# OCM INVESTMENTS, LLC X-17A-5 (2021-03-29) — Broker-dealer annual report - Company: OCM INVESTMENTS, LLC - Form: X-17A-5 - Filed: 2021-03-29 - Period: 2020-12-31 - Accession: 0001265072-21-000003 - CIK: 1265072 - File #: 8-66176 - Material weakness: No - Auditor: Ernst & Young LLP - Auditor location: Los Angeles, CA - Contact: John B. Edwards - Phone: (213) 830-6229 - Website: notaryclasses.com - Signed by: John B. Edwards (Chief Financial Officer, FINOP) Original filing: https://www.sec.gov/Archives/edgar/data/1265072/000126507221000003/ocminvest2020full.pdf --- {0}------------------------------------------------ UNITED STATES SECURITIES AND EXCHANGE CONIMISSION Washington, D.C. 20549 ## ANNUAL AUDITED REPORT FORM X-17A-5 PART III OMB APPROVAL OMB Number: 3235-0123 Expires: October 31, 2023 Estimated average burden hours per response. 12.00 ## SEC FILE NUMBER 8-66176 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 01/01/20 | | AND ENDING 12/31/20 | | | |-----------------------------------------------------------------------------------------------|--------------------------------------------------------|---------------------|---------------------------------|--| | | MM DD YY | | MM DI)
YY | | | | A. REGISTRANT IDENTIFICATION | | | | | NAME OF BROKER-DEALER: OCM Investments, LLC | | | OFFICIAL USE ONLY | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | FIRM I.D. NO. | | | 333 South Grand Avenue, 28th floor | | | | | | | (No. and
Street) | | | | | Los Angeles | CA | | 90071 | | | (City) | (State) | | (Zip ('ode) | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
John B. Edwards | | | (213) 830-6229 | | | | | | (Area Code
Telephone Number) | | | | B. ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report*
Ernst & Young LLP | (Name - if individual. state lust, first, middle name) | | | | | 725 South Figueroa Street | Los Angeles | CA | 90017 | | | (Address) | (City) | (State) | (Zip ('ode) | | | CHECK ONE: | | | | | | Public Accountant
Public Accountant
Accountant not resident in United Stales or any | f | its possessions. | | | | | | | | | | | FOR OFFICIAL USE ONLY | | | | | | | | | | | | | | | | \*Claims for exemption from the requirement that the annual report he covered by the opinion of an independent public accountant must he 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 unless the form displays a currently valid OMB control number. SEC 1410 (11-05) {1}------------------------------------------------ #### OATH OR AFFIRMATION | | , swear (or affirm) that, to the best of
my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of | |------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | OCM Investments, LLC | , as | | of December 31, | , 20 20
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 a customer, except as follows: | | | | | | | | | | | | | | | | | | | | | | | | | Signature | | | Chief Financial Officer, FINOP | | | | | | Title | | -
.( | | | Notary Public | z | | | | | This report ** contains (check all applicable boxes):
El (a) Facing Page. | | | (b) Statement of Financial Condition. | | | | (c) Statement of Income (Loss) or, if there is other comprehensive income in the period(s) presented, a Statement | | | 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.
(f) Statement of Changes in Liabilities Subordinated to Claims of Creditors. | | (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. | | ❑ | (j) A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule 15c3-1 and the | | | Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3. | | consolidation. | (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of | | (1) An Oath or Affirmation. | | | (m) A copy of the SIPC Supplemental Report. | | | | (n) A report describing any material inadequacies found to exist or 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). | {2}------------------------------------------------ | JURAT | | | | |-------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--| | the truthfulness, accuracy, or validity of that document. | A notary public or other officer completing this certificate verifies only the identity of
the individual who signed the document to which this certificate is attached, and not | | | | State of California | | | | | County of Los Angeles | | | | | Subscribed and sworn to (or affirmed) before me on this
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5 | day of | | | | (Seal)
• | Commission No. 2300817
NOTARY PUBLIC-CALIFORNIA
SAN DIEGO COUNTY
My Comm. Expires
AUGUST 9. 2023 | | | | OPTIONAL INFORMATION | INSTRUCTIONS | | | | DESCRIPTION OF THE ATTACHED DOCUMENT
(Title or description of attached document)
X
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(Title or description o attached document continued) | The wording of all Jurats completed in California after January 1, 2015 must be in the
form as set forth within this Jurat. There are no exceptions. If a Jurat to be completed
does not follow this form, the notary must correct the verbiage by using a jurat stamp
containing the correct wording or attaching a separate jurat form such as this one with
does contain the proper wording. In addition, the notary must require an oath or
affirmation from the document signer regarding the truthfulness of the contents of the
document. The document must be signed AFTER the oath or affirmation. If the document
was previously signed, it must he re-signed in front of the notary public during the jurat
process.
• State and county information must be the state and county where the
document signer(s) personally appeared before the notary public.
• Date of notarization must be the date the signer(s) personally
appeared which must also be the same date the jurat process is | | | | Number of Pages
Document | completed.
• Print the name(s) of the document signer(s) who personally appear at
the time of notarization. | | | | | • Signature of the notary public must match the signature on file with the | | | | Additional information | office of the county clerk.
• The notary seal impression must be clear and photographically
reproducible. Impression must not cover text or lines. If seal impression
smudges, re-seal if a sufficient area permits, otherwise complete a
different jurat form. | | | www.NotaryClasses.com 300-873-9865 • Securely attach this document to the signed document with a staple. pages and date. {3}------------------------------------------------ #### **OCM INVESTMENTS, LLC** (SEC FILE NUMBER 8-66176) ## AND FINANCIAL STATEMENTS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM DECEMBER 31, 2020 PURSUANT TO RULE 17a-5 OF THE SECURITIES AND EXCHANGE COMMISSION {4}------------------------------------------------ #### **CONTENTS** | Report of Independent Registered Public Accounting Firm | | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----| | Financial Statements | | | Statement of Financial Condition | 3 | | Statement of Income | 4 | | Statement of Changes in Member's Equity | 5 | | Statement of Cash Flows | 6 | | Notes to Financial Statements | 7-9 | | Supplemental Information | | | Schedule 1. Computation of Net Capital Under Rule 15c3-1 of the Securities
and Exchange Commission | 10 | | Schedule 2. Computation for Determination of Reserve Requirements and Information
Relating to Possession and Control Requirements Under Rule 15c3-3
of the Securities and Exchange Commission | 11 | {5}------------------------------------------------ ![](_page_5_Picture_0.jpeg) Ernst & Young LLP Suite 500 725 South Figueroa Street Los Angeles, CA 90017-5418 Tel: +1 213 977 3200 Fax: +1 213 977 3729 ey.com ### **Report of Independent Registered Public Accounting Firm** The Member and Management OCM Investments, LLC ### **Opinion on the Financial Statements** We have audited the accompanying statement of financial condition of OCM Investments, 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 at December 31, 2020, and the results of its operations and its cash flows for the year then ended in conformity with U.S. generally accepted accounting principles. ### **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. #### **Supplemental Information** The accompanying information contained in Schedules 1 and 2 has been subjected to audit procedures performed in conjunction with the audit of the Company's financial statements. Such information is the responsibility of the Company's management. Our audit procedures included determining whether the 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. In forming our opinion on the information, we evaluated whether such information, including its form and content, is presented in conformity with Rule 17a-5 under the Securities Exchange Act of 1934. In our opinion, the information 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 2014. March 25, 2021 {6}------------------------------------------------ ### **STATEMENT OF FINANCIAL CONDITION** | December 31, 2020 | | |----------------------------------------------------------------------------------|------------------------| | | | | ASSETS | | | Cash | \$
341,138 | | Prepaid expenses | 167,648 | | Deposits | 409 | | Total assets | \$
509,195 | | LIABILITIES AND MEMBER'S EQUITY | | | Liabilities
Accounts payable and accrued expenses
Payable to related party | \$
67,290
12,072 | | Total liabilities | 79,362 | | Member's equity | 429,833 | | Total liabilities and member's equity | \$
509,195 | {7}------------------------------------------------ #### **STATEMENT OF INCOME** | Year Ended December 31, 2020 | | |----------------------------------------|---------------| | | | | Revenues | | | Servicing fees from related party | \$
416,346 | | Expenses | | | FINRA fees and other licensing charges | 193,249 | | Professional fees | 165,878 | | Taxes and other assessments | 16,900 | | Insurance and other | 2,470 | | Total expenses | 378,497 | | Net income | \$
37,849 | {8}------------------------------------------------ ### **STATEMENT OF CHANGES IN MEMBER'S EQUITY** | Year Ended December 31, 2020 | | |------------------------------------|---------------| | | | | Member's equity, beginning of year | \$
391,984 | | Net income | 37,849 | | Member's equity, end of year | \$
429,833 | {9}------------------------------------------------ #### **STATEMENT OF CASH FLOWS** #### **Year Ended December 31, 2020** | Cash flows from operating activities | | |-----------------------------------------------------------------------------------|---------------| | Net income | \$
37,849 | | Adjustments to reconcile net income to net cash provided by operating activities: | | | Changes in operating assets and liabilities: | | | Prepaid expenses | (20,903) | | Deposits | 10,662 | | Accounts payable and accrued expenses | (3,003) | | Payable to related party | 48,001 | | Net cash provided by operating activities | 72,606 | | Net increase in cash | 72,606 | | Cash, beginning of year | 268,532 | | Cash, end of year | \$
341,138 | {10}------------------------------------------------ ### **NOTES TO FINANCIAL STATEMENTS** #### **1. Nature of operations and summary of significant accounting policies** #### *Nature of Operations* OCM Investments, LLC (the "Company") is a securities broker-dealer whose business consists of (i) acting as placement agent for the private placement of interests in limited partnerships and other pooled vehicles managed by an affiliated investment adviser, Oaktree Capital Management, L.P. ("Oaktree"), and (ii) the offer, sale and promotion of mutual fund shares issued by funds managed by Oaktree. The Company, a wholly-owned subsidiary of Oaktree, is organized under the laws of the state of Delaware pursuant to the Delaware Limited Liability Company Act and is a registered broker-dealer under the Securities Exchange Act of 1934 and a member of the Financial Industry Regulatory Authority ("FINRA"). #### *Basis of Presentation* The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). #### *Revenue Recognition* The Company acts as a placement agent for the private placement of interests in limited partnerships and other pooled vehicles managed by Oaktree, and engages in the offer, sale and promotion of mutual fund shares issued by funds managed by Oaktree (collectively "the Services"). In connection with the Services, the Company earns a quarterly fee equivalent to the total of all costs and expenses incurred directly by the Company in connection with the performance of the Services plus ten percent of the amount of such costs and expenses. The performance obligation for providing the Services is satisfied over time as the customer is receiving and consuming benefits as they are provided by the Company. The fees are considered variable consideration, since there is uncertainty in the amount of revenue depending on the cost and expenses incurred, which is susceptible to factors outside the Company's influence. Revenue is recognized evenly over the contract period once it is probable that a significant reversal will not occur. The ratable recognition over the service period is the appropriate approach for recognizing revenue because the Services are substantially the same each day and have the same pattern of transfer. Services fees recognized in the current year are related to performance obligations that have been satisfied this year. #### *Income Taxes and Other Assessments* The Company is a limited liability company and is not subject to Federal income taxes. Taxable income of the Company is reported on the member's tax returns. The Company is subject to a state annual minimum franchise tax and limited liability company fee. The Company, as a licensed broker-dealer, is also subject to a state occupation tax. At December 31, 2020, management has determined that the Company had no uncertain tax positions that would require financial statement recognition. This determination will always be subject to ongoing reevaluation as facts and circumstances may require. The Company remains subject to U.S. federal and state income tax audits for all periods subsequent to 2017. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as an income tax expense in the Statement of Operations. For the period from January 1, 2020 to December 31, 2020, the Company did not have a liability for any unrecognized tax benefits nor did it recognize any interest and penalties related to unrecognized tax benefits. {11}------------------------------------------------ ### **NOTES TO FINANCIAL STATEMENTS** #### *Use of Estimates* The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. #### **2. Related party transactions** In accordance with the Company's limited liability agreement, Oaktree pays the Company a fee for services provided equivalent to 110 percent of costs incurred by the Company in its operations. For the year ended December 31, 2020, fees received by the Company totaled \$416,346. Oaktree is the managing member of the Company. The Company has a payable to Oaktree of \$12,072 at December 31, 2020. Pursuant to the Company's expense sharing agreement, Oaktree pays all shared overhead expenses of the Company, such as compensation, benefits, rent and other expenses incurred in maintaining the Company's place of business. The Company has no obligation to repay Oaktree for such costs. Pursuant to a placement agent agreement with a pooled vehicle managed by Oaktree, the Company may receive distribution fees from the pooled vehicle which are payable to a sub-placement agent. For the year ended December 31, 2020, no such transactions occurred through the Company. #### **3. Net capital requirements** The Company, as a member of FINRA, is subject to the Securities and Exchange Commission ("SEC") Uniform Net Capital Rule 15c3-1. This rule requires the maintenance of minimum net capital, and that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1, and that equity capital may not be withdrawn or cash dividends paid if the resulting net capital ratio would exceed 10 to 1. At December 31, 2020, the Company's net capital was \$261,776, which was \$256,485 in excess of its minimum net capital requirement of \$5,291. #### **4. Exemption from Rule 15c3-3** The Company does not claim an exemption under Rule 15c3-3 and relies on Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5 because of its limited business activities and because the Company (1) does not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers; (2) does not carry accounts of or for customers; and (3) does not carry PAB accounts (as defined in Rule 15c3-3). {12}------------------------------------------------ ### **NOTES TO FINANCIAL STATEMENTS** #### **5. Concentration of credit risk** The Company maintains its cash balances at a financial institution, which at times may exceed federally insured limits. The Company is subject to credit risk to the extent any financial institution with which it conducts business is unable to fulfill contractual obligations on its behalf. Management monitors the financial condition of such financial institution and does not anticipate any losses from this counterparty. #### **6. Commitments and contingencies** In the normal course of business, the Company enters into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Company's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. However, based on experience, the Company expects the risk of loss to be remote. #### **7. Subsequent events** These financial statements were approved by management and available for issuance on March 25, 2021. Subsequent events have been evaluated through this date. {13}------------------------------------------------ #### **SUPPLEMENTAL INFORMATION SCHEDULE 1. COMPUTATION OF NET CAPITAL UNDER RULE 15c3-1 OF THE SECURITIES AND EXCHANGE COMMISSION** **December 31, 2020** | Member's equity | | | \$
429,833 | |-------------------------------------------------------------------------|----------|-------------------|---------------------------| | Less nonallowable assets:
Prepaid expenses
Deposits | | | 167,648
409
168,057 | | Net capital | | | \$
261,776 | | Aggregate indebtedness | | | \$
79,362 | | Minimum net capital required (under SEC Rule 15c3-1) | | | \$
5,000 | | Computed minimum net capital required (6.67% of aggregate indebtedness) | | | \$
5,291 | | Excess net capital (\$261,776 - \$5,291) | | | \$
256,485 | | Percentage of aggregate indebtedness to net capital | \$
\$ | 79,362
261,776 | 30% | There are no material differences between the computation of net capital presented above and the computation of net capital in the Company's unaudited Form X-17A-5, Part II-A filing as of December 31, 2020. {14}------------------------------------------------ #### **SUPPLEMENTAL INFORMATION** #### **SCHEDULE 2. COMPUTATION FOR DETERMINATION OF RESERVE REQUIREMENTS AND INFORMATION RELATING TO POSSESSION AND CONTROL REQUIREMENTS UNDER RULE 15c3-3 OF THE SECURITIES AND EXCHANGE COMMISSION** #### **December 31, 2020** The Company does not claim an exemption under Rule 15c3-3 and relies on Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5 because of its limited business activities and because the Company (1) does not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers; (2) does not carry accounts of or for customers; and (3) does not carry PAB accounts (as defined in Rule 15c3-3). {15}------------------------------------------------ ![](_page_15_Picture_0.jpeg) Ernst & Young LLP 725 South Figueroa Street Los Angeles, CA 90017 Tel: +1 213 977 3200 Fax: +1 213 977 3729 ey.com ### **Report of Independent Registered Public Accounting Firm** The Member and Management of OCM Investments, LLC We have reviewed management's statements, included in the accompanying OCM Investments, LLC's Exemption Report, in which OCM Investments, LLC (the Company) stated that: - (1) The Company does not claim an exemption under paragraph (k) of 17 C.F.R. § 240.15c3-3. - (2) The Company is relying on Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5 because, the Company limits its business activities exclusively to: (1) broker selling limited partnerships in primary distributions on a best efforts basis only; (2) private placement of securities as agent on a best efforts basis only; and (3) acting as mutual fund retailer; and the Company (1) did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers; (2) did not carry accounts of or for customers; and (3) did not carry PAB accounts (as defined in Rule 15c3-3), throughout the most recent fiscal year ended December 31, 2020 without exception. Management is responsible for compliance with 17 C.F.R. § 240.15c3-3 and its statements. Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included inquiries and other required procedures to obtain evidence about the Company's compliance with 17 C.F.R. § 240.15c3-3. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's statements. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to management's statements referred to above for them to be fairly stated, in all material respects, pursuant to footnote 74 of SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5. This report is intended solely for the information and use of the Member, management, the SEC, FINRA, other regulatory agencies that rely on Rule 17a-5 under the Securities Exchange Act of 1934 in their regulation of registered brokers and dealers, and other recipients specified by Rule 17a-5(d)(6) and is not intended to be and should not be used by anyone other than these specified parties. March 25, 2021 {16}------------------------------------------------ ### OCM Investments, LLC's Exemption Report OCM Investments, LLC ("the Company") is a registered broker-dealer subject to Rule 17a-5 promulgated by the Securities and Exchange Commission (17 C.F.R. §240.17a-5, "Reports to be made by certain brokers and dealers"). This Exemption Report was prepared as required by 17 C.F.R. §240.17a-5(d)(1) and (4). To the best of its knowledge and belief, the Company states the following: (1) The Company does not claim an exemption under paragraph (k) of 17 C.F.R. § 240.15c3-3, and (2) The Company is filing this Exemption Report in reliance on Footnote 74 of the SEC Release No. 34- 70073 adopting amendments to 17 C.F.R. § 240.17a-5 because the Company limits its business activities exclusively to: (1) broker selling limited partnerships in primary distributions on a best efforts basis only; (2) private placement of securities as agent on a best efforts basis only; and (3) acting as mutual fund retailer, and the Company (1) did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers; (2) did not carry accounts of or for customers; and (3) did not carry PAB accounts (as defined in Rule 15c3-3) throughout the most recent fiscal year without exception. OCM Investments, LLC I, John Edwards, affirm that, to my best knowledge and belief, this Exemption Report is true and correct. By: Title: Chief Financial Officer, FINOP March 25, 2021 Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.