# FEARNLEY SECURITIES, INC X-17A-5 (2025-02-28) — Broker-dealer annual report - Company: FEARNLEY SECURITIES, INC - Form: X-17A-5 - Filed: 2025-02-28 - Period: 2024-12-31 - Accession: 0001627302-25-000002 - CIK: 1627302 - File #: 8-69566 - Type: Broker-dealer - Material weakness: No - Auditor: DCPA - Auditor location: CENTURY CITY, CA - Contact: Anthony Shaw - Phone: 212-751-4422 - Email: a.shaw@fearnleys.com - Website: fearnleys.com - Signed by: Jason Peter Fink (Chief Executive Officer) Original filing: https://www.sec.gov/Archives/edgar/data/1627302/000162730225000002/fearnleys.pdf --- {0}------------------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION **Washington, D.C. 20549** > **ANNUAL REPORTS FORM X-17A-5 PART** Ill | 0MB APPROVAL | | | |--------------------------|--|--| | 0MB Number: 3235-0123 | | | | Expires: Nov. 30, 2026 | | | | Estimated average burden | | | | hours per response: 12 | | | SEC FILE NUMBER 8-69566 | Information Required Pursuant to Rules 17a-5, 17a-1Z, and 18a-7 under the Securities Exchange Act of 1934 | | FACING PAGE | | | | | |---------------------------------------------------------------------------------------------------------------------------------------|-------------------------------|------------------------------------------------------------|--|----------------------|---------|--------------------------------------------| | | | | | | | | | FILING FOR THE PERIOD BEGINNING 01/01/2024 | | | | | | AND ENDING 12/31/2024 | | | | MM/DD/YY | | | | MM/DD/YY | | | | A. REGISTRANT IDENTIFICATION | | | | | | NAME oF FIRM: Fearnley Securities, Inc. | | | | | | | | TYPE OF REGISTRANT (check all applicable boxes):
C!J Broker-dealer
□ Check here if respondent is also an OTC derivatives dealer | □ Security-based swap dealer | | | | | □ Major security-based swap participant | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | | | | | 880 Third Avenue, 16Th Floor | | | | | | | | | | (No. and Street) | | | | | | New-York | | | | | | 1.0022 | | (City) | | (State) | | | | (Zip Code) | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | | | Anthony Shaw | (212)-751-4422 | | | a.shaw@fearnleys.com | | | | (Name) | (Area Code -Telephone Number) | | | (Email Address) | | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing*
DCPA | | | | | | | | | | (Name - if individual, state last, first, and middle name) | | | | | | 2121 AVE OF THE STARS #800 CENTURY CITY | | | | | CA | 90067 | | (Address) | | (City) | | | (State) | (Zip Code) | | 09/15/2020 | | | | | 6567 | | | (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-S(e)(l)(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 0MB control number.** {1}------------------------------------------------ #### **OATH OR AFFIRMATION** | I,
Jason Peter Fink | financial report pertaining to the firm of Feamley Securities, Inc. | swear (or affirm) that, to the best of my knowledge and belief, the
as of | |--------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------| | 12/31 | 2~ | is true and correct. I further swear (or affirm) that neither the company nor any | | | | partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely | | as that of a customer.
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' | Notary Public #### **This filing\*\* contains (check all applicable boxes):** - **!ii** (a) Statement of financial condition. - **iii** (b) Notes to consolidated statement of financial condition. - D (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 (d) Statement of cash flows. - D (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - D (f) Statement of changes in liabilities subordinated to claims of creditors. - D (g) Notes to consolidated financial statements. - D (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable. - D (i) Computation of tangible net worth under 17 CFR 240.18a-2. - D 0) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. - D (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or Exhibit Ato17 CFR 240.18a-4, as applicable:- - - D (I) Computation for Determination of PAB Requirements under Exhibit A to§ 240.15c3-3. - D (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3. - D (n) Information relating to possession or control requirements for security-based swap customers under 17 CFR 240.15c3-3(p)(2) or 17 CFR 240.18a-4, as applicable. - D (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-1, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences exist. - D (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - **ii** (q) Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. - D (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - D (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - **ii** (t) Independent public accountant's report based on an examination of the statement of financial condition. - D (u) Independent public accountant's report based on an examination of the financial report or financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable. - D (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - D (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - D (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-le or 17 CFR 240.17a-12, as applicable. - D (y) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k). D (z) Other: \_ \_ \_\_\_ \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \_ \_\_\_\_ \_ - \*\*To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5(e)(3) or 17 CFR 240.18a-7(d)(2), as applicable. {2}------------------------------------------------ # **Fearnley Securities, Inc.** Financial Statement December 31, 2024 (With Report of Independent Registered Public Accounting Firm) The report is deemed PUBLIC in accordance with Rule 17-5(e) (3) under the Securities Exchange Act of 1934. {3}------------------------------------------------ # **Fearnley Securities, Inc Contents** | | Page(s) | |-----------------------------------------------------------|---------| | Report of Independent Registered Public Accounting Firm 1 | | | Financial Statement | | | Statement of Financial Condition 2 | | | Notes to the Financial Statement3-8 | | {4}------------------------------------------------ ### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** DCPA To the Board of Directors and the Stockholder of Fearnley Securities, Inc.: #### **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of Fearnley Securities, Inc. (the "Company") as of December 31, 2024, 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 the Company as of December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. #### **Basis for Opinion** This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company'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 the Company 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. **DCPA** DCPA We have served as the Company's auditor since 2024. Century City, California February 25, 2025 {5}------------------------------------------------ ### **Fearnley Securities, Inc. Statement of Financial Condition As of December 31, 2024** | ASSETS | | |----------------------------------------------------------|-----------------| | ASSETS | | | Cash | \$
3,491,032 | | Accounts Receivable | 600,000 | | Receivables from Parent | 734,690 | | Receivables from Clearing Broker | 357,923 | | Prepaid Expenses | 73,210 | | Equipment and Furniture (net) | 8,591 | | Deferred Tax Assets | 2,735,351 | | TOTAL ASSETS | \$
8,000,797 | | LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES | | | Accounts Payable and Accrued Expenses | \$
586,812 | | Taxes Payable | 57,937 | | TOTAL LIABILITIES | 644,749 | | STOCKHOLDER'S EQUITY | | | Common Stock - no par value | | | 200 Shares Authorized, 100 Shares Issued and Outstanding | 48,795 | | Additional Paid-in Capital | 15,400,000 | | Accumulated Deficit | (8,092,747) | | TOTAL STOCKHOLDER'S EQUITY | 7,356,048 | | TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY | \$
8,000,797 | {6}------------------------------------------------ #### **1. Organization** Fearnley Securities, Inc. ("the Company") is a wholly owned subsidiary of Fearnley Securities AS (the Parent Company). The Parent Company was established in 1987 and is an independent fullservice investment bank, a member of the Oslo Stock Exchange, and part of the Astrup Fearnley Group. The idea behind the formation of an investment bank within the Astrup Fearnley umbrella was, and remains, to capitalize on the Group's global resources within maritime industries. The Company and the Parent Company remain close to the Group's heritage and core businesses, hence focusing exclusively on shipping, offshore and energy. From its office in New York, the Company provides a full range of brokerage and investment banking services for domestic and global clients. The Company is a broker-dealer in securities registered with the Securities and Exchange Commission ("SEC"), as well as a member of the Financial Industry Regulatory Authority ("FINRA") and the Securities Investor Protection Corporation ("SIPC"). #### **2. Summary of Significant Accounting Policies** #### **Basis of Presentation** The Company's financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP") as promulgated by the Financial Accounting Standards Board ("FASB") through the Accounting Standards Codification ("ASC") as the source of authoritative accounting principles in the preparation of the accompanying financial statements. The U.S. dollar (\$) is the functional currency of the Company. ### **Use of Estimates** The preparation of financial statements in conformity with 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. ### **Cash** The Company maintains its cash in bank accounts at high credit quality financial institutions. The balances at times may exceed federally insured limits of \$250,000. However, the Company has not experienced any losses in such accounts and does not believe there to be any significant credit risk with respect to these deposits. #### **Clearing Arrangements** The Company clears its brokerage transactions through its clearing broker on a fully disclosed basis as outlined in the clearing agreement between the Company and its clearing brokers. The Company has a Tri-Party arrangement whereas Beech Hill Securities, Inc., a broker dealer registered with SEC and a member of FINRA, clears the Company's domestic transactions through its clearing firm, Pershing LLC. As of December 31, 2024, the Company had a \$357,923 receivable from clearing broker, of which \$295,581 was held as clearing deposit. International transactions are cleared through its Parent Company. #### **Accounts Receivable** Accounts receivable are carried at the amounts billed to customers, net of an allowance for credit losses, which is an estimate for credit losses based on a review of all outstanding amounts. The Company received all funds and did not record any allowances against the receivable, which is from a single customer, for the year ended December 31, 2024. {7}------------------------------------------------ ### **2. Summary of Significant Accounting Policies (Continued)** #### **Allowance for Credit Losses** As prescribed under ASC 326, management establishes an allowance of current expected credit losses against customer contract assets and receivables, and other receivables including security deposits to reflect the net amount the Company expects to collect. The allowance for credit losses is based on the Company's expectation of the collectability of financial instruments carried at amortized cost, including fees receivable utilizing the current expected credit losses 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. Management does not believe that an allowance is required as of December 31, 2024. #### **Revenue** The Company recognizes revenue pursuant to FASB ASC 606, Revenue from Contracts with Customers. The revenue recognition guidance requires that an entity recognize revenue resulting from 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 guidance requires an entity to follow a five-step model to (a) identify the contract(s) with the customer, (b) identify the performance obligations in the contract, (c) determine the transaction prices, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, an entity may include variable consideration only to the extent that it is possible that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. Judgement is required in the application of the five-step model when determining whether performance obligations are satisfied at a point in time or over time; how to allocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on the appropriate measure of the Company's progress under the contract; and whether constraints on variable consideration should be applied due to uncertain future events. Investment banking revenues consist of underwriting revenues, private placement fees and corporate finance advisory revenues. Underwriting revenues arise from securities offerings in which the Company acts as an underwriter, or as another category of participants in an underwritten distribution and may include management fees, selling concessions and underwriting fees. Underwriting revenues are recorded at the time the underwriting is completed and income is reasonably determined and assured of collection. Typically, collection of the related underwriting fees and or management fees occurs within 60 days of the transaction date. Revenues from advisory services are recorded in accordance with the terms of the related investment banking and advisory service agreements and are recognized at the point in time that performance under the arrangement is completed or the contract is cancelled. In some circumstances, retainers and other fees received from customers prior to recognizing revenue are reflected as contract liabilities. Payments for advisory services are generally due upon completion of a specified event or, for retainer fees, periodically over the course of the engagement. Commission revenues are front-end sales commissions for brokerage transactions introduced to the clearing broker, which are recognized on a trade date basis. Net dealer inventory gains and losses are recorded on a trade date basis, include realized and unrealized net gains and losses, resulting from the Company's principal trading activities. {8}------------------------------------------------ #### **2. Summary of Significant Accounting Policies (continued)** #### **Revenue (continued)** Service fees are recognized monthly based upon the Intercompany Service Agreement between the Company and the Parent Company. As per the terms of this agreement, the Parent Company compensates the Company a service fee equal to the Company's monthly running cost base, adjusted for an annual revenue split, plus a margin of 10%. ASC 606 does not apply to revenue associated with interest and expense. ### **Concentration, Risk and Credit Risk** In the normal course of business, the Company's securities activities will involve the execution and settlement of various securities transactions for customers. These activities may expose the Company to risk in the event customers are unable to fulfill their contractual obligations. The Company continuously monitors the credit-worthiness of customers. If the agency transactions do not settle because of failure to perform by either the customer or the counter parties, the Company may be obligated to discharge the obligation of the non-performing party and, as a result, may incur a loss if the market value of the security is different from the contract amount of the transaction. #### **Furniture, Equipment and Leasehold Improvements** Furniture, equipment and leasehold improvements are stated at historical cost less accumulated depreciation. Amounts incurred for repairs and maintenance are charged to operations in the period incurred. Depreciation on these assets is computed using the straight-line method over the estimated useful lives of the assets. Estimated useful lives of these assets range from three to five years. #### **Accounts Payable and Accrued Expenses** The Company has accrued expenses and other liabilities that represent payments due for outside services and other various liabilities. #### **Leases** The Company recognizes and measures its leases in accordance with FASB ASC 842, Leases. During the year ended December 31, 2024, the Company's long- term operating lease agreement expired, and was on a month-by-month lease payment, which is not subject to ASC 842. #### **Income Taxes** Income taxes are provided under the provisions of ASC 740, Income Taxes. The Company uses the asset and liability method of accounting for deferred income taxes. The provision for income taxes includes income taxes currently payable and those deferred because of temporary differences between the financial statements and tax bases of assets and liabilities. The Company records tax liabilities for income tax contingencies based on our best estimates of the underlying exposures. The Company's federal and state income tax returns for the years 2020 through 2024 remain open for audit by the applicable regulatory authorities. {9}------------------------------------------------ #### **2. Summary of Significant Accounting Policies (Continued)** #### **Segment Reporting** In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Improvements to Reportable Segment Disclosures ("ASU 2023- 07"), which requires incremental disclosures about reportable segments but does not change the definition of a segment or the guidance for determining reportable segments. The new guidance requires disclosure of significant segment expenses that are (1) regularly provided to (or easily computed from information regularly provided to) the chief operating decision maker ("CODM") and (2) included in the reported measure of segment profit or loss. The new standard also requires companies to disclose the title and position of the individual (or the name of the committee) identified as the CODM, allows companies to disclose multiple measures of segment profit or loss if those measures are used to assess performance and allocate resources, and is applicable to companies with a single reportable segment. The requirements are effective for annual reporting periods beginning on January 1, 2024, and are required to be applied retrospectively. The Company has identified its Chief Executive Officer as the CODM, and has adopted the additional disclosure requirements under ASU 2023-07. The additional requirements did not have a material impact on the financial statements. #### **3. Furniture and Equipment** Depreciation is based on the straight-line method over the estimated useful life of five years. As of December 31, 2024, Office Equipment and Furniture consist of the following: | Equipment | \$
12,701 | |-------------------------------|--------------| | Furniture | 4,328 | | Total | 17,029 | | Less Accumulated Depreciation | (8,438) | | Net | \$
8,591 | #### **4. Related Party Transactions** The Company and the Parent Company entered into an Intercompany Services Agreement effective January 1, 2024, in accordance with a cost-plus transfer pricing study. As per the terms of this agreement, the Parent Company shall pay to the Company an amount equal to 110% or such other mark-up as may be agreed from time to time, of prorated expenses of the Company driven from revenue splits. As of December 31, 2024, the Company has a due from balance with the Parent Company of \$734,690. During the year 2024, the Parent Company made capital contributions of \$1,500,000 to the Company. It is possible that the terms of certain of the related party transactions are not the same as those that would result for transactions among wholly unrelated parties. {10}------------------------------------------------ #### **5. Income Taxes** Under the accounting guidance, income taxes are recognized for the amount of taxes payable for the current year and for the impact of deferred tax liabilities and assets, which represent future tax consequences of events that have been recognized differently in financial statements than for tax purposes. Management's judgement is required in evaluating items that factor into determining tax provisions. Management believes its tax provisions reflected in the financial statement are fully supportable. The income tax provision consists of the following components as of December 31, 2024: | Tax Liability at Statutory Rate | \$
50,765 | 21.00% | |-------------------------------------------|--------------|--------| | State Liability, Net of Federal Liability | 9,672 | 2.95% | | Income Tax Liability | 60,437 | | The components of the deferred tax assets and liabilities at December 31, 2024 are summarized as follows: | Deferred Tax Assets: | | |--------------------------------------|-----------------| | Net Operating Loss Carryforwards | \$
2,719,210 | | Depreciation - Book greater than Tax | 16,141 | | Total Deferred Tax Assets | \$
2,735,351 | The Company has federal net operating losses of \$10,814,067, which do not expire, but can be fully utilized to offset up to 80% of the Company's taxable income in any given year. State net operating losses are generally calculated on a post-apportionment basis, and either do not expire (and are subject to the 80% utilization rule) or are subject to a 20-year life with unlimited utilization, depending on each state's rules. ### **6. Defined Contribution 401K Plan** The Company formed a 401K plan whereby a voluntary and discretionary contribution by both, the Company and its employees can be made. #### **7. Commitments and Contingencies** The Company is not involved in any material litigation, nor is any material litigation threatened against the Company. #### **8. Net Capital Requirements** The Company is subject to the SEC Uniform Net Capital Rule (SEC rule 15c3-I), which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined in the Rule, shall not exceed 15 to 1. At December 31, 2024, the Company had net capital of \$3,204,206 which was \$2,954,206 in excess of its required net capital of \$250,000. The ratio of aggregated indebtedness to net capital is 0.20 to 1. {11}------------------------------------------------ #### **9. Reclassifications** Certain prior year amounts have been reclassified to conform with the current year's presentation. These changes had no impact on previously reported results of operations or total equity, unless stated otherwise. ### **10. Subsequent Events** The Company has evaluated events subsequent to the Statement of Financial Condition date for items requiring recording or disclosure in the financial statements. The evaluation was performed through the date the financial statements were available to be issued. On January 22, 2025, the Company entered into a long-term lease agreement which is not expected to commence until later in 2025. A Letter of Credit for \$376,327 with City National Bank was established for this new lease agreement. Based upon this review, the Company has determined that there were no events other than mentioned above, which took place that would have a material impact on these financial statements. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.