# SURETY FINANCIAL SERVICES INC. X-17A-5 (2021-02-23) — Broker-dealer annual report - Company: SURETY FINANCIAL SERVICES INC. - Form: X-17A-5 - Filed: 2021-02-23 - Period: 2020-12-31 - Accession: 0000798926-21-000001 - 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/798926/000079892621000001/sfs2.pdf --- {0}------------------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 OMB APPROVAL OMB Number: 3235-0123 Expires: October 31, 2023 Estimated average burden hours per response ... 12.00 SEC FILE NUMBER 8- 36521 #### ANNUAL AUDITED REPORT FORM X-17A-5 PART 111 | FACING PAGE | | | | |-------------|--|--|--| | | | | | Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder | | AND ENDING | 12/31/20 | |-----------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | MM/DD/YY | | MM/DD/YY | | | | | | | | OFFICIAL USE ONLY | | | | FIRM I.D. NO. | | (No. and Street) | | 11793 | | (State) | | (Zip Code) | | | | | | | | | | 2727 Paces Ferry Rd SE, Ste 2-1680
Atlanta | Georgia | 30339 | | (City) | (State) | (Zip Code) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NY | A. REGISTRANT IDENTIFICATION
ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.)
NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
(516) 785-2355
(Area Code - Telephone Number)
B. ACCOUNTANT IDENTIFICATION
INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in the Report*
(Name - if individual, state last, firmi, middle name)
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 must be supported by a statement of facts and circumstances relied on as the basis for the exemption. See Section 240.17a-5(e)(2) Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB contro SEC 1410 (11-05) {1}------------------------------------------------ #### OATH OR AFFIRMATION ਲ ਕਰਨ ar and the search and the search and the search and the search and the search and the comments of the country of the country of the country of the country of the country of t | 1. | John J. Renck
swear the such as a swear (or affirm) that, to the best of my | |----|---------------------------------------------------------------------------------------------------------------------------------------------------| | | knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of | | | Surety Financial Services, Inc.
. 32 | | | | | of | December 31, 2020 , are true and correct. I further swear (or affirm) that | | | neither the company nor any partner, principal officer or director has any proprietary interest in any account | | | | | | classified solely as that of a customer, except as follows: | | | | | | | | | | | | | | | | | | Signature | | | | | | Title | | | Jennifer Wilson
Notary Public, State of New York | | | No. 01W16331165 | | | Qualified in Nassau County
Notary Public | | | | | | This report 2 contains (check all applicable boxes): | | | (a) Facing Page. | | | (b) Statement of Financial Condition. | | | (c) Statement of Income (Loss). | | | (d) Statement of Changes in Financial Condition. | | | (c) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital. | | | (1) Statement of Changes in Liabilities Subordinated to Claims of Creditors. | | | (g) Computation of Net Capital. | | | (h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3. | | | (i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3. | | | (j) A Reconciliation, including appropriate explanation of the Computation of Net Capital Under | | | Rule 15c3-1 and the Computation for Determination of the Reserve Requirements Under Exhibit | | | A of Rule 15c3-3. | | | (k) A Reconciliation, between the audited and unaudited Statements of Financial Condition with | | | respect to methods of consolidation. | | | (1) An Oath or Affirmation. | | | (m) A copy of the SIPC Supplemental Report
(n) A report describing any material inadequacies found to exist or found to have existed since the | | | | \*\* For conditions of confidential treatment of certain portions of this filing, see section 240.17a-5(e)/3). date of the previous audit. {2}------------------------------------------------ # **SURETY FINANCIAL SERVICES, INC.** Financial Statements For the Year Ended December 31 , 2020 With Report of Independent Registered Public Accounting Firm {3}------------------------------------------------ # **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, lnc. (the "Company") as of December 3 l, 2020, the related statements of operations, changes in stockholder's equity, and cash flows for the year then ended and the related notes (collectively referred to as the " financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, 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 the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. 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 financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement to the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. #### Supplemental information The 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 responsibility of the Company's management. Our audit procedures included determining whether the information in Schedules I, II and III reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of t:he information presented in the accompanying schedules. In forming our opinion on the accompanying schedules, we evaluated whether the supplementa l information, includ ing its form and content, is presented {4}------------------------------------------------ in conformity with 17 C.F.R. §240.17a-5. Jn 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 22, 2021 Atlanta, Georgia ~ **t:/A;l'v** Rubio CPA, PC {5}------------------------------------------------ ## **Surety Financial Services, Inc. Statement of Financial Condition December 31, 2020** #### Assets | Cash
Accounts receivable
Other | \$
94,907
1,534
430 | |------------------------------------------------------|------------------------------| | Total Assets | 96,871 | | Liabilities and Stockholder's Equity | | | Liabilities
Accounts payable and accrued expenses | 11 ,996 | | Total Liabilities | 11,996 | | Stockholder's Equity | 84,875 | | Total Liabilities and Stockholder's Equity | \$
96,871 | {6}------------------------------------------------ ## Surety Financial Services, Inc. Statement of Operations For t he Year Ended December 31, 2020 | Revenues | | |---------------------------|---------------| | Commissions | \$
101,510 | | Interest | 118 | | Total revenues | 101,628 | | Expenses | | | Compensation and benefits | 67,201 | | Occupancy | 12,350 | | Professional fees | 10,205 | | Other | 15,641 | | Total expenses | 105,397 | | Net Loss | \$
!31769~ | {7}------------------------------------------------ ## Surety Financial Services, Inc. Statement of Changes in Stockho lder's Equity For the Year Ended December 31, 2020 | Balance, December 31, 2019 | \$
88,644 | |-----------------------------|--------------| | Net loss | (3,769) | | Balance, December 31 , 2020 | \$
84 875 | {8}------------------------------------------------ ## **Surety Financial Services, Inc. Statement of Cash Flows For the Year Ended December 31, 2020** | Cash Flows from Operating Activities: | | |----------------------------------------------------------------------------------|---------------| | Net loss | \$
(3,769) | | Adjustments to reconcile net loss to net cash provided by oper.ating activities: | | | Change in accounts receivable | 10,780 | | Change in accounts payable and accrued expenses | 8,244 | | Net Cash Provided by Operating Activities | 15,255 | | | | | Net Increase in Cash | 15,255 | | Cash balance | | | Beginning of year | 79,652 | | End of year | \$
94 907 | {9}------------------------------------------------ ## **SURETY FINANCIAL SERVICES, INC. NOTES TO FINANCIAL STATEMENTS December 31, 2020** #### **NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** Organization and Description of Business: Surety Financial Services, Inc. (the "Company") 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 and a member of the Financial Industry Regulatory Authority and the securities commissions of appropriate states. The Company received approval to operate as a licensed broker-dealer in 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. Accounting Policies:: The Company follows Generally Accepted Accounting Principles (GAAP), as established by the Financial Accounting Standards Board (the FASS), to ensure consistent reporting of financial condition, results of operations, and cash flows. Cash: The Company maintains its bank accounts in a high credit quality financial institution. Balances at times may exceed federally insured limits. Income Taxes: The Company has elected S corporation status for income tax report1ing purposes. 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 FASS Accounting Standards Codific,ation 740-10, 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 from Contracts with Customers: The Company introduces institutions to other broker dealers that buy and sell securities on behalf the institutions. When the institutions enter into certain buy or sell transactions, the Company receives a portion of the commission. Commissions are recorded on the trade date (the date that the other broker dealer 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 ownership of the securities have been transferred to/from the institutional customer. {10}------------------------------------------------ ## **SURETY FINANCIAL SERVICES, INC. NOTES TO FINANCIAL STATEMENTS December 31, 2020** ### **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: Accounts receivable are non-interest bearing uncollateralized obligations receivable in accordance with the terms agreed upon with each customer. The Company regularly reviews its accounts receivable for any uncollectible amounts. The review for uncollectible amounts is based on an analysis of the Company's collection experience, customer credit worthiness, and current economic treads. #### **NOTE 2 - NET CAPITAL** The Company, as a registered broker dealer is subject to the Securities and Exchange Commission Uniform Net Ca pita I Rule (Rule 15c3-1 ), which requires the maintenance of minimum net capital, as defined, equal to the greater of \$5,000 or 6 2/3% of aggregate indebtedness as well as a ratio of aggregate indebtedness to net capital that shall not exceed 15 to 1. At December 31, 2020, the Company had net capital of \$82,911 which was \$77,91 1 in excess of its required net capital of \$5,000 and its ratio of aggregate indebtedness to net capital was .14 to ·1.0. #### **NOTE 3-RELATED PARTY** The Company occupies office space that it shares with a sister company, Monitoring and Evaluation Services, Inc. The Company pays all of the rent due to the landlord under a month-to month lease held by the Company's stockholder. Rent expense for the year ended December 31 , 2020 was approximately \$12,350. The Company receives certain services from an employee of the sister company at no cost under an informal arrangement. Financial position and results of operations would differ from the amounts in the accompanying financial statements if these arrangements did not exist. #### **NOTE 4 - CONTINGINCIES** The Company is subject to litigation in the normal course of business. The Company has no litigation in progress at December 31 , 2020. #### **NOTE 5- ECONOMIC RISKS** In March 2020, the World Health Organization (WHO) declared COVID-19 a global pandemic. This pandemic event has resulted in significant business disruption and uncertainty in both global and U.S. markets. While the Company believes that it is in an appropriate position to sustain the potential shortterm effects of these world-wide events, the direct and long-term impact to the Company and its financial statements is undetermined at this time. {11}------------------------------------------------ ## SUPPLEMENTAL INFORMATION {12}------------------------------------------------ #### **Surety Financial Services, Inc.** ## **Schedule I Computation of Net Capital Pursuant to Rule 15c3-1 Of The Securities and Exchange Commission As of December 31, 2020** Net Capital: | Total stockholder's equity | \$
84,875 | |----------------------------------------------------------------|--------------| | Less non-allowable assets: | | | Accounts receivable | 1,534 | | Other asset | 430 | | Total non-allowable assets | 1,964 | | Net capital before haircuts | 82,911 | | Less haircuts | | | Net capital | 82,911 | | Minimum net capital required | 5,000 | | (greater of \$5,000 or 6 2/3% of total aggregate indebtedness) | | | Excess net capital | \$
77,911 | | Aggregate indebtedness | \$
11,996 | | Percentage of aggregate indetedness to net capital | 14.47% | Reconciliation with the Company's computation of net capital included in Part llA of Form X-17 A-5 as of December 31, 2020. There was no significant difference between net capital as reported in the Part llA of Form X-17 A-5 and the computation above. {13}------------------------------------------------ ### Surety Financial Services, Inc. ## SCHEDULE II COMPUTATION FOR DETERMINATION OF RESERVE REQUIREMENTS UNDER Rl.llLE 15c3-3 OF THE SECURITIES AND EXCHANGE COMMISSION AS OF DECEMBER 31, 2020 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 Rl.llLE 15c3-3 OF THE SECURITIES AND EXCHANGE COMMISSION AS OF DECEMBER 31 , 2020 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. {14}------------------------------------------------ ![](_page_14_Picture_0.jpeg) ## SURETY FINANCIAL SERVICES Brokerage Services MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS SECURITIES INVESTOR PROTECTION CORPORATION 3375 PARK AVENUE, SUITE 3006 WANTAGH, NY 11793 (516)785-2355 FAX (516)785-2354 EXEMPTION REPORT SEA RULE 17a-5(d)(4) February 19, 2021 RUBIO CPA, PC 2727 Paces Ferry Rd, SE Building 2, Suite 1680 Atlanta, GA 30339 To Whom it May Concern: The below information is designed to meet the Exemption Report criteria pursuant to SEA Rule 17a-5(d)(4): Surety Financial Services, 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, 2020. 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 {15}------------------------------------------------ **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, 1nc. We have reviewed management's statements included in the accompanying Broker Dealers Annual Exemption Report in which (1) Surety Financial Services, Inc. identified the following provisions of 17 C.F.R. § 15c3-3(k) under which Surety f inancial Services, Inc. claimed an exemption from 17 C.F.R. § 240. l 5c3-3: (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 opm1on. Based on our review, we are not aware of any material modifications that should be made to management's statements referred to above for them to be fairly stated, in all material respects, based on the provisions set forth in paragraph (k)(2)(ii), of Rule l 5c3-3 under the Securities Exchange Act of 1934. February 22, 2021 Atlanta, GA Rubio CPA, PC Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.