# BERENBERG CAPITAL MARKETS LLC X-17A-5 (2024-02-14) — Broker-dealer annual report - Company: BERENBERG CAPITAL MARKETS LLC - Form: X-17A-5 - Filed: 2024-02-14 - Period: 2023-12-31 - Accession: 0001514067-24-000001 - CIK: 1514067 - File #: 8-68821 - Type: Broker-dealer - Material weakness: No - Auditor: Crowe LLP - Auditor location: New York, NY - Contact: Gregory Shamalov - Phone: 19299965053 - Email: lars.schwartau@berenberg-us.com - Website: berenberg-us.com - Signed by: Gregory Shamalov (VP, Finance) Original filing: https://www.sec.gov/Archives/edgar/data/1514067/000151406724000001/2023BCMPublic.pdf --- {0}------------------------------------------------ # BERENBERG CAPITAL MARKETS LLC (SEC I.D. No. 8-68821) STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2023, AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Filed pursuant to Rule 17a‐5(e)(3) under the Securities Exchange Act of 1934 as a PUBLIC DOCUMENT. {1}------------------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ANNUAL REPORTS FORM X-17A-5 PART III OMB APPROVAL OMB Number: Expires: Estimated average burden hours per response: ## SEC FILE NUMBER 8-68821 | | 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 _____________________ AND ENDING ______________________ | 01/01/23 | 12/31/23 | | | MM/DD/YY | MM/DD/YY | | | A. REGISTRANT IDENTIFICATION | | | Berenberg
NAME OF FIRM: _______________________________________________________________________ | Capital
Markets | LLC | | TYPE OF REGISTRANT (check all applicable boxes):


Broker-dealer
Security-based swap 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.) |  | Major security-based swap participant | | 1251
Avenue
of
the
_____________________________________________________________________________________ | Americas, | 53rd
Floor | | | (No. and Street) | | | New
York
_____________________________________________________________________________________ | NY | 10020 | | (City) | (State) | (Zip Code) | | PERSON TO CONTACT WITH REGARD TO THIS FILING
Lars
Schwartau
_____________________________________________________________________________________ | (646)
949-9101 | Lars.Schwartau@berenberg-us.com | | (Name) | (Area Code – Telephone Number) | (Email Address) | | | B. ACCOUNTANT IDENTIFICATION | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing*
Crowe
LLP
_____________________________________________________________________________________ | | | | 485
Lexington
Ave
_____________________________________________________________________________________ | (Name – if individual, state last, first, and middle name)
New
York | NY
10017 | | | | | | (Address)
September,
24
2003 | (City) | (State)
(Zip Code)
173 | | _____________________________________________________________________________________
(Date of Registration with PCAOB)(if applicable) | | | | | FOR OFFICIAL USE ONLY | (PCAOB Registration Number, if applicable) | 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. {2}------------------------------------------------ | we, Lars Schwartau and Zachary Brantly | | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | financial report pertaining to the firm of Berenberg Capital Markets LLC | as of as as of | | 12/31 | 2 ____________________________________________________________________________________________________________________________________________________________________________ | | 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. | | | ALEXANDRA J DIDOMENICO
Notary Public - State of New York
NO. 01DI0015507
Qualified in Kings County | Signature: | | My Commission Expires Nov 3, 2027 | Title: | | | Head of US Trading | | | Signature: | | Notary Public | | | | litle: | | This filing** contains (check all applicable boxes): | Head of US Investment Banking | | (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. | | | J (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. | | | പ (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. | | | L (i) Computation of tangible net worth under 17 CFR 240.18a-2. | | | □ (j) 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. | | | (I) 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 | | | worth under 17 CFR 240.15c3-1, 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. | | | പ (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-5, 17 CFR 240.18a-7, as applicable. | | | □ (r) Compliance 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. | | - - {3}------------------------------------------------ ![](_page_3_Picture_0.jpeg) #### REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Member of Berenberg Capital Markets LLC New York, New York #### **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of Berenberg Capital Markets LLC (the "Company") as of December 31, 2023, and the related notes (collectively referred to as the "financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company as of December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. #### **Basis for Opinion** This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statement, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audit of the financial statement provides a reasonable basis for our opinion. Crowe LLP We have served as the Company's auditor since 2023. New York, New York February 13, 2024 {4}------------------------------------------------ Statement of Financial Condition | S | 25,045,562 | |----|-------------| | | 1,319,433 | | | 1,000,000 | | | 284,772 | | | 2,173,531 | | | 20,769,652 | | | 58,831,021 | | | 64,984 | | | 194.458 | | | 1,875,842 | | \$ | 111,559,255 | | | | | | | | | 3,074,593 | | | 901,500 | | | 833,334 | | | 71,632,340 | | | 76,441,767 | | | | | | | | | 35,117,488 | | | 35,117,488 | | | \$ | See accompanying notes to statement of financial condition. {5}------------------------------------------------ Notes to Statement of Financial Condition ## 1. Business Berenberg Capital Markets LLC ("Company"), a Delaware limited liability company, is a registered broker‐dealer in securities under the Securities Exchange Act of 1934 and is a registered member of the Financial Industry Regulatory Authority ("FINRA") as of November 9, 2011, incorporated on December 8, 2010 and commenced operations on January 1, 2011. The Company is wholly‐ owned by Berenberg Asset Management LLC ("Parent"), an investment advisor registered with the SEC. Berenberg Asset Management LLC is the wholly owned subsidiary of Berenberg Beteiligungsholding GmbH, which is a subsidiary of Joh. Berenberg, Gossler & Co. KG, ("Berenberg Bank"), the ultimate parent company. The Company's primary activities include providing investment banking services, sales and trading of equity securities, and Securities and Exchange Commission ("SEC") Rule 15a‐6 activities through settlement with Berenberg Bank. The Company conducts its SEC Rule 15a‐6 activities on a receive versus payment ("RVP")/delivery versus payment ("DVP") basis. The Company is allowed to conduct a settlement method that stipulates cash payment must be made simultaneously with the delivery of a security. Berenberg Bank has only been given the right to settle trades on behalf of the Company through the Prezioso interpreted letter in SEC Rule 15a‐6. The Company conducts sales and trading of U.S. equity securities as an introducing broker dealer. All transactions are cleared on an RVP/DVP basis and on a fully‐disclosed basis through the Company's clearing broker. The Company does not hold funds or securities for customers and does not carry accounts of customers. Accordingly, the Company operates under the exemptive provisions of SEC Rule 15c3‐ 3(k)(2)(i) for the 15a‐6 activities and under SEC Rule 15c3‐3(k)(2)(ii) for the U.S. securities business, and the provisions of Footnote 74 for proprietary trading and other investment banking activities. ## 2. Significant Accounting Policies ## Basis of Presentation The Statement of Financial Condition has been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). ## Use of Estimates The preparation of the Statement of Financial Condition in conformity with U.S. GAAP requires Company management to make estimates and assumptions including but not limited to, deferred tax assets and deferred revenue, that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Statement of Financial Condition. Actual results could differ from those estimates. {6}------------------------------------------------ Notes to Statement of Financial Condition ## 2. Significant Accounting Policies (Continued) ## Cash Cash held at financial institutions, at times, may exceed the amount insured by the Federal Deposit Insurance Corporation. The Company has not incurred any losses to date regarding these excess balances. ## Current Expected Credit Losses The Company accounts for estimated credit losses on financial assets measured at an amortized cost basis in accordance with FASB ASC 326‐20, Financial Instruments – Credit Losses. FASB ASC 326‐20 requires the Company to estimate expected credit losses over the life of its financial assets and certain off‐balance sheet exposures as of the reporting date based on relevant information about past events, current conditions, and reasonable and supportable forecasts. The Company records the estimate of expected credit losses as an allowance for credit losses. For financial assets measured at an amortized cost basis the allowance for credit losses is reported as a valuation account on the balance sheet that adjusts the asset's amortized cost basis. Changes in the allowance for credit losses if any are reported in credit loss expense. 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. It is the Company's policy to review, as necessary, the credit standing of each counterparty. ## Accounts Receivable Accounts receivable include amounts earned from investment banking advisory revenue. The Company performs a review of its receivables periodically to evaluate the need for an allowance for credit losses. Management reviews all accounts receivable to evaluate the basis of estimation of expected credit losses. There is no allowance as management believes all amounts are fully collectible. ## Fair Value of Financial Instruments FASB 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 to sell 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. Valuation techniques that are consistent with the market, income or cost approach, as specified by FASB 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: {7}------------------------------------------------ Notes to Statement of Financial Condition ## 2. Significant Accounting Policies (Continued) ## Fair Value of Financial Instruments (Continued) - Level 1. Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date. - Level 2. Inputs other than quoted prices included within level 1 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 fair value of cash and cash deposits with clearing organizations (included in Clearing deposit), was estimated to be carrying value and classified as Level 1 of the fair value hierarchy. The fair value of accounts receivables and payables, fails to deliver and receive, due to and due from customer, and prepaid expenses and other assets, were estimated to approximate carrying value and classified as Level 2 of the fair value hierarchy due to their short‐term nature. ## Due from Customer Due from customer includes amounts due from customers for the failed foreign securities transactions executed pursuant to SEC Rule 15a‐6. The Company records these receivables when the transaction fails to settle on the contracted settlement date. As of December 31, 2023, the Company had no receivables for these failed transactions. ## Fails to Deliver/Fails to Receive In the normal course of business, the Company chaperones security transactions pursuant to SEC Rule 15a‐6 on behalf of customers on a receipt versus payment basis. If these transactions do not settle due to failure to perform by either the customer or the counterparty, the Company may be obligated to discharge the obligation of the nonperforming party and, as a result, may incur a loss if the market value of the securities is different from the contract amounts. The risk of loss to the Company is normally limited to differences in market values of the securities compared to their contract amounts. {8}------------------------------------------------ Notes to Statement of Financial Condition ## 2. Significant Accounting Policies (Continued) ## Fails to Deliver/Fails to Receive (Continued) As of December 31, 2023, the Company had no fails to deliver on trades executed and to be settled by Berenberg Bank. As of December 31, 2023, the Company had no fails to receive on trades executed and to be settled by Berenberg Bank. ## Property and Equipment Furniture and fixtures and other equipment are depreciated over the estimated useful lives of the assets (ranging from 3‐7 years) using the straight‐line method. Leasehold improvements are amortized over the lesser of the economic useful life of the improvement or the term of the respective lease (ranging from 1‐14 years), using the straight‐line method. ### Leases The Company accounts for its leases under Accounting Standard Codification ("ASC") Topic 842, Leases. Under this guidance, lessees classify arrangements meeting the definition of a lease as operating or financing leases, and leases are recorded on the Statement of Financial Condition as both a right‐of‐use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company's incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. In calculating the right of use asset and lease liability, the Company elects to combine lease and non‐lease components. The Company excludes short‐term leases having initial terms of 12 months or less as an accounting policy election. ## Principal Transactions The Company records principal transactions on a trade date basis. In many cases, the Company participates in these principal transactions for the purpose of facilitating customer trade orders on a riskless principal basis. ## Foreign Currency In the normal course of business, the Company may enter into transactions not denominated in U.S. dollars. The Company's balances denominated in foreign currencies are translated into U.S. dollars at the end of each period. ## Income Taxes The Company accounts for income taxes in accordance with ASC 740, "Income Taxes". Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. {9}------------------------------------------------ Notes to Statement of Financial Condition ## 2. Significant Accounting Policies (Continued) ## Income Taxes (Continued) When applicable, a valuation allowance is established to reduce any deferred tax asset when it is determined that it is more likely than not that some portion of the deferred tax asset will not be realized. It is the policy of the Company to comply with the provisions applicable to companies, as defined by Subchapter C of the Internal Revenue Code. The Company files Federal, state and local income tax returns. On the Federal and various State returns, the Company files on a group basis with the Parent. The Company was able to utilize previous net operating losses generated by the Parent. No income tax returns are currently under examination. The Company's Federal tax returns since 2020 are currently open to examination. As of the end of the tax year 2023, the Company has various state and local net operating losses, which start expiring in 2037. Additionally, the Company incurred a federal loss in 2022 and 2023 which can be carried forward indefinitely. The Company has previously made an election to be treated as a corporation for U.S. tax purposes. ## 3. Significant Risk Factors #### Market risk The Company's revenues are subject to substantial fluctuations due to a variety of factors that cannot be predicted with great certainty, including the overall condition of the economy and the securities markets as a whole. #### Credit risk The Company is engaged in various trading and brokerage activities in which counterparties primarily include broker‐dealers and banks. Credit risk represents the potential loss that the Company would incur if the counterparties failed to perform pursuant to the terms of their obligations to the Company. The Company minimizes its exposure to credit risk by conducting transactions with established and reputable financial institutions. Counterparty exposure is monitored on a regular basis. As of December 31, 2023, the Company did not have any off‐balance sheet credit exposure. {10}------------------------------------------------ Notes to Statement of Financial Condition ## 4. Income Taxes Management has analyzed the Company's tax positions taken on income tax returns for all open tax years. The Company has no unrecognized tax benefits at December 31, 2023. In addition, the Company has concluded that it does not have any uncertain tax positions. Differences between the financial statement carrying amounts and the tax bases of assets and liabilities that give rise to significant portions of the deferred tax assets and liabilities are as follows: | Deferred tax assets (liabilities): | | | |------------------------------------|---|--------------| | Operating lease liabilities | S | 19,612,372 | | Bonus accrual | | 300,948 | | Severance accrual | | 218,456 | | Net operating losses carryforward | | 10,612,278 | | State bonus depreciation | | 703,521 | | Deferred revenue | | 229,588 | | Charitable contributions | | 7,123 | | Total deferred tax assets | | 31,684,286 | | Right of Use assets | | (16,069,035) | | Property and equipment, net | | (1,558,371) | | Valuation Allowance | | (14,056,880) | | Total deferred tax liabilities | | (31,684,286) | | Net deferred tax asset | S | | | | | | In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the existence of, or generation of, taxable income in the periods in which those temporary differences are deductible. Management considers the scheduled reversal of deferred tax liabilities, taxes paid in carryback years, projected future taxable income, and tax planning strategies in making this assessment. On the basis of this evaluation, as of December 31, 2023, a valuation allowance has been recorded as it is more likely than not that the net deferred tax asset will not to be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income change during the carryforward period or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth. {11}------------------------------------------------ Notes to Statement of Financial Condition ## 5. Related Party Transactions ## Cash As of December 31, 2023, the Company maintains a cash account of approximately \$231,000 with Berenberg Bank. ## Transfer Pricing Effective January 1, 2018, the Company entered into a Transfer Pricing Agreement ("TPA") with Berenberg Bank to allocate and distribute global equities profits across all reporting entities. As of December 31, 2023, the Company had a receivable for TPA compensation of \$166,444, which is included in the Due from Berenberg Bank section of the Statement of Financial Condition. ## Sublease Agreement with Parent The Company entered into an Agreement of Sublease with the Parent on June 1, 2019. Under this agreement, the Parent is subleasing a 100 square foot single office within the Company's New York office space. As of December 31, 2023, the Company had a receivable from Parent of \$64,984, which is included in Due to Parent on the Statement of Financial Condition. ## Commissions As of December 31, 2023, the Company had a receivable for commissions from Berenberg Bank of \$265,721, which is included in Due from Berenberg Bank on the Statement of Financial Condition. #### Due to Berenberg Bank As of December 31, 2023, the Company had a payable to Berenberg Bank of \$147,395 for research checks received on behalf of Berenberg Bank, which is included in Due from Berenberg Bank on the Statement of Financial Condition. ## 6. Due from Clearing Broker The Company has a clearing agreement with its clearing broker to carry its customers' DVP & RVP accounts at Pershing, LLC, as well as the Company's accounts as a customer of the clearing broker. At times, the Company will have receivables (e.g. client commissions received) and/or payables to the broker, which may include cash balances, amounts receivable for unsettled trades and collateral posted (e.g. clearing deposit). The due from clearing balance of \$1,319,433 includes cash balances, net of debit balances as of December 31, 2023. {12}------------------------------------------------ Notes to Statement of Financial Condition ## 6. Due from Clearing Broker (Continued) As part of the Company's clearing agreement with its clearing broker, a minimum deposit of \$1,000,000 is to be maintained at all times. As of December 31, 2023, the Company maintained a clearing deposit of \$1,000,000 in the form of a certificate of deposit, which is shown on the Statement of Financial Condition. The Company's trades are cleared through the clearing broker and settled daily between the clearing broker and the Company. Because of this daily settlement, the amount of unsettled credit exposures is limited to the amount owed the Company for a very short period of time. The Company continually reviews the credit quality of its counterparties. ## 7. Property and Equipment, Net At December 31, 2023, property and equipment, net consisted of: | | Estimated | | | |---------------------------------|-------------|----|-------------| | | Useful Life | | Amount | | Artwork | | રે | 63,554 | | Leasehold improvements | Lease term | | 21,554,571 | | Computers and equipment | 3-5 years | | 3,829,191 | | Furniture and fixtures | 7 years | | 3,117,776 | | | | | 28,565,091 | | Less: Accumulated depreciation | | | (7,795,439) | | | | | 20,769,652 | | | | | | #### 8. Commitments and Contingencies ### Operating Leases The Company leases office space and copiers under non‐cancellable operating leases expiring through 2038. The majority of the Company's right‐of‐use assets and lease liabilities as of December 31, 2023 result from an operating lease of 62,400 square feet in New York for its corporate office, which commenced in 2017 and expires in 2038. The Company pays fixed rent and its share of the building's operating costs and real estate taxes. Fixed rate increases every 4 years during the lease term. In 2023, the Company accrued \$7,239,903 for a tenant improvement allowance from the landlord for improvement costs that were incurred by the Company. Once the contingent payment amounts identified within the lease contract were determined and resolved, the Company remeasured the right of use asset and lease liability upon the remeasurement event date. The Company's office space leases do not require any contingent rental payments, impose any financial restrictions, or contain any residual value guarantees. Non‐lease components generally represent the Company's share of the landlord's operating expenses. {13}------------------------------------------------ ## 8. Commitments and Contingencies (Continued) ## Operating Leases (Continued) #### Other information | Berenberg Capital Markets LLC | | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------| | Notes to Statement of Financial Condition | | | 8.
Commitments and Contingencies (Continued) | | | Operating Leases (Continued)
At December 31, 2023, the Company had operating lease liabilities of \$71,632,340 and operating
right of use assets of \$58,831,021, which is shown on the Statement of Financial Condition.
Variable lease payments are not included in determining the lease liability. | | | Other information | | | Operating cash flows from operating leases | \$
961,410 | | Weight‐average remaining lease term ‐ operating leases | 14.75 | | Weighted‐average discount rate ‐ operating leases | 3.50% | | | | | Operating Leases (Continued) | | ## Operating Leases (Continued) | expires in 2033. As of December 31, 2023, the Company had a deferred rent balance of \$423,531,
which is included in Prepaid expenses and other assets on the Statement of Financial Condition.
Future undiscounted sublease payments for operating lease, are as follows: | | |----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------| | For the year ending December 31, | | | 2024 | \$
611,897 | | 2025 | 2,763,000 | | 2026 | 2,763,000 | | 2027 | 2,763,000 | | 2028 | 2,763,000 | | | | ## Sublease Agreement with AustralianSuper LLC ## Future undiscounted sublease payments for operating lease, are as follows: | Sublease Agreement with AustralianSuper LLC | | |-------------------------------------------------------------------------------------------------|------------------| | The Company entered into an operating sublease agreement with AustralianSuper ("AS") on | | | March 13, 2023. Under this agreement, AS is subleasing 30,700 square feet of office space on | | | the 52nd floor within the Company's New York office space, which commenced in 2023 and | | | expires in 2033. As of December 31, 2023, the Company had a deferred rent balance of \$423,531, | | | which is included in Prepaid expenses and other assets on the Statement of Financial Condition. | | | | | | Future undiscounted sublease payments for operating lease, are as follows: | | | For the year ending December 31, | | | 2024 | \$
611,897 | | 2025 | 2,763,000 | | 2026 | 2,763,000 | | 2027 | 2,763,000 | | 2028 | 2,763,000 | | Thereafter | 11,842,076 | | Total | \$
23,505,973 | | 11 | | | | | | | | {14}------------------------------------------------ Notes to Statement of Financial Condition ## 8. Commitments and Contingencies (Continued) ## Other As of December 31, 2023, the Company declared \$901,500 in discretionary bonuses, which is included in Compensation payable on the Statement of Financial Condition. The securities industry is subject to extensive regulation under federal, state and applicable international laws. From time to time, the Company has been threatened with or named as a defendant in, lawsuits, arbitrations and administrative claims involving securities and other matters. The Company is also subject to periodic regulatory examinations and inspections. Compliance and trading problems that are reported to regulators, such as the SEC or FINRA by dissatisfied customers or others are investigated by such regulators, and may, if pursued, result in formal claims being filed against the Company by customers or disciplinary action being taken against the Company or its employees by regulators. Any such claims or disciplinary actions that are decided against the Company could have a material impact on the financial results of the Company. The Company is subject to various legal proceedings and claims that arise in the normal course of business. In each pending matter, the Company contests liability or the amount of claimed damages. In view of the inherent difficulty of predicting the outcome of such matters, particularly in cases where claimants seek substantial or indeterminate damages, or where investigation or discovery have yet to be completed, the company is unable to estimate a range of reasonably possible losses on its remaining outstanding legal proceedings; however, the Company believes any losses, both individually or in the aggregate, should not be reasonably likely to have a material adverse effect on the Company's financial condition. ## 9. Employee Benefit Plan The Company offers a Safe Harbor 401 (k) plan covering substantially all of the Company's employees. Participants may contribute a percentage of compensation, but not in excess of the maximum allowed under the Internal Revenue Code. ## 10. Deferred Revenue from Contracts with Customers ## Investment Banking – Advisory The Company provides advisory services. Advisory services vary in scope based on client's needs and are typically defined in the applicable governing documents agreed to with the client. As of December 31, 2023, the Company recorded deferred revenue of \$833,334 for advisory services, which is included in Deferred revenue on the Statement of Financial Condition. {15}------------------------------------------------ Notes to Statement of Financial Condition ## 11. Regulatory Net Capital Requirements As a registered broker‐dealer, the Company is subject to the SEC Uniform Net Capital Rule (Rule 15c3‐1), which requires that the Company maintain minimum net capital. The Company has elected to use the alternative method, which requires that the Company maintain minimum net capital, as defined, equal to the greater of \$250,000 or 2% of customer debit items, as defined. At December 31, 2023, the Company had net capital of \$11,027,044 which exceeded its requirement of \$250,000 by \$10,777,044. ## 12. Subsequent Events On January 26, 2024, the Company received a capital contribution from the Parent of \$5,000,000. Management has evaluated the possibility of subsequent events existing in the Company's Statement of Financial Condition through February 13, 2024, the date the Statement of Financial Condition was available to be issued. Management has determined that there were no other material events that would require adjustment to or disclosure in the Company's Statement of Financial Condition. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.