# HUDSON HOUSING SECURITIES LLC X-17A-5 (2021-04-01) — Broker-dealer annual report - Company: HUDSON HOUSING SECURITIES LLC - Form: X-17A-5 - Filed: 2021-04-01 - Period: 2020-12-31 - Accession: 0001105689-21-000003 - CIK: 1105689 - File #: 8-52348 - Material weakness: No - Auditor: CohnReznick LLP - Auditor location: New York, NY - Contact: Mathew Brush - Phone: 212 218 4456 - Signed by: Joseph A. Macari (COO) Original filing: https://www.sec.gov/Archives/edgar/data/1105689/000110568921000003/hhspublic.pdf --- {0}------------------------------------------------ **Financial Statements (With Supplementary Information) and Report of Independent Registered Public Accounting Firm** **December 31, 2020** {1}------------------------------------------------ **UNITEDSTATES SECURITIESANDEXCHANGECOMMISSION Washington, D.C. 20549** OMB APPROVAL OMB Number: 3235-0123 Expires: 0DUPCFS Estimated average burden **8-** SEC FILE NUMBER 52348 # hours per response.. . . . . 12.00 **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** | | January
1,
2020
REPORT FOR THE PERIOD BEGINNING______________________________ | | December
31,
2020
AND ENDING______________________________ | | | |-------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|---------------------------------------------------------------------|--|--| | | MM/DD/YY | | MM/DD/YY | | | | | A.
REGISTRANT IDENTIFICATION | | | | | | NAME OF BROKER-DEALER: | Hudson
Housing
Securities | LLC | OFFICIAL USE ONLY | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | FIRM I.D. NO. | | | | 630
Fifth
Avenue,
Suite | 2850
___________________________________________________________________________________________________________________ | | | | | | | (No. and Street) | | | | | | New
York | NY
___________________________________________________________________________________________ | | 10111
__________________________ | | | | (City) | (State) | | (Zip Code) | | | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | | | | | | Matthew Brush | _____________________________________________________________________________________________________________________ | | (212) 218-4456 | | | | | | | (Area Code – Telephone Number) | | | | | B.
ACCOUNTANT IDENTIFICATION | | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | | CohnReznick
LLP | _____________________________________________________________________________________________________________________ | | | | | | | (Name – if individual, state last, first, middle name) | | | | | | 1301
Avenue
of | New
York
Americas
10th
FL
_____________________________________________________________________________________________________________________ | NY | 10019 | | | | (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** SEC 1410 () **unless the form displays a currently valid OMB control number.** {2}------------------------------------------------ | Joseph A. Macari | sweather and any and more and seems of the affirm) that, to the best of | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | Hudson Housing Securities LLC | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of | | of December 31 | are true and correct. I further swear (or affirm) are true 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 | | ROBERT J. CASTANO
NOTARY PUBLIC, State of New York
No. 02CA5009567
Qualified in New York County
Commission Expires March 15, 2023 | Signature
COO, Hudson Housing Socurities LLC | | | Title | | | | | Notary Public | | | This report ** contains (check all applicable boxes):
く
(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.
1 <
(f) Statement of Changes in Liabilities Subordinated to Claims of Creditors.
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(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.
Computation for Determination of the Reserve Requirements Under Exhibit A of 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
(j) A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule 15c3-1 and the
[ (k) A Reconciliation between the audited Statements of Financial Condition with respect to methods of
(n) A report describing any material inadequacies 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). | | | | | | | | | | | {3}------------------------------------------------ #### Index | | Page | |----------------------------------------------------------------------------------------------------------------------------------------------------------|------| | Annual Audited Report Form X-17a-5 Part III | | | Report of Independent Registered Public Accounting Firm | 2 | | Financial Statements | | | Statement of Financial Condition | 4 | | Statement of Income | 5 | | Statement of Changes in Member's Equity | 6 | | Statement of Cash Flows | 7 | | Notes to Financial Statements | 8 | | Supplementary Schedules Required by Rule 17a-5 of the
Securities Exchange Act of 1934 | | | I - Computation of Net Capital Under Rule 15c3-1 of the
Securities and Exchange Commission
December 31, 2020 | 11 | | II - Computation for Determination of the Reserve Requirements
Under Rule 15c3-1 of the Securities and Exchange Commission
December 31, 2020 | 12 | | III - Information Relating to the Possession or Control Requirements Under
Rule 15c3-3 of the Securities and Exchange Commission
December 31, 2020 | 13 | {4}------------------------------------------------ ![](_page_4_Picture_1.jpeg) # Report of Independent Registered Public Accounting Firm To the Managing Member Hudson Housing Securities LLC # *Opinion on the Financial Statements* We have audited the accompanying statement of financial condition of Hudson Housing Securities LLC (the "Company") as of December 31, 2020, the related statements of income, changes in member's equity and cash flows for the year then ended, 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 the Company as of December 31, 2020, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. # *Basis for Opinion* These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with 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. {5}------------------------------------------------ ![](_page_5_Picture_0.jpeg) # *Supplemental Information* The supplemental information contained in Schedules I, II and III has been subjected to audit procedures performed in conjunction with the audit of the Company's financial statements. The supplemental information is the responsibility of the Company's management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with 17 C.F.R. §240.17a-5. In our opinion, the information contained in Schedules I, II and III is fairly stated, in all material respects, in relation to the financial statements as a whole. We have served as the Company's auditor since 2001. New York, New York February 25, 2021 {6}------------------------------------------------ #### **STATEMENT OF FINANCIAL CONDITION** #### **December 31, 2020** #### Assets | Cash | \$
1,479,829 | |------------------------------------------------------|-----------------| | Total assets | \$
1,479,829 | | Liabilities and Member's Equity | | | Liabilities
Accounts payable and accrued expenses | \$
16,125 | | Total liabilities | 16,125 | | Member's equity | 1,463,704 | | Total liabilities and member's equity | \$
1,479,829 | {7}------------------------------------------------ #### **STATEMENT OF INCOME** #### **Year ended December 31, 2020** | Revenue | | |----------------------------|-----------------| | Placement fees | \$
5,012,983 | | Total revenue | 5,012,983 | | Expenses | | | Dues and filing fees | 17,276 | | Professional fees | 39,850 | | Occupancy | 44,243 | | Salaries | 613,248 | | Travel | 20,956 | | General and administrative | 36,595 | | Total expenses | 772,168 | | | 4,240,815 | | Interest income | 1,437 | | Net income | \$
4,242,252 | {8}------------------------------------------------ #### **STATEMENT OF CHANGES IN MEMBER'S EQUITY** #### **Year ended December 31, 2020** | Balance, December 31, 2019 | \$
897,506 | |----------------------------|-----------------| | Distributions | (3,676,054) | | Net income | 4,242,252 | | Balance, December 31, 2020 | \$
1,463,704 | | | | {9}------------------------------------------------ # **STATEMENT OF CASH FLOWS** #### **Year ended December 31, 2020** | Cash flows from operating activities | | |--------------------------------------------------------------------------------------------------|-----------------| | Reconciliation of net income to net cash provided by operating activities
Net income | \$
4,242,252 | | Changes in operating assets and liabilities
Increase in accounts payable and accrued expenses | 1,070 | | Net cash provided by operating activities | 4,243,322 | | Cash flows from financing activities
Distributions | (3,676,054) | | Net cash used in financing activities | (3,676,054) | | Net increase in cash | 567,268 | | Cash, beginning of year | 912,561 | | Cash, end of year | \$
1,479,829 | {10}------------------------------------------------ # **NOTES TO FINANCIAL STATEMENTS** # **December 31, 2020** # **NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** Hudson Housing Securities LLC (the "Company"), a Delaware limited liability company, is a whollyowned subsidiary of Hudson Housing Capital LLC ("Hudson"). The Company is registered as a broker-dealer with the Securities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority ("FINRA"). The Company acts as the placement agent for affiliated investment partnerships in which limited partnership interests are sold to third party investors. In addition, the Company acts as a finder for unaffiliated investment partnerships in connection with proposed investments by the unaffiliated investment partnerships in partnerships which own multifamily residential real estate. The Company remains in effect in perpetuity unless earlier terminated in accordance with the Operating Agreement. Material subsequent events have been considered for disclosure and recognition in these financial statements through February 25, 2021. # **Use of Estimates** The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. # **Revenue Recognition** In exchange for providing placement services, the Company is entitled to a placement fee which is evidenced in a Capital Commitment Addendum ("CCA") for each Commitment Closing. The Company earns substantially all of its revenue through placement fees earned in connection with the sale of limited partnership interests in investment partnerships managed and syndicated by affiliates. The Company establishes a contract in the form of a limited partnership agreement or operating agreement in which the performance obligation is identified as the sale of a limited partnership or member interest in an investment partnership to an investor limited partner. In addition, the investor limited partner must provide consent for the investment partnership to acquire a limited partnership or member interest in a property partnership for a Commitment Closing to occur. The Company recognizes revenue at the time of the Commitment Closing once a CCA is delivered to and accepted by the general partner or managing member of the investment partnership which satisfies the Company's performance obligation. In addition, the Company may be engaged as a finder in connection with the introduction of an unaffiliated investment partnership to a property partnership in connection with the proposed investment by the unaffiliated investment partnership in the property {11}------------------------------------------------ # **NOTES TO FINANCIAL STATEMENTS - CONTINUED** # **December 31, 2020** # **NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)** # **Revenue Recognition (continued)** partnership. Pursuant to the Engagement Letter evidencing the engagement, the Company will receive compensation for its services in its capacity as a finder and such compensation is recognized as revenue at the time the unaffiliated investment partnership is admitted as an investor member or investor limited partner in the property partnership. During the year ended December 31, 2020, the Company earned and received \$4,996,690 from affiliated investment partnerships and \$16,293 from unaffiliated investment partnerships and such amounts are included in placement fees on the statement of income. #### **Income Taxes** The Company has elected to be treated as a pass-through entity for income tax purposes and, as such, is not subject to income taxes. For tax purposes, the Company is included in the consolidated Hudson tax return and does not file a separate federal or state tax return. All items of taxable income, deductions and tax credits are passed through to and are reported by members of Hudson on their respective income tax returns. The Company's federal tax status as a pass-through entity is based on its legal status as a limited liability company. Accordingly, the Company is not required to take any tax positions in order to qualify as a pass-through entity. Therefore, these financial statements do not reflect a provision for income taxes and the Company has no other tax positions which must be considered for disclosure. Income taxes filed by Hudson are subject to examination by the Internal Revenue Service for a period of three years. While no income taxes are currently being examined by the Internal Revenue Service, tax years since 2017 remain open. #### **Recent Accounting Pronouncement** In June 2016, the FASB issued ASU 2016-13, Financial Statements – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU amends the requirement on the measurement and recognition of expected credit losses for financial assets held. The ASU was effective for annual periods beginning after December 15, 2019 and interim periods within those annual periods. This amendment should be applied on a modified retrospective basis with a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. The Company adopted this guidance in 2020 and it did not have a material impact on the Company's financial statements and related disclosures. {12}------------------------------------------------ # **NOTES TO FINANCIAL STATEMENTS - CONTINUED** #### **December 31, 2020** #### **NOTE 2 - RELATED PARTY TRANSACTIONS** Under an agreement with Hudson, certain operating and administrative costs incurred by the Company are paid by Hudson on behalf of the Company. The agreement is renewed annually and revised as needed. As of December 31, 2020, \$0 is due to Hudson for costs paid on behalf of the Company. During the year ended December 31, 2020, these services totaled \$771,098. ### **NOTE 3 - CONCENTRATION OF CREDIT RISK** At times during the year, cash balances exceed federally insured limits. Management believes the balances are maintained in a credit-worthy institution. # **NOTE 4 - NET CAPITAL REQUIREMENTS** The Company is in compliance with the net capital requirements of the SEC and FINRA. The Company is subject to the SEC "Uniform Net Capital Rule," which requires the maintenance of a specified amount of minimum net capital, as defined, and that the ratio of aggregate indebtedness to net capital, as defined, not exceed 15 to 1. Net capital and the related net capital ratio may fluctuate on a daily basis. At December 31, 2020, the Company had net capital of \$1,463,704 which is \$1,458,704 in excess of its required net capital of \$5,000. The Company's ratio of aggregate indebtedness to net capital was .011 to 1. # **NOTE 5 - COVID-19** The spread of a novel strain of coronavirus ("COVID-19") that began in early 2020 has caused significant business disruptions and financial market volatility in the United States. Developments related to COVID-19 that disrupt the economy of the United States and its financial markets may magnify factors that affect the Company's performance. While any disruption is currently expected to be temporary, there is considerable uncertainty around the duration of the COVID-19 pandemic and its financial impact on the Company. The ultimate impact of COVID-19 on the financial performance of the Company cannot be reasonably estimated at this time. {13}------------------------------------------------ #### **SUPPLEMENTARY INFORMATION** # **Schedule I - Computation of Net Capital Under Rule 15c3-1 of the Securities and Exchange Commission** #### **December 31, 2020** #### Line | 1. Total ownership equity from statement of financial condition | \$
1,463,704 | |--------------------------------------------------------------------------|-----------------| | 5. Total capital and allowable subordinated liabilities | 1
,463,704 | | 6. Deduction: Nonallowable assets | - | | 10. Net capital | \$
1,463,704 | | 11. Minimum net capital required (6 2/3% of aggregate indebtedness) | \$
1,075 | | 12. Minimum dollar net capital requirement of reporting broker or dealer | \$
5,000 | | 13. Net capital requirement | \$
5,000 | | 14. Excess net capital | \$
1,458,704 | | 15. Net capital less greater of 10% of line 19 or 120% of line 12 | \$
1,457,704 | | COMPUTATION OF AGGREGATE INDEBTEDNESS | | | 19. Total aggregate indebtedness from statement of financial condition | \$
16,125 | | 20. Percentage of aggregate indebtedness to net capital | 1.10% | There are no material differences in the computation of net capital between this audited report and the unaudited Focus Report (Part IIA - Form X-17A-5). See Report of Independent Registered Public Accounting Firm {14}------------------------------------------------ # **SUPPLEMENTARY INFORMATION - CONTINUED** # **Schedule II - Computation for Determination of the Reserve Requirements Under Rule 15c3-1 of the Securities and Exchange Commission** # **December 31, 2020** The Company does not claim an exemption from SEA Rule 15c3-3, in reliance on Footnote 74 to SEC Release 34-70073. {15}------------------------------------------------ # **SUPPLEMENTARY INFORMATION - CONTINUED** # **Schedule III - Information Relating to the Possession or Control Requirements Under Rule 15c3-3 of the Securities and Exchange Commission** # **December 31, 2020** The Company does not claim an exemption from SEA Rule 15c3-3, in reliance on Footnote 74 to SEC Release 34-70073 and did not maintain possession or control of any customer funds or securities at December 31, 2020. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.