# BHK SECURITIES, LLC X-17A-5 (2020-03-02) — Broker-dealer annual report
- Company: BHK SECURITIES, LLC
- Form: X-17A-5
- Filed: 2020-03-02
- Period: 2019-12-31
- Accession: 0001352126-20-000001
- CIK: 1352126
- File #: 8-67236
- Material weakness: No
- Auditor: DAVID LUNDGREN & COMPANY CERTIFIED PUBLIC ACCOUNTANTS, CHARTERED
- Auditor location: OLATHE, KS
- Contact: MEREDYTH R HAZZARD
- Phone: 205-322-2025
- Website: bhkllc.com
- Signed by: MEREDYTH R HAZZARD (CEO)
Original filing: https://www.sec.gov/Archives/edgar/data/1352126/000135212620000001/bhkaudit.pdf
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#### UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
OMB APPROVAL OMB Number: 3235-0123 Expires: August 31, 2020 Estimated average burden hours per response 12.00
SEC FILE NUMBER
8-67236
## **ANNUAL AUDITED REPORT FORM X-17A-5 PART Ill**
FACING PAGE
Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder
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*\*Claims for exemption from the requirement that the annual report be covered by the opinion of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis for the exemption. See Section 240.17 a-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.
{1}------------------------------------------------
#### **OATH OR AFFIRMATION**
I, Meredyth R Hazzard , swear ( or affirm) that, to the best of
my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of �BH�K�Se�curi�tie�s, �LLC ������������������������������������' as
of December 31 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:
�/;L-*g* - Signature CEO
Title
-
- **[2J** (b) Statement of Financial Condition.
- [2J ( c) Statement oflncome (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).
-
- **0 ../ (** d) Statement of Changes in Financial Condition. **0 (** e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital. D (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.
-
- **[2J** U) A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule l 5c3-l and the Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3. **0** (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of
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- 0./ ../ (I) An Oath or Affirmation. **0** (m) A copy of the SIPC Supplemental Report. **0** (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 240.17 a-5(e)(3).*
{2}------------------------------------------------
BHK SECURITIES, LLC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION YEAR ENDED DECEMBER 31, 2019
{3}------------------------------------------------
#### TABLE OF CONTENTS
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{4}------------------------------------------------
DAVID B. LUNDGREN, r,tBA, CPA CATHERINE LUNDGREN MBA, CPA
TELEPHONE (913) 782·9530 FACSIMILE; (91 3) 7 82-9564
#### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Members of BHK Securities, LLC
### Opinion on the Financial Statements
We have audited the accompanying statement of financial condition of BHK Securities, LLC as of December 31, 2019, the related statements of operations, changes in member's equity, and cash flows for the year then ended, and the related notes and schedules (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of BHK Securities, LLC as of December 31, 2019, 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 BHK Securities, LLC's management. Our responsibility is to express an opinion on BHK Securities, LLC'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 BHK Securities, LLC 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
Schedule I, II, and Ill have been subjected to audit procedures performed in conjunction with the audit of BHK Securities, LLC's financial statements. The supplemental information is the responsibility of BHK Securities, LLC'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. ln our opinion, the Schedule I, II, and Ill are fairly stated, in all material respects, in relation to the financial statements as a whole.
Olathe, Kansas February 27, 2020
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### STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2019
### **ASSETS**
| C
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### **LIABILITIES AND MEMBER'S EQUITY**
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{6}------------------------------------------------
### STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 2019
#### **REVENUES** Advisory Fee Mutual Fund distribution fees Commissions Interest, dividends & other income **EXPENSES** Employee compensation and benefits Occupancy Advisory Platform Fees Communications and data processing Professional fees Business and professional development Exchange and clearance fees Business taxes and licenses Office and administrative Insurance Trading errors **NET INCOME** \$ 905,105 322,619 1,505 105,018 1,334,247 179,955 47,958 237,868 53,707 75,087 25,818 21, 158 31,733 10,679 7,208 103 691,274 \$ 642,973
{7}------------------------------------------------
### STATEMENT OF CHANGES IN MEMBER'S EQUITY FOR THE YEAR ENDED DECEMBER 31, 2019
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{8}------------------------------------------------
### STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2019
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{9}------------------------------------------------
### **1. ORGANIZATION AND NATURE OF BUSINESS**
BHK Securities, LLC (the Company) is an introducing Broker Dealer that was organized in 2006 as an LLC with perpetual duration for the purpose of engaging in the business of effecting transactions in securities for the accounts of others, effecting transactions in securities for the Company's own account, to act as intermediary between buyers and sellers, to charge commissions, to act as an agent when buying securities to act as a principal when selling securities and to engage in all other activities related incidental thereto. The Company is a broker-dealer registered with the Securities and Exchange Commission (SEC) and is a member of various exchanges and the Financial Industry Regulatory Authority ("FINRA"). The Company is a wholly owned subsidiary ofBHK Holdings, LLC (the Parent).
### **2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
*Basis of Presentation -* The Company is engaged in a single line of business as a securities broker-dealer, which comprises several classes of services. The financial statements are prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles.
*Use of Estimates -* The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.
*Cash and Cash Equivalents -* For the purposes of the Statement of Cash Flows, the Company considers all highly liquid investments, with an original maturity of three months or less, that are not held for sale, to be cash equivalents. From time to time, the Company may maintain cash balances with financial institutions in excess of federally insured limits.
*Receivable from Clearing Organization -* The Company reports receivables at net realizable value. Management determines the allowance for doubtful accounts based on historical losses and current economic conditions. On a continuing basis, management analyzes delinquent receivables and once these receivables are determined to be uncollectible, they are written-off through a charge against an existing allowance account or against earnings. The Company is also required, by agreement, to maintain at all times a broker's deposit account with its clearing broker in the amount of \$100,000.
### *Revenue Recognition -*
On January 1, 2018, the Company adopted ASU 2014-09 *Revenue from Contracts with Customers* and all subsequent amendments to the ASU (collectively, "ASC 606"), which
{10}------------------------------------------------
*Evaluation of subsequent events -* Management has assessed subsequent events through February 25, 2020, the date the financial statements were available to be issued and concluded no events or transactions occurred during that period requiring recognition or disclosure.
*Accounting Standards -* The Company is evaluating new accounting standards and will implement as required.
#### **3. TRANSACTIONS WITH CLEARING ORGANIZATION**
The Company has entered into a clearing agreement with Wells Fargo Clearing Services, LLC under the trade name First Clearing. Under the terms of this agreement, the Company utilizes the clearing, execution and other services provided by First Clearing, (FC). Specific services include execution of orders for the Company's customers whose cash or margin accounts have been accepted by FC; generation, preparation and mailing of confirmations of customer accounts; preparation and mailing of summary monthly or quarterly statements; settlements of contracts and transactions in securities; engagement in all cashiering functions for the customer accounts; construction and maintenance of books and records for all transactions executed and cleared through FL; and, reporting of orders entered into FC's order entry system by FC on behalf of the Company in accordance with the FINRA Order Audit Trail System (OATS). Under this agreement, the Company is required at all times to maintain a minimum net capital of \$100,000, as computed in accordance with Rule **l** 5c3-l. The Company was in compliance with respect to this agreement at December 31, 2019.
#### **4. RELATED PARTY TRANSACTIONS**
The Company is a wholly owned subsidiary of BHK Holdings, LLC. In connection with this relationship, the Company and its Parent have executed an expense sharing agreement whereby the Company receives a monthly allocation of expenses incurred by the Parent on its behalf. During 2019, the Company incurred expenses under this agreement totaling \$240,775. The Company owed its Parent Company \$0.00 related to these intercompany transactions. Included in these amounts is a provision for rent payments. The total amount of rent expensed by the Company for the year ended December 31, 2019 amounted to \$46,477. The Company's portion of future minimum rent payments as of December 31, 2019 is as follows:
| 2
02
0 | \$
4
6
,4
77 |
|--------------|--------------------------|
| 2
02
1 | 4
6
4
77 |
| | \$
9
3
,9
54 |
#### **5. EMPLOYEE BENEFIT PLANS**
The Company participates in the Parent Company's 40lk profit sharing retirement plan covering all employees who meet eligibility requirements. The Company's annual discretionary contribution to the plan is based on employee eligible earnings and results of the
{11}------------------------------------------------
### SUPPLEMENTARY INFORMATION
{12}------------------------------------------------
### SCHEDULE II COMPUTATION FOR DETERMINATION OF RESERVE REQUIREMENTS UNDER RULE 15c3-3 OF THE SECURITIES AND EXCHANGE COMMISSION AS OF DECEMBER 31, 2019
The Company is exempt from the provisions of Rule 15c3-3 under the Securities Exchange Act of 1934, pursuant to paragraph (k)(2)(ii) of the Rule, and was in compliance with the conditions of the exemption at December 31, 2019.
### SCHEDULE III
### INFORMATION RELATING TO THE POSSESSION OR CONTROL REQUIREMENTS UNDER RULE 15c3-3 OF THE SECURITIES AND EXCHANGE COMMISSION AS OF DECEMBER 31, 2019
The Company is exempt from the provisions of Rule 15c3-3 under the Securities Exchange Act of 1934, pursuant to paragraph (k)(2)(ii) of the Rule, and was in compliance with the conditions of the exemption at December 31, 2019.
{13}------------------------------------------------
DAVID B. LUNDGREN, MBA, CPA CATHERINE LUNDGREN MBA, CPA
TELEPHONE (91 3) 782-9530 FACSIMILE (913) 782-9564
#### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Members of BHK Securities, LLC
We have reviewed management's statements, included in the accompanying Exemption Report for year ended December 31, 2019, in which (1} BHK Securities, LLC identified the following provisions of 17 C.F.R. §15c3-3(k} under which BHK Securities, LLC claimed an exemption from 17 C.F.R. §240.15c3-3: (k}(2}(ii) (exemption provisions} and (2) BHK Securities, LLC stated that BHK Securities, LLC met the identified exemptron provisions throughout the most recent fiscal year without exception. BHK 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 BHK 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)(2)(ii Rule 15c3-3 under the Securities Exchange Act of 1934.
Olathe, Kansas February 27, 2020
{14}------------------------------------------------
2200 Lakeshore Drive Suite 250 Birmingham, AL 35209
(205) 322-2025 (888) 529-2610 Fax (205) 322-9025 www.bhkllc.com
### **MANAGEMENT EXEMPTION REPORT**
BHK Securities, LLC, ("Company") is a registered broker-dealer subject to SEC Rule l 7a-5 ("Reports to be made by certain brokers and dealers"). This Exemption Report was prepared as required by Rule l 7a-5( d)( 1) and ( 4 ). To the best of its knowledge and belief, the Company states the following:
Throughout the fiscal year ended December 31, 2019, the Company claimed an exemption to SEC Rule l 5c3-3 pursuant to paragraph k(2)(ii) ("identified exemption provision").
The Company has met the identified exemption provision throughout the most recent fiscal year without exception.
I, Robby Hazzard, swear (or affirm) that, to my best knowledge and belief, this Exemption Report is true and correct.
By: Meredyth R. Hazzard CEO/FIN OP
Dated: 27 February 2020
{15}------------------------------------------------
DAVID 8, LUNDGREN, MBA, CPA CATHERINE LUNDGREN, MBA, CPA
TELEPHONE (913) 782-9530 FACSIMILE (91 3) 782-9564
#### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON APPLYING AGREED-UPON PROCEDURES
### Board of Directors of BHK Securities LLC
We have performed the procedures included in Rule 17a-5(e)(4) under the Securities Exchange Act of 1934 and with the Securities Investor Protection Corporation (SIPC) Series 600 Rules, which are enumerated below, which were agreed to by BHK Securities LLC (Company) and the SIPC, solely to assist you and the SIPC in evaluating the Company's compliance with the applicable instructions of the General Assessment Reconciliation (Form SIPC-7) for the year ended December 31, 2019. Management of the Company is responsible for its Form SIPC-7 and for its compliance with those requirements. This agreed-upon procedures engagement was conducted in accordance with attestation standards of the Public Company Accounting Oversight Board (United States) and in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose.
The procedures we performed and our findings are as follows:
- 1) Compared the listed assessment payments in Form SI PC-7 with respective bank disbursement records entries, noting no differences;
- 2) Compared the Total Revenue amount reported on the Annual Audited Report Form X-17A-5 Part Ill for the year ended December 31, 2019 with the Total Revenue amount reported in Form SIPC-7 for the year ended December 31, 2019, noting no differences;
- 3) Compared any adjustments reported in Form SIPC-7 with supporting schedules and working papers, noting no differences;
- 4) Recalculated the arithmetical accuracy of the calculations reflected in Form SIPC-7 and in the related schedules and working papers supporting the adjustments, noting no differences; and
- 5) Compared the amount of any overpayment applied to the current assessment with the Form SIPC-7 on which it was originally computed, noting no differences.
We were not engaged to, and did not conduct an examination, the objective of which would be the expression of an opinion on compliance with the applicable instructions of the Form SIPC-7. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.
This report is intended solely for the information and use of the specified parties listed above and is not intended to be and should not be used by anyone other than these specified parties.
*?:2*�*/l*
February 27, 2020
{16}------------------------------------------------
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#### SECURITIES INVESTOR PROTECTION CORPORATION P.O. Box 92185 Washington, D.C. 20090-2185 202-371-8300
### General Assessment Reconciliation
**SIPC-7** (36-REV 12/18)
### For the fiscal year ended 12/31/2019
(Read carefully the instructions in your Working Copy before completing this Form)
### TO BE FILED BY ALL SIPC MEMBERS WITH FISCAL YEAR ENDINGS
1. Name of Member, address, Designated Examining Authority, 1934 Act registration no. and month in which fiscal year ends for purposes of the audit requirement of SEC Rule 17a-5:
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{17}------------------------------------------------
## DETERMINATION OF "SIPC NET OPERATING REVENUES" AND GENERAL ASSESSMENT Amounts for the fiscal period
beginning 01/01/2019 and ending 12/31/2019
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{18}------------------------------------------------
#### SIP C-7 In s t r u c tio ns
This form is to be filed by all members of the Securities Investor Protection Corporation whose fiscal years end in 2011 and annually thereafter. The form together with the paym ent is due no later than 60 days after the end of the fiscal year, or after membership termination. A mounts reported herein must be readily reconcilable with the member's records and the Securities and Exchange Com mission Rule 17 a-5 report filed. Questions pertaining to this form should be directed to SIPC via e-m ail at form @sipc.org or by telephoning 202·371-8300.
A. For the purposes of this form, the term "SIPC Net Operating Revenues" shall m e an gross revenues from the se curities business as defined in or pursuant to the applic able se ctions of the Se curities Investor Protection A ct of 1970 ("Act") and Article 6 of SIP C's byla ws (see page 4). less item 2c(9) on page 2.
B. Gross revenues of subsidiaries, except foreign subsidiaries, are required to be included in SIPC Net Operating Revenues on a consolidated basis except for a subsidiary filing sep arately as explained hereinafter.
If a subsidiary w as required to file a Rule 17a-5 annual audited statem ent of inc o me separately and is also a SIPC m e mber, then such subsidiary must itself file SIP C-7, pay the assessm ent, and should not be cons olidated in your SIP C-7.
SIPC Net O perating Re v enues of a prede c essor m e mber which are not included in item 2a, were not reported separately and the SIPC assessm ents were not paid thereon by such prede c essor, shall be included in item 2b(1).
C. Your General Assessm ent should be computed as follo ws:
- (1) *Line 2a* For the applicable period enter total revenue based upon amounts reported in your Rule 17a·5 Annual Audited Statement of Income prepared in conformity with generally accepted accounting principles applicable to securities brokers and de alers. or if exempted from that rule, use X-17 A-5 (FO CUS Report) Line 12, Code 4030.
- (2) *A djustm e nts* The purpose of the adjustm ents on page 2 is to determine SIPC Net Operating Revenues.
- (a) *A d ditions* Lines 2b(1) through 2b(7) assure that assess able inc o me and gain items of SIPC Net Operating Re v enues are totaled, unreduced by any loss es (e.g., if a net loss w as incurred for the period from all trans a ctions in trading ac count se curities, that net loss do es not reduce other assessable re v enues). Thus, line 2b(4) would include all short dividend and interest pa y m ents including those incurred in reverse conv ersion accounts, rebates on stock loan positions and repo interest which ha ve be en netted in determining line 2(a).
- (b) *Deductions* Line 2c(1 J through line 2c(9) are either provided for in the statue, as in deduction 2c(1), or are allo wed to arrive at an assessm ent base consisting of net operating revenues from the securities business. For example, line 2c(9) allo ws for a deduction of either the total of interest and dividend expense (not to exce ed interest and dividend incom e), as reported on FO C US line 22/PA RT IIA line 13 (Code 4075), plus line 2b(4) or 40% of interest earn ed on custom ers' securities accounts (40% of FO CUS Line 5 Code 3960). Be certain to complete both line (i) and (ii), entering the greater of the two in the far right column. Dividends paid to shareholders are not considered "E xpense" and thus are not to be included in the deduction. Likewise, interest and dividends paid to partners pursuant to the partnership agree m ents would also not be deducted.
*If the am o u nt rep o rted on line 2c (8) ag gregates to \$10 0,0 00 or greate r, sup porting doc u m e ntation m ust ac c o m p a ny the form that identifies these deductio ns. Exam ples of sup p o rt information include; co ntractual ag ree m e nts, p rosp e ctuses, and limited p a rtne rship doc u m e ntation.*
- (i) Determine your SIPC Net Operating Revenues, item 2d, by adding to item 2a, the total of item 2b, and deducting the total of item 2c.
- (ii) Multiply SIPC Net Operating Re venues by the applic able rate. Enter the resulting am ount in item 2e and on line 2A of page 1.
- (iii) Enter on line 28 the assessment due as refle cted on the SIP C-6 previously filed.
- (iv) Subtract line 28 and 2C from line 2A and enter the difference on line 20. This is the balance due for the period.
- (v) Enter interest computed on late paym ent (if applic able) on line 2E.
- (vi) Enter the total due on line 2F and the pa y m ent of the am ount due on line 2G.
- (vii) Enter overpayment carried forw ard (if any) on line 2H.
D. Any SIPC m e mber which is also a bank (as defined in the Se curities Exchange A ct of 1934) m ay exclude from SIPC Net Operating Rev enues dividends and interest rec eived on se curities in its investm ent ac c ounts to the extent that it can de m onstrate to SIP C's satisfa ction that such se curities are held, and such dividends and interest are received, solely in conne ction with its operations as a bank and not in conne ction with its operations as a broker, de aler or m e mber of a national securities exchang e. Any mem b er who excludes from SIPC Net Operating Revenues any dividends or interest pursuant to the preceding sentence shall file with this form a supple m entary statem ent setting forth the am ount so excluded and proof of its entitl e m ent to such exclusion.
E. *Interest on A ssessments* If all or any part of assessm ent payable under Section 4 of the Act has not been postm arked within 15 days after the due date thereof, the m e mber shall pay, in addition to the am ount of the assessment, interest at the rate of 20% per annum on the unpaid portion of the assessm ent for each day it has been overdue.
F. Se curities and Ex change Co m mission Rule 17a-5(e) (4) requires those who are not exempted from the audit requirem ent of the rule and whose gross rev enues are in excess of \$500,000 to file a supple m ental independent public accountants report co vering this SIP C-7 no later than 60 da ys after their fis cal year ends.
M all this co m pleted form to SIPC to g ether with a che ck for the am o unt du e, m a de pa y a ble to SIP C, using the enclo s ed return PO BOX env elo p e, pay via A CH D e bit Authoriz ati on through SIP C's A CH sy stem at w w w.sip c.orglfor-m e m b ers/as s e s s m ents or wire the pa y m ent to:
On the wire Id entify the na me of the firm and Its SEC R e gistrati on 8-# and label It as "for ass ess m ent." Please tax a copy of the ass essm ent form to (202)-223-1679 or e-m ail a co py to form @slp c.org on the sa me day as the wire.
{19}------------------------------------------------
### **From Section 16(9) of the Act:**
The term "gross revenues from the securities business" means the sum of (but without duplication)-
(A) commissions earned in connection with transactions in securities effected for customers as agent (net of commissions paid to other brokers and dealers in connection with such transactions) and markups with respect to purchases or sales of securities as principal;
(8) charges for executing or clearing transactions in securities for other brokers and dealers;
- (C) the net realized gain, if any, from principal transactions in securities in trading accounts;
- (0) the net profit, if any, from the management of or participation in the underwriting or distribution of securities;
(E) interest earned on customers' securities accounts;
(F) fees for investment advisory services (except when rendered to one or more registered investment companies or insurance company separate accounts) or account supervision with respect to securities;
(G) fees for the solicitation of proxies with respect to, or tenders or exchanges of, securities;
(H) income from service charges or other surcharges with respect to securities;
(I) except as otherwise provided by rule of the Commission, dividends and interest received on securities in investment accounts of the broker or dealer;
(J) fees in connection with put, call, and other options transactions in securities;
(K) commissions earned for transactions in (i) certificates of deposit, and (ii) Treasury bills, bankers acceptances, or commercial paper which have a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof, the maturity of which is likewise limited, except that SIPC shall by bylaw include in the aggregate of gross revenues only an appropriate percentage of such commissions based on SIPC's loss experience with respect to such instruments over at least the preceding five years; and
(L) fees and other income from such other categories of the securities business as SIPC shall provide by bylaw.
Such term includes revenues earned by a broker or dealer in connection with a transaction in the portfolio margining account of a customer carried as securities accounts pursuant to a portfolio margining program approved by the Commission. Such term does not include revenues received by a broker or dealer in connection with the distribution of shares of a registered open end investment company or unit investment trust or revenues derived by a broker or dealer from the sales of variable annuities, the business of insurance, or transactions in security futures products.
### **From Section 16(14) of the Act:**
The term "Security" means any note, stock, treasury stock, bond, debenture, evidence of indebtedness, any collateral trust certificate, preorganization certificate or subscription, transferable share, voting trust certificate, certificate of deposit, certificate of deposit for a security, or any security future as that term is defined in section 78c(a)(55)(A) of this title, any investment contract or certificate of interest or participation in any profit-sharing agreement or in any oil. gas or mineral royalty or lease (if such investment contract or interest is the subject of a registration statement with the Commission pursuant to the provisions of the Securities Act of 1933 [15 U.S.C. 77a et seq.]). any put, call, straddle, option, or privilege on any security, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase or sell any of the foregoing, and any other instrument commonly known as a security. Except as specifically provided above, the term "security" does not include any currency, or any commodity or related contract or futures contract, or any warrant or right to subscribe to or purchase or sell any of the foregoing.
# **From SIPC Bylaw Article 6 (Assessments): Section 1 (f):**
The term "gross revenues from the securities business" includes the revenues in the definition of gross revenues from the securities business set forth in the applicable sections of the Act.
### **Section 3:**
For purpose of this article:
(a) The term "securities in trading accounts" shall mean securities held for sale in the ordinary course of business and not identified as having been held for investment.
(b) The term "securities in investment accounts" shall mean securities that are clearly identified as having been acquired for investment in accordance with provisions of the Internal Revenue Code applicable to dealers in securities. (c) The term "fees and other income from such other categories of the securities business" shall mean all revenue related either
directly or indirectly to the securities business except revenue included in Section 16(9)(A)-(L) and revenue specifically excepted in Section 4(c)(3)(C)[ltem 2c(1), page 2].
Note: If the amount of assessment entered on line 2e of SIPC·7 is greater than 1/2 of 1% of 'gross revenues from the securities business' as defined above. you may submit that calculation along with the SIPC·7 form lo SIPC and pay the smaller amount, subject to review by your Examining Authority and by SIPC.
#### **SIPC Examining AnthnriTies·**
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- CBOE Chicago Board Options Exchange, Incorporated CHX Chicago Stock Exchange. Incorporated **4**
-
- FINRA Financial Industry Regulatory Authority NYSE Arca, Inc. NASDAQ OMX PHLX SIPC Securities Investor Protection Corporation
Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.