# BROADHAVEN SECURITIES LLC X-17A-5 (2021-02-26) — Broker-dealer annual report
- Company: BROADHAVEN SECURITIES LLC
- Form: X-17A-5
- Filed: 2021-02-26
- Period: 2020-12-31
- Accession: 0001519614-21-000001
- 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
- Website: topelforman.com
- Signed by: Gregory Phillips (CEO)
Original filing: https://www.sec.gov/Archives/edgar/data/1519614/000151961421000001/bhssrt.pdf
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**UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549**
0MB APPROVAL 0MB Number: 3235-0123 Expires: August 31, 2020 Estimated average burden hours r res nse ...... 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 BEGINNING 01/01/2020 | | ----------
AND ENDING 12/31/2020 | |
|---------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------|-------------------------------------|--------------------------------|
| | MM/DD/VY | | MM/DD/VY |
| | 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. |
| | | | |
| CHICAGO | (No. and Street)
IL | | 60606 |
| (City) | (State) | | (Zip Code) |
| NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
Greg Phillips | | | (312)-621-9801 |
| | | | (Area Code - Telephone Number) |
| | B. ACCOUNTANT IDENTIFICATION | | |
| INDEPENDENT PUBLIC ACCOUNT ANT whose opinion is contained in this Report• | | | |
| TOPEL FORMAN, L.L.C. | | | |
| | (Name - if Individual. state last, first, middle name) | | |
| 500 N MICHIGAN AVE | CHICAGO | IL | 60611 |
| (Address) | (City) | (State) | (Zip Code) |
| CHECK ONE: | | | |
| I I I
certified Public Accountant | | | |
| Public Accountant | | | |
| 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 240.17a-5(e)(2)*
**Potentlal persons who are to respond to the collectlon of Information contained** In **this form are not required to respond unless the form dlsplays a currently valld 0MB control number.**
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### **OATH OR AFFIRMATION**
| _____________________
I, _G_R_E_G_O_R_Y_P_H_IL_L_IP_S | , swear (or affirm) that, to the best of |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|
| my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of
------------------------------------------,
BROAOHAVEN SECURITIES, LLC | |
| of DECEMBER 31
2020 | as
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 IWNOIS
MY COMMISSION
IRES:09/12fl2 | CEO
Title |
| | |
| This report•• contains (check all applicable boxes):
0 (a) Facing Page.
0 (b) Statement of Financial Condition.
O (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 Changes in Financial Condition.
(e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital.
(f) Statement of Changes in Liabilities Subordinated to Claims of Creditors. | |
| § (g) Computation of Net Capital.
(h) Computation for Determination of Reserve Requirements Pursuant to Rule I 5c3-3.
(i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3.
D (i) A Reconciliation, including appropriate explanation of the Computation ofNet Capital Under Rule I 5c3-
Computation for Determination of the Reserve Requirements Under Exhibit A of Rule I 5c3-3. | I and the |
| 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. / 7a-5(e)(3). | |
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# **BROADHAVEN SECURITIES, LLC**
Financial Statements For the Year Ended December 31 , 2020
Filed as PUBLIC information pursuant to Rule 17a-5(d) under the Securities Exchange Act of 1934
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## **BROADHAVEN SECURITIES, LLC**
#### **Index**
| Report of Independent Registered Public Accounting Firm | |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|-----|
| Statement of Financial Condition as of December 31 , 2020 | 2 |
| Notes to Financial Statements | 3-7 |
| 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 |
| | |
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#### Report of Independent Registered Public Accounting Firm
To the Board of Directors of Broadhaven Securities, LLC
#### **Opinion on the Financial Statement**
We have audited the accompanying statement of financial condition of Broadhaven Securities, LLC (a Delaware limited liability company and wholly-owned subsidiary) as of December 31 , 2020, 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 , 2020 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.
!~/=u:~~~(,
We have served as Broadhaven Securities, LLC's auditor since 2012. Chicago, Illinois February **26 , 2021**
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## **BROADHAVEN SECURITIES, LLC STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2020**
#### ASSETS
| Cash and cash equivalents
Prepaid expenses
Deposits | \$
21 ,908,717
28,557
2,966 |
|-----------------------------------------------------------|--------------------------------------|
| Total assets | \$
21 ,940,240 |
| LIABILITIES AND MEMBER'S EQUITY | |
| Due to Parent
Accounts payable
Deferred revenue | \$
282,529
78,857
2,100,000 |
| Total liabilities | \$
2,461,386 |
| MEMBER'S EQUITY | \$
19,478,854 |
| Total liabilities and member's equity | \$
21,940,240 |
(The accompanying notes to financial statements are an integral part of these statements)
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#### **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 Authority ("FINRA"). The 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 , 2020.
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 accounts and a United States money market account denominated in British Pounds.
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 , 2020.
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
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#### **Note 2. Significant Accounting Policies - Continued**
not associated with a distinct performance obligation the revenue will be recognized at the closing of the transaction.
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.
Foreign currency transactions -
The Company may enter into agreements with clients to provide merger and acquisition and other advisory services and accept payment in the form of foreign currency. As a result, the Company is exposed to foreign exchange risk (see note 7).
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. The Company has made a policy election to not allocate current and deferred taxes from BCP.
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 , 2020. The Company is subject to income tax examination for years 2018, 2019 and 2020. If applicable, the Company would recognize penalties and interest related to uncertain tax positions in income tax expense.
#### **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 price). 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.
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#### **Note 3. Fair Value Measurements - Continued**
- 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, 2020.
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, cash equivalents, 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, 2020, 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 \$282,529 related to the shared expenses which is reflected on the accompanying statement of financial condition.
#### **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 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. 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.
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#### **Note 5. Revenue Recognition - Continued**
The Company's significant revenue stream consists entirely of investment banking revenues and all revenues are earned at a specific point in time.
Investment banking revenues consist of advisory services on corporate finance activities, reimbursable expenses related to these advisory services 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 services 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 \$21 ,658,717 at December 31 , 2020.
#### **Note 7. Foreign Exchange Risk**
Foreign exchange risk represents exposure to changes in the values of current holdings and future cash flows denominated in currencies other than the U.S. dollar. The Company is exposed to non-trading foreign currency risk as a result of its holdings of a non-U.S. dollar denominated cash account at a U.S. financial institution totaling \$272 (200 British Pounds) as of December 31 , 2020. Foreign currency denominated cash account values fluctuate with changes in the level of volatility of currency exchange rates. The Company's foreign currency denominated cash account is held in British Pounds.
#### **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 , 2020, the Company had net capital and net capital requirements of \$19,447,315 and \$24,092, respectively. The net capital rule may effectively restrict the withdrawal of member's equity.
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#### **Note 9. Risk and Uncertainty**
On January 30, 2020 the World Health Organization ("WHO") announced a global health emergency because of a new strain of coronavirus originating in China (the "COVID-19 outbreak") and in March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid exposure globally.
The full impact of the COVID-19 outbreak continue to evolve as of the date of this report. This pandemic has adversely affected global economic activity and greatly contributed to significant deterioration and instability in financial markets. As a result, the Company's earnings have and will continue to fluctuate in response to changing market conditions, and any future impact on the Company's earnings, if any, cannot be determined at this time.
#### **Note10.SubsequentEvents**
The Company has evaluated subsequent events through February 26, 2021 the date on which the financial statements were issued.
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SUPPLEMENTARY INFORMATION
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#### 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 did not claim an exemption under paragraph (k) 17 C.F.R. §240.15c3-3. The Company is filing Exemption Report relying on Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R § 240.17a-5 because the Company limits its business activities exclusively to receiving transaction-based compensation for identifying potential merger and acquisition opportunities for clients. The Company did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers, did not carry accounts of or for customers; and did not carry PAB accounts (as defined in Rule 15c3-3) throughout the most recent fiscal year without exception. Broad haven 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 Rule 15c3-3 under the Securities Exchange Act of 1934.
Chicago, Illinois February **26, 2021**
audit • ta x • consulting www.topelforman.com
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#### **BROADHAVEN SECURITIES, LLC EXEMPTION REPORT**
February 26, 2021
Topel Forman, LLC 500 N. Michigan Ave. Suite 1700 Chicago, IL 60611
To Whom It May Concern:
Broadhaven Securities, LLC is a registered broker-dealer subject to Rule 17a-5 promulgated by the Securities and Exchange Commission (17 C.F.R. § 240.17a-5, "Reports to be made by certain brokers and dealers"). This Exemption Report was prepared as required by 17 C.F .R § 240.17a-5(d)(1) and (4 ). To the best of its knowledge and belief, the Company states the following: the below information is designed to meet the Exemption Report criteria pursuant to SEC Rule 17a-5(d)(4):
- (1) The Company does not claim an exemption under paragraph (k) 17 C.F.R § 240. 15c3-3, and
- (2) The Company is filing Exemption Report relying on Footnote 7 4 of the SEC Release No. 34- 70073 adopting amendments to 17 C.F.R § 240.17a-5 because the Company limits its business activities exclusively to receiving transaction-based compensation for identifying potential merger and acquisition opportunities for clients. The Company did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers, did not carry accounts of or for customers; and did not carry PAB accounts (as defined in Rule 15c3-3) throughout the most recent fiscal year without exception.
#### BROADHAVEN SECURITIES, LLC
I, Greg Phillips, affirm that, to my best knowledge and belief, this Exemption Report is true and correct.
Signed: 0~ */?~* Date: 2/2'6/2021
Name: Gregory Phillips
Title: CEO
Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.