# INSTITUTIONAL SECURITIES CORPORATION X-17A-5 (2021-03-22) — Broker-dealer annual report - Company: INSTITUTIONAL SECURITIES CORPORATION - Form: X-17A-5 - Filed: 2021-03-22 - Period: 2020-12-31 - Accession: 0000818043-21-000002 - CIK: 818043 - File #: 8-38158 - Material weakness: No - Auditor: Moss Adams LLP - Auditor location: Dallas, TX - Contact: Andreya Weadon - Phone: 2145201115 - Signed by: Scott Hayes (President) Original filing: https://www.sec.gov/Archives/edgar/data/818043/000081804321000002/2020FinancialsCIK0000818043.pdf --- {0}------------------------------------------------ #### Institutional Securities Corporation Report Pursuant to Rule 17a-5(d) For the Year Ended December 31, 2020 {1}------------------------------------------------ | UNITED STATES | |------------------------------------| | SECURITIES AND EXCHANGE COMMISSION | | Washington, D.C.
20549 | | OMB Number: | 3235-0123 | |--------------------------|------------------| | Expires: | October 31, 2023 | | Estimated average burden | | | hours per response | 12.00 | # **ANNUAL AUDITED REPORT FORM X-17A-5 PART III** # SEC FILE NUMBER 8-38158 #### **FACING PAGE Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder** | REPORT FOR THE PERIOD BEGINNING | 01/01/20
AND ENDING | | | | |------------------------------------------------------------------------------------------|------------------------------------------------|---------|------------------------------|--| | | MM/DD/YY | | MM/DD/YY | | | | A. REGISTRANT IDENTIFICATION | | | | | NAME OF BROKER-DEALER: | | | OFFICIAL USE ONLY | | | Institutional Securities
Corporation | | | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. | FIRM ID. NO. | | | | | Ave.,
Lawn
3500
Oak
Suite
400 | | | | | | | (No. and
Street) | | | | | Dallas | Texas | | | | | (City) | (State) | | (Zip Code) | | | | | | (Area Code-Telephone
No.) | | | | B. ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | | Moss
Adams
LLP | | | | | | (Name-if | individual,
state last, first, middle name) | | | | | Parkway,
14555 Dallas
Suite
300 | Dallas | TX | 75254 | | | (Address) | (City) | (State) | (Zip Code) | | | CHECK ONE:
x]
Certified Public Accountant | | | | | | Public Accountant
Accountant not resident in United States or any of its possessions. | | | | | | | FOR OFFICIAL USE ONLY | | | | | | | | | | | | | | | | *\*Claims for exemption from the requirement that the annual report be covered by the opinion of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis for the exemption. See section 240.17a-5(e)(2).* {2}------------------------------------------------ # OATH OR AFFIRMATION l, Scott Haves , swear (or affirm) that,to the best of my knowledge and belief the accompanying financial statements and supporting schedules pertaining to the firm of Institutional Securities Corporation 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: , as of December 31 2020, are true and correct. I Signature President Title ANDREYA S. WEADON - ^ WrF|NOtarV Pub,ic' State of Texas Comm' Expires 06-22-2024 *' ' 'ofliw" \** Notary ID 10500978 This report\*\* contains (check all applicable boxes): X (a) Facing Page. X (b) Statement of Financial Condition. X (c) Statement of Income (Loss). X (d) Statement of Cash Flows. X[ (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietor's Capital. J (f) Statement of Changes in Liabilities Subordinated to Claims of Creditors. **x[** (g) Computation of Net Capital. (h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3. J (i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3. Xj (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. (L ) An Oath or Affirmation. (m) A copy of the SIPC Supplemental Report. (n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit. X| (o) Report of Independent Registered Public Accounting Firm on Management's Exemption Report. § \*\*For conditions of confidential treatment of certain portions of this filing, see Section 240.17a-5(e)(3). {3}------------------------------------------------ ![](_page_3_Picture_0.jpeg) # **Report ofIndependent Registered Public Accounting Firm** To the Board of Directors Institutional Securities Corporation # *Opinion on the Financial Statements* We have audited the accompanying statement of financial condition of Institutional Securities Corporation (the Company) as of December 31, 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. ## *Basisfor 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. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to 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. # *Opinion on the Supplemental Information* The supplemental information in Schedule I has been subjected to audit procedures performed in conjunction with the audit of the Company's financial statements. The information in Schedule I is the responsibility of the Company's management. Our audit procedures include determining whether the information in Schedule I reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in Schedule I. In forming our opinion on the information in Schedule I, we evaluated whether the information in Schedule I, including its form and content, is presented in conformity with 17 C.F.R. § 240.17a-5. In our opinion, the information in Schedule I is fairly stated in all material respects in relation to the financial statements as a whole. *L-LP* Dallas, Texas March 9, 2021 We have served as the Company's auditor since 2016. {4}------------------------------------------------ #### INSTITUTIONAL SECURITIES CORPORATION Statement of Financial Condition December 31,2020 #### **ASSETS** | Cash and cash equivalents
Receivable from broker-dealers and | \$ | 351 939 | |-----------------------------------------------------------------|----|---------------| | clearing organizations | | 1,046,756 | | Other receivables | | 35,402 | | Securities owned | | 203 | | Prepaid expenses and advances | | 39.880 | | | | | | Total Assets | S | 1.474.180 | | LIABILITIES AND STOCKHOLDER'SEQUITY | | | | | | | | Liabilities: | | | | Accounts payable and accrued expenses | \$ | 19,206 | | Commissions payable | | 805,175 | | Accounts payable clearing broker
Securities sold short | | 198
18,448 | | Federal income tax payable | | 4,454 | | | | | | | | 847.481 | | Stockholder's
equity: | | | | Common stock,
10,000 shares | | | | authorized with \$.10
par value, | | | | 10,000
shares issued and outstanding | | 1,000 | | Additional paid in capital | | 286,709 | | Retained earnings | | 338,990 | | Total stockholder's
equity | | 626,699 | | Total liabilities and stockholder's
equity | \$ | 1.474.180 | The accompanying notes are an integral part of these financial statements, {5}------------------------------------------------ # INSTITUTIONAL SECURITIES CORPORATION Statement of Operations For the Year Ended December 31, 2020 | Revenues | | |-----------------------------------|-----------------| | Commissions | 1,396,971
\$ | | Insurance and annuity products | 2,560,519 | | 12b1
fees/distribution
fees | 1,228,123 | | Mutual fund commissions | 435,310 | | Interest income | 47,375 | | Other income | 70,928 | | Trading gains | 3.582.769 | | Total revenues | 9,321.995 | | Expenses | | | Commissions and clearance | 8,522,514 | | Regulatory fees and expenses | 58,719 | | Other expenses | 682,086 | | Total expenses | 9.263.319 | | Net income before income taxes | 58,676 | | Federal income tax expense | (12,322) | | Net income | \$
46.354 | The accompanying notes are an integral part of these financial statements. {6}------------------------------------------------ # INSTITUTIONAL SECURITIES CORPORATION Statement of Changes in Stockholder's Equity For the Year Ended December 31, 2020 | | Common
Shares
Stock | | Additional
Paid In
Capital | | Retained
Earnings | | Total | | | |------------------------------------|---------------------------|----|----------------------------------|----|----------------------|----|---------|----|------------| | Balance at
December 31,
2019 | 10,000 | \$ | 1,000 | \$ | 286,709 | \$ | 292,636 | | \$ 580,345 | | Net income | | | | | | | 46.354 | | 46,354 | | Balance at
December 31,
2020 | 10.000 | \$ | 1.000 | \$ | 286.709 | \$ | 338.990 | \$ | 626.699 | The accompanying notes are an integral part of these financial statements. {7}------------------------------------------------ # INSTITUTIONAL SECURITIES CORPORATION Statement of Cash Flows For the Year Ended December 31.2020 | Cash flows from operating activities | | |-----------------------------------------------------|---------------| | Net income | \$
46,354 | | Adjustments to reconcile net income to net cash | | | provided (used)
by operating activities: | | | Change in current assets and liabilities: | | | Increase in receivable from broker-dealers and | | | clearing organizations | (617,312) | | Decrease in other receivables | 6,598 | | Decrease in securities owned | 228,671 | | Decrease in prepaid expenses and advances | 25 | | Increase in accounts payable and accrued expenses | 6,169 | | Increase in commissions payable | 298,894 | | Decrease in accounts payable clearing broker | (217,370) | | Increase in income tax payable—related party | 4,454 | | Decrease in income tax receivable—related party | 17,980 | | Net cash provided (used)
by operating activities | (225,537) | | Cash flows from investing activities | | | Securities sold short | 18,448 | | Net cash provided (used)
by investing activities | 18,448 | | Cash flows from financing activities | | | Contributed Capital | -0- | | Net cash provided (used)
by financing activities | -0- | | Net decrease in cash and cash equivalents | (207,089) | | Cash and cash equivalents at beginning of year | 559,028 | | Cash and cash equivalents at end of year | \$
351.939 | | Supplemental Schedule of Cash Flow Information | | | Cash paid during the year for: | | | Interest | \$
528 | | | | | Income taxes | \$
7.778 | The accompanying notes are an integral part of these financial statements. {8}------------------------------------------------ #### Note 1 - Summary of Significant Accounting Policies Institutional Securities Corporation (the "Company") is a broker-dealer in securities registered with the Securities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority ("FINRA"). The Company operates under (SEC) Rule 15c3-3(k)(2)(ii), which provides that all funds and securities belonging to the Company's customers would be handled by a clearing broker-dealer. The Company is a Texas corporation that is a wholly-owned subsidiary of ISC Group, Inc. ("Parent"). Substantially all the Company's business is conducted with customers in Texas. The Company follows Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606). ASC 606 requires that an entity recognize revenue to depict the transfer of 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 and services. The guidance requires an entity to follow a five step model to a) identify the contracts) with a customer, b) identify the performance obligations in the contract, c) determine the transaction price, d) allocate the transaction price to the performance obligation, in determining the transaction price, an entity may include variable consideration only to extent that is probable that a significant reversal in the amount of the cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved, and e) recognize revenue when (or as) the Company satisfies a performance obligation. Revenue from contracts with customers includes commission income primarily from commissions, insurance and annuity products, 12b1 fees/distribution fees, and mutual fund commissions. The recognition and measurement of revenue is based on the assessment of individual contract items. Significant judgement is required to determine whether performance obligations are satisfied at a point in time or over tie; how to allocate transaction process where multiple performance obligations are identified; when to recognize revenue based on the appropriate measure of the Company's progress under the contract, and whether constraints on variable considerations should be applied due to uncertain future events. #### Commission Revenue Commission revenue represents sales commissions generated by registered representatives for their clients' purchases and sales of securities on exchanges and over-the-counter, as well as purchases of other investment products. The Company views the selling, distribution and marketing, or any combination thereof, of investment products to such clients as a single performance obligation to the product sponsors and clearing firm. Security transactions are recorded on a trade date basis. The Company is the principal for commission revenue, as it is responsible for the execution of the clients' purchases and sales, and maintains relationships with the product sponsors and clearing firm. Registered Representatives assist the Company in performing its obligations. Accordingly, total commission revenues are reported on a gross basis. #### 12b1 Fees/Distribution Fees, Mutual Funds, Insurance and Annuity Products The Company earns revenue for selling mutual funds, fixed and variable annuities and insurance products. The performance obligation is satisfied at the time of each individual sale. A portion of the revenue is based on a fixed rate applied, as a percentage, to amounts invested at the time of sale. The remaining revenue is recognized over the time the client owns the investment or holds the contract and is generally earned based on a fixed rate applied, as a percentage, to the net asset value of the fond, or the value of the insurance policy or annuity contract. The future anticipated revenue is not recognized at the time of sale because it is variably constrained due to factors outside the Company's control, including market volatility and client behavior (such as how long clients hold their mutual fond investment, insurance policy, or annuity contract). The revenue is not recognized until it is probable that a significant reversal will not occur. {9}------------------------------------------------ #### Note 1 - Summary of Significant Accounting Policies-continued #### Trading Gains The Company buys and sells securities on behalf of its customers and on behalf of the Company. Each time a transaction is executed, the Company recognizes a gain or loss. This gain or loss is then recorded in the books of the Company. 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 have been transferred to/ffom customer. The economic conditions which affect the Company's operations are related to overall trends in the economy and trends in interest rates which affect the Company's fixed income positions. Securities owned and securities sold short, not yet purchased, are carried at fair value. The increase or decrease in net unrealized appreciation or depreciation of securities is credited or charged to operations. For purposes of reporting cash flows, the Company has defined cash equivalents as highly liquid investments, with original maturities of less than ninety days that are not held for sale in the ordinary course of business. Receivables from broker-dealers and clearing organizations are generally collected in full in the month following their accrual. As such, management has not recorded an allowance for credit losses on these receivables. The Company advances funds to its registered representatives as determined necessary by management. The advances are generally recouped upon the following commission payment cycle. The Company takes into consideration the composition of the receivables, current economic conditions, the estimated net realizable value of the underlying collateral, historical loss experience, delinquency, and bankrupt accounts when determining management's estimate of probable credit losses and the adequacy of the allowance for credit losses. Any receivables deemed uncollectible are written off against the allowance. The Company had receivables related to contracts with customers of \$1,046,756 and \$429,444 as of December 31, 2020 and 2019, respectively. Compensated absences have not been accrued because the amount cannot be reasonably estimated. For the year ended December 31, 2020, the Company has provided for income taxes as if it were a standalone taxpayer. However, because the Company is not required to settle any tax liability, benefit or credit resulting from its separate tax position with the Parent, all tax liabilities or recoverables accrued by the Company are deemed settled by way of a capital contribution or capital distribution by or to the Parent. Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the basis of assets and liabilities for financial and income tax reporting. Deferred tax asset and liabilities represent future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income, subject to a valuation allowance. Tax benefits associated with uncertain tax positions are recognized in the period in which one of the following conditions is satisfied: 1) the more likely than not recognition threshold is satisfied; 2) the position is ultimately settled through negotiation or litigation; or 3) the statue of limitations for the taxing authority to examine and challenge the position has expired. Tax benefits associated with an uncertain tax position are derecognized in the period in which the more likely than not recognition threshold is no longer satisfied. Any potential interest and penalty associated with tax contingency, should one arise, would be included as a component of income tax expense in the period in which the assessment arises. The Company's income tax returns are subject to examination by over the {10}------------------------------------------------ #### Notel - Summary of Significant Accounting Policies-continued statues of limitations, generally three years form the date of filing. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On December 18, 2019, Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2019-12, Simplifying the Accounting for Income Taxes to reduce the cost and complexity in accounting for income taxes in Topic 740. Prospective adoption is required in the first quarter of fiscal 2022 with early adoption permitted, including adoption in an interim period. The Company is currently evaluating the impact this update will have on its financial statements and the timing of adoption. In June 2016, the FASB issued ASU 2016-13, Accounting for Financial Instruments -Credit Losses (Topic 326), which requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The standard requires an entity to estimate its lifetime expected credit loss and record an allowance, that when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. This forward-looking expected loss model generally will result in the earlier recognition of allowances for losses. The Company adopted this ASU effective January 1, 2020 with no material impact on its financial statements. #### Note 2 - Net Capital Requirements Pursuant to the net capital provisions of Rule 15c3-1 of the Securities Exchange Act of 1934, the Company is required to maintain a minimum net capital, as defined under such provisions. Net capital and the related net capital ratio may fluctuate on a daily basis. At December 31, 2020, the Company had net capital of approximately \$534,301 and net capital requirements of \$100,000. The Company's ratio of aggregate indebtedness to net capital was 1.55 to 1. The Securities and Exchange Commission permits a ratio of no greater than 15 to 1. #### Note 3 - Possession or Control Requirements The Company does not carry customer accounts or otherwise hold customer funds. The Company is exempt from the provision of Rule 15c3-3 under the Securities Exchange Act of 1934 as the Company's activities are limited to those set forth in the conditions for exempt appearing in paragraph (k)(2)(ii) of Rule 15c3-3 and otherwise limits its business activities to effecting securities transactions via subscription way basis where the funds are payable to the issuer or its agent and not to the Company and participating in distributions of securities in accordance with the requirements of paragraphs (a) or (b)(2) of Rule 15c2-4. #### Note 4 - Related Party Transactions The Company and various entities are under common control and the existence of that control creates operating results and financial position significantly different than if the companies were autonomous. {11}------------------------------------------------ # Note 4 - Related Party Transactions-continued The Parent has agreed to furnish management services, office space, and various general and administrative expenses to the Company. Amounts incurred under this agreement for the year ended December 31, 2020 totaled \$849,112 and are reflected in commission and clearance and other expenses. In addition, The Company made payments to an affiliated entity, Investment Sales Corp., for the year ended December 31, 2020 totaling \$346,604. These payments comprised of fees that were paid to the broker dealer for plan administration activities carried out by the affiliated entity and for life insurance policies sold by representatives in the capacity as an insurance agent by the affiliated entity, Investment Sales Corp. The Company also made payments to an affiliated entity, ISC Advisors, Inc., for the year ended December 31, 2020 totaling \$75,345. These payments comprised advisory fees that were received into the broker dealer in error and also E&O insurance premiums withheld from commissions. The premiums for the corporate E&O policy are paid by the affiliate, ISC Advisors, Inc. These payments are reflected in commission and clearance and other expenses. #### Note 5 - Concentration Risk At various times throughout the year, the Company had cash balances in excess of federally insured limits. #### Note 6 - Fair Value Measurements In determining fair value, the Company uses various methods including market, income, and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories: Level 1 - Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Level 1 also includes U.S. Treasury and federal agency securities and federal agency mortgage-backed securities, which are traded by dealers or brokers in active markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2 - Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or similar assets or liabilities. {12}------------------------------------------------ # Note 6 - Fair Value Measurements-continued Level 3 - Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities. For the year ended December 31, 2020, the application of valuation techniques applied to similar assets and liabilities has been consistent. The fair value of securities owned is deemed to be Level 1 investments. There were no transfers into or out of the Level 1, 2, or 3 categories in the fair value hierarchy for the year ended December 31, 2020. State and municipal obligations and corporate bonds consist of debt securities that are valued based on quotations received from dealers who make markets in such securities or by independent pricing services. These pricing services generally utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as wells as dealer supplied prices. The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on recurring basis as of December 31, 2020. | | Securities owned | | | |---------------------------------|------------------|---------|---------| | | Level 1 | Level 2 | Level 3 | | State and municipal obligations | \$ - | \$ 203 | \$ - | | Corporate Bonds | | | | | Total | \$ - | \$ 203 | \$ - | #### Note 7 - Commitment and Contingencies Included in the Company's clearing agreement with its clearing broker-dealer, is an indemnification clause. This clause relates to instances where the Company's customers fail to settle security transactions. In the event this occurs, the Company will indemnify the clearing broker-dealer to the extent of the net loss on the unsettled trade. At December 31, 2020, management of the Company had not been notified by the clearing broker-dealer, nor were they otherwise aware, of any potential losses relating to this indemnification. Also included in the Company's agreement with its clearing broker-dealer is a clause in which the Company represents that it shall maintain at all times a minimum of \$250,000 in regulatory net capital. The clause requires the Company to do certain things and cease introducing any business in alternative investment products through its clearing firm in the event the Company's capital falls below \$250,000. The Company engages in short selling activities; it borrows securities and sells them to third parties. Until the Company covers its short position it is exposed to market risk to the extent that subsequent market fluctuation may require purchasing securities sold short at prices that may be significantly higher than the fair value reflected in financial statements. At December 31, 2020, the Company had \$18,448 of securities sold short. {13}------------------------------------------------ #### Note 8 - Risks and Uncertainties In March 2020,the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic.Since that time,the disease has continued to spread globally. While the disruption of the global economy is currently expected to be temporary, there is uncertainty around the duration of the pandemic. Therefore, the effects of the pandemic upon the Company's business, financial position, results of operations and cash flows cannot be reasonably estimated at this time. {14}------------------------------------------------ Supplementary Information Pursuant to Rule 17a-5 of the Securities and Exchange Act of 1934 For the Year Ended December 31, 2020 {15}------------------------------------------------ #### **Schedule I** #### INSTITUTIONAL SECURITIES CORPORATION Computation of Net Capital Under Rule 15c3-1 of the Securities and Exchange Commission As of December 31, 2020 #### **COMPUTATION OF NET CAPITAL** | Total stockholder's equity qualified for net capital | | \$
626,699 | |---------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------|-------------------------------------------| | Add:
Other deductions or allowable credits | | -0- | | Total capital and allowable subordinated liabilities | | 626,699 | | Deductions and/or charges
Non-allowable assets:
Concession receivable in excess
of the payable
Other receivables
Prepaid expenses and advances | \$
14,336
35,402
39,880 | | | | | 89,618 | | Net capital before haircuts on securities positions | | 537,081 | | Haircuts on securities (computed,
where applicable,
pursuant to Rule 15c3-1(c)(2))
Other securities | 2,780 | 2,780 | | Net capital | | S 534.301 | | AGGREGATE INDEBTEDNESS | | | | Items included in statement of financial condition | | | | Accounts payable and accrued expenses
Commissions payable
State taxes payable
Federal income taxes payable | | \$
12,606
805,175
6,600
4,454 | | Total aggregate indebtedness | | \$
828.835 | {16}------------------------------------------------ # **Schedule I (continued)** # INSTITUTIONAL SECURITIES CORPORATION Computation of Net Capital Under Rule 15c3-1 of the Securities and Exchange Commission As of December 31.2020 #### **COMPUTATION OF BASIC NET CAPITAL REQUIREMENT** | Minimum net capital required (6 2/3% of
total
aggregate indebtedness) | \$ | 55.256 | |-------------------------------------------------------------------------------|------------|-----------| | Minimum dollar net capital requirement of
reporting broker or dealer | \$ 10Q.QQQ | | | Net capital requirement (greater of above two
minimum requirement amounts) | | S 1Q0.QQQ | | Net capital in excess
of required minimum | \$ 434.301 | | | Excess net capital at 1000% | \$ | 451.417 | | Ratio:
Aggregate indebtedness to net capital | | 1.55 to 1 | #### **RECONCILIATION WITH COMPANY'S COMPUTATION** There were no material differences in the computation of net capital under Rule 15c3-1 from the Company's computation in its unaudited Focus IIA Report. {17}------------------------------------------------ # REVIEW REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON MANAGEMENT'S EXEMPTION REPORT Required by SEC Rule 17a-5 Year Ended December 31, 2020 {18}------------------------------------------------ ![](_page_18_Picture_0.jpeg) # **Report ofIndependent Registered Public Accounting Firm** To the Board of Directors of Institutional Securities Corporation We have reviewed management's statements, included in the accompanying Institutional Securities Corporation's Exemption Report (the exemption report), in which: - 1**)** Institutional Securities Corporation states Institutional Securities Corporation claims an exemption under paragraph (k)(2)(ii) of 17 C.F.R. §240.15c3-3 (the exemption provisions); - Institutional Securities Corporation states Institutional Securities Corporation met the identified exemption provisions throughout the most recent fiscal year except as described in its exemption report; and **2**) - Institutional Securities Corporation states Institutional Securities Corporation is also filing the exemption report relying on Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. §240.17a-5 (Footnote 74) because, throughout the most recent fiscal year, without exception: 3) - Institutional Securities Corporation limits its other business activities contemplated by Footnote 74 to (1) effecting securities transactions via subscriptions on a subscription way basis where the funds are payable to the issuer or its agent and not to Institutional Securities Corporation, (2) participating in distributions of securities (other than firm commitment underwritings) in accordance with the requirements of paragraphs (a) or (b)(2) of Rule 15c2-4; and - Institutional Securities Corporation (1) 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 (b)(2) of Rule 15c2-4 and/or funds received and 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 Institutional Securities Corporation; (2) did not carry accounts of or for customers; and (3) did not carry PAB accounts (as defined in Rule 15c3-3). Institutional Securities Corporation's management is responsible for compliance with the exemption provisions and the provisions of Footnote 74 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 Institutional Securities Corporation's compliance with the exemption provisions and the provisions of Footnote 74. 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 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 exemption provisions set forth in paragraph (k)(2)(ii) of 17 C.F.R. §240.15c3-3 and the provisions of Footnote 74 of SEC Release No. 34-70073. *L~ L~P* Dallas, Texas March 9, 2021 {19}------------------------------------------------ ![](_page_19_Picture_0.jpeg) ![](_page_19_Picture_1.jpeg) ![](_page_19_Picture_2.jpeg) ![](_page_19_Picture_3.jpeg) ![](_page_19_Picture_4.jpeg) ![](_page_19_Picture_5.jpeg) W E A L T H #### **Institutional Securities Corp Exemption Report** Institutional Securities Corp (the "Company") is a registered broker-dealer subject to Rule 17a-5 promulgated by the Securities and Exchange Commission (17 C.F.R. §240.17a-5;"Reports to be made by certain brokers and dealers"). This Exemption Report was prepared as required by 17 C.F.R. §240.17a-5(d)(l) and (4). To the best of its knowledge and belief,the Company states the following: - (1) The Company claimed an exemption from 17 C.F.R. § 240.15c3-3 under the following provisions of 17 C.F.R. §240.15c3-3 (k)(2):(ii) - (2) The Company met the identified exemption provisions in 17 C.F.R. §240.15c3-3 (k) throughout the most recent fiscal year,except as described below: Date of Exception Number of Exceptions Reason for Exception 5/26/2020 1 Handling error - (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. § 240.17a-5 are limited to (1) 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;(2) participating in distributions of securities (other than firm commitment underwritings) in accordance with the requirements of paragraphs (a) or (b)(2) of Rule 15c2-4, and the Company (1) 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 (b)(2) of Rule 15c2-4 and/or funds received and 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. Institutional Securities Corp I,Scott A.Haves, swear (or affirm) that,to my best knowledge and belief,this Exemption Report is true and correct. By: 17 Title: President March 9,2021 4 ISCGROUP.COM {20}------------------------------------------------ ![](_page_20_Picture_0.jpeg) # **Report ofIndependent Registered Public Accounting Firm on Applying Agreed-Upon Procedures** To the Board of Directors Institutional Securities Corporation We have performed the procedures included in Rule 17a-5(e)(4) under the Securities Exchange Act of 1934 and in the Securities Investor Protection Corporation (SIPC) Series 600 Rules, which are enumerated below and were agreed to by Institutional Securities Corporation (the Company) and SIPC, solely to assist you and the SIPC in evaluating the Company's compliance with the applicable instructions of the General Assessment Reconciliation (Form SIPC-7) for the year ended December 31, 2020. Management of the Company is responsible for its Form SIPC-7 and for its compliance with those requirements. This agreed-upon procedures engagement was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures enumerated below either for the purpose for which this report has been requested or for any other purpose: - 1. Compared the listed assessment payments in Form SIPC-7 with respective cash disbursement records entries, noting no differences. - 2. Compared the Total Revenue amounts reported on the Annual Audited Report Form X-17A-5 Part III for the year ended December 31, 2020, with the Total Revenue amounts reported in Form SIPC-7 for the year ended December 31, 2020, 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. - 5. Compared the amount of any overpayment applied to the current assessment with the Form SIPC-7 on which it was originally computed, noting no differences. We were not engaged to and did not conduct an examination or a review, the objective of which would be the expression of an opinion or conclusion, respectively, on the Company's compliance with the applicable instructions of the Form SIPC-7 for the year ended December 31, 2020. 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. This report is intended solely for the information and use of the Company and the SIPC, and is not intended to be, and should not be, used by anyone other than these specified parties. *L~LP* Dallas, Texas March 9, 2021 {21}------------------------------------------------ | Assessment
Reconciliation
General
(36- REV 12 /18 )
For the fiscal year ended 12/31/2020
(Read carefully the instructions » n your Working Copy before completing tms Form)
TO BE FILED BY ALL SIPC MEMBERS WITH FISCAL YEAR ENDINGS
Name of Member , address, Designated Examining Authority , 1934 Act registration no . and month in which fiscal year ends for
purposes of the audit requirement of SEC Rule 17a - 5:
Mole: If any of the information shown on the
mailing label requires correction, please e -mail
14*34*******2300'
***M!XED AADC 220
any corrections to form@sipc.org and so
38158
FINRA
DEC
indicate on the form filed.
INSTITUTIONAL SECURITIES CORE
3500 OAK LAWN AVE STE 400
Name and telephone numbei of person to
DALLAS, TX 7521^
4343
contact respecting this form.
Sterling 214-226-7507
Don
2616 \$
Genera / Assessment (item 2e from page 2)
A.
1478
Less payment made with SIPC - 6 filed (exclude Interest)
B.
8/20/20
Date Paid
Less prior overpayment applied
C .
1138
Assessment balance due or ( overpayment)
D.
Interest computed on late payment ( see instruction E) for
days at 20% per annum
E.
1138
*
Total assessment balance and interest due (or overpayment carried forward)
F.
V
the box
G
PAYMENT:
Funds Wired U
ACH
Check mailed to P.O. Box
'18
\$ 1138
Total (must be same as F above)
\$ (
Overpayment carried forward
H
3 . Subsidiaries ( S ) and predecessors ( P ) included in this foim ( give name and 1934 Act registration number) *
The SIPC member submitting this form and the
Securities
Corp
Institutional
person by whom it is executed represent thereby
that ali information contained herein is true , correct
l
j
'
and complete.
zo
{.yrhnri/od Signature)
Compliance O
Chief
r
February
22
20 21
day of
Tilly )
f
This form and the assessment payment is due 60 days after the end of the fiscal year. Retain the Working Copy of this form
for a period of not less than 6 years, the latest 2 years in an easily accessible place.
Reviewed
Received
Postmarked
Documentation
Forward Copy
Calculations
Exceptions
^
c/3 Disposition of exceptions | SIPC-7 | | P.O . Box 921 85 Washington , D C , 20090 - 2185
202-371 - 8300 | | SIPG-7 | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------|--|--------------------------------------------------------------------|--|-------------------| | | | | | | ( 36- REV 12/ 18) | | | | | | | | | | | | | | | | | 1 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Daied the | | | | | | | ffz Dates:
UJ | | | | | | | UJ | | | | | | | UJ
cn | | | | | | PC-7 | SECURITIE
P.O | |------|------------------| | | | {22}------------------------------------------------ # **DETERMINATION OF "SIPC NET OPERATING REVENUES" AND GENERAL ASSESSMENT** Arnounls for the fiscal period beginning **1/1/2020** and ending **12/31/2020** | Item No ,
2a. Total revenue (FOCUS Line 12/Part 11 A Line 9. Code 4030) | Eliminate cents
\$.
-9321995 | |--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------| | 2b Additions :
( 1 ) Iota; revenues from the securities business ol subsidiaries ( except foreign subsidiaries) and
predecessors no! included above. | | | (2) Net loss from principal transactions in securities in trading accounts. | | | (3) Nei loss from principal transactions in commodities in trading accounts | | | (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 fees and iegal fees deducted in determining nei
profit from management of or participation in underwriting or distribution of securities. | | | ( 7) Net loss from securilies in investment accounts . | | | Total additions | | | 2 c Deductions:
( 1 ) Revenues from the distribution of shares of a registered open end Investment company or unit
investment trust, from the sate of variable annuities, from the business of insurance, from investment
advisory services rendered to registered investment companies or insurance company separate
accounts , and Irom transactions in security futures products. | 4223952 | | ( 2) Revenues from commodity transactions | | | (3) Commissions , floor brokerage and clearance paid to other SIPC;
members in conneclion with
securities transactions. | 3279345 | | ( 4 ) Reimbursements for postage in conneclion with proxy solicitation | | | ( 5 ) Net gain irom securities In investment accounts . | | | (6) lOO'X. of commissions and markups earned from transactions in (i)
certificates of deposit and
(iij Treasury bills , bankers acceptances or commercial paper that mature nine months or less
from issuance date. | | | (7 ) Diracl expenses of printing advertising and legal fees incurred in connection with other revenue
related to the securities business (revenue defined by Section 16(9) (L) of the Act ) . | | | ( 6) Other revenue no! related either directly or indirect!
/
to the securities business.
(See Instruction C ) : | | | | 70928 | | (Deductions in excess of \$100 , 000 require documentation / | | | ( 9) (i)
Total interest and dividend expense (FOCUS Line 22/PART 11A Line 13
Code 4075 plus line 2b(4) above) but not in excess
528
of total interest and dividend income.
t
(if) 40% of margin interest earned on customers securities
3937
accounts { 40% of FOCUS line 5 . Code 3960).
\$ | | | Enter the greater of line (i)
or (ii) | 3937 | | Total deductions | 7578162 | | 2 d SIPC Net Operating Revenues | 1743833
\$ | | 2e. General' Assessment @ . 0015 | 2616 | | | ecasa
( to page 1, line 2 A.) | Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.