# DWS DISTRIBUTORS, INC. X-17A-5 (2025-03-21) — Broker-dealer annual report
- Company: DWS DISTRIBUTORS, INC.
- Form: X-17A-5
- Filed: 2025-03-21
- Period: 2024-12-31
- Accession: 0000932690-25-000007
- CIK: 932690
- File #: 8-47765
- Type: Broker-dealer
- Material weakness: No
- Auditor: KPMG LLP
- Auditor location: New York, NY
- Contact: Nancy Tanzil
- Phone: 2124548603
- Email: nancy.tanzil@db.com
- Website: db.com
- Signed by: Nancy Tanzil (Finance and Operations Principal)
Original filing: https://www.sec.gov/Archives/edgar/data/932690/000093269025000007/DDIAFS2024.pdf
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(A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.)
Financial Statements and Schedules
December 31, 2024
(With Report of Independent Registered Public Accounting Firm Thereon)
These Financial Statements and Schedules should be deemed Confidential Pursuant to Subparagraph (e)(3) of Rule 17a-5 under the Securities Exchange Act of 1934
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| UNITED STATES |
|------------------------------------|
| SECURITIES AND EXCHANGE COMMISSION |
| Washington, D.C. 20549 |
| xpires: Nov. 30, 2026
stimated average burden | |
|--------------------------------------------------|--|
| ours per response: 12 | |
| SEC FILE NUMBER | |
| 8-47765 | |
| FILING FOR THE PERIOD BEGINNING | 01/01/24 | AND ENDING | | 12/31/24 |
|--------------------------------------------------------------------------------------------|------------------------------------------------------------|------------|-----------------|--------------------------------------------|
| | MM/DD/YY | | | MM/DD/YY |
| | A. REGISTRANT IDENTIFICATION | | | |
| DWS Distributors, Inc.
NAME OF FIRM: | | | | |
| TYPE OF REGISTRANT (check all applicable boxes): | | | | |
| [] Security-based swap dealer Major security-based swap participant
Broker-dealer | | | | |
| Check here if respondent is also an OTC derivatives dealer | | | | |
| ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | |
| 222 South Riverside Plaza | | | | |
| | (No. and Street) | | | |
| Chicago | | IL | | 60606-5808 |
| (City) | (State) | | | (Zip Code) |
| PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | |
| Nancy Tanzil | 212-454-8603 | | | nancy.tanzil@db.com |
| (Name) | (Area Code - Telephone Number) | | (Email Address) | |
| | B. ACCOUNTANT IDENTIFICATION | | | |
| INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing*
KPMG LLP | | | | |
| | (Name - if individual, state last, first, and middle name) | | | |
| 345 Park Avenue | New York | | NY | 10154 |
| (Address) | (City) | (State) | | (Zip Code) |
| (Date of Registration with PCAOB) (if applicable) | | | | (PCAOB Registration Number, if applicable) |
| | FOR OFFICIAL USE ONLY | | | |
| Claims for everytion from the requirement that the annual reports of an independent public | | | | |
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| financial report pertaining to the firm of DWS Distributors, Inc. | | | , as of |
|-----------------------------------------------------------------------------------------------|------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------|---------|
| December 31 | | , 2024 , is true and correct. I further 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 classified solely | |
| as that of a customer. | | | |
| | Monica Pelaez-McGinley | | |
| | Notary Public, State of New York | Signature: | |
| | Reg. No. 02PE0025281 | | |
| | Qualified in Westchester County | Title: | |
| | Commission Expires May 29, 2028 | Finance and Operations Principal | |
| | | | |
| Notary Public | | | |
| | | | |
| This filing** contains (check all applicable boxes): | | | |
| (a) Statement of financial condition. | | | |
| (b) Notes to consolidated statement of financial condition. | | | |
| | | (c) Statement of income (loss) or, if there is other comprehensive in the period(s) presented, a statement of | |
| | | | |
| | comprehensive income (as defined in § 210.1-02 of Regulation S-X). | | |
| (d) Statement of cash flows. | | | |
| (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) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable. | | | |
| [i) Computation of tangible net worth under 17 CFR 240.18a-2. | | | |
| | | [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. | | | |
| [1) Computation for Determination of PAB Requirements under Exhibit A to § 240.15c3-3. | | | |
| | | [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. | | | |
| | | O (o) Reconcliations, Including appropriate explanations, of the FOCUS Report with computation of net | |
| | | worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-1, 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. | |
| | | (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. | | | |
| (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. | |
| | | (u) Independent public accountant's report based on an examination of the 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. | | | |
| | | (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 240.17a-12, | |
| as applicable. | | | |
| | | [ (y) Report describing any material inadequacies found to have existed since the date of the previous audit, or | |
| | a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k). | | |
| I (z) Other: | | | |
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(A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Statement of Financial Condition
December 31, 2024
#### Assets
| Cash and cash equivalents | \$
44,764,549 |
|---------------------------------------------------------------------------------------|------------------------|
| Administrative, service and distribution fees receivable | 3,539,633 |
| Commissions receivable | 12,903 |
| Receivable from affiliates | 10,494,039 |
| Income tax receivable | 168,616 |
| Deferred tax asset, net
Other assets | 3,714,739
1,124,745 |
| Total assets | \$
63,819,224 |
| Liabilities and Stockholder's Equity | 5,008,100 |
| Administrative, service and distribution fees payable | \$
6,503,191 |
| Payable to affiliates | 6,395,471 |
| Income tax payable | 3,739,455 |
| Compensation payable | 14,839,184 |
| Accounts payable and accrued expenses | 2,516,781 |
| Total liabilities | 33,994,082 |
| Stockholder's equity: | |
| Common stock: | |
| Class A, par value \$1.00 per share. Authorized, issued, and outstanding 1,000 shares | 1,000 |
| Class B, par value \$0.01 per share. Authorized, issued, and outstanding 1,000 shares | 10 |
| Paid-in capital | 11,992,567 |
| Retained earnings | 17,831,565 |
| Total stockholder's equity | 29,825,142 |
| Total liabilities and stockholder's equity | \$
63,819,224 |
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# (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Statement of Income
For the year ended December 31, 2024
| Revenues: | |
|-----------------------------------------------|------------------|
| Administrative, service and distribution fees | \$
19,896,600 |
| Fees for services provided to affiliates | 119,118,815 |
| Commissions | 241,595 |
| Other income | 2,042,899 |
| Total revenues | 141,299,909 |
| Expenses: | |
| Compensation and benefits | 44,343,491 |
| Administrative, service and distribution fees | 39,949,524 |
| Services provided by affiliates | 23,203,229 |
| Commissions | 7,474,152 |
| Sales | 2,593,602 |
| Travel and entertainment | 2,147,150 |
| Communications | 2,194,986 |
| Professional fees | 1,214,488 |
| Other | 4,826,327 |
| Total expenses | 127,946,949 |
| Income before income taxes | 13,352,960 |
| Income tax expense | 3,615,380 |
| Net income | \$
9,737,580 |
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(A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Statement of Changes in Stockholder's Equity
Year ended December 31, 2024
| | Class A
common
stock | Class B
common
stock | Paid-in
capital | Retained
earnings | Total |
|--------------------------------|----------------------------|----------------------------|--------------------|----------------------|--------------|
| Balance at December 31, 2023 | \$
1,000 | 10 | 12,097,298 | 23,093,985 | 35,192,293 |
| Net income | — | — | — | 9,737,580 | 9,737,580 |
| Shared-based compensation, net | — | — | (104,731) | — | (104,731) |
| | — | — | — | (15,000,000) | (15,000,000) |
| Balance at December 31, 2024 | \$
1,000 | 10 | 11,992,567 | 17,831,565 | 29,825,142 |
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#### (A Wholly Owned Subsidiary of
#### DWS Investment Management Americas, Inc.)
#### Statement of Cash Flows
#### Year ended December 31, 2024
| Cash flows from operating activities: | |
|-----------------------------------------------------------------------------------|------------------|
| Net income | \$
9,737,580 |
| Adjustments to reconcile net income to net cash provided by operating activities: | |
| Depreciation | 254 |
| Shared-based compensation, net | (104,731) |
| (Increase) decrease in operating assets: | |
| Administrative, service and distribution fees receivable | (343,531) |
| Commissions receivable | 1,834 |
| Receivable from affiliates | 641,120 |
| Income tax receivable | (6,884) |
| Deferred tax asset, net | (532,912) |
| Other assets | (274,432) |
| Increase (decrease) in operating liabilities: | |
| Administrative, service and distribution fees payable | 1,859,776 |
| Payable to affiliates | (970,724) |
| Income tax payable | 1,531,304 |
| Compensation payable | 997,504 |
| Accounts payable and accrued expenses | (2,427,562) |
| Net cash provided by operating activities | 10,108,596 |
| Cash flows from investing activities: | |
| Purchase of time deposit | 25,000,000 |
| Maturity of time deposit | (25,000,000) |
| Net cash provided by investing activities | — |
| | (15,000,000) |
| Cash flows from financing activities:
Net cash used in financing activities | (15,000,000) |
| Net decrease in cash and cash equivalents | (4,891,404) |
| | |
| Cash and cash equivalents at beginning of year | 49,655,953 |
| Cash and cash equivalents at end of year | \$
44,764,549 |
| Supplemental disclosure on cash flow information: | |
| Income taxes paid | \$
2,623,930 |
| | |
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(A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.)
Notes to Financial Statements
December 31, 2024
#### (1) Organization and Business
DWS Distributors, Inc. (the Company) is a wholly owned subsidiary of DWS Investment Management Americas, Inc. ("DIMA or the Parent"). DIMA is a wholly owned subsidiary of DWS USA Corporation ("DWS USA"). DWS USA is a wholly owned subsidiary of DWS Group GmBH & Co. KGaA ("DWS Group"), a publicly traded company on the Frankfurt Stock Exchange, which is majority–owned by Deutsche Bank AG ("the Bank"). The Company was incorporated in Delaware on September 20, 1994 and is a registered broker-dealer under the Securities Exchange Act of 1934. The Company is a registered broker dealer with the Securities and Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC).
#### (2) Summary of Significant Accounting Policies
#### (a) Basis of Presentation
The Company's financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP), which require management to make estimates and assumptions that affect the reported amounts of 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.
The accompanying financial statements have been prepared from separate records maintained by the Company, and may not necessarily be indicative of the financial condition and results of operations, which would have existed if the Company had been operating as an unaffiliated entity.
#### (b) Use of Estimates
The preparation of the financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions are based on the Company's best estimates and judgment. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and adjusts such estimates and assumptions when facts and circumstances dictate. Actual results could differ from those estimates.
#### (c) Foreign Currency Translation
The functional currency of the Company is U.S. dollar. Assets and liabilities denominated in non-U.S. dollar currencies are translated into U.S. dollar equivalents using year-end spot foreign exchange rates. Revenues and expenses are translated into U.S. dollar equivalent using the average rates of exchange for the period. Gains and losses resulting from translation to U.S. dollar equivalents are reflected on the statement of income as a part of other expenses.
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(A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.)
Notes to Financial Statements
December 31, 2024
# (d) Cash and Cash Equivalents
The Company defines cash and cash equivalents as cash or short term, highly liquid securities and interest earning deposits with original maturities of three months or less.
# (e) Common Stock
The Company has two classes of common stock. The Parent holds all Class A voting shares and Class B non-voting shares.
# (f) Share-Based Compensation
The cost of employee services received in exchange for a share-based award is generally measured based on the grant-date fair value of the award in accordance with Accounting Standards Codification (ASC) Topic 718, Stock Compensation and is recorded in the statement of income of the Company.
Awards were granted by DWS Group to selected employees of the Company. Both awards (DWS Equity Plan and DWS Stock Appreciation Rights (SAR)) Plan are considered as cash settled but equity-linked plans. All employees who are offered the DWS Equity Plan are subject to performance conditions and forfeiture provisions, which need to be met for each tranche to be eligible for settlement. In case such performance conditions are not met, the tranche will lapse. Employees who are offered the DWS SAR Plan awards are also subject to specific performance and forfeiture provisions, as applicable under the SAR Plan.
Compensation expense is recorded on a straight-line basis over the period in which employees perform services to which the awards relate or over the period of the tranches for those awards delivered in tranches and is recorded in the statement of income of the Company. Estimates of expected forfeitures are periodically adjusted in the event of actual forfeitures or for changes in expectations. The timing of expense recognition relating to grants which, due to early retirement provisions, include a nominal but non-substantive service period are accelerated by shortening the amortization period of the expense from the grant date to the date when the employee meets the eligibility criteria for the award, and not the vesting date. For awards that are delivered in tranches, each tranche is considered a separate award and amortized separately.
# (g) Administrative, Service and Distribution Fees Income and Expense
The Company earns administrative service fees (some of which are under 12b-1 plans) and 12b-1 distribution fees from Class C and R mutual fund shares and various classes of money market fund shares. The Administrative Service Fee ("ASF") is for certain funds that have entered into shareholder services agreements with the Company to provide post-sale administrative services to investors. The agreements apply to the Class A, C and R shares of the funds. Under these
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(A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.)
Notes to Financial Statements
December 31, 2024
agreements, the applicable classes pay the Company an ASF at an annual rate that varies among the classes. While the ASF payments for the Class A, C and R shares are covered by Rule 12b-1 plans, the ASF is paid for post-sale administrative services and not for distribution services. Revenue from administrative service and 12b-1 distribution fees are recognized when earned and expenses are recognized when incurred.
12b-1 distribution fees are fees paid by the mutual funds out of mutual funds assets to cover distribution expenses and shareholder service expenses. 12b-1 distribution fees include fees paid for sales and marketing expenses. Some 12b-1 plans also authorize and include shareholder service fees, which are fees paid to persons to respond to investor inquiries and provide investors with information about their investments.
### (h) Commissions Revenue
The Company earns commission revenue for the distribution of Class A mutual fund shares sold with a front-end load. Revenue is recognized on the date which shares or notes are sold.
#### (i) Commissions Expense
Commission expense represents amounts paid to broker-dealers for the sale of Class A, B, C, and R mutual fund shares. Expenses are recognized when incurred.
# (j) Income Taxes
The results of the Company are included in the consolidated U.S. Federal income tax return of DWS USA Corporation.
The Company's full year results are included in certain combined and unitary state tax returns of the Deutsche Bank New York Branch. In addition, the Company files tax returns in certain states on a standalone basis.
The Company provides for income taxes on all transactions that have been recognized in the statement of financial condition in accordance with ASC Topic 740, Income Taxes. Accordingly, deferred taxes are adjusted to reflect the tax rates at which future taxable amounts will likely be settled or realized. The effects of tax rate changes on future deferred tax liabilities and deferred tax assets, as well as other changes in income tax laws, are recognized in the period during which such changes are enacted. Deferred tax assets are recognized subject to management's judgment that realization is more likely than not. Deferred tax assets are included in the statement of financial condition.
ASC Topic 740 provides guidance on the accounting for uncertainty in income taxes and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC
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(A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.)
Notes to Financial Statements
December 31, 2024
Topic 740 also provides guidance on de-recognition, classification, interest and penalties, disclosure, and transition.
Under the Company's accounting policy, interest and penalties recognized in accordance with ASC Topic 740 are classified as interest expense.
#### (k) Recent Accounting Developments
The Financial Accounting Standards Board (FASB) amended the guidance in Accounting Standards Codification (ASC) 280, Segment Reporting, to require a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment's profit or loss and assets that are currently required annually. Public entities with a single reportable segment are required to provide the new disclosures and all the disclosures previously required under ASC 280. The standard is adopted in the 2024 financial statements and has no material impact.
Income Taxes (Topic 740): Improvements to Income Tax Disclosures - In December 2023, the FASB issued ASU 2023-09 to enhance the information presented on the income tax disclosure. These amendments require an entity on an annual basis to disclose certain specific differences between its effective tax rate and the statutory rate. The Company expects to adopt this ASU as of January 1, 2025 with no material impact on the financial statements.
#### (3) Revenue Recognition
The revenue recognition guidance requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance requires an entity to follow a five step model to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. Significant judgments are required in the application of the five step model when determining whether performance obligations are satisfied at a point in time or over time; how to allocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on the appropriate measure of the Company's progress under the contract; and whether constraints on variable consideration should be applied due to uncertain future events.
The revenue recognition guidance does not apply to revenue associated with financial instruments, interest income and expense, leasing and insurance contracts. The following is a description of the Company's primary sources of revenue.
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(A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.)
Notes to Financial Statements
December 31, 2024
#### a) Distribution Fees
12b-1 distribution fees are fees paid by the mutual fund out of mutual fund assets to cover distribution expenses and shareholder service expenses. 12b-1 distribution fees include fees paid for sales and marketing expenses. Some 12b-1 plans also authorize and include shareholder service fees, which are fees paid to persons to respond to investor inquiries and provide investors with information about their investments. The Company may receive distribution fees paid by the fund upfront, over time, and upon the investor's exit from the fund (that is, a contingent deferred sales charge), or as a combination thereof, for serving as the distributor of mutual funds managed by the Parent. The Company believes that its performance obligation is the sale of securities to investors and as such this is fulfilled on the trade date. The upfront commission fee is generally a fixed percentage of the share price. The fixed price is allocated to the performance obligation, which is satisfied at the time shares are sold to investors. For variable amounts, as the uncertainty is dependent on the value of the shares at future points in time as well as the length of time the investor remains in the fund, both of which are highly susceptible to factors outside the Company's influence, the Company does not believe that it can overcome this constraint until the market value of the fund and the investor activities are known, which are usually monthly or quarterly. Distribution fees recognized in the current period are primarily related to performance obligations that have been satisfied during the period.
#### b) Administrative Services Fees (ASF)
The ASF fees are for certain mutual funds that have entered into shareholder services agreements with the Company to provide post-sale administrative services to investors. The Company provides administrative services on a daily basis. Such services may include, but not limited to, establishing and maintaining accounts and records, processing purchase and redemption transactions, and answering routine inquiries regarding the fund and its special features. The Company believes the performance obligation for providing these services is satisfied over time because the customer is receiving and consuming benefits as they are provided by the Company. The ASF fee is generally calculated as a fixed percentage of the mutual fund's daily net asset value. The ASF fee is recognized as revenue when the constraint is resolved and it is probable that a subsequent change in the estimate of variable consideration will not result in a significant revenue reversal. This will generally occur on a daily basis when net asset values are known and determined.
#### c) Commissions
The Company receives a portion of the upfront commission that investors pay as underwriter commissions on sales of certain mutual fund share classes. Revenue is recognized on the trade date.
The Company believes that its performance obligation is the sale of securities to investors and as such this is fulfilled on the trade date. The Company believes that the trade date is the appropriate point in time to recognize revenue as there are no significant actions which the Company needs to take subsequent to this date.
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(A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.)
Notes to Financial Statements
December 31, 2024
#### d) Fees for Services Provided to Affiliates
The Company has related-party transactions with the Bank and affiliated companies as the result of transactions entered into in the ordinary course of business. Such transactions are based on contractual agreements or standard allocations methodologies between the Company and its affiliates.
The Company provides management, marketing, and sales and distribution support to DIMA and other affiliates. The business areas receiving the benefits of these services are charged for their respective costs based upon service agreements among various affiliated entities. The Company also receives administrative fees for the sale of commingled trust and other collective investment vehicles. The administrative fee is equal to the amount of administrative expense for personnel and service expenses that are incurred with the sale of commingled trust, other collective investment vehicles, and real estate investment products. For the year ended December 31, 2024, the gross amount charged by the Company to the affiliates was \$80,819,787. Additionally, in accordance with a separate service level agreement between DIMA and the Company, DIMA reimbursed the Company for its compensation and other operating expenses amounting to \$38,299,028, during 2024. Accordingly, the total amount of fees for services provided to affiliates by the Company was \$119,118,815 for the year ended December 31, 2024.
The following table presents the Company's disaggregated revenue from contracts with customers for the year ended December 31, 2024:
| Affiliated revenue from contractual agreements | \$
80,819,787 |
|--------------------------------------------------------------------|-------------------|
| DIMA reimbursement of compensation and other
operating expenses | 38,299,028 |
| Administrative service fees | 18,450,741 |
| Distribution fees | 1,445,859 |
| Commissions | 241,595 |
| Total revenue | \$
139,257,010 |
#### (4) Related Party Transactions
DIMA and other bank affiliates provide services to the Company including management, information technology, operations, and back office support, such as finance, compliance, human resources, legal, and risk. Concurrently, the Company provides management, marketing, and sales and distribution support to DIMA and other affiliates (See Note 3d). For the year ended December 31, 2024, the gross amount charged to the Company by affiliates was \$23,203,229.
The administrative, service and distribution fees and commissions earned by the Company relates to services provided to DWS mutual funds and are considered affiliates of the Company.
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# (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.)
Notes to Financial Statements
December 31, 2024
#### (a) Related Party Assets and Liabilities
The following table sets forth related party assets and liabilities as of December 31, 2024, as included in the statement of financial condition:
| Assets | |
|---------------------------------------------------------|------------------|
| Receivable from affiliates | \$
10,494,039 |
| Administrative, service and distribution fee receivable | 3,539,633 |
| Commission receivable | 12,903 |
| | \$
14,046,575 |
| Liabilities | |
| Payable to affiliates | \$
6,395,471 |
| Compensation payable | 180,053 |
| Income tax payable | 3,739,163 |
| | \$
10,314,687 |
#### (b) Related Party Revenues and Expenses
The following table sets forth the Company's related party revenues and expenses for the year ended December 31, 2024, as included in the statement of income:
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(A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.)
#### Notes to Financial Statements
December 31, 2024
| Revenues | |
|----------------------------------------------|-------------------|
| Fees for services provided to affiliates | \$
119,118,815 |
| Administrative service and distribution fees | 19,896,600 |
| Commissions | 241,595 |
| | \$
139,257,010 |
| Expenses | |
| Administrative service and distribution fees | \$
1,331,252 |
| Compensation and benefits | 610,036 |
| Services provided by affiliates | 23,203,229 |
| Sales expenses | 4,492 |
| Professional fees | 18,698 |
| Travel and entertainment | 75,441 |
| Communications | 88,775 |
| Other | 3,022,271 |
| | \$
28,354,194 |
#### (5) Segment Reporting
The Company is engaged in a single line of business as a broker-dealer, which is comprised of several classes of services, including brokerage services, including securities underwriting, trading, and financial advisory services. The Company has identified its DWS USA's Chief Executive Officer ("CEO") as the chief operating decision maker ("CODM"). The CODM uses the DWS USA's net income (which includes DDI) to evaluate the performance of DWS USA and its subsidiaries and to allocate resources across entities under DWS USA. The Company's operations share similar economic characteristics, including the nature of its services, the type of clients it serves, and the regulatory environment in which it operates. The Company's Board of Directors uses net income to evaluate the results of the business to manage the Company. Additionally, the Company's Chief Financial Officer ("CFO") uses excess net capital (see Note 10 and schedule I), which is not a measure of profit and loss, to make operational decisions while maintaining capital adequacy, such as whether to reinvest profits or pay dividends. The Company's operations constitute a single operating segment and therefore, a single reportable segment, because the CODM manages the business activities using information of DWS USA and its subsidiaries as a whole. The accounting policies used to measure the profit and loss of the segment are the same as those described in the summary of significant accounting policies. The segment revenue and significant expenses for the year ended December 31, 2024 are reported in the statement of income and segment assets can be found in the statement of financial condition. The Company generates significant revenue
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(A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.)
Notes to Financial Statements
December 31, 2024
from related parties which is disclosed in the statement of income and the related party transaction footnote (see Note 3d and 4).
#### (6) Income Taxes
The provision for income taxes for the year ended December 31, 2024 consisted of the following:
| Current: | |
|--------------------------|-----------------|
| Federal | \$
3,308,902 |
| State and local | 839,334 |
| Total current | 4,148,236 |
| Deferred: | |
| Federal | (492,500) |
| State and local | (40,356) |
| Total deferred | (532,856) |
| Total income tax expense | \$
3,615,380 |
For the year ended December 31, 2024, \$3,615,380 of income tax expense was allocated to net income.
The reconciliation between the Company's effective tax rate from continuing operations and the statutory tax rate is as follows:
| Computed tax expense | \$
2,804,122 |
|------------------------------------------------|-----------------|
| State & local tax, net of federal benefit | 631,193 |
| Nondeductible meals and entertainment expenses | 180,187 |
| Other | (122) |
| | \$
3,615,380 |
{17}------------------------------------------------
(A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.)
Notes to Financial Statements
December 31, 2024
Significant components of the Company's deferred tax assets and liabilities as of December 31, 2024, were as follows:
Deferred tax assets:
| Deferred compensation
\$ | 2,692,033 |
|--------------------------------------------------|-----------|
| State net operating loss carryforward | 2,596 |
| Accrued but unpaid foreign related party expense | 1,906,591 |
| Other | 5,954 |
| Gross deferred tax assets | 4,607,174 |
| Valuation allowance | (2,596) |
| Deferred tax assets, net of valuation allowance | 4,604,578 |
| Deferred tax liabilities: | |
| Pension and post-retirement benefits | (889,839) |
| Gross deferred tax liabilities | (889,839) |
| Net deferred tax asset
\$ | 3,714,739 |
The Company participates in the tax sharing agreement with DWS USA as a result of the Company being included in the Federal consolidated tax return filed under DWS USA.
The Company also participates in the tax sharing agreement with Deutsche Bank New York Branch Consolidated Group as a result of the Company being included in the New York State and New York City Combined tax returns filed under the Deutsche Bank New York Branch.
Income taxes are computed on a modified separate company basis and the Company reflects the separate return tax liability as a current tax liability on the books and records. U.S. Federal tax liability is paid by the Company to DWS USA on a current basis. In the event the Company generates a tax benefit from Federal tax losses or tax credits, such benefit is reflected as a current tax receivable on the Company's books and the Company is reimbursed for this tax benefit on a current basis by DWS USA.
Since the Company utilizes a modified separate company method for its separate company income tax computation, the taxable income of the DWS USA consolidated tax group of which the Company is a member is considered in evaluating whether deferred tax assets ("DTAs") are expected to be realized. The Company believes it is more likely than not that the results of future operations, taking into account the impact of the Company's various strategic initiatives, will generate sufficient taxable income to realize the net DTAs.
{18}------------------------------------------------
(A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.)
Notes to Financial Statements
December 31, 2024
As of December 31, 2024, the Company determined that it has no uncertain tax positions, interest, or penalties as defined within FASB ASC 740, and accordingly, no additional disclosures are required. In the next twelve months the Company believes that there will be no material changes to unrecognized tax benefits.
As of December 31, 2024, the consolidated group of which the Company is a member, is under examination by the New York City for tax years 2015 through 2020, New York State for the tax years 2018 through 2022, and other states for tax years 2013 through 2021.
The Company primarily files in the following jurisdictions: Federal, New York State and New York City.
Tax refunds receivable from other state tax authorities at December 31, 2024 was \$168,616. Tax payable to affiliates at December 31, 2024 was \$3,739,163 and tax payable to authorities is \$292.
# (7) Employee Benefit Plans
#### Retirement Plans
The Company continues to participate, together with other affiliates of Deutsche Bank Americas Holding Corporation (DBAH) in a tax-qualified 401(k) plan that covers substantially all U.S. Employees who have completed six months of service are entitled to matching contributions. The Company recognized approximately \$1.4 million in 401(k) expense for this plan, included in compensation and benefits within the statement of income for the year ended December 31, 2024.
#### Share-Based Compensation Plans
#### DWS Equity and Stock Appreciation Rights (SAR) Plans
DWS Group made grants of share-based compensation under the DWS Equity Plan. This plan represents a contingent right to receive a cash payment by referencing to the value of DWS shares during a specified time period. The DWS SAR Plan represents a contingent right to receive a cash payment equal to any appreciation (or gain) in the value of a set number of notional DWS Group shares over a fixed period of time. This award does not provide any entitlement to receive DWS Group shares, voting rights or associated dividends. The DWS Equity Plan is a phantom share plan representing a contingent right to receive a cash payment by referencing to the value of DWS Group shares during a specified period of time. The award recipient for any share-based compensation plan is not entitled to receive dividends during the vesting period of the award. The share awards granted under the terms and conditions of any share-based compensation plan are forfeited fully or partly if the recipient voluntarily terminates employment before the end of the relevant vesting period or the end of the retention period for upfront awards. Vesting usually continues after termination of employment in cases such as redundancy or retirement.
{19}------------------------------------------------
(A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.)
Notes to Financial Statements
December 31, 2024
For the year ended December 31, 2024, the Company recognized approximately \$2.4 million for these plans, which is included in compensation and benefits in the accompanying statement of income.
The fair value of the DWS SAR Plan awards have been measured using the generalised Black-Scholes formula model. The liabilities incurred are re-measured at the end of each reporting period until settlement. The principal inputs being the market value on reporting date, discounted for any dividends foregone over the holding periods of the award, and adjustment for expected and actual levels of vesting which includes estimating the number of eligible employees leaving Deutsche Bank Group and number of employees eligible for early retirement. Given the limited trading in the market years of DWS share price volatility and the absence of implied volatility, the expected volatility of the DWS share price has been based in an evaluation of the historical volatility for a comparable peer group over the preceding 5-year period.
#### Cash Retention Plan
The Company participates in the DWS Restricted Incentive Plan, a cash retention plan of the DWS Group, under which Restrictive Incentive Awards ("RIA") are granted as deferred cash compensation generally vesting over a three to five year period. RIA are expensed over the vesting period, net of estimated forfeitures. In line with regulatory requirements, this plan is subject to performance conditions and forfeiture provisions. Thus, there is the possibility that parts of the awards will be subject to forfeiture in case such performance conditions are not met.
For the year ended December 31, 2024, the Company recognized approximately \$1.3 million in compensation and benefit expense related to these plans in the statement of income.
#### (8) Legal Contingencies
The Company operates in a legal and regulatory environment that exposes it to significant legal risks. As a result, the Company is involved in litigation, arbitration and regulatory proceedings in the ordinary course of business.
In accordance with ASC 450, Loss Contingencies, the Company will accrue a liability when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In many lawsuits, regulatory proceedings and arbitration, it is not possible to determine whether a liability has been incurred or to estimate the ultimate or minimum amount of that liability until the matter is close to resolution, in which event no accrual is made until that time. In view of the inherent difficulty of predicting the outcome of such matters, particularly in cases in which claimants seek substantial or indeterminate damages, the Company cannot determine the probability or estimate what the eventual loss or range of loss related to such matters will be. Subject to the foregoing, the Company continues to assess such matters and believes, based on information available, that the resolution of these matters will not have a material adverse effect on the financial condition of the Company.
The Company may settle litigation or regulatory proceedings or investigations prior to a final judgment or determination of liability. It may do so for a number of reasons, including to avoid the cost, management
{20}------------------------------------------------
(A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.)
Notes to Financial Statements
December 31, 2024
efforts or negative business, regulatory or reputational consequences of continuing to contest liability, even when the Company believes it has valid defenses to liability. It may also do so when the potential consequences of failing to prevail would be disproportionate to the costs of settlement.
#### (9) Categories of Risks
The Company's risk management policies and related procedures are aligned with those of DWS Group. The policies and related procedures are administered on a coordinated global and legal entity basis with consideration given to each subsidiary's including the Company's internal and external requirements.
Risk is an inherent part of the Company's business and activities. Management believes effective risk management is vital to the success of the Company's business activities. Accordingly, the Company has policies and procedures in place to identify, measure, monitor, advise, challenge and control the principal risks involved in the activities of its business and support functions. The Company's ability to properly and effectively identify, measure, monitor, advise, challenge and control each of the various types of risk involved in its activities is critical to its soundness and profitability.
Credit Risk
Credit risk arises from all transactions where actual, contingent or potential claims against any counterparty, borrower, obligor or issuer (which we refer to collectively as "counterparties") exist. For the Company, credit risk relates primarily to cash and cash equivalent positions that are placed with third party banking and financial institutions and is considered as not material. The counterparties are monitored via market parameters, the usage of independent credit ratings, ESG signals, and proprietary credit risk assessments. The related credit risk exposure to these counterparties is aggregated and managed within appropriate limits.
#### Model Risk
Model risk is the risk of adverse consequences from decisions based on incorrect and/or misused models. Model risk management is a core component of our risk management framework. We rely on models for investment, portfolio management, risk management, valuation, capital planning, and other purposes. The model risk management framework is in place to safeguard the interests of our clients and stakeholders as well as to fulfill regulatory requirements.
A model is defined as a quantitative method, system, or approach that applies statistical, economic, financial, mathematical theories, techniques and assumptions to process input data into quantitative estimates. The definition of a model also covers quantitative approaches whose inputs are qualitative or based on expert judgement, provided that the output is quantitative in nature. Models used by us and covered by the model risk framework include models used for both fiduciary and non-fiduciary purposes and may either be internally developed and/or sourced from third party vendors.
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(A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.)
Notes to Financial Statements
December 31, 2024
Model risk appetite is designed to ensure that model risk management is embedded in our risk culture and that risks are mitigated as appropriate.
Operational and Support Risk
Non-financial risk is comprised of operational risk and reputational risk. Operational risk means the risk of loss resulting from inadequate or failed internal processes, people, and systems or from external events, including legal risk. Operational risk excludes business and reputational risk. Reputational risk means the risk of possible damage to our brand and reputation, and the associated risk to earnings, capital, or liquidity, arising from any association, action or inaction which could be perceived by stakeholders to be inappropriate or unethical or inconsistent with our Code of Conduct.
Non-financial risk is inherent to our business activities. We have embedded internal risk management and control processes and the use of risk management tools and concepts. Our integrated approach along the risk management lifecycle is designed to enable sound risk identification, evaluation, remediation, and monitoring of key non-financial risks. Any failures related to key non-financial risks, caused by external or internal influences, could lead to material financial, regulatory, and/or reputational impacts.
Our business profile is exposed primarily to the following non-financial risks:
- Fiduciary obligations: We face the risk that we do not comply with our fiduciary obligations to put the interests of our clients first. This requires us to balance between various interests of our clients and the economic interests of our firm to avoid undue conflicts, taking into consideration regulatory requirements, principles, contractual agreements, and specific disclosure requirements.
- Information security: We face the risk that our business is not sufficiently protected against information security failures, i.e. targeted cyber security attacks. The financial industry is subject to continuous elevated threat levels of cyber-attacks in the context of geo-political developments and technology advancements such as Artificial Intelligence. Direct or indirect attacks may undermine our ability to act in a fiduciary capacity to serve our clients in a resilient way.
- Transformation: Implementing a hybrid infrastructure with Deutsche Bank may have material implications for our risk profile posing both strategic and operational risks. From a non-financial risk perspective, we are faced with transformation risks by replacing select infrastructure platforms, embrace new technologies (including the utilization of artificial intelligence) and engage with new external service providers. All transformation activities are subject to close monitoring to ensure the appropriate controls and safeguards are in place to protect our firm, employees, and clients while adhering to regulatory requirements.
- Regulatory developments: The development of new and evolving regulatory requirements for the asset management industry, for instance on business resilience, ESG requirements, Artificial Intelligence use and disclosure requirements, IT disclosures or record retention, imposes a challenge for us for timely identification, interpretation and implementation. Non-compliance with laws and regulations may expose us to material non-financial risks.
{22}------------------------------------------------
(A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.)
Notes to Financial Statements
December 31, 2024
– Service providers: Third parties support us to deliver our business operations and fiduciary obligations. The use of and dependency on our vendors is key to our business. Inadequate vendor oversight may adversely impact our business resiliency.
The management of non-financial risks follows the three lines of defense approach with the aim of protecting the Company, our clients, and shareholders against risk of material financial, regulatory, or reputational damages. It seeks to ensure that all our key non-financial risks are identified and addressed, that responsibilities regarding the management of non-financial risks are clearly assigned and risks are consciously taken and managed in the most appropriate and long-term interest of our franchise, clients and stakeholders. The three lines of defense approach and its underlying standards apply to all levels of the organization.
#### Liquidity Risk
Liquidity risk is the risk arising from our potential inability to meet all payment obligations when they come due or only being able to meet these obligations at excessive costs. The objective of the Company's liquidity risk management framework is to ensure that it can always fulfil its payment obligations and can manage liquidity and funding risks within the agreed risk appetite. The framework considers relevant onbalance sheet and off-balance sheet drivers of liquidity risk as well as expected future cash flows. Capital and Liquidity Management is mandated to manage the overall liquidity and funding position of the Company as well as the liquidity risk profile. Risk oversees the application of the liquidity risk framework and adherence to the risk appetite.
#### (10) Regulatory Requirements – Net Capital
Pursuant to the SEC's Uniform Net Capital Rule (Rule 15c-1), the Company is required to maintain minimum net capital. The Company computes its required net capital using the alternative method. As of December 31, 2024, the Company's net capital, alternative net capital requirement, and excess net capital were \$10,400,305, \$250,000, and \$10,150,305 respectively. Capital may not be withdrawn nor dividends paid to the extent capital is required for continued compliance with Rule 15c3-1.
#### (11) Subsequent Events
In accordance with U.S. GAAP disclosure requirements on subsequent events, management has evaluated events for possible recognition or disclosure in the financial statements through March 21, 2025, the date the financial statements were issued.
{23}------------------------------------------------
#### Schedule I
### DWS Distributors, Inc.
(A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Computation of Net Capital under Rule 15c3-1
#### December 31, 2024
| 29,825,142 |
|----------------------|
| |
| |
| |
| 3,539,633 |
| 12,903 |
| 10,494,039 |
| 5,008,100 |
| 370,162 |
| 19,424,837
1 |
| 0
10,400,305
4 |
| 250,000 |
| 1
0 |
| |
Note: The above computation does not differ from the amended computation filed by the Company on Form X-17A-5 on March 14, 2025.
Excess net capital \$ 10,150,305
See accompany report of independent registered public accounting firm.
. 2
{24}------------------------------------------------
Schedule II
DWS Distributors, Inc. (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Computation of Reserve Requirements Pursuant to Rule 15c3-3 and Information Related to Possession and Control Requirements Pursuant to Rule 15c3-3 December 31, 2024
The Company does not claim an exemption under paragraph (k) of 17 C.F.R. § 240. 15c3-3; and is relying on Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5, because the Company limits its business activities to: (i) mutual fund underwriter or sponsor; (ii) wholesaler of exchange traded funds; (iii) wholesaler of foreign investment company securities to U.S. and non-U.S. broker-dealers; and (iv) wholesaler or distributor of real estate investment trusts (REITs) and the Company (i) 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); (ii) did not carry accounts of or for customers; and (iii) did not carry PAB accounts (as defined in Rule 15c3-3) throughout the most recent fiscal year without exception.
See accompanying report of independent registered public accounting firm.
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{26}------------------------------------------------
Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.