# BAILLIE GIFFORD FUNDS SERVICES LLC X-17A-5 (2020-05-21) — Broker-dealer annual report - Company: BAILLIE GIFFORD FUNDS SERVICES LLC - Form: X-17A-5 - Filed: 2020-05-21 - Period: 2020-03-31 - Accession: 0001604870-20-000001 - CIK: 1604870 - File #: 8-69448 - Material weakness: No - Auditor: COHNREZNICK LLP - Auditor location: NEW YORK, NY - Contact: Janice Parise - Phone: 2127514422 - Signed by: DAVID SALTER (CHIEF EXECUTIVE OFFICER) Original filing: https://www.sec.gov/Archives/edgar/data/1604870/000160487020000001/bgfspublicv2.pdf --- {0}------------------------------------------------ **UNITEDSTATES SECURITIESANDEXCHANGECOMMISSION Washington, D.C. 20549** OMB APPROVAL OMB Number: 3235-0123 Expires: "VHVTU Estimated average burden hours per response.. . . . . 12.00 **8-** SEC FILE NUMBER 69448 # **ANNUAL AUDITED REPORT FORM X-17A-5 PART III** **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\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ AND ENDING\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ MM/DD/YY MM/DD/YY **A. REGISTRANT IDENTIFICATION** NAME OF BROKER-DEALER: ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) OFFICIAL USE ONLY FIRM I.D. NO. \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (No. and Street) (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\* (Name – *if individual, state last, first, middle name*) (Address) (City) (State) (Zip Code) **CHECK ONE:** Certified Public Accountant Public Accountant Accountant not resident in United States or any of its possessions. April 1, 2019 March 31, 2020 BAILLIE GIFFORD FUNDS SERVICES LLC CALTON SQUARE, 1 GREENSIDE ROW EDINBURGH UK EH1 3AN Janice Parise (212) 751-4422 COHNREZNICK LLP 1301 AVENUE OF THE AMERICAS NEW YORK NY 10019 ✔ *\*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** SEC 1410 (06-02) **unless the form displays a currently valid OMB control number.** ## FOR OFFICIAL USE ONLY {1}------------------------------------------------ #### **OATH OR AFFIRMATION** | DAVID SALTER
I, ___________________________________________________________________________ , swear (or affirm) that, to the best of | | | | |-----------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--| | BAILLIE GIFFORD FUNDS SERVICES LLC | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of
_____________________________________________________________________________________________________________ , as | | | | MARCH 31 | 20
of _________________________________________________, 20________, 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: | | | | | | | | | | | __________________________________________________________________________________________________________________________ | | | | | __________________________________________________________________________________________________________________________ | | | | | __________________________________________________________________________________________________________________________ | | | | | | | | | | _________________________________________ | | | | | Signature | | | | | CHIEF EXECUTIVE OFFICER
_________________________________________ | | | | | Title | | | | NOT NOTARIZED DUE TO COVID-19
_________________________________________ | | | | | Notary Public | | | | | | | | | | 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. | | | | | (f) Statement of Changes in Liabilities Subordinated to Claims of Creditors. | (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital. | | | | (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. | | | | | (j) A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule 15c3-1 and the | | | | | Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3. | | | | consolidation. | (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of | | | | (l) 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 240.17a-5(e)(3). | | | {2}------------------------------------------------ Statements of Financial Condition March 31, 2020 and 2019 (With Report of Independent Registered Public Accounting Firm Thereon) {3}------------------------------------------------ ## **Contents** | Report of Independent Registered Public Accounting Firm | 3 | |---------------------------------------------------------|-----| | Managers' and Company Information | 4 | | Statements of Financial Condition | 5 | | Notes to the Financial Statements | 6-9 | {4}------------------------------------------------ ![](_page_4_Picture_1.jpeg) #### 5HSRUWRI,QGHSHQGHQW5HJLVWHUHG3XEOLF\$FFRXQWLQJ)LUP 7RWKH0HPEHURI%DLOOLH\*LIIRUG)XQGV6HUYLFHV//& #### *Opinion on the Financial Statements* :HKDYHDXGLWHGWKHDFFRPSDQ\LQJVWDWHPHQWVRIILQDQFLDOFRQGLWLRQRI%DLOOLH\*LIIRUG)XQGV6HUYLFHV//&DZKROO\ RZQHGVXEVLGLDU\RI%DLOOLH\*LIIRUG2YHUVHDV/LPLWHGDQGD'HODZDUHOLPLWHGOLDELOLW\FRPSDQ\ WKH³&RPSDQ\´ DV RI0DUFKDQGDQGWKHUHODWHGQRWHVFROOHFWLYHO\UHIHUUHGWRDVWKH³ILQDQFLDOVWDWHPHQWV´ ,QRXU RSLQLRQWKHVWDWHPHQWVRIILQDQFLDOFRQGLWLRQSUHVHQWIDLUO\LQDOOPDWHULDOUHVSHFWVWKHILQDQFLDOSRVLWLRQRI%DLOOLH \*LIIRUG )XQGV6HUYLFHV //& DV RI0DUFK DQG LQ FRQIRUPLW\ ZLWK DFFRXQWLQJ SULQFLSOHV JHQHUDOO\ DFFHSWHGLQWKH8QLWHG6WDWHVRI\$PHULFD #### *Basis for Opinion* 7KHVH ILQDQFLDO VWDWHPHQWV DUH WKH UHVSRQVLELOLW\ RI %DLOOLH \*LIIRUG )XQGV 6HUYLFHV //&¶V PDQDJHPHQW 2XU UHVSRQVLELOLW\LVWRH[SUHVVDQRSLQLRQRQ%DLOOLH\*LIIRUG)XQGV6HUYLFHV//&¶VILQDQFLDOVWDWHPHQWVEDVHGRQRXU DXGLWV:HDUHDSXEOLFDFFRXQWLQJILUPUHJLVWHUHGZLWKWKH3XEOLF&RPSDQ\\$FFRXQWLQJ2YHUVLJKW%RDUG8QLWHG 6WDWHV ³3&\$2%´ DQG DUH UHTXLUHG WR EH LQGHSHQGHQW ZLWK UHVSHFW WR %DLOOLH \*LIIRUG )XQGV 6HUYLFHV //& LQ DFFRUGDQFHZLWKWKH86IHGHUDO VHFXULWLHV ODZV DQGWKH DSSOLFDEOH UXOHV DQG UHJXODWLRQVRIWKH6HFXULWLHV DQG ([FKDQJH&RPPLVVLRQDQGWKH3&\$2% :HFRQGXFWHGRXUDXGLWVLQDFFRUGDQFHZLWKWKHVWDQGDUGVRIWKH3&\$2%7KRVHVWDQGDUGVUHTXLUHWKDWZHSODQ DQGSHUIRUPWKHDXGLWVWRREWDLQUHDVRQDEOHDVVXUDQFHDERXWZKHWKHUWKHILQDQFLDOVWDWHPHQWVDUHIUHHRIPDWHULDO PLVVWDWHPHQW ZKHWKHU GXHWR HUURU RUIUDXG2XU DXGLWV LQFOXGHG SHUIRUPLQJ SURFHGXUHVWR DVVHVVWKH ULVNV RI PDWHULDOPLVVWDWHPHQWRIWKHILQDQFLDOVWDWHPHQWVZKHWKHUGXHWRHUURURUIUDXGDQGSHUIRUPLQJSURFHGXUHVWKDW UHVSRQGWRWKRVHULVNV6XFKSURFHGXUHVLQFOXGHGH[DPLQLQJRQDWHVWEDVLVHYLGHQFHUHJDUGLQJWKHDPRXQWVDQG GLVFORVXUHV LQWKHILQDQFLDO VWDWHPHQWV2XU DXGLWV DOVR LQFOXGHG HYDOXDWLQJWKH DFFRXQWLQJ SULQFLSOHV XVHG DQG VLJQLILFDQW HVWLPDWHV PDGH E\ PDQDJHPHQW DV ZHOO DV HYDOXDWLQJ WKH RYHUDOO SUHVHQWDWLRQ RI WKH ILQDQFLDO VWDWHPHQWV:HEHOLHYHWKDWRXUDXGLWVSURYLGHDUHDVRQDEOHEDVLVIRURXURSLQLRQ VWDWHPHQWV :H EHOLHYH WKDW R :HKDYHVHUYHGDV%DLOOLH\*LIIRUG)XQGV6HUYLFHV//&¶VDXGLWRUVLQFH :H KDYH VHUYHG DV %DLOOLH \*LI 1HZS A McKechnie
A Graham
M G Saliba
K Hamilton | | | |-------------------------------------|----------------------------------------------------------------------------------------|--|--| | Officers: | J D Parise (Financial & Operations Principal) | | | | Bankers: | Lloyds Bank plc
City Branch
PO Box 72
Bailey Drive
Gillingham
ME8 0LS | | | | | Citibank N.A.
PO Box 769018
San Antonio
TX 78245 | | | | | HSBC Bank USA N.A.
452 5th Ave
New York
NY 10018 | | | | Registered Office: | Corporation Service Company
251 Little Falls Drive
Wilmington
DE 19808
USA | | | | Principal Office: | Calton Square
1 Greenside Row
Edinburgh
EH1 3AN | | | | UK Company Number: | FC031788 | | | | UK Establishment Registered Number: | BR016858 | | | | US (Delaware) Registered Number: | 5482323 | | | {6}------------------------------------------------ #### **Statements of Financial Condition** #### **March 31, 2020 and 2019** | | Note | 2020 | 2019 | |--------------------------------------------|------|-----------------|---------------| | Assets | | | | | Cash | | \$
1,062,946 | \$
362,438 | | Due from Parent | 3 | 375,956 | 477,084 | | Prepayments | | 116,370 | 87,673 | | Income taxes prepayment | | - | 26,957 | | Total assets | | \$
1,555,272 | \$
954,152 | | Liabilities and member's equity | | | | | Accounts payable and accrued expenses | | \$
23,117 | \$
124,881 | | Due to affiliates | | 199,865 | 29,358 | | Income taxes payable | | 43,848 | - | | Total current liabilities | | 266,830 | 154,239 | | Member's equity | | | | | Common units 100,000 shares, par value \$1 | | 100,000 | 100,000 | | Retained earnings | | 1,188,442 | 699,913 | | Total member's equity | | 1,288,442 | 799,913 | | Total liabilities and member's equity | | \$
1,555,272 | \$
954,152 | | | | | | Accompanying notes on pages 6-9 are an integral part of these financial statements. The financial statements were approved by the Board of Managers on May 20, 2020 and signed on its behalf by: **D W Salter** *Manager* Company Number FC031788 {7}------------------------------------------------ ## **Notes to the Financial Statements** ### **March 31, 2020 and 2019** ### **1) Nature of Business** Baillie Gifford Funds Services LLC (the "Company") is a wholly owned subsidiary of Baillie Gifford Overseas Limited ("BGO" or the "Parent"), a wholly owned subsidiary of Baillie Gifford & Co. ("BGC") and is economically dependent on its Parent to sustain its operations. The Company was formed on February 14, 2014 as a limited liability company in Delaware, USA to act as distributor of securities managed and advised by BGO. On March 2, 2015, the Financial Industry Regulatory Authority ("FINRA") approved the registration of the Company. The Company is registered as a broker-dealer with the Securities and Exchange Commission ("SEC") and is a member of FINRA. The primary business of the Company is to act as general distributor of Baillie Gifford US Mutual Public Offer Funds (the "Funds"), which are Open Ended Investment Companies registered under the Investment Company Act of 1940 and registered under the Securities Act of 1933. The Company does not hold funds or securities for, or owe money or securities to, customers or perform custodial services and, accordingly, claims exemption from Rule 15c3-3 of the Securities Exchange Act of 1934. The Funds were registered under the Securities Act of 1933 with the SEC. Registration was granted on April 2, 2015. The Company also acts as distributor of private investment funds (the "BG Private Funds") sponsored and advised by BGO that are not registered under the Securities Act of 1933. The Company is also registered, in the UK, under the Companies Act 2006 as having a UK Establishment, given at Companies House on February 14, 2014. {8}------------------------------------------------ ## **Notes to the Financial Statements (continued)** #### **March 31, 2020 and 2019** ## **2) Summary of Significant Accounting Policies** ### *a) Basis of Presentation* The Company's financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles ("US GAAP"), which require management to make estimates and assumptions and that may 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 may differ from those estimates. Functional and presentational currency is deemed to be US dollars ("USD"). ### *b) Related Party Transactions* On February 27, 2015, the Company and BGO entered into an Expense Sharing Agreement. In accordance with the Expense Sharing Agreement, the Company will reimburse BGO on a monthly basis for a proportional share of costs borne by BGO in relation to activities performed by staff working for the Company. In addition, the Expense Sharing Agreement incorporates the services the Company provides to BGO. A placement services fee equivalent to all of the Company's expenses, excluding financing costs, is charged to BGO on a monthly basis including a mark-up of 10%. ### *c) Concentration of Credit Risk* The Company maintains its cash accounts in three commercial banks. The Company does not consider itself to be at risk with respect to its cash balances which at times may exceed Federally insured levels. #### **3) Amount due from Parent** In accordance with the Expense Sharing Agreement, reimbursements from BGO included costs with a mark-up of 10% and were \$7,128,173 (2019 - \$6,010,899). \$978,173 (2019 - \$540,542) is due from BGO to the Company as of March 31, 2020; this amount is included net in Due from Parent on the Statements of Financial Condition. {9}------------------------------------------------ ## **Notes to the Financial Statements (continued)** #### **March 31, 2020 and 2019** ### **4) Amount due to Parent** In accordance with the Expense Sharing Agreement, there is \$602,217 (2019 - \$63,458) due to BGO from the Company as of March 31, 2020, which is included net in Due from Parent on the Statements of Financial Condition. ## **5) Affiliated Parties** The Company derives substantially all of its revenue by acting as the general distributor of the Funds and providing sales and marketing services to BGO. \$199,865 (2019 - \$29,358) is due to affiliates as of March 31, 2020. #### **6) Income Taxes** The Company was organized as a single-member limited liability company but elected to be treated as a corporation for federal and state tax purposes. The Company files its federal and state income tax returns, where applicable, on a corporate basis. The tax years that remain subject to examination by the tax authorities are 2017 through 2019. ## **7) Off-Balance Sheet Risk and Credit Risk** The Company acts as general distributor of the Funds and BG Private Funds. Receipts and payments for mutual fund shares sold or redeemed are made directly to, or by, the issuers or their agents. There is no off-balance sheet risk associated with these transactions as customers will deal directly with the funds and the Company does not hold or transfer customer funds. #### **8) Commitments and Contingencies** In the ordinary course of business, various claims and lawsuits may be brought by or against the Company. As of the end of the year, there were no such claims or lawsuits brought by or against the Company. {10}------------------------------------------------ ### **Notes to the Financial Statements (continued)** #### **March 31, 2020 and 2019** #### **ϵͿ Net Capital Requirement** As a FINRA registered broker-dealer, the Company is subject to the SEC Uniform Net Capital Rule ("Rule 15c3-1") of the Securities Exchange Act of 1934, which requires the maintenance of minimum net capital. Under Rule 15c3-1, the Company is required to maintain minimum net capital equal to the greater of \$5,000 or 6 2/3% of aggregate indebtedness. The ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1, and that equity capital may not be withdrawn, or cash dividends paid if the resulting net capital ratio would exceed 10 to 1. At March 31, 2020, The Company had net capital of \$795,883, which was \$778,094 above its required net capital of the greater of \$5,000 or 6 2/3% of aggregated indebtedness. The ratio of aggregate indebtedness to net capital was 0.33526 to 1 at March 31, 2020. #### **ϭϬͿ Subsequent Events** In December 2019 and early 2020, the coronavirus that causes COVID-19 was reported to have surfaced in China. The spread of this virus globally including in early 2020 has caused business disruption domestically in the United States, the area in which the Company primarily operates. While the disruption is currently expected to be temporary, there is considerable uncertainty around the duration of this uncertainty. Therefore, while the Company does not expect this matter to negatively impact the Company's financial condition, results of operations, or cash flows, the extent of the financial impact and duration cannot be reasonably estimated at this time.dŚĞŽŵƉĂŶLJŚĂƐĞǀĂůƵĂƚĞĚƚŚĞŶĞĞĚ ĨŽƌĚŝƐĐůŽƐƵƌĞƐĂŶĚͬŽƌĂĚũƵƐƚŵĞŶƚƐƌĞƐƵůƚŝŶŐĨƌŽŵƐƵďƐĞƋƵĞŶƚĞǀĞŶƚƐƚŚƌŽƵŐŚDĂLJϮϬ͕ϮϬϮϬ͕ ƚŚĞĚĂƚĞƚŚĞĨŝŶĂŶĐŝĂůƐƚĂƚĞŵĞŶƚƐǁĞƌĞĂǀĂŝůĂďůĞƚŽďĞŝƐƐƵĞĚ͘ Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.