# LOCKTON INVESTMENT SECURITIES, LLC X-17A-5 (2025-06-30) — Broker-dealer annual report - Company: LOCKTON INVESTMENT SECURITIES, LLC - Form: X-17A-5 - Filed: 2025-06-30 - Period: 2025-04-30 - Accession: 0001339862-25-000002 - CIK: 1339862 - File #: 8-67090 - Type: Broker-dealer - Material weakness: No - Auditor: Baker Tilly US, LLP - Auditor location: Chicago, IL - Contact: Susan Hayes - Phone: 609-642-6593 - Email: shayes@pattentraining.com - Website: pattentraining.com - Signed by: Suzette Clark (President) Original filing: https://www.sec.gov/Archives/edgar/data/1339862/000133986225000002/locktonaudit043025public.pdf --- {0}------------------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 | ANNUAL REPORTS | |----------------| | FORM X-17A-5 | | PART III | | OMB APPROVAL | | | | |---------------------------|--|--|--| | OMB Number: 3235-0123 | | | | | Expires: Nov. 30, 2026 | | | | | Estimated average burden | | | | | hours per response:
12 | | | | SEC FILE NUMBER 8-67090 FACING PAGE Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 FILING FOR THE PERIOD BEGINNING 05/01/24 04/30/25 MM/DD/YY MM/DD/YY A. REGISTRANT IDENTIFICATION NAME OF FIRM: Lockton Investment Securities, LLC TYPE OF REGISTRANT (check all applicable boxes): 🇿 Broker-dealer [] Check here if respondent is also an OTC derivatives dealer ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) # 444 West 47th Street, Suite 900 | | (No. and Street) | | |----------------------------------------------|---------------------------------------------------------------------------|---------------------------| | Kansas City | MO | 64112 | | (City) | (State) | (Zip Code) | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | Susan Hayes | 609-642-6593 | shayes@pattentraining.com | | (Name) | (Area Code - Telephone Number) | (Email Address) | | | B. ACCOUNTANT IDENTIFICATION | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing* | | | Baker Tilly US, LLP | | | | | (Noma, it individual crato lact prot and middle mamel | | | | | 60601 | | | |--------------------------------------------------|---------------------------------------------|--------------------------------------------------------------------------------------|--|--| | (City) | (State) | (Zip Code) | | | | | 23 | | | | | (Date of Registration with PCAOB)(if applicable) | | (PCAOB Registration Number, if applicable) | | | | | | | | | | | | | | | | | 205 N. Michigan Avenue, 28th floor Chicago | 11 11:40 Hauten areas 18:55 11:46 ATIA 11114 11114 11114 11
FOR OFFICIAL USE ONLY | | | \* Claims for exemption from the requirement that the annual 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. {1}------------------------------------------------ ### OATH OR AFFIRMATION | | Suzette Clark
swear (or affirm) that, to the best of my knowledge and belief, the
and and the lands of the comments assumments of the comments on | |------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | financial report pertaining to the firm of Lockton Investment Securities, LLC
as of | | 4/30 | ___ 2 025___ is true and correct. I further swear (or affirm) that neither the company nor any | | | partner, officer, director, or equivalent person, as the case may be__has any proprietary interest in any account classified solely | | | as that of a customer.
JAYNE E RITZINGER
Notary Public · Notary Seal
STATE OF MISSOURI
Signature:
Jackson County
My Commission Expires: Oct. 19, 2028
Commission # 10429271 | | | Title:
President | | | | | | Notary Public | | | | | | This filing** contains (check all applicable boxes): | | | (a) Statement of financial condition. | | | (b) Notes to consolidated 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). | | | LJ (d) Statement of cash flows. | | | ال (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. | | | LJ (f) Statement of changes in liabilities subordinated to claims of creditors. | | | J (g) Notes to consolidated financial statements. | | | □ (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable. | | | (i) Computation of tangible net worth under 17 CFR 240.18a-2. | | | □ (j) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. | | | പ (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or | | | Exhibit A to 17 CFR 240.18a-4, as applicable. | | | | - [ (I) Computation for Determination of PAB Requirements under Exhibit A to § 240.15c3-3, - □ (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3. - □ (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.15c3-3(p)(2) or 17 CFR 240.18a-4, as applicable. - □ (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-2, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences exist. - □ (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - ص (q) Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. - □ (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - □ (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 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 240.17a-12, as applicable. - □ (y) Report describing any material inadequacies 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(e)(3) or 17 CFR 240.18a-7(d)(2), as applicable. {2}------------------------------------------------ Financial Statements and Supplementary Information April 30, 2025 (With Report of Independent Registered Public Accounting Firm Thereon) {3}------------------------------------------------ ![](_page_3_Picture_0.jpeg) # **Report of Independent Registered Public Accounting Firm** To the Members of Lockton Investment Securities, LLC # *Opinion on the Financial Statement* We have audited the accompanying balance sheet of Lockton Investment Securities, LLC (the "Company"), as of April 30, 2025, that is filed pursuant to Rule 17a-5 under the Securities Exchange Act of 1934, 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 as of April 30, 2025, in conformity with accounting principles generally accepted in the United States of America. # *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 to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion. Dallas, Texas June 27, 2025 We have served as the Company's auditor since 2023. {4}------------------------------------------------ Balance Sheet April 30, 2025 #### Assets | Cash and cash equivalents
Commissions and fees receivable
Producer members receivable
Prepaid expenses | \$ 4,313,650
194,042
38,393
31,446 | |-----------------------------------------------------------------------------------------------------------------|---------------------------------------------| | Total assets | \$ 4,577,531 | | Liabilities and Members' Equity | | | Producer members payable
Accounts payable
Payable to affiliates, net
Accrued expenses: | \$
479,229
324
892,502 | | Interest | 95 | | Other
Cancellation reserve
Producer unit purchases | 11,767
10,285
6,205 | | Total liabilities | 1,400,407 | | Members' equity | 3,177,124 | | Total liabilities and members' equity | \$ 4,577,531 | See accompanying notes to financial statements. {5}------------------------------------------------ #### Notes to Financial Statements April 30, 2025 #### (1) Nature of Operations Lockton Investment Securities, LLC (the Company), a subsidiary of Lockton Insurance Agency, LLC (Lockton), is organized in the state of Missouri. The Company is a limited liability company approved to conduct business as a registered broker-dealer in securities under the Securities Exchange Act of 1934. The Company is an exemptive status stand-alone broker-dealer, operating as a limited broker-dealer on its own behalf and is enabled to conduct securities activities, which may include the sale of variable contracts and mutual funds through employee benefit plans. The Company does not maintain custody or receive customer funds or securities; customer accounts are held by plan vendors. The Company handles individual accounts on a subscription-way basis direct with the fund company or carrier. In addition, the Company is a member of the Financial Industry Regulatory Authority (FINRA), and the Securities Investor Protection Corporation (SIPC) and is subject to the rules and regulations of each agency. The Company is a subsidiary of Lockton, with Lockton (Corporate Member) owning the Corporate Unit. The associates who have the primary responsibility for establishing new client relationships (Producer Members) own the Producer Units. The Producer Members derive their compensation from the profits of the Company after providing a predetermined allocation of profits to Lockton as the holder of the Corporate Unit. While the legal form of payments to Producer Members is a capital distribution, the Company reflects such payments in the statement of operations as selling expenses. Profits of the Company used to determine Producer Member compensation (Producer Profit Return) generally represent revenue less selling and general and administrative expense. #### (2) Summary of Significant Accounting Policies #### (a) Basis of Presentation The accompanying financial statements are presented in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). #### (b) Use of Estimates The preparation of financial statements in conformity with U.S. GAAP 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 dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. #### (c) Cash and Cash Equivalents The Company considers all liquid investments with original maturities of three months or less to be cash equivalents. At April 30, 2025, cash and cash equivalents consisted of a commercial checking account and a money market mutual fund. Deposits maintained in the commercial checking account are insured by the Federal Deposit Insurance Corporation (FDIC) up to \$250,000. The Company's deposits may have exceeded the FDIC insurance limits during the year ended April 30, 2025. {6}------------------------------------------------ Notes to Financial Statements April 30, 2025 Certain investments in money market funds are not insured or guaranteed by the U.S. government or by the underlying corporation; however, management believes that credit risk related to these investments is minimal. #### (d) Revenue Recognition The Company's revenue subject to the guidance of Accounting Standards Codification (ASC) Topic 606 – Revenue from contracts with customers is comprised principally of commissions paid by the plan vendors and fees paid directly by clients for consulting services related to qualified retirement plans and non-qualified executive benefit programs. Commission revenue from plan vendors generally represents a percentage of the fair value of the plan assets held on account by the customer and is materially affected by fluctuations in the fair value of the assets in the plan. Commissions received directly from the plan vendor and fees paid directly by clients are recognized as performance obligations are met, generally over time for compliance services and investment monitoring. Payment terms are commensurate with the underlying performance obligations and no significant judgements were made in applying the revenue recognition policy. The economic conditions which affect the Company's operations are related to overall trends in the economy and their impact on the insurance and mutual fund industries. A cancellation reserve is recognized for commissions that are subject to chargeback and is estimated based on historical chargeback rates. Under current revenue recognition guidance, the Company is required to capitalize costs to obtain or fulfill a contract that are expected to be recovered and amortize on a systematic basis consistent with the pattern of the transfer of the good or services. The Company elected the practical expedient to expense sales commissions as incurred related to contracts that are one year or less. The Company has no significant instances of long duration contracts that would result in sales commissions amortizing outside of the current reporting period, and therefore has no contract costs capitalized for these arrangements. In accordance with the Company's operating agreement, sales commissions are recognized commensurate with the fulfillment of performance obligations and recognition of revenue. Costs to fulfill a customer contract are not significant in the context of the guidance. Contingent commissions may be paid to the Company by insurance carriers based on retention of clients and the volume of business placed with or through such insurance carriers related to non securities-based insurance products. Interest income is recognized as earned and realized or realizable. #### Contract Balances The Company's timing of revenue recognition may differ from the timing of customer payments. When there is an unconditional right to payment, according to the terms of the contract, the Company records a receivable. For receivables with unsatisfied performance obligations, the Company records deferred revenue until the performance obligations are satisfied. Receivables with no outstanding performance obligations, are recognized as revenue upon issuance of the related invoice. {7}------------------------------------------------ #### Notes to Financial Statements April 30, 2025 The Company takes into consideration the composition of its receivables, current economic conditions, the estimated net realizable value of the underlying collateral, historical loss experience, delinquency, and bankrupt accounts when determining management's estimate of probable credit losses and the adequacy of the allowance for credit losses. Any receivable deemed uncollectible is written off against the allowance. The Company had receivables related to contracts from customers of \$194,042 and \$145,918 as of April 30, 2025 and April 30, 2024, respectively. Management has determined no allowance for credit losses was necessary. The Company had no deferred revenue as of April 30, 2025 and April 30, 2024, respectively. #### (e) Producer Members Receivable and Payable Producer Members receive advances throughout the year based upon estimated annual Producer Profit Return as defined in the Company's operating agreement. At the end of each fiscal year, each Producer Member's Producer Profit Return is adjusted to the actual amount earned based on the economic performance of the Company. This adjustment results in some Producer Members having a negative balance in their capital account as a result of an over distribution and other Producer Members having a positive balance in their capital account resulting from the actual Producer Profit Return exceeding distributions made throughout the year. These amounts due from/to Producer Members are reflected as Producer Members receivable or payable, respectively, in the accompanying balance sheet. ## (f) Income Taxes The Company is considered a "pass-through" entity under the Internal Revenue Code and, therefore, does not pay federal corporate income taxes on its taxable income. Instead, income is reported on its members' federal income tax returns. Accordingly, no income taxes have been recorded in the financial statements for the year ended April 30, 2025. The Income Taxes Topic of the Financial Accounting Standards Board Accounting Standards Codification clarifies accounting for uncertainty in income taxes reported in the financial statements. The interpretation provides criteria for assessment of individual tax positions and a process for recognition and measurement of uncertain tax positions. Tax positions are evaluated on whether they meet the more likely than not standard for sustainability on examination by tax authorities. The Company has no uncertain tax positions that qualify for either recognition or disclosure in the financial statements. Additionally, no interest or penalties have been recorded in the accompanying financial statements related to uncertain tax positions. ## (g) Segment Reporting The Company is engaged in a single line of business as a securities broker-dealer, which is comprised of selling and consulting on nonqualified deferred compensation plans using variable products (including private placement variable universal life) and mutual funds. The Company has identified its President as the chief operating decision maker ("CODM"), who uses net income to evaluate the results of the business, predominantly in the forecasting process, to manage the Company. Additionally, the {8}------------------------------------------------ Notes to Financial Statements April 30, 2025 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 the 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. ### (3) Producer Unit Purchases In exchange for certain restrictive covenants and other considerations from Producer Members, the Company has the option to purchase each Producer Member's Producer Unit upon his/her termination. The agreement to purchase the Producer Members' interest is applicable to all Producer Members and valued based on 25% of the Producer Members' average annual revenue for the preceding three fiscal years and change in value of the Company for the final six months of membership. The purchase is subject to put and call features and is only mandatory upon the death or permanent and total disability of a Producer Member. The Producer Unit meets the attributes for equity classification and, accordingly, is reported as producer units and displayed as a separate component of equity in the statement of changes in members' equity with the related expense recognized in the statement of operations. Once exercised, the purchase obligation is no longer subject to the attributes of equity ownership and, thus, is reclassified from a component of equity to a liability. During the agreed upon payment term, the Company and the Producer Members have agreed that such payments will be funded through a charge of 50% of the purchase obligation to the profits attributable to the Producer Members. However, as future profits of the Company are not guaranteed, U.S. GAAP does not allow for the establishment of a receivable from the future profits attributable to Producer Members. Consequently, despite its belief that only 50% of the cost of purchasing Producer Members' interest will be funded from profits attributed to the Corporate Unit, the Company has recorded the related expense as if it will solely fund the Producer Unit purchase. Balance, April 30, 2024 \$ 771,680 Producer Unit purchases (7,227) Producer Unit expense 38,853 Balance, April 30, 2025 \$ 802,906 Producer Unit activity within the statement of changes in members' equity during the year ended April 30, 2025, is as follows: | Producer Member capital distributions | (400) | | |---------------------------------------|-------|--| | | | | The liability for Producer Unit purchases had the following activity during the year ended April 30, 2025: {9}------------------------------------------------ ## Notes to Financial Statements | LOCKTON INVESTMENT SECURITIES, LLC | | | |-------------------------------------|--------------------|--| | Notes to Financial Statements | | | | April 30, 2025 | | | | | | | | Balance, April 30, 2024 | \$
767,374 | | | | 7,227
(768,396) | | | Producer Unit purchases
Payments | | | Balance, April 30, 2025 \$ 6,205 Because the Company intends for this purchase to be an end-of-career transaction between the Company and the Producer Member, it does not anticipate significant cash requirements in the near term. Committed future payments at April 30, 2025, resulting from terminations and retirements are as follows: #### (4) Transactions with Affiliates The Company and its Producer Members receive services from affiliated entities. These services include, but are not limited to, general executive management, general legal counsel, treasury, tax, financial accounting, information technology services, subscriptions, insurance, bank fees, office accommodations, and various other support functions. Fees paid for these services were \$3,143,754 for the year ended April 30, 2025. These charges are an allocation of costs incurred by the affiliated entities and are accounted for in accordance with agreements among these parties. At April 30, 2025, the Company had a net payable to affiliates of \$892,502 for payments made in the ordinary course of business on behalf of the Company by its affiliates. These transactions with affiliates are accounted for in accordance with agreements among these parties. There can be no assurance that such transactions would have occurred under the same terms and conditions with an unrelated party. # (5) Concentrations The Company is engaged in various brokerage activities with financial institutions. In the event such institutions do not fulfill their obligations, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the issuer of the instrument. It is the Company's policy to review, as necessary, the credit standing of each issuer. The Company's two largest customers contribute approximately 26% and 12% of commissions and fees revenue during the year ended April 30, 2025. Additionally, two different customers comprise approximately 13% and 10% of the Company's commissions and fees receivable as of April 30, 2025. {10}------------------------------------------------ #### Notes to Financial Statements April 30, 2025 # (6) Net Capital Requirements The Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule (SEC Rule 15c3-1), and treated as a registered broker-dealer, which requires the maintenance of minimum net capital defined as the greater of \$25,000 or a ratio of aggregate indebtedness to net capital. As of April 30, 2025, the Company had net regulatory capital of \$2,835,481, which is \$2,742,121 in excess of required net capital as of April 30, 2025. The ratio of aggregate indebtedness was 0.49 to 1. # (7) Commitments and Contingencies The Company may become involved in various legal matters and regulatory inquiries or examinations in the ordinary course of business. The Company is not aware of any material contingencies relating to such matters that would require accrual or disclosure in the financial statements or their notes as of April 30, 2025. The Company does not have any guarantees or other commitments as of April 30, 2025. # (8) Subsequent Events The Company has performed an evaluation of events that have occurred through June 27, 2025. There have been no material subsequent events that occurred during such period that would require disclosure in this report or would be required to be recognized in the financial statements as of April 30, 2025. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.