Net Capital Requirements
|12 Months Ended|
Dec. 31, 2016
|Regulatory Capital Requirements [Abstract]|
|Net Capital Requirements||
Net Capital Requirements
The Company’s broker-dealer subsidiaries are subject to the SEC’s Uniform Net Capital Rule 15c3-1, which requires the maintenance of minimum net capital. Each of Securities America, Triad, Investacorp, KMS and Ladenburg has elected to compute its net capital under the alternative method allowed by this rule, and, at December 31, 2016, each had a $250 minimum net capital requirement. At December 31, 2016, Securities America had regulatory net capital of $5,192, Triad had regulatory net capital of $11,262, Investacorp had regulatory net capital of $7,293, KMS had regulatory net capital of $5,517 and Ladenburg had regulatory net capital of $22,523.
SSN has elected to compute its net capital under the basic method allowed by the Net Capital Rule and at December 31, 2016, it had net capital of $7,739, which was $6,918 in excess of its required net capital of $821, and had a net capital ratio of 1.59 to 1.
Securities America, Triad, Investacorp, KMS, SSN and Ladenburg claim exemptions from the provisions of the SEC’s Rule 15c3-3 pursuant to paragraph (k)(2)(ii) as they clear their customer transactions through correspondent brokers on a fully disclosed basis.
On February 26, 2016, Triad sent written notification to FINRA of a net capital deficiency of $1,579 at January 31, 2016, which arose from changing its methodology of recognizing intra-quarterly revenue and related commission expense. Such methodology resulted in the recording of a non-allowable asset for purposes of computing net capital.
At February 29, 2016, the deficiency had been cured through the amortization of the non-allowable asset and Triad has taken steps to prevent recurrence. Also, the Company contributed $2,500 to Triad to increase its capital for purposes of maintaining excess net capital prospectively.
Premier Trust, chartered by the state of Nevada, is subject to regulation by the Nevada Department of Business and Industry Financial Institutions Division. Under Nevada law, Premier Trust must maintain minimum stockholders’ equity of at least $1,000, including at least $250 in cash. At December 31, 2016, Premier Trust had stockholders’ equity of $1,766, including at least $250 in cash.
The entire disclosure for banks, savings institutions, and credit unions, for regulatory capital requirements imposed by the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS) or for any state imposed capital requirements, as applicable. The disclosure may include (1) a description of regulatory capital requirements (a) for capital adequacy purposes and (b) established by the prompt corrective action provisions of Section 38 of the Federal Depository Insurance Act; (2) the actual or possible material effects of noncompliance with such requirements; (3) whether the entity is in compliance with the regulatory capital requirements including (a) required and actual ratios and amounts of Tier 1 leverage, Tier 1 risk-based, and total risk-based capital, tangible capital (for savings institutions), and Tier 3 capital for market risk (for certain banks and bank holding companies), (b) factors that may significantly affect capital adequacy; (4) the prompt corrective action category in which the entity was classified as of its most recent notification; (5) whether management believes any conditions or events since notification have changed the entity's category. Also may include additional information that might be disclosed in situations where substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time.
Reference 1: http://www.xbrl.org/2003/role/presentationRef