# ETORO USA SECURITIES INC. X-17A-5 (2025-04-11) — Broker-dealer annual report - Company: ETORO USA SECURITIES INC. - Form: X-17A-5 - Filed: 2025-04-11 - Period: 2024-12-31 - Accession: 0001753042-25-000001 - CIK: 1753042 - File #: 8-70212 - Type: Broker-dealer - Material weakness: No - Auditor: Ernst & Young LLP - Auditor location: New York, NY - Contact: CHARLIE DI MAGGIO - Phone: 551-689-2232 - Signed by: CHARLIE DI MAGGIO (CONTROLLER / FINOP) Original filing: https://www.sec.gov/Archives/edgar/data/1753042/000175304225000001/eToro_USA_Sec_Public24.pdf --- {0}------------------------------------------------ # UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 OMB APPROVAL OMB Number: Expires: Estimated average burden hours per response: SEC FILE NUMBER # ANNUAL REPORTS FORM X-17A-5 PART III FACING PAGE Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 FILING FOR THE PERIOD BEGINNING \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ AND ENDING \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ MM/DD/YY MM/DD/YY A. REGISTRANT IDENTIFICATION # NAME OF FIRM: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ | NAME OF FIRM: _______________________________________________________________________ | | | | |---------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------|---------------------------------------|--------------------------------------------| | TYPE OF REGISTRANT (check all applicable boxes):
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.) | | | | | _____________________________________________________________________________________ | | | | | | (No. and Street) | | | | _____________________________________________________________________________________ | | | | | (City) | (State) | | (Zip Code) | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | _____________________________________________________________________________________ | | | | | (Name) | (Area Code – Telephone Number) | (Email Address) | | | | B.
ACCOUNTANT IDENTIFICATION | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing* | | | | | _____________________________________________________________________________________ | | | | | | (Name – if individual, state last, first, and middle name) | | | | _____________________________________________________________________________________ | | | | | (Address) | (City) | (State) | (Zip Code) | | _____________________________________________________________________________________ | | | | | (Date of Registration with PCAOB)(if applicable) | | | (PCAOB Registration Number, if applicable) | | | FOR OFFICIAL USE ONLY | | | | | | | | \* Claims for exemption from the requirement that the annual reports be covered by the reports of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 CFR 240.17a-5(e)(1)(ii), if applicable. Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. {1}------------------------------------------------ - - - - - - - - - - - - - - - - - - - - - - - - - - - {2}------------------------------------------------ Financial Statement With Report of Independent Registered Public Accounting Firm ETORO USA SECURITIES INC. December 31, 2024 This report is deemed CONFIDENTIAL in accordance with rule 17a-5(e)(3) under the Securities Exchange Act of 1934. A statement of financial condition, bound separately, has been filed with the Securities and Exchange Commission simultaneously herewith as a Public Document. {3}------------------------------------------------ # CONTENTS | CONTENTS | | |---------------------------------------------------------|----------| | | PAGE | | Report of Independent Registered Public Accounting Firm | 1 | | Financial Statement | | | Statement of Financial Condition | 2 | | Notes to the Financial Statement | 3 -
9 | | | | | | | This report is deemed CONFIDENTIAL in accordance with rule 17a-5(e)(3) under the Securities Exchange Act of 1934. A statement of financial condition, bound separately, has been filed with the Securities and Exchange Commission simultaneously herewith as a Public Document. # PAGE {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) ### Report of Independent Registered Public Accounting Firm To the Stockholder and the Board of Directors of eToro USA Securities Inc. #### Opinion on the Financial Statement We have audited the accompanying statement of financial condition of eToro USA Securities Inc. (the Company) as of December 31, 2024 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, 2024, 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 2021. April 11, 2025 {5}------------------------------------------------ # eToro USA Securities Inc. STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2024 # ASSETS | eToro USA Securities Inc.
STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 2024 | | | |------------------------------------------------------------------------------------|-----------------|--| | ASSETS | | | | Cash and cash equivalents | \$
6,212,405 | | | Deposit with clearing broker | 375,024 | | | Prepaid expenses and other assets | 118,942 | | | Due from clearing broker | 49,502 | | | Due from affiliate | 14,645 | | | Total assets | \$
6,770,518 | | | LIABILITIES AND STOCKHOLDER'S EQUITY | | | | Liabilities | | | # LIABILITIES AND STOCKHOLDER'S EQUITY | ASSETS | | |--------------------------------------------------------------|-----------------| | | | | Deposit with clearing broker | 375,024 | | | | | | | | | | | | | | LIABILITIES AND STOCKHOLDER'S EQUITY | | | Liabilities | | | Due to affiliate | 20,149 | | Accounts payable and accrued expenses | 208,176 | | Due to clearing broker | 35,148 | | Total liabilities | \$
263,473 | | Stockholder's equity | | | Common stock, \$0.0001 par value per share | | | 5,000 shares authorized, 1,000 shares issued and outstanding | 1 | | Additional paid-in capital | 28,730,566 | | Accumulated deficit | (22,223,522) | | Total stockholder's equity | 6,507,045 | | Total liabilities and stockholder's equity | \$
6,770,518 | {6}------------------------------------------------ # eToro USA Securities Inc. NOTES TO THE STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 2024 NOTE 1. ORGANIZATION AND NATURE OF BUSINESS eToro USA Securities Inc. (the "Company" or "we"), is a wholly-owned subsidiary of eToro US Trading LLC (the "Parent"), which is ultimately owned by eToro Group Ltd. The Company is registered as a broker-dealer with the Securities and Exchange Commission ("SEC") and is a member of the Financial Industry Regulatory Authority, Inc. ("FINRA") and the Securities Investor Protection Corporation ("SIPC"). The Company currently operates in one reportable business segment which represents principally all of the Company's capital markets activity as a brokerdealer. The Company has identified its CEO as the chief operating decision maker ("CODM"), who uses net income to evaluate the results of the business and to manage the Company predominantly in the forecasting and planning process. Additionally, the CODM uses excess net capital (see Note 8), which is not a measure of profit and loss, to make operational decisions while maintaining capital adequacy and liquidity for operations. The Company's operations constitute a single operating segment and therefore, a single reportable segment, because the CODM manages the business activities using information of the Company as a whole. The accounting policies used to measure the profit and loss of the segment are the same as those described in the summary of significant accounting policies (See note 2). The Company earns all of its revenues from customers in the US except for commissions which are earned from customers in the UK and amounted to \$6,614 for the year ended December 31, 2024. The measure of total segment assets used by the CODM is total assets as reported on the statement of financial condition. The Company operates as a non-exchange member and is approved to operate as a fully disclosed introducing broker-dealer brokering online transactions using mobile technology in listed equities, listed options, and exchange traded funds (ETFs) for retail users. Retail users have electronic access to the Company's trading platform, transactions are unsolicited and the Company works in an agency capacity, executing and clearing transactions through its clearing broker, Apex Clearing Corporation ("Apex"). The Company has a fractional shares program which allows customers to purchase and sell stock based on a dollar amount they select rather than the price of a whole share. This may be particularly advantageous for customers who are working with limited capital but want to build a highly diversified portfolio. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES # Basis of presentation {7}------------------------------------------------ ### NOTES TO THE STATEMENT OF FINANCIAL CONDITION # DECEMBER 31, 2024 The accompanying statement of financial condition has been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). # Use of estimates The preparation of financial statements in accordance 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 amounts of revenue and expenses during the reporting period. The Company based its estimates on historical experience, anticipated future trends and other assumptions we believe to be reasonable under the circumstances, which together form the basis for making judgements about the carrying values of assets and liabilities. Actual results could differ from those estimates. # Cash and cash equivalents Cash includes cash deposits at banks. The Company considers all demand and time deposits and all highly liquid investments with an original maturity of three months or less to be cash equivalents. There were no cash equivalents at December 31, 2024. # Prepaid expenses The Company classifies prepayments made under contracts as prepaid expenses and expenses these items over the contract terms. These prepaid expenses may include items such as insurance, regulatory fees, web services, data feeds and subscriptions. # Due from Clearing broker The Company introduces its customers on a fully disclosed basis to Apex. Balances in firm accounts at the clearing broker, excluding deposit accounts, that are due to the Company are recorded as due from clearing broker on the statement of financial condition. # Fractional Shares The Company offers customers the ability to purchase fractional shares facilitated by our clearing broker-dealer allowing users to purchase stocks on a dollar basis instead of a quantity basis. We do not own or control the stock inventory associated with the fractional program and therefore do not recognize the shares on the statement of financial condition. {8}------------------------------------------------ #### NOTES TO THE STATEMENT OF FINANCIAL CONDITION #### DECEMBER 31, 2024 # Deposit with clearing broker The Company holds deposits with its clearing broker as part of its introducing and clearing broker arrangements. # NOTE 3. INCOME TAXES Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance may be established to reduce the deferred tax asset to the level at which it is "more likely than not" that the tax asset or benefits will be realized. Realization of tax benefits of deductible temporary differences and operating loss carryforwards depends on having sufficient taxable income of an appropriate character within the carryback or carryforward periods. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained upon review by the taxing authority. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Interest and/or penalties related to income taxes are reported as a component of tax expense, if applicable. As of December 31, 2024, there are no uncertain tax positions. The Company is treated as a corporation for federal tax purposes. The Company is included in the consolidated federal income tax return of the Parent and is also included in certain combined state and local tax returns of eToro USA LLC. The Company's statement of financial condition recognizes the current and deferred income tax consequences that result from the Company's activities during the current and preceding periods pursuant to the provisions of ASC 740, as if the Company were a separate taxpayer rather than a member of the parent company's consolidated income tax return group. As of December 31, 2024, the Company had federal net operating losses of \$22,233,306 that do not expire. As of December 31, 2024, the Company's New Jersey net operating losses totaling \$22,222,889 will begin to expire in 2038. {9}------------------------------------------------ #### NOTES TO THE STATEMENT OF FINANCIAL CONDITION # DECEMBER 31, 2024 The Company incurred no income tax expense during 2024, resulting in an effective tax rate of 0%. This rate differs from the federal statutory rate of 21% primarily due to state taxes and the change in the valuation allowance on the Company's deferred tax assets. As of December 31, 2024, the Company's deferred tax assets of \$6,249,042 relate to net operating losses. Management believes that, based on the positive and negative evidence, including a history of tax losses and lack of carryback potential, it is more likely than not that the deferred tax assets will not be realized, and a full valuation allowance is appropriate. The valuation allowance as of December 31, 2024 was \$6,249,042, an increase of \$1,433,663 from the prior year. The Company is not currently under examination by income tax authorities in federal or state jurisdictions. However, because the Company will have net operating losses and credits carried forward in several jurisdictions, including federal and various state jurisdictions, certain items attributable to closed tax years will be subject to adjustment by applicable taxing authorities through an adjustment to tax attributes carried forward to open years. All tax returns will remain open for examination by the federal and key state taxing authorities for 3 years and 4 years, respectively, from the date of utilization of any net operating loss carryforwards or research and development credits. NOTE 4. RELATED PARTY TRANSACTIONS As of December 31, 2024 , the Company had a payable of \$20,149 due to eToro USA LLC, an affiliate, included in due to affiliate on the statement of USA LLC and pursuant to the agreement, the Company reimburses the affiliate for financial condition. The Company has an expense sharing agreement with eToro expenses such as base salaries, technology, information services, occupancy, and other expenses. The affiliate also pays certain direct expenses on behalf of the Company, which are allocated back to the Company. Intercompany amounts with this affiliate are settled periodically during the year when working capital permits such repayments. The expense sharing agreement clarifies that the Company has no obligation to reimburse or otherwise compensate the affiliate for any such costs other than as provided in the agreement. certain resources without charge, including IT-related services, the license of the The Company has an expense sharing agreement with the eToro Group Ltd, whereby the affiliate provides the Company with certain services and access to eToro trading platform to the Company, and the creation of marketing materials. The expense sharing agreement clarifies the expenses that would be borne by the Company, as well as the expenses that the affiliate would solely be liable for. The Company has no obligation to repay the affiliate for such costs. {10}------------------------------------------------ #### NOTES TO THE STATEMENT OF FINANCIAL CONDITION # DECEMBER 31, 2024 The Company has an expense sharing agreement with the Parent, whereby the Parent provides the Company with certain services including the license to the eToro options platform and related support and maintenance services for no charge. The Company has no obligation to repay the Parent for such costs. Pursuant to the agreement, the Parent may also provide other administrative services to the Company that the Company would be required to reimburse the Parent for. As of the beginning of the year, the Company had a payable to the Parent of \$362,078. In the current year, there were no costs allocated from the Parent pursuant to this expense sharing agreement. The Company pays certain direct expenses on behalf of the Parent, which amounted to \$87,216 in the current year and reduced the Company's payable to the Parent to \$274,862. During the year ended December 31, 2024 we paid the Parent \$274,862 thereby eliminating the due to eToro US Trading. The Company has a services agreement with the eToro UK Ltd, whereby dormant, however, it has incurred various professional services, business license During the year, the Parent approved and paid capital contributions to the the affiliate provides the Company with certain services and resources without charge, and the Company offers UK customers the ability to buy and sell U.S. listed options on securities through its options platform. As of December 31, 2024, the Company had a receivable of \$14,645 due from eToro USA Advisors Inc., an affiliate, related to certain expenses that the Company paid on behalf of eToro USA Advisors Inc. eToro USA Advisors Inc. is and registration related costs. NOTE 5. CONCENTRATIONS OF CREDIT RISK Company in the amount of \$8,500,000. Cash consists of cash in banks, primarily held at a financial institution which at times may exceed FDIC limits of \$250,000. As of December 31, 2024, the cash account balance exceeded federally insured limits by approximately \$5,962,405. The Company is subject to credit risk to the extent any financial institution with which we conduct business is unable to fulfill contractual obligations on our behalf. As we have not experienced any losses in our accounts and we believe that we have placed our cash on deposit with financial institutions which are financially stable, we do not have an expectation of credit losses for these arrangements. There were no material commitments or contingencies during the year. {11}------------------------------------------------ #### NOTES TO THE STATEMENT OF FINANCIAL CONDITION # DECEMBER 31, 2024 # NOTE 6. RISKS REGARDING COMMENCEMENT OF THE BUSINESS AND THE ABILITY OF THE COMPANY TO CONTINUE AS A GOING CONCERN The Company has generated operating losses during the year ended December 31, 2024. There are many risks related to any business including attracting and retaining new employees, creating an efficient operations platform, acceptance by the marketplace of the business created, and its ability to generate profitable operations and positive cash flows. While management has created a business in trading equities, ETFs, and options contracts, the Company presently does not have the profitability to support the Company's operations, however financial support from the Parent has provided the Company with the capital necessary to support the Company's operations. If the Company is unable to generate adequate sales and achieve profitable operations, eToro Group Ltd. has the ability to and has agreed to provide the necessary financial support to the Company. NOTE 7. SUBSEQUENT EVENTS available to be issued, April 11, 2025. The Company has evaluated all events and transactions that occurred after December 31, 2024 through the date that the statement of financial condition was NOTE 8. NET CAPITAL REQUIREMENT The Company's business is subject to significant regulation by various governmental agencies and self-regulatory organizations, including the SEC and FINRA. Such regulation includes, among other things, periodic examinations by these regulatory bodies to determine whether the Company is conducting and reporting its operations in accordance with the applicable requirements of these organizations. As a registered broker-dealer, the Company is subject to the SEC's Net Capital Rule (Rule 15c3-1). Pursuant to the Company's membership agreement with FINRA, the Company maintains a minimum "Net Capital" equal to the greater of \$100,000 or 6-2/3% of "Aggregate Indebtedness," as defined. Rule 15c3-1 requires that the ratio of aggregate indebtedness to net capital shall not exceed 15 to 1. Advances to affiliates, dividend payments and other equity withdrawals are subject to certain notification and other provisions of the net capital rule of the SEC and other regulatory bodies. As of December 31, 2024, the Company's "Net Capital" was \$6,348,255 and the "Required Net Capital" was \$100,000. As of December 31, 2024, the Company's ratio of aggregate indebtedness to net capital was 0.04 to 1. {12}------------------------------------------------ #### NOTES TO THE STATEMENT OF FINANCIAL CONDITION ### DECEMBER 31, 2024 The SEC Division of Examinations ("DOE") recently completed an examination of the Company. In connection therewith, DOE issued the firm an examination report (the "Report") identifying certain findings regarding the Company's compliance with certain provisions of the federal securities laws as well as other applicable rules and regulations (the "Findings"). The Report claims deficiencies and weaknesses associated with the Company's compliance with SEC Rule 15c3-1 and SEC Rule 15c3-3 due to its flow of funds model, together with related recordkeeping and reporting requirements. The Company disagrees with the Findings, however is currently in process of implementing a revised flow of funds model which management believes will minimize the risk of any further action resulting from the Findings. The Report is a function of DOE's routine examination function and does not constitute an enforcement action or a referral to the SEC Division of Enforcement ("Enforcement"). As a result of the Findings, management determined there was no impact to the Company's financial position or computation of net capital as of December 31, 2024, and no impact to the results of the Company's operations or cash flows for the year then ended. The DOE Findings are not findings or conclusions of, or in any way binding on, the SEC or any of its divisions or offices and the Report does not constitute a final determination as to the matters addressed therein. Following the Company's formal response to the Report, there is no guarantee that the Company will receive any further correspondence regarding the Report, or that any further action will be taken with respect to this matter. If the DOE disagrees with the Company's response or deems the Company's revised flow of funds, once implemented, to be inadequate, the Company may become subject to higher net capital requirements or other potential requirements or actions. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.