# INSTITUTIONAL SECURITIES CORPORATION X-17A-5 (2023-02-27) — Broker-dealer annual report
- Company: INSTITUTIONAL SECURITIES CORPORATION
- Form: X-17A-5
- Filed: 2023-02-27
- Period: 2022-12-31
- Accession: 0000818043-23-000001
- 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/818043/000081804323000001/2022FinancialsCIK0000818043.pdf
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**UNITED STATES SECURITIES AND EXCHANGE COMMISSION' Washington, D.C. 20549**
| REPORTS
ANNUAL |
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| X-17A-5
FORM |
| PARTIN |
OMB APPROVAL OMB Number: 3235-0123 Expires:Oct. 31, 2023 Estimated average burden hours per response: 12
| SEC FILE NUMBER | |
|-----------------|--|
| 8-38158 | |
**FACING PAGE Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934** 01/01/22 12/31/22 AND ENDING FILING FOR THE PERIOD BEGINNING MM MM/DD/YY /DD/YY **REGISTRANT IDENTIFICATION A.**Institutional Securities Corporation NAME OF FIRM TYPE OF REGISTRANT (check all applicable boxes): **S** 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 (Zip Code) (State) (City) PERSON TO CONTACT WITH REGARD TO THIS FILING Scott Hayes 214-520-1115 shayes@iscgroup.com (Email Address) (Area Code -Telephone Number) (Name) **B. ACCOUNTANT IDENTIFICATION** INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing\* Sanville & Company (Name -if individual, state last,first,and middle name) TX 75201 325 N. Saint Paul St., #3100 Dallas (State) (Zip Code) (City) (Address) 169 09/18/03 (PCAOB Registration Number,if applicable) (Date of Registration with PCAOB) (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 thisform are notrequired to respond unless the form displays a currently valid OMB control number.**
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### **OATH OR AFFIRMATION**
, swear (or affirm) that;to the best of my knowledge and belief, the *\ r*Scott Hayes
*,* as of financial report pertaining to the firm of institutional Securities corporation
,is true and correct. I further swear (or affirm) that neither the company nor any December 31 *2022*
President
partner,officer, director, or equivalent person, as the case may be,has any proprietary interest in any account classified solely as that of a customer.
ANDREYA s - WEADON Notary Public, State of Texas Comm. Expires 06-22-2024 Notary ID 10500978
Title:
# / ANotary flulblic
## **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 of comprehensive 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.
- @ (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.
- S (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 17 CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences exist.
- (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition.
- 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 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
- **B** (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 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 thisfiling, see17 CFR 240.17a-S(e}(3) or 17 CFR 240.18a-7(d)(2), as applicable.*
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### **Institutional Securities Corporation**
Report Pursuant to Rule 17a-5(d)
For the Year Ended December 31, 2022
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MICHAEL T BARANOWSKY,CPA JOHN P TOWNSEND, CPA
*SanviCCe & Company* ROBERT F 5ANV1LLE,CPA
NATHANIELS. HARTGRAVES,CPA CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PENNSYLVANIA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
1514 OLD YORK ROAD AB1NGTON,PA 19001 (215) 884-8460 •(215) 884-8686 FAX 325 NORTH SAINT PAULST SUITE 3100 DALLAS,TX 75201 (214) 738-1998
100 WALL STREET 8th 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 Statements**
We have audited the accompanying statement of financial condition of Institutional Securities Corporation (the Company) as of December 31. 2022, the related statements of operations, changes in 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 present fairly, in all material respects, the financial position of the Company as of December 31. 2022, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted m 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 andregulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express nosuch 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 The Schedule I, Computation of Net Capital Under SEC Rule 15c3-1, Schedule II, Computation for Determinationof Reserve Requirements Under Rule SEC 15c3-3 and ScheduleIII.Information Relating to the Possession or Control Requirements Under SEC Rule 15c3-3 have been subjected to audit procedures performed in conjunction with the audit of the Company's financial statements. The supplemental information is the responsibility of the Company's management Our audit procedures included determining whether the 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 informationcontainedin the ScheduleI. Computation of Net Capital Under SEC Rule 15c3-1, Schedule II, Computation for Determination of Reserve Requirements Under SEC Rule 15c3-3 and Schedule III, Information Relating to the Possession or Control Requirements Under SEC Rule 15c3-3 are fairly stated, in all material respects, in relation to the financial statements as a whole.
We have served as the Company's auditor since 2021.
Dallas, Texas February 15, 2023
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### INSTITUTIONAL SECURITIES CORPORATION Statement of Financial Condition December 31, 2022
#### **ASSETS**
| Cash and cash equivalents | \$ | 489,893 |
|-----------------------------------------------------------------------------------|----|---------------------|
| Receivable from broker-dealers and
clearing organizations
Other receivables | | 1,385,155
21,554 |
| Securities owned | | 448,794 |
| Prepaid expenses and advances | | 42.682 |
| Total Assets | S | 2.388.078 |
| LIABILITIES AND STOCKHOLDER'S EQUITY | | |
| Liabilities: | \$ | 4,356 |
| Accounts payable and accrued expenses
Commissions payable | | 1,094,152 |
| Accounts payable clearing broker | | 447,674 |
| State income tax payable
Deferred clearing charges | | 6,600
129.167 |
| | | 1,681.949 |
| Stockholders equity: | | |
| Common stock, 10,000 shares | | |
| authorized with \$.10 par value, | | 1,000 |
| 10,000 shares issued and outstanding
Additional paid in capital | | 286,709 |
| Retained earnings | | 418,420 |
| Total stockholder's equity | | 706,129 |
| Total liabilities and stockholder's equity | S | 2.388.078 |
The accompanying notes are an integral part of these financial statements.
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## INSTITUTIONAL SECURITIES CORPORATION Statement of Operations For the Year Ended December 31, 2022
| Revenues
Commissions
Insurance and annuity products
12b1 fees/distribution fees
Mutual fund commissions
Interest income
Other income
Riskless principal | 974,493
\$
2,016,983
1,175,616
428,137
506,467
63,776
6.755.811 |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------|
| Total revenues | 11.921,283 |
| Expenses
Commissions and clearance
Compensation and benefits
Technology and communications
Professional fees
Occupancy
General and administrative
Regulatory fees and expenses | 5,819,305
4,504,032
294,390
80,009
142,053
980,686
68.870 |
| Total expenses | 11,889,345 |
| Net income before income taxes | 31,938 |
| Federal income tax expense | (7.3961 |
| Net income | 24.542
£ |
The accompanying notes are an integral part of these financial statements.
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### INSTITUTIONAL SECURITIES CORPORATION Statement of Changes in Stockholder's Equity For the Year Ended December 31, 2022
| | Common
Stock
Shares | | | Additional
Paid In
Capital | | Retained
Earnings | | Total | |
|---------------------------------|---------------------------|----|-------|----------------------------------|---------|----------------------|---------|-------|------------|
| Balance at
December 31, 2021 | 10,000 | \$ | 1,000 | \$ | 286,709 | \$ | 393,878 | | \$ 681,587 |
| Net income | | | | | | | 24.542 | | 24.542 |
| Balance at
December 31, 2022 | 10.000 | £ | 1.000 | £ | 286.709 | £ | 418.420 | | £ 706.129 |
The accompanying notes are an integral part of these financial statements.
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### INSTITUTIONAL SECURITIES CORPORATION Statement of Cash Flows For the Year Ended December 31, 2022
| Cash flows from operating activities | \$
24,542 |
|------------------------------------------------------------------------------------|----------------------|
| Net income
Adjustments to reconcile net income to net cash | |
| provided (used) by operating activities: | |
| Change in current assets and liabilities: | |
| Decrease in receivable from broker-dealers and | |
| clearing organizations | 352,838 |
| Increase in securities owned | (370,709)
(2,042) |
| Increase in prepaid expenses | 20,000 |
| Decrease in other receivables | (84,848) |
| Decrease in accounts payable and accrued expenses | (297,220) |
| Decrease in commissions payable
Increase in accounts payable to clearing broker | 369,460 |
| Decrease in deferred revenue | (25,000) |
| Net cash provided (used) by operating activities | (12,979) |
| 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- |
| Net decrease in cash and cash equivalents | (12,979) |
| Cash and cash equivalents at beginning of year | 502.872 |
| | \$
489.893 |
| Cash and cash equivalents at end of year | |
| Supplemental Schedule of Cash Flow Information | |
| Cash paid during the year for: | |
| Interest | \$
-0- |
| Income taxes | \$
7.396 |
The accompanying notes are an integral part of these financial statements,
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## INSTITUTIONAL SECURITIES CORPORATION Notes to Financial Statements December 31, 2022
### 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 theCompany'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 satisfiedat 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.
#### Interest Income
Interest income is recognized as earned from participation on client brokerage accounts in accordance with the terms specified in the customer brokerage agreements and the Company's clearing contract.
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
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### INSTITUTIONAL SECURITIES CORPORATION Notes to Financial Statements December 31.2022
### Note 1 - Summary of Significant Accounting Policies - continued
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 \$1,385,155 as of December 31, 2022.
Compensated absences have not been accrued because the amount cannot be reasonably estimated.
For the year ended December 31, 2022, 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 statute of limitations for the taxing authority to examine and challenge the position has expired. Tax benefits associated with an uncertain tax position are derecognizedin the period in which themore 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, 2022, the Company had net capital of approximately \$622,267 and net capitalrequirements of \$100,000. The Company's ratio of aggregate indebtedness to net capital was 1.99 to 1. The Securities and Exchange Commission permits a ratio of no greater than 15 to 1.
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### INSTITUTIONAL SECURITIES CORPORATION Notes to Financial Statements December 31, 2022
### 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 incurredunder this agreement for the year ended December 31, 2022 totaled \$1,415,000 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, 2022 totaling \$334,717. 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 affiliatedentity, ISC Advisors, Inc., for the year ended December 31, 2022 totaling \$71,098.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
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### INSTITUTIONAL SECURITIES CORPORATION Notes to Financial Statements December 31, 2022
### 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.
Forthe year ended December 31, 2022, 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, 2022.
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 b
y 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, 2022.
| | Total | | Level 1 | | Level 2 | | Level 3 | |
|--------------------------------|-------|-------------------|---------|--|---------|-------------------|---------|--|
| Security
Corporate Bonds | \$ | 24,241
424,553 | \$ | | \$ | 24,241
424,553 | \$ | |
| Municipal Obligations
Total | S | 448,794 | \$ | | \$ | 448,794 | \$ | |
### 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, 2022, 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, 2022, the Company did not have any securities sold short.
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Supplementary Information
Pursuant to Rule 17a-5 of the
Securities and Exchange Act of 1934
For the Year Ended
December 31, 2022
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#### **Schedule I**
### INSTITUTIONAL SECURITIES CORPORATION Computation of Net Capital Under Rule 15c3-1 of the Securities and Exchange Commission As of December 31.2022
#### **COMPUTATION OF NET CAPITAL**
| Total stockholder's equity qualified for net capital | | \$
706,129 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------|----------------------------------------------|
| Add:
Other deductions or allowable credits | | -0- |
| Total capital and allowable subordinated liabilities | | 706,129 |
| Deductions and/or charges
Non-allowable assets:
Concession receivable in excess of the payable
Other receivables
Prepaid expenses and advances | 12,380
\$
21,554
42,682 | 76.616 |
| Net capital before haircuts on securities positions | | 629,513 |
| Haircuts on securities (computed, where applicable
pursuant to Rule 15c3-1(c)(2))
Other securities | 7.246 | 7,246 |
| Net capital | | S 622.267 |
| AGGREGATE INDEBTEDNESS | | |
| Items included in statement of financial condition | | |
| Accounts payable and accrued expenses
Commissions payable
State taxes payable
Deferred clearing charges | | 4,356
\$
1,094,152
6,600
129,167 |
| Total aggregate indebtedness | | S 1.234.275 |
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## **Schedule I (continued)**
## INSTITUTIONAL SECURITIES CORPORATION Computation of Net Capital Under Rule 15c3-1 of the Securities and Exchange Commission As of December 31, 2022
# **COMPUTATION OF BASIC NET CAPITAL REQUIREMENT**
| Minimum net capital required (6 2/3% of total
aggregate indebtedness) | S | 82.285 |
|-------------------------------------------------------------------------------|----|-----------|
| Minimum dollar net capital requirement of
reporting broker or dealer | \$ | 100.000 |
| Net capital requirement (greater of above two
minimum requirement amounts) | \$ | 100.000 |
| Net capital in excess of required minimum | | S 522.267 |
| Excess net capital at 1000% | | S 498.839 |
| Ratio: Aggregate indebtedness to net capital | | 1.99 to 1 |
### **RECONCILIATION WITH COMPANY'S COMPUTATION**
There were no material differences in the computation of net capital under Rule 15c3-1from the Company's computation in its unaudited Focus IIA Report.
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#### **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, 2022
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."
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### REVIEW REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON MANAGEMENT'S EXEMPTION REPORT
Required by SEC Rule 17a-5
Year Ended December 31, 2022
{17}------------------------------------------------
MICHAEL ROBERT T F BARANOWSKY SANV1LLE,CPA JOHN P TOWNSEND,CPA NATHANIELS. HARTCRAVES,CPA CERTIFIED PUBLIC ACCOUNTANTS
,CPA *Sanvitfe & Company*
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PENNSYLVANIA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
1514 OLD YORK ROAD AB1NGTON, PA 19001 (215) 884-8460 - (215) 884-8686 FAX 325 NORTH SAINT PAUL ST.SUITE 3100 DALLAS,TX 75201 (214) 738-1998
100 WALLSTREET 8th 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 (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 throughout the most recent fiscal year; 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;(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 (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 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; (2) did not carry accounts of or for customers; and (3) did not carry propnetary accounts of brokerdealers (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, Texas February 15, 2023
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### **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
*y~*
President Date of Report: January 25, 2023
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MICHAELT ROBERT F BARANOWSKY 5ANVILLE,CPA JOHN P TOWNSEND, CPA NATHANIELS. HARTGRAVES,CPA CERTIFIED PUBLIC ACCOUNTANTS
,CPA *Sanvitfe & Company*
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PENNSYLVANIA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
1514 OLD YORK ROAD ABINCTON, PA 19001 (215) 884-8460 •(215) 884-8686 FAX 325 NORTH SAINT PAUL ST SUITE 3100 DALLAS,TX 75201 (214) 738-1998
100 WALL STREET 8th FLOOR NEW YORK,NY 10005 (212) 709-9512
# **Report of Independent Registered Public Accounting Firm on Applying Agreed-Upon Procedures**
To the Board of Directors of 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, 2022. 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, 2022. 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:
- Compared the listed assessment payments in Form SIPC-7 with respective cash disbursement record entries, noting no differences. 1**.**
- Compared the Total Revenue amounts reported on the Annual Audited Report Form X-17A-5 Part III for the year ended December 31, 2022, with the Total Revenue amounts reported in Form SIPC-7 for the year ended December 31, 2022, noting no differences. 2**.**
- Compared any adjustments reported in Form SIPC-7 with supporting schedules and working papers, noting no differences. 3.
- 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. 4.
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 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, 2022. Accordingly, we
{20}------------------------------------------------
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 15, 2023
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| | S E C U R I T I E S | P R O T E C T I O N
I N V E S T O R
Mail Code: 8967 P.O. Box 7247 Philadelphia, PA | C O R P O R A T I O N
19170-0001 | SIPC-7 |
|-----------------------|-----------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------|--------------|
| SIPC-7 | (36 -REV 12 / 18 ) | | | |
| ( 36 - REV 12 / 18 ) | | General Assessment Reconciliation
12/31/2022 | | |
| | | e ^ded
Pcr the f i sc a' yea
'
( Read carefu. > y the . ^srruchons c your Workmg Copy belore 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 II any of the information shown on the | |
| | 38158 FINRA DEC | | mailing label requires correction, olease e -mail
any corrections to form@sipc org and so | |
| | Institutional Securities Corp | | indicate on the form filed | |
| | 3500 Oak Lawn Ave, Ste 400
Dallas TX 75219 | | Name and telephone number of person to | |
| | | | contact respecting this form | |
| | | | Don Sterling (214)226-7507 | |
| | | | | |
| | | | 684
\$ 3 | |
| A
2 | Genera! Assessment ( item 2 e from page 2 ) | | , | |
| 8 | Less payment made with S 1 PC - 6 filed ( exclude interest) | | 1,436 | |
| | 8/1/2022 | | | |
| C | Date Paid
Less prior overpayment applied | | | |
| | | | 2,248 | |
| D | Assessment balance due or (overpayment ) | | | |
| E | Interest computed on late payment (see instruction E ) for | | days at 20% per annum
.2,248 | |
| F | Total assessment balance and interest due (or overpayment carried forward ) | | | |
| G | V
the box
PAYMENT:
Funds Wired
Check mailed to P.O. Box
Total (must be same as F above) | AC
2,248 | | |
| H | Overpayment carried forward | S( | | |
| | | | | |
| | 3 Subsidiaries ( S ) and predecessors ( P ) included in this form ( give name and 1934 Act registration number ) | | | |
| | | | | |
| | | | | |
| | The SIPC member submitting this form and the | | | |
| | person by wnom it is executed represent thereby | Institutional | Corp
Securities | |
| and complete | that all informalion contained herein is true, correct | f | jfcare c
*
r*re'
o o' c "Cf Grga - za o '
;Ooroo'a
cr
5-
^
/ohsvi
/) | |
| | | | S g a < o'e:
Ated 5 | |
| Dated the 22 | day of FsbrU3fy
2023
.20 | President | c: | |
| | 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. | | | |
| | | | | |
| | | | | |
| Dates
l
U
- | Received
Postmarked | Reviewed | | |
| UJ
Calculations | | Documentation | | Forward Copy |
| LLJ
cc Exceptions: | | | | |
| | | | | |
OL.
**co** Disposition of exceptions
{22}------------------------------------------------
# DETERMINATION OF "SIPC NET OPERATING REVENUES" AND GENERAL ASSESSMENT Amounts for the fiscal period
beginning 1/1/2022 and ending 12 /31/2022
| Eliminate cents | |
|-----------------|--|
| | |
5,819,305
Item No.
- 2a Tctal rever ^e ( FOCUS Lme \* 2 / Part - IA Line 9 Code 4030 \$11,921,283
- 2b Adc t.0"s
- ( \* ) Total revenjes from the securities busmess 0 ' subsidiaries ( exceo; loreign subsidises) and predecessors rot included above
- (2) Net loss from orncipai :ransactions in secu' ties in trading accounts
- (3) Net loss Irom or ncioal transactions in commodities in trading accounts
- ( 4 ) Inre'es! and d vidend expense ceaucted in determining item 2 a
- (5 ) Net loss Irom management ol or participation *\r.* the underwriting or distribution of secur t.es
- ( 6 ) Expenses other than advertising or.ntmg registrat on fees and legal lees deducted in determining net profit \*rom management of or oartcipafon in underwriting or distribution of securities
- (7) Net oss 'rom securities = n investment accounts
- Tota addition's
#### 2c Deductions
- ( 1 ; Revenues f-on the d slribuhon of shares of a reg stered open end investment company or unit investment trust . from the safe of variable annuities from the business of insurance , from investment advisory services rendered to 'egisterea investment companies or nsurance company separate accounts and from transactions in secu'Uy futures products 3,620,735
- ( 2) Revenues Irom commodity transactions
- ( 3 ) Commissions floor orokerage ana c 'earance oaid to otner S ' 3C members m connection with secu'ities transactions
- ( 4 ) Re mbursements for postage in connection Wit" proxy so ' :citation
- ( 5 ) Net gam from secjnt 'es in investment accounts
- ( 6) 00% of commiss -'ons and markups earned from transactions .n (i) cert ' ficates of deposit and (i ) Treasury bids bankers acceptances or commercial paper that mature nine montns or less from issuarce date
- 7 ) Direct expenses of pr ntmg advertising and egal fees mcurred in connection witn other revenue related to the secjr.ties business (revenue defined by Section 16 (9 ) (l) of tne Act ) .
- (8 ) Other revenue not related either directly or rdirectly to the securities busmess (See Instruction C)
( Deductions n excess of \$ '00 000 requ re documentation }
- ( 9 ) ( 1 ) Tota interest and d vidend expense ( cOCUS Line 22/PART HA Line 13 Code 4075 p us fine 2b{ 4 ) aoove ) but not n excess of total interest and dividend ncome **\$.**
- ( ) 40% of margin interest earned on customers securities accou°ts ( 40% of FOCUS line 5 Code 3960 ) 25,390
Enter the greater ol une ( 1 ) or ( 11 )
-
-
25,390 ,465,430 "ota deductions ,455,853 \$ 2d S DC Net Operating Revenues ,684 \$ 2e General Assessment @ 0015
| ( to page * 1 ne 2 A ) | | | | | | |
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|------------------------|--|--|--|--|--|--|
Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.