# BAILLIE GIFFORD FUNDS SERVICES LLC X-17A-5 (2023-05-30) — Broker-dealer annual report - Company: BAILLIE GIFFORD FUNDS SERVICES LLC - Form: X-17A-5 - Filed: 2023-05-30 - Period: 2023-03-31 - Accession: 0001604870-23-000002 - CIK: 1604870 - File #: 8-69448 - Type: Broker-dealer - Material weakness: No - Auditor: Citrin Cooperman & Company, LLP - Auditor location: Livingston, NJ - Contact: Janice Parise - Phone: 9172700699 - Email: jparise@dfppartners.com - Website: dfppartners.com - Signed by: David Salter (Chief Executive Officer) Original filing: https://www.sec.gov/Archives/edgar/data/1604870/000160487023000002/bgfspublic3312023.pdf --- {0}------------------------------------------------ **UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549** # **ANNUAL REPORTS FORM X-17A-5 PART III** OMB APPROVAL OMB Number: 3235-0123 Expires: Oct. 31, 2023 Estimated average burden hours per response: 12 SEC FILE NUMBER 8-69448 **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 \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ 04/01/22 3/31/23 MM/DD/YY MM/DD/YY **A. REGISTRANT IDENTIFICATION** #### NAME OF FIRM: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ BAILLIE GIFFORD FUNDS SERVICES LLC 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.) #### \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ CALTON SQUARE, 1 GREENSIDE ROW | | | (No. and Street) | | | | | | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--------------------------------|--------------------------------------------|-------------------------|--|--|--| | EDINBURGH
_____________________________________________________________________________________ | | UK | | EH1 3AN | | | | | (City) | | (State) | | (Zip Code) | | | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | | | | JANICE PARISE
_____________________________________________________________________________________ | | (212) 751-4422 | | JParise@dfppartners.com | | | | | (Name) | | (Area Code – Telephone Number) | (Email Address) | | | | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing*
Citrin Cooperman & Company, LLP
_____________________________________________________________________________________
(Name – if individual, state last, first, and middle name) | | | | | | | | | 290 West Mt. Pleasant Avenue
_____________________________________________________________________________________ | | Livingston | New Jersey | 07039 | | | | | (Address) | | (City) | (State) | (Zip Code) | | | | | 11/02/2005
_____________________________________________________________________________________ | | | 2468 | | | | | | (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 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.** {1}------------------------------------------------ | I DAVID SALTER | swear (or affirm) that, to the best of my knowledge and belief, the | | |-------------------------------------------------------------------------------|---------------------------------------------------------------------|--| | financial report pertaining to the firm of BAILLIE GIFFORD FUNDS SERVICES LLC | | | ![](_page_1_Figure_4.jpeg) - - - - - - - - - - - - - - - - - - - - - - - - - - - {2}------------------------------------------------ # BAILLIE GIFFORD FUNDS SERVICES LLC Statements of Financial Condition March 31, 2023 and 2022 (With Report of Independent Registered Public Accounting Firm Thereon) {3}------------------------------------------------ ## BAILLIE GIFFORD FUNDS SERVICES LLC #### Contents | Report of Independent Registered Public Accounting Firm | 3 | |---------------------------------------------------------|------| | Managers' and Company Information | 4 | | Statements of Financial Condition | 5 | | Notes to the Statements of Financial Condition | 6-10 | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) #### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Member and Management Baillie Gifford Funds Services LLC #### **Opinion on the Financial Statements** We have audited the accompanying statements of financial condition of Baillie Gifford Funds Services LLC as of March 31, 2023 and 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of Baillie Gifford Funds Services LLC as of March 31, 2023 and 2022, in conformity with accounting principles generally accepted in the United States of America. #### **Basis for Opinion** These financial statements are the responsibility of Baillie Gifford Funds Services LLC's management. Our responsibility is to express an opinion on Baillie Gifford Funds Services LLC's financial statements based on our audits. 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 Baillie Gifford Funds Services 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 audits 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 statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, 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 audits 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 audits provide a reasonable basis for our opinion. We have served as Baillie Gifford Funds Services LLC's auditor since 2022. Livingston, New Jersey May 22, 2023 {5}------------------------------------------------ ## Managers' and Company Information | Managers: | L Archibald (Chair)
D Salter
K Hamilton
S Quinn
M Saliba | |-------------------------------------|---------------------------------------------------------------------------------------------------------------------------| | Officers: | J D Parise (Financial & Operations Principal) | | Bankers: | Lloyds Bank plc
City Branch
PO Box 72
Bailey Drive
Gillingham
ME8 0LS
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}------------------------------------------------ ## BAILLIE GIFFORD FUNDS SERVICES LLC ### Statements of Financial Condition #### March 31, 2023 and 2022 | | 2023 | 2022 | |--------------------------------------------|-----------------|-----------------| | Assets | | | | Cash | \$
3,167,598 | \$
2,399,019 | | Prepayments | 158,094 | 94,588 | | Due from affiliates | 3,801 | - | | Total assets | \$
3,329,493 | \$
2,493,607 | | Liabilities and member's equity | | | | Accounts payable and accrued expenses | \$
7,525 | \$
7,203 | | Due to Parent | 239,903 | 63,434 | | Due to affiliates | 55,076 | 85,433 | | Income taxes payable | 83,103 | 49,196 | | Total current liabilities | 385,607 | 205,266 | | Member's equity | | | | Common units 100,000 shares, par value \$1 | 100,000 | 100,000 | | Retained earnings | 2,843,886 | 2,188,341 | | Total member's equity | 2,943,886 | 2,288,341 | | Total liabilities and member's equity | \$
3,329,493 | \$
2,493,607 | Accompanying notes on pages 6-10 are an integral part of these financial statements. The financial statements were approved by the Board of Managers on May 22, 2023, and signed on its behalf by: D W Salter Manager Company Number FC031788 {7}------------------------------------------------ #### Notes to the Statements of Financial Condition #### March 31, 2023 and 2022 #### 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 and/or its affiliates 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 Statements of Financial Condition (continued) #### March 31, 2023 and 2022 #### 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. 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 two 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, there is \$400,249 and \$11,316 due from BGO to the Company as of March 31, 2023 and 2022 respectively, which is included net in Due to Parent on the Statements of Financial Condition. This is due to the year-end calculated placement service fee exceeding the payments on account received from BGO during the year as explained in note 2b. {9}------------------------------------------------ #### Notes to the Statements of Financial Condition (continued) #### March 31, 2023 and 2022 #### 4) Amount due to Parent In accordance with the Expense Sharing Agreement, certain costs borne by BGO are to be reimbursed by the Company. These costs are then subsequently recharged back to BGO with a mark-up of 10%. \$640,152 and \$74,750 is due to BGO from the Company as of March 31, 2023 and 2022 respectively; this amount is included net in Due to Parent on the Statements of Financial Condition. This is due to year-end calculated costs borne by BGO due for reimbursement exceeding the payments on account paid to BGO by the Company during the year as explained in note 2b. #### 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. Expenses incurred are recharged with a mark-up. \$51,275 and \$85,433 of expenses paid by affiliates on behalf of the Company is due back to affiliates as of March 31, 2023 and 2022 respectively. #### 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 2020 through 2022. Deferred tax assets and liabilities are recognized for all future tax consequences attributable to "temporary differences" between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. The Company evaluates deferred tax assets periodically to determine if they are realizable. Factors in the determination include the performance of the business including the ability to generate capital gains from a variety of sources and tax planning strategies. If, based on available information, it is more likely than not that deferred income tax assets will not be realized, then a valuation allowance must be established with a corresponding charge to net income. {10}------------------------------------------------ ## Notes to the Statements of Financial Condition (continued) #### March 31, 2023 and 2022 #### 6) Income Taxes (continued) The Company records liabilities for uncertain tax filing positions in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 740, Income Taxes, where it is more-likely-than-not that the position will not be sustainable upon audit by taxing authorities. These liabilities are re-evaluated routinely and are adjusted appropriately based upon changes in facts or law. The Company has no unrecorded liabilities from uncertain tax filing positions. The Company's effective tax rate would be affected to the extent there were unrecognized tax benefits that could be recognized. There are no positions for which it is reasonably possible that the total amount of unrecognized tax benefit will significantly increase within the next 12 months. The Company's policy for classifying interest and penalties associated with unrecognized income tax benefits is to include such items as interest expense and operating expense, respectively. No significant interest or penalties have been recorded during the years ended March 31, 2023 and March 31, 2022, respectively. #### 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) Other Risk Factors As the impact of Coronavirus has declined, BGFS has re-emphasised the importance of physical interactions with colleagues and clients while also incorporating the flexible working benefits experienced through the remote working culture adopted throughout the pandemic. We have therefore seen increased face-to-face marketing activity and supervision over the year following the easing of restrictions, resulting in less disruption than previous years. {11}------------------------------------------------ ### Notes to the Statements of Financial Condition (continued) #### March 31, 2023 and 2022 #### 9) 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) 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 and 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, 2023, The Company had net capital of \$2,780,966, which was \$2,755,259 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 0.13866 to 1 at March 31, 2023. #### 11) Subsequent Events The Company has performed an evaluation of events that have occurred subsequent to March 31, 2023, and through May 22, 2023, the date of the filing of this report. There have been no material subsequent events that occurred during such period that would require disclosure in this report or would be required to be recognized in the financial statements as of March 31, 2023. #### 12) Recent Events Relating to the Disruption in the U.S. Banking System In March 2023, the shut-down of certain financial institutions raised economic concerns over disruption 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-2, the Company maintains cash amounts in excess of federally insured limits in the aggregate amount of \$2.9 million, as of March 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.