# BHK SECURITIES, LLC X-17A-5 (2022-03-29) — Broker-dealer annual report - Company: BHK SECURITIES, LLC - Form: X-17A-5 - Filed: 2022-03-29 - Period: 2021-12-31 - Accession: 0001352126-22-000001 - CIK: 1352126 - File #: 8-67236 - Type: Broker-dealer - Material weakness: No - Auditor: David Lundgren & Co - Auditor location: Olathe, KS - Contact: Meredyth R Hazzard - Phone: 205-874-1002 - Signed by: Meredyth R Hazzard (CEO / FINOP) Original filing: https://www.sec.gov/Archives/edgar/data/1352126/000135212622000001/bhkaudit2021pub.pdf --- {0}------------------------------------------------ | PUBLICLY AVAILABLE | |--------------------| |--------------------| **UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549** 0MB APPROVAL 0MB Number: 3235-0123 Expires: Oct. 31, 2023 Estimated average burden ## **ANNUAL REPORTS FORM X-17A-5 PART** Ill | 8
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: | | | | | **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 **O 1/01/2021** AND ENDING **12/31/2021** MM/DD/VY MM/DD/VY **A. REGISTRANT IDENTIFICATION** # NAME OF FIRM: BHK Securities, LLC TYPE OF REGISTRANT (check all applicable boxes): [ Broker-dealer [] Security-based swap dealer Check here if respondent is also an OTC derivatives dealer Major security-based swap participant ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) # 2200 Lakeshore Drive, Suite 250 | (N
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le | | \* Claims for exemption from the requirement that the annual reports be covered by the reports of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 CFR 240.17a-5(e)(1)(ii), if applicable. **Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid 0MB control number.** {1}------------------------------------------------ #### **OATH OR AFFIRMATION** | I,
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z | | CEO I FINOP *{gee* i%5rs.sn *-tie,* #### **This filing\*\* contains (check all applicable boxes):** - iii (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). - (d) Statement of cash flows. - (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - (f) Statement of changes in liabilities subordinated to claims of creditors. - (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. - D (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. - [l (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-l, 17 CFR 240.18a-1, 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. - iii (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. - iii (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. - El (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 240.15c3-1e or 17 CFR 240.17a-12, as applicable. - D (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(e)(3) or 17 CFR 240.18a-7(d)(2), as applicable.* {2}------------------------------------------------ ## BHK SECURITIES, LLC STATEMENT OF FINANCIAL CONDITION For the Year Ended December 31, 2021 (With Report of Independent Registered Public Accounting Firm Thereon) {3}------------------------------------------------ ## BHK SECURITIES, LLC TABLE OF CONTENTS FOR THE YEAR ENDED DECEMBER 31, 2021 | REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM……… | 1 | |-----------------------------------------------------------------------------------------------------------------------------|--------| | FINANCIAL
STATEMENTS | | | Statement
of
Financial Condition…………………………………………………
Notes to the Statement of Financial Condition…………………………………………. | 2
3 | {4}------------------------------------------------ DAVID B. LUNDGREN, **MBA,** CPA CATHERINE LUNDGREN **MBA,** CPA **TELEPHONE** (913) **782-9530 FACSIMILE (913) 782-9564** #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of BHK Securities, LLC #### **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of BH K Securities, LLC as of December 31, 2021, and the related notes (collectively referred to as the "financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of BHK Securities, LLC as of December 31, 2021 in conformity with accounting principles generally accepted in the United States of America. #### **Basis for Opinion** This financial statement is the responsibility of BHK Securities, LLC's management. Our responsibility is to express an opinion on BHK Securities, LLC'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 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 statement is free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statement, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial 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. We have served as BHK Securities, LLC's auditor since 2017. Olathe, Kansas March 25, 2022 {5}------------------------------------------------ | ASSETS | | |-----------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------| | Cash and cash equivalents | \$
277,120 | | Deposits with clearing organizations | 102,952 | | Receivables from brokers, dealers and clearing organizations | 591 | | Prepaid deposits and expenses | 12,829 | | TOTAL ASSETS | \$
393,492 | | LIABILITIES AND MEMBER'S EQUITY
LIABILITIES
Deferred revenue
Accounts payable, accrued expenses
and other
liabilities
TOTAL LIABILITIES | \$
1,191
1,466
2,657 | | MEMBER'S
EQUITY
Member's equity | 390,835 | | TOTAL LIABILITIES AND MEMBER'S EQUITY | \$
393,492 | See notes to the Statement of Financial Condition. {6}------------------------------------------------ ### 1. Organization and Nature of Business BHK Securities, LLC (Company) is a dually registered broker dealer and registered investment advisor with the Securities and Exchange Commission (SEC) and member Financial Industry Regulatory Authority (FINRA). The Company is a wholly owned subsidiary of BHK Holdings, LLC (Parent). The Company is an introducing broker and executes and clears securities transactions and providesthe custody client assets primarily through Wells Fargo Clearing Services, LLC under the trade name First Clearing as clearing broker. ## 2. Significant Accounting and Reporting Policies ## Basis of Presentation The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States (GAAP) as determined by the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). The Company believes that the disclosures in these financial statements are adequate and not misleading. In the opinion of management, the financial statements contain all adjustments necessary for a fair presentation of the Company's financial position as of December 31, 2021 and is not necessarily indicative of the results for any future period. #### Use of 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. #### Cash and Cash Equivalents The Company maintains its cash in brokerage deposit accounts which, at times, may exceed federally insured limits. The Company monitors these accounts and does not expect to incur any losses from such accounts. The Company has defined cash and cash equivalents as highly liquid investments with original maturities of less than 90 days that are not held-for-sale in the ordinary course of business. The recorded value of such instruments approximates their fair value. At December 31, 2021, the Company had \$277,120 cash equivalents. #### Receivable from Brokers, Dealers and Clearing Organizations The Company clears all of its proprietary and customer transactions through First Clearing on a fully disclosed basis. Based on the terms and conditions of the Company's agreement with its clearing broker, the amount receivable from the clearing broker represents cash on hand plus commission receivables and less amounts payable for transaction costs on unsettled securities trades. {7}------------------------------------------------ ## 2. Significant Accounting and Reporting Policies, Continued The Company is required, by agreement, to maintain at all times a broker's deposit account with its clearing broker in the amount of \$100,000. Deposits with clearing organizations consist of cash collateral that provides the Company with clearance and settlement of security transaction service. The balance of the deposit account at December 31, 2021 was \$102,952. The Company reports receivables at net realizable value. Amounts receivable from and payable to brokers, dealers, and clearing organizations at December 31, 2021 were as follows: Receivables from brokers, dealers and clearing organizations \$ 591 \$ - | Receivable | Payable | |------------|---------| | | | ## Income Taxes The Company is a limited liability company that is treated as a disregarded entity for income tax purposes as all income or lossflowsthrough to its Parent. Therefore, no income tax expense or liability is recorded in the accompanying financial statements. The Company follows the FASB Accounting Standards Codification (ASC) 740-10, Accounting for Uncertainty in Income Taxes. Under FASB ASC 740-10, the Company is required to evaluate each of its tax positions to determine if they are "more likely than not" of being sustained "when challenged" or "when examined" by the applicable taxing authority. Tax positions not deemed to meet the "more likely than not" threshold would be recorded as a tax expense and liability in the current year. A tax position includes an entity's status, including its status as a pass-through entity, and the decision not to file a tax return. Management has evaluated the Company's tax positions and concluded that the Company has taken no uncertain tax positions that require adjustment to the financial statements to comply with the provisions of this guidance as of December 31, 2021. The Company is not currently under audit by any tax jurisdiction. ### Current Expected Credit Losses In June 2016, the FASB issued ASU No. 2016‐13 (Topic 326) Measurement of Credit Losses on Financial Instruments, which significantly changed the ways entities recognize and record credit losses on financial instruments such loans, loan commitments and other financial assets. The CECL model requires measurement of expected credit losses for financial assets measured at amortized cost, net investments in leases, and off-balance sheet credit exposures based on historical experience, current conditions, and reasonable and supportable forecasts over the remaining contractual life of the financial assets. {8}------------------------------------------------ #### 2. Significant Accounting and Reporting Policies, Continued The Company has a fully disclosed clearing agreement with First Clearing; thus, receivables from brokers, dealers and clearing organizations include amounts receivable and cash on deposit with First Clearing. Management determinesthe 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. For financial assets measured at amortized cost, (e.g., cash equivalents and receivables from brokers, dealers, and clearing organizations), the Company has concluded that there are de minimis expected credit losses based on the nature and contractual life or expected life of the financial assets. ### Coronavirus In the second year of the COVID-19 coronavirus pandemic, the adverse impacts to global commercial activity have continued to contribute to significant volatility in the financial markets. Government-imposed responses and other related recovery measures intended to control the spread of the disease have created a variety of unintended challenges and risks. As such, economic uncertainty, changes in consumer demand, disrupted supply chains, staffing shortages and hybrid working patterns all continue to have a negative impact on many industries. The continued development and fluidity of this situation precludes any prediction as to the ultimate material adverse impact of the COVID-19 coronavirus. Nevertheless, the COVID-19 coronavirus presents material uncertainty and risk with respect to the Company, its performance, and its financial results. At present, the extent to which the coronavirus may impact the Company's financial condition or results of operations in future periods is uncertain. #### 3. Transactions with Clearing Organizations 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. Specific services include execution of orders for the Company's customers whose accounts have been accepted by First Clearing; 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 customer accounts; construction and maintenance of books and records for all transactions executed and cleared through First Clearing; and, reporting of orders entered into the clearing broker's order entry system by First Clearing on behalf of the Company. 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 15c3-1. The Company was in compliance with respect to this agreement at December 31, 2021. {9}------------------------------------------------ #### 4. Related Parties 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. The Company had no payable due to Parent at December 31, 2021. ## 5. Employee Benefit Plans The Company participates in the Parent Company's 401k 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 Company's operations. #### 6. Net Capital Requirements The Company is subject to the SEC's Uniform Net Capital Rule (SEC Rule 15c3-1) of the Securities Exchange Act of 1934, which requires maintenance of minimum net capital. Under the Rule, the Company is required to maintain minimum net capital, as defined, equal to the greater of \$100,000 or 6 2/3% of aggregate indebtedness and the ratio of aggregate indebtedness to net capital cannot exceed 1500 percent (15:1). At December 31, 2021, the Company had net capital of \$370,306 which was \$270,306 in excess of its required net capital and the ratio of aggregate indebtedness to net capital was 0.72%. The Company is exempt from the provisions of SEC Rule 15c3-3 under the Securities Exchange Act of 1934, in that the Company's activities are limited to those set forth in the conditions for exemption appearing in paragraph (k)(2)(ii) of the Rule. #### 7. Operating Lease Obligations In accordance with ASU 2016-02, the Company is required to record a right-of-use asset and a corresponding lease liability on the balance sheet for all leases with terms greater than 12 months. All such leases and are to be classified as either finance or operating. The Company had no lease obligations that required recording or disclosures in the December 31, 2021 financial statements. #### 8. Subordinated Liabilities The Company had no liabilities subordinated to the claims of general creditors as of the beginning of the year, end of the year, and during the year ended December 31, 2021. {10}------------------------------------------------ #### 9. Subsequent Events Management has evaluated all events or transactions that occurred after December 31, 2021, through the date of the issued financial statements. During this period, there were no material recognizable subsequent events that required recording or disclosures in the December 31, 2021 financial statements. #### 10. Commitments, Contingencies and Guarantees The Company does not have any commitments, contingencies, or guarantees, including arbitration or other litigation claims that may result in a loss or a future obligation. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.