# SOFI SECURITIES LLC X-17A-5 (2021-03-11) — Broker-dealer annual report - Company: SOFI SECURITIES LLC - Form: X-17A-5 - Filed: 2021-03-11 - Period: 2020-12-31 - Accession: 0001472443-21-000003 - CIK: 1472443 - File #: 8-68389 - Material weakness: No - Auditor: Deloitte & Touche LLP - Auditor location: SAN FRANCISCO, CA - Contact: Akiva Nimchinsky - Phone: 4159035257 - Signed by: Akiva Nimchinsky (Principal Financial Officer) Original filing: https://www.sec.gov/Archives/edgar/data/1472443/000147244321000003/2020_SFS_PublicFS.pdf --- {0}------------------------------------------------ UNITEDSTATES SECURITIES ANDEXCHANGE COMMISSION Washington, D.C. 20549 # ANNUAL AUDITED REPORT FORM X-17A-5 PART III 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 MM/DDWN A. REGISTRANT IDENTIFICATION # NAME OF BROKER-DEALER: SOFI SECURITIES LLC ADDRESS OF PRINCIPAL PLACE OF BUSINESS: [Do not use P.O. Box No.) 234 1ST STREET | | [ No. and Street] | | |---------------|-------------------|------------| | San Francisco | CA | 94105 | | 16.0151 | | (Zip Lodey | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT AKIVA NIMCHINSKY # B. ACCOUNTANT IDENTIFICATION INDEPENDENT PUBLIC ACCOUNTANT whose opiation is contained in this Report\* Deloitte & Touche LLP SEC 1410 (11-05) | | Name - if individual, stant last first middle numer | | | |---------------------------------------------------------------------|-----------------------------------------------------|---------|------------| | 555 Mission Street, Suite 1400 | San Francisco | CA | 94105 | | (Address) | (C (1) ) | 45tate) | (Zip Code) | | CHECK ONE: | | | | | Certified Public Accountant | | | | | Public Accountant | | | | | Accountant not resident in United States or any of its possessions. | | | | | | FOR OFFICIAL USE ONLY | | | \* laims for exemption from the recordement has the annual report be covered by the integrendent public accommuni must be supported by a statument of for sand circumsances relled on as the basis for the exemption. See Section 240.17a-5tef.21 > 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. OMB APPROVAL OMB Number 3235-0123 Expires: October 31, 2023 Estimated average burden hours per response ...... 12.00 | SEC FILE NUMBER | | | |-----------------|--|--| | 6-68389 | | | OFFICIAL USE ONLY MM/DD/VY FIRM I.D. NO. AND ENDING 12/31/20 (415) 903-5257 (Area Cade - Telephame Number) {1}------------------------------------------------ # OATH OR AFFIRMATION | LAKIVA NIMCHINSKY | swear (or affirm) that. to the best of | |----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | SOFI SECURITIES LLC | my knowledge and belief the accompany ing financial statement and supporting schedules perfaining to the firm of
. | | of DECEMBER 31 | 2020 . Ire true and correct. I further swear (or affirm) that | | classified solely as that of a customer, except as follows: | neither the company not may partner, principal officer or director has any proprietury interest in any account | | | Signature | | | Principal Financial Officer | | Natary Public
This report ** contains (check all applicable boxes);
(a) Fucing Page.
(b) Statement of Financial Condition.
of Comprehensive Income (as defined in §210.1-03 of Regulation S-X).
d) Statement of Changes in Financial Condition.
(e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital.
(1) Statement of Changes in Liabilities Subordinated to Claims of Creditors,
Ig) Compation of Net Capital,
(h) Computation for Deletmination of Reserve Requirements Parsuant to Rule 15c3-3.
(i) Information Relating to the Possession or Control Requirements Linder Rule 15e3-3. | Title
YAAKOV GOLDING
Notary Public-State of New York
No. 01GOE2B5256
Qualified in Rockland County
Commission Expires July 09, 20 2 4
(c) Statement of Income (1.05s) or, if there is ofher comprehensive in the periods > presented. a Statement
13 A Reconcllation, including appropriate explanation of the Computation of Net Capital Under Rule 15ch-1 and the
Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15e3-3, | | consolidation.
(1) An Oath or Affirmation.
(m) A copy of the SIPC Supplemental Report. | (K) A Revonciliation between the audited and unaudited Statements of Financial Condition with respect to methods of | | | (1) A report describing any material inadeguacies found to exist or found to have existed since the date of the previous audit. | \*\* For conditions of confidential treument of certual portions of this filing, see wetton 240 Fra-5(c)(3). {2}------------------------------------------------ # SOFI SECURITIES LLC Statement of Financial Condition and Independent Auditors' Report for the year ended December 31, 2020 {3}------------------------------------------------ # TABLE OF CONTENTS | Independent Auditors' Report | | |-----------------------------------------------|--| | Financial Statements | | | Statement of Financial Condition | | | Notes to the Statement of Financial Condition | | {4}------------------------------------------------ # **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Member and the Board of Directors of Social Finance, Inc.͗ # **Opinion on the Financial Statements** We have audited the accompanying statement of financial position of SoFi Securities LLC (the "Company") as of December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present 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** These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company'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 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 statements are 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 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. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. March 11, 2021 We have served as the Company's auditor since 2019. {5}------------------------------------------------ ### SOFI SECURITIES LLC # STATEMENT OF FINANCIAL CONDITION ### DECEMBER 31, 2020 ### ASSETS | Cash - segregated under federal regulations | | |---------------------------------------------|-----------| | Due from member and intermediary banks | | | Software, net | 291,667 | | Securities owned | 1,577,060 | | Prepaid expenses and other assets | | | Total assets | | | | | # LIABILITIES AND MEMBER'S EQUITY | Accounts payable and accrued liabilities | | |------------------------------------------|--| | Due to intermediary banks | | | Payable to brokerage clients | | | Due to affiliates (Note 3) | | | Total liabilities | | | Commitments and contingencies (Note 7) | | | Member's equity | | | Total liabilities and member's equity | | {6}------------------------------------------------ ### SOFI SECURITIES LLC #### NOTES TO THE STATEMENT OF FINANCIAL CONDITION #### DECEMBER 31, 2020 #### 1. #### Nature of business SoFi Securities LLC (the "Company") is a broker-dealer registered with the U.S. Securities and Exchange Commission ("SEC") pursuant to section 15(b) of the Securities Exchange Act of 1934, as amended ("the Act") and is a member of the Financial Industry Regulatory ("FINRA"). The Company's operations consist of operating a cash management account and bank sweep program, in addition to facilitating brokerage transactions through our introductory relationship with APEX Clearing Corporation ("Clearing Broker"), as discussed below. The Company is wholly owned by Social Finance, Inc. (the "Parent") and is affiliated with SoFi Wealth, LLC ("SoFi Wealth"), an investment advisor registered with the SEC and wholly owned by our Parent. The Company is also affiliated with SoFi Digital Assets LLC, a money transmitter that is licensed by various states and is wholly owned by the Parent. ### Introducing arrangement In July 2015, the Company entered into a clearing agreement with our Clearing Broker, who executes, clears and settles all customer securities transactions on a fully disclosed basis. Therefore, as it relates to the foregoing, the Company does not carry or clear customer accounts. The Company's agreement with its Clearing Broker provides that the Clearing Broker will make and keep such records of the transactions effected and cleared in the customer accounts as are customarily made and kept by a clearing broker pursuant to the requirements of Rules 17a-3 and 17a-4 of the Act. Our Clearing Broker also performs all services customarily performed thereon, including the preparation and distribution of customer's confirmation and statements under the Act and the Self-Regulatory Organizations of which the Company is a member. #### Self-clearing bank sweep program On November 29, 2017, the Company received regulatory approval from FINRA to implement a bank sweep program wherein its customers may place funds on deposit with the Company, which are then swept out and placed on deposit with member banks within the program (the "Bank Sweep Program"). This approval removed the exemptive relief provided under subparagraph (k)(2)(ii) of SEC Rule15c3-3 ("the Customer Protection Rule") thereby making the Company fully subject to the Customer Protection Rule and requiring the Company to hold customer funds in transit in a special reserve account. Beginning in February 2018 the Company began operating the Bank Sweep Program through the use of an originating partner bank which facilitates the flow of funds from our customers to the Company, an intermediary bank which facilitates the flow of funds from the Company to the member banks, and the member banks which hold the customer funds. ### Basis of presentation The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). #### Use of estimates The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the financial statements, and the reported amounts of revenues and expenses during the reporting period. 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ASU 2020-03 was effective immediately upon its release in March 2020 and had an immaterial impact on our consolidated financial statements. #### つ Fair value measurements Certain carrying amounts of the Company's financial instruments, including cash - segregated under federal regulations, due from member and intermediary banks, prepaid expenses and other assets, accounts payable and other accrued liabilities, approximate fair value due to their short-term nature. The following table presents information about the Company's assets and liabilities that are measured at fair value as of December 31, 2020: | | | Quoted Prices in
Active Markets
for Identical
Assets | Significant Other
Observable
Inputs | Significant
Unobservable
Inputs | | | | Balances as of | |--------------------------------------------------|---|---------------------------------------------------------------|-------------------------------------------|---------------------------------------|-----------|--|----------------------|----------------| | | | (Level I) | (Level 2) | | (Level 3) | | December 31,
2020 | | | Securities owned: | | | | | | | | | | Common stock, including exchange traded
funds | ક | 1.577.060 \$ | | ನಾ | | | ಕೆ | 1,577,060 | The Company did not have any transfers between Level 2 during the period ended December 31, 2020. #### 3. Related-party transactions As of December 31, 2020, the amounts due to affiliates were as follows: | Due to SoFi Wealth
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | | |------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--| | Due to Parent. | | | Total Due to affiliates
| | On March 31, 2017, the Company entered into an Investment Advisor Services Agreement ("IASA") with an affiliate, SoFi Wealth is an SEC registered Investment Advisor providing financial advisory services primarily to retail investors. SoFi Wealth refers advisory clients to the Company to open brokerage accounts on a fully disclosed basis and carried by the Clearing Broker. Under the IASA, SoFi Wealth retains the right to request repayment from the Company of all customer account fees and clearing to the advisory accounts covered by the IASA. During the period of January 1 to December 31, 2020, SoFi Wealth paid approximately \$5,014,344 in fees relating to the advisory accounts on behalf of the Company which has been fully allocated to the Company. As of December 31, 2020, \$442,396 remains outstanding and is presented within Due to affiliates on the Statement of Financial Condition. In April 2019 the Company and its Parent, pursuant to a Management Services Agreement (the "Agreement"), agreed that the Parent will assume responsibility for certain indirect operating expenses incurred by the Company in accordance with FINRA Notice to Members 03-63 (the "Notice"). Consistent with the provisions set forth in the Notice, the Company maintains a schedule of indirect operating expenses paid for by the Parent on behalf of the Company. As of December 31, 2020, the Company has an amount Due to Parent of 2,780,719 relating to direct expenses paid by the Parent on behalf of the Company, which is presented within Due to affiliates on the Statement of Financial Condition. {10}------------------------------------------------ Executives and directors may apply for the Company's products. The Company believes all such transactions by related persons were made in the ordinary course of business. #### ব Off balance sheet transactions In the normal course of business, the Company maintains a Bank Sweep program that sweeps customer funds between a firm-owned and firm-operated account and a series of member banks through the assistance of an originating partner bank and an intermediary bank. Once the funds have reached the member bank accounts, the amounts are removed from the Company's balance sheet. As of December 31, 2020, the total amount held at member banks was \$511,577,398. Additionally, there were \$4,441,618 of customer funds in transit which are recorded as Payable to brokerage clients on the Statement of Financial Condition. #### ನ. Regulatory requirements The Company is subject to the SEC's Uniform Net Capital Rule ("Exchange Act Rule 15c3-1"), which requires the maintenance of minimum net capital. The Company elected to use the alternative method, permitted by Exchange Act Rule 15c3-1, which requires that the Company maintain net capital equal to the greater of \$250,000 or 2% of aggregate debit items. These regulations also prohibit a broker-dealer from repaying subordinated borrowings, paying cash dividends, making loans to its parent, affiliates or employees, or otherwise entering into transactions which would result in a reduction of its total net capital to less than 150% of its required minimum capital. Moreover, broker-dealers are required to notify the SEC and other regulators prior to repaying subordinated borrowings, paying dividends and making loans to its parent, affiliates or employees, or otherwise entering into transactions, which, if executed, would result in a reduction of 10% or more of its excess net capital less minimum requirement). The SEC and FINRA have the ability to prohibit or restrict such transactions if the result is detrimental to the financial integrity of the broker-dealer. As of December 31, 2020, the Company had net capital of \$40,168,563, which was \$39,918,563 in excess of its required net capital of \$250,000. The Company is also subject to the SEC Customer Protection Rule (SEC Rule 15c3-3), which requires the Company to maintain cash or qualified securities in a segregated reserve account for the exclusive benefit of customers. Amounts included in Cash - segregated under federal regulations represent actual balances on deposit. Cash required to be segregated and on deposit for regulatory purposes at December 31, 2020 totaled \$4,441,618 and the balance in the reserve account was \$3,732,909. On January 4, 2021, the Company deposited \$1,983,632 into its segregated reserve bank account to satisfy the reserve requirement. #### 6. Concentrations of credit risk The Company is engaged in various trading and brokerage activities in which counterparties primarily include broker-dealers, banks and other financial institutions. In the event counterparties do not fulfill their obligations, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the counterparty or issuer of the instrument. It is the Company's policy to review, as necessary, the credit standing of each counterparty. #### 7. Commitments and contingencies ### Indemnifications In the normal course of its business, the Company indemnifies and guarantees certain service providers, such as clearing and custody agents, trustees and administrators, against specified potential losses in connection with their acting as an agent of, or providing services to, the Company or its affiliates. The Company also indemnifies some clients against potential losses incurred in the event specified third-party service providers, including sub-custodians and third-party brokers, improperly execute transactions. The maximum potential amount of future payments that the Company could be required to make under these indemnifications cannot be estimated. However, the Company believes that it is unlikely it will have to make material payments and has not recorded any contingent liability in the financial statements for these indemnifications. {11}------------------------------------------------ (30:8;,9D;=:A4/0>=0;=0>09?,?4:9>,9/B,==,9?40>?:.:@9?0=;,=?40>49.:990.?4:9B4?3,A,=40?D:1 .:880=.4,7?=,9>,.?4:9>,9/:..,>4:9,77D49/0894140>?308,2,49>?;:?09?4,77:>>0>.,@>0/-D?30-=0,.3:1?3:>0 =0;=0>09?,?4:9>,9/B,==,9?40> (30:8;,9D8,D,7>:;=:A4/0>?,9/,=/49/089414.,?4:9>?:>:80.:@9?0=;,=?40>?: ;=:?0.??30849?300A09?,//4?4:9,7?,C0>,=0:B0/:=;,D809?>,=0B4?3307//@004?30=?:,.3,92049:=,/A0=>0 ,;;74.,?4:9:1.0=?,49?,C7,B> (30>049/089414.,?4:9>2090=,77D,=0>?,9/,=/.:9?=,.?@,7?0=8>,9/,=009?0=0/49?: 49?309:=8,7.:@=>0:1-@>490>> (308,C48@8;:?09?4,7,8:@9?:11@?@=0;,D809?>?3,??30:8;,9D.:@7/-0 =0<@4=0/?:8,60@9/0=?30>049/089414.,?4:9>.,99:?-00>?48,?0/ :B0A0=?30:8;,9D-0740A0>?3,?4?4> @974607D4?B4773,A0?:8,608,?0=4,7;,D809?>@9/0=?30>0,==,920809?>,9/3,>?30=01:=09:?=0.:=/0/,9D .:9?49209?74,-474?40>=07,?0/?:?30>049/089414.,?4:9>,>:10.08-0= ### **!8&6)48)17)9)176** (30:8;,9D0A,7@,?0/0A09?>?3=:@23!,=.3 ?30/,?0?3,??30>0149,9.4,7>?,?0809?>B0=0,A,47,-70 ?:-04>>@0/,9//0?0=8490/?3,??30=0B0=09:>@->0<@09?0A09?>=0<@4=492,/5@>?809?:=/4>.7:>@=049?30>0 149,9.4,7>?,?0809?> Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.