# TCG CAPITAL MARKETS L.L.C. X-17A-5 (2023-02-22) — Broker-dealer annual report - Company: TCG CAPITAL MARKETS L.L.C. - Form: X-17A-5 - Filed: 2023-02-22 - Period: 2022-12-31 - Accession: 0001725013-23-000001 - CIK: 1725013 - File #: 8-70061 - Type: Broker-dealer - Material weakness: No - Auditor: Ernst & Young LLP - Auditor location: New York, NY - Contact: Rafael Beck - Phone: 212-897-1690 - Signed by: Rafael Beck (Chief Financial Officer) Original filing: https://www.sec.gov/Archives/edgar/data/1725013/000172501323000001/tcg22s-1.pdf --- {0}------------------------------------------------ | | | | | | 0MB APPROVAL | | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------|------------------------------------|-----------------------------------------|-----------------|-------------------------------------------------------------------------------------------------------|--| | UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 | | | | | 0MB Number: 3235-0123
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REPORTS | | | SEC FILE NUMER | | | | | | | | 8-
70061 | | | | | | | FORM X-17A-S | | | | | | | | PART Ill | | | | | | Information Required Pursuant to Rules 17a-S, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 | | FACING PAGE | | | | | | FILING FOR THE PERIOD BEGINNING | | __
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AND ENDING | | | 12/31/22 | | | | | MM/D0/YY | | | MM/DD/YY | | | | A. REGISTRANT IDENTIFICATION | | | | | | | NAM!: OF FIRM : | TCG Capital Markets L.L.C. | | | | | | | ~ Broker-dealer
□ Check here if respondent is also an OTC deri atives dealer
ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.)
1 Vanderbilt Avenue, Suite 3400 | □ Security-based swap dealer | | □ Major security-based swap participant | | | | | | | (No. and Street) | | | | | | New York | | NY | | | 10017 | | | (City) | | (State) | | | (Zip Code) | | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | | Rafael Beck | | (212) 897-1690 | | | rbeck@integrated.so1utions | | | (Name) | | (Area Code - Telephone Number) | | (Email Address) | | | | | 8. ACCOUNTANT IDENTIFICATION | | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing* | | | | | | | | Ernst & Young LLP | | | | | | | | | (Name - if individual, state last, first, and midd le name) | | | | | | | One Manhattan West | | New York | | NY | 10001 | | | (Address) | (City) | | | (State) | (Zip Code) | | | 10/20/2003 | | 42 | | | | | | (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 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 appl icable. 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 AFFTRMATIO** I, Rafael Beck , swear (or affirm) that, to the best of my knowledge and belief, the fi nancial report pertain ing to TCG Capital Markets L.L.C. as of 12/31 /22 , is true and correct. further swear (or affirm) that ne ither 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. **Signature** Chief Financial Officer **Title** ST ATE OF TEXAS COUNTY OF HARRIS 1\1\1111,,, ! I -- 1/111\I **Abril Murray** ID NUMBER 13285140-3 COMMISSION EXPIRES **January** 5, 2025 Notarized online using audio-vrdeo communication 02/2V2023 {2}------------------------------------------------ #### **This filing\*\* contains (check all applicable boxes):** - **CE)** (a) Statement of financial condition. - **CE)** (b) Notes to unconsolidated or consolidated statement offinancial condition, as applica ble. - **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. - □ (e) Statement of changes in stockholders' or partners' or members' or sole proprietor's equity, as applicable. - **D** (t) Statement of changes in liabilities subordinated to claims of creditors. - **D** (g) Notes to unconsolidated or consolidated financia l statements,, as applicable. - **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. - □ G) 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 A to 17 CFR 240.18a-4, as applicable. - **D** (I) Computation for Determination of PAB Requirements under Exhibit A to§ 240.15c3-3. - □ (m) Information relating to possession or control requirement s for customers under 17 CFR 240.15c3-3. - □ (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) Reconci liations, including appropriate explanations, of the FOCUS Report wit h 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 appl icable, 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 offinancial condition. - **CE]** (q) Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as appl icable. - **D** (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - □ (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as appl icable. - **CE)** (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. - □ ( ) 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. - □ (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. - □ (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-1e or 17 CFR 240.17a-12, as applicable. - **D** (y) Report describing any material inadequacies found to exist or found t o have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k). (z) Other:-------------------------------------- - **D** *\*\*To request confidential treatment of certain portions of this filing, see 17 CFR 240.l 7a-5{e}{3} or 17 CFR 240.18a-* *7(d){2}, as applicable.* {3}------------------------------------------------ Statement of Financial Condition December 31, 2022 {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) Ernst & Young LLP Tel: +1 212 773 0000 One Manhattan West ey.com New York, NY 10001 #### **Report of Independent Registered Public Accounting Firm** To the Member and Management of TCG Capital Markets L.L.C. #### **Opinion on the Financial Statement** We have audited the accompanying statement of financial condition of TCG Capital Markets L.L.C. (the Company) as of December 31 , 2022 and the related notes (the "financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company at December 31 , 2022, in conformity with U.S. generally accepted accounting principles. #### **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 statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We have served as the Company's auditor since 2018. February 21 , 2023 {5}------------------------------------------------ ### **Statement of Financial Condition December 31, 2022** | Assets | | |---------------------------------------|------------| | Cash and cash equivalents | 34,953 390 | | Fees recei able | 1,028,994 | | Prepaid expense | 181 514 | | Other asset | 16 024 | | Total assets | 36,179,922 | | Liabilities and Member's Equity | | | Liabilities | | | Fees payable to sub-plac rnent agents | 793,048 | | Due to affiliates | 3 418 | | Accru d exp nses | 31 ,216 | | Total liabilities | 827,682 | | Member's equity | 35,352 240 | | Total liabilities and member's equity | 36,179 922 | The accompanying notes are an integral part of these financial statements. {6}------------------------------------------------ ### **Notes to Statement of Financial Condition December 31 , 2022** #### **1. Organization and Business** TCG Capital Markets L.L.C. (the "Company"), a wholly owned subsidiary of Carlyle lov stm ot Management, L.L.C. (the "Parent', or the "Member"), is a limited liability company formed under the laws of the State of Delaware. The Company is a broker~dealer registered with the Securities and Exchang Commission (th "SEC") and a memb r of the Financial Industry R gulatory Authority ("FINRA"). The Company acts as an agent with respect to the offer and sale of interests in d bt, collateralized loan obligations, equity securities and loans of corporate issu rs and special purpose vehicles in transactions in securities and other instruments that are exempt from registration under the Securities Act of 1933. The primary focus of the Company is to originate and syndicate loans underwrite or act as a private placement agent of securities of both third parties and affiliated portfolio companies or entities. The liability of the M mber is limited to the capital h ld by the Company. #### **2. Summary of Significant Accounting Policies** #### **Basis of Presentation** These financial statements were prepared in conformity with accounting principles generally accepted in the United States of America ( 'U.S. GAAP") 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. ctual results could differ from these estimates. #### **Revenue Recognition** The Company recognizes r enue in accordance with ASC Topic 606 *Revenue from ontracl with Customers.* The revenue recognition guidance requires that an entity recognize re enue 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 fi ve-step model to (a) identify the contract(s) with a customer, which includes assessing the collectability of the consideration to which it will be entitled in exchange for the goods or services transferred to the customer, (b) identify the perfonuance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and ( e) recognize revenu 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 cumulati e revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. Revenue from contracts with customers may include comrruss1on income and fees from origination, syndication distribution and underwriting services. The recognition and measurement of re enue is based on the assessment of indi idual contract terms. Significant judgment is required to determine 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 appli d due to uncertain future events. {7}------------------------------------------------ ### **Notes to Statement of Financial Condition December 31 , 2022** *DtsMbution f ees.* The Company may enter into arrangements with managed accounts or other pooled investment ehicles (funds) to distribute shares to investors. The Company may recei e distribution ◄ es paid by the fund up front, over tim , upon the inv stor's exjt from the fund (that is a contingent deferred sales charge), or as a combination thereof. The Company believes that its perfonnance obligation is the sale of securities to investors and as such this is fulfilled on the trade date. Any fixed amounts are recognized on the trade date and variable amounts are recognized to the extent it is probable that a significant re cnue reversal will not occur once the uncertainty is resol ed. For variable amounts as the uncertainty is dependent on the value of the shares at future points in time as well as the length of time the investor remains in the fund, both of which are highly susceptible to factors outside the Company's influence, the Company does not belie e that it can o ercome this constraint until the market value of the fund and the investor activities are known, whkh usually occurs on a monthly or quarterly basis. Distribution fees recognized in the current period are primarily related to performance obligations that ha e been satisfied in prior periods. The Company typically does not charge any fees to the extent that it distributes shares of funds that are managed by affiliates. *Underwriting fees.* The Company underwrites securities for affilfated entities that want to raise funds through a sale of securities. Revenues are earned from fees arising from securities offerings in which the Company acts as an underwriter. Re enue is recognized on the trade date (the date on which the Company sells the securities to customers) for the portion the Company has sold to customers. The Company has determined that the trade date is the appropriate point in time to recognize re enue for securities underwriting transactions as there are no significant actions which the Company n eds to take subsequent to this date and th purchas r obtains the control and benefit of the capital markets offering at that point. Underwriting costs that are deferred are recognized in expense at the time the related revenues are recorded. In the event that transactions are not completed, and the securities are not issued, the Company immediately expenses those costs. *Marketing f ees.* The Company earns fees by providing marketing services to affiliated entities pursuant to placement agent agr ements. The customer in these contracts is generally th investment advisor or the fund entity that is retaining the Company as a placem nt agent. The Company considers the perfonnance obligation in these contracts to be the promise to provide placement agent services, , hich it satisfies at a point in time ,,; hen the customer recei es and accepts the subscriptions submitted by the Company. Th transaction price is the amow1t of consideration to which the Company expects to be entitled in exchange for transferring promised services to a customer. For contracts with affiliated closed-end private equity funds, the Company receives marketing fees that are generally ranging up to 0.20% of accepted investor capital commitments. The Company recognizes re enue when the customer accepts the investor commitment and it bas a present right to payment. *Platfonn f ees.* For contracts with affiliated business development companies ("BDCs"), the Company r c ives quarterly platform fees for its servic s in th capital raising proc ss. These platfonu fees generally range from 0.0625% to 0.1875% of the in estor's average aggregate drawn capital and is payable quarterly until the end of the in estrnent period (3 years from the final closing date, subject to a on -year extension). Platform fi es earn d over the contract lifi repres nt variable consideration because the consideration the Company is entitled to varies based on the investor's average drawn capital balance at future points in time and the length of time the investor {8}------------------------------------------------ ### **Notes** to **Statement of Financial** Condition **December 31 , 2022** remains a shareholder of the BDC. Gi en that the platform fee basis is susceptible to market factors outside of the Company's influence, platform fees are constrained. Accordingly, estimates of future period platform fees are generally not includ d in the transaction price because thes estimates are constrained. Th Company incurs costs in connection with its use of sub-placement ag nts for th solicitation of investors and otherwise to assist the Company in performing its obligations under the placement agent agreements. The Company concluded that it controls the services provided by sub-placement agents before they are transferred to the customer and therefore the Company is a principal. Accordingly, the Company recognizes fees payable to sub-placement agents on a gross basis as mark ting fee revenue for the amount recei ed from investors and a corresponding expense for the obligation to the sub-placement agent. Interest income is recognized on an accrual basis. #### **Fees Receivable** Fees receivable represent amounts due from the Company's affiliates pursuant to the terms of Placement Agent Agreements. The entire outstanding receivable balance is with entities that are under common control. Fees receivable amounted to \$4 020,616 and 1,028,994 as of December 31 , 2021, and 2022, respecti ely. #### **Cash and Cash Equivalents** Cash includes cash held at banks. The Company considers investments in money market mutual funds to be cash equi aJeots. As of December 31 , 2022, the Company held a cash equivalent amounting to 34,953 390 with one money market mutual fund. #### **Prepaid Expense and Other Asset** The Company prepaid some of its FINRA renewal fees for 2023 and the amount is reported as a prepaid expense on the statement of financial condition. A deposit with Central Registration Depository (' CRD") is includ d in other asset on the statement of financial condition. FINRA operates the CRD and uses the funds deposited to process registrations and other regulatory assessments of the Company. #### **Income Taxes** Since the Company is a single member limited liability company, it is disregarded for income tax purposes and management made an election not to allocate tax expense from the Parent. Therefore, no ti deral, state, or local income taxes are provided or considered for the purpose of the financial statements. As of December 31 , 2022, managem nt has determined that the Company had no uncertain tax positions that would require financial statement recognition. This detem1ination is subject to ongoing evaluation as facts and circumstances may require. #### **Credit Losses** The Company follows the guidance in ASU 20 l 6-13 Accounting for Financial Instruments - Credit Losses (Topic 326). ASU 2016-13 requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience current conditions, and reasonabl.e and supportable forecasts. Under the standard, the allowance for credit losses must be deducted from the amortized cost of the financial asset to present the net amount {9}------------------------------------------------ ### **Notes to Statement of Financial Condition December 31 , 2022** expected to be collected. The statement of operations may reflect the measurement of credit losses for financial assets as well as the expected increases or decreases of expected credit losses that have taken place during th period. As of December 31 , 2022, management has d termined that th Company's expected credit losses are de minimi<: and that they do not require financial statement recognition. #### **Foreign Currency Remeasurement** Assets and liabilities denominated in foreign currencies are remeasured into U.S. dollar amounts at the date of aluation. Transactions denominated in foreign currencies including income and expenses, are remeasured into U.S. dollar amounts on the date of those transactions. #### **3. Transaction with Related Parties** The Company maintains an administrative services agreement with the Parent. Pursuant to the agreement the Parent pro ides accounting, administration, information technology, compliance services, offic space, employee servic s and oth r services. The Parent provides th se services at no cost to the Company. The Company maintains a letter agreement with TCG Senior Funding L.L.C, an affiliate (or "TCGSF"). In accordance with the letter agreement, the Company and TCGSF agreed that TCGSF alone shall bear, in full, any and all facility fees payable to Mizuho Bank, Ltd. (''Mizuho") under a revolving credit facility agreement entered into by the Company TCGSF and Mizuho (see ote 5). During the year ended Dec mber 31 2022 TCGSF incurr d 0.8 million of facility fees due to Mizuho. All transactions with related parti s are s ttl d in the normal course of business. Th 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. Regulatory Requirements** The Company is subj ct to SEC Uniform Net Capital Rul l 5c3- l und r the Securities Exchange Act of 1934 and has elected to compute its net capital requirements in accordance witl1 the Alternative et Capital Method. Under the alternative method, net capital, as defined, shall not be less than 250,000. As of December 3 l, 2022, the Company had net capital of approximately \$34,220,000 which exceeded the required net capital by approximately \$33,970,000. The Company does not hold customers' cash or securities, and therefore has no obligations under SEC Rule 15c3-3 und r the Securities Exchange Act of 1934. #### **5. Revolving Credit Facility** In December 2018, the Company and TCGSF established a revolving line of credit, primarily intended to support certain lending activities within the Global Credit segment at the Parent. Th credit facility, which was amended in December 2020 and September 202 l , is scheduled to mature in September 2024, and has a capacity of \$250 million. Principal amounts outstanding under the facility accrue interest, at the option of the borrowers either (a) at an alternate base rate plus applicable margin not to exceed 1.00%, or (b) at the Eurocurrency rate plus an applicable margin not to exceed 2.00% (as of December 31 , 2022, the interest rat was 8.5%). During the year ended {10}------------------------------------------------ ### **Notes to Statement of Financial Condition December 31 , 2022** December 3 1, 2022 the Company and TCGSF did not draw on the credit facili ty and there is no outstanding balance as of December 31 2022. Under the terms of the credit facility the Company is not liable for amounts drawn by TCGSF. #### **6. Commitments and Contingencies** In the nonnal course of business, the Company enters into underwriting cornmitm nts. There were no such underwriting commitments that were open at December 31 , 2022. The Company may also enter into contracts or agreements that contain indemnjfications or warranties. Future e ents could occur that lead to the execution of these pro isions against the Company. Based on its history and experience, the Member considers the likelihood of such an event to be remote; however, the maximum potential exposure is unknown. #### 7. **Subordinated Borrowings** In the normal course of business, the Company may borrow funds from related parties. The funds are a ailable in computing net capital under the SEC's uniform net capital rule to have sufficient capital to participate in certain underwriting commitments. To the extent that such borrowings are required for the Company 's continued compliance with minimum net capital requirements, they may not be repaid. During the year ended December 3 I, 2022, the Company did not borrow funds from related parties and there were no such outstanding subordinated borrowings that were open at December 31 , 2022. #### **8. Legal Matters** The Company may be a party to btigation in the ordinary course of business. The Member does not belie e that the outcome of current matters if any, will materially affect the Company or the financial statements. #### **9. Concentrations** As of December 31 2022, all cash deposits are held by one financial institution and therefore are subject to the credit risk at that financ ial institution. The Company has not experienced any losses in such accounts and does not believe ther to b any significant credit risk with respect to these deposits. The Company does not consider itself to be at risk with respect to its cash equivalents though it is invested in a single money market mutual fund. Fees receivable from two customers amount to approximately 1,029,000, representing aJI of the fees receivable on th statement of financial condition as ofDecemb r 31, 2022. #### **10. Economic Risks** Our business may be significantly affected by conditions in the global financial markets and economic conditions or events throughout the world that are outside of the control of management, including, but not limited to, changes in interest rates, availability and cost of credit, infl ation rates, availability and cost of energy, economic uncertainty, slm: down in global growth, chang sin laws {11}------------------------------------------------ ### **Notes to Statement of Financial Condition December 31 , 2022** (including laws relating to taxation and regulation in the financial industry), disease, pandemics or other severe public health events, trade barriers, commodity pric s, currency exchange rates and controls, national and international political circumstances, (including government shutdowns, wars, terrorist acts or security operations), geopolitical tensions and instability, social unrest, supply chain pressures, and the effects of climate change, and events particular to the capital markets industry. There may also be limited opportunities to participate in transactions due to, among other things, lower valuations, a lack of potential buyers with the financial resources to pursue acquisitions, and limited ability to conduct initial public offerings or follow-on offerings in debt and equity capital markets. Such events are beyond the Company's control, and the likelihood that they may occur and the effect on the Company cannot be predicted. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.