# ICICI SECURITIES INC. X-17A-5 (2020-05-12) — Broker-dealer annual report - Company: ICICI SECURITIES INC. - Form: X-17A-5 - Filed: 2020-05-12 - Period: 2020-03-31 - Accession: 0001120007-20-000004 - CIK: 1120007 - File #: 8-52746 - Material weakness: No - Auditor: WithumSmith & Brown, PC - Auditor location: Whippany, NJ - Contact: Fredric Obsbaum - Phone: 212-897-1694 - Signed by: Bishen Pertab (President) Original filing: https://www.sec.gov/Archives/edgar/data/1120007/000112000720000004/19icses.pdf --- {0}------------------------------------------------ Statement of Financial Condition March 31, 2020 {1}------------------------------------------------ UNITED ST A TES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 0MB APPROVAL 0MB Number: 3235-0123 Expires: August 31, 2020 Estimated average burden hours per response ... 12.00 8-52746 I SEC FILE NUMBER I | ANNUAL AUDITED REPORT | |-----------------------| | FORMX-17A-5 | | PARTID | #### **FACING PAGE** **Information Required of Brokers and Dealers P11rsuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-S Thereunder** | REPORT FOR THE PERIOD BEGINN1NG | ___
---'0"'"'4"""'/0'-"l'-'/l"'-9 | AND ENDING | 03/31/20 | |--------------------------------------------------------------------------|--------------------------------------------------------|---------------|-------------------------------| | | MM/DD/YY | | MM/DD/YY | | | A. REGISTRANT IDENTIFICATION | | | | NAME OF BROKER -
DEALER: | | | | | ICICI Securities Inc. | | | OFFICIAL USE ONLY | | | | | FIRM JD. NO. | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | | | 1120 Avenue of the Americas, 4th Floor | | | | | | (No. and Street) | | | | New York | NY | | 10036 | | (City) | (State) | | (Zip Code) | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | | | | | Fredric Obsbaum | | | {212~897-1694 | | | | | (Area Co e-
Telephone No.) | | | | | | | | B. ACCOUNT ANT IDENTIFICATION | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained io this Report* | | | | | WithumSmith+Brown PC | | | | | | (Name - if individual, state last, first, middle name) | | | | 200 Jefferson Park
(Address) | Whippany
(City) | NJ
(State) | 07981
(Zip Code) | | | | | | | CHECK ONE: | | | | | [!] Certified Public Accountant | | | | | D
Public Accountant | | | | | D
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}.SEC* 1410 (3-91) {2}------------------------------------------------ **(a wholly owned subsidiary of ICICI Securities Holdings, Inc.)** # **TABLE OF CONTENTS** ### **This report\*\* contains (check all applicable boxes):** - [x] Independent Auditors' Report. - [x] (a) Facing Page. - [x] (b) Statement of Financial Condition. - [ x] Footnotes. - [] (c) Statement of Operations. - [] (d) Statement of Changes in Stockholder's Equity. - [ ] ( e) Statement of Cash Flows. - [ ] (f) Statement of Changes in Liabilities Subordinated to Claims of General Creditors (not applicable). - [ ] (g) Computation of Net Capital for Brokers and Dealers Pursuant to Rule 15c3-l under the Securities Exchange Act of 1934. - [] (h) Computation for Determination of Reserve Requirements for Brokers and Dealers Pursuant to Rule 15c3-3 under the Securities Exchange Act of 1934. - [ ] (i) Information Relating to the Possession or Control Requirements for Brokers and Dealers Pursuant to Rule 15c3-3 under the Securities Exchange Act of l 934. - [] G) 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 (not applicable). - [] (k) A Reconciliation Between the Audited and Unaudited Statements of Financial Condition With Respect to Methods of Consolidation (not applicable). - [x] (1) An Affirmation. - [ ] (m) 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). - [ l (n) Independent Auditors' Report Regarding Rule 15c3-3 exemption. - [] (o) Rule 15c3-3 Exemption Report. - \* \* *For conditions of confidential treatment of certain portions of this filing, see section 240.17 a-5 (e)(3).* {3}------------------------------------------------ #### **AFFIRMATION** I. Bishen PerLab. affirm chat. to the best of my knowledge and belief. the accompanying statement of financial condition pcnaining to ICICI Securities Inc. for the year ended March 31. 2020. 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 ofa customer. c::: - Signature Subscribed ana Sworn to before me l a notary public, in and for county of f(tu:futd and state ct Cnnnecticut, this ~day of M~ \_ 20..ao. President Title *-* ~ *(1,* Ir *J, Q\_* ~ =-'vf\_ ~ - - .· ....... *.II'/* **Domtni\$\$iOn Expir6s** October 31, 2024 {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) # **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Management, ICICI Securities. Inc.: #### **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of ICICI Securities, Inc. (the "Company"), as of March 31, 2020, 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 of March 31, 2020, 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 this 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. We have served as the Company's auditor since 2015. April 23, 2020 {5}------------------------------------------------ **(a wholly owned subsidiary of ICICI Securities Holdings, Inc.)** # **Statement of Financial Condition March 31, 2020** | Assets | | |-----------------------------------------------------------------|---------------------------| | Cash | \$
1,872,387 | | Certificates of deposit | 2,063,703 | | Fixed assets, net of accumulated depreciation of \$14,159 | 3,676 | | Due from affiliated companies | 296,780 | | Deposits | 91,732 | | Prepaid expenses | 22,010 | | Deferred tax asset | 242,213 | | Other assets | 20,244 | | Total assets | \$
42
612,745 | | Liabilities and Stockholder's Equity | | | Accounts payable and other accrued liabilities | \$
567,186 | | Income taxes payable | 6,428 | | Total liabilities | 573,614 | | Stockholder's equity: | | | Common stock, no par value. Authorized 1,500 shares; issued and | | | outstanding 1,298 shares | 12,980,000
(8,940,869) | | Accumulated deficit | | | Total stockholder's equity | 4,039,131 | | Total liabilities and stockholder's equity | \$
4,6122
745 | The accompanying notes are an integral part of this statement of financial condition. {6}------------------------------------------------ **(a wholly owned subsidiary of ICICI Securities Holdings, Inc.)** # **Notes to Statement of Financial Condition March 31, 2020** ### **1. Organization** ICICI Securities Inc. (the Company) is a wholly owned subsidiary ofICICJ Securities Holdings, Inc. (Parent), which in turn is a wholly owned subsidiary of ICICI Securities Ltd, an Indian financial services company listed on the major Indian stock exchanges. The Company provides brokerage and corporate :finance services to institutional investors in the United States, Canada and Singapore, investing in securities of companies principally headquartered in India. In addition, it may provide brokerage services to Indian corporations wishing to invest in the United States and underwriting services for issuers wishing to offer securities to the marketplace. The Company is registered with the Securities and Exchange Commission (SEC) as a broker-dealer and is regulated by the Financial Industry Regulatory Authority (FINRA) and the Monetary Authority of Singapore (MAS). The Company is also approved to operate in Canada under the International Dealer Exemption in the provinces of British Columbia, Ontario and Quebec. The Company's customers transact their business on a delivery versus payment basis. The settlement of the customer securities transactions is facilitated by an affiliate in India for securities traded in the Indian stock markets. Accordingly, the Company operates under the exemptive provisions of Rule 15c3-3(k)(2)(i) of the Securities Exchange Act of 1934, and it is also subject to Rule 15c3-1, the Uniform Net Capital Rule. #### **2. Significant Accounting Policies** ### **Cash** The Company maintains cash at banking institutions in various countries. Cash on deposit in U.S. financial institutions may at times exceed federal insurance limits. The Company also maintains cash deposits in a Singapore financial institution that is subject to the limits of the deposit insurance scheme administered by the Monetary Authority of Singapore. ### **Fixed Assets** Fixed assets are carried at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. #### **Income Taxes** The Company is a wholly owned subsidiary of its Parent and, therefore, all of its income and losses are included in the consolidated tax return filed by its Parent. Tax liabilities are calculated on a separate return basis. Deferred tax assets and liabilities are recognized subject to management's judgement that realization is more likely than not. {7}------------------------------------------------ **(a wholly owned subsidiary ofICICI Securities Holdings, Inc.)** # **Notes to Statement of Financial Condition March 31, 2020** #### *2.* **Significant Accounting Policies (continued)** #### **Foreign Currency** Asset and liability accounts are translated at the exchange rate in effect at year-end, and income accounts are translated at the average rates of exchange prevaiUng during the year for revenues and month-end exchange rate for expenses. The U.S. dollar is considered the functional currency for the Company's foreign branch and foreign currency translation gains and losses are recorded in the statement of operations. #### **Estimates** These financial statements are prepared in conformity with accounting principles generally accepted in the United States of America ("US GAAP") which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. #### **3. Fair Value Measurements** U.S. GAAP defines fair value, establishes a framework for measuring fair value, and establishes a fair value hierarchy that prioritizes the inputs 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 the 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. Valuation techniques that are consistent with the market, income or cost approach are used to measure fair value. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels: Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 - Significant other observable inputs, which may include, but are not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market corroborated inputs. Level 3 - Unobservable inputs for the asset or liability that rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability. The unobservable inputs are developed based on the best information available in the circumstances and may include the Company's own data. The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including,for example, the type of security, the liquidity of markets, and other {8}------------------------------------------------ **(a wholly owned subsidiary of ICICI Securities Holdings, Inc.)** ### **Notes to Statement of Financial Condition March 31, 2020** #### **3. Fair Value Measurements (continued)** characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair vaJue requires more judgement. Accordingly, the degree of judgement exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fairvalue measurement in ils entirety. The following table presents the Company's fair value hierarchy for the investments measured at fair value as of March 31, 2020: | Securities owned, at fair value | Level 1 | | Level2 | Level 3 | | Total | |---------------------------------|---------|---|-----------------|---------|---|-----------------| | CD -
maturity date 12/18/20 | \$ | - | \$
1,039,273 | \$ | - | \$
1,039,273 | | CD -
maturity date 06/05/21 | | | 1,024,430 | | | 1,024,430 | | Total | \$ | - | \$
2,063,703 | \$ | - | \$
2,063,703 | #### **4. Related Party Transactions** The Company's customer securities transactions are facilitated by an affiliate in India. Commissions earned are collected and retained by the affiliate. The affiliate compensates the Company by paying its expenses plus a markup of 8%. The Company also provided management services for another affiliated company. The total amount due from the affiliated companies was \$296,780 at March 31, 2020. #### **5. Net Capital Requirement** The Company is subject to the Securities and Exchange Commission Uniform Net Capital (SEC Rule 15c3-l) ("the Rule") under the Securities Exchange Act of 1934. The Company has elected to use the alternative method permitted by the Rule, which requires that the Company maintain minimum net capital, as defined, shall not be less than \$250,000. At March 31, 2020, the Company had net capital of approximately \$1,150,000 which exceeded requirements by approximately \$900,000. #### **6. Off-Balance-Sheet Risk, Concentration Risk and Credit Risk** The Company's policy is to continuously monitor its exposme to market and counterparty risk using a variety of financial, position and credit exposme reporting and control procedures. In addition, the Company has a policy of reviewing the credit standing of each customer and/or other counterparty with which it conducts business. A majority of the Company's operations are conducted through an affiliated company located .in India. The Company's performance can be significantly influenced by economic factors and risks {9}------------------------------------------------ **(a wholly owned subsidiary ofICICI Securities Holdings, Inc.)** # **Notes to Statement of Financial Condition March 31, 2020** ### **6. Off-Balance-Sheet Risk, Concentration Risk and Credit Risk (continued)** inherent in conducting business in foreign countries, including government regulations, currency restrictions and other factors that may significantly affect management's estimates and the Company's performance. Substantially all of the Company's cash is held in accounts at major financial institutions. Management does not expect any losses to result with respect to any of these concentrations. A significant portion of the Company's assets are represented by receivables from its affiliates and a foreign bank account. The Company is dependent on its affiliates for 100% of its revenue. #### **7. Income Taxes** The deferred tax asset of \$24 2,2 I 3 was computed using the effective tax rate of 21 %. The components of the net deferred tax assets are as follows: | Deferred tax assets: | | |-----------------------------------------|---------------| | Net operating loss federal carryforward | \$ 1,671,084 | | Fixed assets | (581) | | Gross deferred tax | 1,670,503 | | Less: valuation allowance | (1,428,290) | | Deferred tax assets, net | \$
242,213 | At March 31, 2020, the Company's deferred tax assets were primarily related to federal net operating loss carryovers that primarily will start to expire in 2028. The value of the deferred tax asset was calculated based on estimated future earnings of the Company over the next five years. '- The decrease in the valuation allowance during the year was \$1,220,140 and primarily represents the write off of state net operating losses deemed unrealizable. The Company does not have any liabilities for uncertain tax positions or any known unrecognized tax benefits at March 31, 2020. The Company recognizes accrued interest and penalties related to uncertain tax positions in income tax expense within the statement of operations; however, there are none for the year ended March 31 , 2020. At this time, the Company does not expect any material change in the unrecognized tax benefits amount over the next twelve months. ### **8. Certificate of Deposit** At March 31, 2020, the Company held ce1tificates of deposit that have two-year terms and are valued at cost plus accrued interest. The CD's are non-negotiable, not convertible into cash and non-redeemable prior to maturity. {10}------------------------------------------------ **(a wholly owned subsidiary of ICICI Securities Holdings, Inc.)** # **Notes to Statement of Financial Condition March 31 , 2020** ### **9. Commitments and Contingencies** The Company rents office space under operating leases that expire January 31, 2021 and August 31, 2020, respectively. Future minimum payments through the end of the leases will be \$70, l 08. The Company has a long-term incentive bonus plan in place that is partly dependent on the overall economic performance of the Company. To be eligible to receive payment, an employee must be employed by the Company past the payment date. Future payments are projected to be as follows: | Due Date | Amount | |----------------|---------------| | April 30, 2020 | \$
336,112 | | April 30, 2021 | 240,129 | | April 30, 2022 | 111,239 | | | \$
687,480 | ### **10. New Accounting Pronouncements** In June 2016, the FASB issued ASU 2016-13, Accounting for Financial Instruments - Credit Losses (Topic 326). ASU 2016- 13 requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Currently, GAAP requires an "incurred loss" methodology that delays recognition until it is probable a loss has been incurred. Under the new standard, the allowance for credit losses must be deducted from the amortized cost of the financial asset to present the net amount expected to be collected. The income statement will reflect the measurement of credit losses for newly recognized financial assets as well as the expected increases or decreases of expected 1,;redit losses that have taken place during the period. This provision of the guidance requires a modified retrospective transition method with a cumulativeeffect adjustment in retained earnings upon adoption. This guidance is effective for the Company on April 1, 2020, and the Company adopted this guidance on that date. The impact of this guidance is not expected to be material to the Company. # **11. COVID-19** During the 2020 calendar year, the World Health Organization has declared COYID-19 to constitute a "Public Health Emergency of International Concern". This pandemic bas disrupted economic markets and the economic impact, duration and spread of the COVlD-19 virus is uncertain at this time. The financial performance of the Company is subject to future developments related to the COVID-19 outbreak and possible government advisories and restrictions placed on the financial markets and business activities. The impact on financial markets and the overall economy, all of which are highly uncertain, cannot be predicted. ff the financial markets and/or the overall economy are impacted for an extended period the Company's results may be materially affected. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.