# RIALTO MARKETS LLC X-17A-5 (2022-09-29) — Broker-dealer annual report - Company: RIALTO MARKETS LLC - Form: X-17A-5 - Filed: 2022-09-29 - Period: 2022-06-30 - Accession: 0001670539-22-000002 - CIK: 1670539 - File #: 8-69756 - Type: Broker-dealer - Material weakness: No - Auditor: YSL & Associates LLC - Auditor location: New York, NY - Contact: Michael Stupay - Phone: 212-897-1692 - Signed by: Shari Noonan (CEO) Original filing: https://www.sec.gov/Archives/edgar/data/1670539/000167053922000002/rito22s2.pdf --- {0}------------------------------------------------ (a wholly-owned subsidiary of Rialto Trading Holdings LLC) Statement of Financial Condition Pursuant to Rule 17 A-5 under the Securities Exchange Act of 1934 June 30, 2022 {1}------------------------------------------------ #### 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 NUMER 8- 69756 FACING PAGE Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Excha nge Act of 1934 FILING FOR THE PERIOD BEGINNING 07/01 /21 MM/DDNY MM/DDNY AND ENDING 06/30/22 ## A. REGISTRANT IDENTIFICATION ## NAME OF FIRM: Rialto Markets LLC TYPE OF REGISTRANT (check all applicable boxes): ~ Broker-dealer D Security-based swap dealer D Major security-based swap participant D Check here if respondent is also an OTC derivatives dealer ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) ## 42 Broadway Suite 12-129 | | (No. and Street) | | | |----------------|----------------------------------------------|--------------------------------|--| | New York | NY | 10004 | | | (City) | (State) | (Zip Code) | | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | Michael Stupay | (212) 897-1692 | mstupay@integ rated. solutions | | | (Name) | (Area Code - Telephone Number) | (Email Address) | | | | B. ACCOUNTANT IDENTIFICATION | | | | | | | | INDEPENDENT PUBLIC ACCOUNT ANT whose reports are contained in this filing\* ## YSL & Associates | (Name - if individual, state last, first, and middle name) | | | | | | | |------------------------------------------------------------|----------|---------|-------------------------------------------|--|--|--| | 11 Broadway, Suite 700 | New York | NY | '10004 | | | | | (Address) | (City) | (State) | (Zip Code) | | | | | 06/06/2006 | | 2699 | | | | | | (Date of Registration with PCAOB)(if applicable) | | | (PCAOB Registration Number, ifapplicable) | | | | #### 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 supp-0rted by a statement of facts and circumstances relied on as the basis of the exemption. See 17 CFR 240. l 7a-5(e)( I )(ii), if applicable. Persons who arc to respond to the collection of information contained in this form arc not required to respond unless the form displays a currently valid OMB control number. {2}------------------------------------------------ ### AFFIRJ.\1A TION '•\-&- I, Shari Noonan , swear (or affirm) that, to the best of my knowledge and belief, the financial re1>ort pertaining to Rialto Markets LLC as of 06130122 , 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. CEO Title Notary Public ![](_page_2_Picture_7.jpeg) {3}------------------------------------------------ ## This filing\*\* contains (check all applicable boxes): - [El (a) Statement of financial condition. - l!l (b) Notes to unconsolidated or consolidated statement of financial condition, as applicable. - 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 § 2 JO. l-02 of Regulation S-X). - D ( d) Statement of cash flows. - D (e) Statement of changes in stockholders' or partners' or members' or sole proprietor's equity, as applicable. - D (f) Statement of changes in liabilities subordinated to claims of creditors. - D (g) Notes to unconsolidated or consolidated financial statements,, as applicable. - D (h) Computation of net capital under 17 CFR 240.15c3-l or 17 CFR 240.18a-l, as applicable. - D (i) Computation of tangible net worth under I 7 CFR 240.18a-2. - D U) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240. l 5c3-3. - D (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3- 3 or Exhibit A to 17 CFR 240. I 8a-4, as applicable. - D (I) Computation for Determination of PAB Requirements under Exhibit A to§ 240.l 5c3-3. - 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 I 7 CFR 240. l 8a-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. l 5c3-l , 17 CFR 240. l 8a-l , or 17 CFR 240. l 8a-2, as applicable, and the reserve requirements under 17 CFR 240. l 5c3-3 or 17 CFR 240. J 8a-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. - [El (q) Oath or affirmation in accordance with 17 CFR 240. l 7a-5, J 7 CFR 240. l 7a-12, or 17 CFR 240. J 8a-7, as applicable. - D (r) Compliance report in accordance with 17 CFR 240. I 7a-5 or I 7 CFR 240. l 8a-7, as applicable. - D (s) Exemption report in accordance with 17 CFR 240.l7a-5 or 17 CFR 240.J8a-7, as applicable. - [El ( 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. J7a-5, 17 CFR 240. l 8a-7, or 17 CFR 240.J 7a-J2, as applicable. - D (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240. l 7a-5 or 17 CFR 240. l 8a-7, as applicable. - D ( w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240. l 7a-5 or 17 CFR 240.18a-7, as applicable. - D (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-1 e or 17 CFR 240. l 7a-l 2, 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. l 7a-12(k). D(z) Other:------------------------------------ - *\*\*To request confidential treatment of certain portions of this filing, see 17 CFR 240. J 7a-5(e)(3) or 17 CFR 240. J 8a-7(d)(2), as applicable.* {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) 11 Broadway, Suite 700, New York, NY 10004 Tel: (212) 232-0122 Fax: (646) 218-4682 ## REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Member of Rialto Markets LLC ## Opinion on the Financial Statement We have audited the accompanying statement of financial condition of Rialto Markets LLC (the "Company") as of June 30, 2022, and the related notes (collectively referred to as the "financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company as of June 30, 2022 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 overa!a presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. We have served as Rialto Markets LLC's auditor since 2017. New York, NY September 28, 2022 {5}------------------------------------------------ (a wholly-owned subsidiary of Rialto Trading Holdings LLC) ## Statement of Financial Condition June 30, 2022 | Assets | | |-----------------------------------------------------------|------------------------| | Cash | \$
634,737 | | Due from Parent | 10,000 | | Due from escrow agent | 18,307 | | Prepaid expenses and other assets | 18,855 | | Total assets | \$
681 ,899 | | Liabilities and Member's Equity | | | Liabilities: | | | Accounts payable and accrued expenses
Deferred revenue | \$
54,470
10,000 | | Total liabilities | 64,470 | | Member's equity | 617,429 | | Total liabilities and member's equity | \$
681,899 | The accompanying notes are an integral part of this financial statement. {6}------------------------------------------------ (a wholly-owned subsidiary of Rialto Trading Holdings LLC) ## Notes to Statement of Financial Condition June 30, 2022 ## 1. Nature of operations Rialto Markets LLC (the "Company") is a limited liability company formed under the laws of the state of Delaware on August 5, 2016. The Company is a wholly-owned subsidiary of Rialto Trading Holdings LLC (the "Parent"). The Company is a broker-dealer registered with the Securities and Exchange Commission (the "SEC") and is a member of the Financial Industry Regulatory Authority ("FINRA"). The Company is permitted to act as a placement agent for privately offered securities, in the primary market, and to operate as an altemati ve trading system ("A TS") creating an electronic matching system for non-publicly traded securities, corporate debt securities, US government securities and municipal securities in the secondary market. However, the Company, currently acts only as a service provider to issuers that engage in self issuance of private securities. The Company earns fees commensurate with the amount of capital that the issuers raise via exempt offerings (ex. Regulation CF, Regulation A+, etc.). ## 2. Summary of significant accounting policies ## lBasis of presentation These financial statements were prepared in conformity with accounting principles generally accepted in the United States of America which 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 amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. ## Revenue recognition The Company recognizes 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 guidance requires an entity to follow a five-step model to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (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 probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. This revenue recognition guidance does not apply to revenue associated with financial instruments and interest income. The Company's revenues are generally from one-time nonrecurring transactions. #### Significant judgments R.evenue from contracts with customers includes comm1ss1on income. The recognition and measurement of revenue is based on the assessment of individual contract terms. Significant j udgment is required to determine whether performance obligations are satisfied at a point in time or over time; how to allocate transaction prices where multiple perfonnance 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. {7}------------------------------------------------ (a wholly-owned subsidiary of Rialto Trading Holdings LLC) ## Notes to Statement of Financial Condition June 30, 2022 ## 2. Summary of significant accounting policies (continued) ### !Revenue recognition (continued) #### Commissions The Company earns transaction-based fees for acting as a service provider to issuers that engage in self issuance of private securities. The Company has determined that the performance obligation is satisfied at the time that all contingencies have been met and funds are available to be distributed by the escrow agent. ## Platform fees The Company receives offering set up and processing fees which are earned and recognized upon signing an agreement. ## Consulting Revenue is recognized when control of the promised services ts transferred to the Company's customer. ## Cash All cash deposits are held by one financial institution and therefore are subject to the credit risk at that financial institution and may at times exceed amounts insured by the Federal Deposit Insurance Corporation. The Company has not experienced any losses in such accounts and does not believe there to be any significant crediit risk with respect to these deposits. #### [ ncome taxes The Company is a single member limited liability company and is treated as a disregarded entity for income tax reporting purposes. The Internal Revenue Code ("IRC") provides that any income or loss is passed through to the ultimate beneficial individual member for federal and state income taxes. Accordingly, the Company has not provided for federal and state income taxes. At June 30, 2022, management has determined that the Company had no uncertain tax positions that would require financial statement recognition. This determination will always be subj ect to ongoing reevaluation as facts and circumstances may require. #### Accounts Receivable Accounts receivable include comm1ss1ons due from clients and held by an escrow agent. Management reviews all accounts receivable balances, determines a course of action on any delinquent amounts, and provides an allowance for amounts which collection is considered to be doubtful. At June 30, 2022 management believed no valuation allowance was warranted. {8}------------------------------------------------ **(a wholly-owned subsidiary of Rialto Trading Holdings LLC)** ## **Notes to Statement of Financial Condition June 30, 2022** ### **2. Summary of significant accounting policies (continued)** ## **Allowance for Credit** Losses ASC Topic 326, Financial Instruments - Credit Losses ("ASC 326") :impacts the impairment model for certain financial assets by requiring a current expected credit loss ("CECL") methodology to estimate expected credit losses over the entire life of the financial asset. Under ASC 326, the Company could determine there are no expected credit losses in certain circumstances (e.g., based on the credit quality of the client). The allowance for credit losses is based on the Company's expectation of the collectability of financial instruments, including fees and other receivables utilizing the CECL framework. The Company considers factors such as historical experience, credit quality, age of balances and current and future economic conditions that may affect the Company's expectation of the collectability in determining the allowance for credit losses. Under the standard, the allowance for credit losses must be deducted from the amortized cost of the financial asset to present the net amount expected to be collected. The statement of operations would reflect the measurement of credit losses for newly recognized financial assets as well as the expected increases or decreases of expected credit losses that might have taken place during the period. The Company has not provided an allowance for credit losses at June 30, 2022. ## **3. Transactions with related parties** The Company may be dependent on its access to funding from the Parent. The Parent intends to continue to fund the operational and regulatory needs of the Company for the foreseeable future. The Company maintains an administrative services agreement (the "Expense Sharing Agreement") with its Parent and affiliates owned by the Parent (the "Affiliates") whereby the Affiliates provide accounting, administrative, office space, human resources and other services. The Company does not have any obligation, direct or indirect, to reimburse or otherwise compensate the Affiliates for any or all costs that the Affiliates have paid on behalf of the Company. During the period ending June 30, 2022, the affiliate paid expenses on behalf of the Company in the amount of \$1,800 and the Company had loaned the affiliate \$10,000 that had been repaid during the year. Additionally, the Company loaned the Parent \$375,000 during the year of which \$10,000 remains outstanding at June 30, 2022. The Company received revenue in the fonn of stock compensation that was distributed to the Parent. {9}------------------------------------------------ ## **Rialto Markets LLC (a wholly-owned subsidiary of Rialto Trading Holdings LLC)** ## **Notes to Statement of Financial Condition June 30, 2022** ## **3. Transactions with related parties (continued)** All transactions with related parties are settled in the normal course of business. The terms of any of these arrangements may not be the same as those that would otherwise exist or result from agreements and transactions among unrelated parties. #### **4. Concentration** Accounts receivable at June 30, 2022 are due from I 0 clients the largest of which comprises 43% of that balance. One customer comprised approximately 59% of total revenue for the year ended June 30, 2022. #### **5. Regulatory requirements** The Company is subject to SEC Uniform Net Capital Rule l 5c3-l u nder the Securities Exchange Act of 1934, which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to I. At June 30, 2022, the Company had net capital of \$570,267 which exceeded the required net capital by \$565,267. The ratio of aggregate indebtedness to net capital, at June 30, 2022 was .11 to 1. The Company does not hold customers' cash or securities and, has no requirements under SEC Rule 15c3-3 and therefore does not claim an exemption under paragraph (k). #### **6. Subsequent events** Management of the Company has evaluated events or transactions that may have occurred since June 30, 2022. The Parent paid off its loan balance of \$10,000. The Company made capital distributions to the Parent in the aggregate amount of \$380,000. The Company loaned the Parent \$142,000 of which \$62,000 has been repaid. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.