# COHNREZNICK CAPITAL MARKETS SECURITIES, LLC X-17A-5 (2023-04-24) — Broker-dealer annual report - Company: COHNREZNICK CAPITAL MARKETS SECURITIES, LLC - Form: X-17A-5 - Filed: 2023-04-24 - Period: 2023-01-31 - Accession: 0001526646-23-000002 - CIK: 1526646 - File #: 8-68918 - Type: Broker-dealer - Material weakness: No - Auditor: Citrin Cooperman and Company LLP - Auditor location: Livingston, NJ - Contact: Virginia Voos - Phone: 6032168971 - Email: virginia.voos@acaglobal.com - Website: acaglobal.com - Signed by: Nicholas Knapp (President) Original filing: https://www.sec.gov/Archives/edgar/data/1526646/000152664623000002/crcpublic.pdf --- {0}------------------------------------------------ ## FINANCIAL STATEMENT AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ## **COHNREZNICK CAPITAL MARKETS SECURITIES, LLC** **JANUARY 31, 2023** {1}------------------------------------------------ ## TABLE OF CONTENTS | SEC FORM X-17A-5 PART III | 3 | |---------------------------------------------------------|---| | REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 5 | | STATEMENT OF FINANCIAL CONDITION | 6 | | NOTES TO FINANCIAL STATEMENT | 7 | {2}------------------------------------------------ #### **UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549** OMB APPROVAL OMB Number: ϯϮϯϱͲϬϭϮϯ Expires: KĐƚ͘ϯϭ͕ϮϬϮϯ Estimated average burden hours per response: # **ANNUAL REPORTS FORM X-17A-5 PART III** SEC FILE NUMBER 8-68918 **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 \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ MM/DD/YY MM/DD/YY **A. REGISTRANT IDENTIFICATION** NAME OF FIRM: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ TYPE OF REGISTRANT (check all applicable boxes): ܆ Broker-dealer ܆ Security-based swap dealer ܆ Major security-based swap participant ܆ Check here if respondent is also an OTC derivatives dealer ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (No. and Street) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (City) (State) (Zip Code) PERSON TO CONTACT WITH REGARD TO THIS FILING \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (Name) (Area Code – Telephone Number) (Email Address) **B. ACCOUNTANT IDENTIFICATION** INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing\* \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (Name – if individual, state last, first, and middle name) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (Address) (City) (State) (Zip Code) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (Date of Registration with PCAOB)(if applicable) (PCAOB Registration Number, if applicable) **FOR OFFICIAL USE ONLY** \* Claims for exemption from the requirement that the annual reports be covered by the reports of an independent public 02/01/2022 01/31/2023 CohnReznick Capital Markets Securities, LLC 220 East 42nd Street, 35th Floor New York NY 10017 Virgina Voos 6032168971 virginia.voos@acaglobal.com Citrin Cooperman & Company, LLP 290 West Mount Pleasant Ave Livingston NJ 07039 11/02/2005 2468 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.** {3}------------------------------------------------ ![](_page_3_Figure_3.jpeg) - - - - - - - - - - - - - - - - - - - - - - - - - - {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) ## **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Members and the Board of Managers CohnReznick Capital Markets Securities, LLC ## **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of CohnReznick Capital Markets Securities, LLC as of January 31, 2023, and the related notes (collectively referred to as the "financial statement"). In our opinion, the statement of financial condition presents fairly, in all material respects, the financial position of CohnReznick Capital Markets Securities, LLC as of January 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 CohnReznick Capital Markets Securities, LLC's management. Our responsibility is to express an opinion on CohnReznick Capital Markets 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 CohnReznick Capital Markets 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 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 provides a reasonable basis for our opinion. We have served as CohnReznick Capital Markets Securities, LLC's auditor since 2018. Livingston, New Jersey April 21, 2023 {5}------------------------------------------------ ## STATEMENT OF FINANCIAL CONDITION #### January 31, 2023 #### ASSETS | Cash | | \$ 13,014,529 | | |-----------------------------------------------------------------------------------------------------|----|---------------|--| | Accounts receivable, net of allowance
for doubtful accounts of \$175,000 | | 743,233 | | | Furniture, equipment and software, net of
accumulated depreciation and amortization of \$608,817 | | 611,388 | | | Deposit at clearing broker | | 100,000 | | | Right of use assets | | 3,117,196 | | | Prepaid expenses and other assets | | 456,501 | | | | | | | | TOTAL ASSETS | | \$ 18,042,847 | | | | | | | | LIABILITIES AND MEMBERS' EQUITY | | | | | Accrued expenses | \$ | 6,877,408 | | | Lease liabilities | | 3,321,757 | | | Accounts payable and other liabilities | | 165,069 | | | Due to related party | | 69,765 | | | Due to members | | 72,533 | | | | | | | | TOTAL LIABILITIES | | 10,506,532 | | | MEMBERS' EQUITY | | 7,536,315 | | | TOTAL LIABILITIES AND MEMBERS' EQUITY | | \$ 18,042,847 | | See notes to financial statement {6}------------------------------------------------ ### NOTES TO FINANCIAL STATEMENT ## January 31, 2023 ## NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS CohnReznick Capital Markets Securities, LLC (the "Company") is a majority-owned subsidiary of CohnReznick LLP ("CohnReznick") formed under the laws of the State of Maryland on January 14, 2011, for the purposes of operating, managing and maintaining a broker-dealer in securities, registered with the Securities and Exchange Commission ("SEC") and as a member organization of the Financial Industry Regulatory Authority ("FINRA"). The Company is headquartered in New York, New York. The Company's primary focus for its customers is to identify capital sources, conduct due diligence, facilitate transactions and address regulatory and compliance matters. The Company is a Capital Acquisition Broker which does not hold any funds or securities for the accounts of customers and is therefore exempt from SEC Rule 15c3-3. ## NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES ## Use of Estimates The preparation of the statement of financial condition in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts. Actual results could differ from those estimates. ### Cash and Cash Segregated under Federal Regulations Cash represents funds on deposit which at times may exceed federally insured limits. The Company has not experienced any losses and does not believe it is exposed to any significant credit risk with respect to its financial institution. Cash segregated under federal regulations is subject to a legal or contractual restriction by third parties as well as a restriction as to withdrawal or use, including restrictions that require the funds to be used for a specified purpose and restrictions that limit the purpose for which the funds can be used. As of January 31, 2023, cash segregated under federal regulations consisted of a deposit at a clearing broker. The Company considers short-term, interest-bearing investments with initial maturities of three months or less to be cash equivalents. At January 31, 2023, the Company has no cash equivalents. #### Accounts Receivable, Net Current payments of accounts receivable are allocated to the specific invoices identified on the customer's remittance advice or if unspecified, the payment is applied to the oldest unpaid invoice. The carrying amount of accounts receivable is reduced by an allowance for credit losses that reflect management's best estimate of the amounts that will not be collected. Each {7}------------------------------------------------ ## NOTES TO FINANCIAL STATEMENT ## January 31, 2023 ## NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued) ## Accounts Receivable, Net (continued) customer's balance is individually reviewed where all or a portion of the balance exceeds 180 days from the invoice date or when facts and circumstances indicate collection might be in doubt. Based on management's assessment of the customer's current creditworthiness, the estimated portion of the balance that will not be collected is recorded as an allowance for credit losses. The Company writes off receivables when, in management's estimation, it is probable that the receivable is worthless. ## Financial Instruments - Current Expected Credit Losses Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 326, *Financial Instruments - Credit Losses*, introduces a new credit loss methodology, Current Expected Credit Losses ("CECL"), which requires recognition of credit losses, based on the expectation of losses while also providing additional transparency about credit risk. The CECL methodology utilizes a lifetime "expected credit loss" measurement objective for the recognition of credit losses for loans, held-to-maturity securities and other receivables at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. The methodology replaces the multiple existing impairment methods in current GAAP, which generally require that a loss be incurred before it is recognized. The allowance for credit losses is based on the Company's expectation of the collectability of financial instruments carried at amortized cost, including accounts receivable utilizing the CECL framework. The Company considers factors such as historical experience, credit quality, age of balances and current and future economic conditions that may affect the Company's expectation of the collectability in determining the allowance for credit losses. The allowance for credit losses was approximately \$175,000 at January 31, 2023, and is included in "Accounts receivable, net" on the Statement of Financial Condition. ## Income Taxes The Company is a limited liability company and as such is not subject to income taxes. Rather, all items of taxable income, deductions and tax credits are passed through to and are reported by its members on their respective tax returns. Accordingly, the Company is not required to take any tax positions and this financial statement does not reflect a provision for income taxes. The Company has no other tax positions which must be considered for disclosure. For the year ended January 31, 2023, the Company did not incur any interest or penalties from taxing authorities. Income tax returns filed by the Company/members are subject to examination by the Internal Revenue Service for a period of three years. While no income tax {8}------------------------------------------------ ## NOTES TO FINANCIAL STATEMENT ## January 31, 2023 ## NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued) ## Income Taxes (continued) returns are currently being examined by the Internal Revenue Service, tax years since 2019 remain open. ## Furniture, Equipment and Software Furniture, equipment and software are carried at cost less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in income for the period. The cost of maintenance and repairs is charged to expense as incurred. Depreciation and amortization are determined using the following estimated useful lives: | | Years | |--------------------------------------------------------------|-------| | Furniture and Fixtures | 7 | | Computer Equipment excluding Laptops
and Docking Stations | 5 | | Laptops and Docking Stations | 4 | | Software | 3 | ### Lease Accounting The Company recognizes its leases in accordance with ASC Topic 842, *Leases* ("ASC 842"). The guidance increases transparency by requiring the recognition of Right of use ("ROU") assets and lease liabilities on the statement of financial condition. In applying ASC 842, the Company made an accounting policy election not to recognize the ROU assets and lease liabilities relating to short-term leases that have a lease term of 12 months or less at the lease inception, and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. The Company recognizes lease costs associated with short-term leases on a straight-line basis over the lease term. ROU assets represent the Company's right of use of the underlying asset for the lease term, and lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of the lease payments over the lease term. As the Company's lease does not provide an implicit rate and the implicit rate is not readily determinable, the Company estimates its incremental borrowing rate based on the information available at the commencement date in determining the present value of the lease payments. {9}------------------------------------------------ ## NOTES TO FINANCIAL STATEMENT ## January 31, 2023 ## NOTE 3 - FURNITURE, EQUIPMENT AND SOFTWARE Furniture, equipment and software consist of the following as of January 31, 2023: | Furniture, equipment and software | \$1,220,205 | |-------------------------------------------|-------------| | Accumulated depreciation and amortization | (608,817) | | | \$611,388 | ## NOTE 4 - COMMITMENTS The Company has a non-cancelable lease for office space in Connecticut through September 30, 2026. The Company currently has a lease in California that will end April 30, 2023; that lease has been extended through April 30, 2025. The Company had a lease for office space in New York through April 30, 2022. The Company entered into a new non-cancelable lease in New York which ends September 30, 2027. The addition of the California and New York leases resulted in an increase in the right of use asset and the lease liability of \$3,180,209 each. Remaining minimum lease payments are as follows for the fiscal years ending January 31: | Year ending January 31, | Amount | |-----------------------------------|-------------| | 2024 | \$856,706 | | 2025 | 966,793 | | 2026 | 764,924 | | 2027 | 662,852 | | 2028 | 395,360 | | Thereafter | 0 | | Total undiscounted lease payments | \$3,646,635 | | Less: Imputed interest | 324,878 | | Total lease liabilities | \$3,321,757 | | Weighted average lease term | 54 months | | Weighted average discount rate | 3.32% | {10}------------------------------------------------ ## NOTES TO FINANCIAL STATEMENT ## January 31, 2023 ## NOTE 5 - CONCENTRATIONS OF CREDIT RISK The Company holds substantially all of its cash at one bank. Cash in the bank account is insured by the Federal Deposit Insurance Corporation ("FDIC"). At times, balances in the bank account may exceed the FDIC insured limits. As of January 31, 2023, approximately \$12,800,000 was on deposit in excess of FDIC coverage. The Company has not experienced any losses with respect to its cash held in the bank account in excess of the insured limits. The Company transacts business with a limited number of parties. One customer accounted for 89% of accounts receivable, net on January 31, 2023. #### NOTE 6 - RELATED PARTY TRANSACTIONS The Company entered into an expense sharing agreement with CohnReznick. Under the agreement, CohnReznick provides office space, office supplies, computers and other office equipment, and general managerial and administrative support and services to the Company. For the year ended January 31, 2023, the amount due to CohnReznick from the Company was \$69,765 and is included in due to related party on the statement of financial condition. For the year ended January 31, 2023, the amount due to members of the Company was \$72,533 and is reported on the statement of financial condition. This is a noninterest bearing amount, without fixed repayment terms. ## NOTE 7 - NET CAPITAL REQUIREMENTS The Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule (SEC Rule 15c3-1), which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 1500%. At January 31, 2023, the Company had net capital of \$5,725,193 which was \$5,232,571 in excess of its required net capital of \$492,622. The Company's aggregate indebtedness ratio was 129.07%. The Company's business activities are limited to those of a Capital Acquisition Broker and therefore, the Company does not handle customer cash or securities. Accordingly, it had no obligations under SEC Rule 15c3-3. #### NOTE 8 - EMPLOYEE BENEFIT PLAN The Company's employees participate in the CohnReznick LLP 401(k) Profit Sharing Plan. Employees may elect to defer a portion of their salaries under the plan. Employer matching is fully discretionary. {11}------------------------------------------------ ### NOTES TO FINANCIAL STATEMENT ## January 31, 2023 ## NOTE 9 - LITIGATION CONTINGENCIES From time to time, the Company and its affiliates may be named as a defendant in various lawsuits or proceedings. At the current time, except as set forth below, the Company is unaware of any legal proceedings pending against the Company. The Company intends to aggressively contest all litigation and contingencies, as well as pursue all sources for contributions to settlements. The Company and CohnReznick are party to several legal actions brought by investors in a project the Company performed services for during the years 2014 through late 2018. The Company's customer in which the investors had a financial stake filed for bankruptcy protection, and the investors are seeking unspecified damages based on claims of alleged negligent misrepresentation, unfair trade practices and violation of securities laws. Management denies the claims against the Company and intends to aggressively contest all litigation. Management of the Company believes that any liability that may ultimately result from the resolution of these matters will not have a material adverse effect on the financial condition or results of operations of the Company. ## NOTE 10 - SUBSEQUENT EVENTS The Company has performed an evaluation of events that have occurred subsequent to January 31, 2023 through April 21, 2023, the date of the filing of this report, and has determined that there have been no material subsequent events that occurred during the period that would require recognition or disclosure in this financial statement, except as disclosed in Note 11 and below. Subsequent to year end, the Company was party to an executed lease agreement whereby members of the Company are also owners of this entity, under common ownership. The Company is a guarantor of this lease agreement executed on April 14, 2023, and commencing on May 1, 2023 or thereafter. {12}------------------------------------------------ #### NOTES TO FINANCIAL STATEMENT ## January 31, 2023 ## NOTE 11 - RECENT EVENTS RELATING TO THE DISRUPTIONS IN THE U.S. BANKING SYSTEM In March 2023, the shut-down of certain financial institutions raised economic concerns over disruptions in the U.S. banking system. The U.S. government took certain actions to strengthen public confidence in the U.S. banking system. However, there can be no certainty that the actions taken by the U.S. government will be effective in mitigating the effects of financial institution failures on the economy, which may include limits on access to short-term liquidity in the near term or other adverse effects. As disclosed in Note 5, the Company maintains cash amounts in excess of federally insured limits in the aggregate amount of approximately \$12,800,000 as of January 31, 2023 and has certain concentrations in credit risk that expose the Company to risk of loss if the counterparty is unable to perform as a result of future disruptions in the U.S. banking system or economy. Given the uncertainty of the situation, the related financial impact cannot be reasonably estimated at this time. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.