# DV SECURITIES, LLC X-17A-5 (2022-03-30) — Broker-dealer annual report - Company: DV SECURITIES, LLC - Form: X-17A-5 - Filed: 2022-03-30 - Period: 2021-12-31 - Accession: 0001785508-22-000005 - CIK: 1785508 - File #: 8-70393 - Type: Broker-dealer - Material weakness: No - Auditor: RSM US LLP - Auditor location: Chicago, IL - Contact: Richard J. Horgan - Phone: 312-878-6785 - Email: rhorgan@dvsecurities.com - Website: dvsecurities.com - Signed by: Richard J. Horgan (Chief Financial Officer) Original filing: https://www.sec.gov/Archives/edgar/data/1785508/000178550822000005/DVSFinCond.pdf --- {0}------------------------------------------------ # **DV Securities, LLC** Statement of Financial Condition December 31, 2021 Filed as PUBLIC in accordance with Rule 17aͲ5(d) under the Securities Exchange Act of 1934. {1}------------------------------------------------ #### **UNITED STATES SECURITIES AND EXCHANGE COMMISSION** Washington, D.C. **20549** | ANNUAL REPORTS | |----------------| | FORM X-17A-5 | | PART Ill | 0MB APPROVAL 0MB Number: 3235-0123 Expires: Oct. 31, 2023 Estimated **average** burden hours per response: 12 | | SEC FILE NUMBER | | |--|-----------------|--| | | 8-70393 | | FACING **PAGE** Information Required Pursuant to Rules 17a-S, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 FILING FOR THE PERIOD BEGINNING **0 1/01 /21** AND ENDING **12/31** f 21 MM/DD/VY MM/DD/VY **A. REGISTRANT IDENTIFICATION** NAMEOFFIRM: DV SECURITIES, LLC TYPE OF REGISTRANT (check all applicable boxes): ~Broker-dealer O Security-based swap dealer □ Major security-based swap participant □ Check here if respondent is also an OTC derivatives dealer ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) ## 216 W JACKSON BLVD 3RD FLOOR | | (No. and Street) | | | |--------------------------------------------------|------------------------------------------------------------|--------------------------------------------|------------| | CHICAGO | IL | | 60606 | | (City) | (State) | | (Zip Code) | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | Richard J. Horgan | 312-878-6785 | rhorgan@dvsecurities.com | | | (Name) | (Area Code-Telephone Number) | (Email Address) | | | | B. ACCOUNTANT IDENTIFICATION | | | | RSM US | (Name - if individual, state last, first, and middle name) | | | | 30 S Wacker Drive, Suite 3300 Chicago | | | | | | | IL | 60606 | | (Address)
09/24/2003 | (City) | (State)
49 | (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-S(e)(l)(ii}, if applicable. Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid 0MB control number. {2}------------------------------------------------ #### **OATH OR AFFIRMATION** | I, Richard J. Horgan | | swear (or affirm) that, to the best of my knowledge and belief, the | | | |-------------------------------------------------------------------------------------------------------------------------------------|----|-----------------------------------------------------------------------------------|--|--| | financial report pertaining to the firm of ov Securities, LLC | 2~ | as of | | | | 12/31 | | 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. | | | | | | | | r
Signature: ~ vit+.-,( ~ th, | | | Title: Chief Financial Officer #### This filing\*\* contains (check all applicable boxes): - **!!ii** (a) Statement of financial condition. - !!ii (b) Notes to consolidated statement of financial condition. - □ (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 5-X). - D (d) Statement of cash flows. - D (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - 0 (f) Statement of changes in liabilities subordinated to claims of creditors. - □ (g) Notes to consolidated financial statements. - □ (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.lBa-1, as applicable. - □ (i) Computation of tangible net worth under 17 CFR 240.18a-2. - □ (j) 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 requirements 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) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-l, 17 CFR 240.18a-1, or 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences exist. - D (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - **l!!I** (q) Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. - D (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.lBa-7, as applicable. - D (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - **l!!I** (t) Independent public accountant's report based on an examination of the statement of financial condition. - D (u) Independent public accountant's report based on an examination of the financial report or financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable. - D (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - D (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.lBa-7, as applicable. - □ (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-le or 17 CFR 240.17a-12, as applicable. - D (y) Report describing any material inadequacies found to exist or found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k). □ (z) Other: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \_ - - \*\*To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5(e)(3) or 17 CFR 240.18a-7(d)(2), as applicable. {3}------------------------------------------------ #### **Contents** | Report of Independent Registered Public Accounting Firm | | |---------------------------------------------------------|-----| | Statement of financial condition | | | Statement of financial condition | 2 | | Notes to statement of financial condition | 3Ͳ7 | |
| | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) RSMUSLLP #### **Report of Independent Registered Public Accounting Firm** Member of DV Securities, LLC of #### **Opinion on the Financial Statement Opinion on Statement** We have audited the accompanying statement of financial condition of DV Securities, LLC (the Company) as of December 31, 2021, and the related notes (collectively, the financial statement). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company as of December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. accompanying of of LLC Company) 2021, and notes the the of 31, 2021, generally the of #### **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 U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. This financial statement public counting registered with Public Accounting States) to the laws of the PCAOB.We conducted accordance 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. 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. we plan the audit to error fraud. Company not required of internal control over financial we are of not over financial 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 presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion. procedures to risks of the respond those risks. Such disclosures in the management, well statement. We have served as the Company's auditor since 2020. since Chicago, Illinois March 29, 2022 March 29, THE **POWER** OF **BEING** UNDERSTOOD AUDIT I TAX I CONSULTING {5}------------------------------------------------ #### **DV Securities, LLC** ### **Statement of Financial Condition December 31, 2021** | Assets | | |------------------------------------------------------------------------|-------------------| | Cash | \$
24,750,000 | | Receivable
from
clearing
organizations,
net |
5,043,000 | | Securities
purchased
under
agreements
to
resell,
net |
6,000 | | Other
assets | 52,000 | | Total
assets | \$
29,851,000 | | Liabilities
and
Member's
Equity | | | Liabilities: | | | Accounts
payable
and
accrued
expenses | \$

193,000 | | Total
liabilities | 193,000 | | Member's
equity |
29,658,000 | | Total
liabilities
and
member's
equity | \$
29,851,000 | | | | See notes to statement of financial condition. {6}------------------------------------------------ #### **Note 1. Nature of Operations and Significant Accounting Policies** **Nature of operations:** DV Securities, LLC, (the Company), is a wholly owned subsidiary of DV Group, LLC (DV Group) and was formed in 2016 to engage in trading in futures, options on futures, equities, and equity options on U.S. exchanges.The Company was approved as a Netting Member by the Fixed Income Clearing Corporation on February 17, 2021, to expand into the business of buying, selling, and dealing in securities backed or guaranteed by the full faith and credit of the U.S. Government. In August 2021, the Company transferred its trading activities in futures, options on futures, equities, and equity options to DV Equities, LLC, a company owned by DV Group and registered as a U.S. brokerͲdealer. The firm has no customers. **Accounting policies:** The Company followsthe accounting standardsset by the Financial Accounting Standards Board (FASB). The FASB sets generally accepted accounting principles (GAAP) that the Company follows to ensure consistent reporting of financial condition. **Use of estimates:** The preparation of statement of financial condition in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the statement of financial condition. Actual results could differ from those estimates. **Securities and derivative financial instruments:**Transactions in securities and derivative financial instruments are recorded on trade date. Securities owned by and sold, not yet purchased are carried at fair value. Contractual interest on securities owned and secured financing are recognized on an accrual basis. Amounts receivable and payable for securities transactions that have not reached their contractual settlement date are recorded net on the statement of financial condition in receivable from clearing organization. **Offsetting of amounts related to certain contracts:**When the requirements are met, the Company offsets certain fair value amounts recognized for cash collateral receivables and payables against amounts recognized for resale and repurchase agreements with the same counterparty.See Note 5 for additional details. **Resale and repurchase agreements:**Securities purchased under agreements to resell (reverse repurchase or resale agreements) and securities sold under agreements to repurchase (repurchase agreements) are accounted for as collateralized financing transactions and are carried at the amounts at which the securities will subsequently be resold or reacquired as specified in the respective agreements; such amounts include accrued interest.It is the policy of the Company to obtain possession of collateral with a market value equal to or in excess of the principal amount loaned under resale agreements. The Company is a netting member of the Government Securities Division of FICC, an industry clearinghouse for repurchase and reverse repurchase agreements and fixed income securities. As a netting member of the FICC, the Company is held to a minimum capital requirement of \$25,000,000. At the end of each business day, for every trade submitted to and matched by the FICC, the transaction is novated to the FICC, thereby the FICC becomes the Company's counterparty. At December 31, 2021, included in securities purchased under agreements to resell, net on the statement of financial condition are amounts under contracts with the FICC. In accordance with applicable accounting guidance, netting has been applied to the FICC repurchase balance of \$6,000. **Receivable from Clearing Organizations:** Amounts receivable from clearing organizations represents the cash balances and related amounts, including unsettled trades and interest owed by or to clearing organizations arising from securities transactions. **Other Assets:**Other assets of \$52,000 primarily consistent of prepaid assets, to which the Company paid in advance for services that will be received in the future. **Credit Losses on Financial Assets:**The Company evaluates financial assets that are measured at amortized cost for credit losses under the Current Expected Credit Losses ("CECL") model.Financial assets evaluated include cash and receivablesfrom clearing organizations.Expected credit losses are measured based on historical experience, current {7}------------------------------------------------ conditions and forecasts that affect the collectability of the reported amount.Due to the short duration of the financial assets, there are no material estimates of credit losses related to these financial assets as of December 31, 2021. Transactions involving securities purchased under agreements to resell and securities sold under agreements to repurchase are accounted for as collateralized financing transactions and are carried at the amounts at which the securities will subsequently be resold or reacquired as specified in the respective agreements;such amounts include accrued interest. It is the policy of the Company to obtain possession of collateral with a fair value equal to or in excess of the principal amount loaned under resale agreements. Collateral is valued daily, and the Company may require counterparties to deposit additional collateral or return collateral pledged where appropriate. In consideration of CECL model, the Company requires the borrower to continually adjust the amount of the collateral securing the financial asset(s) as a result of fair value changes in the collateral. In those situations, the Company, as a practical expedient, compares the amortized cost basis with the fair value of collateral at the reporting date to measure the estimate of expected credit losses. The Company has determined that the expectation of nonpayment of the amortized cost basis is zero as the borrower continually replenishes the collateral securing the financial asset such that the fair value of the collateral is equal to or exceeds the amortized cost basis of the financial asset and the Company expectsthe borrower to continue to replenish the collateral as necessary. Resale and repurchase activities are generally transacted under master netting agreements that give the Company the right, in the event of default, to liquidate collateral held. The counterparties to all resale and repurchase transactions at December 31, 2021, are with the Government Securities Division of the Fixed Income Clearing Corporation (FICC) and an affiliate. When the requirements are met, the Company offsets resale and repurchase agreements executed with the same counterparty and the same settlement date. #### **Note 2. Receivable from Clearing Organizations** Receivable from clearing organizations consists of the following as of December 31, 2021: | | Receivables | | | | | |----------------------------------------|-----------------|--|--|--|--| | Receivable from clearing organizations | \$
5,043,000 | | | | | | Total | \$
5,043,000 | | | | | #### **Note 3. Fair Value** Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company utilizes valuation techniques to maximize the use of observable inputs and minimize the use of unobservable inputs. Assets and liabilities recorded at fair value are categorized within the fair value hierarchy based upon the level of judgment associated with the inputs used to measure their value. The fair value hierarchy givesthe highest priority to quoted pricesin active marketsfor identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Inputs are broadly defined as assumptions market participants would use in pricing an asset or liability. The Company'sfinancial instruments are reported at fair value using quoted market prices. ExchangeͲtraded futures and options on futures contracts are valued using exchange settlement prices. Financial instruments owned and financial instruments sold, not yet purchased that are actively trading and traded on a national securities exchange are valued using the last reported sales price on the day of valuation. Municipal and Corporate Bonds are based on fair value based on the indicative prices obtained from an independent pricing authority plus accrued interest. U.S. Government securities are based on fair value using recently executed transactions and market price quotations in active markets plus accrued interest. The carrying value of shortͲterm financial instruments, including securities purchased under agreements to resell and securities sold under agreements to repurchase are recorded at contract value which approximates the fair value of these instruments due to their shortͲterm nature and level of collateralization. There were no Level 1, 2 or 3 investments as of December 31, 2021. {8}------------------------------------------------ #### **DV Securities, LLC Notes to the Statement of financial condition** #### **Note 4. Commitments and Contingencies** The Company is subject to various legal proceedings and claims that arise in the ordinary course of business. The Company defends against these claims and, in the opinion of management the results of these legal matters will not result in any material adverse effect on the Company's financial position. #### **Note 5. Offsetting** The Company holds resale and repurchase agreementsthat are either eligible for offset in the statement of financial condition and/or are subject to master netting arrangements or similar agreements. Master netting arrangements allow the counterparty to net applicable collateral held on behalf of the Company against applicable liabilities or payment obligations of the Company to the counterparty. These arrangements also allow the counterparty to net any of its applicable liabilities or payment obligations they have to the Company against any collateral sent to the Company. The following tables provide disclosure regarding the effect or potential effect of offsetting of recognized derivative instruments, resale and repurchase agreements presented in the statement of financial condition: | | | Gross Amounts of
Recognized Assets and
Liabilities | Gross Amounts
Offset in the | Net Amounts of
Recognized
Assets and
Liabilities
Presented in the
Statement of
Financial
Condition | | Gross Amounts Not
Offset in the Statement
of Financial Condition | | | | | | | |-----------------------------------------------------------------|--|----------------------------------------------------------|--------------------------------|-------------------------------------------------------------------------------------------------------------------------|---------|------------------------------------------------------------------------|---------|--|--------------------------|--|---------------|---------| | | | | Statement of
Financial | | | Financial | | | Collateral
Received / | | | | | | | | Condition | | | Instruments | | | Pledged | | Net
Amount | | | Assets
Securi ties purchased under agreements to resell* | | \$
24,969,000 | \$(24,963,000) \$ | | 6,000 | | \$
Ͳ | | Ͳ \$ | | | \$6,000 | | Liabilities
Securi ties sold under agreements to repurchase* | | \$
(24,963,000) | \$
24,963,000 | | \$
Ͳ | | Ͳ \$ | | Ͳ \$ | | | Ͳ \$ | Located in Securities purchased under agreements to resell, net #### **Note 6. Collateral** Reverse repurchase and repurchase agreements are collateralized primarily by receiving or pledging securities, respectively. Typically, the Company has rights of rehypothecation with respect to the securities collateral received under reverse repurchase agreements. As of December 31, 2021,substantially allsecurities collateral received under reverse repurchase agreements has been delivered or repledged in connection with repurchase agreements. Also, the counterparty generally has rights rehypothecation with respect to the securities collateral from the Company under repurchase agreements. The Company monitors the fair value of underlying securities in comparison to the related receivable or payable, including accrued interest, and as necessary, transfers or requests additional collateral as provided under the applicable agreement to ensure transactions are adequately collateralized.Maturities of financial instruments sold under agreements to resell and repurchase accounted for as secured borrowings are provided in the table below: | | Overnight | | | | | |---------------------------------------------------------------------------|------------------|--|--|--|--| | Securities sold under agreements to repurchase U.S. government securities | \$
24,963,000 | | | | | At December 31, 2021, the fair value of assets pledged as collateral under agreements to repurchase is approximately \$24,963,000 and the fair value of assets obtained from securities purchased under agreements to resell is approximately \$24,969,000. {9}------------------------------------------------ #### **DV Securities, LLC Notes to the Statement of financial condition** #### **Note 7. Related Party Transactions** There were no amounts due to or receivable from DV Group.Eligible employees of the Company may participate in the 401(k) plan of DV Group. At December 31, 2021, the Company owed \$136,000 to the affiliate and is included in accounts payable and accrued expenses. #### **Note 8. Liabilities Subordinated to Claims of General Creditors** Effective June 24, 2021, the Company entered into a \$10 million revolving cash subordinated loan agreement with CIBC Bank USA, N.A., with an interest rate per annum equal to prime rate plus 2% and a revolving loan maturity date of June 30, 2023.During the year, the Company had no borrowings against the agreement and as of December 31, 2021, the Company had no outstanding liability. The subordinated borrowing is available in computing the net capital under the Securities and Exchange Commission's uniform net capital rule.To the extent thatsuch borrowing, when outstanding, isrequired for the Company's continued compliance with the minimum net capital requirements, it may not be repaid.This loan is guaranteed by DV Group. #### **Note 9. Indemnifications** In the normal course of business, the Company enters into contracts that contain a variety of representations and warranties that provide indemnifications under certain circumstances. The Company's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. The Company expects the risk of loss to be remote. #### **Note 10. Market Risk and Concentrations of Credit Risk** Exposure to market risk is influenced by a number of factors, including the relationships between financial instruments and the Company's proprietary inventories, and the volatility and liquidity in the markets in which the financial instruments are traded. The Company manages its exposure to market risk arising from the use of these financial instruments through various analytical monitoring techniques. The Company entersinto varioustransactions with brokerͲdealers and other financial institutions. In the event these counterparties do not fulfill their obligations, the Company may be exposed to risk. It is the Company's policy to monitor the creditworthiness of each party with which it conducts business. The Company maintains its cash in bank deposit accounts. The Company has not experienced any losses in such accounts. Management believes that the Company is not exposed to any significant credit risk on cash deposits. #### **Note 11. Net Capital Requirements** The Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule (Rule 15(c)3Ͳ1 under the Securities Exchange Act of 1934).Under this rule, the Company is required to maintain "net capital" equal to the greater of \$100,000 or 6 2/3% of "aggregate indebtedness" as a broker dealer that received its approval less within the past year, as defined.Equity withdrawals are subject to certain notifications and other provisions of Rule 15c3Ͳ1 or other regulatory bodies. Effective with February 2022 FOCUS filing, the Company adopted the Alternative Method for computing net capital. At December 31, 2021, the Company had net capital of \$29,606,000 and net capital requirements of \$100,000. {10}------------------------------------------------ #### **DV Securities, LLC Notes to the Statement of financial condition** #### **Note 12. Subsequent Events** The Company has evaluated subsequent events for potential recognition and/or disclosure through the date of the audit report. The Company was approved as a member of FINRA on February 8, 2022.The Company withdrew its NASDAQ PHLX, LLC membership on February 24, 2022. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.