# HPS SECURITIES, LLC X-17A-5 (2025-05-22) — Broker-dealer annual report - Company: HPS SECURITIES, LLC - Form: X-17A-5 - Filed: 2025-05-22 - Period: 2025-03-31 - Accession: 0002013816-25-000071 - CIK: 1920105 - File #: 8-70910 - Type: Broker-dealer - Material weakness: No - Auditor: WithumSmith&Brown, PC - Auditor location: Prince, 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/1920105/000201381625000071/hpsauditcpublic.pdf --- {0}------------------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 omb approval OMB Number: 3235-0123 Expires: Nov, 30, 2026 Estimated average burden hours per response: 12 # 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 04/01/2024 AND ENDING 03/31/2025 | | | | | | | | | | MM/DD/YY | | MM/DD/YY | | | | | | A. REGISTRANT IDENTIFICATION | | | | | | | | | NAME OF FIRM: HPS SECURITIES, LLC | | | | | | | | | TYPE OF REGISTRANT (check all applicable boxes):
■ Broker-dealer
□ 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 | | | | | | | | | llina 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 400 PRINCETON | | 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 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. displays a currently valid OMB control number. {1}------------------------------------------------ | (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 | | | | | FOR OFFICIAL USE ONLY | | | | | OATH OR AFFIRMATION | | | | Joseph James Virgilio | | | swear (or affirm) that, to the best of my knowledge and belief, the | | financial report pertaining to the firm of HPS Securities LLC | | | ______________________________________________________________________________________________________________________________________________________________________________ | | 3/31 | | | , 2 025 , is true and correct. I further swear (or affirm) that neither the company nor any | | | | | a the reas marcha has any unterest in any possuat in any possuat concrition coloriz | 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. | | ROMINA KHAN | |---------------|-----------------------------------| | | NOTARY PUBLIC, STATE OF NEW YORK | | | Registration No. 01KH6379310 | | | | | Notary Public | My Commission Expires: 08/13/2026 | | | Qualified in Queens County | | | œ | | |------------|---|--| | Signatures | | | | Title: | | | | CCO | | | This filing\*\* contains (check all applicable boxes): \*\*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. {2}------------------------------------------------ - (a) Statement of financial condition. - (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 S-X). - O (d) Statement of cash flows. - [] {e) Statement of changes in stockholders' or partners' or sole proprietor's equity. - □ (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 240.18a-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. - □ (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. - □ (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. - □ (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-2, 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. - □ (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. - (q) Oath or affirmation in accordance with 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. - | (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 applicable. - = (t) Independent public accountant's report based on an examination of the statement of financial condition. - □ (u) Independent public accountant's report based on an examination of the financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable. - □ (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. - □ (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 240.17a-12, as applicable. - □ (y) Report describing any material inadequacies 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: {3}------------------------------------------------ **Report on Audit of Financial Statement** **As of and for the Year ended March 31, 2025** This report is deemed PUBLIC in accordance with Rule 17a-5(e)(3) under the Securities Exchange Act of 1934. {4}------------------------------------------------ #### Table of Contents As of and for the Year ended March 31, 2025 | Report of Independent Registered Public Accounting Firm | 1 | |----------------------------------------------------------|-----| | Financial Statement:
Statement of Financial Condition | 2 | | Notes to Financial Statement | 3-5 | {5}------------------------------------------------ ![](_page_5_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, 2025, 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, 2025, 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 20, 2025 {6}------------------------------------------------ #### Statement of Financial Condition As of March 31, 2025 #### **ASSETS** | Cash
Due from affiliate
Prepaid expenses | \$
6,395,361
99,353
157,029 | |-------------------------------------------------------|--------------------------------------| | TOTAL ASSETS | \$
6,651,743 | | LIABILITIES AND MEMBER'S EQUITY | | | LIABILITIES:
Accounts payable and accrued expenses | \$
75,752 | | TOTAL LIABILITIES | 75,752 | | MEMBER'S EQUITY | 6,575,991 | | TOTAL LIABILITIES AND MEMBER'S EQUITY | \$
6,651,743 | | | | See accompanying notes to this financial statement. {7}------------------------------------------------ Notes to Financial Statement Year Ended March 31, 2025 #### **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"). #### **Due from Affiliate** The Company's accounts receivable consists primarily of amounts due from the affiliate related to 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, 2025, 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 April 1, 2024 and as of March 31, 2025. #### **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 recognizes 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. During the fiscal year ended March 31, 2025, the Company earned advisory fees for providing general investor-related advice and are earned, in accordance with the terms of their respective contracts, only when performance obligations have been fully met. The Company's revenue from transfer pricing is recognized when the related expenses are incurred. There was a receivable balance from an affiliate of \$99,353 on March 31, 2025. #### *Disaggregation of Revenue* The Company's revenues, for the period ended March 31, 2025, originated from transfer pricing, advisory services and from interest income from its banking institution. #### *Significant Judgement* Significant judgement 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 applied due to uncertain future events. {8}------------------------------------------------ Notes to Financial Statement Year Ended March 31, 2025 #### **NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)** #### *Receivables and Contract Balances* Receivables arise when the Company has an unconditional right to receive payment under a contract with a customer and are derecognized when the cash is received. The receivable balances as of March 31, 2025 were \$99,353. Contract assets arise when the revenue associated with the contract is recognized prior to the Company's unconditional right to receive payment under a contract with a customer (i.e., unbilled receivable) and are derecognized when either it becomes a receivable or the cash is received. Contract assets are reported in the Statement of Financial Condition. As of April 1, 2024 and March 31, 2025, contract asset balances were \$0. Contract liabilities arise when customers remit contractual cash payments in advance of the Company satisfying its performance obligations under the contract and are derecognized when the revenue associated with the contract is recognized when the performance obligation is satisfied. As of April 1, 2024 and March 31, 2025, there were no contract liabilities. #### **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 statements. For the period ended March 31, 2025, 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 statements. 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, 2025, 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, 2025 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, 2025, the Company has no accrued interest or penalties associated with uncertain tax positions. #### **Use of Estimates** The preparation of financial statements 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 statements, 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, 2025, the amount in excess of the FDIC limit was \$6,145,361. #### **Revenue** During the period ended March 31, 2025, all the revenue was received from two customers. #### **Due from Affiliate** During the period ended March 31, 2025, one customer accounted for 100% of the accounts receivable. This was collected subsequent to year-end. {9}------------------------------------------------ Notes to Financial Statement Year Ended March 31, 2025 #### **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 amount of these expenses for the year ended March 31, 2025 were \$3,481,600. The Company also receives transfer pricing revenue from HPS Investment Partners LLC. Total revenue was \$4,507,103 for the year ended March 31, 2025. ### **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 statements 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, 2025, the Company had net capital of \$6,319,609 which was \$6,314,559 in excess of its required net capital of \$5,050; and the Company's percentage of aggregate indebtedness to net capital was approximately 1.20%. #### **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 - SEGMENT REPORTING** The Company follows ASC 280, Segment Reporting (including adoption of ASU 2023-07), which requires companies to disclose segment data based on how management makes decisions about allocating resources to segments and evaluating performance. The Company conducts its business activities and reports financial results as a single reportable segment, which is comprised of transfer pricing and advisory income. Using the management approach, qualitative and quantitative criteria established by ASC 280, the Company is considered to be a single reportable segment. The Company has identified its Chief Compliance Officer as Chief Operating Decision Maker ("CODM") who uses net income to evaluate the results of the business, predominantly in the forecasting process, to manage the Company. The nature of business and accounting policies of the private placements segment are the same as described in the organization and nature of business and summary of significant accounting policies. #### **NOTE 9 – SUBSEQUENT EVENTS** Management has evaluated the Company's events and transactions that occurred subsequent to March 31, 2025 through May 20, 2025 the date which the financial statement was available to be issued. On December 3, 2024, the HPS Group entered into an agreement with BlackRock (NYSE: BLK) for BlackRock to acquire 100% of the HPS Group for approximately 12 billion dollars, with 100% of consideration paid in BlackRock equity. The BlackRock transaction is subject to customary closing conditions and is expected to close in 2025. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.