# CIT CAPITAL SECURITIES LLC X-17A-5 (2020-02-20) — Broker-dealer annual report - Company: CIT CAPITAL SECURITIES LLC - Form: X-17A-5 - Filed: 2020-02-20 - Period: 2019-12-31 - Accession: 0001019122-20-000001 - CIK: 1019122 - File #: 8-49466 - Material weakness: No - Auditor: EisnerAmper LLP - Auditor location: New York, NY - Contact: Hailing Huang - Phone: 9734223685 - Signed by: Hailing Huang (Financial and Operations Principal) Original filing: https://www.sec.gov/Archives/edgar/data/1019122/000101912220000001/FinancialBS2019.pdf --- {0}------------------------------------------------ **(A wholly owned subsidiary of C.I.T. Leasing Corporation, whose ultimate parent is CIT Group Inc.) Statement of Financial Condition Pursuant to Rule 17a-5 under the Securities Exchange Act of 1934 December 31, 2019** {1}------------------------------------------------ **UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549** OMB APPROVAL OMB Number: 3235-0123 Expires: August 31, 2020 Estimated average burden hours per response . . . 12.00 ## **ANNUAL AUDITED REPORT** SEC FILE NUMBER **FORM X-17A-5** 8-49466 **PART III** #### **FACING PAGE** **Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder** | REPORT FOR THE PERIOD BEGINNING | | 01/01/19
MM/DD/YY | AND ENDING | 12/31/19
MM/DD/YY | |--------------------------------------------------------------------------|------------------------------------|---------------------------------------------------------------------|-------------------|-----------------------------------| | | | A. REGISTRANT IDENTIFICATION | | | | NAME OF BROKER -
DEALER: CIT Capital Securities LLC | | | OFFICIAL USE ONLY | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | __________________
FIRM ID. NO. | | | | | | | 11 West 42nd Street | | | | | | (No. and Street) | | | | New York | | NY | | 10036 | | (City) | | (State) | | (Zip Code) | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | | | | | | Hailing Huang | | | | (973) 422-3685 | | | | | | (Area
Code -
Telephone No.) | | | | | | | | | | B. ACCOUNTANT IDENTIFICATION | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | | | EisnerAmper | LLP | | | | | (Name - | if individual, state last, first, middle name) | | | | 750 Third Avenue | | New York | NY | 10017 | | (Address) | | (City) | (State) | (Zip Code) | | CHECK ONE: | | | | | | •
Certified Public Accountant | | | | | | •
X
Public Accountant | | | | | | • | | Accountant not resident in United States or any of its possessions. | | | | | | FOR OFFICIAL USE ONLY | | | | | | | | | | | | | | | \**Claims for exemption from the requirement that the annual report be covered by the opinion of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis for the exemption. See section 240.17a-5(e)(2).* **Potential persons who are to respond to the collection of information contained in this form are not required to respond** SEC 1410 (06-02) **unless the form displays a currently valid OMB control number.** {2}------------------------------------------------ **(A wholly owned subsidiary of CIT Capital USA Inc., whose ultimate parent is CIT Group Inc.) TABLE OF CONTENTS** #### **This report \*\* contains (check all applicable boxes):** - [x] Report of Independent Registered Public Accounting Firm - [x] Facing Page. - [x] Statement of Financial Condition. - [ ] Statement of Operations. - [ ] Statement of Changes in Member's Equity. - [ ] Statement of Changes in Liabilities Subordinated to Claims of General Creditors (not applicable) - [ ] Statement of Cash Flows. - [ ] Computation of Net Capital for Brokers and Dealers Pursuant to Rule 15c3-1 - under the Securities Exchange Act of 1934. - [ ] Computation for Determination of Reserve Requirements for Brokers and Dealers Pursuant to Rule 15c3-3 under the Securities Exchange Act of 1934. - [ ] Information Relating to the Possession or Control Requirements for Brokers and Dealers Pursuant to Rule 15c3-3 under the Securities Exchange Act of 1934 - [ ] A Reconciliation, including appropriate explanations, of the Computation of Net Capital Pursuant to Rule 15c3-1 and the Computation for Determination of Reserve Requirements Under Rule 15c3-3. - [ ] A Reconciliation Between the Audited and Unaudited Statements of Financial Condition With Respect to Methods of Consolidation (not applicable). - [x] An Affirmation. - [ ] A copy of the SIPC Supplemental Report. - [ ] A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit (Supplemental Report on Internal Control). - [ ] Report of Independent Public Accounting Firm Regarding Rule 15c3-3 exemption - [ ] Rule 15c3-3 Exemption Report - *\*\* For conditions of confidential treatment of certain portions of this filing, see section 240.17a-5(e)(3).* {3}------------------------------------------------ #### AFFIRMATION I, Hailing Huang, affirm that, to the best of my knowledge and belief, the accompanying statement of financial condition pertaining to CIT Capital Securities LLC at December 31, 2019, is true and correct. I further affirm that neither the Company nor any officer or director has any proprietary interest in any account classified solely as that of a customer. Financial and Operations Principal Title Subscribed and sworn to before me ~ ~ . · -lf *l~* ·.rJ~ LEE A. SCANLON NOTARY PUBLIC OF NEW JERSEY My Commission Expires 03/31/2020 {4}------------------------------------------------ **(A wholly owned subsidiary of C.I.T. Leasing Corporation, whose ultimate parent is CIT Group Inc.)** ## **Index** **December 31, 2019** | | Page(s) | |------------------------------------------------------------|---------| | Report of Independent Registered Public
Accounting Firm | 1 | | Financial Statement | | | Statement of Financial Condition
| 2 | | Notes to Statement of Financial Condition | 3–6 | {5}------------------------------------------------ # **EISNERAMPER** #### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Member of CIT Capital Securities LLC #### **Opinion on the Financial Statements** We have audited the accompanying statement of financial condition of CIT Capital Securities LLC (the "Company") as of December 31 , 2019 and the related notes (collectively referred to as the "financial statement"). In our opinion , the financial statement presents fairly, in all material respects , the financial position of the Company as December 31 , 2019, in conformity with accounting principles generally accepted in the United States of America . #### **Basis for Opinion** This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement, whether due to error or fraud . Our audit included performing procedures to assess the risks of material misstatement of the financial statement, 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 statement. 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 statement. We believe that our audit provides a reasonable basis for our opinion. ~rt,llfJ We have served as the Company's auditor since 2019. EISNERAMPER LLP New York, New York February 14, 2020 {6}------------------------------------------------ **(A wholly owned subsidiary of C.I.T. Leasing Corporation, whose ultimate parent is CIT Group Inc.)** ## **Statement of Financial Condition** (dollars in thousands) **December 31, 2019** #### **Assets** | Cash | \$ | 405 | |-------------------------------------------------------|----|--------| | Investments - U.S. Treasury securities, at fair value | | 9,294 | | Accounts receivable | | 169 | | Due from affiliates | | 2,740 | | Other assets | | 28 | | Total assets | | 12,636 | | | | | | Liabilities | | | | Accounts payable and accrued expenses | \$ | 83 | | Due to affiliate | | 2 | | Total liabilities | | 85 | | | | | | Member's equity | | 12,551 | | Total liabilities and member's equity | \$ | 12,636 | | | | | The accompanying notes are an integral part of this financial statement. {7}------------------------------------------------ **(A wholly owned subsidiary of C.I.T. Leasing Corporation, whose ultimate parent is CIT Group Inc.)** # **Notes to Statement of Financial Condition December 31, 2019** #### **1. Organization and Business** CIT Capital Securities LLC (the "Company"), is a wholly owned subsidiary of C.I.T. Leasing Corporation (the "Parent"), whose ultimate parent is CIT Group Inc. ("CIT"). CIT and all its subsidiaries collectively are referred to as the Company's Affiliates. The Company is a limited liability company and was formed under the laws of Delaware. The Company is a broker-dealer registered with the Securities and Exchange Commission (the "SEC") and a member of the Financial Industry Regulatory Authority ("FINRA"). On behalf of its Affiliates, the Company arranges and syndicates corporate debt or equity securities. ### **2. Summary of Significant Accounting Policies** #### **Basis of Presentation** These financial statements were prepared in conformity with generally accepted accounting principles ("GAAP") in the United States of America which requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from these estimates. The most significant estimate relates to the realizability of deferred tax assets. ### **Cash** All cash deposits are held by one financial institution and, therefore, are subject to the credit risk at that financial institution. The Company has not experienced any losses in such accounts and does not believe there to be any significant credit risk with respect to these deposits. #### **Investments in securities** The Company's investments in U.S. treasury securities are classified as available-for-sale ("AFS") securities. They are carried at fair value with changes in fair value reported in accumulated other comprehensive income, a component of member's equity, net of applicable income taxes. The security purchases and sales are recorded as of the trade date. #### **Fair Value Measurement** The Company measures the fair value of its financial assets in accordance with Accounting Standards Codification ("ASC") 820, *Fair Value Measurements*, which defines fair value, establishes a consistent framework for measuring fair value and requires disclosures about fair value measurements. The Company categorizes its financial instruments, based on the significance of inputs to the valuation techniques, according to the following three-tier fair value hierarchy: · Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that are accessible at the measurement date. Level 1 assets and liabilities include debt and equity securities that are traded in an active exchange market; {8}------------------------------------------------ **(A wholly owned subsidiary of C.I.T. Leasing Corporation, whose ultimate parent is CIT Group Inc.)** # **Notes to Statement of Financial Condition December 31, 2019** - · Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments; - · Level 3 Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. The Company's financial assets measured at fair value consist of investments in U.S. treasury securities. The Company's other financial assets and liabilities are recorded at their carrying amounts that approximate fair value. ### **Income Taxes** The Company is a single member limited liability company and as such is treated as a disregarded entity for income tax purposes. The Company's income and expense items are included within the filings of CIT's federal and state income tax returns. However, pursuant to an intercompany tax sharing agreement, the Company calculates its income taxes as though it were to file federal and state tax returns as a separate entity. Currently enacted federal and state tax law is used to compute current and deferred income taxes as of the date of the financial statements. Deferred tax assets and liabilities are recorded for the expected future taxation of events that have been reflected in the financial statements. To the extent a deferred tax asset or liability may not be realized, consideration for a valuation allowance is examined. Based on an analysis as of December 31, 2019, Management determined that a valuation allowance is not necessary on the deferred taxes of the Company. During December 2019, the FASB issued new guidance under ASC 740 regarding the separate financial statements of legal entities not subject to tax. This guidance clarifies that legal entities that are not subject to tax, including the Company as it is a disregarded single member LLC for tax purposes, are not required to include in their separate financial statements amounts of consolidated current and deferred taxes. Consequently, during January 2020, the Company cancelled its internal tax sharing agreement with CIT. Subsequent to the cancellation of the tax sharing agreement with CIT, the Company will be entitled to intercompany settlement of existing deferred taxes as of December 31, 2019. The deferred tax balances have been reclassified to tax receivables which were included in due from affiliates and will be reimbursed by CIT during 2020. The Company will no longer record income taxes after December 31, 2019. As of December 31, 2019, Management has determined that the Company had no uncertain tax positions that would require financial statement disclosure. This determination will be subject to ongoing reevaluation as facts and circumstances change. If interest and penalties are assessed to the Company, they are recorded within income tax expense. CIT's consolidated 2017 federal income tax return is open for examination as well as various state and local tax returns from years 2014 through 2018. {9}------------------------------------------------ **(A wholly owned subsidiary of C.I.T. Leasing Corporation, whose ultimate parent is CIT Group Inc.)** # **Notes to Statement of Financial Condition December 31, 2019** #### **3. Transactions with Related Parties** Due from affiliates includes approximately \$2.7 million tax receivables from CIT as discussed in Note 2 and Note 5. It also includes \$84 thousand for payments received or made by an affiliate on behalf of the Company. #### **4. Investments in securities** At December 31, 2019, the Company's U.S. treasury securities' amortized cost and fair value each amounted to \$9.3 million. Approximately \$12 thousand of changes in fair value during 2019, net of applicable income taxes, were reported in accumulated other comprehensive income. As of December 31, 2019, the Company had accumulated other comprehensive income of approximately \$12 thousand. Approximately \$9.0 million of these securities mature within one year and \$248 thousand mature within two years. The Company's U.S. Treasury bills and notes were classified as Level 1 and Level 2, which amounted to \$4.7 million and \$4.6 million, respectively, at December 31, 2019. #### **5. Income Taxes** As of December 31, 2019, the Company had net operating loss carryforwards of \$39.0 million for state purposes which expire in 2035. The state deferred tax asset relating to NOL is \$2.7 million which will be available to offset future profits. Additionally, the Company has a deferred tax asset of \$11.8 thousand related to federal AMT tax credit carryforward. The evaluation and recoverability of the deferred tax assets and the need for a valuation allowance requires management to evaluate evidence to reach a conclusion that it is more likely than not that all or some portion of the deferred tax asset will not be realized. Management is expecting the Company to be profitable in the foreseeable future and as of December 31, 2019, believes that it is more likely than not that the deferred tax asset relating to net operating loss carryforwards will be realized. Accordingly, the Company has determined that no valuation allowance is appropriate as of December 31, 2019. As discussed in Note 2, the Company cancelled its internal tax sharing agreement with CIT during January 2020. The deferred tax balances of \$11.8 thousand and \$2.7 million for federal and state, respectively, have been reclassified to tax receivables which were included in due from affiliates and will be reimbursed by CIT during 2020. ### **6. Indemnifications, Commitments and Contingencies** In the normal course of business, the Company may enter into contracts and agreements that contain a variety of representations, warranties and general indemnifications. The Company's maximum exposure under these arrangements cannot be quantified as this could involve future claims that may be made against the Company that have not yet occurred. Management believes that the likelihood of any material liability arising under these arrangements is remote. No related liability has been recorded in the statement of financial condition. {10}------------------------------------------------ **(A wholly owned subsidiary of C.I.T. Leasing Corporation, whose ultimate parent is CIT Group Inc.)** # **Notes to Statement of Financial Condition December 31, 2019** In the normal course of business, the Company may be named as a defendant in various lawsuits and may be involved in certain regulatory investigations and proceedings. Some of these matters may involve claims of substantial amounts. It is the opinion of management, after consultation with legal counsel, that there are no matters pending against the Company that would have a material effect on the statement of financial condition of the Company at December 31, 2019. ## **7. Regulatory Requirements** The Company is subject to SEC Uniform Net Capital Rule 15c3-1 under the Securities Exchange Act of 1934, which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. At December 31, 2019, the Company had net capital of \$9.6 million which exceeded the required net capital of \$100 thousand by \$9.5 million. The Company does not hold customers' cash or securities and, SEC Rule 15c3-3 under the Securities Exchange Act of 1934 has no impact on the Company. ## **8. Subsequent Events** Management of the Company has evaluated events or transactions that have occurred since December 31, 2019 and determined that there are no material events that would require recognition or additional disclosure in the Company's financial statements. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.