# INDEPENDENT BROKERAGE SOLUTIONS LLC X-17A-5 (2021-02-24) — Broker-dealer annual report - Company: INDEPENDENT BROKERAGE SOLUTIONS LLC - Form: X-17A-5 - Filed: 2021-02-24 - Period: 2020-12-31 - Accession: 0001488377-21-000003 - CIK: 1488377 - File #: 8-68549 - Material weakness: No - Auditor: YSL & Associates LLC - Auditor location: New York, NY - Contact: Richard Sobel - Phone: 2127514422 - Signed by: Richard Sobel (FinOp/CFO) Original filing: https://www.sec.gov/Archives/edgar/data/1488377/000148837721000003/indeshort.pdf --- {0}------------------------------------------------ # Independent Brokerage Solutions LLC Statement of Financial Condition As of December 31, 2020 {1}------------------------------------------------ **UNITEDSTATES SECURITIESAl'\l> EXCHANGECOMMJSSION Washington, D.C. 20549** 0MB APPROVAL 0MB Number: 3235-0123 Expires: October 31, 2023 Estimated average burden hours per response ...... 12.00 ## **ANNUAL AUDITED REPORT FORM X-17 A-5 PARTIII** | SEC FILE NUMBER | |-----------------| | 8-68549 | | | **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 BEGrNNING | ____
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MM/DD/ VY | | |--------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------|-------------|---------------------------------------------|--| | | A. REGISTRANT IDENTIFICATION | | | | | NAME OF BROKER-DEALER: | Independent Brokerage Solutions, LLC | | OFFICIAL USE ONLY | | | | ADDRESS OF PRINCLPAL PLACE OF BUSl ESS: (Do not use P.O. Box 1 o.) | | FIRM I.D. NO. | | | | 485 Madison Avenue -
15 Floor | | | | | | (No. and Street) | | | | | New York | NY | | _10022 | | | {City) | (State) | | (Zip Code) | | | NAME A D TELEPHO E
UMBER OF PERSO
Richard Sobel | TO CO TACT IN REGARD TO THIS REPORT | | 212-751-4422 | | | | | | (Area Code - Telephone Number) | | | | B. ACCOUNT ANT IDENTIFICATION | | | | | I 'DEPE. DE T PUBLIC ACCOUKT ANT whose opinion is contained in this Report*
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YSL & Associates LLC - | | | | | | | (Name - if individual. state last. first. middle name) | | | | | 11 Broadway | New York | NY | 10004 | | | (Address) | (City) | (State) | (Zip Code) | | | C H ECK ONE:
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Certified Pub I ic Accountant
OPublic Accountant
D | 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 2../0. I 7a-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) {2}------------------------------------------------ #### **OATH OR AFFIRMATION** | ___
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_ | |-----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------| | _ | _ 1_nd_e_p_e_n_d_e_nt_B_ro_ke_r_a_ge_So_lu_ti_o_ns_,_L_L_C | | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm o f
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- | . are true and correct. I further swear (or affirm) that | | | classified solely as that of a customer. except as follows: | | neither the company nor any partner, proprietor. principal oflicer or director has any proprietary interest in any account | | | | NO EXCEP I IONS | / | | | | | | | | | | Signature | | | (_ | CLAUDIA 1/.\VLOR
NOTARY FUSLIC, State of New York TIiie
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Qualifiat'. in !~ommission ExPlrcs 10/261-~ ~--~ | FinOp/CFO
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- | | | This repon •• contains (check all applicable boxes):
0 (a) Facing Page.
12] (b) Statement of Financial Condi1ion.
of Comprehen\$ive Income (as defined in §:! I 0. | 1-02 of Regulation SX). | O (c) Statement of Income (Loss) or. if there is other comprehensive income in the period(s) presented. a Statement | | | § (d) Statement of Changes in Financial Condition.
§ (g) Computation of Net Capital. | (e) Statement of Changes in Stockholders· Equity or Panners· or Sole Proprietors' Capital.
(f) Statement of Changes in Liabilities Subordinated to C'lnims of Creditors.
(h) CompuLation for Determination of Reserve Requirements Pursuant 10 Rule 15c3-3.
(i) Information Relating to the Possession or Control Requirements Linder Rule I 5c3-3. | | | | | Computation for Determination of the Reserve Requirements Under Exhibit A of Rule I 5c3-3. | 0 U} A Reconciliation. including appropriate explanation of the Compulation of et Capital Under Rule I 5c3-I and the | | | consolidation. | | D (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect 10 methods of | | | § (I) An Oath or Affim,ation.
{m) A copy of the SIP( Supplemental Report. | | (n) A repon describing any material inadequacies found to exist or found to have existed since the date oft he previous audit. | •• *For conditions of conjidt:nlia/ treatment* 911 ,553 | | Accounts receivable | 156,361 | | Due from broker | 242,214 | | Investment in securities, at fair value | 10,960 | | Prepaid expenses | 18,444 | | Other assets | 67,722 | | Total assets | \$
1,407,254 | | | | | Liabilities and Members' Equity | | | Accounts payable and other accrued expenses | \$
200,918 | | PPP Loan | 71,800 | | Total liabilities | 272,718 | | | | | Members' equity | 1,134,536 | | Total liabilities and members' equity | \$
1,407,254 | The accompanying notes are an integral part of this financial statement. {6}------------------------------------------------ ### NOTE 1- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Independent Brokerage Solutions LLC (f/k/a SDDco Brokerage Advisors LLC) (the "Company") was formed in the State of New York in December 2009. The Company changed its name effective May 19, 2020 in response to the requirements of Regulation BI. No other aspect of the Company organization changed. The Company registered with the Securities and Exchange Commission ("SEC") and the Financial Industry Regulatory Authority ("FINRA") on November 3, 2010. The Company is registered in all fifty states, the District of Columbia, Puerto Rico, Guam, and the Virgin Islands. The Company ownership consists of two members. In 2020, the Company issued a non-voting Class B member interest. The Company is authorized to conduct a business in the Private Placement of securities; act as a Dealer Manager in best efforts distributions of shares in public non-traded REIT securities; conduct a business in exempt Regulation A offerings; and in conjunction with its clearing agent, the Company conducts the following business lines: retailing corporate debt and equity securities, both over-the-counter and through an exchange member; mutual funds; and, U.S. Government securities. The Company may also conduct Investment Advisory Services; the distribution of Third-Party Research; and, General Corporate Advisory and Compliance Consulting Services to other broker dealers, investment advisors, corporate clients, and hedge funds. The Company will continue indefinitely, unless terminated sooner by Management. The Company does not carry securities accounts for customers or perform custodial functions relating to customer securities. The Company introduces all customer accounts on a folly disclosed basis to its clearing agent, Pershing LLC, and maintains a minimum net capital requirement of \$5,000 pursuant to SEC Rule 15c3-l(a)(2)(vi) (the Net Capital Rule). The Company operates pursuant to SEC Rule l 5c3-3(k)(2)(ii) (the Customer Protection Rule) and will not hold customer funds or safe keep customer securities. ### Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The company places its cash with high credit quality financial institutions. At times may be in excess of the Federal Deposit Insurance Corporation (FDIC) insurance limit. The Company has not incurred such a loss in the past. ### Revenue Recognition and Account Receivable Revenue is recognized in the period the fees are earned. Securities transactions are recorded on a trade-date basis. The Company earns both securities related commission income for brokerage activities, private placements, investment banking, and referral arrangements, and non-securities related revenue from compliance consulting and corporate advisory engagements. This is in addition to interest income and any gains/losses from investments. Expenses related to registered representatives are typically significant but proportionate in relation to the corresponding income accounts for private placements and corporate advisory commissions due to the fee share arrangements between the Company and each of its registered representatives. {7}------------------------------------------------ ### NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued) ### Revenue Recognition and Accounts Receivable (continued) Accounts Receivable are reviewed monthly and invoices sent on a 30-day net basis. The Company has not made provisions for bad debt expense or any amount of allowance for uncollectible accounts at year-end since it has determined that there is no need for any write-offs. In 201 7 F ASB has adopted ASC 606, Revenue from Contracts with Customers, which will supersede nearly all existing revenue recognition guidance under accounting principles generally accepted in the United States. The core principle of this standard is that revenue should be recognized for the amount of consideration expected to be received for promised goods or services transferred to customers. This standard was effective for the Company for the annual reporting period beginning January l, 2018. The Company evaluated the new guidance and the adoption has not had a significant impact on the Company's financial statements. A cumulative effect adjustment under the modified retrospective method of adoption has not been necessary. ### Estimates The preparation of financial statements in conformity with generally accepted accounting principles 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. ### Taxes No provision for federal and state income taxes have been made for the Company since, as a limited liability company, the Company is treated as a partnership. The Company's income or loss is reportable by its members on their tax returns. The Company has determined that there are no uncertain tax positions which require adjustment or disclosure on the financial statements. The tax years that remain subject to examination by taxing authorities are 2017, 2018, and 2019. The Company is subject to New York City Unincorporated Business Tax, a provision for which is reported on the statement of operations. ### Fair Value Hierarchy F ASB ASC 820 defines fair value, establishes a framework for measuring fair value, and establishes a hierarchy of fair value inputs. Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. {8}------------------------------------------------ #### NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued) ### Fair Value Hierarchy (continued) Valuation techniques that are consistent with the market, income or cost approach, as specified by F ASB ASC 820, are used to measure fair value. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels: • Level 1. Quoted prices (unadjusted) in active markets for identical assets or liabilities the Company can access at the measurement date. • Level 2. Inputs other than quoted prices included within Level l that are observable for the asset or liability, either directly or indirectly. • Level 3. Unobservable inputs for the asset or liability. The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The investment of the Company at December 31, 2020 mainly consists of publicly traded shares categorized as Level 1. #### NOTE 2- NET CAPITAL REQUIREMENT The Company is subject to the SEC Uniform Net Capital Rule (SEC Rule I 5c3- 1 ), which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1 (and the rule of the 'applicable' exchange also provides that equity capital may not be withdrawn or cash dividends paid if the resulting net capital ratio would exceed 10 to 1 ). At December 31 , 2020, the Company had net capital of \$1,016,717 which was \$ 1,003,322 in excess of its required net capital of\$13,395. The Company's net capital ratio was .20 to 1. {9}------------------------------------------------ #### NOTE 3 - RELATED PARTY TRANSACTIONS The Company has an agreement with S. D. Daniels & Co., CPA, P.C. ("SDDCO"), a related entity, whereby SDDCO and its affiliate provides certain administrative services and the use of certain office space in connection with the Company's operations. In exchange for these services and office space, the Company is billed a representative allocation of direct expenses based on square footage, human resources and other related factors. The Rent allocation is a month-to-month expense with the SDDCO lease expiring in December 2030. For the year ended December 31, 2020, expenses allocated to the Company by SDDCO and its affiliate were \$87,955 and are included in various categories of the accompanying statement of operations. At December 31 , 2020, the Company had a balance of\$0 due to SDDCO. SDDCO as the majority owner, also guarantees to provide all necessary capital to the Company, in the event of extraordinary circumstances and the maintenance of adequate net capital. #### NOTE4- SIGNIFICANT GROUP CONCENTRATION OF RISK The Company's policy is to continuously monitor its exposure to market and counterparty risk through the use of a variety of financial, position and credit exposure reporting and control procedures. In addition, the Company has a policy of reviewing the credit standing of each broker-dealer, clearing organization, customer and/or other counterparty with which it conducts business. The Company one largest customer accounted for approximately 50% of the corporate advisory and private equity fee income for 2020. #### NOTE 5- GUARANTEES F ASB ASC 460, *Guarantees,* requires the Company to disclose information about its obligations under certain guarantee arrangements. F ASB ASC 460 defines guarantees as contracts and indemnification agreements that contingently require a guarantor to make payments to the guaranteed party based on changes in an underlying value (such as an interest or foreign exchange rate, security or commodity price, an index or the occurrence or nonoccurrence of a specified event) related to an asset, liability or equity security of a guaranteed party. This guidance also defines guarantees as contracts that contingently require the guarantor to make payments to the guaranteed party based on another entity's failure to perform under an agreement, as well as indirect guarantees of the indebtedness of others. The Company has issued no guarantees effective at December 31, 2020 or during the year then ended. #### NOTE6- COMMITMENTS AND CONTINGENT LIABILITIES The Company had no lease or equipment rental commitments, no underwriting commitments, and no contingent liabilities and had not been named as defendant in any lawsuit at December 31 , 2020 or during the year then ended. {10}------------------------------------------------ #### NOTE 7- BENEFITS The Company participates in a 40l{k) profit sharing plan covering substantially all of its employees. The plan includes employee contributions and discretionary employer contributions. The Company is not required to make contributions; however, if the Company makes a contribution, it must at a minimum equal at least 3% of each participant's compensation, as defined under the plan. The Company contributed \$14,828 to the plan for the year ended December 31 , 2020 which is reported on the 401 (k) employer contributions line on the statement of operations. #### NOTE 8- OTHER ASSETS Other assets were mainly consisting of registered representatives reimbursable expenses at year end. #### NOTE9- CECL ### Fees Receivable Fees receivable are carried at the amounts billed to customers, net of an allowance for credit losses, which is an estimate for credit losses based on a review of all outstanding amounts. ### Allowance for Credit Losses Effective January 1, 2020, the Company adopted ASC Topic 326, Financial Instruments - Credit Losses ("ASC 326"). ASC 326 impacts the impairment model for certain financial assets measured at amortized cost by requiring a current expected credit loss ("CECL") methodology to estimate expected credit losses over the entire life of the financial asset, recorded at inception or purchase. Under the accounting update, the Company has the ability to determine there are no expected credit losses in certain circumstances. The Company identified fees receivable carried at amortized cost as impacted by the new guidance. ASC 326 specifies that the Company adopt the new guidance prospectively by means of a cumulative-effect adjustment to the opening retained earnings as of the beginning of the first reporting period effective. The Company believes there is no impact to opening member's equity upon adoption of ASC 326. The allowance for credit losses is based on the Company> s expectation of the collectability of financial instruments carried at amortized cost, including fees receivable utilizing the CECL framework. The Company considers factors such as historical experience, credit quality, age of balances and current and future economic conditions that may affect the Company's expectation of the collectability in determining the allowance for credit losses. The Company's expectation is that the credit risk associated with fees receivables is not significant until they are 90 days past due on the contractual arrangement and expectation of collection in accordance with industry standards. Management does not believe that an allowance is required as of December 31 , 2020. {11}------------------------------------------------ #### NOTE IO-PPP LOAN During April 2020, the Company applied for and received a promissory note (the "PPP Loan") evidencing an unsecured loan in the amount of approximately \$71,800 made to the Company pursuant to the Paycheck Protection Program (the "PPP") under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), which was enacted March 27, 2020. The PPP Loan may be forgiven, in part or in whole, subject to certain conditions as stipulated under the PPP. The Company has not started the process of applying for loan forgiveness. The PPP Loan is being administered by First Republic and bears interest at a rate of 1.0% per annum. In accounting for the terms of the PPP Loan, the Company is guided by ASC 470 Debt, and ASC 450-30 Gain Contingency. Accordingly, the Company recorded the proceeds of the PPP Loan as debt and it will derecognize the liability when the loan is paid off or when forgiveness is reasonably certain. The Company believes that the possibility of loan forgiveness is to be regarded as a contingent gain and therefore will not recognize the gain (and derecognize the loan) until all uncertainty is removed (i.e. all conditions for forgiveness are met). As of December 31 , 2020, the PPP Loan amounted to approximately \$71 ,800. #### NOTE 11 - RISKS AND UNCERTAINTIES During 2020, the World Health Organization declared COVID-19 to constitute a "Public Health Emergency of International Concern.,, This pandemic has disrupted economic markets and the economic impact, duration and spread of the COVID-19 virus is uncertain at this time. The impact on financial markets and the overall economy, all of which are highly uncertain, cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period the Company's results may be affected. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.