# INSTITUTIONAL SECURITIES CORPORATION X-17A-5 (2022-02-25) — Broker-dealer annual report - Company: INSTITUTIONAL SECURITIES CORPORATION - Form: X-17A-5 - Filed: 2022-02-25 - Period: 2021-12-31 - Accession: 0000818043-22-000001 - CIK: 818043 - File #: 8-38158 - Type: Broker-dealer - Material weakness: No - Auditor: Sanville & Company - Auditor location: Dallas, TX - Contact: Scott Hayes - Phone: 2145201115 - Email: shayes@iscgroup.com - Website: iscgroup.com - Signed by: Scott A. Hayes (President) Original filing: https://www.sec.gov/Archives/edgar/data/818043/000081804322000001/2021FinancialsCIK0000818043.pdf --- {0}------------------------------------------------ OMB APPROVAL **UNITED STATES SECURITIES AND EXCHANGE COMMISSION** **Washington, D.C. 20549** OMB Number:3235-0123 Expires:Oct. 31, 2023 Estimated average burden hours per response: 12 > SEC FILE NUMBER 8-38158 # **ANNUAL REPORTS FORM X-17A-5 PART III** **FACING PAGE** **Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934** 01/01/21 12/31/21 FILING FOR THE PERIOD BEGINNING AND ENDING MM MM/DD/YY /DD/YY > **A.REGISTRANT IDENTIFICATION** #### .Institutional Securities Corporation NAME OF FIRM- TYPE OF REGISTRANT (check all applicable boxes): B Broker-dealer Security-based swap dealer Major security-based swap participant Check here if respondent is also an OTC derivatives dealer ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) # 3500 Oak Lawn Ave., Suite 400 | | | (No. and Street) | | | | | |---------------------------------------------------------------------------------------------------------------------------|-------------------|----------------------------------------------------------|----|-------------------------------------------|--|--| | Dallas | | Texas | | 75219 | | | | (City) | | (State) | | (Zip Code) | | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | | | Scott
Hayes | | 214-520-1115 | | shayes@iscgroup.com | | | | (Name) | | (Email Address)
(Area Code -Telephone Number) | | | | | | | B. | ACCOUNTANT IDENTIFICATION | | | | | | &
Company
Sanville | | (Name -if individual, state last,first, and middle name) | | | | | | Saint
Paul
N
325 | St
#3100
., | Dallas | TX | 75201 | | | | (Address) | (City) | | | (Zip Code) | | | | 09/18/03 | | 169 | | | | | | (Date of Registration with PCAOB)(if applicable) | | | | (PCAOB Registration Number,if applicable) | | | | | | FOR OFFICIAL USE ONLY | | | | | | | | | | | | | | Claims for exemption from the requirement that the annual reports be covered by the reports of an independent public
* | | | | | | | accountant must be supported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 CFR 240.17a-5(e)(l)(ii),if applicable. **Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.** {1}------------------------------------------------ ## **OATH OR AFFIRMATION** , swear (or affirm) that,to the best of my knowledge and belief, the y as of ;2 021 *,*is true and correct. Ifurther swear (or affirm) that neither the company nor any partner,officer,director,or equivalent person,as the case may be,has any proprietary interest in any account *\f* Scott Hayes financial report pertaining to the firm of Institutional Securities Corporation December 31 classified solely as that of a customer. Signature: ![](_page_1_Figure_5.jpeg) Title: President # **This filing\*\* contains (check all applicable boxes):** - H(a) Statement of financial condition. - (b) Notes to consolidated statement of financial condition. - H (c) Statement of income (loss) or,if there is other comprehensive income in the period(s) presented,a statement ofcomprehensive income (as defined in § 210.1-02 of Regulation S-X). - H(d) Statement of cash flows. - H(e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - (f) Statement of changes in liabilities subordinated to claims of creditors. - H(g) Notes to consolidated financial statements. - H(h) Computation of net capital under 17 CFR 240.15c3-lor 17 CFR 240.18a-l,as applicable. - (i) Computation of tangible net worth under 17 CFR 240.18a-2. - H(j) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. - (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or Exhibit A to 17 CFR 240.18a-4, as applicable. - (I) Computation for Determination of PAB Requirements under Exhibit A to § 240.15c3-3. - B(m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3. - (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.15c3-3(p)(2) or 17 CFR 240.18a-4, as applicable. - H (o) Reconciliations,including appropriate explanations,of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-l, 17 CFR 240.18a-l,or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable,if material differences exist, or a statement that no material differences exist. - (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - H(q) Oath or affirmation in accordance with 17 CFR 240.17a-5,17 CFR 240.17a-12, or 17 CFR 240.18a-7,as applicable. - (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7,as applicable. - B(s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - (t) Independent public accountant's report based on an examination of the statement of financial condition. - B (u) Independent public accountant's report based on an examination of the financial report or financial statements under 17 CFR 240.17a-5,17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable. - (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - S (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17CFR 240.18a-7, as applicable. - (x) Supplemental reports on applying agreed-upon procedures,in accordance with 17 CFR 240.15c3-le or 17 CFR 240.17a-12,as applicable. - (y) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audit,ora statement that no material inadequacies exist,under 17 CFR 240.17a-12(k). - (z) Other: - *\*\*To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5(e)(3) or 17 CFR 240.18a-7(d)(2), as applicable.* {2}------------------------------------------------ #### **Institutional Securities Corporation** Report Pursuant to Rule 17a-5(d) For the Year Ended December 31, 2021 {3}------------------------------------------------ *SanviCCe & Company* CERTIFIED PUBLIC ACCOUNTANTS ROBERT F.SANV1LLE,CPA MICHAEL T BARANOWSKY,CPA JOHN P TOWNSEND,CPA NATHANIELS. HARTCRAVES,CPA 1514 OLD YORK ROAD ABINGTON, PA 19001 (215) 884-8460 •(215) 884-8686 FAX GOVERNANCE OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PENNSYLVANIA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 100 WALL STREET 8 ,h FLOOR NEW YORK,NY 10005 (212) 709-9512 # **Report of Independent Registered Public Accounting Firm** To the Board of Directors of Institutional Securities Corporation # **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of Institutional Securities Corporation (the Company) as of December 31, 2021, and the related statements of operations, stockholder's equity and cash flows for the year then ended, and the related notes to the financial statements (collectively, the financial statements). In our opinion, the financial statements presents fairly, in all material respects, the financial position of the Company as of December 31, 2021, 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 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 from 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 of 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 supplementary information contained in Schedule I, Computation of Net Capital Under Rule 15c3-1, Schedule II, Computation of Requirements Under Rule 15c3-3 (exemption) and Schedule III Information Relating to the Possession or Control Requirements Under Rule 15c3-3, all under the Rules of the Securities and Exchange Commission have been subjected to audit procedures performed in conjunction with the audit of the Company's {4}------------------------------------------------ financial statements. The Supplemental Information is the responsibility of the Company's management. Our audit procedures included determining whether the Supplemental Information 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 the Supplemental Information. In forming our opinion on the Supplemental Information, we evaluated whether the Supplemental Information, including its form and content, is presented in conformity with 17 C.F.R. § 240.17a-5. In our opinion, the supplementary information contained in Schedule I, Computation of Net Capital Under Rule 15c3-1, Schedule II, Computation of Requirements Under Rule 15c3-3 (exemption) and Schedule III Information Relating to the Possession or Control Requirements Under Rule 15c3-3, all under the Rules of the Securities and Exchange Commission are fairly stated, in all material respects, in relation to the financial statements as a whole. *\ jowvtjA, \** This is the initial year we have served as the Company's auditor. Dallas, Texas February 22, 2022 {5}------------------------------------------------ ## INSTITUTIONAL SECURITIES CORPORATION Statement of Financial Condition December 31,2021 #### **ASSETS** | and cash equivalents
Cash | \$ | 502,872 | |----------------------------------------------------------------------------------------------------------|----|------------------------------| | Receivable from broker-dealers and
clearing organizations
Other
receivables
Securities owned | | 1,737,995
3,000
78,085 | | Prepaid expenses and advances | | 79.194 | | Total Assets | \$ | 2.401.146 | | LIABILITIES AND STOCKHOLDER'S EQUITY | | | | Liabilities: | | | | Accounts payable and accrued expenses
Commissions payable | \$ | 89,205
633,748 | | Accounts payable clearing broker | | 78,214 | | Commissions payable - other broker dealers
State income tax payable | | 757,625
6,600 | | Deferred clearing charges | | 154.167 | | | | 1,719.559 | | 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
Retained earnings | | 286,709
393,878 | | stockholder's equity
Total | | 681.587 | | Total liabilities and stockholder's equity | S | 2.401.146 | {6}------------------------------------------------ # INSTITUTIONAL SECURITIES CORPORATION Statement of Operations For the Year Ended December 31, 2021 | Revenues
Commissions
Insurance and annuity products
12b1 fees/distribution fees
Mutual fund commissions
Interest income
Other income
Trading losses
Riskless principal | \$
1,238,850
3,000,444
1,390,694
601,467
55,831
266,699
(134)
5.896.941 | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------| | Total revenues | 12.450.792 | | Expenses
Commissions and clearance
Compensation and benefits
Technology and communications
Professional fees
Occupancy
General and administrative
Regulatory fees and expenses
Total expenses | 4,866,529
6,196,410
304,488
109,805
137,590
712,455
60.260
12,387,537 | | Net
income before income taxes | 63,255 | | Federal income tax expense | (8,367) | | Net
income | S
54.888 | {7}------------------------------------------------ # INSTITUTIONAL SECURITIES CORPORATION Statement of Changes in Stockholder's Equity For the Year Ended December 31, 2021 | | Shares | | Common
Stock | | Additional
Paid In
Capital | | Retained
Earnings | | Total | | |---------------------------------|--------|----|-----------------|----|----------------------------------|----|----------------------|----|---------|--| | Balance at
December 31, 2020 | 10,000 | \$ | 1,000 | \$ | 286,709 | \$ | 338,990 | \$ | 626,699 | | | Net
income | | | | | | | 54,888 | | 54,888 | | | Balance at
December 31, 2021 | 10.000 | \$ | 1.000 | S | 286.709 | S | 393.878 | | | | {8}------------------------------------------------ ### INSTITUTIONAL SECURITIES CORPORATION Statement of Cash Flows For the Year Ended December 31.2021 | Cash flows from operating activities | | | |------------------------------------------------------------------------|----|-----------| | Net income | \$ | 54,888 | | 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 | | (691,239) | | clearing organizations | | (77,882) | | Increase in securities owned | | 402 | | Decrease in other receivables | | (7,314) | | Increase in prepaid expenses | | 76,599 | | accounts payable and accrued expenses
Increase in | | (18,448) | | Decrease in securities sold short | | (4,454) | | Decrease in federal income tax payable
Increase in | | 586,198 | | commissions payable
Increase in accounts payable to clearing broker | | 78,016 | | Increase in deferred revenue | | 154,167 | | | | | | cash provided (used) by operating activities
Net | | 150,933 | | Cash flows from investing activities | | | | Net cash provided (used) by investing activities | | -0- | | Cash flows from financing activities | | | | Net cash provided (used) by financing activities | | -0- | | increase in cash and cash equivalents
Net | | 150,933 | | | | 351,939 | | and cash equivalents at beginning of year
Cash | | | | Cash and cash equivalents at end of year | S | 502.872 | | Supplemental Schedule of Cash Flow Information | | | | Cash paid during the year for: | | | | Interest | \$ | 2.345 | | Income taxes | \$ | 8.367 | {9}------------------------------------------------ ## INSTITUTIONAL SECURITIES CORPORATION Notes to Financial Statements December 31, 2021 #### 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. #### 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 fund, 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 fund investment, insurance policy, or annuity contract). The revenue is not recognized until it is probable that a significant reversal will not occur. #### Riskless Principal and Trading Gains and Losses 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/from 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 {10}------------------------------------------------ # INSTITUTIONAL SECURITIES CORPORATION Notes to FinancialStatements December 31.2021 #### Note1- Summary of Significant Accounting Policies - continued 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 \$1,737,995 as of December 31, 2021. Compensated absences have not been accrued because the amount cannot be reasonably estimated. For the year ended December 31, 2021, 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 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. #### 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, 2021, the Company had net capital of approximately \$572,517 and net capital requirements of \$109,423. The Company's ratio of aggregate indebtedness to net capital was 2.87 to 1. The Securities and Exchange Commission permits a ratio of no greater than 15 to 1. {11}------------------------------------------------ # INSTITUTIONAL SECURITIES CORPORATION Notes to Financial Statements December 31.2021 #### 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. 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, 2021 totaled \$1,264,000 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, 2021 totaling \$6S7,169. 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, 2021 totaling \$75,452. 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 {12}------------------------------------------------ ## INSTITUTIONAL SECURITIES CORPORATION Notes toFinancialStatements December 31, 2021 #### Note 6 - Fair Value Measurements-continued 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. 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, 2021, 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, 2021. 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, 2021. | Security | Total | | Level 1 | | Level 2 | Level 3 | | | |-----------------|-------|--------|---------|--|--------------|---------|--|--| | Corporate Bonds | \$ | 78,085 | \$ | | \$
78,085 | \$
_ | | | | Total | \$ | 78,085 | \$ | | \$
78,085 | \$ | | | #### 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, 2021, 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, 2021, the Company did not have any securities sold short. {13}------------------------------------------------ Supplementary Information Pursuant to Rule 17a-5 of the Securities and Exchange Act of 1934 For the Year Ended December 31, 2021 {14}------------------------------------------------ #### **Schedule I** ## INSTITUTIONAL SECURITIES CORPORATION Computation of Net Capital Under Rule 15c3-1 of the Securities and Exchange Commission As of December 31. 2021 #### **COMPUTATION OF NET CAPITAL** | Total stockholder's equity qualified for net capital | | \$
681,587 | |---------------------------------------------------------------------------------------------------------------------------|---------------------------------|-----------------------------------------------| | Add:
deductions or allowable credits
Other | | -0- | | Total capital and allowable subordinated liabilities | | 681,587 | | Deductions and/or charges
Non-allowable assets:
Concession receivable in excess of the payable
Other receivables | \$
15,162
3,000
79,194 | | | Prepaid expenses and advances | | 97.356 | | capital before haircuts on securities positions
Net | | 584,231 | | Haircuts on securities (computed, where applicable,
pursuant to Rule 15c3-1(c)(2))
Other securities | 11.714 | 11,714 | | Net capital | | \$
572.517 | | AGGREGATE INDEBTEDNESS | | | | Items included in statement of financial condition | | | | Accounts payable and accrued expenses
Commissions payable
State
taxes payable
Deferred clearing charges | | \$
89,205
1,391,373
6,600
154.167 | | Total aggregate indebtedness | | 81.641.345 | {15}------------------------------------------------ # **Schedule I (continued)** # INSTITUTIONAL SECURITIES CORPORATION Computation of Net Capital Under Rule 15c3-1 of the Securities and Exchange Commission As of December 31, 2021 ### **COMPUTATION OF BASIC NET CAPITAL REQUIREMENT** | Minimum net capital required (6 2/3% of total
aggregate indebtedness) | S 109.423 | |-------------------------------------------------------------------------------|-----------| | Minimum dollar net capital requirement of
reporting broker or dealer | | | Net capital requirement (greater of above two
minimum requirement amounts) | S 109.423 | | Net capital in excess of required minimum | S 463.094 | | Excess net capital at 1000% | | | Ratio: Aggregate indebtedness to net capital | 2.87 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. {16}------------------------------------------------ #### **Schedule II & III** ## INSTITUTIONAL SECURITIES CORPORATION Computation For Determination Of Reserve Requirements And Information Relating To Possession Or Control Requirements Under Rule 15c3-3 of the Securities and Exchange Commission December 31, 2021 The Company is exempt from Securities Exchange Commission ("SEC") Rule 15c3-3 pursuant to both the exemptive provisions of subparagraph (k)(2)(ii) and is considered a "Non-Covered Firm" from 15c3-3 by relying on footnote 74 to SEC Release 34-70073 and therefore, is not required to maintain a "Special reserve bank account for the Exclusive benefit of customers." {17}------------------------------------------------ #### REVIEW REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON MANAGEMENT'S EXEMPTION REPORT Required by SEC Rule 17a-5 Year Ended December 31, 2021 {18}------------------------------------------------ ROBERT F. SANVILLE,CPA MICHAELT. BARANOWSKY,CPA JOHN P TOWNSEND,CPA NATHANIELS. HARTGRAVES,CPA *Sanvitfe& Company* CERTIFIED PUBLIC ACCOUNTANTS 1514 OLD YORK ROAD ABINGTON,PA 19001 (215) 884-8460 •(215) 884-8686 FAX GOVERNANCEOF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PENNSYLVANIA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 100 WALL STREET 8 th FLOOR NEW YORK, NY 10005 (212) 709-9512 #### **Report of Independent Registered Public Accounting Firm** To the Board of Directors of Institutional Securities Corporation We have reviewed management's statements, included in the accompanying Exemption Report, in which Institutional Securities Corporation (the Company) stated that: - 1. The Company identified the following provisions of 17 C.F.R. § 240.15c3-3(k) under which the Company claimed an exemption from 17 C.F.R. § 240.15c3-3: Paragraph (k)(2)(ii) (the exemption provisions), and the Company stated that it met the identified exemption provisions throughout the most recent fiscal year without exception; - 2. 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 acting as a mutual fund retailer, broker or dealer selling variable life insurance or annuities, broker or dealer selling tax shelters or limited partnerships in primary distributions, the private placement securities and the private placement of securities including real estate investment trust ("REIT") and structured products; and - 3. 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 17 C.F.R. § 240.15c2-4 and/or funds received and promptly transmitted for effecting transactions via subscriptions on a subscriptionway 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 proprietary accounts of broker-dealers (as defined in 17 C.F.R. § 240.15c3-3), throughout the most recent fiscal year without exception. The Company's management is responsible for its statements. Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included inquiries and other required procedures to obtain evidence about the Company's compliance with the exemption provisions and that the Company's other business activities were limited to acting as a mutual fund retailer, acting as a broker or dealer selling variable life insurance or annuities, solicitor of time deposits in a financial institution and providing investment advisory services and (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 17 C.F.R. § 240.15c2-4 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 proprietary accounts of broker-dealers (as defined in 17 C.F.R. § 240.15c3-3) throughout the most recent fiscal year without exception. 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 provisions set forth in 17 C.F.R. § 240.15c3-3 and 17 C.F.R. § 240.17a-5. Dallas, TX February 22, 2021 {19}------------------------------------------------ ![](_page_19_Picture_0.jpeg) # **Institutional Securities Corporation Exemption Report** Institutional Securities Corporation (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)(1) 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 without exception. - (3) The Company is considered "Non-Covered Firm" exempt from 17 C.F.R. §240.15c3-3 and is filing an Exemption Report relying on footnote 74 to SEC Release 34-70073, and as discussed in Q&A 8 of the related FAQ issued by the SEC staff. The Company limits its business activities exclusively to:(1) acting as a mutual fund retailer (2) broker or dealer selling variable life insurance or annuities (3) broker or dealer selling tax shelters or limited partnerships in primary distributions (4) private placements (5) the private placement of securities including real estate investment trust ("REIT") and structured products. - (4) 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; (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. I, Scott Hayes, swear (or affirm) that, to my best knowledge and belief, this exemption report is true and correct. Regards *^\jCT A* Scott A. Hayes President Date of Report: February 7, 2022 3 5 0 0 O a k L a w n A v e n u e , S u i t e 4 0 0 D a l l a s , T e x a s 7 5 2 1 9 8 0 0 - 8 8 8 - 3 5 2 0 **ISCGROUP.COM** {20}------------------------------------------------ *SanviCCe & Company* CERTIFIED PUBLIC ACCOUNTANTS ROBERT F.SANVILLE,CPA M1CHAELT. BARANOWSKY,CPA JOHN P.TOWNSEND,CPA NATHANIEL S.HARTCRAVES,CPA 1514 OLD YORK ROAD ABINGTON,PA 19001 (215) 884-8460.(215) 884-8686 FAX GOVERNANCEOF AMERICAN INSTITUTEOF CERTIFIED PUBLIC ACCOUNTANTS PENNSYLVANIA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 100 WALL STREET 8 th FLOOR NEW YORK, NY 10005 (212) 709-9512 # **Report of Independent Registered Public Accounting Firm on Applying Agreed-Upon Procedures** 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 on the accompanying General Assessment Reconciliation (Form SIPC-7) for the year ended December 31, 2021, Management of Institutional Securities Corporation (the Company) is responsible for its Form SIPC-7 and for its compliance with the applicable instructions on Form SIPC-7. Management of the Company has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of assisting you and SIPC in evaluating the Company's compliance with the applicable instructions on Form SIPC-7 for the year ended December 31, 2021. Additionally, SIPC has agreed to and acknowledged that the procedures performed are appropriate for their intended purposes. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes. The appropriateness of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the appropriateness of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures we performed and our findings are as follows: - 1. Compared the listed assessment payments in Form SIPC-7 with respective cash disbursement record 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, 2021, with the Total Revenue amounts reported in Form SIPC-7 for the year ended December 31, 2021, 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 engaged by the Company to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the American Institute of Certified Public Accountants and in accordance with the standards of the Public Company Accounting Oversight Board (United {21}------------------------------------------------ States). We were not engaged to, and did not, conduct an examination or a review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the Company's Form SIPC-7 and for its compliance with the applicable instructions on Form SIPC-7 for the year ended December 31, 2021. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement. This report is intended solely for the information and use of the Company and SIPC and is not intended to be, and should not be, used by anyone other than these specified parties. Dallas, Texas February 22, 2022 {22}------------------------------------------------ | | SECURITIES
INVESTOR | PROTECTION | CORPORATION | | | |---------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------|----------------|--| | SIPC-7
Philadelphia,
PA
19170-0001
Code:
8967 P.O.
Box 7247
Mail | | | SIPC-7 | | | | (36-REV 12/18) | Assessment Reconciliation
General | | | (36-REV 12/18} | | | 12/31/2021
For the fiscal year ended | | | | | | | | (Read carefully Ihe instructions in your Working Copy before completing this Form) | | | | | | | TO BE FILED BY ALL SIPC MEMBERS WITH FISCAL YEAR ENDINGS | | | | | | 1. | Name of Member, address, Designated Examining Authority, 1934 Act registration no. and month in which fiscal year ends for
purposes of the audit requirement of SEC Rule 17a-5: | | | | | | Note:
DEC
38158 FINRA | | If any of the information shown on the
mailing label requires correction, please e-mail
any corrections to form@sipc.org and so
indicate on the form filed. | | | | | Institutional
3500 | Corp
Securities
Ste
400
Ave
Oak
Lawn | | | | | | Dallas | 75219-4343
TX | | Name and telephone number of person to
contact respecting this form. | | | | | | | (214)
Don Sterling | 226-7507 | | | | | | | | | | | | | | | | | | | | 3,782
\$ | | | | . A.
2 | General Assessment (item 2e from page 2) | | ( 4,308 | | | | B
7/30/2021 | Less payment made with SIPC-6 filed (exclude interest) | | | | | | | Date Paid | | | | | | C. | Less prior overpayment applied | | (526) | | | | D. | Assessment balance due or (overpayment) | | | | | | E. | Interest computed on (ate payment (see instruction E) for_ | days at 20% per annum | | | | | F. | Total assessment balance and Interest due (or overpayment carried forward) | | (526)
\$ | | | | PAYMENT:
G. | V
the box
Funds Wired
Check mailed to P.O. Box
Total (must be same as F above) | AC | | | | | H. | Overpayment carried forward | 526
\$< | | | | | | 3. Subsidiaries (S) and predecessors (P) included in this form (give name and 1934 Act registration number): | | | | | | | | | | | | | | | | | | | | and complete. | The SIPC member submitting this form and the
person by whom it is executed represent thereby
that all information contained herein is true, correct | Institutional
{Nam | Securities
Corp
arloership or other organization)
Cy^
aj | | | | | | 1 | (Authorized Signature) | | | | Dated the | 20
day of | President | | | | | | | | (Title) | | | | | This form and the assessment payment is due 60 days after the end of the fiscal year. Retain the Working Copy of this form
tor a period of not less than 6 years, the latest 2 years in an easily accessible place. | | | | | | | | | | | | | Dates: | Received
Postmarked | Reviewed | | | | | LU
Calculations | | Documentation | | Forward Copy | | | LU
ca | | | | | | | CJ, Exceptions: | | | | | | | c/5 Disposition of exceptions: | | | | | | **1** {23}------------------------------------------------ # **DETERMINATION OF "SIPC NET OPERATING REVENUES" AND GENERAL ASSESSMENT Amounts for the fiscal period** | | beginning 1/1/2021
and ending ttOUBRI | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------| | Hem Wo.
2a. Total revenue (FOCUS Line 12/Part IIA Line 9, Code 4030) | Eliminate cents
\$12,450,792 | | Additions:
2b.
the securities business of subsidiaries (except foreign subsidiaries) and
(1) Total revenues from
predecessors not included above. | | | (2) Net loss from principal transactions in securities in trading accounts. | | | principal transactions in commodities in trading accounts.
(3) Net loss from | | | (4) Interest and dividend expense deducted in determining item 2a. | | | management of or participation in the underwriting or distribution of securities.
(5) Net loss from | | | (6) Expenses other than advertising, printing, registration fees and legal fees deducted in determining net
management of or participation in underwriting or distribution of securities.
profit from | | | (7) Net loss from securities in investment accounts. | | | Total additions | | | 2c. Deductions:
(.1),Revenues from the distribution of shares of a registered open end investment company or unit
the sale of variable annuities, from
the business of insurance, from investment
investment trust, from
advisory services rendered to registered investment companies or insurance company separate
transactions in security futures products.
accounts, and from | 4,992,605 | | (2) Revenues from commodity transactions. | | | (3) Commissions, floor brokerage and clearance paid to other SIPC members in connection with
securities transactions. | 4,866,529 | | (4) Reimbursements for postage in connection with proxy solicitation. | | | (5) Net gain from
securities in investment accounts. | | | (6) 100% of commissions and markups earned from transactions in (i) certificates of deposit and
(ii) Treasury bills, bankers acceptances or commercial paper that mature nine months or less
from issuance date. | | | (7) Direct 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). | | | (8) Other revenue not related either directly or Indirectly to the securities business. | | | (See Instruction C): | 50,000 | | (Deductions in excess of \$100,000 require documentation) | | | | | | (9) (i) Total interest and dividend expense (FOCUS Line 22/PART IIA Line 13,
Code 4075 plus line 2b(4) above) but not in excess
\$2,345
of total interest and dividend income. | | | (ii) 40% of margin interest earned on customers securities
20,175
\$.
accounts (40% of FOCUS line 5, Code 3960). | | | Enter the greater of line (i) or (ii) | 20,175 | | Tolal deductions | 9,929,309 | | 2d. SIPC Net Operating Revenues | ,2,521,483
v | | e. General Assessment @
.0015
2 | 3,782
\$ | | | (to page 1, line 2.A.) | Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.