# GALLAGHER SECURITIES, INC X-17A-5 (2025-03-28) — Broker-dealer annual report - Company: GALLAGHER SECURITIES, INC - Form: X-17A-5 - Filed: 2025-03-28 - Period: 2024-12-31 - Accession: 0001146172-25-000006 - CIK: 1146172 - File #: 8-53563 - Type: Broker-dealer - Material weakness: No - Auditor: Ernst & Young - Auditor location: Chicago,, IL - Contact: ryan Fitzpatrick - Phone: 09174998859 - Email: ryan\_fitzpatrick@ajgre.com - Website: ajgre.com - Signed by: ryan fitzpatrick (coo) Original filing: https://www.sec.gov/Archives/edgar/data/1146172/000114617225000006/gsisofc2024.pdf --- {0}------------------------------------------------ # Gallagher Securities, Inc. (A Wholly Owned Subsidiary of Arthur J. Gallagher & Co.) (SEC I.D. No. 53563) Statement of Financial Condition as of December 31, 2024, and Report of Independent Registered Public Accounting Firm \*\*\*\*\*\*\* Filed pursuant to Rule 17a-5(e)(3) under the Securities Exchange Act of 1934 as a Public Document {1}------------------------------------------------ | SECURITIES
AND
EXCHANGE
COMMISSION
Washington, D.C. 20549
ANNUAL AUDITED REPORT
FORM X‐17A‐5
PART
III
FACING PAGE | Estimated average burden | APPROVAL | | | | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------|--------------------------------------------|-------|--|--| | | | | OMB | | | | | | OMB Number: 3235‐0123 | | | | | | | Expires: November 30, 2026 | | | | | | hours per response… | | 12.00 | | | | | | SEC FILE NUMBER | | | | | | | | | | | | | | 8‐53563 | | | | | | | | | | | | Information Required Pursuant to Rules 17a‐5, 17a‐12, and 18a‐7 under the Securities Exchange Act of 1934 | | | | | | | REPORT
FOR
THE
PERIOD
BEGINNING
01/01/2024
AND
ENDING | 12/31/2024 | | | | | | MM/DD/YY | MM/DD/YY | | | | | | A.
REGISTRANT
IDENTIFICATION | | | | | | | FIRM: Gallagher Securities, Inc.
NAME
OF | | | | | | | ☒Broker‐dealer
☐Security‐based
☐Major
swap
dealer
security‐based
☐
Check here if respondent is also an OTC derivatives dealer
ADDRESS
OF
PRINCIPAL
PLACE
OF
BUSINESS:
(Do
not
use
P.O.
Box
No.)
28th Floor
300
Madison
Avenue, | swap
participant | | | | | | (No. and Street) | | | | | | | New
York
NY | | 10017 | | | | | (City)
(State) | | (Zip Code) | | | | | PERSON
TO
CONTACT
WITH
REGARD
TO
THIS
FILING | | | | | | | Mr.
Ryan
Fitzpatrick,
Chief
Compliance
Officer 212‐309‐3494 Ryan_Fitzpatrick@ajgre.com | | | | | | | (Name)
(Area Code – Telephone Number) | (Email Address) | | | | | | B.
ACCOUNTANT
IDENTIFICATION | | | | | | | INDEPENDENT
PUBLIC
ACCOUNTANT
whose
opinion
is
contained
in
this
Report* | | | | | | | Ernst
&
Young
LLP | | | | | | | (Name – if individual, state last, first, middle name) | | | | | | | 155
North
Wacker
Drive
Chicago | IL | 60606 | | | | | (Address)
(City) | (State) | (Zip Code) | | | | | 10/20/2003 | | 42 | | | | | (Date of Registration with PCAOB)(if applicable) | | (PCAOB Registration Number, if applicable) | | | | | FOR OFFICIAL USE ONLY | | | | | | | | | | | | | | | | | | | | | * Claims for exemption from the requirement that the annual reports be covered by the reports of an independent public accountant must be
supported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 CFR 240.17a‐5(e)(1)(ii), if applicable. | | | | | | **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 OMB control number.** {2}------------------------------------------------ #### **CONFIDENTIAL** #### DA'U I011 ""IIIMATlON I, " ..., ... f; ~ ·~ ...-~ ,,...,, l10 .... DflA QI r.'Wy .. o "' led •nrl bclhrf, :ho r tll'PQR Pfl'UI .,,.. ,o ~ I o,; OI Ci.Ii, ~ UR~ IM., '"al DilrttfTUK!f 3,, .?O;t-4 1, l r l.lO and CIOff1HS. I *ii.#* al!rm • · -. 'f! , ,.., ,g0r,:- ""' no. , tefltt', ,:ipr, ll'«Dr, Or ectwil!- lPP.t °"· **:at P.• ~• *.m* ~ i:-, llf'QPfWlal'Y lnt..rn., n ""'• ot1:awnt l'L'!ilfll - as 11'1.M d, **.a~.** - " " 1"""""'-...e O U' r at ,1¢<.. lnc, .......\_,.,...\_\_\_,.,...,. llbt **d\_\_\_,\_** C I le **r ff~ ~"""41irS..of** y C'l:!-lliniioa ~DIJl1tmHI - , .. - - . '"' 0 t~1",:t.i.,.,. ... ,A - ... - - C l - a - 0 - C - 0 - 0 ,.\_...,,,,..,,,..,,,,,..pLdWIC.I.,, Lib-"tl ,. .... ., - C "' J' - C - - 0 C - a - 0 & - C\_\_ \_.. **1h** - - D( "I.II o J•C **cit** ~..,\_........,,... o ea,.. ort ,..\_..,..=< **a**1 - - **W**••JD IC I ...... -~-- D(IIJ C I I *I* ..... ----·•• ,......, **era a..-... ,** • 17 **CFll :MO** I :r .. -~ .. ,. .,,p~!lk. tT l J - c-,a ·u s .,.... ~D **1,aa>a., ... 1** oL ct - a t•JF au ,.,,... \_\_ .. ,,.. - c,e DI C11\$1tt• •...--~LS Jt4M~ln...: .il C:Oh.: - D .,,..,.. II II **a** ., ...... I # a rwla fl!IUnd ""'"'~' I - C .. ..,...►, t .....\_...\_,.,na:J.40l .. 1~i.~ - D(IOGeill' {3}------------------------------------------------ ![](_page_3_Picture_0.jpeg) Ernst & Young LLP 155 N Wacker Dr. Chicago. IL 60606 Tel: +1 312 879 2000 Fax: +1 312 879 4000 ey.com ## **Report of Independent Registered Public Accounting Firm** To the Stockholder and the Board of Directors of Gallagher Securities, Inc. ## **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of Gallagher Securities, Inc. (the Company) as of December 31 , 2024, and the related notes (the "financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company at December 31 , 2024, 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 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 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 financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We have served as Gallagher Securities, Inc.' s auditor since 2023. March 27, 2025 {4}------------------------------------------------ #### **STATEMENT OF FINANCIAL CONDITION AS OF DECEMBER 31, 2024** ## **ASSETS** | Cash and cash equivalents | \$
13,067,358 | |-----------------------------------|------------------| | Accounts receivable, net | 2,455,609 | | Due from Parent | 10,442,092 | | Prepaid expenses and other assets | 70,418 | | Deferred tax asset | 68,488 | | TOTAL | \$
26,103,965 | ## **LIABILITIES AND STOCKHOLDER'S EQUITY** | LIABILITIES: | | |-------------------------------------------------------------------------------|------------------| | Payable to Parent | \$
1,696,900 | | Accounts payable, accrued expenses, and other liabilities | 1,153,682 | | Income taxes payable | 1,494,173 | | Total liabilities | 4,344,755 | | STOCKHOLDER'S EQUITY: | | | Common stock, \$1 par value — 1,000 shares authorized, issued and outstanding | 1,000 | | Additional paid-in capital | 6,074,173 | | Retained earnings | 15,684,037 | | Total stockholder's equity | 21,759,210 | | TOTAL | \$
26,103,965 | The accompanying notes are an integral part of this Statement of Financial Condition. {5}------------------------------------------------ #### **NOTES TO STATEMENT OF FINANCIAL CONDITION AS OF DECEMBER 31, 2024** #### **1. ORGANIZATION** Gallagher Securities, Inc. (the "Company") is a broker-dealer registered with the Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934 and is a member of the Financial Industry Regulatory Authority ("FINRA"). Additionally, the Company is registered with the Municipal Securities Rulemaking Board and the National Futures Association. The Company was incorporated in 1977 and is a wholly owned subsidiary of Arthur J. Gallagher & Co. (the "Parent"). The Company is a broker, consultant, and FINRA registered broker-dealer that specializes in providing securities services to not-for-profit entities, corporations, and publicly traded entities and operates as a single segment. The Company has identified its Chief Compliance Officer as the chief operating decision maker ("CODM"), who uses net income to evaluate the results of the business to manage the Company. Additionally, the CODM uses excess net capital, which is not a measure of profit and loss, to make operational decisions while maintaining capital adequacy, such as whether to reinvest profits or pay dividends. The Company's operations constitute a single operating segment and therefore, a single reportable segment, because the CODM manages the business activities using information of the Company as a whole. The accounting policies used to measure the profit and loss of the segment are the same as those described in the summary of significant accounting policies. The Company has a fully disclosed clearing agreement with Pershing LLC and acts as an introducing broker only for customer accounts through such agreement. The Company does not handle or maintain customer funds. ## **2. SIGNIFICANT ACCOUNTING POLICIES** **Basis of Presentation** — The accompanying Statement of Financial Condition has been prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The Parent provides the Company with management, accounting, and recordkeeping services, and allocates a relevant portion of these costs to the Company pursuant to an intercompany cost sharing agreement. This Statement of Financial Condition has been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company's primary use of liquidity is to fund working capital requirements of the business, including meeting necessary collateral posting requirements established by FINRA to facilitate revenue earning activities. The Company entered into, and repaid, un-subordinated loans totaling \$1,321,538,900 with the Parent and \$1,400,000,000 with an unrelated third-party financial institution for the year ended December 31, 2024. These loans were to finance catastrophe bond underwriting activities and were generally outstanding 1 to 2 days only, and had stated rates of interest between 5.0% and 6.5%. {6}------------------------------------------------ #### **NOTES TO STATEMENT OF FINANCIAL CONDITION AS OF DECEMBER 31, 2024** **Cash and cash equivalents** — All highly liquid investments consisting principally of cash and money market accounts that have average maturities of 90 days or less, are considered cash equivalents. There is no restricted cash at December 31, 2024. Cash equivalents at December 31, 2024 include \$12,240,000 invested in low risk money market accounts held in a Goldman Sachs asset management account. **Accounts receivable, net** — Accounts receivable, net consists of commissions and fees receivable that are recognized net of allowance for uncollectible accounts. Credit losses are recorded, when necessary, in an amount considered by management to be sufficient to recognize expected losses for uncollectible accounts to state the commissions and fees receivable at their net realizable value. The Company recognized receivables from commissions and fees of \$2,455,609 at December 31, 2024. The Company did not have any contract assets December 31, 2024. For the year ended December 31, 2024, the Company did not write off any uncollectable accounts receivable. **Income Taxes** — The Company is included in the consolidated federal and unitary state income tax returns filed by the Parent. The Company's income tax provision is the amount that it would have incurred on a separate company tax return basis. Deferred income taxes represent the net tax effects of temporary differences between amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. All income taxes are settled through additional paid in capital account with the Parent. **Use of Estimates** — The preparation of this Statement of Financial Condition in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Statement of Financial Condition and accompanying notes. These accounting principles require the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues and expenses, and the disclosure of contingent assets and liabilities at the date of this Statement of Financial Condition. The Company periodically evaluates estimates and assumptions, including those relating to the valuation of discretionary compensation, share-based compensation, accrued liabilities, income taxes, commitments and contingencies, and revenue recognition. The Company bases its estimates on historical experience and various assumptions that the Company believes to be reasonable based on specific circumstances. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein. **Fidelity Bond** — The Company maintains a \$1,000,000 fidelity bond. #### **Recent Accounting Pronouncements** **Segment Reporting** - In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires that an entity report segment information in accordance with Topic 280, Segment Reporting. The amendment in the ASU is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments in this update were effective for {7}------------------------------------------------ #### **NOTES TO STATEMENT OF FINANCIAL CONDITION AS OF DECEMBER 31, 2024** fiscal years beginning after December 15, 2023. We adopted this ASU as of December 31, 2024, which affected our segment disclosures. See Note 1 to these consolidated financial statements for further detail regarding the impact of this ASU. **Income Taxes –** In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this update are effective for annual periods beginning after December 15, 2025. We are currently evaluating the impact of the new standard on the Company's Statement of Financial Condition, which is expected to result in enhanced disclosures. #### **3. FAIR VALUE** The FASB Accounting Standards Codification (ASC) Topic 820, Fair Value Measurement, defines fair value, establishes a framework for measuring fair value, and establishes a fair value hierarchy that prioritizes the input 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, as specified by FASB ASC 820, 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 inputs are based on unadjusted quoted prices in active markets for identical financial instruments; - Level 2 inputs are based on quoted market prices, other than quoted prices included in Level 1, in markets that are not active or on inputs that are observable either directly or indirectly for the full term of the financial instrument; and - Level 3 are based on pricing or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement of the financial instrument. Such inputs may reflect management's own assumptions about the assumptions a market participant would use in pricing the financial instrument. The level in the fair value hierarchy within which the fair value measurement is classified is determined based on the lowest level input that is significant to the fair value measure in its entirety. {8}------------------------------------------------ #### **NOTES TO STATEMENT OF FINANCIAL CONDITION AS OF DECEMBER 31, 2024** The carrying amounts of financial assets and liabilities reported in this Statement of Financial Condition for cash and cash equivalents, accounts receivable, net, due from Parent, payable to Parent and accounts payable, accrued expenses and other liabilities, at December 31, 2024, approximate fair value because of the short-term duration of these instruments. There were no transfers between Levels 1, 2, or 3 during the year. #### **4. INCOME TAX** At December 31, 2024 the Company had recorded net deferred tax assets and liabilities of \$68,645 and \$157, respectively. The Company's net deferred income tax asset is attributable to basis differences primarily in accrued compensation, deferred revenue and miscellaneous reserves. During 2024, there was no valuation allowance or change in the valuation allowance. At December 31, 2024, the Company had no accrued interest and penalties related to unrecognized tax benefits. At December 31, 2024, the Parent's consolidated tax return had been examined by the IRS or the statute had lapsed through calendar year 2020. In addition, from 2020 forward, various state jurisdictions remain open. ## **5. RELATED-PARTY TRANSACTIONS** The Parent and other entities under common control of the Parent, which we refer to as "Affiliates", provide the Company with various services, including management, accounting, and recordkeeping services, and allocates these costs to the Company. The Company enters into transactions with Parent and Affiliates as presented below: {9}------------------------------------------------ #### **NOTES TO STATEMENT OF FINANCIAL CONDITION AS OF DECEMBER 31, 2024** | Affiliate | Agreement | Description of Service | |-----------------|--------------------|------------------------------------------------------------------------| | Gallagher Re | Services Agreement | Affiliate provides the Company with various services, including | | Inc. | | management, accounting, and recordkeeping services, and allocates | | | | these costs to the Company. | | Arthur J. | Intercompany loan | On June 28, 2024, the Company entered into an agreement and | | Gallagher & Co. | | funded a loan to the Parent in the amount of \$8,355,370, which is | | | | included in Due from Parent in the Statement of Financial Condition. | | | | This loan to the Parent has an interest rate of 5.12% and is due on | | | | June 28, 2025 with various terms to prepay by the Parent or right to | | | | demand by the Company prior to maturity. | | Arthur J. | Underwriting | The Company borrowed \$1,321,538,900 from the Parent on an un‐ | | Gallagher & Co. | Funding Loan | subordinated basis. These funds are used to purchase securities, | | | Agreement | which are immediately re‐sold to third parties through the Pershing | | | | broking system. These loans with Parent are generally outstanding | | | | only one or two days and all have been repaid in 2024. | | Gallagher | Service Level | This agreement establishes procedures for the parties to provide | | Securities Ltd. | Agreement and | certain consulting services to each other, and for the party receiving | | | Revenue Sharing | such consulting services to share a portion of revenues received from | | | Agreement | related transactions with the party providing such services. | | | | | | | | The Company's CODM also spends some of their time providing | | | | management oversight to the Affiliate | | Gallagher | Service Level | This agreement establishes procedures for the parties to provide | | Securities | Agreement and | certain consulting services to each other, and for the party receiving | | Europe SAS | Revenue Sharing | such consulting services to share a portion of revenues received from | | | Agreement | related transactions with the party providing such services. | ## **6. CONCENTRATION OF RISKS** The Company maintains its cash balances with major depository institutions, in amounts, which may exceed the insurance limits of the Federal Deposit Insurance Corporation. The Company is subject to credit risk should this financial institution be unable to fulfill its obligations. ## **7. NET CAPITAL REQUIREMENTS** The Company is subject to the Uniform Net Capital Rule of the SEC (Rule 15c3-1) and elects to calculate the minimum net capital under the alternate method as permitted under Rule 15c3-1, paragraph (a)(1)(ii), which requires the maintenance of minimum net capital of \$250,000. At December 31, 2024, the Company had net capital of \$8,337,012, which was \$8,087,012 in excess of required net capital. The Company's ratio of aggregate indebtedness to net capital was .52 to 1. {10}------------------------------------------------ #### **NOTES TO STATEMENT OF FINANCIAL CONDITION AS OF DECEMBER 31, 2024** #### **8. SUBSEQUENT EVENTS** Subsequent events have been evaluated through the date the Statement of Financial Condition was issued on March 27, 2025. No subsequent events were noted that required adjustment or disclosure in the Statement of Financial Condition. \*\*\*\*\*\* Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.