Form X-17A-5 Mbsc Securities Corporation

FOCUS Report

Published: 2019-03-01 09:11:46
Submitted: 2019-03-01
Period Ending In: 2018-12-31
primary_doc.html


X-17A-5: Filer Information

X-17A-5: Submission Information

X-17A-5: A. Registrant Identification

Address of Principal Place of Business (Do not use P.O. Box No.)

Address 1
200 PARK AVENUE
City
NEW YORK
State/Country
NEW YORK
Mailing Zip/ Portal Code
10166

Name and Telephone Number of Person to Contact in Regard to this Report

Name
Susan Verbil
Telephone Number
212-815-5597

X-17A-5: B. Accountant Identification

Independent Public Accountant

X-17A-5: Signature

Oath or Affirmation

I, Alban Miranda, swear (or affirm) that, to the best of my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of MBSC SECURITIES CORPORATION, as of 12-31-2018, are true and correct. I further swear (or affirm) that neither the company nor any partner, proprietor, principal officer or director has any proprietary interest in any account classified solely as that of a customer, except as follows:

Notary Public

primary_doc.xml

Header Data

Submission Type
X-17A-5

Filer Info

Filer

Filer Credentials

Filer Cik
0000277871
Filer Ccc
XXXXXXXX
Confirming Copy Number
008-13801
Live Test Flag
LIVE

Flags

Return Copy Flag
true
Confirming Copy Flag
true
Override Internet Flag
false

Form Data

Submission Information

Period Begin
01-01-2018
Period End
12-31-2018
Type Of Registrant
Broker-dealer
Material Weakness
N

Registrant Identification

Broker Dealer Name
MBSC SECURITIES CORPORATION
Contact Person Name
Susan Verbil
Contact Person Phone Number
212-815-5597

Accountant Identification

Accountant Name
KPMG LLP
Accountant Type
Certified Public Accountant

Oath Signature

Sign Person Name
Alban Miranda
Entity Name
MBSC SECURITIES CORPORATION
Sign Date
12-31-2018
Signature
Alban Miranda
Oath Title
Chief Financial Officer
Confirm Notarized Flag
Y
PUBLIC2.pdf MBSC STATEMENT OF FINANCIAL CONDITION


    MBSC SECURITIES CORPORATION AND SUBSIDIARY
           (An Indirect Wholly Owned Subsidiary of
          The Bank ofNew York Mellon Corporation)

             Consolidated Statement of Financial Condition

                          December 31 , 2018

(With Report of Independent Registered Public Accounting Firm Thereon)


                                                            UNITEDSTATES                                                 OMB APPROVAL
                                           SECURITIES AND EXCHANGE COMMISSION                                      OMB Number:       3235—0123
                                                   Washington, D.C. 20549                                          Expires:     August 31, 2020
                                                                                                                   Estimated average burden
                                            ANNUAL AUDITED REPORT                                                  |housperresponse..... 1200
                                                        Fo FF"XR)'(I: 1"7|A'5                                                   SEC FILE NUMBER
                                                                                                                                *13801
                                                            FACING PAGE
                   Information Required of Brokers and Dealers Pursuantto Section 17 of the
                          Securities Exchange Act of 1934 and Rule 172—5 Thereunder

REPORT FOR THE PERIOD BEGINNING 01/01/2018                                              AND ENDING 12/31/2018
                                                                  MM/DD/YY                                                MM/DDIYY

                                         A. REGISTRANT IDENTIFICATION

NAME OF BROKER—DEALER: MBSC Securities Corporation                                                                      OFFICIAL USE ONLY
ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.0. Box No.)                                                               FIRM L.D. NO.
 200 Park Avenue
                                                              (No. and Street)
                         New York                                      New York                                    10166
                        (City                                          (State)                                     (Zip Code)

NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
Linda 0. Fu                                                                                                         @212 sissore
                                                                                                                    (Area Code — Telephone Number)
                                         B. ACCOUNTANT IDENTIFICATION

INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report*

KPMG LLP
                                                   (Name ifindividual, state last, first, middle name)
        345 Park Avenue                                   New York                                       New York                    10154
       (Address)                                         (City)                                          (State)                    (Zip Code)

CHECK ONE:
              ZCenified Public Accountant
                   [Public Accountant
                   ‘Accountant not resident in United States or any of its possessions.

                                                   FOR OFFICIAL USE ONLY




*Claimsfor exemption from the requirement that the annual report be covered by the opinion of an independentpublic accountant
must be supported by a statement offacts and circumstances relied on as the basisfor the exemption. See Section 240.17a—5(e)(2)



                                   Potential persons who are to respond to the collection of
                                   information contained in this form are not m&uired torespond
   SEC 1410 (11—05)                unless the form displays a currently valid OMB control number.


                                               OATH OR AFFIRMATION

1, _A_lb_a_n_M
             _.1_ra_n_d_a_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ , swear (or affirm) that, to the best of
my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of
MBSC Securities Corporation                                                                                                   as
---------------
of December 3 1
                - - -- - - - - - -- - - - -- - - - - - - -- --- '
                                                                        are true and correct. I further swear (or affirm) that
neither the company nor any partner, proprietor, principal officer or director has any proprietary interest in any account
classified solely as that of a customer, except as follows:




 NOTARY PUBLIC, STATE OF NEW YORK
         NO. 01RU6081733
  QUALIFIED IN NEW YORK COUNTY
 MY COMMISSION EXPIRES APR 4, 2019
                                                                   Chief
                                                                                         Title




This report** contains (check all applicable boxes):
0   (a) Facing Page.
B   (b) Statement of Financial Condition.
O   (c) Statement oflncome (Loss) or, ifthere is other comprehensive income in the period(s) presented, a Statement
        of Comprehensive Income (as defined in §210.1-02 of Regulation S-X).


§   (d) Statement of Changes in Financial Condition.
    (e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital.
    (f) Statement of Changes in Liabilities Subordinated to Claims of Creditors.


§   (g) Computation of Net Capital.
    (h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3.
    (i) Information Relating to the Possession or Control Requirements Under Rule 1Sc3-3.
D   (j) A Reconciliation, including appropriate explanation of the Computation ofNet Capital Under Rule l 5c3-1 and the
        Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3.
0   (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of
        consolidation.


§   (1) An Oath or Affirmation.
    (m) A copy of the SIPC Supplemental Report.
    (n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit.

••For conditions ofconfidential treatment ofcertain portions ofthis filing, see section 240. 17a-5(e)(3).


                       MBSC SECURITIES CORPORATION AND SUBSIDIARY
            (An Indirect Wholly Owned Subsidiary of The Bank of New York Mellon Corporation)


                                                Table of Contents



                                                                                               Page

Report of Independent Registered Public Accounting Firm

Consolidated Statement of Financial Condition

Notes to Consolidated Statement of Financial Condition                                           2


                                KPMG LLP
                                345 Park Avenue
                                New York, NY 10154-0102




                         Repo rt of Independent Registered Public Account ing Firm


To the Board of Directors and Stockholder
MBSC Securities Corporation:

Opinion on the Consolidated Financial Statement
We have audited the accompanying consolidated statement of financial condition of MBSC Securities
Corporation and subsidiary (the Company) as of December 31, 2018, and the related notes (collectively, the
consolidated financial statement). In our opinion, the consolidated financial statement presents fairly, in all
material respects, the financial position of the Company as of December 31, 2018, in conformity with
U.S. generally accepted accounting pri11ciples.

Basis for Opinion
This consolidated financial statement is the responsibility of the Company's management. Our responsibility is
to express an opinion on this consolidat ed 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 consolidated financia l 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 consolidated 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 consolidated 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 consolidated financial statement. We believe that our audit provides a
reasonable basis for our opinion.




We have served as the Company's auditor since 1994.

February 27, 2019




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                                f 1m of ti KPMG n l'VVOrk ol mrl pen 1• nl m rr t r f ms af'• 1 tod w 11
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                  MBSC SECURITIES CORPORATION AND SUBSIDIARY
       (An Indirect Wholly Owned Subsidiary of The Bank of New York Mellon Corporation)
                          Consolidated Statement of Financial Condition
                                       December 31, 2018
                                (In thousands, except share data)

                                                 Assets
Cash and cash equivalents - notes 3 & 6                                          $       127,937
Cash segregated for the exclusive benefit of customers                                     3,027
Receivables:
   Receivables from related investment companies - note 9 (a)                             15,212
   Receivables from affiliates - note 9 (b)                                               42,437
   Receivables from others                                                                 3,145
Fixed assets, at cost, less accumulated depreciation and amortization - note 4               499
Deferred sales commissions - note 5                                                          562
Deferred income taxes, net - note 10                                                       2,235
Other assets                                                                               9,637
              Total assets                                                       $      204,691
                                                                                     ==::::::::::==
                                Liabilities and Stockholder' s Equity
Liabilities:
  Income tax reserves - note 10                                                  $         4,363
  Due to affiliates - note 9 (b)                                                          25,587
  Accounts payable and accrued expenses                                                   42,704
              Total liabilities                                                           72,654
Stockholder's equity
  Common stock, no par value, authorized, issued, and outstanding 200 shares
   Additional paid-in capital                                                           298,989
   Accumulated deficit                                                                 (166,952)
              Total stockholder's equity                                                 132,037
              Total liabilities and stockholder's equity                         $       204,691


See accompanying notes to consolidated statement of financial condition.


                       MBSC SECURITIES CORPORATION AND SUBSIDIARY
            (An Indirect Wholly Owned Subsidiary of The Bank of New York Mellon Corporation)
                          Notes to Consolidated Statement of Financial Condition
                                           December 31, 2018
                                              (In thousands)



(1)   Nature of Business and Summary of Significant Accounting Policies
       (a) Organization
           MBSC Securities Corporation (Company), a registered broker-dealer and a registered investment
           adviser, is a wholly owned subsidiary of The Dreyfus Corporation (Corporation), which is an
           indirect wholly owned subsidiary of The Bank of New York Mellon Corporation (BNY Mellon). 'fhe
           Company provides various investment product related services and advisory services as follows:

                 Distribution and sales of mutual funds sponsored/administered by the Corporation and by
                 BNY Mellon Investment Management, a division of BNY Mellon;

                 Distribution and sales of variable annuity products issued through insurance carriers;

                 Sales and marketing of various wrap fee and institutional separate account products for high
                 net worth individuals, corporate pension plans, public employee trust funds, endowments and
                 foundations;

                 Sales of private placements including hedge funds.

           Introducing brokerage services are cleared through an affiliate, Pershing LLC, on a fully disclosed
           basis.

           The consolidated statement of financial condition includes the accounts of the Company and its
           wholly owned subsidiary, BNYM Asset Management Operations LLC (BNYM AM OPS). All
           significant intercompany accounts and transactions have been eliminated in consolidation.

       (b) Preparation of Financial Statements
           The preparation of the consolidated statement of financial condition in conformity with accounting
           principles generally accepted in the United States of America 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. Actual results could differ
           from those estimates.

       (c) Fair Value Measurement
           Fair value is defined under Financial Accounting Standards Board (FASB) Accounting Standards
           Codification (ASC), 820, Fair Value Measurements, as 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. It establishes a hierarchy of inputs for measuring value:

           Level 1 inputs    Unadjusted quoted prices at the measurement date in active, accessible markets
                             for identical assets or liabilities.



                                                       2


               MBSC SECURITIES CORPORATION AND SUBSIDIARY
    (An Indirect Wholly Owned Subsidiary of The Bank of New York Mellon Corporation)
                  Notes to Consolidated Statement of Financial Condition
                                   December 31, 2018
                                      (In thousands)



   Level 2 inputs     Quoted prices in inactive markets for identical instruments, quoted prices in active
                      markets for similar instruments, other observable inputs (interest rates and yEeld
                      curves) or other inputs derived from/corroborated by observable market data.

   Level 3 inputs     Prices or valuations that require inputs that are both significant to the fair value
                      measurement and unobservable.

   The Company assigns assets and liabilities that are carried at fair value on a recurring basis to the
   level when they are acquired or incurred. Subsequent appropriate changes are evaluated each
   reporting period.

   A financial instrument's level within the fair value hierarchy is based on the lowest level of any input
   that is significant to the fair value measurement.

(d) Financial In struments
   ASC 825, Financial Instruments, requires the disclosure of the fair value of financial instruments,
   including assets and liabilities recognized in the statement of financial condition. Management
   estimates that the fair value of financial instruments recognized in the statement of financial
   condition, including cash, receivables, securities owned, certain other assets and certain other
   liabilities, approximate their carrying value.

(e) Cash anti Cash Equivalents
   Cash and cash equivalents include cash on hand, demand deposits and highly liquid investments
   including money market accounts with original maturities of three months or less at time of
   purchase. Due to the short-term nature of these instruments the recorded value approximates fair
   value.

   In November 2016, the FASB issued an ASU, Statement of Cash Flows - Restricted Cash. This ASU
   provides guidance on the presentation of restricted cash or restricted cash equivalents in the
   statement of cash flows. Cash segregated for regulatory purposes totaled $3,027 at the beginning and
   end of the year.

(t) Income Taxes
   The Company is included in the consolidated federal and combined state and local income tax
   returns filed by BNY Mellon. Jn addition, the Company fi les stand-alone tax returns in certain
   jurisdictions including New Jersey. Income taxes are calculated using the modified separate return
   method, and the amount of current tax expense or benefit is either remitted to or received from BNY
   Mellon, pursuant to a tax-sharing agreement between BNY Mellon and the Company.

   The Company accounts for income taxes in accordance with ASC 740, Income Taxes, which
   generally requires recognition of tax benefits or expenses on the temporary differences between the
   financial reporting and the tax basis of assets and liabilities. If appropriate, deferred tax assets are

                                                3


               MBSC SECURITIES C ORPORATION AND SUBSIDIARY
    (An Indirect Wholly Owned Subsidiary of The Bank of New York Mellon Corporation)
                  Notes to Consolidated Statement of Financial Condition
                                   December 31, 2018
                                      (In thousands)



    adjusted by a valuation allowance, which reflects expectations of the extent to which such assets will
    be realized.

   In accordance with FASB ASC 740, Income Taxes, the Company uses a two-step approach in
   recognizing and measuring its uncertain tax benefits whereby it is first detennined if the tax position
   is more likely than not to be sustained under examination. If the tax position meets the more likely
   than not threshold, the position is then measured at the largest amount of benefit that is greater than
   50 percent likely of being realized upon ultimate settlement. A tax position that fails to meet the
   more likely than not recognition threshold will result in either a reduction of current or deferred tax
   assets, and/or recording of current or deferred tax liabilities. The Company recognizes accrued
   interest and penalties, if applicable, related to income taxes as a component of income tax expense in
   the statement of operations.

(g) Restricted Stock
    Certain employees of the Company participate in BNY Mellon's Long-Term Incentive Plan. Under
    the terms of this incentive plan, the awards paid may be in the form of BNY Mellon Restricted Stock
    Units. Restricted stock unit awards are issued at fair market value at the date of grant and vest over
    three or four years from the date of grant. The Company recognizes compensation cost related to
    restricted stock unit awards over the vesting period . The offsetting credit is recorded as additional
    paid-in capital.

(h) Stock Options
    Pursuant to ASC 718, Compensation-Stock Compensation, the Company recognizes compensation
    costs related to stock-based awards with a graded vesting schedule on a straight-line basis over the
    required service period for the entire award. The offsetting credit is recorded as additional paid-in
    capital.

(i) Accounting Changes and Recent Accounting Developments
    In February 2016, the FASB issued ASU No. 2016-02, Leases. The primary objective of this ASU is
    to increase transparency and! comparability by recognizing lease assets and liabilities on the balance
    sheet and expand related disclosures. This ASU requires a "right of use" asset and payment
    obligation liability on the balance sheet for most leases and subleases. Additionally, depending on
    the lease classification under the standard, it may result in different expense recognition patterns and
    classification than under existing accounting principles. For leases classified as finance leases, it will
    result in higher expense recognition in the earlier periods and lower expense in the later periods of
    the lease. The Company adopted this guidance on January 1, 2019 using the alternative transition
    method, which allows the adoption of the accounting standard prospectively without adjusting
    comparative prior period financial information.



                                                 4


                        MBSC SECURITIES CORPORATION AND SUBSIDIARY
            (An Indirect Wholly Owned Subsidiary of The Bank of New York Mellon Corporation)
                          Notes to Consolidated Statement of Financial Condition
                                           December 31, 2018
                                              (In thousands)



(2)   Summarized Financial Information of BNYM AM OPS
      The consolidated statement of financia l condition has been prepared on the basis of U.S. GAAP and differs
      in certain respects from accounting practices prescribed by the SEC's general instructions to Form X-17A-
      5. Under the SEC's general instruction's, certain subsidiaries may not be consolidated.

      The consolidated statement of financial condition as of December 31, 2018 reflects $10,869 of net assets
      attributable to the Company's subsidiary as well as certain elimination and reclassification adjustments
      which are not reflected in the Company's statement of financial condition contained in Part IIA of
      Form X-17 A-5, which is prepared on an unconsolidated basis.

(3)   Cash and Cash Equivalents
      Cash and cash equivalents consisted of the following at December 31 , 20 .18:


        Cash at The Bank of New York Mellon*                                          $      17,675
        Investment in money market funds managed by a related party                         104,000
        Time deposits at The Bank of New York Mellon*                                         6,262

                       Total cash and cash equivalents                                $     127,937
                                                                                          =======


        *An affiliate of the company


(4)   Fixed Assets
      The Company provides for depreciation of fixed assets based on the estimated useful life of the assets
      using the straight-line method. Amortization of leasehold improvements is computed over the lesser of the
      economic useful life of the improvement or the term of the lease.

      The major classifications of fixed assets and their estimated useful lives at December 3 l, 20 l 8 are as
      follows:

        Furniture, fixtures and equipment (5 - 10 years)                                       $      2,317
        Leasehold improvements                                                                        6,018
                                                                                                       8,335
        Less accumulated depreciation and amortization                                                (7,836)
                      Fixed assets, net                                                        $        499


                                                           5


                        MBSC SECURITIES CORPORATION AND SUBSIDIARY
             (An Indirect Wholly Owned Subsidiary of The Bank of New York Mellon Corporation)
                           Notes to Consolidated Statement of Financial Condition
                                            December 31, 2018
                                               (In thousands)



(5)   Deferred Sales Commissions
      Certain funds sponsored by the Corporation offer multiple classes of shares. Class A shares are sold with a
      sales charge imposed at the time of purchase. Class C shares (excluding money market funds) are subject
      to a contingent deferred sales charge (CDSC) imposed on redemptions made within a specified period.
      Class C shares are also subject to an annual distribution fee payable to the distributor pursuant to a
      distribution plan adopted in accordance with Rule 12b-1 under the Investment Company Act of 1940
      (Rule 12b-l Plan). Sales commissions paid to third-party intermediaries by the Company for selling
      Class C shares are capitalized and amortized to operations on a straight-line basis over 12 months
      (the investment-aging period). This amortization period approximates the period of time during which the
      sales commissions paid by the Company to broker-dealers for selling Class C shares are expected to be
      recovered from the funds through payments made pursuant to the funds' Rule 12b-l Plan.

      The funds' Rule 12b-l Plan is subject to annual review by the funds' respective Boards of Directors.

      The following is the change in deferred sales commissions for the year ended December 31 , 2018:

                             Balance at beginning of year                  $         392
                             C Share deferred sales commissions                    l ,231
                             Amortization expense                                 (l ,013)
                             Redemption write-offs                                    (48)
                             Balance at end of year                        $         562


(6)   Financial Instruments
      The balances of assets and liabilities measured at fair value on a recurring basis as of December 31, 2018,
      are as follows:


                                               Level 1           Level 2       level 3
      Cash equivalents - money
        market funds                     $      I04,000                                          104,000


      There were no Leve l 2 or 3 assets or liabilities during the year.

(7)   Employees' Benefit Plans and Share-Based Compensation Payments
      The Bank of New York Mellon Corporation has defined-benefit and defined-contribution retirement plans
      covering substantially all full-time and eligible part-time employees of the Company. Employees
      contributions through payroll deductions into The Bank of New York Mellon Corporation 401 (k) Savings
      Plan are matched by BNY Mellon's contribution, at the rate of $1.00 on the dollar, up to 4% of the
      employees' eligible pay and $0.50 on the dollar on the next 2% of the employees eligible pay.
                                                            6


                        MBSC SECURITIES CORPORATION AND SUBSIDIARY
             (An Indirect Wholly Owned Subsidiary of The Bank of New York Mellon Corporation)
                           Notes to Consolidated Statement of Financial Condition
                                            December 31, 2018
                                               (In thousands)



      Restricted stock units of BNY Mellon are issued to the Company's employees in connection with BNY
      Mellon's Long-term Profit Incentive Plan, as well as performance-based awards made to key employees at
      the discretion of the Compensation Committee of the Board of Directors of BNY MeUon. BNY Mel Ion
      grants employees of the Company deferred share awards, which provide the right to receive common
      shares of BNY Mellon at specified future dates.

      The Company's Long-Term Incentive Plans provided for the issuance of BNY Mellon's stock options at
      the then fair market value at the date of grant to officers and employees of the Company. Generally, each
      option granted was exercisable between one and ten years from the date of grant.

(8)   Minimum Lease Commitments
      Future minimum payments, by year and in the aggregate, under noncancelable operating leases (premises)
      with initial or remaining terms of one year or more consisted of the following at December 31, 20 J8:

                                                                               A mount
                         Year ending December 31 :
                           2019                                                     2,493
                           2020                                                     2,104
                           2021*                                                    1,105
                                                                        $           5,702
                                                                            =======
                         * There are no rental commitments beyond 2021.



(9)   Related-Party Transactions
          (a) Included in receivables from related investment companies on the consolidated statement of
              financial condition is $ 12,l 80 of distribution fee revenue receivable at December 31, 2018.
          (b) As of December 3 I, 2018, amounts receivable from affiliates and payable to affiliates are $42,437
              and $25,587, respectively, and are reflected in Receivables from and Due to affiliates on the
              consolidated statement of financial condition.


(10) Fed!eral, State and! Local Income Taxes
      The deferred income taxes reflect the tax effects of temporary differences between the financial reporting
      and tax basis of assets and liabilities. The Company has a gross deferred tax asset of $2,822 and a gross
      deferred tax liability of $587 at December 31, 2018. The deferred tax asset is primarily attributable to stock
      compensation and the deferred tax liability is primarily attributable to depreciation. The net deferred tax
      asset is $2,235. The Company has not recorded a valuation allowance because management believes it is
      more likely than not that the deferred tax assets will be realized.


                                                         7


                        MBSC SECURITIES CORPORATION AND SUBSIDIARY
             (An Indirect Wholly Owned Subsidiary of The Bank of New York Mellon Corporation)
                           Notes to Consolidated Statement of Financial Condition
                                            December 31, 2018
                                               (In thousands)



      As of December 31 , 2018, the Company has gross unrecognized tax benefits of$15,693 .. Of that balance at
      December 31 , 2018, $4 ,363 represents the amount of unrecognized tax benefits that, if recognized, would
      favorably affect the effective tax rate in future periods.

      The Company recognized no interest in 2018 and had a $100 balance of accrued interest at December 31,
      2018.

      The Company does not expect any change in the total amount of unrecognized tax benefits over the next
      12 months to have a material impact on the Company' s financial statements.

      Federal taxes payable of $305 and state and local taxes receivable of $515 is included in due to/from
      affiliates on the consolidated statement of financial condition.

      The Company's federal consolidated income tax returns are closed to examination through 2013. The New
      York State and New York City returns are closed to examination through 2012.

(11) Net Capital Requirements
      Pursuant to the net capital prov1s10ns of Rule 15c3-l of the Securities Exchange Act of 1934 and
      Regulation 1.17 of the Commodity Exchange Act of 1936, the Company is required to maintain minimum
      net capital, as defined under the ahemative method as equal to the greater of $250 or 2% of the aggre.gate
      debit balances arising from customer transactions.

      The Company acts as an introducing broker-dealer, clearing trades on a fully disclosed basis and does not
      carry customer or broker-dealer accounts. Net capital may fluctuate on a daily basis. At December 31,
      2018, the Company had net capital of $52,302 which was $52,052 in excess of the required net capital.
      The Company had $3,027 in cash segregated for the exclusive benefit of customers as of December 31,
      2018.

      The net capital rules may effectively restrict the payment of cash distributions and the withdrawal of equity
      capital.

(12) Liti.g ation
      In the ordinary course of business the Company may be a defendant or codefendant in legal actions. In
      accordance with applicable accounting guidance, the Company establishes reserves for litigation and
      regulatory matters when those matters proceed to a stage where they present loss contingencies that are
      both probable and reasonably estimable. In such cases, there may be a possible exposure to loss in excess
      of any amounts accrued. The Company will continue to monitor such matters for developments that will
      affect the amount of the reserve, if any, and will adjust the reserve amount as appropriate.




                                                         8



Document Created: 2019-03-01 08:20:12
Document Modified: 2019-03-01 08:20:12
Additional Files
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0000277871-19-000002.txt   Complete submission text file   2859801

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