# SURETY FINANCIAL SERVICES INC. X-17A-5 (2020-02-25) — Broker-dealer annual report
- Company: SURETY FINANCIAL SERVICES INC.
- Form: X-17A-5
- Filed: 2020-02-25
- Period: 2019-12-31
- Accession: 0000798926-20-000001
- CIK: 798926
- File #: 8-36521
- Material weakness: No
- Auditor: Rubio CPA, PC
- Auditor location: Atlanta, GA
- Contact: John J. Renck
- Phone: 516-785-2355
- Signed by: John J. Renck (President)
Original filing: https://www.sec.gov/Archives/edgar/data/798926/000079892620000001/surety.pdf
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
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## **ANNUAL AUDITED REPORT FORM X-17A-5 PART Ill**
SEC FILE NUMBER 8-36521
#### FACING PAGE
Information Required of Brokers and Dealers Pursuant to Section 17 ()(the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder
| REPORT FOR THE PERIOD BEGINNING 1/1/19 | | | AND ENDING 12/31/19 | |
|---------------------------------------------------------------------------|---------------------------------------------------------------------|---------------------------------------------------------|---------------------|-------------------------------------|
| | | MMfDDtYY | | -----------------------
MM/DD/YY |
| | | A. REGISTRANT IDENTIFICATION | | |
| | AME OF BROKER-DEALER: Surety Financial Services, Inc. | | OFFICIAL USE ONLY | |
| ADDRESS OF PRINCIPAL PLACE OF BUS! ESS: (Do not use P.O. Box No.) | | | FIRM I.D. NO. | |
| 3375 Park Avenue, Suite 3006 | | | | |
| | | (No. and Street) | | |
| Wantagh | | NY | | 11793 |
| (Ctty) | | (State) | | (Ztp Code) |
| NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT TN REGARD TO THIS REPORT | | | | |
| John J. Renck | | | | (516) 785-2355 |
| | | | | (Area C()de Telephone Number) |
| | | B. ACCOUNTANT JDENTIFICA TION | | |
| INDEPENDENT PUBLIC ACCOUNTANT w hose opinion is contained in this Report* | | | | |
| Rubio CPA, PC | | | | |
| | | (~a me - if individual, stare last, first, middle name) | | |
| | | | | |
| 2727 Paces Ferry Rd. SE, Building 2, Suite 1680 Atlanta | | | GA | 30339 |
| | | | (State) | (Zip Code) |
| CHECK ONE: | | | | |
| I"
!certified Public Accountant | | | | |
| Public Accountant | | | | |
| B | Accountant not resident in United States or any of its possessions. | | | |
| | | FOR OFFICIAL USE ONLY | | |
| | | | | |
| | | | | |
| | | | | |
*\*Claims for exemption from the requirement that the annual report be covered by the opinion of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis for the exemption. See Section 240. I 7a-5(e}(2)*
> Potential persons who are to respond to the collection of Information contained in this form are not required to respond unless the form displays a currently valid OMB control number.
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#### **OATH OR AFFIRMATION**
| _________________________
I, _J_o_h_n_J_. R__en_c_k | | | , swear (or affinn) that, to the best of |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------|
| my knowledge and belief the .accompanying financial statement and supporting schedules pertaining to tbe firm of
Surety Fina ncial Services, Inc. | | | , as |
| of December 31 | 20 19 | | are true and correct. I further swear (or affirm) that |
| neither the company nor any partner, proprietor, principal officer or director has any proprietary interest in any account
classified solely as that of a customer, except as follows: | | | |
| | | | |
| This report * co
ns (check all applicable boxes):
cing Page.
Statement of Financial Condition. | | President
Title
Jennifer Wilson
Notllry Public, State of New York
tv ")Q
No.01WI6331155
Qulllfted In HIIIIU Coun~ "'._.,)
eomml lon, Expire• Oct. 5,
- | |
| Statement of Income (Loss).
Statement of Changes in Financial Condition.
Statement of Changes in Stockholders' Equiry or Partners' or Sole Proprietors' Capital.
Statement of Changes in Liabilities Subordinated to Claims of Creditors.
Computation ofNet Capital.
Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3.
Information Relating to the Possession or Control ReqUirements Under Rule 15c3-3.
0
A Reconciliation, including appropriate explanation oft be Computation of Net Capital Under Rule 15c3-l and the | | | |
| Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3.
0 (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of
consolidation.
0 (I) An Oath or Affirmation.
0 (m) A copy of the STPC Supplemental Report.
0 (n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit. | | | |
• • *For conditions of confidential treatment of certain portions of this filing, see section 240. I 7a-5(e){3).*
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# **SURETY FINANCIAL SERVICES, INC.**
Financial Statements For the Fiscal Year End December 31 , 2019 With Report of Independent Registered Public Accounting Firm
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# RUBIO CPA, PC CERTIFIED PUBLIC ACCOUNTANTS
2727 Paces Ferry Road SE Building 2, Suite 1680 Atlanta, GA 30339 Office: 770 690-8995 Fax: 770 838-7123
## REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholder of Surety Financial Services, Inc.
#### Opinion on the Financial Statements
We have audited the accompanying statement of financial condition of Surety Financial Services, Inc. (the "Company" ) as of December 31, 2019, the related statements of operattons, changes in stockholder's equity, and cash flows for the year then ended and the related notes (collectively referred to as the " financial statements"). ln our opinion, the financ ial statements present fairly, in all material respects, the financial position of the Company as of December 3 I, 2019, and the results of its operations and its cash flows for the year then ended in confom1 ity with accounting principles generally accepted in the Un ited States of America.
#### Basis for Opinion
These financial statements are the responsibility ofthe Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company i:n 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 aud it in accordance w ith the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financ ial reporting. Accord ingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement to the finru1cial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used ru1d significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
#### Supplemental Information
The information contained in Schedules I, II and III has been subjected to audit procedures performed in conjunction with the audit of the Company's financial statements. The supplemental information is the n::sponsibility of the Company's management. Our audit procedures included determining whether the information in Schedules I, 11 and Ill reconciles to the financial statements or the w1derlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the accompanying schedules. In forming our opinion on the accompanying
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schedules, we evaluated whether the supplemental information, including its form and content, is presented in conformitty with 17 C.F.R. §240.17a-5. In our opinion, the aforementioned supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.
We have served as the Company's auditor since 2005.
February 19, 2020 Atlanta, Georgia
~ *{\_1',1,/'t-*
Rubio CPA, PC
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## **Surety Financial Services, Inc. Statement of Financial Condition Decemebr 31, 20·19**
#### Assets
| Cash | \$
79,652 |
|------------------------------------------------------|--------------|
| Accounts receivable- broker dealers | 12,314 |
| Other asset | 430 |
| Total Assets | 92,396 |
| Liabilities and Stockholder's Equity | |
| Liabilities
Accounts payable and accrued expenses | 3,752 |
| Total Liabilities | 3,752 |
| Stockholder's Equity | 88,644 |
| Total Liabilities and Stockholder's Equity | \$
92,396 |
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## Surety Financial Services, Inc. Statement of Operations For the Year Ended December 31, 2019
| Revenues | |
|-------------------------------------|-------------------|
| Commissions | \$
101
,221 |
| Interest income | 201 |
| Other income | 77 |
| Total revenues | 101,499 |
| General and Administrative Expenses | |
| Compensation and benefits | 65,211 |
| Professional fees | 11 ,973 |
| Occupancy | 11 ,371 |
| Other operating expenses | 20,061 |
| Total expenses | 108,616 |
| Net Loss | \$
{71117} |
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## Surety Financial Services, Inc. Statement of Changes in Stockholder's Equity For the Year Ended December 31 , 2019
| Balance, December 31, 2018 | \$
95,761 |
|----------------------------|--------------|
| Net loss | (7,117) |
| Balance, December 31, 2019 | \$
88,644 |
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## **Surety Financial Services, Inc. Statement of Cash Flows For the Year Ended December 31, 2019**
| Cash Flows from Operating Activities: | |
|-----------------------------------------------------------------------------|----------------|
| Net loss | \$
(7, 117) |
| Adjustments to reconcile net loss to net cash used by operating activities: | |
| Change in accounts receivable- broker dealers | 4,021 |
| Change in other assets | |
| Change in accounts payable and accnued expenses | (2,884) |
| Net Cash Used by Operating Activities | (5,980) |
| Net Decrease in Cash | (5,980) |
| Cash balance | |
| Beginning of year | 85,632 |
| End of year | \$
79,652 |
| | |
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## **SURETY FINANCIAL SERVICES, INC. NOTES TO FINANCIAL STATEMENTS December 31, 2019**
#### **NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
Organization and Description of Business: Surety Financial Services, Inc. is a registered broker dealer organized under the laws of the state of New York. The Company is registered with the Securities and Exchange Commission, the Financiial Industry Regulatory Authority and the securities commissions of appropriate states. The Company received approval to operate as a licensed broker-dealer in December of 1986.
The Company's business is brokerage of marketable securities for institutional customers located throughout the United States. The Company operates from offices located in Wantagh, New York.
Cash: The Company maintains its bank accounts in high credit quality institutions. Deposits at times may exceed federally insured limits.
Income Taxes: The Company has elected to be taxed as an S corporation. Therefore, the income or losses of the Company flow through to the stockholder and no income taxes are recorded in the accompanying financial statements.
The Company has adopted the provisions of FASB Accounting Standards Codification, Accounting for Uncertainty in Income Taxes. Thus, the Company is required to evaluate each of its tax positions to determine if they are more likely than not to be sustained if the taxing authority examines the respective position. A tax position includes an entity's status, including its status as a pass-through entity, and the decision not to file a return. The Company has evaluated each of its tax positions and has determined that no provision or liability for income taxes is necessary.
Estimates: Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could vary from the estimates that were assumed in preparing the financial statements.
Revenue Recognition: Revenues are generally recognized when earned and realized or realizable, when persuasive eviidence of an arrangement exists, delivery has occurred, or services have been rendered, the price is fixed and determinable, and collectability is reasonably assured.
Revenue from Contracts with Customers Standard (ASU 2014-09) core principle is that an entity should recognize revenue wihen it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 prescribes a five-step process to accomplish this core principle, including:
- Identification of the contract with the customer;
- Identification of the performance obligation(s) under the contract;
- Determination of transaction price;
- Allocation of the transaction price to the identified performance obligation(s); and
- Recognition *ot* revenue as (orr when) an entity satisfies the identified performance obligation(s).
The Company recognizes commission revenue upon the execution of the underlying trade as this satisfies the only performance obligation identified in accordance with this standard.
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### **SURETY FINANCIAL SERVICES, INC. NOTES TO FINANCIAL STATEMENTS December 31, 2019**
#### **NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**
Date of Management's Review: Subsequent events were evaluated through the date the financial statements were issued.
Accounts Receivable - Broker Dealers: The Company provides for doubtful accounts when market conditions indicate that collection of an account is doubtful. The receivables at December 31, 2019 are considered wholly collectible and no allowance for doubtful accounts is provided.
#### **NOTE 2 -LEASES**
During 2019, the Company occupied office premises and made payments to a landlord under a lease held by its stockholder. During 2019, approximately 92% of the lease obligation of t he stock hoI de r was paid by the Company (see Note 4 ). The lease is on a month to month basis.
Rent expense for the year ended December 31, 2019 was approximately \$11 ,371.
## **NOTE 3- NET CAPITAL**
The Company, as a registered broker dealer is subject to the Securities and Exchange Commission Uniform Net Capital Rule (Rule 15c3-1 ), which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined shall not exceed 15 to 1. At December 31 , 2019, the Company had net capital of \$75,900 which was \$70,900 in excess of its required net capital of \$5,000 and its ratio of aggregate indebtedness to net capital was .05 to 1.0.
## **NOTE 4- RELATED PARTIES**
The Company shares office facilities with Monitoring and Evaluation Services, Inc. ("Monitoring'), a sister company. During 2019, the Company paid approximately 92% of the occupancy costs of the shared office facilities (see Note 2). In addition, employees of the Company provide some services to Monitoring and employees of Monitoring provide some services to the Company.
Financial position and results of operations would differ from the amounts in the accompanying financial statements if these transactions did not exist.
#### **NOTE 5 - CONTINGINCIES**
The Company is subject to litigation in the normal course of business. The Company has no litigation in progress at December 31 , 2019.
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## SUPPLEMENTAL INFORMATION
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#### **Surety Financial Services, Inc.**
## **Schedule I Computation of Net Capital Pursuant to Rule 15c3-1 Of The Securities and Exchange Commission Act of 1934 As of December 31, 2019**
#### Net Capital:
| Total stockholder's equity | \$
88,644 |
|----------------------------------------------------|--------------|
| Less non-allowable assets: | |
| Accounts receivable-
broker dealers | 12,314 |
| Other asset | 430 |
| Net capital before haircuts | 75,900 |
| Less haircuts | |
| Net capital
Minimum net capital required | 75,900 |
| | 5,000 |
| Excess net capital | \$
70 900 |
| Aggregate indebtedness | \$
3 752 |
| Percentage of aggregate indetedness to net capital | 4.94% |
Reconciliation with the Company's computation of net capital inclluded in Part IIA of Form X-17 A-5 as of December 31 , 2019.
There was no significant difference between net capital in the FOCUS Part IIA form and the computation above.
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#### Surety Financial Services, Inc.
## SCHEDULE II COMPUTATION FOR DETERMINATION OF RESERVE REQUIREMENTS UNDER RULE 15c3-3 OF THE SECURITIES AND EXCHANGE COMMISSION AS OF DECEMBER 31,2019
The Company is exempt from the provisions of Rule 15c3-3 under the Securities Exchange Act of 1934, pursuant to paragraph (k)(2)(ii) of the rule.
## SCHEDULE Ill INFORMATION RELATING TO THE POSSESSION OR CONTROL REQUIREMENTS UNDER RULE 15c3-3 OF THE SECURITIES AND EXCHANGE COMMISSION AS OF DECEMBER 31,2019
The Company is exempt from the provisions of Rule 15c3-3 under the Securities Exchange Act of 1934, pursuant to paragraph (k)(2)(ii) of the rule.
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# **SURETY FINANCIAL SERVICES**
MEMBER
NATIONAl ASSOCIATION OF SECURITIES DEALERS
SECURITIES INVESTOR PROTECTION CORPORATION
February 6. 2020
RUBIO CPA, PC 2727 Paces Ferry Rd. SE Building 2, Suite 1680 Atlanta, GA 30339
**EXEMPTION REPORT SEA RULE 17a-5(d)(4)** 3376 PARK AVENtJE, SUITE 3006 WANTAGH, NY 11 793 (516 )785-2366 FAX 16161786-2364
To Whom it May Concern
The below mformat1on IS des1gned to meet the Exempt1on Report criteria pursuant to SEA Rule 17a-5(d)(4):
Surety Financial Serv1ces, Inc. is a broker/dealer registered with the SEC and FINRA. Pursuant to paragraph k(2)(ii) of SEA Rule 15c3-3, the Company is claiming an exemption from SEA Rule 15c3-3 for the fiscal year ended December 31 , 2019.
The Company has met the identified exemption provisions throughout the most recent fiscal year without exception.
The above statement IS true and correct to the best of my and the Company's knowledge
Signed:
Name: John J. Renck
Title CEO
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# **RUBIO CPA, PC** CERTIFIED PUBLIC ACCOUNTANTS 2727 Paces Ferry Rood SE
Building 2. Suite 1680 Atlanta. GA 30339 Office: 770 690-8995 Fax: 770 838-7123
#### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
To the Stockholder of Surety Financial Services, Inc.
We have reviewed management's statements, included in the accompanying Broker Dealers Annual Exemption Report in which (I) Surety Financial Services, Inc. identified the following provisions of 17 C.f.R. § 15c3-3(k) under which Surety Financial Services, lnc. claimed an exemption from 17 C.F.R. § 240. I Sc3-3: (k)(2)(ii) (the "exemption provisions"); and, (2) Surety Financial Services, Inc. stated that Surety Financial Services, Inc. met the identified exemption provisions throughout the most recent fiscal year without exception. Surety Financial Services, Inc.'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 Surety Financial Services, Inc.'s compliance with the exemption provisions. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's statements. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modificationslhat 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 J 5c3-3 under the Securities Exchange Act of 1934.
February 19, 2020
Atlanta, GA *f2wt:..* **?tl4/** *fJ C-*
Rubio CPA, PC
Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.