# SOFI SECURITIES LLC X-17A-5 (2022-03-01) — Broker-dealer annual report - Company: SOFI SECURITIES LLC - Form: X-17A-5 - Filed: 2022-03-01 - Period: 2021-12-31 - Accession: 0001472443-22-000002 - CIK: 1472443 - File #: 8-68389 - Type: Broker-dealer - Material weakness: No - Auditor: Deloitte & Touche LLP - Auditor location: San Francisco, CA - Contact: Alan Carlisle - Phone: 415-481-0740 - Email: acarlisle@sofi.org - Website: sofi.org - Signed by: Alan Carlisle (Principal Financial Officer) Original filing: https://www.sec.gov/Archives/edgar/data/1472443/000147244322000002/21Public.pdf --- {0}------------------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 OMB APPROVAL OMB Number: 3235-0123 Expires: Oct. 31, 2023 Estimated average burden hours per response: 12 SEC FILE NUMBER 8-68389 # ANNUAL REPORTS FORM X-17A-5 PART III FACING PAGE Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 | Filing for the period beginning 01/01/21 | | AND ENDING 12/31/21 | |------------------------------------------|----------|---------------------| | | MM/DD/YY | MM/DD/YY | A. REGISTRANT IDENTIFICATION # NAME OF FIRM: SOFI SECURITIES LLC TYPE OF REGISTRANT (check all applicable boxes): @ Broker-dealer Check here if respondent is also an OTC derivatives dealer ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) # 234 1ST Street | | (No. and Street) | | | | |------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------|-----------------------|--------------------|--| | San Francisco | CA | 94105 | | | | (City) | (State) | (Zip Code) | | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | Alan Carlisle | 415-481-0740 | | acarlisle@sofi.org | | | (Name) | (Area Code - Telephone Number)
(Email Address) | | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing*
Deloitte & Touche LLP
(Name - if individual, state last, first, and middle name) | | | | | | 555 Mission Street, Suite 1400 San Francisco | | CA
94105 | | | | (Address) | (City) | (State)
(Zip Code) | | | | 10/20/2003 | | 34 | | | | (Date of Registration with PCAOB)(if applicable)
(PCAOB Registration Number, if applicable
FOR OFFICIAL USE ONLY | | | | | | | | | | | \* Claims for exemption from the requirement that the annual reports of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 CFR 240.17a-5(e)(1)(ii), if applicable. 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. {1}------------------------------------------------ ## OATH OR AFFIRMATION | Alan Carlisle | swear (or affirm) that, to the best of my knowledge and belief, the | | |----------------------------------------------------------------|---------------------------------------------------------------------|-------| | financial report pertaining to the firm of SOFI SECURITIES LLC | | as of | | ANIGA | | | 12/31 , 2021 , is true and correct. I further swear (or affirm) that neither the company nor any partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely as that of a customer. ![](_page_1_Picture_3.jpeg) | Signature: | | | |------------|--|--| | a
Cir | | | | Title: | | | Principal Financial Officer Notary Public ## This filing \*\* contains (check all applicable boxes): - (a) Statement of financial condition. - [ (b) Notes to consolidated statement of financial condition. - [] {c) Statement of income (loss) or, if there is other comprehensive income in the period(s) presented, a statement of comprehensive income (as defined in § 210.1-02 of Regulation S-X). - [ (d) Statement of cash flows. - [e] Statement of changes in stockholders' or partners' or sole proprietor's equity. - [] (f) Statement of changes in liabilities subordinated to claims of creditors. - = (g) Notes to consolidated financial statements. - [ (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable. - [ (i) Computation of tangible net worth under 17 CFR 240.18a-2. - [] Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. - [ (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or Exhibit A to 17 CFR 240.18a-4, as applicable. - [1) Computation for Determination of PAB Requirements under Exhibit A to § 240.15c3-3. - (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3. - [ (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.15c3-3(p)(2) or 17 CFR 240.18a-4, as applicable. - [ (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capible net worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-1, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences exist. - | (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - @ (q) Oath or affirmation in accordance with 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. - [ (r) Compliance report in accordance with 17 CFR 240.18a-7, as applicable. - [ (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - (t) Independent public accountant's report based on an examination of the statement of financial condition. - [ (u) Independent public accountant's report based on an examination of the financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable. - [ (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - \_ (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - . [x] Supplemental reports on applying agreed upon procedures, in accordance with 17 CFR 240.17a-12, as applicable. - [] (y) Report describing any material inadequacies found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k). - L (z) Other: - \*\* To request confidential treatment of chis filing, see 17 CFR 240.17a-5(e)(3) or 17 CFR 240.18a-7(d)(2), as applicable. {2}------------------------------------------------ # SOFI SECURITIES LLC Statement of Financial Condition and Independent Auditors' Report for the year ended December 31, 2021 {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 SoFi Technologies, 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, 2021, 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, 2021, 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 1,2022 We have served as the Company's auditor since 2019. {5}------------------------------------------------ ## **!** ## ### ## | ,>3 | | |---------------------------------------|------| | ,>3 >02=02,?0/@9/0=10/0=,7=02@7,?4:9> |
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5(37,6: | | {6}------------------------------------------------ ### SOFI SECURITIES LLC #### NOTES TO THE STATEMENT OF FINANCIAL CONDITION #### DECEMBER 31, 2021 #### 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", a wholly owned subsidiary of SoFi Technologies, Inc., a public issuer) and is affiliated with 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 The Company has a clearing agreement with our Clearing Broker, who executes, clears and settles all customer securities transactions on a fully disclosed basis. Therefore, 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-4 of the Act. Our Clearing Broker also performs all services customarily performed thereon, including the preparation and distribution of customers' confirmation and statements under the Act and the rules of the Self-Regulatory Organizations of which the Company is a member. #### Self-clearing bank sweep program The Company has 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"), which received regulatory approval from FINRA. 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. The Company operates the Bank Sweep Program through the use of an originating partner bank that facilitates the flow of funds from our customers to the Company, an intermediary bank that facilitates the flow of funds from the Company to the member banks, and the member banks that 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. Actual results could differ from those estimates. {7}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| <@4?40> |
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| | | | G | | G | | | {9}------------------------------------------------ The Company did not have any transfers between Level 2 during the period ended December 31, 2021. #### 3. Related-party transactions As of December 31, 2021, the amounts due from affiliates were \$1,571,941. This balance represents intercompany receivables for promotion and reward point redemptions in broker-dealer products, which were earned through SoFi affiliate products. As of December 31, 2021, the amounts due to affiliates were as follows: | Due to SoFi Wealth
| | |-------------------------|--------------| | Due to Parent | | | Total due to affiliates | \$ 1.223.088 | The Company has an Investment Advisor Services Agreement ("IASA") with an affiliate, SoFi Wealth. 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 expenses relating to the advisory accounts covered by the IASA. During the year ended December 31, 2021, SoFi Wealth paid approximately \$6,304,779 in fees relating to the advisory accounts on behalf of the Company which has been fully allocated to the Company. As of December 31, 2021, \$480,000 remains outstanding and is presented within Due to affiliates on the Statement of Financial Condition. The Company and its Parent, pursuant to a Management ("MSA"), 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, 2021, the Company has an amount due to Parent under the MSA of \$78,762, which is presented within Due to affiliates on the Statement of Financial Condition. As of December 31, 2021, the Company has a balance of \$471,107 due to Parent related to intercompany payables for promotion and reward point programs which is presented within Due to affiliates on the Statement of Financial Condition. On May 17, 2021, the Company entered into a Subordinated Loan Agreement (the "Agreement") with the Parent for a \$65,000,000 note payable with interest due monthly at a rate of 3.5% for an initial term of one year. The Agreement is deemed to constitute a satisfactory subordination agreement under Appendix D to Rule 15c3-1 under the Securities Exchange Act of 1934, as amended (the "Act" or "SEA"). As of December 31, 2021, the Company had an amount Due to Parent of \$65,000,000 related to the Subordinated Loan Agreement, which is presented within Subordinated borrowings on Statement of Financial Condition. The Company had previously paid \$1,234,110 in interest relating to the subordinated loan to the Parent and has an outstanding accrual balance of \$193,219 as of December 31, 2021. The accrued interest associated with the subordinated payable is presented within Due to affiliates on the Statement of Financial Condition. On May 14, 2020, the Parent of the Company acquired Galileo Financial Technologies, Inc. and its subsidiaries ("Galileo") by acquiring 100% of the outstanding Galileo stock as of that date. Galileo primarily provides technology platform services to financial and non-financial institutions and in 2020 began providing platform services for the Company. 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. {10}------------------------------------------------ #### 4. 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 Statement of Financial Condition. As of December 31, 2021, the total amount held at member banks was \$792,050,067. Additionally, there were \$6,553,184 of customer funds in transit which are recorded as Payable to brokerage clients on the Statement of Financial Condition. #### 5. 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, 2021, the Company had net capital of \$76,971,045, which was in excess of its required net capital. 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, 2021 totaled \$6,553,184 and the balance in the reserve account was \$7,656,005. On January 3, 2022, the Company deposited \$462,367 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, includians and third-party brokers, improperly execute transactions. The maximum 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. The Company provides representations and warranties to counterparties in connection with a variety of commercial transactions and occasionally indemnifies them against potential losses caused by the breach of those representations and warranties. The Company may also provide standard indemnifications to some counterparties to protect them in the event additional taxes are owed or payments are withheld, due either to a change in or adverse application of certain tax laws. These indemnifications generally are standard contractual terms and are entered into {11}------------------------------------------------ 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= ## **7%5(37(06(8(065** (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>0149,9.4,7 >?,?0809?> Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.