# CARL MARKS SECURITIES LLC X-17A-5 (2021-02-26) — Broker-dealer annual report - Company: CARL MARKS SECURITIES LLC - Form: X-17A-5 - Filed: 2021-02-26 - Period: 2020-12-31 - Accession: 0001399878-21-000001 - CIK: 1399878 - File #: 8-67642 - Material weakness: No - Auditor: Eisner Amper LLC - Auditor location: New York, NY - Contact: Robert Speer - Phone: 212-909-8400 - Signed by: Robert Speer (CFO) Original filing: https://www.sec.gov/Archives/edgar/data/1399878/000139987821000001/cmsaudit2020pub.pdf --- {0}------------------------------------------------ **UNITEDSTATES SECURITIESANDEXCHANGECOMMISSION Washington, D.C. 20549** OMB APPROVAL OMB Number: 3235-0123 Expires: October 31,2023 Estimated average burden ## hours per response 12.00 **ANNUAL AUDITED REPORT FORM X-17A-5 PART III** | SEC FILE NUMBER | |-----------------| | s-67642 | **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
12/31/20
AND ENDING | | | | |-----------------------------------------------------------------------------------------|---------------------------------------------------------------------|----------------|---------------------------------------------------|--| | | MM/DD/YY | | MM/DD/YY | | | A. | REGISTRANT
IDENTIFICATION | | | | | Carl
Marks
Securities
LLC
NAME OF BROKER-DEALER: | | | OFFICIAL USE ONLY | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS:
(Do not use P.O.
Box No.) | | | FIRM I.D.
NO. | | | 900
33rd
Third
Avenue,
Floor | | | | | | | ( No.
and Street) | | | | | New
York | NY | | 10022 | | | (City) | (State) | | (Zip Code) | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
Robert Speer | | | 212-909-8400
(Area Code -
Telephone Number) | | | B. | ACCOUNTANT | IDENTIFICATION | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | | Eisner
Amper
LLP | | | | | | | ( Name -if
individual, state last, first, middle name ) | | | | | 733
Third
Avenue | New
York | NY | 10017 | | | ( Address) | (City ) | (State) | (Zip Code) | | | ONE:
CHECK | | | | | | X
Certified Public Accountant | | | | | | Public Accountant | | | | | | | Accountant not resident in United States or any of its possessions. | | | | | | USE
FOR
OFFICIAL | ONLY | | | | | | | | | | | | | | | *^Claims for exemption from the requirement that the annual report he 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 240.17a-5(e)(2)* **Potential persons who are to respond to the collection of information contained in this form are not required to respond** SEC 1410 **unless the form displays a currently validOMB controlnumber.** (11-05) {1}------------------------------------------------ #### **OATH OR AFFIRMATION** | I
Speer,
Robert
CFO | ,
swear
(or
affirm) that,
to
the
best
of | | | | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--| | my knowledge
the
accompanying
financial
and belief
Carl
Marks
Securities
LLC | of
statement
supporting
schedules
pertaining
to
the
firm
and
,
as | | | | | ,
Qf December
31 | ,
correct.
are
true
I further
swear
(or affirm)
that
and | | | | | proprietor,
partner,
neither
the
company
principal
nor any | 202^
officer
director
in any account
or
has
any proprietary
interest | | | | | a customer,
follows:
classified
solely
except
as
as
that
of | | | | | | | | | | | | | | | | | | | Signature | | | | | ss | CFO | | | | | i
lAbi.Mo
Notary
Public | JAMES F. HICKEtfe
Notary Public, State of New
York
Registration #01HI6340819
Qualified In Queens County
0
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Subordinated
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the | | | | *\*\*For conditions of confidential treatment of certain portions of this filing, see section 240.17a-5(e)(3).* {2}------------------------------------------------ **CARL MARKS SECURITIES LLC STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2020** {3}------------------------------------------------ | Contents | Paqe | |---------------------------------------------------------------------------|------| | Report
independent
registered
public
accounting
of
firm | 1 | | Financial
Statement | | | Statement
of financial
condition | 2 | | Notes
to
statement
of financial
condition | 3-5 | {4}------------------------------------------------ # **EISNERAMPER** EisnerAmper LLP ### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** The Member of Carl Marks Securities LLC #### *Opinion on the Financial Statement* We have audited the accompanying statement of financial condition of Carl Marks Securities LLC (the "Company"), a wholly-owned subsidiary of Carl Marks Advisory Group LLC, as of December 31, 2020, 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 the Company as of December 31, 2020, in conformity with accounting principles generally accepted in the United States of America. #### *Basis for Opinion* This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statement, whether due to error or fraud, and performing procedures 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 believe that our audit provides a reasonable basis for our opinion. We have served as the Company's auditor since 2008. EISNERAMPER LLP New York, New York February 23, 2021 {5}------------------------------------------------ #### **Statement of Financial Condition December 31, 2020** #### **ASSETS** | Cash
Advisory
fee
receivable
Other
assets | 203,384
\$
110,000
40,868 | |-----------------------------------------------------------------------------------------------------------------------|------------------------------------| | Total
assets | £ 354.252 | | AND
MEMBER'S
EQUITY
LIABILITIES
Deferred
revenue
Accrued
expenses
and
other
liabilities | \$ 100,000
51,874 | | Total
liabilities | 151,874 | | Member's
equity | 202,378 | | Total
liabilities
and
member's
equity | £ 354.252 | {6}------------------------------------------------ #### **Notes to Statement of Financial Condition December 31, 2020** #### **NOTE A - ORGANIZATION AND NATURE OF BUSINESS** Carl Marks Securities LLC (the "Company"), a wholly-owned subsidiary of Carl Marks Advisory Group LLC (the "Parent") and a New York limited liability company, was formed on May 26, 2006. The Company is a broker-dealer registered with the Securities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority. The Company commenced its broker-dealer operations on October 12, 2007 and shall continue unless terminated in accordance with its operating agreement. The Company is engaged in providing advisory services involving private placement and mergers and acquisitions for its clients. It is intended that all offerings will be exempt from registration under the provisions of either Regulation D or Rule 144A. The Company does not hold customer funds or safe-keep customer securities or engage in the underwriting of securities. # **NOTE B-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** #### **[1] Basis of Presentation:** The statement of financial condition is prepared in conformity with accounting principles generally accepted in the United States of America. #### **[2] Cash:** The Company maintains cash in bank accounts which, at times, may exceed federally insured limits. #### **[3] Advisory Fees:** The Company provides advisory services on mergers and acquisitions and private placement of securities. Revenue for advisory arrangements is generally recognized at the point in time that performance under the arrangement is completed (the closing date of the transaction) or the contract is cancelled. However, for certain contracts, revenue is recognized over time for advisory arrangements in which the performance obligations are simultaneously provided by the Company and consumed by the customer. In some circumstances, significant judgement is needed to determine the timing and measure of progress appropriate for revenue recognition under a specific contract. Retainers and other fees received from customers prior to recognizing revenue are reflected as deferred revenue. As of December 31, 2020, the Company has deferred \$100,000 in revenue related to contracts that have not been completely fulfilled. #### **[4] Income Taxes:** As a single member LLC, the Company is considered a disregarded entity for federal, state and local income tax purposes and is not required to pay income taxes on income or gains. As such, its income and losses are reported on the Parent's tax return. The Company has not recognized in this financial statement any interest or penalties related to income taxes and has no unrecognized tax benefits. {7}------------------------------------------------ #### **Notes to Statement of Financial Condition December 31, 2020** #### **[5] Use of Estimates:** Preparation of the financial statement in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from these estimates. #### **[6] Fair Value of Financial Instruments:** The Company carries its financial instruments at fair value. Fair value is an estimate of the exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (i.e., the exit price at the measurement date). A fair value hierarchy provides for prioritizing inputs to valuation techniques used to measure fair value into three levels: Level 1 -unadjusted quoted prices in active markets for identical assets or liabilities; Level 2 -inputs other than quoted market prices that are observable, either directly or indirectly, and reasonably available; Level 3 - unobservable inputs reflect the assumptions that the Company develops based on available information about what market participants would use in valuing the asset or liability. The Company's cash is considered a level 1 asset. Certain other financial instruments are carried at amounts that approximate fair value due to the short-term nature and negligible credit risk. These instruments include accrued expenses and other liabilities and are classified as level 2. The Company's non-cash advisory fee receivable is classified as a level 3 asset (see note D). #### **[7] Recent Accounting Pronouncements:** In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 replaces the "incurred loss" credit losses framework with a new accounting standard that requires management's measurement of the current expected credit loss ("CECL") to be based on a broader range of reasonable and supportable information for lifetime credit loss estimates including historical experience, current conditions, and reasonable and supportable forecasts. Effective January 1, 2020, the Company's adoption of ASU 2016-13 did not have any impact on the financial statement. # **NOTE C-RELATED PARTY TRANSACTIONS** The Company entered into a service agreement with the Parent in which the Company agreed to reimburse the Parent for certain general and administrative costs incurred on the Company's behalf. In addition, direct costs, which consist of employees' compensation and benefits, are allocated to the Company based upon actual time spent by the Parent's personnel on the Company's business. At December 31, 2020, \$39,779 is included in accrued expenses and other liabilities for amounts owed to the Parent for direct costs and overhead reimbursements. The Company's statement of financial condition may not necessarily be indicative of the Company's financial condition had the Company operated as an unaffiliated entity of the Parent. # **NOTE D-ADVISORY FEE RECEIVABLE** For services rendered pursuant to a financial advisory and placement agency agreement with Klicktrack Inc. ("Klicktrack") in 2020, the Company is entitled to receive 138,688 shares of Series Seed Preferred Stock certificates which have yet to be issued and received as of December 31, 2020. The value of the {8}------------------------------------------------ #### **Notes to Statement of Financial Condition December 31, 2020** shares is estimated based on the market approach using the transaction price per share of the most recent offering to new investors. The Company's receivable from Klicktrack is classified as a level 3 asset and is valued at \$110,000. #### **NOTE E - NET CAPITAL REQUIREMENTS** The Company is subject to the Uniform Net Capital Rule under the Securities Exchange Act of 1934 (the "Rule"). The Rule requires the maintenance of minimum net capital, as defined, of 6 2/3% of aggregate indebtedness, or \$5,000, whichever is greater, 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's net capital of \$51,510 exceeded required minimum net capital of \$10,125 by \$41,385 and the ratio of aggregate indebtedness to net capital was 2.95 to 1. # **NOTE F-CLIENT REFERRAL AGREEMENT** The Company has a client referral agreement with Morgan Stanley Smith Barney LLC ("MSSB"). The Company is required to pay MSSB 20% of net cash placement fees, net advisory success, transactions, closing, retainer, or other cash or non-cash fees received by the Company in connection with any completed transaction for a referred party from MSSB. In 2020, the Company did not incur a referral fee to MSSB as there were no completed transactions. # **NOTE G- RISK** The extent of the impact of the coronavirus ("COVID-19") outbreak on the financial performance of the Company will depend on future developments, including the duration and spread of the outbreak, related advisories and restrictions, and the impact of COVID-19 on the financial markets and the overall economy, all of which are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period of time, the Company's financial condition may be materially adversely affected. # **NOTE H-SUBSEQUENT EVENT** Subsequent to December 31, 2020 and through February 23, 2021, there was a capital contribution of \$100,000 which is not reflected in the statement of financial condition. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.