or sales of securities as principal; (B) charges for executing or clearing transactions In securities ior other brokers and dealers; (C) the net realized gain, If any, from principal transactions in securities In trading accounts; (D) the net profit, If any, from the management of or participation ln the underwriting or distribution of securities; (E) lnleresl earned on customers' securities accounts; (F) fees for investment advisory services (except when rendered lo one or more registered Investment companies p.r Insurance company separate accounts) or account supervision with respect to securities; (G) fees for the solicitation of proxies with respect to, or tenders or exchanges of, securities; (H)· Income from service charges or other surcharges with respect to securilies ; (I) except as otherwise provided by ru le of the Commission, dividends and Interest received on securities in investment ac• counts of the broker or dealer; (J) fees In conneotion with put, call, and other options transactions In securities; (K) comm issions earned for transactions In (i) certificates of deposit, and (ii), Treasury bills, bankers acceptances, or commercial paper which have a maturity at lhe time of issuance ol nol exceeding nine months, exclusive of days of grace, or any renewal thereof, the maturity of which is likewise limited, except that SIPC shall by bylaw include in the aggregate ol gross revenues only an appropriate percentage of such commissions based on SIPC's loss experience with respect to such instruments over at least the preceding live years; and ·(L) lees and other income from such other categories of the securities business as S!PC shall provld.e by bylaw: Such term includes revenues earned by a broker or dealer In conn.action wi th a transaction in the portfolio margining account of a customer carried as securities accounts pursuant to a porlfolfo margining program approved by the Commission. Such term does not include revenues received by a broker or dealer in connection with the distribution of shares of a registered open end investment company or unit investment trus t or revenues derived by a broker or dealer from the sales of variable annuities, the business of Insurance, or transactions in securit y futures products. # **From Section 16(14) of the Act:** The term "Security" means any note, stock, tre-asury stqck, bond, debenture, evidence of Indebtedness, any collateral trust certificate, preorganization certificate or subscription, transferable share, voting trust certificate, certificate of deposit, certificate of deposit for a security, or any security future as that term Is defined in section 78c(a)(55)(A) of this title, any Investment contract or certificate of Interest or participation In any profit-sharing agreement or In any oil, gas or mineral royalty or lease (If such Investment contract or Interest Is the subject oi a registration statement with the Commission pursuant to the provisions of the Securities Act of 1933 [15 U.S.C. 77a et seq.]), any put, cal l, straddle, option, or privilege on any security, or group or index of securilies (Including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, any cerlllicate ol interest or parli.cipa tion in, temporary or interim certificate for, receipt lor, guc1ran1ee of, or warrant or rig.ht to subscribe to or purchase or sell any of lhe foregoing, and any other instrument commonly known as a security. Except as specifically provided above, the term "security" does not include any 9urrency, or any commodity or related contract or futures contract, or any warrant or right to subscribe to or purchase or sell any of the foregoing. # **From SIPC Bylaw Article 6 (Assessments): Section 1 (f):** The term "gross revenues lrom the securities business• Includes the revenues in the definition ol gross revenues from the securities business set fcirth in the applicable sections of the Act. # **Section 3:** For purpose of this article: (a) The term ·securities in trading accounts" shall mean securities held for sale In the ordinary course ol business and not identified as having been held for Investment. (b) The term ·securities In Investment accounts" shall mean securities that are clearly Identified as having been acquired for investment In accordance with provisions of the Internal Revenue Code applicable lo dealers in securities. (c) The term "fees and other income from such other cc1 tegories of the securiti es business" shall mean all revenue related either directly or Indirectly to the securities business except revenue Included in Section 16(9)(A)-(L) and reven ue specifically ·excepted In Section 4(c)(3)(Cl[llem 2c(1 ), page 2]. Note: /I Ine amount ol.assessmonI 01110,od on line 2o ol SIPC-7 Is groaI01 lllan 112 ol l o/, ol •g,oss. 1evenuos lrOrn tho soourlllos b.us,ne\$S" us defined abavo, you rnoy su~mll 1ha1 calou1allon along wllh the SIPC,7 lorm lo SIPC and pay lhe smaller am0~nI, subjecl to review· by your Examining Aulhorily and by SIPC. #### s1ec fxarolnlng A11Iborllles· | ASE | | American Slack Exchange, LLC | | |-----|--|------------------------------|--| | | | | | - CBOE CHX Chicago Board Options Etchango, Incorporated Ohicaoo Stock Etchange, lncorporaled **4** - flNRA Financial lnduslry Rogulalory Authority NYSE Arca·, Inc. NASDAQ OMX PHLX SIPC Socurlllo·• ln11ostor Prolocllon Corpo,allon Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.