# TRADIER BROKERAGE, INC. X-17A-5 (2018-03-15) — Broker-dealer annual report - Company: TRADIER BROKERAGE, INC. - Form: X-17A-5 - Filed: 2018-03-15 - Period: 2017-12-31 - Accession: 0001127272-18-000001 - CIK: 1127272 - File #: 8-52972 - Material weakness: No - Auditor: PKF O'Connor Davies, LLP - Auditor location: New York, NY - Contact: Lee J. MacLeod - Phone: 716-799-5700 - Website: pkfod.com - Signed by: Peter Laptewicz (President) Original filing: https://www.sec.gov/Archives/edgar/data/1127272/000112727218000001/TBIAUDIT17SEC852972PUBLIC.pdf --- {0}------------------------------------------------ # TRADIER BROKERAGE, INC. (a QSSS Subsidiary of Tradier, Inc.) ANNUAL REPORT DECEMBER 31, 2017 {1}------------------------------------------------ UNITE0 ST ATES SECURITIESANDEXCHANGECOMMJSSION Washington, D.C. 20549 0MB APPROVAL 0MB Number; 3235-0123 Expires: August 31, 2020 Estimated average burden hours er res onse ....•. 12.00 ## **ANNUAL AUDITED REPORT FORM X-17 A-5 PART Ill** | SEC ALE NUMBER | |----------------| | B- 52972 | **FACING PAGE** **Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder** | REPORT FOR THE PERIOD BEGINNING | -----------
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FIRM 1.0. NO. | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | | | | | 11016 RUSHMORE DR., SUITE 350 | | | | | | (No. and Street) | | | | | CHARLOTTE | NC | | 28277 | | | (City) | (Stale} | | (Zip Code} | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | | | | | | | | | (Arca Code - Telephone
umber) | | | | B. ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | | | PKF O'Connor Davies, LLP | | | | | | (Name - if mdll'ldual, state last. first. middle ,iame) | | | | | 665 Fifth Avenue | New York | NY | 10022 | | | (Address) | (City) | (State) | (Zip Code) | | | CHECK ONE: | | | | | | I
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Certified Public Accountant | | | | | | | | | | | | | | | | | | B Public Accountant
Accountant not resident in United States or any of its possessions. | | | | | | [ | FOR OFFICIAL USE ONLY | | | | | | | | | | | | | | | | | | | | | | *\*(;/aims jor exemption from the requirement thaJ 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. /7a-5(e)(2)* > **Potential persons who are to respond to the collection of information contained in this form are not required to respond** unless **the form displays a currently valid 0MB control** number. {2}------------------------------------------------ #### **OATH OR AFFIRMATION** | I, Peter Laptewic:z | | , swear (or affirm) that, to the best ot | | |-------------------------------------------------------------|--|----------------------------------------------------------------------------------------------------------------------------|--| | TRAOIER BROKERAGE, INC. | | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the ftrm of
, as | | | of Deoember 31 | | arc true and comx:L I further swear (or affirm) that | | | clas.nfied solely as that of a customer, except as follows: | | neither the company nor any partner, proprietor, principal officer or director has any proprietary interest in any account | | | | President | |----------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------| | | ,,,,,, ,,,,,.
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111,,,,,\: | | (e) Statemc::nt of Changes in Stockboldcn• Equity or ParUlers' or Sole Proprietors· Capital. | | | (t) Statement of Changes in Liabilities Subordinated to Claims of Creditors. | | | (g) Compotation of Net Capital. | | | {b) Computation for Detcnnination ofR~e Requirements Pursuant to Rule 15c3-3. | | | (i) f.nformation Relating to the Possession or Control Requirements Under Rule 1 Sc3-3. | | | | (j) A Reconciliation, including appropriate explanation of the Computation ofNet Capital Under Rule l5c3-I and the | | Computallon for Determination of the Reserve Requirements Under Exhibit A of Rule l Sc3-3. | | | | 0 (k) A Reconciliation between the audited and waudited Statements of Fmancial Condition with respect 10 methods of | | consolidation. | | | | | | § 0) An Oath or Afrmnation.
(m) A copy of the SIPC Supplemental Report. | | | | (n) A report describing any material inadequacies found to exi!lt or found to have eiostcd since the date of the prevtous audiL | | | | | For ccndition.r of confidential treallMnt of certain portioM of lhJ1 filing, ue | | {3}------------------------------------------------ ## **TRADIER BROKERAGE, INC. (a QSSS Subsidiary of Tradier, Inc.) Table of Contents** FOR THE YEAR ENDED DECEMBER 31, 2017 | Report of Independent Registered Public Accounting Firm | | |---------------------------------------------------------|-----| | Financial Statement: | | | Statement of Financial Condition | 2 | | Notes to Financial Statement | 3·8 | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING **FIRM** To **the Stockholder of Tradier Brokerage, Inc.** #### **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of Tradier Brokerage, Inc. (the "Company») as of December 31, 2017 and the related notes to the statement of financial condition (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 December 31 , 2017 in conformity with accounting principles generally accepted in the United States of America. #### Basis for Opinion The financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's 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 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 financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. #### **Emphasis of Matter** As more fully described in Note 1 and Note 7 to the financial statement, the Company has material transactions with related parties. Because of these relationships, it is possible that the terms of these transactions are not the same as those that would result from transactions between unrelated parties. We have served as the Company's auditor since 2013. March 14, 2018 PKF O'CONNOR DAVIES, LLP 665 Fifth Avenue, New York, NY 10022 I Tel: 212.867.8000 or 212.2862600 I Fax: 212.286.4080 I www.pkfod.com PKF O'Connor Davies, LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibdity or liability for the actions Of inactions on the pan of any other individual member finn or finns {5}------------------------------------------------ # **TRADIER BROKERAGE, INC.** ### (a QSSS Subsidiary of Tradier, Inc.) STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2017 ### ASSETS | Cash and cash equivalents | 10,277 | |--------------------------------------------|---------------| | Cleru·ing deposits | 250,272 | | Accounts Receivable · Other | 31,471 | | Receivable from clearing broker | 75,501 | | et
Fixed Assets, n | 10,065 | | ses
P1·epaid expen | 36.293 | | TOTAL ASSETS | \$
413.879 | | LIABILITIES AND STOCKHOLDER'S EQUITY | | | Accounts payable and accrued expenses | 30.315 | | Total Liabilities | \$
30,315 | | Stockholder's Equity | 383,564 | | TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY | \$ | See accompanying notes. {6}------------------------------------------------ ### Note 1 - Organization and Nature of Operations: Tradier Brokerage, Inc. ("th e Company") is an independent wholly owned subsidiary of Tradier, Inc. ("TI") and was pm·chased under the terms of a stock purchase agreement on April 1, 2013 to operate the broke1· dealer arm and business model of Tradier, Inc. The Company is a broker-dealer registered with the Securities and Exchange Commission ("SEC") and a member of the Financial Industry Regulatory Authority ("FINRA") and was incorporated in Illinois on July 1, 1993. The Company is a discount online service brokerage firm specializing in featuring Application Programming Interfaces ("APis") which serve as a intermediary between online traders a nd their customized or purchased integrated ti·ading platforms. The Company has agi·eements with other broker-dealers ("clearing brokers") to clear transactions and carry customers' accounts on a fully·disclosed basis and perform record keeping functions and, consequently, ope1·ates under exemptive provisions of Rule 15c3-3(k)(2)(ii) under the Securities Exchange Act of 1934 ("SEA"). The accompanying financial statement has been prepared from the separate records mai11tained by the Company and d-ue to certain transactions and agreements with affiliated entities, s uch financial statement may not necessarily be indicative of the financial condition that would h ave existed or the results that would have been obtained from operations had th e Company operated as an unaffiliated entity. ### Note 2 - Summary of Significant Accounting Policies: Significant accounting policies followed by the Company m the preparation of the accompanying financial statement is summarized below: ### Revenue Recognition Commissions and related clearing expenses are recorded on a trade date basis as secm·ities transactions occur. In payment for order flow ("PFOF") transactions, the Company 1·eceives a small payment, usually pennies per share or contract, as compensation for directing the order to the clearing fu·ms managed route. PFOF is recorded monthly based on statements from the clearing broke1·. In platfo1·m fees, the Company receives a payment from third parties for use of company's brokerage services. Platform fees are recorded based on monthly invoices. {7}------------------------------------------------ # **TRADIER BROKERAGE, INC.** ### (a QSSS Subsidiary of Tradier, Inc.) NOTES TO FINANCIAL STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017 ## Note 2- Summary of Significant Accounting Policies (continued): ### Revenue Recognition (continued) In subscription fees, the Company receives a payment from customer for use of one of TBis subscription services. Subscription fees ai·e recorded based on settlement statement or monthly invoice. Other income includes reselling software to customers. The costs and revenue are recorded for the month for which the revenue and associated expenses are incurred. Tradier Brokerage earns a portion of the interest on customer balances carried by its clearing broker net of the clearing broker's allocated cost of borrowed funds. ### Receivables from Clearing Organization Pursuant to an agreement with the Company's cleai·ing organization, the clearing organization remits a commission payment to the Company dU1·ing the month subsequent to the trade-date. The Company has one month of outstanding commission payments due from the clearing organization. The Company did not incur any bad debts from the clearing organization during 2017. ### **Cash and Cash Equivalents** Cash consists of checking accounts and savings accounts. FOl' purposes of the financial statement, the Company considers all highly liquid investments with mat,uities of 90 days or less at ptuchase to be cash equivalents. ### Income Taxes The Company is a 100% owned subsidiary and files under their parent Tradier, Inc. as a Qualified Subchapter S Subsidiary ("QSSS"). Under Federal law, upon election of the parent federal S·Corporation, the two corporations are treated as a single entity and the assets, liabilities, income, deductions, and credits of the wholly owned subsidiary are treated as if they belong to the parent corporation. Under the QSSS tax election, the Company's shareholders report the:u.· pro·rated portion of the Company's taxable income or loss on the:u.· personal income tax returns and ai·e responsible for the applicable income tax at their level. As a result, the Company is exempL from mosL federal income Laxes. The Company holds state registrations in Delaware, Illinois, and N01'th Carolina whe1·e they currently have nexus. The State of Illinois imposes a 1.5% replacement tax on the taxable income of the Company sepai·ately, and the Company directly is responsible for payment of this state tax. {8}------------------------------------------------ # **TRADIER BROKERAGE, INC.** (a QSSS Subsidiary of Tradier, Inc.) NOTES TO FINANCIAL STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017 ## Note 2- Summary of Significant Accounting Policies (continued): ### Income Truces (continued) The Company believes that it has no uncertain tax provisions and accordingly, no liability has been recorded. The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law, and new authoritative rulings. The 2014, 2015, and 2016 tax years of the Company remain subject to examination by U.S. federal and certain state and local tax authorities. ### Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. At times, cash balances may exceed federally insured limits. ### Use of Estimates The preparation of the financial statement in conformity with generally accepted accounting principles recognized in the United States ("US GAAP") requires management to make estimates and assumptions that affect certain reported amounts a nd disclosui·es, Actual results may differ froro those estimates, and the differences could be material. ### Note 3 - Cash Segregated under Federal and Other Regulations: The Company is not required to maintain a special r eserve bank account for the protection of customers as required by SEA Rule 15c3·3 under Section (k)(2)(ii) of the rule. ### Note 4 - Fixed Assets: Fixed assets are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. ### Note 5 - Clearing Deposit: In accordance with the Company's clearing contract, the company is required to keep a deposit of \$250,000 in a clearing deposit account with Apex Clearing, Inc. ### Note 6 - Advertising: The Company does not advel'tise or incm· any such advertising expenditm·es di1·ectly. All advertising expenses are incuiTed by Tradier, Inc. See Note 7 (Related Party Transactions) for more details. {9}------------------------------------------------ ### Note 7 - Related Party Transactions: The Company operates under two agreements with its parent co1·poration TI: The first agreement known as an Outsource Hosted Platform, Services, a Support Agreement ("Service Agreement"), was executed on April 30, 2013 and has been updated periodically. The service agreement sets forth the specific terms and conditions under which TI shall supply certain services to the Company. The agTeement is effective (valid) and services held under the agreement include but are not limited to: Hosted platform and support and maintenance. The agreement calls for monthly payments due to TI of \$20,000. As required, the Company may contract additional services from TI as specified in a statement of work ("SOW'). In 2017, there were two SOWs for a total of \$130,000. During the year ended December 31, 2017, the Company paid TI a total of \$370,000. For a listing of future minimum commitments under this agreement, see Note 8 (Commitments). If the Company does not provide a 100 day notice before the completion of a 1 year term, the Service Agreement will automatically be renewed for an additional 1 yeru· term. The second agreement known as an Expense Sharing Agreement ("Expense Agreement") was execl.lted on October 14, 2013 and has been updated periodically. The expense agreement identifies expenses incurred by the Company which are paid by Tl. The agreement identifies indirect shared expenses such as: office space, telecommunication and internet services, pay1·oll processing fees, and bond (insurance) coveTage costs to be shared at 40% by the Company, and identifies direct costs such as employee compensation which are to be shaTed 5% by the Company, payable in monthly payments to TI. Total payments to the parent for costs related to the expense sharing agreement amount to \$440,993 for the year ended December 31, 2017. These expenses have been reflected on the Statement of Operations in the appropriate categories. The agreement is month-to-month. ### Note 8 - Commitments: During 2015, the Company entered into a clearing agreement with Apex Clearing Corporation. Pursuant to the clearing agreement, the Company is to pay minimum monthly clearing charges as follows: \$10,000 per month, a percentage of Assets Under Management as defined, or Customer transactions per month priced at \$0.01 per share. The Related Party commitments correspond to the Expense Agreement and Expense Agreement as detailed in Note 7 - Related Party Transactions. {10}------------------------------------------------ # Note 8- Commitments (continued): Minimum future payments due for all commitments of the Company are as follows: | | Non· Related
Party | Related
Party | Totals | |--------|-----------------------|--------------------|----------------| | 2018 | 120.000 | 723,332 | 843,332 | | Totals | 120,000 \$
\$ | 723,332 :IS,\$ ==' | 8"-'4=3=,3=3=2 | ### Note 9 - Net Capital Requirement: The Company is subject to the net capital r equiremen ts of the SEA Rule 15c3·1, and as such, is required to maintain a net capital of \$5,000. Net capital of the Company as of December 31, 2017 was \$305,735, see Computation of Net Capital for more details. ### Note IO-Additional Paid·in·Capital: Dm.·ing t he year, the Company 1·eceived capital infusions from TI and from the former shareholder for operational purposes in the amount of \$10,000. ### Note II-Common **Stock:** Effective April 9, 2013 100% of the common stock of Robbins Securities, Inc. ("Robbins") was purchased by Tl. At the time of the acquisition, common stock consisted of 1,000 shares, no par value stock, with 1,000,000 shares authorized, and 1,000 shares outstanding. The stock was pU1·chased under the terms of a stock purchase agreement ("Stock Agreement"), where 100% of the issued and authorized shares were purchased by TI for a sale price of \$95,000. ### Note 12 - Indemnifications: In normal course of its business, the Company indemnifies and guarantees certain service providers, such as cleai·ing and custody agents, trustees and administrators, against specified potential losses in connections with their acting as an agent of, or providing services to, t he Company or its affiliates. The Company also indemnifies some clients against potential losses incurred in the event specified third·party service provide1·s, including sub-custodians and third·pa1'ty b1·okers, improperly execute tl'ansactions. The maximum potential amount {11}------------------------------------------------ ### Note 12-Indemnifications (continued): of future payments that the Company could be requfred to make under these indemnifications cannot be estimated. However, the Company believes that it is unlikely it will have to make material payments under these arrangements and has not recorded any contingent liability in the financial statement for these indemnifications. The Company provides representations and warranties to counterparties in connection with a viuiety of commercial transactions and occasionally indemnifies them against potential losses caused by the breach of those representations and wananties. The Company may a lso provide standard indemnifications to some counterparties to protect them in the event additional taxes are owed or payments are withheld, due eithe1· to a change in or adverse application of certain tax laws. These indemnifications generally are standard contractual terms and are entered into in the normal course of business. The maximum potential amount of future payments that the Company could be requir ed to make under these indemnifications cannot be estimated. However, the Company believes that it is unlikely it will have to make material payments under these arrangements and has not 1·ecorded any contingent liability in the financial statement for these indemnifications. #### **Note 13** - **Subsequent Events:** Management has evaluated subsequent events as of March 14, 2018, which is the date the financial statement was issued, and has noted no items requiring disclosure. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.