# SEPULVEDA DISTRIBUTORS LLC X-17A-5 (2020-02-20) — Broker-dealer annual report - Company: SEPULVEDA DISTRIBUTORS LLC - Form: X-17A-5 - Filed: 2020-02-20 - Period: 2019-12-31 - Accession: 0001565380-20-000002 - CIK: 1565380 - File #: 8-69221 - Material weakness: No - Auditor: Ernst & Young LLP - Auditor location: Los Angeles, CA - Contact: Al Hassanein - Phone: 3102355942 - Signed by: Paul Douglas (Chief Compliance Officer) Original filing: https://www.sec.gov/Archives/edgar/data/1565380/000156538020000002/SDLLC2019v2.pdf --- {0}------------------------------------------------ UNITED ST ATES SECURITIES AND EXCHANGECOMMlSSION Washington, D.C. 20549 # **ANNUAL AUDITED REPORT FORM X-17A-5 PARTlll** | | OMB APPROVAL | |-------------|---------------------------| | OMB Number: | 3235-0123 | | Expires: | August 31, 2020 | | | Estimated average burden | | | hours per response 12.00 | | SEC FILE NUMBER | | |-----------------|--| | 8-69221 | | # 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 01/01/19 | | AND ENDING 12/31/19 | | | |-----------------------------------------------------------------------------------------------|---------------------------------------------------------|---------------------|----------------------------------|--| | | MM/DD/VY | | ~------------------~
MM/DD/VY | | | | A. REGISTRANT IDENTIFICATION | | | | | NAME OF BROKER-DEALER: Sepulveda Distributors, LLC | | | OFFICIAL USE ONLY | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | FIRM 1.0. NO. | | | 11100 Santa Monica Blvd, Ste 2000 | | | | | | | (No. and Street) | | | | | Los Angeles | CA | 90025 | | | | (City) | (State) | | (Zip Code) | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT | | | | | | | | | (Area Code - Telephone Number) | | | | B. ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report*
Ernst & Young LLP | | | | | | | (Name - if lndlvld11al. stale last, first, middle name) | | | | | 725 S. Figueroa Street | Los Angeles | CA | 90017 | | | (Address) | (City) | (State) | (Zip Code} | | | CHECK ONE:
l/'lcertified Public Accountant | | | | | | DPublic Accountant
OAccountant 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)* > Potential persons who are to respond to the collection of Information contained In this form are not required to respond unless the form displays a currently valid OMB control number. {1}------------------------------------------------ #### **OATH OR AFFIRMATION** 1, Paul Douglas , swear (or affirm) that, to the best of my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of Sepulveda Distributors, LLC ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~- 'as of December 31st 20 19 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: Notary Public This report\*\* contains (check all applicable boxes): - 0 (a) Facing Page. - 0 (b) Statement of Financial Condition. - [{] (c) Statement of Income (Loss) or, ifthere is other comprehensive income in the period(s) presented, a Statement of Comprehensive Income (as defined in §210.1-02 of Regulation S-X). - - ~(e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital. - § (d) Statement of Changes in Financial Condition. (t) 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 15c3-3. - (i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3. - D U) A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule 15c3-l and the Computation for Determination of the Reserve Requirements Under Exhibit A of Rule l 5c3-3. - 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.* J *7a-5(e)(3).* {2}------------------------------------------------ #### CALIFORNIA JURAT WITH AFFIANT STATEMENT GOVERNMENTCODE§8202 )ii See Attached Document (Notary to cross out lines 1-6 below) o See Statement Below (Lines 1-6 to be completed only by document signer[s], not Notary) Signature of Document Signer No. 1 Signature of Document Signer No. 2 (if any) A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of Los Angeles @ SARAH C. WEILER ... Notary Public - California ~Los Angeles County ~ z Commission# 2171212 ~ J . My Comm. Expires Nov 8. 2020 J ------------------- Place Notary Seal and/or Stamp Above Subscribed and sworn to (or affirmed) before me on this 20th day of February ,20~. by Date Month Year (1) Paul Douglas (and (2) ), Name(s} of Signer(sJ proved to me on the basis of satisfactory evidence to be the person(s) who appeared before me. Signature --'.......,,~~<:.....:;.:... . *......, W ...,.. 'll .... 1V...:;..'------* Signature of Notary Public Completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document. Description of Attached Document Title or Type of Document: Ann11al A11djted Report - Sep!llveda Distrih11tors, I I C DocumentDate: 01/01/19-12/31/19 Number of Pages:------- Slgner(s) Other Than Named Above: --UL=---------------------- 0 2017 National Notary Association {3}------------------------------------------------ Financial Statements and Supplementary Information As of and for the Year Ended December 31, 2019 (With Report of Independent Registered Public Accounting Firm Thereon) {4}------------------------------------------------ # Table of Contents Page | Report of Independent Registered Public Accounting Firm | | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----| | Financial Statements: | | | Statement of Financial Condition | 2 | | Statement of Operations | 3 | | Statement of Changes in Member's Capital | 4 | | Statement of Cash Flows | 5 | | Notes to Financial Statements | 6 | | Supplementary Schedule I: Computation of Net Capital Under Rule l 5c3-
l of the
Securities and Exchange Commission | 9 | | Supplementary Schedule II: Computation for Determination of Reserve Requirements
and Information Relating to Possession and Control Requirements under
Rule l 5c3-3 of the Securities and Exchange Commission | 10 | {5}------------------------------------------------ ![](_page_5_Picture_0.jpeg) Ern&t & Young LU' 7 25 South Figueroa Street Los Angeles. CA 90017 United States ot America T I I 1 '.! 77 1200 fiJX t ' 21 ~{ 917 3 Jl114,997 | | Prepaid expenses | 49,900 | | Deposits | 13,649 | | Total assets | \$
178,546 | | Liabilities | | | Accrued expenses | \$
38,100 | | Due to affiliate | 64,706 | | Total liabilities | 102,806 | | Member's Capital | | | Member's capital | 75,740 | | Total member's capital | 75,740 | | Total liabilities and member's capital | \$
178,546 | {7}------------------------------------------------ Statement of Operations For the year ended December 31, 2019 | Revenues | | |-------------------------|-----------------| | Commissions from Member | \$ | | Total revenues | | | Expenses | | | Commissions | | | Audit and tax services | 38,000 | | Regulatory fees | 82,296 | | Taxes | 800 | | Other expenses | 109 | | Total expenses | 121,205 | | Net loss | \$
{121,205) | {8}------------------------------------------------ Statement of Changes in Member's Capital For the year ended December 3 1, 2019 | Member's capital as of January 1, 2019 | \$
76,945 | |------------------------------------------|--------------| | Contributions | 120,000 | | Net loss | (121,205) | | Member's capital as of December 31, 2019 | \$
75,740 | | | | {9}------------------------------------------------ # Statement of Cash Flows For the year ended December 31, 2019 | Cash flow from operating activities: | | |-----------------------------------------------------------------------------|-----------------| | Net loss | \$
(121,205) | | Adjustments to reconcile net loss to net cash used in operating activities: | | | lncrease in prepaid expenses | (4,525) | | lncrease in deposits | (8,859) | | Decrease in accrued expenses | (JOO) | | lncrease in due to affiliate | 7,176 | | Net cash used in operating activities | (127,513) | | Cash flow from financing activities: | | | Capital contributions | 120,000 | | Net cash provided by financing activities | 120,000 | | Net decrease in cash | (7,5 13) | | Cash as of the beginning of the year | 122,510 | | Cash as of the end of the year | \$
114,997 | {10}------------------------------------------------ # SEPULVEDA DISTRIBUTORS, LLC Notes to Financial Statements # (1) Organization and Nature of Business Sepulveda Distributors, LLC (the "Company") is a Delaware limited liability company formed on November 15, 2012 with the U.S. Securities and Exchange Commission (the "SEC") and has been a member of the Financial Industry Regulatory Authority ("FINRA") since April 29, 2014. The Company is engaged in a single line of business as a securities broker-dealer. The Company is 100% owned by Crescent Capital Group, L.P. (the "Member"). The Member is registered as an investment adviser under the Advisers Act of 1940 as amended. The Member is 99.8% owned by Crescent Capital Group Holdings, LP ("CCG Holdings"), a Delaware limited partnership. # (2) Summary of Significant Accounting Policies # *(a) Basis of Presentation* The Company's financial statements are prepared m accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). ## *(b) Cash* The Company maintains its cash in a bank deposit account, which at times may exceed the federally insured limits. No losses have been experienced to date related to such account. The Company monitors the financial condition of the financial institution and does not anticipate any losses due to its exposure. ## *(c) Deposits* The Company maintains a FINRA Flex-Funding Account. This account is used to pay invoices and fees fonnerly paid through the Web CRD system. As of December 31, 2019, the balance in the account is \$13,649. # *(d) Use of Estimates* The preparation of financial statements in confonnity with U.S. 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 statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. #### *(e) /11co111e Taxes* As a limited liability company, the Company is generally not subject to income taxes; rather its net income and losses are passed through directly to the Member for inclusion in its taxable income or loss. Accordingly, no provision for federal and state income taxes has been made in the accompanying financial statements. The Company reviews and evaluates tax positions in its major jurisdictions and detennines whether or not there are uncertain tax positions that require financial statement recognition. The Company is subject to examination by state tax authorities for returns filed since inception. {11}------------------------------------------------ # SEPULVEDA DISTRIBUTORS, LLC Notes to Financial Statements The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as an income tax expense in the Statement of Operations. For the year ended December 31, 2019, the Company did not have a liability for any unrecognized tax benefits nor did it recognize any interest and penalties related to unrecognized tax benefits. ## *(/) Prepaid Expe11ses* Prepaid expenses consist of prepaid FINRA registration fees. ## *(g) Revenue Recognition* In May 2014, the Financial Accounting Standards Board issued Accounting Standard Update 2014- 09 ("ASU 2014-09"), "Revenue from Contracts with Customers (Topic 606)." The guidance in ASU 2014-09 supersedes the revenue recognition requirements in "Revenue Recognition (Topic 606)." Under the new guidance, an entity should recognize 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. The amendments in ASU 2014-09 were effective for annual reporting periods beginning after December 15, 2018 for nonpublic companies. There was no impact to the financial statements as a result of adoption in the current year as the Company had no revenues for the year ended December 31, 2019. # (3) Related Party Transactions ## *(a) D11e to Affiliate* Amount due to affiliate of \$64,706 relates to monies owed to the Member for expenses paid on behalf of the Company. ## *(b) Expense Sharing Agreement* The Company and Member entered into an expense sharing agreement in December 2013, which was amended and restated on May 27, 2015, whereas the Member agreed to make available office space, office equipment, administrative support and personnel to the Company. The Member is solely responsible for the payment of any expenses incurred and those expenses are reflected in the Member's consolidated financial statements. The Company maintains a separate schedule of the allocable costs of the services. ## *(c) Commissions Expense* The Member may enter into an employment agreement whereby the Company may make payments of bonus commissions on behalf of the Member. Commissions expense is incurred when it becomes due and payable by the Company. The Company did not incur any commissions expense for the year ended December 31, 2019. ## *(d) Commissions from Member* The Company charges the Member a fee equal to 100% of the commissions expense. The Company did not earn any commissions from the Member for the year ended December 31, 2019 .. {12}------------------------------------------------ # **SEPULVEDA DISTRIBUTORS, LLC** Notes to Financial Statements #### **(4) Net Capital Requirements** The Company is subject to the SEC Uniform Net Capital Rule ("SEC Rule 1 Sc3-l "), which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined in SEC Rule 15c3-l, shall not exceed 15 to 1 (and the rule of the "applicable" exchange also provides that equity capital may not be withdrawn or cash dividends paid if the resulting net capital percentage would exceed 10 to 1 ). As of December 31 , 2019, the Company had net capital of \$12, 191. | | | December 31, 2019 | | |--------------------------------------------------------------------|----|---------------------------|--| | Net capital as a percent of aggregate indebtedness to net capital: | | 843.29% | | | Net capital | \$ | 12, 191 | | | Less: required net capital | | (6,854) | | | Excess net capital | \$ | 5,337
================ | | | | | | | #### **(5) Subsequent Events** Management has evaluated the activity of the Company through February 20, 2020, the date that the financial statements are available to be issued, and concluded that no further subsequent events have occurred that would require recognition or disclosure. {13}------------------------------------------------ # SUPPLEMENTAL SCHEDULES I TO II {14}------------------------------------------------ #### Supplementary Schedule I #### Computallon of Net Capital Under Rule I Sc3-I of the Secunlles and Exchange Commission As of December JI, 2019 | I Total ownership equity from Statement of Fmanc1al Cond1uon
2 Deduct ownership equity not allowable for Net Capital | | s | 75,740 | |-------------------------------------------------------------------------------------------------------------------------|--------|-----|---------------| | 3 Total ownership equity qualified for Net Capital | | | 75 740 | | 4 Add | | | | | A L1ab1llt1cs subordmated to claims of general creditors allowable m | | | | | computation of nel capital | | | | | B Other (deducuons) or allowable credits (List) | | s | 75,740 | | 5 Total capital and allowable subordinated llab1h11es
6 Deductions and/or charges | | | | | A Total non-allowable assets from | | | | | Statement of Fmancial Cond1Uon | 63.549 | | | | B Secured demand note delinquency | | | | | | | | | | C Commodity futures contracts and spot commod1ues - | | | | | proprietary capital charges | | | | | D Other dcducllons and/or charges | | | (63,549) | | 7 Other add111ons and/or allowable credits (L1sl) | | | | | 8 Net capital before haircuts on securities pos11Jons | | | 12,191 | | 9 Haircuts on secunues (computed, where applicable, pursuant 10 15cJ-l(f)} | | | | | A Contractual securities commitments | | | | | B Subordmated securities borrowings | | | | | C Trading and mvestment secur111es | | | | | I Exempted securities | | | | | 2 Debt secunues | | | | | 3 Options
4 Other securities | | | | | D Undue Concentrauon | | | | | E Other (List) | | | | | I 0 Net Cap1tal | | s _ | _ 12 _19_1 _ | | | | | | | COMPUTATION OF NET CAPITAL REQUIREMENT | | | | | Part A | | | | | 11 Mm1mum net capital required (6 2/3 °'o oflmc 19) | | s | 6,854 | | 12 Mm1mum dollar net capltal requirement of report mg broker or dealer and | | | | | mm1mum net capital requirement | | | | | ofsubs1d1anes computed m accordance with Note (A} | | | 5.000 | | 13 Net capital requirement (greater of line 11 or 12) | | | 6,854 | | 14 Excess net capital (line 10 less 13) | | | 5,337 | | IS Net capital lessgreateroflOo/o of11ne 19or 120o/oofllne 12 | | | 1,910 | | | | | | | COMPUTATION OF AGGREGATE fNDEBTEDNESS | | | | | 16 Total A I llab1llues from Statement of Fmanc1al Condition | | | 102,806 | | 17 Add | | | | | A Drafts for 1mmed1ate credit | | | | | B Market value of securities borrowed for which no equivalent value
1s paid or credited | | | | | C Other unrecorded amounts (List) | | | | | 19 Total aggregate mdebtedness | | s | 102.806 | | 20 Percentage of aggregate mdcbtedness to net capital (line 19 + by I me I 0) | | | 843 29% | | 21 Percentage of debt to debt-equity total computed m accordance | | | | | with Rule 1Sc3-l(d) | | | 00% | | | | | | There are no material differences between the computation of net capital presented above and the computation of net capital m the company's unaudited Form X-17 A-5, Part llA filing as of December 31 , 2019 {15}------------------------------------------------ Supplementary Schedule II Computation for Determination of Reserve Requirements and Information Relating to Possession and Control Requirements under Rule I 5c3-3 of the Securities and Exchange Commission As of December 3I,2019 The company is exempt from Securities and Exchange Commission (•'SEC") Rule l 5c3-3 pursuant to the exemptive provisions of sub-paragraph (k)(2)(i) and, therefore, is not required to maintain a "Special Reserve Bank Account for the Exclusive Benefit of Customers." {16}------------------------------------------------ ![](_page_16_Picture_0.jpeg) Ernst & Young LLP 7 25 South Figueroa Street Los Angeles. CA 90017 United States of America T I l 21 .. 91 OC Fax 1 2 Hl7 l 37? wV'NI y con # **Report of Independent Registered Public Accounting Firm** # The Member Sepulveda Distributors, LLC We have reviewed management's statements, included in the accompanying Exemption Report, in which (1) Sepulveda Distributors, LLC (the Company) identified the following provisions of 17 C.F.R. § 15c3-3(k) under which the Company claimed an exemption from 17 C.F.R. § 240.15c3-3: (k)(2)(i) (the "exemption provision") and (2) the Company stated that it met the identified exemption provision throughout the most recent fiscal year ended December 31 , 2019 without exception. Management is responsible for compliance with the exemption provision 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 the Company'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)(2)(i) of Rule 15c3-3 under the Securities Exchange Act of 1934. This report is intended solely for the information and use of management, the SEC, FINRA, and other regulatory agencies that rely on Rule 17a-5 under the Securities Exchange Act of 1934 in their regulation of registered brokers and dealers, and other recipients specified by Rule 17a-5(d)(6) and is not intended to be and should not be used by anyone other than these specified parties. February 20, 2020 {17}------------------------------------------------ # **SEPULVEDA DISTRIBUTORS, LLC** Exemption Report Sepulveda Distributors, LLC (the "Company") is a registered broker-dealer subject to Rule 17a-5 promulgated by the Securities and Exchange Commission (17 C.F.R. §240. l 7a-5, "Reports to be made by certain brokers and dealers"). This Exemption Report was prepared as required by 17 C.F.R. § 240. l 7a-5( d)( 1) and ( 4). To the best of its knowledge and belief, the Company states the following: (1) The Company claimed an exemption from 17 C.F.R. § 240. l 5c3-3 under the following provisions of 17 C.F.R. § 240. l 5c3-3 (k)(2)(i). (2) The Company met the identified exemption provisions in 17 C.F.R. § 240.15c3-3(k) throughout the most recent fiscal year ended December 3 l, 2019 without exception. Sepulveda Distributors, LLC I, Paul Douglas, swear (or affirm) that, to my best knowledge and belief, this Exemption Report is true and correct. *By•f!fl2* Title: Chief C pliance Officer February 20, 2020 {18}------------------------------------------------ #### CALIFORNIA JURAT WITH AFFIANT STATEMENT GOVERNMENT CODE § 820 2 81] e BOB D JB ••a@ WBOlllOlJitll' IJDl)i[i De~ JB J [JOllJ8(JBBD i ]~ IJOOOOO( 0 Bl B [)O )!! See Attached Document (Notary to cross out lines 1-6 below) o See Statement Below (Lines 1-6 to be completed only by document signer[s), not Notary) Signature of Document Signer No. 1 Signature of Document Signer No. 2 (if any) A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of Los Angeles ![](_page_18_Picture_9.jpeg) Subscribed and sworn to (or affirmed) before me | | on this 20th | day of | February | '20__2Q__, | |----|--------------|--------|----------|------------| | by | Date | | Month | Year | | | | | | | (1) Paul Douglas (and(2) ), Name(sJ of Signer(sJ proved to me on the basis of satisfactory evidence to be the person(s) who appeared before me. Signature \_\_,\_.,.,.,.,~-'-'-.... Q'"'-- . *......., (A..., JJ ...... A·....., /V'-----* • Signature of Notary Public Place Notary Seal and/or Stamp Above Completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document. Description of Attached Document Title or Type of Document: Sepulveda Distributors LLC Exemption Report Document Date: February 20. 2020 Number of Pages:\_...\_ \_\_\_\_ \_ Slgner(s) Other Than Named Above: -...Lli=-- ---- ----- ----- ----- - **,.....aooo** Slllll)@ ;n; :ll008'0 BE J"i088811Wl080'0l17J'8€ J B8I XJlll080al DB EBB[Jl:Q ()2017 National Notary Association Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.