# TJM INVESTMENTS, LLC X-17A-5 (2021-03-31) — Broker-dealer annual report - Company: TJM INVESTMENTS, LLC - Form: X-17A-5 - Filed: 2021-03-31 - Period: 2020-12-31 - Accession: 0001072769-21-000003 - CIK: 1072769 - File #: 8-51370 - Material weakness: No - Auditor: Jesser, Ravid, Jason, Basso and Farber, LLP - Auditor location: Chicago, IL - Contact: Colleen Risinger - Phone: 312-432-5102 - Signed by: Colleen Risinger (FinOp) Original filing: https://www.sec.gov/Archives/edgar/data/1072769/000107276921000003/20publ.pdf --- {0}------------------------------------------------ # CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM DECEMBER 31, 2020 {1}------------------------------------------------ ## CONSOLIDATED 67\$7(0(172)FINANCIAL &21',7,21 AND 5(32572)INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM DECEMBER 31, 2020 ### CONTENTS | | Page | |---------------------------------------------------------------------------------------------------------|------| | Facing Page | 1 | | Oath or Affirmation | 2 | | Report of Independent Registered Public Accounting Firm
on &RQVROLGDWHG6WDWHPHQWRI)LQDQFLDO&RQGLWLRQ | 3 | | Consolidated Statement of Financial Condition | | | Notes to Consolidated 6WDWHPHQWRIFinancial&RQGLWLRQ | | {2}------------------------------------------------ UNITED STATES SECURITIES ANDEXCHANGE COMMISSION Washington, D.C. 20549 OMB APPROVAL Expires: October 31, 2023 Estimated average burden hours per response .. . . . . . . 12.00 3235-0123 SEC FILE NUMBER 8-51370 OMB Number: # ANNUAL AUDITED REPORT FORM X-17A-5 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 January 1, 2020 | | | AND ENDING December 31, 2020 | | |----------------------------------------------------------------------------------------------------------|--------------------------------------------------------|----------|--------------------------------|--| | | MM/DD YY | | MM DD Y Y | | | | A. REGISTRANT IDENTIFICATION | | | | | NAME OF BROKER-DEALER: TJM Investments, LLC | | | OFFICIAL USE ONLY | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.)
318 W. Adams St., 9th Floor | | | FIRM I.D. NO. | | | | (No. and Street) | | | | | Chicago | Illinois | | 60606 | | | (City) | (State) | | (Zip Code) | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
Colleen Risinger 312-432-5102 | | | | | | | | | (Area Code - Telephone Number) | | | | B. ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | | Jesser, Ravid, Jason, Basso and Farber, LLP | | | | | | | (Name - if individual, state last, first, middle name) | | | | | 150 N. Wacker Dr., Ste. 3100 | Chicago | Illinois | 60606 | | | (Address) | (City) | (State) | (Zip Code) | | | CHECK ONE: | | | | | | Certified Public Accountant | | | | | | Public Accountant | | | | | | | | | | | | Accountant not resident in United States or any of its possessions. | | | | | | | FOR OFFICIAL USE ONLY | | | | | | | | | | | | | | | | \*Claims for exemption from the requirement that the annual report be covered by the opinion of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis for the exemption. See Section 240.17a-5(e)(2) > Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. SEC 1410 (11-05) 1 {3}------------------------------------------------ ## OATH OR AFFIRMATION | Colleen Risinger | swear ( = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | TJM Investments, LLC | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of
as as as | | of December 31 | the mail and comments and correct. I further swear (or affirm) that | | classified solely as that of a customer, except as follows: | neither the company nor any partner, principal officer or director has any proprietary interest in any account | | Official Seal
Mary K Murphy
Notary Public State of Illinois | Signature
FinOp | | My Commission Expires 04/06/2022
Notary Public | Title | | This report ** contains (check all applicable boxes):
(a) Facing Page.
(b) Statement of Financial Condition.
of Comprehensive Income (as defined in §210.1-02 of Regulation S-X).
(d) Statement of Changes in Financial Condition.
(e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital.
(f) Statement of Changes in Liabilities Subordinated to Claims of Creditors.
(g) Computation of Net Capital.
(h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3.
(i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3.
consolidation.
(1) An Oath or Affirmation.
(m) A copy of the SIPC Supplemental Report. | (c) Statement of Income (Loss) or, if there is other comprehensive income in the period(s) presented, a Statement
(i) A Reconciliation, including appropriate explanation of Net Capital Under Rule 15c3-1 and the
Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3.
(k) A Reconciliation between the audited Statements of Financial Condition with respect to methods of
(n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit. | | ** For conditions of confidential treatment of certain portions of this filing, see section 240.17a-5(e)(3). | | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) # REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON CONSOLIDATED STATEMENT OF FINANCIAL CONDITION To the Members of TJM Investments, LLC and Subsidiary Chicago, Illinois # **Opinion on the Consolidated Financial Statement** We have audited the accompanying consolidated statement of financial condition of TJM Investments, LLC and Subsidiary as of December 31, 2020, and the related notes (collectively referred to as the "consolidated financial statement"). In our opinion, the consolidated financial statement presents fairly, in all material respects, the financial position of TJM Investments, LLC and Subsidiary as of December 31, 2020 in conformity with accounting principles generally accepted in the United States of America. # **Basis for Opinion** This consolidated financial statement is the responsibility of TJM Investments, LLC and Subsidiary's management. Our responsibility is to express an opinion on TJM Investments, LLC and Subsidiary's consolidated 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 requi red to be independent with respect to TJM Investments, LLC and Subsidiary 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 consolidated 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 consolidated 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 consolidated 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 consolidated financial statement. We believe that our audit provides a reasonable basis for our opinion. We have served as TJM Investments, LLC and Subsidiary's auditor since 2017. Chicago, IL March 26, 2021 {5}------------------------------------------------ # CONSOLIDATED STATEMENT OF FINANCIAL CONDITION ## DECEMBER 31, 2020 #### ASSETS | Cash | \$
1,229,834 | |-------------------------------------------------------------|-----------------| | Due from brokers | 3,302,851 | | Due from employees | 166,915 | | Due from others | 41,789 | | Receivables from broker-dealers and clearing organizations, | | | net of allowance for doubtful accounts of \$5,000 | 2,863,647 | | Deposits with clearing organizations and others | 1,610,000 | | Prepaid expenses | 79,795 | | Security deposits | 17,588 | | Right-of-use asset, office sub-lease | 172,712 | | | | \$ 9,485,131 #### LIABILITIES AND MEMBERS' CAPITAL | Liabilities: | | |---------------------------------------|-----------------| | Accounts payable and accrued expenses | \$
4,825,051 | | Due to affiliates | 398,620 | | Note payable to member | 900,000 | | Paycheck Protection Program loan | 1,604,300 | | Lease liability, office sub-lease | 172,712 | | | | | | 7,900,683 | | Members' capital: | | | Controlling interest | 1,561,627 | | Noncontrolling interest in subsidiary | 22,821 | | | 1,584,448 | | | \$
9,485,131 | # See Notes to Consolidated 6WDWHPHQWRI Financial &RQGLWLRQ. {6}------------------------------------------------ #### NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION ### 1. Organization: TJM Investments, LLC (Investments) is an Illinois limited liability company formed for the purposes of conducting business as a broker-dealer in securities. Investments is an approximately 95% owned subsidiary of TJM Holdings, LLC (the Parent). Investments is registered with the Securities and Exchange Commission (SEC), the National Futures Association (NFA) and the Financial Industry Regulatory Authority (FINRA). Investments is scheduled to terminate operations on December 31, 2046. As a limited liability company, each member's liability is limited to the capital invested. Investments has business operations in the United Kingdom (U.K.) through TJM Europe, LLP (Europe), a U.K. subsidiary. Investments owns 100% of TJM International Ltd. (International), which owns 85% of Europe. Europe is registered with the Commodity Futures Trading Commission (CFTC) as an independent Introducing Broker and is a member of the National Futures Association (NFA). Europe introduces customers to Investments and earns introducing broker fees based on the clients and trades introduced. The consolidated statement of financial condition includes the accounts of Investments and its wholly-owned subsidiary, International (collectively, the Company). All significant intercompany balances have been eliminated. Investments operates under the provisions of Paragraph (k)(2)(ii) of Rule 15c3-3 of the Securities and Exchange Act of 1934 and, accordingly, is exempt from the remaining provisions of that rule. Essentially, the requirements of Paragraph (k)(2)(ii) provide that Investments clear all transactions on behalf of customers on a fully disclosed basis with a clearing broker-dealer and promptly transmit all customer funds and securities to the clearing broker-dealer. The clearing broker-dealer carries all of the accounts of the customers and maintains and preserves all related books and records as are customarily kept by a clearing broker-dealer. #### 2. Significant Accounting Policies: The Company follows the accounting standards set by the Financial Accounting Standards Board (FASB). The FASB sets generally accepted accounting principles (GAAP) that the Company follows to ensure consistent reporting of financial condition. The preparation of the consolidated statement of financial condition in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. The Company maintains its cash in domestic and foreign bank accounts which, at times, may have exceeded insured limits. The amounts held in excess of insured limits at December 31, 2020 WRWDOHG \$856,099. The Company has not incurred any losses on the accounts. Management believes that the Company is not exposed to any significant credit risk on cash. {7}------------------------------------------------ #### NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION #### 2. Significant Accounting Policies – continued: The receivable from broker-dealers and clearing organizations is stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a credit to a valuation allowance based on its assessment of the current status of individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to the receivable from broker-dealers and clearing organizations. Investments is treated as a partnership for federal income tax purposes and, as such, is not liable for federal income taxes. Members report their respective shares of income and losses on their individual tax returns. However, Investments is subject to Illinois Replacement Tax; accordingly, a provision for state taxes has been considered in the consolidated statement of financial condition. FASB provides guidance for how uncertain tax positions should be recognized, measured, disclosed and presented in the consolidated statement of financial condition. This requires the evaluation of tax positions taken or expected to be taken in the course of preparing Investments' tax returns to determine whether the tax positions are "morelikely-than-not" of being sustained "when challenged" or "when examined" by the applicable tax authority. Tax positions not deemed to meet the "more-likely-than-not" threshold would be recorded as a tax asset or liability in the current year. As of December 31, 2020, management has determined that there were no material uncertain income tax positions. Investments is not subject to examination by United States federal and state tax authorities for tax years before 2017. Investments prepares its income tax returns on the cash basis. Management of the Company has reviewed and evaluated subsequent events through March 26, 2021, the date on which the consolidated statement of financial condition was available to be issued. See Note 10. #### 3. Fair Value of Financial Instruments: FASB ASC 820 defines fair value, establishes a framework for measuring fair value, and establishes a fair value hierarchy which prioritizes the input to valuation techniques. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that a transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. Assets and liabilities recorded at fair value are categorized within the fair value hierarchy based upon the level of judgment associated with the inputs used to measure their value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The Company utilizes valuation techniques to maximize the use of observable inputs and minimize the use of unobservable inputs. Fair value measurement techniques used by the Company are consistent with the market, income and cost approach, as specified by FASB ASC 820. Inputs are broadly defined as assumptions market participants would use in pricing an asset or liability. The fair value hierarchy prioritizes the input to valuation techniques used to measure fair value into three broad levels: {8}------------------------------------------------ # NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION - 3. Fair Value of Financial Instruments continued: - Level 1. Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. The types of investments considered as Level 1 include listed debt and equity securities. - Level 2. Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly. Fair value is determined through the use of models or other valuation methodologies. The Level 2 inputs taken into consideration generally include quotes received from outside brokers, maturity of securities, values of underlying securities, etc. The types of investments considered as Level 2 include certain corporate bonds and loans, restricted equity securities and certain over-the-counter derivatives. A significant adjustment to a Level 2 input could result in the Level 2 measurement becoming a Level 3 measurement. - Level 3. Inputs are unobservable for the asset or liability and include situations where there is little, if any, market activity for the asset or liability. The inputs into the determination of fair value are based upon the best information in the circumstances and may require significant management judgment or estimation. The types of investments considered as Level 3 include equity and debt positions in private companies. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. Recorded amounts of cash, receivables, deposits, prepaid and accrued expenses, payables, and promissory notes approximate fair value, generally based on their short-term nature, and are categorized as Level 1 assets and liabilities within the fair value hierarchy. 4. Related Party Transactions: Certain shared expenses of the Company are paid by affiliates and reimbursed. The amount due to affiliates was \$398,620 at December 31, 2020. The Company paid the Parent rent under a sub-lease for use of its Chicago office facilities. See Note 8. 5. Liabilities Subordinated to Claims of General Creditors and Secured Demand Notes: The Company had \$2,800,000 in liabilities subordinated to claims of general creditors at December 31, 2020, as follows: {9}------------------------------------------------ ## NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION 5. Liabilities Subordinated to Claims of General Creditors and Secured Demand Notes – cont: The Company has a \$900,000 subordinated loan from a member maturing on March 31, 2022 with a stated rate of interest of 8% per annum, but is subject to increase. No principal payments will be made until the loan matures. All interest due on the loan was paid as of December 31, 2020. The Company also has several subordinated borrowing arrangements with members through secured demand notes totaling \$1,900,000. The secured demand notes range from \$400,000 to \$1,000,000 with stated interest rates of 6% per annum, but are subject to increase. The maturity dates of these notes range from March 31, 2022 through July 31, 2023. The Company had \$1,700,000 in secured demand notes at December 31, 2019. During the year ended December 31, 2020, the Company converted \$800,000 of secured demand notes by execution of a new secured demand note for \$1,000,000 with the same member. Cash and certain securities of Investments totaling \$3,989,420 as of December 31, 2020 have been pledged as collateral. No principal payments will be made until the notes mature. All interest due on the notes was paid as of December 31, 2020. Subordinated borrowings are available in computing adjusted net capital under the minimum capital requirements. To the extent that such borrowings are required for Investments' continued compliance with minimum net capital requirements, they may not be repaid. FINRA, the Designated Self-Regulatory Organization of Investments, and the NFA have approved these borrowings as acceptable regulatory capital. These liabilities are subordinated to the claims of the present and future general creditors and the loan agreements provide that the debt cannot be repaid if such repayments will cause Investments to fail to meet the financial requirements established by the SEC. 6. Off-Balance-Sheet Credit Risk: Customer transactions are introduced to and cleared through clearing brokers. Under the terms of its clearing agreements, the Company is required to guarantee the performance of its customers in meeting contracted obligations. In conjunction with the clearing brokers, the Company seeks to control the risks associated with its customer activities by requiring customers to maintain collateral in compliance with various regulatory and internal guidelines. Compliance with the various guidelines is monitored daily and, pursuant to such guidelines, the customers may be required to deposit additional collateral or reduce positions, where necessary. The Company does not anticipate nonperformance by customers or its clearing brokers. In addition, the Company has a policy of reviewing, as deemed necessary from time to time, the performance of the clearing brokers with which it conducts business. {10}------------------------------------------------ #### NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION 7. Net Capital Requirements: Investments is subject to the SEC Uniform Net Capital Rule (Rule 15c3-1), 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. (The rule of the "applicable" exchange also provides that equity capital may not be withdrawn or cash distributions paid if the resulting ratio would exceed 10 to 1.) Under this rule, Investments is required to maintain "minimum net capital" equivalent to \$250,000 or 6 2/3% of "aggregate indebtedness," whichever is greater, as these terms are defined. At December 31, 2020, Investments had net capital of \$4,517,384, which was \$4,171,028 in excess of its required net capital. At December 31, 2020, Investments' aggregate indebtedness to net capital ratio was 1.1501 to 1. Europe is subject to the CFTC minimum financial requirement for IBs (regulation 1.17). On December 31, 2020, Europe had net capital \$85,154, which was \$40,154 in excess of its required net capital. 8. Commitments and Related Party Leases: The Company leases its Chicago office facilities from the Parent under a sub-lease agreement expiring December 31, 2021, with an option to extend for an additional 12 months. The Company rents its UK office space from a third-party under a lease agreement expiring June 30, 2021. The Chicago and UK leases provide for monthly rentals of \$7,500 and \$10,800 GBP, respectively. The Company recognizes and measures its leases in accordance with FASB ASC 842, *Leases*. The Company is a lessee in an operating sub-lease for office space, as described above. The Company recognizes a lease liability and a right of use (ROU) asset at the commencement date of the lease. The lease liability is initially and subsequently recognized based on the present value of its future lease payments. The implicit rate of the Company's lease is not readily determinable, and accordingly, management has used the Company's incremental borrowing rate, which is defined as the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms and in a similar economic environment. Lease amortization for lease payments is recognized on a straight-line basis over the lease term. The Company has elected to not recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less at lease commencement, and do not include an option to purchase the underlying asset or extend the lease term that the Company is reasonably certain to exercise. The Company recognizes lease amortization associated with its short-term leases on a straight-line basis over the lease term. Because the Company is reasonably certain to exercise the renewal options, the optional periods are included in determining the lease term, and associated payments under the renewal options are included in lease payments. {11}------------------------------------------------ ## NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION 8. Commitments and Related Party Leases – continued: The Company's lease asset and liability as of December 31, 2020 are represented as follows: | Total undiscounted lease payments \$ 180,000 | | |----------------------------------------------|------------| | Less imputed interest | (7,288) | | Total lease asset and liability | \$ 172,712 | The Company's annual minimum payments under its Chicago lease are as follows: | 2021 | \$ 90,000 | |------|-----------| | 2022 | 90,000 | 9. Paycheck Protection Program Loan: On May 19, 2020, the Company received loan proceeds in the amount of \$1,604,300 under the Paycheck Protection Program (PPP). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (CARES Act), provides for loans to qualifying businesses for amounts up to 2.5 times their average monthly payroll costs. The loans and accrued interest are forgivable after the 24-week covered period as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the 24-week covered period. The unforgiven portion of the PPP loan is payable over 2 years at an interest rate of 1%, with a deferral of payments for the first 10 months. The Company utilized the proceeds for purposes consistent with the PPP. The Company currently believes that its use of the loan proceeds will meet the conditions for forgiveness of the loan in its entirety. 10. Subsequent Events: No other events have occurred since the date of the consolidated statement of financial condition and through March 26, 2021 that would require recognition and/or disclosure in the consolidated statement of financial condition as required by GAAP, except as follows: Members of the Company have made capital withdrawals totaling \$1,500,000 during 2021; however, the Company has continued to maintain compliance with its regulatory requirements. The Company's operations may be affected by the ongoing outbreak of the Coronavirus Disease 2019 (COVID-19), which was declared a pandemic by the World Health Organization in March, 2020. The ultimate disruption which may be caused by the outbreak is still uncertain; however, it may result in a future material adverse impact on the Company's financial condition. Possible effects may include, but are not limited to, disruption to the Company's customers, absenteeism in the Company's labor workforce, unavailability of resources used in its operations, a decline in value of assets held by the Company, and possible difficulty in collecting on its receivables. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.