# FINANCIAL ADVOCATES SECURITIES, LLC X-17A-5 (2021-03-25) — Broker-dealer annual report - Company: FINANCIAL ADVOCATES SECURITIES, LLC - Form: X-17A-5 - Filed: 2021-03-25 - Period: 2020-12-31 - Accession: 0001683385-21-000002 - CIK: 1683385 - File #: 8-69827 - Material weakness: No - Auditor: Rubio CPA, PC - Auditor location: Atlanta, GA - Contact: Brian Megenity - Phone: 6785752056 - Signed by: Gary Campbell (CEO) Original filing: https://www.sec.gov/Archives/edgar/data/1683385/000168338521000002/fadaudit.pdf --- {0}------------------------------------------------ | | UNITED STATES | | PM6 APPBQYAl | | |------------------------------------------------------------------------------------------|-----------------------------------------------------------|----------|-------------------------------------------------------|--| | | SECURITIES AND EXCHANGE COMMISSION | | 0MB N�mbfr; �2�S-C123
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hours, per r��nH, 12.00 | | | | ANNUAL AUDITED REPORT | | | | | | FORM X�17 A 5 | | SEC FILS. NUMBER | | | | PART 111 | | e. 69827 | | | | FACING PAGE | | | | | [nforrnatlon Requind of Broken i.11d DtM1crs J>ursU11nt to Section 17 of the | | | | | | | Seurltlu Exchange Act of J!J34 and Ridel 7A-5 Thereunder | | | | | REPORT FOR THE PERIOD BEGINNING ___ 01_/_01_/2_0 __ AND ENDtNO | | | 12/31/20 | | | | MMIDDIYY | | MM/tib/YY | | | | A, REGISTRANT IJ>ENTIFlCATION | | | | | NAMB OF BkOKER·DEALBR; | | | OFFICIAL USE ONLY | | | Financial Advocate\$ SeturiUes, LLC | | | | | | ADDRESS OF PRINCTPAL PLACE OF BUSlNESS: (Po 1101 use P,O, Box No,) | | | FIRM 1,D, NO. | | | 1601 Cooper Point Rd NW | | | | | | Olympia | (No, and Stroot)
WA | | 98502 | | | (Cily) | | | (Zip Codo) | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT TN REGARD TO THIS REPORT
Gary Campbell | | | (360) 866�2345 | | | | | | | | | | B, ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT who�e opinion Is contain�d in the Report*
Rubio CPA PC | | | | | | | (NIM� - If /1,dN/dJ1a!, 1ed Public Accountant | | | | | | □ | | | | | | Pubtfo Accountant | | | | | | □
Accountant not resident ln Unlted Slates ar any of H� posseulons. | | | | | | | | | | | | | FOR OFFICIAL USE ONLY | | | | *"CltJ/mij/Jr ex�1t:plionfrom ilu nquiremenl !hat the 111mual rep;,n be co1'llmi by th� opinion (J/an iHde/Jfndenl public amr1111{Ql!I mwt b, �lipportrd by a MQ/emml of /act: '111d clrc11m1tanct.t r,1/ed Oil rtJ tire ba!frfor tht �ump/Ion. Su Section 240.17a-\$ (t}{2)* > Potantlli persons 'MIO 1111'8 to respond to tl1ll coll�on of lnform.UQl'I contllned In ll'tla fonn n not �Uired to respond SEC 1410 (11-05) unless tllil fonn dlsplays • currenW valid 0MB control numbtr, {1}------------------------------------------------ #### **OATH OR AFFlRMATION** | I, | Gary Campbell | , swear (or at't1rm) 1hal, to the best of | |-----|-------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------| | | my k11owledge a11d belief tile accompanying t1nanclal statement and supporting schedules pertalrilng to lhe 11rm ot' | | | | | | | | of ----------'l)=ec,e,.,,m=b,.,e_r,3==-1, 2020, ue true and correct, I further swear (or afl1rm) 1hat | | | | neither the company nor any partner, proprietor, pdnelpal officer or Jlroctor hu MY µroprletaey Interest In any account | | | | ol11Ssitied oolely as that ot' a customer, except as follows: | | | | | | | | | | | | | | | | | TiHe | | | | NOTARY PUElUC | | | Not~ry Poblto | STATE OF WASHINGTON | | | Thls te!)(irt ** contaltlS (check all app!lcable boxes): | ARAM ELIOT WHEELER | | | | Lie. No. 136897
My Appointment Expires | | | [i (a) Facing P!gc, | MAY 21, 2024 | | | [ii (b) Statement of Financial Cond Ilion. | | | | li] (c) Stalement of Income (Loss), | | | | D (d) Statement of Changes rn Financial Coni.l!llon. | | | | [i] (~) Statement of' Changes In Stockholders' E.qulty or Partners' or Sole Proprietors' Capital. | | | | ~ (f} Stat~ment of Changes In Liabflltics Subordinated to Claims ol' Creditors.
(g:) Computation of Net Capltsl. | | | LBJ | D (h) Compu1ation for DotermlnaUon of Reserve Requirements Pursuant to Rule l 5c3-3. | | | | 0 (i) lnforrna.tlon Ralatlng to the Po.session or Control Requlmnents Under Rule LSc3-3, | | | | 0 U) A Reconollia\ion, Including appropriate explnn~tlon of the 'Computation afNet Capital Under | | | | | Rule I Sc3• l nnd the Computation tor Determination of the Resorvc Requirements Under Exhlb!t | | | A of Rule l5c3-3. | | | | D (k) · A Reconclli~tion, between the audited and unaudiced Statements ofFlnanciD.I Condition with | | | | resp~ct to methods Qf consolid,atlon, | | | | 00 (I)
Ao Oath or Affirmation,
D (m) A oop)' of the S[PC Supplemental Report | | | | D (n) A report de5crlbing anr material inadequaciea found to ox!st or found to have ~xlstQ{j sl/\Ce the | | | | | | date of the previous audit, *HFo, co rid/lions of conf]denllal treatment of 1,~rtafn porilons of lhlsflling, ses section 240.* I *7a-S(e)(J).* {2}------------------------------------------------ FINANCIAL ADVOCATES SECURITIES, LLC Financial Statements For the Year Ended December 31, 2020 With Independent Auditor's Report {3}------------------------------------------------ ## FINANCIAL ADVOCATES SECURITIES, LLC FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES FOR THE YEAR ENDED DECEMBER 31, 2020 ## C O N T E N T S Report of Independent Registered Public Accounting Firm FINANCIAL STATEMENTS: Statement of Financial Condition Statement of Operations Statement of Changes in Member's Equity Statement of Cash Flows Notes to Financial Statements SUPPLEMENTARY SCHEDULES: Schedule I - Computation of net capital pursuant to Rule 15c3-1 of the Securities Exchange Act of 1934 Schedule II - Supplementary information Pursuant to Rule 17a-5 of the Securities Exchange Act of 1934 Report of Independent Registered Public Accounting Firm Broker Dealer Annual Exemption Report {4}------------------------------------------------ **RUBIO CPA, PC** CERTIFIED PUBLIC ACCOUNTANTS 2727 Paces Ferry Road SE Building 2, Suite 1680 Atlanta, GA 30339 Office: 770 690-8995 Fax: 770 838-7123 # **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Member of Financial Advocates Securities, LLC ## Opinion on the Financial Statements We have audited the accompanying statement of financial condition of Financial Advocates Securities, LLC (the "Company") as of December 31 , 2020, the related statements of operations, changes in member's equity, and cash flows for the year then ended and the related notes ( collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the fmancial position of the Company as of December 31 , 2020, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. ## Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements 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 statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement to 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 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. ### Supplemental Information The information contained in Schedules I, II and III has been subjected to audit procedures performed in conjunction with the audit of the Company's financial statements. The supplemental information is the responsibility of the Company's management. Our audit procedures included determining whether the information in Schedules I, II and III reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the accompanying schedules. In forming our opinion on the accompanying schedules, we evaluated whether the supplemental information, including its form and content, is presented {5}------------------------------------------------ in conformity with 17 C.F.R. §240. l 7a-5. In our opinion, the aforementioned supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole. We have served as the Company's auditor since 2019. February 23, 2021 Atlanta, Georgia Rubio CPA, PC {6}------------------------------------------------ # **Financial Advocates Securities, LLC Statement of Financial Condition December 31, 2020** ## **Assets** | Cash
Prepaid expenses
Other assets | \$
15,257
505
683 | |------------------------------------------|----------------------------| | Total assets | \$
16,445 | | | | | Liabilites and member's equity | | | Liabilities | \$
- | | Total liabilities | - | | Member's equity | 16,445 | | Total liabilities and member's equity | \$
16,445 | {7}------------------------------------------------ # **Financial Advocates Securities, LLC Statement of Operations Year Ended December 31, 2020** ## **Revenue** | Income | - | |--------------------------|----------------| | Total Revenue | - | | Expenses | | | Professional fees | 11,581 | | Regulatory expenses | 3,005 | | Occupancy | 3,600 | | Employee compensation | 4,740 | | Other operating expenses | 6,849 | | Total Expenses | 29,775 | | Net loss | \$
(29,775) | {8}------------------------------------------------ # **Financial Advocates Securities, LLC Year Ended December 31, 2020 Statement of Changes in Member's Equity** | Balance at | | |------------------------------------------|--------------| | December 31, 2019 | \$
21,974 | | Contributions from Member - Cash | 10,000 | | Contributions of expenses paid by Member | 14,246 | | Net loss | (29,775) | | Balance at
December 31, 2020 | \$
16,445 | {9}------------------------------------------------ # **Financial Advocates Securities, LLC Statement of Cash Flows Year Ended December 31, 2020** | Cash flows from operating activities: | | |--------------------------------------------------------------------------------|----------------| | Net loss | \$
(29,775) | | | | | Items which do not affect cash | | | Contribution of expenses paid by Member | 14,246 | | Adjustments to reconcile net loss to net cash used
by operating activities: | | | Changes in assets and liabilities | | | Increase in other assets | (495) | | Decrease in due to related party | (1,707) | | | | | Net cash used by operating activities | (17,731) | | Cash flows from financing activities: | | | Contributions from member - Cash | 10,000 | | | | | Net cash provided by financing activities | 10,000 | | | | | Net increase in cash | (7,731) | | Cash at beginning of year | 22,988 | | | | | Cash at end of year | \$
15,257 | | | | | SUPPLEMENTAL CASH FLOW INFORMATION | | | Non-cash financing activity: | | | Capital contributions of expenses paid by Member | \$ | 14,246 | |--------------------------------------------------|----|--------| |--------------------------------------------------|----|--------| {10}------------------------------------------------ ## **FINANCIAL ADVOCATES SECURITIES, LLC NOTES TO FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2020** ## Note 1 **Organization and Summary of Significant Accounting Policies** ## **Organization and Business** Financial Advocates Securities, LLC ('"Company'') is a wholly owned subsidiary of Financial Advocates, Inc. ("Member"). The Company was formed June 10, 2019 under the laws of the state of Washington. The broker-dealer was originally formed in July 2016 as Delta One, LLC in the state of Delaware. On December 11, 2017 the name was changed to Valor First LLC. The Company is a broker-dealer registered with the Securities and Exchange Commission ("SEC") effective May 17, 2017. In May 2019, the Member acquired 100% of Valor First, LLC and changed the name to Financial Advocates Securities, LLC. The Company is a member of the Financial Industry Regulatory Authority. The Company intends to act as a municipal securities broker solely engaged in the receipt of commission override payments (529 plans) from other member firms. ## **Revenue Recognition** The Company has adopted ASU 2014-09 Revenue from Contracts with Customers and all subsequent amendments to the ASU (collectively, "ASC 606"), which creates a single framework for recognizing revenue from contracts with customers that fall within its scope. The Company intends to receive from other member firms commission override payments that are earned on sales of 529 plans to customers. Commission override payments are transaction based and are recognized at the point in time that the override payment is received from other member firms. ### **Income Taxes** The Company, with stockholder's consent, has elected to be taxed as an "S Corporation" under the provisions of the Internal Revenue Code and comparable state income tax law. As an S Corporation, the Company is generally not subject to corporate income taxes and the Company's net income or loss is reported on the individual tax return of the sole stockholder of the Company. Therefore, no provision or liability for income taxes is reflected in the financial statements. Under the provisions of FASB Accounting Standards Codification 740-10, Accounting for Uncertainty in Income Taxes, the Company is required to evaluate each of its tax positions to determine if they are more likely than not to be sustained if the taxing authority examines the respective position. A tax position includes an entity's status and the decision not to file a return. The Company has evaluated each of its tax positions and has determined that no provision or liability for income taxes is necessary. #### **Use of Estimates** The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets {11}------------------------------------------------ ## **FINANCIAL ADVOCATES SECURITIES, LLC NOTES TO FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2020** 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. #### Note 2 **Financial Instruments and Concentration of Risk** Financial instruments subject to risk concentration is cash. The Company maintains depository cash with one banking institution. Depository accounts are insured by the Federal Depository Insurance Corporation ("FDIC") to a maximum of \$250,000 per bank, per depositor. #### Note 3 **Contingencies** The Company is subject to litigation in the normal course of business. The Company had no litigation matters during 2020. ## Note 4 **Net Capital Requirements** The Company, as a registered broker dealer is subject to the Securities and Exchange Commission Uniform Net Capital Rule (Rule 15c3-1), 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 1. At December 31, 2020, the Company had net capital of \$15,257, which was \$10,257 in excess of its required net capital of \$5,000 and its ratio of aggregate indebtedness to net capital was .00 to 1.0. #### Note 5 **Related Party Transactions** Effective December 2019, the Company has an administrative services agreement with its Member. Pursuant to the agreement, the Parent provides office facilities, administrative, human resources and other services. The Company expensed approximately \$12,540 during the year ended December 31, 2020 for these services. The liability to parent that accumulated from these expenses was forgiven by the parent. Financial position and results of operations could differ from the amounts in the financial statements if these transactions did not exist. #### Note 6 **Subsequent Events** The Company has performed an evaluation of subsequent events through the date the financial statements were issued. The evaluation did not result in any subsequent events that required disclosures and/or adjustments. ### Note 7 **Economic Risks** In March 2020, The World Health Organization (WHO) declared COVID-19 a global pandemic. This pandemic event has resulted in significant business disruption and uncertainty in both global and U.S. markets. While the Company believes that it is in an appropriate position to sustain the short-term effects of these world-wide events, the direct and long-term impact to the Company and its financial statements is undetermined at this time. {12}------------------------------------------------ ## SUPPLEMENTAL INFORMATION {13}------------------------------------------------ #### **Schedule I** ## **Financial Advocates Securities, LLC Pursuant to Rule 17a-5 December 31, 2020 Supplemental Information** #### **Computation of Net Capital** | Total member's equity qualified for net capital | \$
16,445 | |-----------------------------------------------------------------------------------------------------|--------------| | | | | Non-allowable assets: | | | Other assets and prepaid expenses | 1,188 | | Total non-allowable assets | 1,188 | | Net capital before haircuts | 15,257 | | Less haircuts on securities positions | \$
- | | Net capital | \$
15,257 | | Aggregate indebtedness | \$
- | | Computation of basic net capital requirement
Minimum net capital required (greater of \$5,000 or | | | 6 2/3% of aggregate indebtedness) | \$
5,000 | | Excess Net Capital | \$
10,257 | | Ratio of aggregate indebtedness to net capital | .00 to 1 | #### **Reconciliation of Computation of Net Capital** There is no significant difference between net capital above and net capital as reported on Part IIA of Form X-17a-5 as of December 31, 2020. {14}------------------------------------------------ ## **FINANCIAL ADVOCATES SECURITIES, LLC** ## SCHEDULE II COMPUTATION FOR DETERMINATION OF RESERVE REQUIREMENTS UNDER RULE 15c3-3 OF THE SECURITIES AND EXCHANGE COMMISSION AS OF DECEMBER 31, 2020 With respect to the Computation for Determination of Reserve Requirements under Rule 15c3-3, the Company does not claim an exemption from Rule 15c3-3 in reliance upon footnote 74 of SEC Release No. 34-70073 dated July 30, 2013, and as discussed in Question 8 of the related FAQ released by SEC staff on April 4, 2014. The Company does not hold customer funds or securities. #### SCHEDULE III ## INFORMATION RELATING TO THE POSSESSION OR CONTROL REQUIREMENTS UNDER RULE 15c3-3 OF THE SECURITIES AND EXCHANGE COMMISSION AS OF DECEMBER 31, 2020 With respect to the Information Relating to Possession and Control Requirements under Rule 15c3-3, the Company does not claim an exemption from Rule l 5c3-3 in reliance upon footnote 74 of SEC Release No. 14- 70073 dated July 30, 2013, and as discussed in Question 8 of the related FAQ released by SEC staff on April 4. 2014. The Company does not hold customer funds or securities. {15}------------------------------------------------ **RUBIO CPA, PC** CERTIFIED PUBLIC ACCOUNTANTS 2727 Paces Ferry Road SE Building 2, Suite 1680 Atlanta, GA 30339 Office: 770 690-8995 Fax: 770 838-7123 ## **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Member of Financial Advocates Securities, LLC We have reviewed management's statements included in the accompanying Broker Dealers Annual Exemption Report in which (1) Financial Advocates Securities, LLC did not claim an exemption from Rule 15c3-3 in reliance upon Footnote 74 of the 2013 Release, and (2) Financial Advocates Securities, LLC stated that Financial Advocates Securities, LLC met the identified conditions for such reliance throughout the most recent fiscal year without exception. Financial Advocates Securities, LLC's management is responsible for compliance with the exemption provisions 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 Financial Advocates Securities, LLC'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 opm1on. 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 Footnote 74 of the 2013 Release. February 23, 2021 Atlanta, GA ~ **e/,+/** *le.-* Rubio CPA, PC {16}------------------------------------------------ ## **EXEMPTION REPORT** We, as members of management of Financial Advocates Securities, LLC (the "Company") are responsible for complying with Rule 17a-5, "Reports to be made by certain brokers and dealers". We have performed an evaluation of the Company's compliance with the requirements of Rule 17a-5 and the exemption provisions in Rule I 5c3-3(k) (the "exemption provisions") and of the 2013 Release adopting amendments to Rule 17a-5, including Footnote 74 of the 2013 Release. We have determined that the Company does not meet any of the exemption conditions of paragraph (k) of Rule 15c3-3 (i.e., paragraph (k)(I), (k)(2)(i) or (k)(2)(ii) but also (1) does not directly or indirectly receive , hold, or otherwise owe funds or securities for or to customers, other than money or other consideration received and promptly transmitted in compliance with paragraph (a) or (b)(2) of Exchange Act Rule 15c2-4 ("Rule 15c2-4"); does not carry accounts of or for customers; and (3) does not carry PAB accounts (as defined in Rule 15c3-3) and therefore is covered by Footnote 74 of the 2013 Release. Accordingly, based on our evaluation we make the following statements to the best knowledge and belief of the Company: - 1. We reviewed the provisions of Rule §15c3-3 and related guidance stated in the SEC Staffs FAQ and confirmed that the Company relied on Footnote 74 of the 2013 Release. - 2. The Company conducted no revenue business activities throughout the year ended December 31, 2020 without exception. The company intends to act as a municipal securities broker that receives commission override payments. - 3. The Company met the identified conditions for such reliance throughout the period January 1, 2020 to December 31, 2020 without exception. */77?) 1/f/2-1* Gary~ ~D-a-te \_ \_,\_,\_ \_\_\_\_\_\_ \_ Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.