# ZIONS DIRECT, INC. X-17A-5 (2022-02-28) — Broker-dealer annual report - Company: ZIONS DIRECT, INC. - Form: X-17A-5 - Filed: 2022-02-28 - Period: 2021-12-31 - Accession: 0000790482-22-000001 - CIK: 790482 - File #: 8-35721 - Type: Broker-dealer - Material weakness: No - Auditor: Ernst & Young LLP - Auditor location: New York, NY - Contact: Ryan Moore - Phone: (424) 290-5115 - Email: ryan.moore@zionsbancorp.com - Website: zionsbancorp.com - Signed by: Ryan Moore (Treasurer and Finance & Operations Principal Officer) Original filing: https://www.sec.gov/Archives/edgar/data/790482/000079048222000001/ZD_2021S.pdf --- {0}------------------------------------------------ **UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549** OMB APPROVAL OMB Number: ϯϮϯϱͲϬϭϮϯ Expires: KĐƚ͘ϯϭ͕ϮϬϮϯ Estimated average burden hours per response: # **ANNUAL REPORTS FORM X-17A-5 PART III** SEC FILE NUMBER 008-35721 | Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 | FACING PAGE | | | | | | | | | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------|---------------------------------------|----------------------------------------------------------------------------------------------------------------------|------------|--|--|--|--|--| | | 01/01/21 | 12/31/21 | | | | | | | | | FILING FOR THE PERIOD BEGINNING _____________________ AND ENDING ______________________
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MM/DD/YY | | | | | | | | | | | A. REGISTRANT IDENTIFICATION | | | | | | | | | | | Zions Direct, Inc.
NAME OF FIRM: _______________________________________________________________________ | | | | | | | | | | | TYPE OF REGISTRANT (check all applicable boxes):
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Broker-dealer
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܆ Check here if respondent is also an OTC derivatives dealer | ܆
Security-based swap dealer | Major security-based swap participant | | | | | | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | | | | | | | | One South Main Street | | | | | | | | | | | _____________________________________________________________________________________ | (No. and Street) | | | | | | | | | | Salt Lake City
_____________________________________________________________________________________ | UT | | | 84133 | | | | | | | (City) | (State) | | | (Zip Code) | | | | | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | | | | | | Ryan Moore | (424) 290-5115 | | Ryan.Moore@zionsbancorp.com
_____________________________________________________________________________________ | | | | | | | | (Name) | (Area Code – Telephone Number) | | (Email Address) | | | | | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing*
Ernst & Young LLP
_____________________________________________________________________________________ | | | | | | | | | | | | (Name – if individual, state last, first, and middle name) | | | | | | | | | | 5 Times Square
_____________________________________________________________________________________ | New York | | NY | 10036 | | | | | | | (Address) | (City) | | (State) | (Zip Code) | | | | | | | 10/20/03
_____________________________________________________________________________________ | | 42 | | | | | | | | | (Date of Registration with PCAOB)(if applicable)
(PCAOB Registration Number, if applicable) | | | | | | | | | | | * Claims for exemption from the requirement that the annual reports be covered by the reports of an independent public | FOR OFFICIAL USE ONLY | | | | | | | | | accountant must be supported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 CFR 240.17a-5(e)(1)(ii), if applicable. **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.** {1}------------------------------------------------ #### OATH OR AFFIRMATION \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ 1. Ryan Moore financial report pertaining to the firm of Zions Direct, Inc. as of as of 12/31 , 2021 \_\_ is true and correct. I further 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 classified solely as that of a customer. Signature: Title · Treasurer and Finance & Operations Principal Officer Vlense see a Haumed California Jurat Notary Public #### This filing \*\* contains {check all applicable boxes): - (a) Statement of financial condition. - (b) Notes to consolidated statement of financial condition. - D (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). - - □ (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - [ (f) Statement of changes in liabilities subordinated to claims of creditors. - [ (g) Notes to consolidated financial statements. - □ (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable. - [ {i) Computation of tangible net worth under 17 CFR 240.18a-2. - □ {j} Computation for determination of customer requirements pursuant to Exhibit A to 17 CFR 200.15c3-3. - | {k} Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or Exhibit A to 17 CFR 240.18a-4, as applicable. - □ (I) Computation for Determination of PAB Requirements under Exhibit A to § 240.15c3-3. - [ {m} Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3. - □ {n} Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.15c3-3(p){2} or 17 CFR 240.18a-4, as applicable. - □ {o} Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences exist. - □ (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - | (q) Oath or affirmation in accordance with 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. - | (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - [s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - @ (t) Independent public accountant's report based on an examination of the statement of financial condition. - [] (u) Independent public accountant's report based on an examination of the financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable. - □ {v} Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - □ (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 200.17a-5 or 17 CFR 240.18a-7, as applicable. - ] {x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.17a-12, as applicable. - コ (y) Report describing any material inadequacies found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k). - \_ {z} Other: \_\_\_ - \*\*To request confidential treatment of certain portions of this fiing, see 17 CFR 240.17o-5(e){2}, as applicable. {2}------------------------------------------------ #### CALIFORNIA JURAT WITH AFFIANT STATEMENT GOVERNMENT CODE § 8202 KERTERACHER CARACTER CARATICAL CARANTA CARA CARA CARA CARA CARA COLOR COLOR COLOR COLOR COLOR COLOR COLOR COLORA CONSECTION See Attached Document (Notary to cross out lines 1-6 below) See Statement Below (Lines 1-6 to be completed only by document signer(s), not Notary) Signature of Document Signer No. 1 Signature of Document Signer No. 2 (if any) A notary public or other officer completing this certificate verifies only 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 County of Losfingeles > ROBIN J. FOSSELMAN Notary Public - California Los Angeles County Commission # 2249201 My Comm. Expires Aug 3, 2022 Subscribed and swom to (or affirmed) before me on this 28th day of February \_, 2022 Month Date Year by Ryan Moore (1) (and (2)\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ proved to me on the basis of satisfactory evidence to be the person(s) who appeared before me. Signature K Signature of Notary Public Seal Place Notary Seal Above OPTIONAL Though this section is optional, completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document. | Description of Attached Document | | |--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------| | Title or Type of Document: Cath or Affir Mation | Document Date: | | Number of Pages: _____________________________________________________________________________________________________________________________________________________________ | | | | | @2014 National Notary Association · www.NationalNotary.org · 1-800-US NOTARY (1-800-876-6827) · Item #5910 {3}------------------------------------------------ #### S TATEMENT OF F INANCIAL C ONDITION Zions Direct, Inc. (A Wholly-Owned Subsidiary of Zions Bancorporation, National Association) As of and for the Year Ended December 31, 2021 With Report of Independent Registered Public Accounting Firm {4}------------------------------------------------ ## Statement of Financial Condition December 31, 2021 # **Contents** Report of Independent Registered Public Accounting Firm ............................................................1 #### **Financial Statements** | Statement of Financial Condition 2 | | |------------------------------------|--| | Notes to Financial Statements 3 | | {5}------------------------------------------------ ![](_page_5_Picture_0.jpeg) #### Report of Independent Registered Public Accounting Firm To the Shareholder and the Board of Directors of Zions Direct, Inc. #### Opinion on the Financial Statement We have audited the accompanying statement of financial condition of Zions Direct, Inc. (the "Company") as of December 31, 2021 and the related notes (the "financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company at December 31, 2021, in conformity with U.S. generally accepted accounting principles. #### Basis for Opinion This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statement, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We have served as the Company's auditor since 2000. February 28, 2022 {6}------------------------------------------------ ## Zions Direct, Inc. (A Wholly-Owned Subsidiary of Zions Bancorporation, National Association) ### Statement of Financial Condition #### December 31, 2021 | Assets | | | |-----------------------------------------------------------------------------------|----|---------------| | Cash and cash equivalents | | 13,912,619 | | Restricted cash | | 300,000 | | Cash deposits with clearing organizations | | 3,350,627 | | Receivables from brokers, dealers, and clearing organizations | | 356,035 | | Fixed assets, at cost, less accumulated depreciation and amortization of \$24,929 | | 351 | | Net deferred income tax assets | | 47,763 | | Prepaid expenses | | 88,198 | | Other assets | | 23,448 | | | | | | Total assets | | \$ 18,079,041 | | | | | | | | | | Liabilities and stockholder's equity | | | | Net payable to affiliates | \$ | 213,216 | | Accrued expenses | | 99,328 | | Total liabilities | | 312,544 | | | | | | Stockholder's equity: | | | | Common stock (50,000 shares authorized, issued and outstanding; \$1.00 par value) | | 50,000 | | Additional paid-in capital | | 37,444,634 | | Retained deficit | | (19,728,137) | | Total stockholder's equity | | 17,766,497 | | Total liabilities and stockholder's equity | \$ | 18,079,041 | | | | | *See accompanying notes to financial statements.* {7}------------------------------------------------ # Zions Direct, Inc. (A Wholly-Owned Subsidiary of Zions Bancorporation, National Association) ## Notes to Financial Statements #### **1. Organization and Ownership** Zions Direct, Inc. (the "Company") is a wholly-owned subsidiary of Zions Bancorporation, National Association ("Parent"). The Company is a member of the Financial Industry Regulatory Authority ("FINRA") and is registered as a broker-dealer under the Securities Exchange Act of 1934. The Company provides brokerage services to its client base, transactions in fixed income products, mutual funds, equities, municipal securities, options, and various other investment products. The Company operates *zionsdirect.com*, an online brokerage service, and a customer service center in its principal office in Salt Lake City, Utah. For retail securities transactions, the Company operates as an introducing broker-dealer, clearing all transactions on a fully disclosed basis through Interactive Brokers ("IB"). The Company does not carry customer balances, clear customer transactions, or serve as custodian for customer securities. On a riskless principal basis, the Company trades with institutional clients under the deliveryversus-payment model through the Depository Trust Company ("DTC"). The Company is a member of the DTC and its affiliate, the National Securities Clearing Corporation ("NSCC"). The DTC and NSCC provide clearing services for the Company's self-cleared trades with other DTC and NSCC members. The Company also engages in investment banking services as a co-manager or co-placement agent in security offerings for institutional clients. The primary role the Company performs is taking on its allocated portion of the underwriting risk and its allocated portion of the liability for errors and omissions. The Company does not have any role in receiving or otherwise handling the cash of investors in an offering. Cash from investors is received and otherwise handled by the lead underwriter in firm commitment underwritings. The Company does not have any role in delivering newlyဨissued securities to investors. Securities are delivered to investors by the lead underwriter in firm commitment underwritings, or the placement is made directly by the issuer to the purchasers when a placement is conducted on a best efforts basis. None of the investors in these security offerings were sold newly-issued securities by the Company. In March 2020, the World Health Organization designated the spread of coronavirus ("COVIDဨ 19") as a pandemic. The COVID-19 pandemic created economic, financial, and social disruptions that have affected, and are likely to continue to affect, our business, financial condition, and results of operations. These effects include the direct and indirect impact on our employees, customers, communities, counterparties, service providers, other market participants, and actions taken by governmental authorities and other third parties in response to the pandemic. The pandemic is likely to continue to affect consumer confidence and business activity generally, including the market for our products and services. Disruptions in supply chains and the cost and availability of {8}------------------------------------------------ ## Notes to Financial Statements (continued) ### **1. Organization and Ownership (continued)** labor and other resources that have adversely affected many businesses are also likely to continue as the pandemic evolves. The extent to which the COVID-19 pandemic (including new variants) will negatively affect our businesses, financial condition, liquidity, and results of operations will depend on future developments that are highly uncertain and cannot be predicted. ### **2. Summary of Significant Accounting Policies** #### **Basis of Financial Statement Presentation** The financial statements have been prepared in conformity with accounting principles generally accepted in the United States ("GAAP"). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. #### **Cash, Cash Equivalents, and Restricted Cash** The Company classifies all highly liquid investments with no restrictions and an original maturity date of three months or less as cash equivalents. Cash equivalents represent funds held in a money market fund that totaled \$13,761,658 as of December 31, 2021. The Company's cash, cash equivalents, and restricted cash are carried at cost, which approximates fair value. Amounts included in restricted cash represent those required to be set aside by a contractual agreement with the Parent for the payment of inter-affiliate support services provided by the Parent to the Company. #### **Cash Deposits with Clearing Organizations** The DTC and NSCC require a cash deposit relative to the Company's membership. ### **Fixed Assets** Fixed assets are carried at cost, less accumulated depreciation. Depreciation expense is computed using the straight-line method over the estimated useful lives, which range between three and ten years. ### **Income Taxes** Deferred tax assets and liabilities are determined based on temporary differences between financial statement asset and liability amounts and their respective tax bases and are measured using enacted tax laws and rates. The effect on deferred tax assets and liabilities of a change in tax rates is {9}------------------------------------------------ Notes to Financial Statements (continued) ### **2. Summary of Significant Accounting Policies (continued)** recognized in income in the period that includes the enactment date. Deferred tax assets are recognized subject to management's judgment that realization is more likely than not to occur. ## **Equity** The Company received no capital injections and made no capital distributions in 2021. ### **3. Recent Accounting Pronouncements** ## **Adoption of New Accounting Standards** The Company adopted no new accounting standards in 2021. ### **4. Receivables from and Payables to Brokers, Dealers, and Clearing Organizations** Included in the receivables from and payables to brokers, dealers, and others are amounts due on unsettled principal securities transactions and payables for clearing charges. There were no unsettled trades at December 31, 2021. Also included in the receivables from brokers, dealers, and others are commission amounts due from the clearing broker related to the settlement of retail securities transactions, net of payables for clearing charges. Also included in the receivables from brokers, dealers, and others are investment banking fee amounts due from activities as co-manager and co-placement agent. ## **5. Income Taxes** The Company is included in the consolidated federal income tax return filed by its Parent. Generally, the Company files separate state and local income tax returns; however, where applicable, it is included in a combined state income tax return with the Parent and certain other subsidiaries of the Parent. State and local taxes have been provided for in these financial statements on separate entity income at the effective rate of the Company. The Company is no longer subject to income tax examinations for years prior to 2013 for federal and certain state returns. The Company's income tax provision is computed in accordance with a Tax Allocation Agreement between the Parent and its subsidiaries. The Company provides for income taxes on a separate return basis, except that, under an agreement between the Parent and the Company, tax benefits are recognized for losses to the extent they can be used in the consolidated return. It is the policy of the Parent to reimburse its subsidiaries for any tax benefits recorded, which amounted to {10}------------------------------------------------ # Zions Direct, Inc. (A Wholly-Owned Subsidiary of Zions Bancorporation, National Association) ## Notes to Financial Statements (continued) ### **5. Income Taxes (continued)** \$101,250 in 2021. Deferred tax assets ("DTAs") of the Company are offset with deferred tax liabilities for financial reporting only. The Company's effective tax rate of 25.03% for 2021 was primarily impacted by the provision for state and local taxes, net of federal tax impact. Interest and penalties, if any, related to income tax matters are included in income tax (benefit)/expense in the statement of operations. As of December 31, 2021, current income taxes payable totaled \$43,683, which is included in payables to affiliates. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. DTAs are reflected without reduction for a valuation allowance. No valuation allowance is recorded as it is more likely than not that the assets will be realized through the Parent's consolidated tax return. A net DTA of \$47,763 relates principally to deferred compensation. The Company does not have any liability for unrecognized tax benefits relating to uncertain tax positions as of December 31, 2021. ### **6. Benefits** The Company participates in the Parent's Payshelter 401(K) and Employee Stock Ownership Plan ("Payshelter") under which employees select from several investment alternatives. Employees can contribute up to 80% of their earnings subject to the annual maximum allowed contribution and will be matched 100% by the Company for the first 3% of employee contributions and 50% for the next 3% of employee contributions. Matching contributions to participants amounted to \$8,020 for 2021 and is included in employee compensation and benefits. The Payshelter plan also has a noncontributory profit-sharing feature which is discretionary and may range from 1% to 3.5% of eligible compensation based upon the Parent's return on average equity for the year. For the year ended December 31, 2021, the contribution percentage was 3% and the Company recorded \$5,006 in profit sharing expense, which is included in employee compensation and benefits. ## **7. Net Capital Requirement** As a registered broker-dealer with the SEC and FINRA, the Company is subject to the SEC's Uniform Net Capital Rule 15c3-1 (the "Rule"), which requires the maintenance of minimum net capital equal to the greater of \$250,000 or 6-2/3% of aggregate indebtedness as defined. At December 31, 2021, the Company had net capital, as defined by the Rule, of \$16,739,486, which {11}------------------------------------------------ ## Notes to Financial Statements (continued) ### **7. Net Capital Requirement (continued)** was \$16,489,486 in excess of its required net capital of \$250,000. The Company's ratio of aggregate indebtedness to net capital was 0.0187 to 1 at December 31, 2021. ### **8. Credit Losses on Financial Instruments** ASU 2016-13, Credit Losses (Topic 326), and subsequent updates, significantly changes how entities will measure credit losses for certain financial assets and other instruments that are not measured at fair value through net income that have the contractual right to receive cash. The update replaces the "incurred loss" approach with a current expected credit loss ("CECL") model for instruments such as loans and held-to-maturity securities that are measured at amortized cost. The ASU requires credit losses relating to available-for-sale ("AFS") debt securities to be recorded through an allowance for credit loss ("ACL") rather than a reduction of the carrying amount and replaces the historically required other-than-temporary impairment ("OTTI") analysis. It also changes the accounting for purchased credit-impaired debt securities and loans. The Company's receivables from brokers, dealers, and clearing organizations include amounts receivable from unsettled trades and commission amounts due from the clearing broker related to the settlement of retail securities transactions, net of payables for clearing charges. The Company's trades are cleared through a clearing organization and settled daily between the clearing organization and the Company. There were no unsettled trades at December 31, 2021. The Company's receivables from brokers, dealers, and clearing organizations include investment banking fee amounts due from activities as co-manager and co-placement agent. Final settlement of syndicate accounts are to be effected by the syndicate manager within 90 days following the syndicate settlement date. Issuer pays placement fee on closing date, when the issuer delivers to each purchaser the notes to be purchased. The amount of unsettled credit exposures is limited to the amount owed the Company for a very short period of time. ### **9. Concentrations of Credit Risk** The Company is involved in various trading and brokerage activities on a riskless principal basis in which the counterparties primarily consist of broker-dealers, financial institutions, and other institutional customers. The risk of loss from failed trades 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 the event counterparties do not fulfill their obligations, the Company will cancel or sell out the trade immediately thus significantly limiting any credit exposure. There were no unsettled trades at December 31, 2021. {12}------------------------------------------------ ## Notes to Financial Statements (continued) #### **10. Commitments and Contingent Liabilities** From time to time, the Company is subject to other lawsuits, arbitrations, claims and other legal proceedings in connection with its business. Some of these legal actions include claims for substantial or unspecified compensatory and/or punitive damages. In the normal course of business, the Company discusses matters with its regulators raised during regulatory examinations or otherwise subject to their inquiry. These matters could result in censures, fines, penalties, or other sanctions. Management believes the outcome of any resulting actions will not be material to the Company's financial condition, results of operations or cash flows. However, the Company is unable to predict the outcome or the timing of the ultimate resolution of these matters or the potential fines, penalties, or injunctive or other equitable relief, if any, that may result from these matters. ### **11. Related Party Transactions** The Company maintained \$450,961 in cash in noninterest-bearing accounts at the Parent as of December 31, 2021. The Company's office space is located primarily in the Parent's banking facilities. The Company reimburses the Parent for allocated overhead costs for back-office support as well as for other operational cash transactions paid on the Company's behalf during the month. The Parent remits payments to the Company for fees earned on the customer sweep programs. The net payable to affiliates at December 31, 2021, was \$213,216 and includes a tax payable of \$43,683. The Company established a \$35 million line of credit from the Parent. At December 31, 2021, the amount of unused credit, subject to the terms of the line, was \$35 million, and related debt outstanding was \$0. The interest rate is subject to change from time to time based on changes in the Prime Rate as published in the Wall Street Journal. The interest rate at the close of business on December 31, 2021, was 3.25%. The line of credit is a liquidity backstop and would support the Company to purchase its allocated portion of any unsold corporate bonds in connection with firm commitment securities underwriting deals in which the Company participates. ### **12. Subsequent Events** Management has evaluated subsequent events through February 28, 2022, the date that the financial statements were issued. No subsequent events were noted that would have a material impact on the financial statements. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.