# BRADESCO SECURITIES, INC. X-17A-5 (2021-03-01) — Broker-dealer annual report - Company: BRADESCO SECURITIES, INC. - Form: X-17A-5 - Filed: 2021-03-01 - Period: 2020-12-31 - Accession: 0001121643-21-000004 - CIK: 1121643 - File #: 8-52806 - Material weakness: No - Auditor: KPMG LLP - Auditor location: New York, NY - Contact: Dmitriy Rutitskiy - Phone: 2127514422 - Signed by: Isabela Behar (CCO) Original filing: https://www.sec.gov/Archives/edgar/data/1121643/000112164321000004/BradescoPublic2020.pdf --- {0}------------------------------------------------ UNITED STATES SECURJTLES AND EXCHANGE COMM JSSJON Washington, D.C. 20549 | OMS APPROVAL | |------------------------------| | OMS Number: 3235-0123 | | Expires: October 31, 2023 | | Estimated average burden | | hours oer resoonse ••. 12.00 | | SEC FILE NUMBER | | 8 - 52806 | # **ANNUAL AUDITED REPORT FORM X-17 A-5 PART Ill** # FACING PAGE Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder | 01/01/2020 | AND ENDING | 12/31/2020
~~~~;_-'-~~~~~ | |----------------------------------------------------------------------|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | MMfDDIYYYY | | MM/DD/YYYY | | | | | | | | | | | | OFFICIAL USE ONLY | | ADDRESS OF PRINCrPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | FIRM ID. NO. | | 450 Park Ave , 32nd Fl | | | | | | | | NY | | 10022 | | (State) | | (ZiuCode) | | | | 212-888-9142 | | | | (Area Code- Telephone No.) | | | | | | | | | | KPMG LLP | | | | New York | NY | 10154 | | (City) | (State) | (Zip Code) | | 0 Accountant not resident in United States or any of its possessions | | | | | | | | | | | | | CNo. and Street) | ~~~~~-'----'-~~~~~~
A. REGISTRANT IDENTIFICATION
NAME AND TELEPHONE NUMBER OF PERSO TO CO TACT JN REGARD TO THIS REPORT
B. ACCOUNT ANT IDENTIFICATION
INDEPE DENT PUBLIC ACCOUNT A T whose opinion is contained in this Repon*
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 stalement of f acts and circumstances relied* 011 *as the basis for lhe exemption. See seclion 240.17a-5(e)(2).* > Potential persons who are to respond to the collection of infonnation contained in this form are not required to respond unless the form displays a currently valid OMB control number. SEC 1410 (06-02) {1}------------------------------------------------ #### OATH OR AFFlRMA TION | lsabela Behar | , swear (or affirm) chat, to the | |----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | | | Bradesco Securities, lac. | , as of | | | | | | | | | | | | | | | | | | | | | cco | | | Title | | | | | | | | 0 ( d) Statement of Changes in Financial Condition.
0 (e) Statement ofChruiges in Stockholders' Equity or Partners' or Sole Proprietors' Capital.
0 (f) Statement of Changes in Liabilities Subordinated to Claims of Creditors. | | | | | | | | | | | | | | | | | | | | | | | | | | | | best of my knowledge and belief cbe accompanying financial statement aad supporting schedules pertaining to the furn of
______ , are true and correct I further swear (or affirm) that neither the company
nor any partner, proprietor, principal officer or director has any proprietary interest in any account classified solely as that of
NOT NOTARIZED DUE TO COVID-19
This report** contains (check all applicable boxes):
0 (b) Computation for Determination of Reserve Requirements Pursuant to Rule I 5c3-3.
0 (i) lafonnation Relating to the Possession or control Requirements Under Rule I 5c3-3.
0 (j) A Reconciliation, including appropriate explanation, of the Computation of Net Ca pi Lal Under Rule l5c3-l and the
Computation for Determination of the Reserve Requirements Under Exhibit A of Rule I 5c3-3.
D (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of con
0 (m) A copy of the SrPC Supplemental Report.
D (n) A report describing any material inadequacies found to exist or found to have existed since the date oftbe previous audit. | *\*\*For condilions of confidential treatment of certain portions of tlu's filing. see section 240.17a-5(e)(3).* {2}------------------------------------------------ # **BRADESCO SECURITIES,** INC. (A Wholly Owned Subsidiary of Banco Bradesco S.A.) Statement of Financial Condition December 31, 2020 (With Report of lndependent Registered Public Accounting Firm Thereon) {3}------------------------------------------------ (A Wholly Owned Subsidiary of Banco Bradesco S.A.) ## **Table of Contents** | | Page | |-----------------------------------------------------------|------| | Report of Independent Registered Pub I ic Accounting Firm | | | Financial Statement: | | | Statement of Financial Condition | | | Notes to Statement of Financial Condition | 2-8 | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) KPMG LLP 345 Park Avenue New York. NY 10154-0102 # **Report of Independent Registered Public Accounting Firm** To the Stockholder and the Board of Directors Bradesco Securities, Inc.: ## Opinion on the Financial Statement We have audited the accompanying statement of financial condition of Bradesco Securities, Inc. (the Company) as of December 31 , 2020, and the related notes (collectively, the financial statement). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company as of December 31 , 2020, in conformity with U.S. generally accepted accounting principles. ## 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 2011. New York, New York March 1, 2021 {5}------------------------------------------------ (A Wholly Owned Subsidiary of Banco Bradesco S.A.) ## Statement of Financial Condition December 3 I, 2020 #### Assets | Cash and cash equivalents | | 11 ,972,237 | |--------------------------------------------------------------------------------|----|-----------------------------------| | Receivables from clearing organization | | 16,136,120 | | Securities owned, at fair value | | 10,438,261 | | Equipment and leasehold improvements at cost | | | | (net of accumulated depreciation and amortization of \$1,822, 723) | | 1,278,362 | | Right of use assets | | 12,066,921 | | Receivables from affiliates | | 5,540,787 | | Taxes receivable | | 24,134 | | Deferred tax assets | | 1,114,286 | | Other assets | | 218,733 | | Total assets | | 58,789,841 | | Liabilities and Stockholder's Equity | | | | Liabililit!s: | | | | Accounts payable, accrued expenses, and other liabilities | \$ | 6,709,632 | | Lease liability | | 12,1
16,517 | | Taxes payable | | 140,366 | | Total liabilities | | 18,966,515 | | Stockholder's equity: | | | | Common stock, \$J par value. Authorized, issued and outstanding I J,000 shares | | 11 ,000 | | Additional paid-in capital | | 21 ,989,000 | | Accumulated earnings | | 17,823,326 | | Total stockholder's equity | | 39,823,326 | | Total liabilities and stockholder's equity | \$ | 58, 789 ,84 l
====:::::::'=:== | | | | | See accompanying notes to Statement of Financial Condition. {6}------------------------------------------------ (A Wholly Owned Subsidiary of Banco Bradesco S.A.) Notes to Statement of Financial Condition December 31, 2020 ## (1) Description of Business Bradesco Securities, lnc. (the Company), a wholly owned subsidiary of Banco Bradesco S.A. (the Bank), is an introducing broker-dealer registered with the Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934 and is a nonclearing member of the Financial Industry Regulatory Authority, Inc. (FINRA). During the normal course of business, tbe Bank, together witb affiliated companies, provide and account for a significant portion of the Company's business activ ities. The Company assists in the marketing of initial public offering (lPO) secur.ities on behalf of the Bank and distributes the Bank's research outside of Brazil. The Company also provides services by acting as an intermediary for securities purchases and sales by introducing institutional clients to Bradesco S.A. Corretora de Titulos e Val.ores Mobiliarios (Corretora). The Company's business consists of performing certain execution services for institutional clients in transactions in Lhe U.S. capital markets. Securities transactions are made on a DVP/RVP (delivery versus payment I receipt versus payment) basis. The Company also functions in the capacity of a placement agent in private offerings. The accompanying Statement of Financial Condition has been prepared from the separate records maintained by the Company, and may not necessarily be indicative of the financial condition that would have existed if the Company had operated as an unaffiliated company (see note 4). ## (2) Summary of Significant Accounting Policies # *(a) Basis of Presentation* This Statement of Financial Condition has been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). # *(b) Use of Estimates* The preparation of the Statement of Financial Condition in conformity with GAAP requires the Company's management to make estimates and assumptions. The reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Statement of Financial Condition, during the reporting period, are affected by these estimates, the most significant of which are disclosed in the notes to the Statement of Financial Condition. Estimates, by their nature, are based on available information. Therefore, actual results could materially differ from those estimates. ## (c) Cash and Cash E<1uivalellfs The Company has defined cash equivalents as highly liquid investments held in the ordinary course of business, with original maturities of less than ninety days that include cash and deposits held with afti I iates. ## *(d) Clearing A rrangem ents* The Company clears all of its customer transactions through its correspondent clearing broker on a fully disclosed basis as outlined in the clearing agreement between the Company and its correspondent clearing broker. As of December 31, 2020 the Company had a \$16, l 36, 120 receivable from clearing organization, of which \$100,000 held in deposit as required by the clearing agreement. {7}------------------------------------------------ (A Wholly Owned Subsidiary of Banco Bradesco S.A.) Notes to Statement of Financial Condition December 31, 2020 #### *(e) Securities Transactions* Investment securities owned, representing U.S. dollar denominated Euro Bonds (Euro Bonds) and U.S. Treasury Notes, are carried at fair value. See note 3 for more information. Securities transactions are recorded on a trade date basis. ## *(/) Rigllt-of-11se assets a11d lease livalue | |------------------------------|-----------------|-----------------|---------|------------------------| | Assets | | | | | | Euro bonds | \$ | \$
5,280,594 | \$ | \$
5,280594 | | United States treasw·y notes | 5,157,667 | | | 5,157,667 | | Total assets at fair value | \$
5,157,667 | \$
5,280,594 | \$ | \$
I 0,438,261 | #### (4) Transactions with Related Parties During the normal course of business, the Bank, together with affiliated companies, provides and accounts for a significant portion of the Company's business activities. The Company assists in the marketing of TPO securities on behalf of the Bank and distributes the Bank's research outside Brazil. The Company also provides services by acting as an intermediary for securities purchases and sales by introducing institutional clients to Corretora. As of December 31, 2020, the receivable related to these activities was \$5,540,787 and was included in receivables from affiliates on the statement of financial condition. At December 31, 2020, cash and cash equivalents included in the accompanying Statement of Financial Condition consists of operating accounts witb the Branch and amounted to \$ 1 1,972,23 7. # (5) Equipment and Leasehold lmprovements The Company's equipment and leasehold improvements, at December 31 , 2020, are summarized as follows: | Equipment | \$
1,0
10,040 | |-----------------------------------|---------------------| | Furniture and fixtures | 630,585 | | Leasehold improvements | 1,460,460 | | Less accumulated depreciation and | | | amortization | (1,822,723) | | Total | \$
1,278,362 | {10}------------------------------------------------ (A Wholly Owned Subsidiary of Banco Bradesco S.A.) Notes to Statement of Financial Condition December 31, 2020 ## (6) Employee Benefit **Plan** The Company has a 401 (k) Plan under the Branch whereby employees voluntarily participate in the Plan. Employees may contribute up to 15% of their compensation subject to certain limits based on federal tax laws. The Company makes matching contributions equal to 100% of the first 5% of the employees' contribution, and then management has the ability to make djscretionary contributions above the matching contribution. However, matching contributions cannot exceed defined limits set by the Bank. ## (7) Deferred Taxes The components of the deferred tax assets and I iabil ities at December 3 I, 2020 are summarized as fol lows: | Deferred tax assets: | | |------------------------------------------|------------------| | Accrued bonuses | \$
l,587,342 | | Capital loss | 165,996 | | Leases -
lease liability | 2,596,474 | | Total deferred tax assets | | | before valuation allowance | 4,349,812 | | Less valuation allowance | (165,996) | | Total defeITed tax assets | 4,183,816 | | Deferred tax liability: | | | Unrealized (gains)/losses on investments | (178,965) | | Unrealized (Gain)/Loss -Treasury BiUs | (33,600) | | Depreciation | ,119)
(271 | | Leases -right of use | (2,585,846) | | Total deferred tax liability | (3,069,530) | | Net deferred tax assets | \$
1, 114,286 | In 2020, the company incurred a capital loss of \$774,625 which will expire if unused by 2025. Under ASC 740, lncome Taxes, the Company regularly assesses the need for a valuation allowance against its deferred taxes. In making that assessment, both positive and negative evidence is considered related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more-likely than not that some or all of its deferred tax assets will not be realized. After consideration of all relevant evidence, including history of pre-tax earnings, Management believes that it is more likely than not that a benefit will be reaLized for all but one of its federal, state and local deferred tax assets. Regarding the defeJTed tax asset related to capital loss, the Company does not expect to generate sufficient capital gains in the future in order to utilize the capital loss carry-forward. Because of this, Management has reflected a full valuation allowance of \$ 165,996. {11}------------------------------------------------ (A Wholly Owned Subsidiary of Banco Bradesco S.A.) Notes to Statement of Financial Condition December 31, 2020 # (8) Concentration of Credit Risk Credit risk is the amount of loss the Company would incur if a counterpatty fails to perform its obligation under contractual terms. All of the clearing and depository operations for the Company are perfonned by clearing brokers pursuant to clearing agreements. The clearing brokers, as well as the Company, review the credit standing of the counterparties with which the Company conducts business. The Company's exposure to credit risk associated with the nonperformance by counterparties in fulfilling their obligations pursuant to securities transactions can be directly impacted by volatile securities markets, credit markets and regulatory changes. # (9) Net Capital Requirement The Company is subject to the SEC Uniform Net Capital Rule (SEC Rule 15c3-I), which requires the maintenance of minimum net capital as defined. The Company computes its net capital under the alternative method permitted by the net capital rule, which requires that mjnimum net capital shall not be less than the greater of \$250,000 or 2% of aggregate debit items arising from customer transactions. At December 31, 2020, the Company had net capital of \$14,037 ,464, which was \$ 13, 787,464 in excess of its required net capital of \$250,000. # (10) Commitments and Contingent Liabilities The Company is not involved in any material litigation, nor is any material litigation threatened against the Company. ## (11) Financial Instruments with Off-Balance Sheet Risk Jn the normal course of business, the Company, acting as an agent, executes transactions on behalf of its customers. If the agency transactions do not settle because of failure by either the customer or the counterparty to perfom1, the Company may be required to discharge the obligation of the nonperforming party. ln such circumstances, the Company may sustain a loss if the market value of tbe security is different from the conh·actual amount of the transaction. ## (12) Recent Adopted Accounting Pronouncements On January I, 2020, the Company adopted ASU 20 16- 13 Financial Instruments - Credit Losses (Topic 326), which replaced the incurred loss model with the current expected credit loss (CECL) model. The CECL impairment model utilizes historical information and forecasts of future economic conditions to determine expected credit losses over the contractual life of a given instrument. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including accounts receivable. The Company evaluated this guidance and determined that this standard does not have an impact on its financial statements. {12}------------------------------------------------ (A Wholly Owned Subsidiary of Banco Bradesco S.A.) Notes to Statement of Financial Condition December 31, 2020 ## (13) Subsequent E vents The Company has evaluated whether events or transactions have occurred after December 3 I, 2020 that would require recognition or disclosure in this statement of financial condition through March 1, 2021, which is the issuance date of this statement of financial condition. There were no subsequent events which would require adj ustment to or disclosure within the statement of financial condition. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.