# BRUDERMAN BROTHERS LLC X-17A-5 (2022-04-01) — Broker-dealer annual report - Company: BRUDERMAN BROTHERS LLC - Form: X-17A-5 - Filed: 2022-04-01 - Period: 2021-12-31 - Accession: 0001092243-22-000001 - CIK: 1092243 - File #: 8-51974 - Type: Broker-dealer - Material weakness: No - Auditor: G.R. Reid Associates, LLP - Auditor location: Woodbury, NY - Contact: SHELLEY SHERECK - Phone: 516-231-1435 - Signed by: James Bruderman (President) Original filing: https://www.sec.gov/Archives/edgar/data/1092243/000109224322000001/PUBLIC.pdf --- {0}------------------------------------------------ # BRUDERMAN BROTHERS, LLC STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2021 {1}------------------------------------------------ ## BRUDERMAN BROTHERS, LLC DECEMBER 31t 2021 CONTENTS | Report of Independent Registered Public Accounting Firm | | |---------------------------------------------------------|-------| | Financial Statement | | | Staternent ofFinancial Condition | 2 | | ·Notes to FinancialStatement | 3 ~12 | {2}------------------------------------------------ ![](_page_2_Picture_0.jpeg) #### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Board of Directors and Shareholders of Bruderman Brothers, LLC #### **Opinion on the Financial Statements** We have audited the accompanying statement of financial condition of Bruderman Brothers, LLC as of December 31, 2021, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of Bruderman Brothers, LLC as of December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. #### **Basis for Opinion** These financial statements is the responsibility of Bruderman Brothers LLC's management. Our responsibility is to express an opinion on Bruderman Brothers. LLC's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to Bruderman Brothers, LLC 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 statements are 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 statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. We have served as Bruderman Brothers LLC's auditor since 2017. Woodbury, NY March 31. 2022 #### **REID CPAs, LLP Woodbury I New York I Boca Raton** 7600 Jericho Turnpike, Suite 400, Woodbury. NY 11797 P. **516·802-0100 W: ReldLLP.com** {3}------------------------------------------------ ## **BRUDERMAN BROTHERS~ LLC** #### **STATEMENT OF FINANCIAL CONDITION** #### **DECEMBER 31; 2021** | Assets | | |-----------------------------------------|---------------| | Cash and cash equivalents | \$
326,464 | | Related party receivable | 327,421 | | Due from clearing broker | 250,000 | | Securities owned, at fair value | 62,733 | | Other assets | 82,796 | | Total As.sets | \$ 1,049,414 | | Liabilities and Member's Equity | | | Liabilities | | | Accounts payable 1llld accn1ed expenses | \$
55,i 16 | | Total Liabilities. | 55,116 | | Member's Equity | 994,298 | | Total Liabilities and Member's Equity | \$ 1,049,414 | *Tlte accompanying notes are an integral part of these financial statements.* {4}------------------------------------------------ #### **NOTE l** - **SUMMARY OF SIGNIFICANTACCOUNTING POLICIES** #### *NATURE.OF BUSINESS.* Bruderman Brothers, LLC (the "'Company") was formedjn December 2014 under the laws of the State ofNewYork. lts predecessorBrudermailBrothers, Inc. (''BBi") wasincorporated 'in New York State in January 1996. Iri February of 2000, BBibecame a broker arid. dealer in securities registered with the Securities and Exchange Commission (''SEC"). In 2014, BBI changed its corporate form from a corporation to a limited fotbility company. To accomplish the change irt corporatefonn, BBI changed its name to BBi II, Inc, on December 5, 2014, and on December 19, 2014, BBf II, Inc'. merged into the Company and became a wholly owned subsidiary of Bruderman Asset Management, LLC ("BAM'' or "Parent'1 ). The Company is also .a member of the Financial Industry Regulatory Authority ("FINRA") arid the Securities Investor Protection Corp **(''SIPC').** As more fully describedinNote 7, onJanuary 2, 2015, the Company andits Parent purchased certain assets • of the brokerage and asset management and advisory businesses from · Gary Goldberg & Co. Inc, (''GGC"} a FINRA registered broker-dealer, and Gary Goldberg Phmnmg Services,.Jncorporated (an SEC-registered investment advispry firm) (the "GG Transaction~'). As a result of the GG Transaction the Company functions as a full service brokerdealer, primarily of insurance annuities and mutual fund products and also assists clients in the sale of their business and/ot in debt and equity financirigs. The .operating agreement provides that the Member will not have any personal. liability for any debt or obligation ofliabiHty of the Company. There are no liabilities subordinated to claims of general creditors during the year ended December 31, 2021. · · #### *CASH AND CASH EQUIVALENTS* The Company considers all highly liquid investments purchased with original maturities of 90 days or less to be cash equivalents. #### *SECURITIES* Marketable securities ate valued at market value. {5}------------------------------------------------ ## **NOTE 1- SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** #### **INCOME** *TAXES* The Company is· a single member LLC, and by default it is treated as a disregarcled entity for tax purposes under the provisions of the Internal Revenue Code and the appropriate sections of New York State Law. Under those provisions, the Company does not pay federal or state cof})orate income taxes. The Company is·included in a chain of single ineinber LLC's with the top tier cif ownership being two grantot trusts. Therefore:, all of the Company's taxable income or loss and other items of taxation will pass4hrough to two grantor trusts whose owners are Hable for any federal arid state.income 1axes. · The Company evaluates its uncertain tax provisions under the provisions ofFinancia,l Acco1Jnting Standarcls Board {"FASB''} Accounting Standards Codification (''ASC';) 740 *Income Taxes* ("FASBASC 740"). FASB ASC 740 prescribes a recognition threshoki and a measurement attribute for the fmancial statement recognition and measurement of tax positions takenorexpectedto be.1ak:eninatax return. Fotthose benefits to be recognized, a tax position m:ust be more-lik:ely.:.than:.,not to be sustained upon examination by taxing authorities. Differences between tax positions taken, or expected to be taken,. in a tax return and the benefit recognized and ineasuted pursuant to the interpretation are· referred fo as · "unrecognized benefits.'' A liability is recognized ( or amount of net operating loss carry fo:rWard or amount oftaxtefundable is reduced) for ail. unrecognized tax benefit because it represents an enterprise's potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of FASB ASC 7 40. As of December 31, 2021, no liability for unrecognized tax benefits was required to be .recorded. #### **REVENliER8COGNITION** Effective January 1, 2018, the Company adopted ASC Topic 606, Revenue from Contracts with Customers C' AS C Topic 60611). The new revenue recognition guidance requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in anarriount 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 modelto (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction prke, (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 ofcumulativerevenuerecognized would not.occur when the uncertainty associated With the variable consideration is resolved. The new revenue recognition guidance does not .apply to revenue associated with fmancial instruments, interest income and expense, leasing and insurance contracts. {6}------------------------------------------------ #### **NOTE 1** - **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)** #### **Commissions** The Company buys and sells · securities on behalf of its customers. Each time a customer enters into a buy or.sell transaction,·theCompany charges a commissicm. Commissions and related clearing expenses are recorded on the trade date. The Company has determined that the performance obligation is satisfied on the trade date because that is when the underlying . financial instrument, counter parties are identified, the pricing is agreed upon and the risks and rewards of ownership have transferred to/from the customer. #### **Advisory** The Company provides advisory services on mergers and acquisitions. Revenue for advisory arrangements is generally recognized at the point in time that performance under the arrangement is completed (the closing date of the transaction)or the contract is.cancelled. #### **G001JW1LL** Goodwill· represents the excess of consideration given over fair value of net assets of businesses acquired. GoodwilLacquired and determined to have an indefinite useful life is not amortized but instead tested for impairment at leastann:ually; In the impaintlent test, the carrying amount of the reporting unit is compared with its fait value. When the carrying amountofthe reporting unit exceeds its fair value, an impainnent loss is recognized up to a niaximUri:I amount of the recorded goodwill related to the reporting unit Goodwill .impairment losses are-not reversed. The Company's evaluation of goodwill completed. during the year resulted in. an impairment loss in the amount of \$222,347. As· a result of the impairment loss, there is no Goodwill remaining at December Jl, 202 L #### *INTANGIBLE* **ASSETS** Amortizing identifiable intangible .assets generally represent the cost of customer relationships, trade names a.mi non-compete agreement. In valuing these assets, the Company makes assumptions regarding useful lives and projected growth rates, and significant judgment is required. The Company periodically reviews identifiable intangibles for impairment as events or changes in circumstances indicate that the carryip.g amount of such assets may not be recoverable. If the carrying amounts of the assets exceed their respective .fair. values, additional impairment tests are performed to measure the amount of the impairmenrloss. ifany. The Company's evaluation ofintangibleassets completed during the year resulted in an impairment loss in the amount of \$365,648. As a result ofthe impairment loss, there are no intangible assets remaining atDecember 31, 2021. {7}------------------------------------------------ #### **Non: l** - **SQM MARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)** #### *CONCENTRATION* **OF** *CREDIT* **RlSKAND** *MAJOR* **CLIENTS** The Company maintains its checking accounts at on~ financialinstitution at December 31, 2021. These accounts are insured by the Federal Deposit Insurance Cotporation (''FDIC'l At times, the cash balances may be uninsured or in a deposit account that exceeds the FDIC insurance limit. #### *FAIRVALCIEMEASUREMENTS* The. Company follows the guidancein FASB ASC820, *Fair Value Measurement.* Under that guidance, 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 measurem~nt date. A fair value measurement assumes thatthe transaction to sell the assetor transfetthe liability occurs in.the principal market for the asset or liability or, in the absence ofa principal market, the most adva.titageoµs market. Valuation techniques thatare consisteritwith the market, income or cost approach, as specified by FASB ASC 820, are used to measure fair value. Using. the provisions within FASB ASC 820, the Company has characterized its investments in securities, based on the order of liquidity of the inputs, used to value the investments, into a three-level fair va,Iue hierarchy. The fairvalue hierarchy gives the highest order ofliquidity to quoted prices in active markets for identical assets or liabilities [Level· 1], and the lowest order of liquidity to unobservable input~ [Level 3]. If the inputs used to measure the . investments fall within diff ereht levels of the hierarchy, the categorization is based on the lowest level input that is significant **to** the fair value measurement of the iri.v~stment. {8}------------------------------------------------ #### **NOTE** I **-SUMMARY oFSIGNIFICANTACCOUNTING POLICIES (CONTINUED)** Investments recorded in the statement of financial position are categorized based on the. inputs to valuation techniques as follows: *Leyel I.* These areinvestments where values are based on unadjusted quoted prices for identical assets in an active market the Company has the . ability to access. These investments are exchange-traded, equity securities. · *Level 2.* Level 2 inputs to the valuation methodology include: quoted prices for similar assets or liabilities in active markets; qµoted prices for identical assets or liabilities .in. inactive markets; inputs other than quoted prices that are observable for the asset or liability;. and~ inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability hasaspecified ( contractual) term, the. Level 2input must be observ&ble for substantially the full term ofthe asset or liability. *Level 3.* These are investments where values are based on 'prices or valuation techniques that require .inp:uts that are both unobservable and significant to the overaH fair value measurement. These inputs reflect assumptions of managemerttaboutthe assuniptions that market participants would use in pricing the investments #### *USE OF'ESTIMATES* The· preparation of financial· statements in conformity with accounting prin<:iples generally accepted in the United States of America requires management to make .estimates and assumptions that aff"ect the reported amounts of assets and liabilities an4 disclosure of contingent assets and liabilities at the date ofthe financial stat~ments and reported amounts of revcnu~ and expenses during the reporting period. Actual results could differ from those estimates. #### *RISK TO OPERATIONS* The Umted States is pi"esently in the midst of a national health emergency related to a virus~ cm:nmonly known.as Novel Coronavirus (CQVID-19). The overall consequences of COVID-19 ona national; regional and local level are unknown, but·it has the potential to result in·a significant economic impact. The impact of this situation on the Company and jts fqture results and financial position is not presently determinable, {9}------------------------------------------------ #### **NOTE 2-DEP0SlTSWITH CLEARING ORGANIZATIO~ AND RELATED INDEMNIFICATION** The C:ompanyb~ a clearing deposit of \$250,000 with the clearing broker pursuant to requirements set forth by the clearingbroker. ·· · The Company dears all its security transactions on a fully disclosed basis through a clearing broker, which is. an exchange member organization. The agreement between the Company and its clearing broker provides, in part, for .the· Company to guarantee the clearing broker against any loss or liability resulting from a cusfomeris, failure to make payments for securities purchased or to delivet securities sold. No significantloss or liability h?S resulted · from this guarantee. The agreement can be terminated any time by either party after giving 90 days' written notice, · #### **NOTE 3-INTANGIBLEASSETS** The Company·determined thatintangible·assetswete impaired resulting in an impairment charge of\$365,646 for the year ended December 31, 2021. The impairment ofintangible assets was due to revised forecasted salesteveilues .. Intangible assets consisted of the following at December3 l ^~ 2021: | | Gross Carrying
Amount | Accumulated
Amortization | | |--------------------------|--------------------------|-----------------------------|---------| | Trade:Narne | \$
0 | \$ 0 | \$
0 | | Non-Compete Ag;reements | 0 | | 0 | | Custc:nner Relationships | 365,646. | 365,646 | 0 | | Total | \$365,646 | \$365,646 | \$0 | {10}------------------------------------------------ #### **NOTE 4** - **FAIR VALUE MEASUREMENTS** Assets and liabilities measured at . fair value are based on one or more of three valuation techniques identified in the table below. The valuationtechniques are as follows: . . - a) Market approach .. Prices and other relevant infci1mation generated by market transactions involving identical or comparable assets or liabilities;. - b) Cost approach. Amount that would be required to replace the service capacity of' an asset ( replacement cost); - c) Income approach. Techniques to convertfuture amounts to a Single presentainount based oilrnatketexpectations (includingptesent value techniques,option-pricing and excess earnings rriodels). The following table summarizes the. Company's assets and liabilities measured at fair value at December 31, 2021: | Descrigtion | .Levell | Level 2 | Level 3 | Total | Valuation
Techni!;J.ue· | |-----------------------------------------------------------------------------------------------------------|----------|---------|---------|-----------|----------------------------| | Assets: | | | | | | | Money market fun(is (included in
cash and cash equivalents)
Equity securities owned,, at fair value | \$20,779 | \$0 | \$0 | \$20,779· | (a) | | Financial industry | 62,733 | 0 | 0 | 62733 ' | (a) | | Total | \$83,512 | \$0 | \$0 | \$83,512. | | There were no transfers betwe~n Levels of the fair value hierarchy during the year ended December 31, 2021. # **NOTE 5-RELATED PARTY TRANSACTIONS** #### *RECEJVA.BLEFROMft{EMBER* The Company made advances to the Member totaling \$327A21 as of December 31, 2021, which are due on demand. The advances are non-interest bearing. {11}------------------------------------------------ #### **Non: 6** ~ **REGULATORY REQUIREMENTS** The Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule (SEC Rule 15c3-l), which requires the maintenance of minimum net capital and reqµires that the ratio of aggregate indebtedness to• net capital, both as defined, shall not exceed 15 to 1. At December 3l, 2021, the Company's net capital amounted to \$574,256 which was \$569,256 in excess of its required net capital of \$5,000. The Company's net capital ratio was 0.00960 to 1 atDecember 3 l,2021. · #### **NOTE 7** ~ **ACQUISITION** On January 2~ 2015, the Company purchased certain assets of GGC for \$5 ,45 8)3 34. The following table summarizes theretognized amountsofidentifiable assets acquired at the acquisition date: | Due from clearing broker | 20 633 ' | | |--------------------------|-------------|--| | Fixed assets
· | 40,137 | | | Other assets | 6,244. | | | Goodwill | 2,236,l6g | | | lhtarigible assets | 3,155,151 | | | Total consideration paid | \$5,458,334 | | As part of the GG Transaction, the GGC brokerage business will operate within the Company and the asset management and advisory business will operate within BAM. The funding for the tran~action was provided by BAM's parent. . # **Nou.; 8- S:UBSEQUENT EVENTS** The Company has evaluated subsequent eyents through March J 1, 2022, the date on which these financial statements are being issued. The Company is not aware of any subsequent events.that would require recognition or disclosure in the financial statements. · · #### **NOTE 9-LITIGATION** On September 24, 2019, Gary M. Goldberg ("Goldberg") filed a complaint naming as defendants the Company, Bruderinan• Asset Management, LLC (''BAM"), which i.s the Company's pru;ent, and J runes M. Bruderman and Matthew J. ]3ruderman, who are-th,e {12}------------------------------------------------ #### **NOTE.9:.\_LITIGATION (CONTINUED)** President and Chairman, respectively~ oftheCompany. On October20,2020,the Supreme Court, New York County, on motion by the Company and the other defendants, ordered that all claims asserted by Goldberg must be arbitrated before the Judicial Arb.1tr~tfon and Mediatio11 Services, Inc. ("JAMS") and that. the complaint was ·••dismissed .and finally disposed for arty substantive purpose." Goldberg appealed the order and on Aprils~ 2021, the Appellate Division, First Department, affinned: · . . . On Dec.ember 10, 2019, Goldberg; GMG2 Corporation (formerly known as Gary Goldberg .·& Company.Inc.) ("GMG2''), and·GM.Gl Corporation (formerly known as·Gazy Goldberg· Planning Servi<::es~ Inc.) ("GMG 1 ';) filed a Statement of Claim ,with the Financial Industry Regulatory Authority (''FINRA"), naming the Company, BAM, James M. Brnderman and Matthew J. Brudemiai1 as respondents and asserting various causes of action ·against all defendants collectively. On October 20, 2020, the Supreme Court; New York CoUnfy, on motion.by the Company and the other defendants, ordered that the FINRA arbitration cease in favor of arbitration before JAM~t On September 30, 2019, the Company and BAM commenced an arbitration before JAMS against Goldberg, asserting that Goldberg is.required to arbitrate before JAMS each.ofthe · claims asserted by Goldberg in the New York Supreme· Court action, Goldberg v: Brudennan . . . . . . . Brothers LLC, etal.,Jndex No.159280/2019, as well as counterclaims by the Company and BAM againstGoldberg. On November 1, 2019; the arbitrator appointed by JAMS issued a decision stating that claims asserted by Goldberg in connection with the asset purchase .agreements and the· employment agreement must be arbitrated. On October 20, 2020, the Supreme Court, New York Courtty,on motion by the Company and BAM, ordered that all claims between Goldberg, the Company, and BAM must be arbitrated before JAMS. Goldberg refused to participate in the JAMS arbitration until ordereq to do so by the Supreme Comt, New York County. On February 7, 2021, Goldberg, GMG2, and GMGl filed a Counterclaim and Third Party Complaint (the "Counterclaim;') naming the Company. BAM, James M. Btuderinan and Matthew J. Bruderman as.Counterclaim Respondents and Third:. Party Defendants (collectively the "Bruderman: Parties;') asserting eight ''Counts'' against the Bruderman Parties collectively. The First Count is for "Violation of WageTheft PreVention Act." Goldberg alleges thatheis owed him \$1,500,000.00 in unpaid commissions, wages and expenses. The Statement of Claim cloes not allege a specific amount due frotn the Company; The Second Count asserts a claim for retaliatory discharge in violation of New York Labor Law, arid alleges that Goldberg was terminated in retaliation for filing the complaint in Goldberg v Bruderman BrothersLLC, et al., IndexNo. 159280/2019. No !3pecific damage claim is alleged. The Third Count asserts . a claim for breach of contract, alleging that the Brudermart.Parties breached the asset purchase agreements, the employment agreement, and {13}------------------------------------------------ #### **NOTE9-LITIGATION (CONTINUED)** a fm;rrth agreement between GoldbergMontebello LLC and the Company and BAM Whereby the Company and BAM sold to Goldberg MontebelloLLC varicn,1s equipment and the use of a trade name for a radio program known as the "Money Matters Financial Network." The Counterclaim alleges damages arising from the alleged contract breaches of "no less than \$-8 million'." The Fourth Count asserts claims for breach of the implied covenant .of good faith and .fair dealing but does rtot allege any additional facts tn support of this Count. Goldberg did nofmake any argument in support ofthis Counterclaim in his post-hearing brief. The Fifth and Sixth Counts assert claims for tortious interference. \vith business relationships and · tortious interference with prospe,ctive economic adva,ntag~ based on the Bruderman Parties' alleged interference-with Goldberg~s ability to communicate with his fornier · customers and former clients after his employment was terminated. Goldberg did not make any argument in support of these Counterclaims iri his post hearing brief; The Eighth Count asserted a claim · for ''violation of COBRA.'' Goldberg abandoned this counterclaim before the commencement of the arbitration hearing. · The arbitration hearing commenced in October 2021 and ended in November 2021.Post hearing briefing was completed oil March 4, 2022. The arbitrator is to render a decision within sixty (60) days of Marth 4, 2022; On September 22, 2020, a former associated person of the C6inpany commen.ced an arbitration against the Company asserting a claim for brec:ich of contract relating to a revenue sharing agreement entered into between the claimant and the Company in 2016. The Company asserted counterclaims against the claimant for failure to repay loans and advances. The claimant and the Company settled all claims between them in January 2022. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.