# CNS SECURITIES, LLC X-17A-5 (2022-03-02) — Broker-dealer annual report - Company: CNS SECURITIES, LLC - Form: X-17A-5 - Filed: 2022-03-02 - Period: 2021-12-31 - Accession: 0001273762-22-000002 - CIK: 1273762 - File #: 8-66293 - Type: Broker-dealer - Material weakness: No - Auditor: Sanville & Company - Auditor location: Dallas, TX - Contact: Tiffany Fisher - Phone: 4694418433 - Signed by: CHRIS SIFUENTES (PRESIDENT) Original filing: https://www.sec.gov/Archives/edgar/data/1273762/000127376222000002/CNSaudit1.pdf --- {0}------------------------------------------------ CNS Securities, LLC Financial Statements and Supplemental Schedules Required by the Securities and Exchange Commission For the Year Ended December 31, 2021 (With Reports of Independent Registered Public Accounting Firm Thereon) {1}------------------------------------------------ ## **CNS SECURITIES, LLC December 31, 2021** ## **Contents** | S
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e. | | | | | | - ❑ (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - E (s) Exemption report In accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - ❑ (t) Independent public accountant's report based on an examination of the statement of financial condition. - (u) Independent public accountant's report based on an examination of the financial report or financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable. - ❑ (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - ❑ (x) Supplemental reports on applying agreed-upon procedures, In accordance with 17 CFR 240.15c3-le or 17 CFR 240.17a-12, as applicable. - ❑ (y) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k). - ❑ (z) Other: - \*•To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5(4(3) or 17 CFR 240.18a-7(d)(2), as applicable. {4}------------------------------------------------ ROBERT F. SANVILLE, CPA MICHAEL T. BARANOWSKY, CPA JOHN P. TOWNSEND, CPA NATHANIEL S. HA RTGRAVES, CPA CERTIFIED PUBLIC ACCOUNTANTS 1514 OLD YORK ROAD ABINGTON, PA 19001 (215) 884-8460 • (215) 884-8686 FAX Sanvide & Company GOVERNANCE OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PENNSYLVANIA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 100 WALL STREET 8thFLOOR NEW YORK, NY 10005 (212) 709-9512 #### **Report of Independent Registered Public Accounting Firm** To the Sole Member of CNS Securities, LLC ## **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of CNS Securities, LLC (the Company) as of December 31, 2021, and the related statements of operations, member's equity and cash flows for the year then ended, and the related notes to the financial statements (collectively, the financial statements). In our opinion, the financial statements presents fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. ## **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 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 from material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. 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 supplementary information contained in Schedule I, Computation of Net Capital Under Rule 15c3-1, Schedule II, Computation of Requirements Under Rule 15c3-3 (exemption) and Schedule III Information Relating to the Possession or Control Requirements Under Rule **15c3-3,** all under the Rules of the Securities and Exchange Commission have been subjected to audit procedures performed in conjunction with the audit of the Company's {5}------------------------------------------------ financial statements. The Supplemental Information is the responsibility of the Company's management. Our audit procedures included determining whether the Supplemental 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 presented in the Supplemental Information. In forming our opinion on the Supplemental Information, we evaluated whether the Supplemental Information, including its form and content, is presented in conformity with 17 C.F.R. § 240.17a-5. In our opinion, the supplementary information contained in Schedule I, Computation of Net Capital Under Rule 15c3-1, Schedule II, Computation of Requirements Under Rule 15c3-3 (exemption) and Schedule III Information Relating to the Possession or Control Requirements Under Rule 15c3-3, all under the Rules of the Securities and Exchange Commission are fairly stated, in all material respects, in relation to the financial statements as a whole. Jegvt4A \* C^ovt^e\_.27 We have served as the Company's auditor since 2019. Dallas, Texas February 10, 2022 {6}------------------------------------------------ # CNS SECURITIES, LLC Statement of Financial Condition December 31, 2021 ## ASSETS | C
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3 | The accompanying notes are an integral part of these financial statements. {10}------------------------------------------------ #### NOTE A — SUMMARY OF ACCOUNTING POLICIES Accounting principles followed by the Company and the methods of applying those principles which materially affect the determination of financial position, results of operation and cash flows are summarized below: ## Organization CNS Securities, LLC (the Company) was formed as a Texas Limited Liability Company in June 2003. Mr. Chris Sifuentes of Plano, TX is the sole member. In June 2004, the Financial Industry Regulatory Authority, Inc. (FINRA) approved the Company's application to provide brokerdealer services for the sale of municipal securities, mutual funds and variable life insurance products. The Company has adopted a calendar year. ## Description of Business The Company, located in Sherman, TX is a broker and dealer in securities registered with the Securities and Exchange Commission ("SEC") and is a member of FINRA. The Company operates under SEC Rule 15c3-3(k)(1), which provides exemption to firms whose business is limited to mutual funds and/or variable insurance products. ## Basis of Accounting The financial statements of the Corporation have been prepared on the accrual basis of accounting and accordingly reflect all significant receivables, payables, and other liabilities. ## Cash and Cash Equivalents The Company considers as cash all short-term investments with an original maturity of three months or less to be considered cash and cash equivalents. ## Accounts Receivable — Recognition of Bad Debt The Corporation considers accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is required. If amounts become uncollectible, they will be charged to operations when that determination is made. #### Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. All of the Company's cash and cash equivalents are held at high credit quality financial institutions. {11}------------------------------------------------ #### NOTE A — SUMMARY OF ACCOUNTING POLICIES, continued ### Revenue Recognition Brokerage commissions. The Company buys and sells securities on behalf of its customers. Each time a customer enters into a buy or sell transaction, the Company charges a commission. Commissions and related clearing expenses are recorded on the trade date (the date that the Company fills the trade order by finding and contracting with a counterparty and confirms the trade with the customer). The Company believes that the performance obligation is satisfied on the trade date because that is when the underlying financial instrument or purchaser is identified, the pricing is agreed upon and the risks and rewards of ownership have been transferred to/from the customer. Distribution fees. The Company enters into arrangements with managed accounts or other pooled investment vehicles (funds) to distribute shares to investors. The Company may receive distribution fees paid by the fund up front, over time, upon the investor's exit from the fund (that is, a contingent deferred sales charge), or as a combination thereof. The Company believes that its performance obligation is the sale of securities to investors and as such this is fulfilled on the trade date. Any fixed amounts are recognized on the trade date and variable amounts are recognized to the extent it is probable that a significant revenue reversal will not occur once the uncertainty is resolved. For variable amounts, as the uncertainty is dependent on the value of the shares at future points in time as well as the length of time the investor remains in the fund, both of which are highly susceptible to factors outside the Company's influence, the Company does not believe that it can overcome this constraint until the market value of the fund and the investor activities are known, which are usually monthly or quarterly. Distribution fees recognized in the current period are primarily related to performance obligations that have been satisfied in prior periods. Other Miscellaneous Fees Earned. From time to time the Company performs functions for the convenience of its customers. In these cases, the Company performs a simple act for which it receives a fee. The performance obligation is satisfied on the date the service is delivered because there are no remaining tasks which are to be performed related to the service that is delivered. No miscellaneous fees were earned in the current year. #### Fair Value of Financial Instruments Financial instruments that are subject to fair value disclosure requirements are carried in the financial statements at an amount that approximates fair value and include cash and cash equivalents. Fair values are based on quoted market prices and assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates reflecting varying degrees of perceived risk. {12}------------------------------------------------ #### NOTE A — SUMMARY OF ACCOUNTING POLICIES, continued #### Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. #### Income Taxes For federal income tax purposes, CNS, a limited liability company has elected to be taxed as corporation. Current provisions or benefits for income taxes are recorded based on estimates of actual income taxes or refunds thereof, as reported in federal and state tax returns. The Company accounts for deferred income taxes using the asset liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequence attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income during the period that includes the enactment date. Additionally, deferred tax assets may be reduced by a valuation allowance to reflect benefits that may not be realized. #### NOTE B — NET CAPITAL REQUIREMENTS The Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule (SEC Rule 15c3-1), which requires the maintenance of minimum net capital and requires the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. As of December 31, 2021, The Company had net capital of \$53,104 which was \$48,104 in excess of its required net capital of \$5,000. The Company's net capital ratio was approximately .08 to 1. #### NOTE C — POSSESSION OR CONTROL REQUIREMENTS The Company does not have any possession or control of customer's funds or securities. There were no material inadequacies in the procedures followed in adhering to the exemptive provisions of SEC Rule 15c-3-3(k)(1). #### NOTE D — FAIR VALUE The Company uses various methods including market, income, and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market {13}------------------------------------------------ #### NOTE D — FAIR VALUE, continued participants would use in pricing the asset or liability, including assumptions about risk and or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories: Level 1 — Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Level 1 also includes money market funds and U.S. Treasury and federal agency securities and federal agency mortgage-backed securities, which are traded by dealers or brokers in active markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2 — Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or similar assets or liabilities. Level 3 — Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities. For the year ended December 31, 2021, the application of valuation techniques applied to similar assets and liabilities has been consistent. The fair value of all securities owned are deemed to be Level 1 and Level 2 investments at December 31, 2021, and during the period then ended. The following table presents the assets and liabilities that are measured at fair value on a recurring basis by level within the fair value hierarchy as reported on the statement of financial condition at December 31, 2021. As required by FASB ASC Topic 820, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. {14}------------------------------------------------ NOTE D — FAIR VALUE, continued Investments in securities, at fair value | In
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64 | \$ | | \$ | | There were no transfers between Levels 1, 2, or 3 during the year. ## NOTE E — RELATED PARTY TRANSACTIONS The Company leases office space from its member, Chris Sifuentes. The office space is shared by CNS Securities, Inc. and CNS Securities Insurance Services, LLC, an affiliated company which is commonly owned by the member. During the year payments of \$25,200 were made to Mr. Sifuentes for occupancy and communications reimbursement. Also, a director's fee of \$4,000 was paid to Mr. Sifuentes during the year. {15}------------------------------------------------ ## **Schedule I CNS Securities, LLC Supplemental Information Pursuant to Rule 17a-5 December 31, 2021** #### **Computation of Net Capital** | al
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04 | | | | See accompanying report of independent registered public accounting firm. {16}------------------------------------------------ ## Schedule II & III ## CNS Securities, LLC Computation for Determination of Reserve Requirements and Information Relating to Possession or Control Requirements Under Rule 15c3-3 of the Securities and Exchange Commission December 31, 2021 The Company is considered exempt from Securities Exchange Commission ("SEC") Rule 15c3-3 pursuant to the exemptive provision of sub-paragraph (k)(1) and therefore, is not required to maintain a "Special reserve bank account for the Exclusive benefit of customers." {17}------------------------------------------------ ROBERT F. SANVILLE, CPA MICHAEL T. BARANOWSKY, CPA JOHN P. TOWNSEND, CPA NATHANIEL S. HARTGRAVES, CPA 1514 OLD YORK ROAD ABINGTON, PA 19001 (215) 884-8460 • (215) 884-8686 FAX CERTIFIED PUBLIC ACCOUNTANTS *Sanville & Company* GOVERNANCE OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PENNSYLVANIA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 100 WALL STREET 8thFLOOR NEW YORK, NY 10005 (212) 709-9512 #### **Report of Independent Registered Public Accounting Firm** To the Sole Member of CNS Securities, LLC We have reviewed management's statements, included in the accompanying Exemption Report, in which (a) CNS Securities, LLC identified the following provisions of 17 C.F.R. § 240.15c3-3(k) under which CNS Securities, LLC claimed an exemption from 17 C.F.R. § 240.15c3-3: (k)(1) (the exemption provisions) and (b) CNS Securities, LLC stated that CNS Securities, LLC met the identified exemption provisions throughout the most recent fiscal year without exception. CNS Securities, LLC's management is responsible for compliance with the exemption provisions 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 CNS Securities, LLC's compliance with the exemption provisions. 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, based on the provisions set forth in paragraph (k)(1) of 17 C.F.R. § 240.15c3-3. ja.rwa-et '0 Corr.,/ Dallas, Texas February 10, 2022 {18}------------------------------------------------ ## **CNS Securities, LLC Exemption Report** CNS Securities, 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 claimed an exemption from 17 C.F.R. §240.15c3-3 under the following provisions of 17 C.F.R. §240.15c3-3(k)(1). - (2) The Company met the identified exemption provisions in 17 C.F.R. §240.15c3-3(k) throughout the most recent fiscal year without exception. I, Chris Sifuentes, swear (or affirm) that, to my best knowledge and belief, this exemption report is true and correct. Regards, \*\*'.-/------- President Date of Report: January 26, 2022 Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.