# HPS SECURITIES, LLC X-17A-5 (2024-05-30) — Broker-dealer annual report - Company: HPS SECURITIES, LLC - Form: X-17A-5 - Filed: 2024-05-30 - Period: 2024-03-31 - Accession: 0002013816-24-000028 - CIK: 1920105 - File #: 8-70910 - Type: Broker-dealer - Material weakness: No - Auditor: WithumSmith Brown - Auditor location: Princeton, NJ - Contact: Ilina Stamova - Phone: 212-668-8700 - Email: istamova@acisecure.com - Website: acisecure.com - Signed by: Joseph James Virgilio (CCO) Original filing: https://www.sec.gov/Archives/edgar/data/1920105/000201381624000028/hpspublic.pdf --- {0}------------------------------------------------ **UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549** OMB APPROVAL OMB Number: ϯϮϯϱͲϬϭϮϯ Expires: EŽǀ͘ϯϬ͕ϮϬϮϲ Estimated average burden hours per response: # **ANNUAL REPORTS FORM X-17A-5 PART III** SEC FILE NUMBER 8-70949 **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 \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ 04/11/2023 03/31/2024 MM/DD/YY MM/DD/YY **A. REGISTRANT IDENTIFICATION** # NAME OF FIRM: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ HPS SECURITIES, LLC TYPE OF REGISTRANT (check all applicable boxes): ܆ Broker-dealer ܆ 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.) # \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ 40 WEST 57TH STREET, 33RD FLOOR | | (No. and Street) | | | | |--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|-----------------|--------------------------------------------|--| | NEW
YORK
_____________________________________________________________________________________ | NY | | 10019 | | | (City) | (State) | | (Zip Code) | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | Ilina
Stamova
_____________________________________________________________________________________ | (212)-668-8700 | | istamova@acisecure.com | | | (Name) | (Area Code – Telephone Number) | (Email Address) | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing*
WITHUMSMITH+BROWN,
PC
_____________________________________________________________________________________
(Name – if individual, state last, first, and middle name) | | | | | | 506
CARNEIGE
CENTER,
SUITE
_____________________________________________________________________________________ | PRINCETON
400 | NJ | 08540 | | | (Address) | (City) | (State) | (Zip Code) | | | 10/08/2003
_____________________________________________________________________________________ | | 100 | | | | (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}------------------------------------------------ ![](_page_1_Picture_4.jpeg) - - - - - - - - - - - - - - - - - - - - - - - - - - - {2}------------------------------------------------ Report on Audit of Financial Statement For the period April 11, 2023 (date of registration) through March 31, 2024 This report is deemed PUBLIC in accordance with Rule 17a-5(e)(3) under the Securities Exchange Act of 1934. {3}------------------------------------------------ #### Table of Contents For the period April 11, 2023 (date of registration) through March 31, 2024 | Report of Independent Registered Public Accounting Firm | 1 | |----------------------------------------------------------|-------| | Financial Statement:
Statement of Financial Condition | 2 | | Notes to Financial Statement | 3 - 5 | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) # REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Member and Management of HPS Securities, LLC: # Opinion on the Financial Statement We have audited the accompanying statement of financial condition of HPS Securities, LLC (the "Company") as of March 31, 2024, and the related notes (collectively referred to as the "financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company as of March 31, 2024, in conformity with accounting principles generally accepted in the United States of America. # Basis for Opinion This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on this 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 presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion. We have served as the Company's auditor since 2024. New York, New York May 29, 2024 {5}------------------------------------------------ Statement of Financial Condition As of March 31, 2024 #### ASSETS | Cash and cash equivalents
Accounts receivable
Prepaid expenses | \$
5,472,352
121,070
93,983 | |----------------------------------------------------------------------|--------------------------------------| | TOTAL ASSETS | \$
5,687,405 | | | | | LIABILITIES AND MEMBER'S EQUITY | | | LIABILITIES: | | | Accounts payable and accrued expenses | \$
99,699 | | TOTAL LIABILITIES | 99,699 | | MEMBER'S EQUITY | 5,587,706 | | TOTAL LIABILITIES AND MEMBER'S EQUITY | \$
5,687,405 | See accompanying notes to this financial statement. {6}------------------------------------------------ Notes to Financial Statement For the period April 11, 2023 (date of registration) through March 31, 2024 # NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS HPS Securities, LLC (the "Company") is a Limited Liability Company that was formed in Delaware on February 7, 2022. The Company is a registered broker-dealer with the Securities and Exchange Commission ("SEC"), the Financial Industry Regulatory Authority ("FINRA") and the Securities Investor Protection Corporation ("SIPC") as of April 11, 2023. The firm operates in New York City and is approved to do private placements of securities, mutual fund distribution, distribution of non-traded business development companies and offer interests in interval funds and exchange traded funds. The Company is a sole member of HPS Group Holdings II, LLC. # NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ### Basis of Presentation The accompanying financial statement has been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ("GAAP"). # Accounts Receivable The Company's accounts receivable consists primarily of amounts due from transfer pricing. The Company follows Accounting Standards Codification ("ASC") Topic 326, Financial Instruments - Credit Losses ("ASC 326"). ASC 326 impacts the impairment model for certain financial assets measured at amortized cost by requiring a current expected credit loss ("CECL") methodology to estimate expected credit losses over the entire life of the financial asset, recorded at inception or purchase. Under the accounting update, the Company has the ability to determine there are no expected credit losses in certain circumstances. The allowance for credit losses is based on the Company's expectation of the collectability of financial instruments carried at amortized cost, including fees receivable utilizing the CECL framework. The Company considers factors such as historical experience, credit quality, age of balances and current and future economic conditions that may affect the Company's expectation of the collectability in determining the allowance for credit losses. The Company's expectation is that the credit risk associated with fees receivables is not significant until they are 90 days past due on the contractual arrangement and expectation of collection in accordance with industry standards. As of March 31, 2024, there are no fees receivable that are in excess of 90 days past due. Management does not believe that an allowance is required as of March 31, 2024. # Revenue and Expense Recognition The Company recognizes revenue in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers ("ASC Topic 606"). ASC Topic 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance requires an entity to follow a five step model to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. The Company solicits prospective investors to the Affiliated Funds who are managed by various investment management entities, each of which is related through common control. The investment management entities compensate the Company with private placement fees for the successful solicitation of investors, at a rate equal to 110% of related costs incurred. The Company recognizes placement fees over time, when the associated expenses are incurred. The Company's revenue from transfer pricing is recognized when the related expenses are incurred. There was a receivable balance from an affiliate of \$121,070 on March 31, 2024. #### Disaggregation of Revenue The Company's revenues, for the period ended March 31, 2024, originated from transfer pricing and from interest income from its banking institution. {7}------------------------------------------------ Notes to Financial Statement For the period April 11, 2023 (date of registration) through March 31, 2024 #### NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES #### Revenue and Expense Recognition (continued) #### Income Taxes The Company is a single member limited liability company that is deemed to be a disregarded entity for income tax purposes. The taxable income or loss of the Company is allocated to its member. The Company's sole member is subject to the New York City Unincorporated Business Tax ("UBT"). As the liability associated with the UBT is principally the result of the operations of the Company, the UBT, which is calculated using currently enacted tax laws and rates, is reflected on the books of the Company, in accordance with the FASB ASC 740, Income Taxes. This Topic requires the consolidated current and deferred tax expense (benefit) for a group that files a consolidated tax return to be allocated among the members of the group when those members issue separate financial statement. For the period ended March 31, 2024, the Company had no allocated portion of UBT. The Company accounts for uncertainties in income taxes under the provisions of FASB ASC 740-10-05, "Accounting for Uncertainty in Income Taxes." The ASC clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statement. The ASC prescribes a recognition threshold and measurement approach for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The ASC provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. At March 31, 2024, the Company had no material unrecognized tax and no uncertain tax positions. The Company did not have material unrecognized tax benefits as of March 31, 2024 and does not expect this to change significantly over the next twelve months. The Company will recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. As of March 31, 2024, the Company has no accrued interest or penalties associated with uncertain tax positions. #### Use of Estimates The preparation of financial statement and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statement, and the reported amounts of income and expenses during the reporting period. Accordingly, actual results could differ from those estimates and such differences could be material. #### Recent Accounting Pronouncements The Company has determined that no recently issued accounting pronouncements will have a material impact on its financial position, results of operations and cash flows, or do not apply to its operations. #### NOTE 3 – CONCENTRATIONS OF CREDIT RISK #### Cash The Company maintains principally all cash balances in one financial institution which, at times, may exceed the amount insured by the Federal Deposit Insurance Corporation. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company's financial condition, results of operations, and cash flows. As of March 31, 2024 the amount in excess of the FDIC limit was \$5,222,352. #### Revenue During the period ended March 31, 2024, all the revenue was received from one customer. #### Accounts Receivable During the period ended March 31, 2024, one customer accounted for 100% of the accounts receivable. This was collected subsequent to year-end. #### NOTE 4 – RELATED PARTY TRANSACTIONS The Company has entered into an expense sharing agreement with HPS Investment Partners LLC. Under the terms of the expense sharing agreement, expenses incurred by the Member on behalf of the Company are allocated at cost. The basis of allocating expenses is based upon applicable expenses incurred by the Company and include salaries, payroll taxes, rent and technology costs. The Company also receives transfer pricing revenue from HPS Investment Partners LLC. {8}------------------------------------------------ For the period April 11, 2023 (date of registration) through March 31, 2024 Notes to Financial Statement #### NOTE 5 - INDEMNIFICATIONS In the normal course of its business, the Company indemnifies and guarantees certain service providers against specified potential losses in connection with their acting as an agent of, or providing services to, the Company. The maximum potential amount of future payments that the Company could be required to make under these indemnifications cannot be estimated. However, the Company believes that it is unlikely it will have to make material payments under these arrangements and has not recorded any contingent liability in the financial statement for these indemnifications. The Company provides representations and warranties to counterparties in connection with a variety of commercial transactions and occasionally indemnifies them against potential losses caused by the breach of those representations and warranties. The Company may also provide standard indemnifications to some counterparties to protect them in the event additional taxes are owed or payments are withheld, due either to a change in or adverse application of certain tax laws. These indemnifications generally are standard contractual terms and are entered into in the normal course of business. The maximum potential amount of future payments that the Company could be required to make under these indemnifications cannot be estimated. However, the Company believes that it is unlikely it will have to make material payments under these arrangements and has not recorded any contingent liability in the financial statement for these indemnifications. ### NOTE 6 – NET CAPITAL REQUIREMENTS The Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule (SEC 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 12.5 to 1, in the first year of membership and 15 to 1, thereafter. SEC Rule 15c3-1 also provides that capital may not be withdrawn or cash dividends paid if the resulting net capital ratio would exceed 10 to 1. Net capital and aggregate indebtedness change day to day, but on March 31, 2024, the Company had net capital of \$5,372,653 which was \$5,360,191 in excess of its required net capital of \$12,462; and the Company's percentage of aggregate indebtedness to net capital was approximately 1.86%. #### NOTE 7 – EXEMPTION FROM RULE 15c3-3 The Company is exempt from the provisions of Rule 15c3-3 under the Securities and Exchange Act of 1934. The Company does not hold customers' cash or securities and, therefore, has no obligations under SEC Rule 15c3-3 under the Securities Exchange Act of 1934. #### NOTE 8 – SUBSEQUENT EVENTS Management has evaluated the Company's events and transactions that occurred subsequent to March 31, 2024 through May 29, 2024 the date which the financial statement was available to be issued. There were no events or transactions that occurred during this period that materially impacted the amounts or disclosures in the Company's financial statement. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.