# KERSHNER SECURITIES, LLC X-17A-5 (2021-02-25) — Broker-dealer annual report - Company: KERSHNER SECURITIES, LLC - Form: X-17A-5 - Filed: 2021-02-25 - Period: 2020-12-31 - Accession: 0001438071-21-000001 - CIK: 1438071 - File #: 8-67922 - Material weakness: No - Auditor: Bauer & Company, LLC - Auditor location: Austin, TX - Contact: Jon Sanderson - Phone: 5124398140 - Website: bauerandcornpany.com - Signed by: Jon B Sanderson (Chief Financial Officer) Original filing: https://www.sec.gov/Archives/edgar/data/1438071/000143807121000001/ks2020finalafs.pdf --- {0}------------------------------------------------ **{JNITEDSTATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549** 0MB APPROVAL 0MB Number: 3235-0123 Expires: August 31, 2020 Estimated average burden hours per response .. . ... 12.00 # **ANNUAL AUDITED REPORT FORM X-17A-5 PARTIII** **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 | ------------
01/01/2020 | AND ENDING | ------------
12/31/2020 | | |------------------------------------------------------------------------------------------|---------------------------------------------------------------------|--------------------------|--------------------------------|--| | | MM/DD/YY | | MM/DD/YY | | | | A. REGISTRANT IDENTIFICATION | | | | | NAME OF BROKER-DEALER: | | Kershner Securities, LLC | OFFICIAL USE ONLY | | | | ADDRESS OF PRJNCIPAL PLACE OF BUSil\TESS: (Do not use P.O. Box No.) | | FIRM I.D. NO. | | | | 1825-B Kramer Lane, Suite 200 | | | | | | (No. and Street) | | | | | Austin | Texas | | 78758 | | | (City) | (State) | | (Zip Code) | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
Jon Sanderson | | 512.439.8140 | | | | | | | (Area Code - Telephone Number) | | | | B. ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | | | Bauer & Company, LLC | | | | | | (Name- if individual, state last, first. m.iddle name) | | | | | P.O. Box 27887 | Austin | Texas | 78755 | | | (Address) | (City) | (State) | (Zip Code) | | | CHECK ONE: | | | | | | lcertified Public Accountant | | | | | | Public Accountant | | | | | | B
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 240.17 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 0MB control number. SEC 1410 (11-05) {1}------------------------------------------------ #### **OATH OR AFFIRMAT£0 N** | | __ J_on_
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____ • swear ( or affirm) that,, to the best of | |------|-------------------------------------------------------------------------------------------------------------------------|--------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | | Kershner Securities, Ltc | ---
my knowledge and belief the accompanying financial statement and st1pporti11g schedules pertaining to the firm of
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• | | | | | Chief Financral Officer | | | | | Title | | | | | APRIL S fllTTS
Notary ID #U1'.i11788
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February ZB, 2023 | | | This report ** contains (check alf applicable bMes): | | | | | 0 ( a) Facing Pag.: | | | | | [2] (h) Statement of Finan
cial Condition . | | 171 (c) Statement o r Income (Loss) or. if there is other comprehensive income in the perio:d(s) presented. a: Statement | | | o f Comprehensive lncomti (as defined in §".llO. !-02 of Regulatio11 S-X}. | | | | | {d) Statement of Cb:ttnges in Filmnci.al Condltio11. | | | | | (el Statement of Changes in Stnck.holders' Equity or :Partners· or Sole Proprietors' Capital. | | | | | {t) Statement o f Clm11ges in Liabilities Subordinated to Claims of Creditors. | | | | | (g) Computation of Net Capital.
{h ) Computation for Determination or Reserve Requirements Pursu.ant to Rule 15c3-3. | | | | | {i) lnformatio;1 Relating to the PossessiM nr Contrnl Requirementi; Under Rule lSc3-3. | | | | | | | (i) A Rcconci I iarion, including appropriate explanation of the Computation oi'Net Capital Under Rule 15c3-
l and the | | | | | Computation for Determination of tb.e Reserve Rcqµkernents Under Exhibit A of Rule l 5c3-3. | | □ | consolidation. | | (k) A Reconci!ialion between ttre iwti.itect and unaudited Stm~mt1nLS ofFi.mu:iuiul C o n d ition wi:fh respec t to 111,;,tho FINANCIAL STATEMENTS | 1 | |----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------| | 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 | | SUPPLEMENTAL SCHEDULES | | | Computation of Net Capital and Aggregate Indebtedness
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Pursuant to Rule l 5c3-l
Computation for Determination of Reserve Requirements
IT.
Pursuant to Rule 15c3-3
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Infonnation Relating to the Possession or Control Requirements
Pursuant to Rule 15c3-3 | 11
11 | | INDEPENDENT REGISTERED POBLCC ACCOUNTING FIRM'S REVIEW
REPORT REGARDING TUE EXEMPTfVE PROVISIONS OF RULE 15c3-3 | 12 | | Kershner Securities, LLC Exemption Report | 13 | | INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED
UPON PROCEDURES RELATED TO AN ENTITY'S SIPC ASSESSMENT
RECONCIUATJON | 14 | | Schedule of Assessment Payments on Form SIPC-7 as required under
Rule 17a-5(e)(4)(i) of the Securities and Exchange Commission | 15 | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) ## REPORT OF INDEPE]\TIENT REGISTERED PUBLIC ACCOUNTING FIRM To Those Charged with Governance and Member of Kershner Securities, LLC: # **Opinion on the Financial Statements** We have audited the accompanying statement of financial condition of Kershner Securities, LLC a Wholly Owned Subsidimy of Kershner Trading Group. LLC as of December 31, 2020, 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, tl1e financial statements present fairly, in all material respects, the financial position o.f Kershner Securities, LLC as of December 31, 2020, and the results of its operations and its cash .flows for the year then ended in conformity with accounting principles genernlly accepted in the United States of America. #### **Basis for Opinion** These financial statements are the responsibility of Kershner Securities, LLC's management. Our responsibility is to express an opinion on Kersln1er 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 Kershner Securities, LLC in accordance \Vith 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 e1Tor 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. Om 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, #### **Auditor's Report on Supplemental Information** The Computation of Net Capital and Aggregate IndebLedness Pursuant to Rule 15c3-l of 01e Securities and Exchange Commission (Schedule I), the Computation for Detem1ination of Reserve Requirements Under Rule 15c3-3 of the Securities and Exchange Commission (Schedule II) and the lnfonnation Relating to 1he Possessions or Control Requirements Under Rule 15c3-3 of the Securities and Exchange Commission (Schedule IU) (the "Supplemental Information") has been subjected to audit procedures performed in conjunction with the audit of Kershner Securities, LLC's financial statements. The supplemental information is the responsibility of Kershner Securities, LLC's management. Our audit procedures included determining whether the supplemental infonnation 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 tl1e supplemental information. In fanning our opinion on the supplemental information, \-Ve evaluated ·whether the supplemental information, including its form and content, is presented in conformity \-Yitb 17 C.F.R §240.17a-5. In our opinion, the Supplemental Information is fairly stated, in all material respects, in relation to the nnancial statements as a whole. **BAUER** & **COMPANY, LLC** We have served as Kershner Securities, LLC's auditor since 2018. Austin, Texas February 11, 2021 Bauer & Company, LLC P.O. Box 27887 Austin, TX 78755 Tel 512.731 .3518 / www.bauerandcornpany.com {5}------------------------------------------------ # **KERSHNER SECURITIES, LLC (A Wholly Owned Subsidiary of Kershner Trading Group, LLC)** Statement of Financial Condition December 31, 2020 #### **Assets** | Cash and cash equivalents
Receivable from clearing organ.ization
Receivable from related entities | \$
60,064
1,196,651
483,381 | |---------------------------------------------------------------------------------------------------------|--------------------------------------| | Total assets | \$
1,740,096 | | Liabilities and member's equity | | | Accounts payable | \$
262,455 | | Other accrued expenses | 82,000 | | Payable to related entities | 32,835 | | Total liabilities | 377,290 | | Member's equity | 1,362,806 | | Total liabilities and member's equity | \$
1,740,096 | The accompanying "Notes to the Financial Statements" are .an integral part of these financial statements. {6}------------------------------------------------ # **KERSHNER SECURITIES, LLC (A Wholly Owned Subsidiary of Kershner Trading Group, LLC)** Statement of Operations Year Ended December 31, 2020 | Revenue | | |-----------------------------------------|------------------| | Related party brokerage commissions | \$
16,994,639 | | Total revenue | 16,994,639 | | Expenses | | | Related party labor allocation | 32-8,538 | | Commissions and clearing fees | 9,956,514 | | Related party communications allocation | 6,416 | | Related party occupancy allocation | 68,725 | | Regulatory fees and expenses | 31,262 | | Other expenses | 24,599 | | Total expenses | 10,416,054 | | Jncome before income tax expense | 6,578,585 | | Franchise taxes | 55,165 | | Net income | \$
6,523,420 | The accompanying "Notes to the Financial Statements" are an integral part of these financial statements. {7}------------------------------------------------ # **KERSHNER SECURITIES, LLC (A Wholly Owned Subsidiary of Kershner Trading Group, LLC)** Statement of Changes in Member's Equity Year Ended December 3 J, 2020 | Balance at December 31, 2019 | \$
1,604,386 | |------------------------------|-----------------| | Capital distributions | (6,765,000) | | Net income | 6,523,420 | | Balance at December 31, 2020 | \$
1,362,806 | The accompanying "Notes to the Financial Statements" are an integral part of these financial statements. {8}------------------------------------------------ #### **KERSHNER SECURITIES, LLC** #### **(A Wholly Owned Subsidiary of Kershner Trading Group, LLC)** Statement of Cash Flows Year Ended December 31, 2020 | Cash flows from operating activities: | | |------------------------------------------------------------------------|--------------------------| | Net income | \$
6,523,420 | | Adjus11nents to reconcile net income to net cash provided by operating | | | activities: | | | Changes in operating assets and liabilities: | | | Receivable from clearing organization | (445,003) | | Receivable from related entities | 527,363 | | Accounts payable | 170,303 | | Other accrued expenses | 37,350 | | Payable to related entities | (2,799) | | Net cash provided by operating activities | 6,810,634 | | Cash flows from investing activities: | | | Net cash used in investing activities | | | Cash flows from financing activities: | | | Capital distributions | (6,765,000) | | Net cash used in financing activities | (6,765,000) | | Net change in cash and cash equivalents | 45,634 | | Cash and cash equivalents at beginning of year | 14,430 | | Cash and cash equivalents at end of year | \$
60,064
======== | | Supplemental disclosures of cash flow information: | | | Cash paid during the year for: | | | Interest | \$ | | Franchise taxes | \$ ===4=9=,s=oo= | The accompanying "Notes to the Financial Statements" are an integral part of these financial statements. {9}------------------------------------------------ #### **KERSHNER SECURITIES, LLC (A Wholly Owned Subsidiary of Kershner Trading Group, LLC)** Notes to Financial Statements December 31, 2020 #### **Note 1-. Nature of Business** Kershner Securities, LLC (the "Company"), was organized as a Delaware Limited Liability Company on February 22, 2008. The Company is a broker-dealer in securities registered with the Securities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority, Inc. ("FINRA"). TI1e Company's sole member is Kershner Trading Group, LLC, ("KTG", the ''Parent", or the "Member"). The Company operates under the provisions of Paragraph k(2)(ii) of Rule 15c3-3 of the SEC, and accordingly is exempt fi-om the remaining provisions of that Rule. The Company does not hold customer funds or securities, but as an introducing broker or dealer, will clear all transactions on behalf of customers on a fully disclosed basis through a clearing broker-dealer, Goldman Sachs Execution & Clearing, L.P. The clearing broker-dealer carries all of the accounts of the customers and maintains and preserves all related books and records as are customarily kept by a clearing broker-dealer. Under these exempt provisions, the Computation for Detennination of Reserve Requireme.nts and Information Relating to the Possession and Control Requirements are not required. Substantially all of the Company's revenues are derived from commission income from a related entity (see Note 5). #### **Note 2 - Significant Accounting Policies** #### Basis of Accow1tin2: These financial statements are presented on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America. Revenues are recognized in the period earned and expenses when incurred. #### 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. The Company's critical accounting estimates affecting the financial statements include the allocation of income and expenses with affiliated entities. #### Cash Equivalents For purposes of repmting cash flows, the Company has defined cash equivalents as highly liquid investments with original maturities of less than ninety days that are not held for sale in the ordinary course of business. #### Revenue Purchases and sales of securities, and commission revenue and expense, are recorded on a trade date basis. Dividends are recorded on the ex-dividend date. #### *Significant Judgments* Revenue includes related party brokerage commissions and related party fees and other income. The recognition and measurement of revenue is based on the assessment of individual contract terms. {10}------------------------------------------------ # **KERSHNER SECURITIES, LLC (A Wholly Owned Subsidiary of Kershner Trading Group, LLC)** Notes to Financial Statements December 31, 2020 Significant judgment 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; and whether constraints on variable consideration should be applied due to uncertain future events. ### *Related Party Brokerage Commissions* The Company serves as an introducing broker-dealer and will charge a commission for the purchases and sales transactions of its related party customer. Related party commissions and clearing expenses are recorded on the trade date (the date that the trade order is filled with a counterparty and confirmed with the related party customer.) The Company believes that the perfonnance obligation is satisfied on the trade date because that is when the underlying financial instrument and/or purchaser are identified, the pricing is agreed upon and the risks and rewards of ownership have been transferred to/from the customer. #### Financial Instruments and Credit Risk Financial instruments that potentially subject the Company to credit risk include cash and cash equivalents and receivables from the clearing organization. The Company did not have cash balances in excess of federally insured limits as of December 31, 2020. Receivables from the clearing organization represent cash deposited and comm issjons receivable from the organization, \$500,000 of which are insured from theft by the Securities Investor Protection Corporation. #### Income Taxes The Company will be taxed at the member level rather than at the corporate level for federal income tax purposes. The Company is liable for a pro rata allocation of the Texas margin tax, which is filed with the Parent. The Company has recorded \$55,165 of Texas margin tax expense for the year ended December 3 J, 2020 of which \$5,365 lS recorded as ''Payable to related entities" on the Statement of Financial Condition .. In the ordinaiy course of business, there are many transactions for which the ultimate tax outcome is uncertain. The Company regularly assesses uncertain tax positions in each of the tax jurisdictions in which it has operations and accounts for the related financial statement implications. Unrecognized tax benefits are reported using the two-step approach under which tax effects of a positions are recognized only if it is "more-likelythan-not" to be sustained and the amount of the tax benefit recognized is equal to the largest tax benefit that is greater than fifty percent likely of being realized upon ultimate settlement ofthe tax position. Determining the appropriate level of unrecognized tax benefits requires the Company to exercise \_judgment regarding tl1e uncertain application of tax law. The amount of unrecognized tax benefits is adjusted when information becomes available or when an event occurs indicating a change is appropriate. The company includes interest and penalties related to its uncertain tax positions as part of income tax expense, if any. There are no. uncertain tax positions as of December 31, 2020. #### Fair Value of Financial Insttuments The carrying amount of cash and cash equivalents, receivable from clearing organization, accounts payable and accrued expenses approximated fair market value at December 31, 2020 due to their relatively short maturities and prevailing market tenns. #### Recent Accounting Pronouncements Accounting standards that have been issued or proposed by the Financial Accounting Standards Board ("FASB") or other standards-setting bodies are not expected to have a material impact on the Company's financial position, results of operations or cash flows. {11}------------------------------------------------ ## **KERSHNER SECURITIES, LLC (A Wholly Owned Subsidiary of Kershner Trading Group, LLC)** Notes to Financial Statements December 31, 2020 ## **Note 3 - Member's Equity** The Company has one class of membership interest and the sole member of the Company is Kershner Trading Group, LLC. The Member makes capital contributions to the Company as it may detennine from time to time. No interest accrues on such contributions and the Member does not have the right to withdraw, or be repaid on its contributions, except as provided in the LLC Agreement. Capital account withdrawals and distributions are made in accordance with the LLC Agreement. Capital distributions to its Member can be made under a capital distribution policy approved by the Member. ## **Note 4 - Net Capital Requirements** Pursuant to the net capital provisions of Rule 15c3-l of the Securities and Exchange Act of 1934, tbe Company is required to maintain a minim um net capital, as defined under such provisions. Net capital and the related net capital ratio may fluctuate daily. At December 31, 2020, the Company had net capital of \$866,425 and net capital requirements of\$] 00,000 which was \$766,425 in excess of the required minimum. The Company's ratio of aggregate indebtedness to net capital was 0.44 to 1. The Securities and Exchange Commission permit<; a ratio of no greater than 15 to l. The Company is exempt from the customer protection provisions of 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 paragraphs (k)(2)(ii) of the Rule. #### **Note 5** - **Related Party Transactions** The Company has an Expense Sharing Agreement ("Sharing Agreement") with its Parent. The Sharing Agreement provides for the pro rata sharing of office space, office equipment and the expenses of cettain administrative and other personnel and ancillary services. The parties have agreed to share the fees and costs based on headcount. The Parent invoices the Company for those expenses monthly. The Company incurred \$340,609 of expense under this agreement for the year ended December 31, 2020, of which \$28,926 was payable at December 31, 2020. The Company entered into a Technology Services Agreement ("Technology Agreement") to outsource all of its technology needs to Kershner Technology and Innovation, LLC, which is wholly owned by the Parent. The Technology Agreement provides for a monthly fixed fee of\$1,000. Additionally, the Technology Agreement calls for technology support and a pro ra.ta sharing of administrative and other personnel based on a predetermined percentage of personnel cost. The Company incurred \$46,908 of expense under this agreement for the year ended December 31, 2020, of which \$3,909 was payable at December 31, 2020. The Company executed an agreement to provide electronic trading services to Kershner Trading Americas, LLC ("Americas"), which is wholly owned by the Parent. The trading service provides Americas with the right to use the software, equipment, telecommunications and connectivity resources of the Company to enter and route orders and execute securities and futures transactions. **ln** exchange for the provision of trading services (pursuant to the agreement) the Company charges monthly fees on a per share basis which are invoiced at month end. The Company earned \$3,683,440 under this agreement for the year ended December 31, 2020, of which \$483,381 was tecdvable at December 31, 2020. Additionally, the Company earned \$13,311,199 in commission income directly through transactions processed at the clearing broker during 2020 resulting from {12}------------------------------------------------ #### **KERSHNER SECURITIES, LLC (A Wholly Owned Subsidiary of Kershner Trading Group, LLC)** Notes to Financial Statements December 31, 2020 trading activity of Americas. The balance of the payment to be received from Americas is charged via the invoicing process outlined previously. The Company also paid Americas \$81,630 for personnel and related costs for suppotting the trading services activities. ## **Note 6 - Commitment and Contingencies** Included in the Company's clearing agreement with its clearing broker-dealer is an indemnification clause. This clause relates to instances ,-vhere the Company's customers fail to settle security transactions. In the event this occurs, the Company will indemnify the clearing broker-dealer to the extent of the net loss on any unsettled trades. At December 31, 2020, management of the Company had not been notified by the clearing brokerdealer, nor were they otheiwise aware, of any potential losses relating to this indemnification. The Company is required to have an account at the clearing broker that shall at all times contain cash, securities, or a combination of both, having a market value of \$500,000 reflecting the combined total of the Minimum Equity Requirement of \$400,000 and the Cleaiing Deposit of\$ I 00,000. These amounts are included within receivables from clearing organizations on the statement of financial condition. # *Litigation* The Company from time to time may be involved in litigation relating to claims arising out of its no,mal course of business. Management believes that there are no claims or actions pending or threatened against the Company, the ultimate disposition of which would have a material impact on the Company's financial position, results of operations or cash flows. ## *Risk Management* The Company maintains various forms of insurance that Company's management believes are adequate to reduce the exposure to these risks to an acceptable level. # *COVID-19* On March 11, 2020, the World Health Organization declared the novel strain of coronavirus ("COVlD-19") a global pandemic and recommended containment and mitigation measures worldwide. The COVID-19 pandemic has continued to spread and has already caused serve global disruptions. The extent ofCOVID-19's effect on the Company's operational and financial performance will depend on future developments, including the duration, spread and intensity of the pandemic, all of which are unce,tain and difficult to predict considering the rapidly evolving landscape. As of the date of the independent auditors' report, the Company cannot reasonably estimate the length or severity of this pandemic, or the extent to which the disruption may materially impact the Company's financial position, results of operations, and cash flows in 2021 . #### **Note 7** - **Subsequent Events** The Company has evaluated subsequent events through F ebrua1y I I, 2021, the date the consolidated financial statements were available to be issued. Subsequent to the year end, the Company made capital distributions to the Parent totaling \$1,000,000. {13}------------------------------------------------ #### **KERSH1'1"'ER SECURITIES, LLC** #### **(A Wholly Owned Subsidiary of Kershner Trading Group, LLC)** ## Computation of Net Capital and Aggregate Indebtedness Pursuant to Rule 15c3-1 of the Securities and Exchange Commission As of December 31, 2020 #### **SCHEDULE I** | Net capital: | | |--------------------------------------------------------------------------------------------|-----------------| | Total member's equity | \$
1,362,806 | | Less: | | | Receivable from related entities | 483,381 | | Net capital before haircuts on securities positions | 879,425 | | Other deductions | 13,000 | | Net capital | \$
866,425 | | Aggregate indebtedness: | | | Total liabilities | \$
377,290 | | Total aggregate indebtedness | \$
377,290 | | Minimum net capital requirement (greater of 6 2/3% of aggregate indebtedness or \$100,000) | \$
100,000 | | Net capital in excess of minimum requirement | \$
766,425 | | Ratio: Aggregate indebtedness to net capital | 0.44 to 1 | The above computation does not differ from the Computation of Net Capital under Rule 15c3-l as of December 31, 2020 as reported by Kershner Securities, LLC on FormX-17 A-5, filed on January 26, 2021. Accordingly, no reconciliation is deemed necessary. See notes to financial statements and report of independent registered public accounting finn. {14}------------------------------------------------ # **KERSHNER SECURITIES, LLC (A Wholly Owned Subsidiary of Kershner Trading Group, LLC) Schedule** II **and Schedule** ill December 31, 2020 # **Schedule** Il #### **Computation for Detenmnation of Reserve Requirements Under Rule l5c-3 of the Securities and Ex'Change Commission** 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. The Company does not hold funds or securities for or owe money or securities to customers. #### **Schedule** ID #### **Information Relating to the Possession or Control Requirements Under Rule 15c3-3 of the Securities and Exchange Commission** The Company is exempt from provisions of Rule 15c3-3 under the Securities Exchange Act of 1934 pmsuant to paragraph (k)(2)(ii) of the Rule. The Company did not maintain possession or control of any customer funds or securities. {15}------------------------------------------------ ![](_page_15_Picture_0.jpeg) # REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIR!\11 To Those Charged ·with Governance and Member of Kershner Securities, LLC: We have reviewed management's statements, included in the accompanying Exemption Report Year Ended December 31, 2020, in v,rhich (1) Kershner Securities, LLC, a Wholly Owned Subsidiary of Kershner Trading Group, LLC identified the following provisions of 17 C.F.R. §l5c3-3(k) 1mder which Kershner Securities, LLC claimed an exemption from 17 C.F.R. §240.15c3-3:(k)(2)(ii) (exemption provisions) and (2) Kershner Securities, LLC slated that Kershner Securities, LLC met the identified exemption provisions throughout the most recent fiscal year of December 31, 2020 without exception. Kershner Securities, LLC's management is responsible for compliance ,,vith 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 Kershner 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 revievv·, we are not aware of any material modifications !hat should be made to management's slatcments referred to above for them to be fairly stated, in all material respects, based on the provisiorts set forth in paragraph (k) (2)(ii) of Rule 15c3-3 wider the Securities Exchange Act of 1934. **BAUER & COMPANY, LLC** Austin, Texas February 11, 2021 {16}------------------------------------------------ ![](_page_16_Picture_0.jpeg) Kershner Securities~ LLC's Exemption Report Kershner Securities, LLC (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)(l) and (4). To the best of its knowledge and belief the Company states the following: - (1) The Company claimed and exemption from 17 C.F.R. §240.) 5c3-3 (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. Kershner Securities, LLC erson, affirm that, to the best of my knowledge and belief, this ..,.,...\_,,.,'" ... ,...,ort is true and correct. February l t 2021 {17}------------------------------------------------ ![](_page_17_Picture_0.jpeg) ## REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON APPL YING AGREED-UPON PROCEDURES To Those Charged with Governance and Member of Kershner Securities, LLC: We have performed the procedures included in Rule 17a-5(e)(4) under the Securities Exchange Act of 1934 and in the Securities Investor Protection Corporation (SIPC) Series 600 Rules, which are enumerated below and were agreed to by Kershner Securities, LLC, a \Vholly Owned Subsidiary of Kershner Trading Group, LLC and the SIPC, solely to assist you and S1PC in evaluating Kershner Securities, LLC's compliance with the applicable instructions of the General Assessment Reconciliation (Form SIPC-7) for the year ended December 31, 2020. Kershner Securities, LLC's management is responsible for its Form SIPC-7 and for its compliance with those requirements. Th.is agreed-upon procedures engagement was conducted in accordance with stmidards established by the Pub\-ic 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 belO\v either for the purpose for ,vhich this report has been requested or for any other purpose. The procedures ""e perfom1ed and our findings are as follows: - I) Compared the listed assessment payments in Form SIPC-7 with respective cash disbursement records entries, noting no differences; - 2) Compared the Total Revenue amounts reported on the Annual Audited Report Fom1 X-17A-5 Part III for the year ended December 31, 2020 with the Total Revenue amount reported in Form SIPC-7 for the year ended December 31, 2020, noting no differences - 3) Compared any adjustments reported in Form SIPC-7 with supporting schedules and working papers, noting no differences; - 4) Recalculated tl1e arithmetical accuracy of the calculations reflected in Fonn SIPC-7 and in the related schedules and working papers supporting the adjustments, noting no differences; and - 5) Compared the amoum of <1.ny overpayment upphcd Lo lhe current nsscssmcnt with the Form SIPC-7 on ,vhich it was originally computed, noting no differences. We ·were not engaged to and did not conduct an examination or reviev11, the objective of which would be the e),.\_l)ression of an op1nio11 or conclusion, respectively, on Kershner Securities, LLC's compliance with the applicable inst.ructions of the Fonn SIPC-7 for the year ended December 31, 2020. Accordingly, we do not express such an opinion or conclusion Had we perfonned additional procedures, other matters might have come to our attention that ·would have been reported to you. This repmt is intended solely for the information and use of Kershner Securities, LLC and the SIPC and is not intended to be and should not be used by anyone other than these specified parties. **BAUER & COMPANY, LLC** Austin, Texas February 11, 2021 Bauer & Company, LLC P.O. Box 27887 Austin, TX 78755 Tel 512.731.3518 / www.bauerandcompany.com {18}------------------------------------------------ | SIPC-7 | |--------| | | SECURITIES INVESTOR PROTECTION CORPORATION P.O. Box 92185 Washington, D.C. 20090-2185 202-371-8300 **SIPC-7** # {36-REV 12/18) General Assessment Reconciliation (36-REV 12118) | SIPC-7 | | |----------------|--| | (36-REV 12/18) | | For the fiscal year ended **12/31/2020** (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 regisiration no. and month in which fiscal year ends for purposes of th.e audit requirement of SEC Rule 17a-5: | | I
Kershner Securities, LLC
1825-B Kramer lane, Suite 200
Austin, TX 78758 | 7 | indicate on the form filed. | Note: II any of the information shown on the
mailing label requires correction, please e-mail
any corrections to form@sipc.org and so | |--|--------------------------------------------------------------------------------------------------------------------------------|---|-------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------| | | L | | contact respecting this form. | Name and telephone number of person to
__J Jon Sanderson 512-439-8140 | | | 2. A. General Assessment (item 2e from page 2) | | \$ | ----------
10,851 | | | B. Less payment made with SIPC-6 filed (exclude interest)
July 15, 2020 | | | 6,673 | | | Date Paid | | | | | | C. Less prior overpayment applied | | | | | | D. Assessment balance due or (overpayment) | | | 4,178 | | | E. Interest computed on late payment (see instruction E) for _____ days at 20% per annum | | | | | | F. Total assessment balance and interest due (or overpayment carried forward) | | \$ | _________
_ | | | G. PAYMENT:
✓ the box
Check mailed to P.O. BoxD Funds WiredO
4,178
ACH[Z]
\$
Total (must be same as F above) | | __________
_ | | | | ________
\$(
H. Overpayment carried forward | | _ | | | | 3. Subsidiaries (S) and predecessors (P) included in this form (give name and 1934 Act registration number): | | | | | | The SIPC member submitting this form and the | | | | | person by whom it rs executed represent thereby
that all information contained herein is true, correct | | | | |-----------------------------------------------------------------------------------------------------------|------------------------------------------------|--|--| | and complete. | orporation, Partnership or other organization) | | | | | (Authorized Signature) | | | | --
Dated the 27th day oi
January
. 20 21 . | | | | | | (Title) | | | | | | | | **This form and the assessment payment is due 60 days after the end of the fiscal year. Retain the Working Copy of this form for a period of not less than 6 years, the latest 2 years in an easily accessible place.** | :3: | ffi Dates: | Postmarked | Received | Reviewed | | |------------|-----------------|--------------------------------|----------|--------------------------|--------------------------| | LU
LL.I | | > Calculations __
_ | | __
Documentation
_ | ___
Forward Copy
_ | | a:
c | c:> Exceptions: | | | | | | | | u:> Disposition of exceptions: | | | | {19}------------------------------------------------ # **DETERMINATION OF "SIPC NET OPERATING REVENUES" AND GENERAL ASSESSMENT** | | | | Amounts for the fiscal period
beginning 0110112020
and ending 1213112020 | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------|------|--------------------------------------------------------------------------------| | Item No.
2a. Total revenue (FOCUS Line 12/Part IIA Line 9, Code 4030) | | \$ . | ___ _
___
Eliminate cents
17:_;_ ,006,783 | | 2b. Additions:
(1 :1 Total revenues from the securities business of subsidiaries (except foreign subsidiaries) and
predecessors not Included above. | | | | | (2) Net loss from principal transactions in securities in trading accounts. | | | | | (3) Net loss from principal transactions in commodities in trading accounts. | | | | | {4) Interest and dividend expense deducted in determining item 2a. | | | | | {5) Net loss irom management of or participation in the underwriting or distribution of securities. | | | | | (6) Expenses other than advertising, printing , registration fees and legal fees deducted in determining net
profit from management of or participation in underwriting or distribution of securities. | | | | | (7) Net loss from securiiies in investment accounts . | | | | | Total additions | | | 0 | | 2c. Ded uctions:
{1) Reven1Jes from the distribution of shares ol a registered open end investment company or unit
investment trust, from the sale of variable annuities, from the business of insurance, from investment
advisory services rendered to registered investment companies or insurance company separate
accounts, and from transaciions in security futures products. | | | | | (2) Revenues from commodi,y transactions. | | | | | (3) Commissions, floor brokerage and clearance paid to other SIPC members in connection with
securities transactions. | | | 9,772,550 | | (4) Reimbursements lor postage in connec1ion with proxy solicitation. | | | | | (5) Net gain from securities in investment accounts. | | | | | (6) 100% of commissions and markups earned from transactions in (i) certificates of deposit and
{ii) Treasury bills, bankers acceptances or commercial paper that mature nine months or less
from issuance date. | | | | | (7) Direct expenses of printing advertising and legal fees incurred in connection with other revenue
related to the securities business (revenue defined by Section 16(9){L) of the Act). | | | | | (8) Other revenue not related either directly or indirectly to th e securities business.
(See lnstrnction C): | | | | | (Deductions in excess of \$100,000 require documentation) | | | | | (9) (i) Total interest and dividend expense (FOCUS Line 22/PART IIA Line 13,
Gode 4075 plus line 2b(4) above) but not in excess | | | | | of total interest and dividend income. | __________
\$
_ | | | | (ii) 40% of margin interest earned on customers securities
accounts (40% of FOCUS line 5, Co-~e 3960). | __________
\$
_ | | | | Enter the greater ol line (i) or (ii) | | | | | Total deductions | | | 9,772,550 | | 2d. SIPC Net Operating Revenues | | \$ | 7,234,233
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= | | 2e . General Assessment@ .0015 | | s _ | 1 o_,==ss1~ | | | | | (to page 1, line 2.A.) | Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.