# BROADHAVEN SECURITIES LLC X-17A-5 (2019-03-01) — Broker-dealer annual report - Company: BROADHAVEN SECURITIES LLC - Form: X-17A-5 - Filed: 2019-03-01 - Period: 2018-12-31 - Accession: 0001519614-19-000002 - CIK: 1519614 - File #: 8-68862 - Material weakness: No - Auditor: Topel Forman, L.L.C. - Auditor location: Chicago, IL - Contact: Greg Phillips - Phone: 312-621-9801 - Signed by: Gregory Phillips (CEO) Original filing: https://www.sec.gov/Archives/edgar/data/1519614/000151961419000002/BHSShort.pdf --- {0}------------------------------------------------ UNITEDSfATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 2{)549 OMB APPROVAL OMB Number: 3235·0123 Expires: August 31, 2020 Estimated average burden hours per response ..•..• 12,00 # **ANNUAL AUDITED REPORT FORM X-17A-5 PART Ill** SEC FILE NUMBER B-68862 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 BEGINNING01/01/18 | | AND ENDING 12/31/18 | | | |--------------------------------------------------------------------------------------------------------|--------------------------------------------------------|---------------------|----------------------------------|--| | | MMIDDIYY | | --------------------
MM/DD/YY | | | | A. REGISTRANT IDENTIFICATION | | | | | NAME OF BROKER-DEALER: BROADHAVEN SECURITIES, LLC | | | OFFICIAL USE ONLY | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.)
150 N RIVERSIDE PLAZA, 25th Floor | | | FIRM 1.0. NO. | | | | (No. and S1reel) | | | | | CHICAGO | IL | 60606 | | | | (City) | (State) | (ZipCod.c) | | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
Greg Phillips | | | a | | | | | | (Area Code-Telephone Number) | | | | B. ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report* | | | | | | TOPEL FORMAN, L.L.C. | | | | | | | (Name - if individual, stale las/, first, middle name) | | | | | 500 IN MICHIGAN AVE | CHICAGO | IL | 60611 | | | (Address) | (Cily) | (Slate) | (Zip Code) | | | CHECK ONE: | | | | | | I t/
!certified Public Accountant | | | | | | OPublic Accountant | | | | | | DAccountant not resident in United States or any of its possessions. | | | | | | | FOR OFFICIAL USE ONLY | | | | | | | | | | | | | | | | | | | | | | *\*Claims for exemption from the requirement that the annual report he covered by the opinion of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis for the exemption. See Section 240.1 7 a-5(e)(2)* > Potential persons who are to respond to the collection of Information contained In this form are not required to respond unless the form displays a currently valfd OMB control number. {1}------------------------------------------------ #### OATH OR AFFIRMATION | 1, GREGORY PHILLIPS | , swear (or affirm) that, to the best of | | | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|--|--| | BROADHAVEN SECURITIES, LLC | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of
, as | | | | of DECEMBER 31 | 2018
are true and correct. I further swear (or affirm) that | | | | | neither the company nor any partner, proprietor, principal officer or director has any proprietary interest in any account | | | | classified solely as that of a customer, except as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | OFFICIAL SEAL | | | | | VALERIE HERRERA | | | | | NOTARY PUBUC ·STATE Of ILUNOIS
MY COMMISSION EXPIRES:09/12122 | CEO | | | | | Title | | | | | | | | | | | | | | | | | | | This report •• contains (check all applicable boxes): | | | | | ~ (a) Facing Page. | | | | | (b) Statement of Financial Condition. | | | | | (c) Statement of Income (Loss). | | | | | (d) Statement of Changes in Financial Condition. | | | | | (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital. | | | | | (f) Statement ofChanges in Liabilities Subordinated to Claims of Creditors. | | | | | (g) Computation ofNet Capital. | | | | | (h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3.
(i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3. | | | | | | 0 (j) A Reconciliation, including appropriate explanation ofthe Computation of Net Capital Under Rule 15c3-1 and the | | | | | Computation for Detennination of the Reserve Requirements Under Exhibit A of Rule 15c3-3. | | | | | 0 (k) A Reconciliation between the audited and unaudited Statements of financial Condition with respect to methods of | | | | consolidation. | | | | | (1) An Oath or Affirmation. | | | | | (m) A copy of the SIPC Supplemental Report. | | | | | ~ | (n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit. | | | | | | | | •• *For conditions of confidential treatment of certain portions of this filing, see section 240. I 7a-5(e)(3).* {2}------------------------------------------------ # **BROADHAVEN SECURITIES, LLC** Financial Statements For the Year Ended December 31, 2018 Filed as PUBLIC information pursuant to Rule 17a-S(d) under the Securities Exchange Act of 1934 {3}------------------------------------------------ ## **BROADHAVEN SECURITIES, LLC** #### **Index** | Report of Independent Registered Public Accounting Firm | | | |---------------------------------------------------------------------------------------------------------------------------------------------------------------|---|--| | Statement of Financial Condition as of December 31, 2018 | 2 | | | Notes to Financial Statements | | | | Supplementary Information | | | | Report. of Independent Registered Public Accounting Firm Review of the Exemption Report SEA Rule
17a-5(g)(2)(ii) of the Securities and Exchange Commission | 8 | | | Exemption Report SEA Rule 17a-5(d)(4) | 9 | | | | | | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) ### Report of Independent Registered Public Accounting Firm To the Board of Directors of Broadhaven Securities, LLC ## Opinion on t he Financial Statement We have audited the accompanying statement of financial condition of Broadhaven Secunities, LLC (a Delaware limited liability company and wholly-owned subsidiary) as of December 31, 2018, 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 Broadhaven Securities, LLC as of December 31, 2018 in conformity with accounting principles generally accepted in the United States of America. #### Basis for Opinion This financial statement is the responsibility of Broadhaven Securities, LLC's management. Our responsibility is to express an opinion on Broadhaven Securities, LLC's 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 Broadhaven Securities, LLC 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 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. ~l~L.L.(. {.,Zfiefblic Accountants We have served as Broadhaven Securities, LLC's auditor since 2012. Chicago, Illinois February 27, 2019 {5}------------------------------------------------ ## **BROADHAVEN SECURITIES, LLC STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2018** #### ASSETS | Cash and cash equivalents | \$
7,876,601 | |---------------------------------------|-------------------| | Account receivable | 174,330 | | Prepaid expenses | 22,433 | | Deposits | 2,515 | | Total assets | \$
8,075,879 | | LIABILITIES AND MEMBER'S EQUITY | | | Due to Parent | \$
254,145 | | Accounts payable
Deferred revenue | 50,298
250,000 | | Total liabilities | \$
554,443 | | MEMBER'S EQUITY | \$
7,521,436 | | Total liabilities and member's equity | \$
8,075,879 | {6}------------------------------------------------ #### **Note 1. Nature of Operations** Broadhaven Securities, LLC (the "Company") is a Delaware limited liability company which organized on April 4, 2011 and was approved to begin operations as a broker-dealer in November 2011. The Company provides financial advisory services to corporate customers in the financial services and technology sectors related to mergers and acquisitions and private placements. The Company is a broker-dealer registered under the Securities Exchange Act of 1934 and is regulated by Financial Industry Regulatory Authonity ("FINRA"). 'fhe Company provides financial advisory services to corporate customers primarily in the United States of America. #### **Note 2. Summary of Significant Accounting Policies** Financial Statement Presentation - The Company is a wholly-owned subsidiary of Broadhaven Capital Partners, LLC ("BCP"). The financial statements presented are solely those of the Company. The statements of income, changes in member's equity and cash flows are presented for the year ended December 31, 2018. Use of Estimates - The process of preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts. Cash and Cash Equivalents- The Company considers all unrestricted demand deposits, money market accounts and highly liquid debt instruments with a maturity of less than 90 days to be cash and cash equivalents. Cash equivalents consist of checking and savings account. Receivables and Credit Policies - Accounts receivable, which represent unsecured customer obligations due under normal trade terms generally requiring payment within 30 days from the invoice date, are stated at the amount billed to the customer. Interest is not charged for receivables unpaid after the expiration of normal terms. Customer account balances with invoices over 90 days old are considered to be delinquent. Payments of accounts receivable are allocated to the specific invoices identified on the customer's remittance advice or, if unspecified, are applied to the earliest unpaid invoices. The carrying amount of accounts receivable is reduced by a valuation allowance that reflects management's best estimate of the amount that will not be collected. Management individually reviews all accounts receivable balances that exceed 90 days from invoice date and, based on an assessment of the customer's current creditworthiness, estimates the portion, if any, of the balance that will not be collected. Additionally, the creditworthiness of the Company's other customers is considered to estimate a general allowance, if any, covering the remaining accounts receivable. No allowance for doubtful accounts was deemed necessary at December 31 , 2018. Deferred Revenue - The Company receives deposits from its customers when it enters into certain agreements related to merger and acquisition services. Those deposits are recognized as revenue when the specific performance obligations associated with the deposits are provided by the Company. If the deposits are not associated with a distinct performance obligation the revenue will be recognized at the closing of the transaction. {7}------------------------------------------------ #### **Note 2. Significant Accounting Policies - Continued** Compensated balances - Employees of the Company are entitled to paid vacations depending on job classification, length of service, and other factors. Vacations are taken in the year earned. The Company does not allow employees to carryover unused vacation time to the next year. Therefore, the Company has not accrued any liability for compensated absences. Commissions - Commissions are recorded upon investment banking revenue recognition. Income taxes- The Company is not subject to U.S. Federal or Illinois income taxes as it is a single member LLC which is disregarded for income tax purposes, and accordingly any income or loss is reported directly by the member in its income tax returns. Effective January 2018, the Company's parent BCP elected to be taxed as a C-Corporation and is subject to federal and state income taxes beginning with the year ending December 31, 2018. BCP files a consolidated return with the Company. The Company recognizes and measures its unrecognized tax benefits as well as its unrecorded liability, if any, in accordance with FASB ASC 740, Income Taxes. Under that guidance, the Company assesses the likelihood, based on technical merit, that tax positions will be sustained upon examination based on the facts, circumstances and information available at the end of each period. The measurement of unrecognized tax benefits as well as unrecorded tax liability is adjusted when new information is available or when an event occurs that requires a change. There were no unrecognized tax positions as of December 31 , 2018. The Company is subject to income tax examination for years 2016, 2017 and 2018. If applicable, the Company would recognize penalties and interest related to uncertain tax positions in income tax expense. Adoption of New Accounting Standards - In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This ASU affected entities that enter into contacts with customers to transfer goods or services and stated that an entity should recogniz.e revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral on the Effective Date", which deferred the effective date of ASU 2014-09 to annual reporting periods beginni11g after December 15, 2017. In March 2016, the FASB issued Accounting Standards Update No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (ASU 2016-08) which clarifies the implementation guidance on principal versus agent considerations. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. The new standard further requires new disclosures for contracts with customers, including the significant judgments the Company has made when applying the guidance, which have been included in the footnotes. The Company's revenue is comprised of investment banking revenues recognized in accordance with the terms agreed upon with each client and are generally based on a percentage of gross proceeds or capital raised in a transaction. The Company adopted ASU 2014-09 in the first quarter of 2018 using the modified retrospective approach effective on January 1, 2018 to all existing contracts with customers. {8}------------------------------------------------ #### Note 2. Significant Accounting Policies - Continued Application of the standard in 2018 using the modified retrospective approach had no effect on reported financial position or results of operations. We have included the newly applicable revenue disclosures in the footnotes to these financial statements. In November 2015, the FASB issued Accounting Standards Update No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes ("ASU 2015-17"). ASU 2015-17 eliminates the requirement to separate deferred tax liabilities and assets into a current and noncurrent amount in the classified balance sheet and requires that deferred tax liabilities and assets be classified as noncurrent in a classified balance sheet. ASU 2015-17 is effective for fiscal years beginning after December 15, 2017, with early adoption permitted, and may be applied either on a prospective or retrospective basis. As allowed by the amendment, the Company adopted ASU 2015-17 for the year ended December 31 , 2018 and retrospectively applied this amendment to deferred tax assets and liabilities presented on the balance sheet at December 31, 2018. The adoption of ASU 2015-17 had no effect on the Company's results of operations for the year ending December 31 , 2018. #### Note 3. Fair Value Measurements Accounting Standards Codification (ASC) 820 defines fair value as 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 (i.e. an exit pric·e). The accounting guidance includes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are as follows: - Level 1 Valuations based on quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. - Level 2 Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. - Level 3 Valuations based on inputs that are supported by little or no market activity that are significant to the fair value of the assets or liabilities. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy levels. The Company measures certain financial instruments at fair value on a recurring basis. There are no financial assets measured on a recurring basis at December 31 , 2018. It is the Company's policy to recognize transfers between fair value levels at the end of the period. There were no transfers between Level 1, 2, or 3 during the year. The Company's short-term financial instruments consist of cash, receivables, and current liabilities. The carrying value of these short-term instruments approximates their estimated fair values based on the instruments' short-term nature. #### Note 4. Related Parties The Company is a wholly-owned subsidiary of Broadhaven Capital Partners, LLC ("BCP"). During the year ended December 31 , 2018, the Company shared certain operating and overhead costs such as payroll, insurance, rent, utilities, and telephone with BCP under an expense sharing agreement. The Company has a balance due to parent in the amount of \$254,145 related to the shared expenses which is reflected on the accompanying statement of financial condition. {9}------------------------------------------------ #### **Note 5. Revenue Recognition** Investment banking revenues are recognized in accordance with terms agreed upon with each client and are generally based on a percentage of capital raised or gross proceeds of a transaction. The Financial Accounting Standards Board (FASB), has issued a comprehensive new revenue recognition standard that supersedes most existing revenue recognition guidance under GAAP (FASB Accounting Standards Codification 606). The Company adopted this standard effective January 1, 2018. The standard's core principle is that an entity should recognize revenue when it transfers promised goods or seNices to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or seNices. ASU 2014-09 prescribes a five-step process to accomplish this core principle, including: - Identification of the contract with the customer; - Identification of the performance obligation(s) under the contract; - Determination of transaction price; - Allocation of the transaction price to the identified performance obligation(s); and - Recognition of revenue as (or when) an entity satisfies the identified performance obligation(s). The Company recognizes revenue upon completion of a success fee-based transaction as this satisfies the only performance obligation identified in accordance with this standard. When client terms include a retainer fee it is determined whether the retainer fee is non-refundable and in connection with specific performance obligations. If distinct performance obligations are not identified the revenue is recognized as part of the overall transaction when the success fee is recognized. The Company's significant revenue stream consists entirely of investment banking revenues and all revenues are earned at a specific poirnt in time. Investment banking revenues consist of advisory seNices on corporate finance activities, reimbursable expenses related to these advisory seNices and valuation or "fairness opinion" fees in conjunction with the sale of a business. These investment banking revenues are received based on contractual terms. The performance obligation for the advisory seNices and related reimbursable expenses is the completion of the corporate finance activities such as mergers and acquisitions, reorganizations and leveraged buyouts. The performance obligation for the valuation or "fairness opinion" is the delivery of the valuation itself. The Company made no significant judgements in applying the revenue guidelines prescribed in ASC-606 that affect the determination of the amount and timing of revenue from the above described investment banking revenues. #### **Note 6. Concentration of Credit Risk** The Company maintains its cash in various deposit accounts in a bank that is a high credit quality financial institution. The balances at times may exceed statutory insured limits. The Company has never experienced any losses as a result of credit risk in such accounts and, based on the size and reputation of the depository institution, believes it is not exposed to any significant credit risk on such credit cash balances. The maximum loss that would have resulted from these risks, representing the excess of the deposit liabilities reported by the bank over the amount that would have been covered by federal deposit insurance amounted to \$7,626,601 at December 31 , 2018. #### **Note** *7.* **Major Customers** One customer accounted for 100% of the Company's account receivable as reflected on the accompanying statement of financial condition. {10}------------------------------------------------ #### **Note 8. Net Capital Requirements** The Company is a registered broker-dealer subject to the Securities and Exchange Commission Uniform Net Capital Rule (SEC Rule 15c3-1 ), which requires the Company to maintain "net capital" of 6-2/3 percent of "aggregate indebtedness" or \$5,000, whichever is greater, as these terms are defined. In addition, the ratio of aggregate indebtedness to net capital shall not exceed 15 to 1. Net capital and aggregate indebtedness change daily. As of December 31, 2018, the Company had net capital and net capital requirements of \$7,322,158 and \$20,296, respectively. The net capital rule may effectively restrict the withdrawal of member's equity. {11}------------------------------------------------ SUPPLEMENTARY INFORMATION {12}------------------------------------------------ ![](_page_12_Picture_0.jpeg) ### Report of Independent Registered Public Accounting Firm To the Board of Directors of Broadhaven Securities, LLC We have reviewed management's statements, included in the accompanying Exemption Report, in which (1) Broadhaven Securities, LLC identified the following provisions of 17 C.F.R. §15c3-3(k) under which Broadhaven Securities, LLC claimed an exemption from 17 C.F .R. §240.15c3-3: provision (2)(i) (the "exemption provision") and (2) Broadhaven Securities, LLC stated that Broadhaven Securities, LLC met the identified exemption provisions throughout the most recent fiscal year without exception. Broadhaven Securities, LLC's management is responsible for compliance with the exemption provisions and its statements. Our review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included inquiries and other required procedures to obtain evidence about Broadhaven Securities, LLC's compliance with the exemption provisions. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's statements. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to management's statements referred to above for them to be fairly stated, in all material respects, based on the provisions set forth in paragraph (k) provision (2)(i) of Rule 15c3-3 under the Securities Exchange Act of 1934. Chicago, Illinois February 27, 2019 audit • tax • consulting www.topelforman.com {13}------------------------------------------------ #### **EXEMPTION REPORT SEA RULE 17a-5(d)(4)** February 27, 2019 Topel forman, LLC 500 N. Michigan Ave. Suite 1700 Chicago, IL 60611 To Whom It May Concem: The below information is designed to meet the Exemption Report criteria pursuant to SEC Rule 17a-S(d)(4): Broadhaven Securities, LLC is a broker/dealer registered with the SEC and FINRA. Pursuant to paragraph k(2)(i) of SEC Rule 15c3-3, the Company is claiming an exemption from SEC Rule 15c3-3 for the fiscal year ended December 31 , 2018. The Company has met the identified exemption provisions throughout the most recent fiscal year without exception. The above statement is true and correct to the best of my and the Company's knowledge. Signed: ~~/)~ Name: Gregory Phillips Title: CEO Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.