# M.D. SASS SECURITIES, L.L.C. X-17A-5 (2021-03-31) — Broker-dealer annual report - Company: M.D. SASS SECURITIES, L.L.C. - Form: X-17A-5 - Filed: 2021-03-31 - Period: 2020-12-31 - Accession: 0001353228-21-000003 - CIK: 1353228 - File #: 8-67246 - Material weakness: No - Auditor: Berdon LLP - Auditor location: New York, NY - Contact: Sam Friedman - Phone: 212-710-8028 - Signed by: Sam Friedman (FINOP) Original filing: https://www.sec.gov/Archives/edgar/data/1353228/000135322821000003/mdsslong2020v1.pdf --- {0}------------------------------------------------ #### STATEMENT OF FINANCIAL CONDITION #### DECEMBER 31, 2020 (Filed as public information pursuant to Rule 17a-5(d) under the Securities Exchange Act of 1934) {1}------------------------------------------------ **UNITEnSTATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549** **ANNUAL AUDITED REPORT FORM X-17A-5 PART Ill** | | 0MB APPROVAL | | | |--------------------------|--------------|------------------|---------------| | 0MB Number: | | | 3235-0123 | | Expires: | | October 31, 2023 | 1
i | | Estimated average burden | | | I | | hours | | | onse 12.00! | | | | | | | | SEC FILE NUMBER | |----|-----------------| | 8- | | **FACING PAGE** **Information Required of Brokers and Dealers Pursuant to Section l 7 of the Securities Exchange Act of 1934 and Rule l 7a-5 Thereunder** | | | --
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MM/DD/YY | | | | | | | | NAME OF BROKER-DEALER: M.D. Sass Securities, L.L.C.
ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | | | | | | | | (No. and Street) | | | | | | | 10036 | | | (State) | | (Zip Code) | | | | | | | | | | (Area Code - Telephone Number) | | | | | | | | | | | | | | | | | | | | | | | | | 10017 | | | (City) | (State) | (Zip Code) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | REPORT FOR THE PERIOD BEGINNING 01 /01 /20
55 W. 46th Street, 28th Floor
NY
New York | ~----------
AND ENDING 12/31 /20
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A. REGISTRANT IDENTIFICATION
NAME AND TELEPHONE NUMBER OF PERSON TO CONT ACT IN REGARD TO THIS REPORT
B. ACCOUNTANT IDENTIFICATION
INDEPENDENT PUBLIC ACCOUNT ANT whose opinion is contained in this Report*
(Name - if individual, stale las/, firs/, middle name)
NY
Accountant not resident in United States or any of its possessions.
FOR OFFICIAL USE ONLY | | *\*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 240.1 7 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 0MB control number.** SEC 1410 (11-05) {2}------------------------------------------------ #### **OATH OR AFFIRMATION** | 1, Sam Friedman | , swear (or affirm) that, to the best of | | | | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------|--|--|--| | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of | | | | | | M.D. Sass Securities, L.L.C. | , as | | | | | of December 31 | 2020
, 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: | | | | | | | | | | | | | | | | | | | | | | | | DONNA M. LANGAN
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- | | | | | No. 01LA6144983
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Notary Public | | | | | | This report** contains (check all applicable boxes): | | | | | | 0 (a) Facing Page. | | | | | | 0 (b) Statement of Financial Condition. | | | | | | | D (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). | | | | | | 8 (d) Statement of Changes in Financial Condition.
(e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital. | | | | | | 0 (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. | | | | | | | 0 (j) A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule 15c3-1 and the | | | | | Computation for Determination of the Reserve Requirements Under Exhibit A of Rule I 5c3-3. | | | | | | | 0 (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of | | | | | consolidation.
0 (I) An Oath or Affirmation. | | | | | | D (m) A copy of the SIPC Supplemental Report. | | | | | | | D (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. J 7a-5(e)(3). | | | | | {3}------------------------------------------------ #### **INDEX DECEMBER 31, 2020** | REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM | | |----------------------------------------------------------------|----------| | STATEMENT OF FINANCIAL
CONDITION -
DECEMBER 31
, 2020 | 2 | | NOTES TO STATEMENT OF FINANCIAL CONDITION | 3 -
5 | {4}------------------------------------------------ # **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Member of M.D. Sass Securities, L.L.C. #### **Opinion on the Financial Statements** We have audited the accompanying statement of financial condition of M.D. Sass Securities, L.L.C. (the "Company") as of December 31, 2020, and the related notes to the financial statement (collectively referred to as the "financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company as of December 31 , 2020, in conformity with accounting principles generally accepted in the United States of America. #### **Basis for Opinion** The 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 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 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 be lieve that our audit provides a reasonable basis for our opinion . Certified Public Accountants We have served as the Company's auditors since 2006. New York, New York March 26, 2021 ![](_page_4_Picture_12.jpeg) {5}------------------------------------------------ #### **STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2020** #### **ASSETS** | Cash and cash equivalents | \$ | 398,297 | |---------------------------------------|----|---------------| | Receivable from affiliate | | 822,819 | | Other assets | | 200,923 | | TOTAL ASSETS | \$ | 1,422,039 | | LIABILITIES AND MEMBERS' EQUITY | | | | LIABILITIES: | | | | Accounts payable and accrued expenses | \$ | 230,279 | | MEMBERS' EQUITY | | 1,191
,760 | | TOTAL LIABILITIES AND MEMBERS' EQUITY | \$ | 1,422,039 | The accompanying notes to statement of financial condition are an integral part of this statement. {6}------------------------------------------------ ## **NOTES TO STATEMENT OF FINANCIAL CONDITION** ## NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES M.D. Sass Securities, L.L.C. (the "Company"), a registered broker-dealer with the Securities and Exchange Commission ("SEC") and the Financial Industry Regulatory Authority, Inc. ("FINRA"), was formed on September 23, 2005 primarily to act as a placement agent for various pooled onshore and offshore investment vehicles including hedge funds, private equity funds, commodity funds and fund of funds. The Company acts solely on an agency basis. The Company is a Delaware limited liability company, taxed as a partnership and governed under a limited liability company agreement (the "Agreement"). The Agreement provides for the member's ownership, liabilities of the member, transfers of interest, capital contributions, distribution to the member and profit or loss allocations. The Company is scheduled to terminate on December 31 , 2040 or shall be dissolved upon the occurrence of an event as set forth in the Agreement. The liability of the member shall be limited to the amount of capital contributions which such member is required to make pursuant to the provisions of the Agreement and the member shall have no further liability to contribute money to the Company for, or in respect of, the liabilities or obligations of the Company, and shall not be personally liable for any obligations of the Company. #### (a) Related party relationships The Company entered into a service agreement dated January 31 , 2007 with M.D. Sass Investors Services, Inc. ("Investors"), a related party registered as an investment advisor under Section 203 of the Investment Advisors Act of 1940. The Company provides broker services of marketing interests in investment funds advised by Investors ("Brokerage Services"), for which Investors and certain affiliates and former affiliates of Investors act as General Manager, Managing Member and Investment Advisor, in exchange for services and personnel to be provided by Investors ("Affiliated Services"). The service agreement calls for the Company to be compensated by Investors at an amount equal to 100.5% of all expenses incurred providing these Brokerage Services. All of the Company's expenses are primarily paid by Investors and allocated to the Company. In addition, the Company entered into a service agreement dated January 1, 2014 with Taurus Funds Management ("Taurus"), an affiliated entity, to cover expenses for Brokerage Services and administrative expenses. Taurus has agreed to pay the Company \$20,000 per annum which cannot terminate except as of December 31 st of any calendar year subject to the terms of the agreement. The Company believes its performance obligation is satisfied when (i) the salesmen have procured a signed subscription agreement as such is fulfilled at the date of signing and (ii) other services are provided to the Company. The Company earns distribution fees for marketing and promoting investment funds of registered investment advisors affiliated or formerly affiliated with the Company to institutional clients. Generally, in consideration for these services the Company receives varying percentages of committed capital associated with such institutional clients' investment. The Company believes its performance obligation is the fulfillment of the subscription agreement by the institutional clients and if such is fulfilled at signing. {7}------------------------------------------------ ## **NOTES TO STATEMENT OF FINANCIAL CONDITION** ## NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (a) Related party relationships (Continued) In some cases, the Company will earn the distribution fee on committed and funded capital, payable within a certain period of each drawdown of capital with respect to such commitment. (b) Cash and Cash Equivalents Cash equivalents are defined as short-term, highly liquid money market funds with original maturities of less than 90 days. At December 31 , 2020, substantially all of the cash and cash equivalents were held at one major financial institution. (c) Income Tax The Company is generally not taxed on its mcome or loss; as such taxes are the responsibility of the member. Generally accepted accounting principles (GAAP) require evaluation of the tax positions taken or expected to be taken in the course of preparing the Company's tax returns to determine whether the tax positions are more likely than not sustainable upon examination by the applicable taxing authorities, based on the technical merits of the tax position, and then recognizing the tax benefit that is more likely than not realizable. Tax positions not deemed to meet the more likely than not threshold would be recorded as a tax expense in the current reporting period. Management believes any such positions would be immaterial to the overall financial statements. The Company's federal and state income tax returns for the years after 2016 remain subject to examination by the taxing authorities. (d) Use of Accounting Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. # NOTE 2 - REGULATORY REQUIREMENTS The Company is subject to the SEC Uniform Net Capital Rule 15c3-l under the Securities Exchange Act ("SEA") of 1934 ("the Rule") and has elected to compute its net capital under the Basic Method of the Rule. The Rule requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1 subject to a minimum net capital requirement of \$5,000. At December 31 , 2020, the Company had a net capital of \$335,012 which was \$319,600 in excess of its required net capital. The Company's net capital ratio was .69 to 1. {8}------------------------------------------------ ## **NOTES TO STATEMENT OF FINANCIAL CONDITION** During 2020, the Company is exempt from the provisions of SEA Rule l 5c3-3 under paragraph (k)(2)(i). In 2021 , the Company is exempt from the provisions of SEA Rule 15c3-3 under Footnote 74. ## NOTE 3 - RELATED PARTY TRANSACTIONS Investors, a related party through common ownership, is a registered investment advisor (see note l(a)). Brokerage Services are provided to Investors by the Company. Substantially all expenses have been allocated to the Company from Investors in accordance with a services agreement. This agreement provides that Investors will provide various services and the use of equipment and in return the Company will provide Brokerage Services referred to above. At December 31 , 2020, included in the statement of financial condition is a net receivable of \$822,819 due from Investors related to these relationships. # NOTE 4 - CONTINGENCIES The Company was subject to a FINRA dispute resolution arbitration with an investor in funds managed by affiliates of the Company whereby the investor made a claim of approximately \$346,000 plus other costs against the Company regarding, among other things, the suitability of such funds. On August 27, 2015, the Panel granted the Company's Motion to Dismiss in part with respect to all claims except claims related to one fund pursuant to FINRA Rule 12206. The Panel granted leave for the investor to refile claims relating to the specific fund but currently has not refiled claims. ## NOTE 5 - RISKS AND UNCERTAINTIES In December 2019, an outbreak of a novel strain of coronavirus emerged globally. The financial industry continues to be adversely affected by the global health crisis due to the outbreak. Given the uncertainties surrounding the duration of the outbreak on the financial industry and potential market volatility, the Company cannot reasonably estimate the financial impact on the 2021 financial results. # NOTE 6 - SUBSEQUENT EVENTS The Company has evaluated subsequent events after December 31 , 2020 through March 26, 2021 , the date that the financial statements were available to be issued. 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 December 31 , 2020. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.