# HEDGECO SECURITIES, LLC X-17A-5 (2021-03-31) — Broker-dealer annual report - Company: HEDGECO SECURITIES, LLC - Form: X-17A-5 - Filed: 2021-03-31 - Period: 2020-12-31 - Accession: 0001380363-21-000002 - CIK: 1380363 - File #: 8-67470 - Material weakness: No - Auditor: OHAB AND COMPANY, P.A. - Auditor location: MAITLAND, FL - Contact: JILL RECKAMP - Phone: 239-810-9646 - Signed by: JILL RECKAMP (CFO/FINOP) Original filing: https://www.sec.gov/Archives/edgar/data/1380363/000138036321000002/hedgecoauditreport.pdf --- {0}------------------------------------------------ UNITEDSTATES SECURITIES ANDEXCHANGECOMMISSION Washington, D.C. 20549 # ANNUAL AUDITED REPORT FORM X-17A-5 PART ill OMB APPROVAL 0MB Number; 3235-0123 Expires: October 31,2023 Estimated average burden hours per response 12.00 # SEC FILE NUMBER 8-67470 FACING PAGE Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder | REPORT FOR THE PERIOD BEGINNING 01/01/20 | | AND ENDING | 12/31/20 | | |--------------------------------------------------------------------------|--------------------------------------------------------|------------|------------------------------------------------|--| | | MM/DD/YY | | MM/DD/YY | | | A. REGISTRANT IDENTIFICATION | | | | | | NAME OF BROKER-DEALER: HEDGECO SECURITIES, LLC | | | OFFICIAL USE ONLY | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | FIRM I.D. NO. | | | 105 S. NARCISSUS AVENUE. SUITE 701 | | | | | | | (No. and Street) | | | | | WEST PALM BEACH | FL | | 33401 | | | (City) | (State) | | (Zip Code) | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | | | | | | JILL RECKAMP | | | 239.S10-S646
(Area Code - Telephone Number) | | | B. ACCOUNTANT IDENTIFICATION | | | | | | | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Reporf" | | | | | | GHAB AND COMPANY, P.A. | | | | | | | (Name - if Individual, slate last, first, middle name) | | | | | 100ESYBELIAAVE,STE130 MAITLAND | | FL | 32751 | | | (Address)
(City) | | (State) | (Zip Code) | | | CHECK ONE; | | | | | | /
Certified Public Accountant | | | | | | Public Accountant | | | | | | Accountant not resident in United States or any of its possessions. | | | | | | | | | | | | | | | | | | | FOR OPPiCIAI. USE ONLY | | | | | | | | | | \*Claimsfor exempt ionfrom the requirement that the annual report be covered by the opinion ofan independent public accountant must be supported by a statement of facts and circumstances relied on as the basis for the exemption. See Section 240.17a-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. SEC1410(11-05) {1}------------------------------------------------ ## OATH OR AFFIRMATION | I. | JILL RECKAMP | | ., swear (or affirm) that, to the best of | |------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | HEDGECO SECURITIES. LLC | | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of
as | | of DECEMBER 31 | | . 2020 | are true and correct. I further swear (or affirm) that | | | classified solely as that of a customer, except as follows: | | neither the company nor any partner, proprietor, principal officer or director has any proprietary interest in any account | | | | | | | | Notary Public | | /FINOP
Title | | 0
(b)
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(c) | This report ** contains (check all applicable boxes):
Zl (a) Facing Page.
Statement of Financial Condition.
of Comprehensive Income (as defined in §210.1-02 of Regulation S-X). | | Statement of Income (Loss) or, if there is other comprehensive income in the period(s) presented, a Statement | | 7
(d)
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(e)
(0
(h)
(i)
0) | Statement of Changes in Financial Condition.
Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital.
Statement of Changes in Liabilities Subordinated to Claims of Creditors.
(g) Computation of Net Capital.
Computation for Determination of Reserve Requirements Pursuant to Rule ISc3-3.
Information Relating to the Possession or Control Requirements Under Rule 15c3-3. | | A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule ISc3-I and the | | | Computation for Determination of the Reserve Requirements Under Exhibit A of Rule ISc3-3.
consolidation.
(1) An Oath or Affirmation.
(m) A copy of the SIPC Supplemental Report. | | (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of
(n) A report describing any material inadequacies found to exist or found to have existed since the date ofthe previous audit. | | | **For conditions of confidential treatment of certain portions of this filing, see section 240.l7a-5(e)(3). | | | {2}------------------------------------------------ ![](_page_2_Picture_0.jpeg) {3}------------------------------------------------ ## **HEDGECO SECURITIES, LLC FINANCIAL STATEMENTS AND SCHEDULES** **For the Year Ended December 31, 2020 With Report of Registered Public Accounting Firm** {4}------------------------------------------------ ## **HEDGECO SECURITIES, LLC Table of Contents Financial Statements for the Year Ended December 31, 2020** | Report of Independent Registered Public Accounting Firm | 1 | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----| | Financial Statements | | | Statement of Financial Condition | 2 | | Statement of Operations | 3 | | Statement of Changes in Member's Equity | 4 | | Statement of Cash Flows | 5 | | Notes to Financial Statements | 6-7 | | Supplementary
Schedule
I
-
Computation
of
Net
Capital
Under
Rule
15c3-1
of
the
Securities
and Exchange Commission Act of 1934 | 8 | | Supplementary Schedule II - Computation for Determination of Reserve Requirements | 9 | | Supplementary Schedule III - Information Relating to the Possession or Control Requirements | 9 | {5}------------------------------------------------ ## **STATEMENT OF FINANCIAL CONDITION HEDGECO SECURITIES, LLC December 31, 2020** ## ASSETS | Cash and cash equivalents
Deposit with clearing broker
Accounts receivable - referral fees
Intercompany receivable
Prepaid expenses and other assets | \$
29,365
10,000
9,942
2,402
1,979 | |------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------| | Total assets | \$
53,688 | | LIABILITIES AND MEMBER'S EQUITY | | | Liabilities
Accounts payable and accrued expenses | \$
1,500 | | Total liabilities | 1,500 | | Member's equity | 52,188 | | Total liabilities and member's equity | \$
53,688 | {6}------------------------------------------------ ## **HEDGECO SECURITIES, LLC STATEMENT OF OPERATIONS For the Year Ended December 31, 2020** | REVENUES | | |---------------------------|--------------| | Referral fee income | \$
53,275 | | | | | Total revenue | 53,275 | | EXPENSES | | | Regulatory fees | 5,541 | | Communications | 300 | | Professional fees | 17,428 | | Occupancy (related party) | 6,000 | | Other operating expenses | 3,566 | | | | | Total expenses | 32,835 | | | | | NET INCOME (LOSS) | \$
20,440 | | | | {7}------------------------------------------------ ## **STATEMENT OF CHANGES IN MEMBER'S EQUITY HEDGECO SECURITIES, LLC For the Year Ended December 31, 2020** | Balance, December 31, 2018 | \$
60,448 | |----------------------------|--------------| | Member's Contribution | 6,300 | | Member's Distribution | (35,000) | | Net Income (Loss) | 20,440 | | Balance, December 31, 2019 | \$
52,188 | {8}------------------------------------------------ ## **HEDGECO SECURITIES, LLC STATEMENT OF CASH FLOWS For the Year Ended December 31, 2020** | CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) | \$
20,440 | |--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------| | Adjustments to reconcile net loss to net cash used by operating activities:
Increase in accounts receivable
Decrease in prepaid expenses
Increase in accounts payable and accrued liabilities | (3,701)
775
1,182 | | Net cash used by operating activities | 18,696 | | CASH FLOWS FROM FINANCING ACTIVITIES:
Member Contributions
Member Distributions
Net cash provided by financing activities | 6,300
(35,000)
(28,700) | | NET INCREASE IN CASH | (10,004) | | CASH AND CASH EQUIVALENTS:
Beginning of period | 39,369 | | End of period | \$
29,365 | {9}------------------------------------------------ ### **HEDGECO SECURITIES, LLC NOTES TO FINANCIAL STATEMENTS December 31, 2020** NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES **Nature of Business**: HedgeCo Securities, LLC (the "Company"), is a securities broker-dealer registered with the Securities and Exchange Commission ("SEC"), a member of the Financial Industry Regulatory Authority ("FINRA"), and a member of the Securities Investor Protection Corporation ("SIPC"). The Company is a Delaware limited liability company (LLC) and a wholly owned subsidiary of HedgeCo Securities Holdings, LLC (the "Parent" and sole member). HedgeCo Securities Holdings, LLC is wholly owned by HedgeCo Networks, LLC. The Company has referral agreements with various other member broker dealer firms that provide services that the company does not offer such as prime and/or mini-prime brokerage and/or execution services and refers hedge fund managers to those firms. The company also has agreements with the managers and/or issuers of private placements hedge funds to receive a percentage of management and/or performance fees they receive in connection with the introductions of those qualified investors of hedge funds to the issuers and/or managers of those hedge funds. **Cash and cash equivalents**: For the purposes of reporting the statement of cash flows, the Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Cash balances in excess of FDIC and similar insurance coverage are subject to the usual banking risks associated with funds in excess of those limits. As December 31, 2020, the Company had no uninsured cash balances. **Referal fee income**: The Company's income is substantially derived from referral fees. Fees are recorded as earned. **Estimates**: The preparation of financial statements in accordance 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. **Income taxes**: The Company, with the consent of its member, has elected under the Internal Revenue Code to be a Limited Liability Company for both federal and state income tax purposes. In lieu of corporation income taxes, the members of a Limited Liability Company are taxed on their proportionate share of the Company's taxable income. Therefore, no provision or liability for federal or state income taxes has been included in the financial statements. The Company has adopted the provisions of FASB Accounting Standards Codification 740-10, Accounting for Uncertainty in Income Taxes. Under ASC 740-10, the Company is required to evaluate each of its tax positions to determine if they are more likely than not to be sustained if the taxing authority examines the respective position. A tax position included in an entity's status, including its status as a pass-through entity, and the decision not to file a tax return. The Company has evaluated each of its tax positions and has determined that no provision or liability for income taxes is necessary. The members and the Company are generally not subject to U.S. federal, state, or local income tax examinations related to the Company's activities for tax years before 2017. #### **Revenue from contracts with customers:** #### *Significant Judgements* Revenue from contracts with customers includes referral fees. The recognition and measurement of revenue is based on the assessment of individual contract terms. Significant judgement is required to determine whether performance obligations are satisfied at a point in time or over time; how to allocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on the appropriate measure of the Company's progress under the contract; whether revenue should be presented gross or net of certain costs; and whether constraints on variable consideration should be applied due to uncertain future events. {10}------------------------------------------------ ### **HEDGECO SECURITIES, LLC NOTES TO FINANCIAL STATEMENTS December 31, 2020** #### NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) #### **Revenue from contracts with customers:** #### *Referral Fees* The Company receives referral fees from other member broker dealer firms that offer prime and/or miniprime brokerage and/or execution services for referring hedge fund managers to those firms. The Company also receives referral fees from managers and/or issuers of private placements hedge funds for the management and/or performance fees they receive in connection with the introductions of those qualified investors of hedge funds to the issuers and/or managers of those hedge funds. Revenue is recognized at the point in time that the performance arrangement is completed. **Fair value of financial instruments**: All of the Company's financial assets and liabilities are carried at market value or at amounts, which, because of their short-term nature, approximate current fair value. #### NOTE B - NET CAPITAL REQUIREMENTS The Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule (Rule 15c3-1), which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. At December 31, 2020, the Company had net capital of \$37,865, which was \$32,865 more than its required net capital of \$5,000 and the ratio of aggregate indebtedness to net capital was .04 to 1.0. #### NOTE C - RELATED PARTY TRANSACTIONS During 2020 the Company had an expense sharing agreement with a party related by common ownership. The parent forgave a total of \$6,300 for shared rent and other administrative expenses during the year 2020, of which \$6,000 was recorded for rent. At December 31, 2020, the Company is owed \$2,402 from the same related party. ### NOTE D - CLEARANCE AGREEMENT The Company has an agreement with a clearing broker to execute and clear, on a fully disclosed basis, customer accounts of the Company. In accordance with this agreement, the Company is required to maintain a deposit in cash or securities. The Company's clearing agreement requires that a minimum balance of \$10,000 be maintained on deposit with the clearing broker. #### NOTE E - BUSINESS CONCENTRATIONS The Company earned revenue from two major customers that accounted for 58% and 29% of referral fees for the year ended December 31, 2020. #### NOTE F - COMMITMENTS AND CONTINGENCIES The Company has no commitments or contingencies. #### NOTE G - SUBSEQUENT EVENTS The Company has evaluated subsequent events through February XX, 2021, the date which the financial statements were available to be issued, and has determined that the Company had no events occurring subsequent to December 31, 2020 requiring disclosure. {11}------------------------------------------------ ## **HEDGECO SECURITIES, LLC** ## **Supplementary Information Securities Exchange Act of 1934 Pursuant to rule 17(a)-5 of the** ## **December 31, 2020** The accompanying schedules are prepared in accordance with the requirements and general format of FOCUS Form X-17 A-5. {12}------------------------------------------------ ### **HEDGECO SECURITIES, LLC** ## **AND EXCHANGE COMMISSION ACT OF 1934 SCHEDULE I COMPUTATION OF NET CAPITAL UNDER RULE 15c3-1 OF THE SECURITIES** ### **December 31, 2020** | Net Capital | | | |----------------------------------------------------------------|--------------|--------------------| | Total member's equity qualified for net capital | \$
52,188 | | | Deduction for non-allowable assets: | | | | Accounts receivable - non-allowable
Intercompany receivable | | (9,942)
(2,402) | | Prepaid expenses | | (1,979) | | | | | | Net capital before haircuts | 37,865 | | | Less haircuts | | 0 | | | | | | Net capital | | 37,865 | | | | | | Minimum net capital required | | 5,000 | | Excess net capital | | 32,865 | | | | | | Aggregate Indebtedness: | | | | Liabilities, net of unearned revenue | | 1,500 | | Minimum net capital based on aggregate indebtedness | \$ | 100 | | | | | | Ratio of aggregate indebtedness to net capital | .04 to 1.0 | | ### RECONCILIATION WITH COMPANY'S COMPUTATION OF NET CAPITAL INCLUDED IN PART IIA OF FORM X-17A-5 AS OF DECEMBER 31, 2020. There are no material differences between the preceding calculation and the Company's corresponding unaudited Part IIA of Form X-17A-5 as of December 31, 2020. {13}------------------------------------------------ ## **HEDGECO SECURITIES, LLC** ## **SCHEDULE II COMPUTATION FOR DETERMINATION OF THE RESERVE REQUIREMENTS UNDER THE SECURITIES AND EXCHANGE COMMISSION RULE 15c3-3 December 31, 2020** The Company is not required to file the above schedules as it is exempt from Securities and Exchange Commission Rule 15c3-3 under paragraph (k)(2)(ii) of the rule and does not hold customers' monies or securities. ## **INFORMATION RELATING TO THE POSSESSION OR CONTROL REQUIREMENTS UNDER THE SECURITIES AND EXCHANGE COMMISSION RULE 15c3-3 December 31, 2020 SCHEDULE III** The Company is not required to file the above schedules as it is exempt from Securities and Exchange Commission Rule 15c3-3 under paragraph and (k)(2)(ii) of the rule and does not hold customers' monies or securities. {14}------------------------------------------------ {15}------------------------------------------------ ![](_page_15_Picture_0.jpeg) ## **Exemption Report** HedgeCo Securities, (the "Company") is a registered broker-dealer subject to Rule 17a-5 promulgated by the Securities and Exchange Commission (17 C.F.R. §240.17a-5, "Reports to be made by certain brokers and dealers"). This Exemption Report was prepared as required by 17 C.F.R. § 240.17a-5(d)(1) and (4). To the best of its knowledge and belief, the Company states the following: - (1) The Company claimed [an]exemption from 17 C.F.R. § 240.15c3-3 under the following provisions of 17 C.F.R. §240.15c3-3 (k)(2) (ii). - (2) The Company met the identified exemption provisions in 17 C.F.R. §240.15c3-3 (k) throughout the most recent fiscal year without exception. (3) The Company is also filing this Exemption Report because the Company's other business activities contemplated by Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5 are limited to: (1) receiving transaction-based compensation for referring securities transactions to other brokerdealers, or providing referrals for private placement offerings. (1) did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers, (other than money or other consideration received and promptly transmitted in compliance with paragraph (a) or (b)(2) of Rule 15c2-4 and/or funds received and promptly transmitted for effecting transactions via subscriptions on a subscription way basis where the funds are payable to the issuer or its agent and not to the Company); (2) did not carry accounts of or for customers; and (3) did not carry PAB accounts (as defined in Rule 15c3-3) throughout the most recent fiscal year without exception. HedgeCo Securities LLC I, Jill A. Reckamp , swear (or affirm) that, to my best knowledge and belief, this Exemption Report is true and correct. **By:** Title: Chief Financial Officer **March 26, 2021** **HedgeCo Securities, LLC** Member FINRA, SIPC 400 Clematis Street | Suite 205 | West Palm Beach, FL 33401 Tel: (561) 835-8690 | Fax: (561) 455-9925 Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.