FOCUS Report Foreside Fund Partners Llc

X-17A-5 [Paper] - FOCUS Report

Published: 2016-02-26 12:39:38
Submitted: 2016-02-25
Period Ending In: 2015-12-31
scanned.pdf Scanned paper document


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                                                         16003209                                            OMB APPROVAL
                                                                                          ION          OMB Number:       3235-0123



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                                                           WaSningtnn PC
                                                        FACING PAGE
                  Information Required of Brokers and Dealers Pursualift Section 17 of the
                         Securities Exchange Act of 1934 and Rule 17a-5 Thereunder

REPORT FOR THE PERIOD BEGINNING                   ,TANIIARY 1, 2015 AND ENDING                              DECEMBER 3 1 , 2-n5
                                                             MM/DD/YY                                           MM/DD/YY

                                     A. REGISTRANT IDENTIFICATION

NAME OF BROKER-DEALER: ARDEN SECURITIES LLC                                                                    OFFICIAL USE ONLY

ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.)                                                      FIRM I.D. NO.

                                            THREE CANAL PLAZA, 3RD FLOOR
                                                          (No. and Street)
                                                                                                                                        V/
                       PORTLAND                                     MAINE                                     04101
                     (City)                                       (State)                                 (Zip Code)

NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
      WESTON SOMMERS                                                 (207) 553-7129
                                                                                                           (Area Code — Telephone Number)

                                    B. ACCOUNTANT IDENTIFICATION

INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report*

                                                             MARCUM LLP
                                              (Name — ifindividual, state last,first, middle name)


750 THIRD AVENUE, 11TH FLOOR, NEW YORK                                                       NEW YORK                      10017
      (Address)                                     (City)                                       (Mate)                    (Zip Code)


CHECK ONE:

           ® Certified Public Accountant
          ❑ Public Accountant

          ❑ Accountant not resident in United States or any of its possessions.

                                              FOR OFFICIAL USE ONLY




*Claimsfor exemptionfrom the requirement that the annual report be covered by the opinion ofan independent public 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 thisform are not required to respond
   SEC 1410(06 02)            uniesstheform displays a currentlyvalid OM'B control number.


                                                OATH OR AFFIRMATION

I    WESTON SOMMERS                                                             , swear (or affirm) that, to the best of
    ,
my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of
 ARDEN SECURITIES LLC                                                                                                       as
of DECEMBER 31                                           '2015         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:




                                                                       A/tA       &I---- -

                                                                                    Signature




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                                     My Commission Expires 10/30/2022
This report ** contains (check all applicable boxes):
® (a) Facing Page.
® (b) Statement of Financial Condition.
❑ (c) Statement of Income (Loss).
❑ (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 156-3.
❑ (i) Information Relating to the Possession or Control Requirements Under Rule 156-3.
❑ 0) A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule 156-1 and the
        Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3.
❑ (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).


                         ARDEN SECURITIES LLC
          (A Wholly-Owned Subsidiary of Foreside Financial Group,LLC)

                                                          CONTENTS


Report of Independent Registered Public Accounting Firm ............................................................1

Statement of Financial Condition ....................................................................................................2

Notes to Financial Statement ....................................................................................................... 3-7


                                                 MARCUM
                                                 ACCOUNTANTS A ADVISORS




           REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


  To the Member of
  Arden Securities LLC
  (A Wholly-Owned Subsidiary of Foreside Financial Group, LLC)

  We have audited the accompanying statement of financial condition of Arden Securities LLC (a
  wholly-owned subsidiary ofForeside Financial Group, LLC)as ofDecember 31, 2015 that is filed
  pursuant to Rule 17a-5 under the Securities Exchange Act of 1934, and the related notes to the
  financial statement. Arden Securities LLC's management is responsible for this financial
  statement. Our responsibility is to express an opinion on this financial statement based on our
  audit.

  We conducted our audit in accordance with the standards of the Public Company Accounting
  Oversight Board (United States). Those standards require that we plan and perform the audit to
  obtain reasonable assurance about whether the statement of financial condition is free of material
  misstatement. The company is not required to have, nor were we engaged to perform, an audit of
  its internal control over financial reporting. Our audit included consideration of internal control
  over financial reporting as a basis for designing audit procedures that are appropriate in the
  circumstances, 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. An
  audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in
  the statement of financial condition, assessing the accounting principles used and significant
  estimates made by management, as well as evaluating the overall statement of financial position
  presentation. We believe that our audit provides a reasonable basis for our opinion.

  In our opinion,the statement offinancial condition referred to above presents fairly, in all material
  respects, the financial condition of Arden Securities LLC as of December 31, 2015 in accordance
  with accounting principles generally accepted in the United States ofAmerica.


                   V_V4k «P
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               a
  New York, NY
  February 22, 2016




                                                         MARCUMGROUP
                                                             MEMBER

Marcum   LLP   ■ 750 Third Avenue ■ 11th Floor ■ New York, New York 10017 ■ Phone 212.485.5500 ■
                                                                                                 Fax 212.485.5501 ■ marcumllp.com


                      ARDEN SECURITIES LLC
       (A Wholly-Owned Subsidiary of Foreside Financial Group,LLC)


                         STATEMENT OF FINANCIAL CONDITION


                                  DECEMBER 31,2015

Assets
 Cash                                                   $      151,854
 Prepaid expenses                                                8,904
 12b-1 fees receivable                                             474
 Other receivables                                              37,491

Total Assets                                                                       198,723

Liabilities and Member's Equity

Liabilities
 Accrued expenses                                       $       30,500
 Accrued 12b-1 fees                                              1,492
 Due to related party                                           15,587

Total Liabilities                                                            $      47,579

Commitments and Contingencies

Member's Equity                                                                    151,144

Total Liabilities and Member's Equity                                        $     198,723




                The accompanying notes are an integralpart ofthis financialstatement.   2


                     ARDEN SECURITIES LLC
      (A Wholly-Owned Subsidiary of Foreside Financial Group,LLC)

                          NOTES TO FINANCIAL STATEMENT

                                    DECEMBER 31, 2015


NOTE 1 - ORGANIZATION

    Arden Securities LLC (the "Company"), a limited liability company, is an indirect, wholly-
    owned subsidiary of Foreside Financial Group, LLC ("Foreside") and a direct subsidiary of
    Foreside Distributors, LLC (the "Parent"). The Company is registered with the Securities
    and Exchange Commission ("SEC") as a broker-dealer and is a member of both the
    Financial Industry Regulatory Authority ("FINRA") and the Securities Investor Protection
    Corporation("SIPC").

    The limited liability company operating agreement provides for the Company to exist into
    perpetuity.

    The Company serves as the distributor and principal underwriter for certain registered
    closed-end and open-end funds (collectively, the "Funds") sponsored by Arden Asset
    Management, LLC (the "Advisor"). Substantially all ofthe Company's revenues are earned
    from the Funds or from the Advisor. In accordance with the structure ofthe Company, sales
    of the Funds' shares are executed by unaffiliated third party broker-dealers. Effective
    December 31, 2015, the closed-end funds serviced by the Company were liquidated. The
    open-end funds serviced by the Company are pending acquisition and/or liquidation during
    the first quarter of2016..

    The accompanying financial statement has been prepared from the separate records
    maintained by the Company and, due to certain transactions and agreements with affiliated
    entities, may not necessarily be indicative of the financial condition that would have
    existed, or the results that would have been obtained from operations, had the Company
    operated as an unaffiliated entity.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    USE OFESTIMATES

    The preparation of the financial statement in conformity with U.S. generally accepted
    accounting principles ("GAAP") requires management to make estimates and assumptions
    that affect the reported amounts of assets, liabilities, and disclosures of contingent assets
    and liabilities at the date of the financial statement. Actual results could differ from those
    amounts.


                     ARDEN SECURITIES LLC
      (A Wholly-Owned Subsidiary of Foreside Financial Group,LLC)

                         NOTES TO FINANCIAL STATEMENT

                                   DECEMBER 31,2015


NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)

    CASH EQUIVALENTS

    The Company considers all highly liquid temporary cash investments with an original
    maturity of three months or less when purchased to be cash equivalents.

    At December 31, 2015,the Company had no cash equivalents.

    RECEIVABLES

    The Company extends unsecured credit in the normal course of business to its clients. The
    determination of the amount of uncollectible accounts is based on the amount of credit
    extended and the length of time each receivable has been outstanding. The allowance for
    uncollectible amounts reflects the amount of loss that can be reasonably estimated by
    management. As of December 31, 2015, the Company had not recorded an allowance for
    any potential non-collection.

    INCOME TAXES

    The Company is organized as a limited liability company ("LLC") that has elected to be
    treated as a single member LLC under the Internal Revenue Code. As such, income, losses,
    and other tax attributes are primarily passed through to Foreside. Foreside is organized as
    an LLC that has elected to be treated as a partnership under the Internal Revenue Code. As
    such, income, losses, and other tax attributes are primarily passed through to its member
    and taxed at the member level.


NOTE 3- FAIR VALUE

    The Company defines fair value 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. The standard establishes the following hierarchy used in fair value
    measurements and expands the required disclosures of assets and liabilities measured at fair
    value:

       • Level 1 - Inputs use quoted unadjusted prices in active markets for identical assets or
          liabilities that the Company has the ability to access.




                                                                                              2


                     ARDEN SECURITIES LLC
      (A Wholly-Owned Subsidiary of Foreside Financial Group,LLC)

                          NOTES TO FINANCIAL STATEMENT

                                     DECEMBER 31,2015



NOTE 3- FAIR VALUE(CONTINUED)

       • Level 2 - Fair value measurements use other inputs that are observable, either
          directly or indirectly. These inputs include quoted prices for similar assets and
          liabilities in active markets as well as other inputs such as interest rates and yield
          curves that are observable at commonly quoted intervals.

       • Level 3 - Inputs that are unobservable inputs, including inputs that are available in
          situations where there is little, if any, market activity for the related asset or liability.

    The inputs or methodology used for valuing assets and liabilities are not necessarily an
    indication of the risk associated with investing in those assets and liabilities.

    As of December 31, 2015, the Company had no financial instruments that required to be
    fair valued.

    There were no transfers between Levels 1, 2, and 3 as of December 31, 2015.

    At December 31, 2015, the Company did not hold any Level                   or Level 3 assets or
    liabilities.


NOTE 4 - RELATED PARTY TRANSACTIONS

    The financial statement has been prepared from the separate records maintained by the
    Company. The Company shares office space and equipment with affiliates, which are under
    common control of Foreside. Accordingly, the Company has been allocated a portion of
    such shared costs. Also, the Parent provides administrative, legal, human resource and other
    general support services, the cost of which is allocated to the Company. At December 31,
    2015, amounts due to the related party totaled $15,587, which is included in "Due to related
    party" on the Statement of Financial Condition.

    The Parent agrees to financially assist the Company and is committed to provide such
    funds, as needed, to operate the business.

    During the year ended December 31, 2015, the Company received capital contributions
    from the Parent totaling $60,000.




                                                                                                     5


                     ARDEN SECURITIES LLC
      (A Wholly-Owned Subsidiary of Foreside Financial Group,LLC)

                         NOTES TO FINANCIAL STATEMENT

                                   DECEMBER 31,2015



NOTE 5 - NET CAPITAL REQUIREMENT

    The Company is subject to the SEC's Uniform Net Capital Rule 150-1, which requires the
    maintenance of minimum net capital and the ratio of aggregate indebtedness to net capital
    not to exceed 15 to 1. The rule also provides that equity capital may not be withdrawn, or
    cash distributions paid, if the resulting net capital ratio would exceed 10 to 1. At December
    31, 2015, the Company had net capital of $104,749, which was $99,749 in excess of its
    minimum required net capital of $5,000. The Company's ratio of aggregate indebtedness to
    net capital at December 31, 2015 was 0.45 to 1.


NOTE 6 - REGULATORY COMPLIANCE

    The Company claims exemption under the exemptive provisions of Rule 15c3-3 under
    subparagraph (k)(2)(i) - the Company has no customers, carries no accounts and does not
    otherwise hold funds or securities.


NOTE 7- COMMITMENTS AND CONTINGENCIES

   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 ofthose representations and warranties. These indemnifications
    generally are standard contractual terms and are entered into in the normal course of
    business. The Company's maximum exposure under these arrangements cannot be known;
    however, the Company expects any risk of loss to be remote.

    CREDITRISK

    The Company maintains a checking account in a financial institution. The account is
    insured by the Federal Deposit Insurance Corporation ("FDIC"). At times, cash may be
    uninsured or in deposit accounts that exceed the FDIC insurance limit. The Company has
    not experienced any losses in the account. The Company believes it is not exposed to any
    significant risk on cash. Management periodically assesses the financial condition of the
    bank and believes that any potential credit loss is minimal.




                                                                                               3


                     ARDEN SECURITIES LLC
      (A Wholly-Owned Subsidiary of Foreside Financial Group,LLC)

                         NOTES TO FINANCIAL STATEMENT

                                   DECEMBER 31,2015


NOTE H - AGREEMENTS

    The Company has Agreements with the Funds under which it acts as the distributor of the
    shares of beneficial interest of the Funds. The Agreements are generally for an initial two
    year term. Thereafter, if not terminated, the Agreements shall continue with respect to the
    Funds for successive one-year terms, provided such continuation is approved at least
    annually in accordance with the terms of the Agreements. The Agreements are generally
    terminable without penalty with 60 days' prior written notice, by the Funds or by the
    Company, in accordance with the terms of the Agreements. The Company has also entered
    into a Distribution Services Agreement with the Advisor (the "Services Agreement") which
    continues in effect through the term of the Agreements, a Securities Activities and Services
    Agreement ("SASA") with the Advisor which, if not terminated, shall continue for
    successive one-year terms, provided such continuation is approved at least annually in
    accordance with the terms of the SASA and Member Services Agreements with each of the
    closed-end funds. The Company receives any distribution and member services fees paid by
    the closed-end funds for shares sold which are still outstanding. Due to the liquidation of
    the closed-end funds, the Member Services Agreements were terminated on December 31,
    2015.

    The Company enters into Dealer and Selling Group Member Agreements with various
    intermediaries (including third party broker-dealers, banks and third party administrators)
    related to the sale of the shares of the Funds and the servicing of the Funds' shareholders.
    The Company may pay these intermediaries 12b-1 fees and member services fees as
    outlined in their respective Dealer and Selling Group Member Agreements provided that the
    Company first receives such payments from the Funds.


NOTE 9- SUBSEQUENT EVENTS

    Management has evaluated the impact of all events and transactions occurring after period
    end through the date this financial statement was issued, and has determined that there were
    no subsequent events requiring recognition or disclosure.




                                                                                              7



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