Managing Director, Asset Management
Vice President
Director, Field Production
Vice President
Head Finance
Head Consolidation and Financial Reporting
Senior Accountant, Audit Department
Do you have any current or past obligations or responsibilities, which could be construed as a conflict of interest with the position you are applying for? If yes, please explain below:
Please add your education, employment, memberships, past activities, or other experience you feel qualifies you to serve on the Board/Commission.
NO
EDUCATION
Specialist in School Psychology, Drake University, 1977 M.A. Counseling Psychology, Drake University, 1976
M.A. Experimental Psychology, University of Notre Dame, 1976 William Randolph Hearst Fellow in the Study of Mental Retardation B.A. Psychology, University of California, Santa Barbara, 1973
EXPERIENCE
September, 2002 to June, 2025. Director of Community Service, Chadwick School.
Developed Community Service Program at Chadwick School that facilitated the interaction between students and those in need. Created leadership opportunities for students; created International Study and Service Fair; created Senior Service Program; developed international service programming; developed long-term relationships with communities throughout the state and world.
March, 1981 to September 2002. Professionally unemployed.
October, 1979 to March, 1981. Enrolled in Accounting program at the University of California, Santa Barbara. Employed as assistant in CPA office.
January, 1977 to October, 1979. School Psychologist for Des Moines Public Schools. Performed duties of student and preschool evaluation to determine appropriate academic placement for students; child observation, interview, and assessment.
January, 1976 to January, 1977. Graduate Psychology Program, Drake University.
July, 1975 to January, 1976. Director of the Short Term Treatment and Respite Care Center and Psychologist at Woodward State Hospital-School. The Short-Term Treatment and Respite Care Center provided residential care and intensive intervention for children aged 0-12 for up to three months. Wrote and implemented behavioral programming, assessed adaptive behaviors, performed intelligence testing.
Rebecca (Becky) Barloon Noble
Hermosa Beach, CA 90254
Telephone:
Email:
EDUCATION
Specialist in School Psychology, Drake University, 1977 M.A. Counseling Psychology, Drake University, 1976
M.A. Experimental Psychology, University of Notre Dame, 1976 William Randolph Hearst Fellow in the Study of Mental Retardation B.A. Psychology, University of California, Santa Barbara, 1973
EXPERIENCE
September, 2002 to June, 2025. Director of Community Service, Chadwick School.
Developed Community Service Program at Chadwick School that facilitated the interaction between students and those in need. Created leadership opportunities for students; created International Study and Service Fair; created Senior Service Program; developed international service programming.
March, 1981 to September 2002. Professionally unemployed.
October, 1979 to March, 1981. Enrolled in Accounting program at the University of California, Santa Barbara. Employed as assistant in CPA office.
January, 1977 to October, 1979. School Psychologist for Des Moines Public Schools. Performed duties of student and preschool evaluation to determine appropriate academic placement for students; child observation, interview, and assessment.
January, 1976 to January, 1977. Graduate Psychology Program, Drake University.
July, 1975 to January, 1976. Director of the Short Term Treatment and Respite Care Center and Psychologist at Woodward State Hospital-School. The Short-Term Treatment and Respite Care Center provided residential care and intensive intervention for children aged 0-12 for up to three months. Wrote and implemented behavioral programming, assessed adaptive behaviors, performed intelligence testing.
VOLUNTEER EXPERIENCE
Board of Directors, Peninsula Chamber Orchestra
Board of Directors, Palos Verdes Peninsula Directory
Founded Female K League Soccer Division, Region 10
Commissioner, AYSO Region 10, Girls and Boys Divisions 6 & 7 Chairman, Art at Your Fingertips, Rolling Hills Country Day School Board Member, Jester & Pharley Phund
Planning Committee Member, Shared Bread Fellowship for the Unhoused Tutor - in - Training, Volunteer Literacy Project
Meeting Date: June 9, 2026
Staff Report No. 26-AS-065
Honorable Mayor and Members of the Hermosa Beach City Council FY 2026-2027 BUDGET DISCUSSION
(Administrative Services Director Brandon Walker)
Recommended Action:
Staff recommends City Council:
1. Receive and File Fiscal Year (FY) 2026-2027 Budget Presentation; Executive Summary:
The City continues to face ongoing fiscal challenges driven by rising operational costs, contractual obligations, and infrastructure needs. In response, staff developed a balanced FY 2026-2027 budget strategy that addresses near-term financial pressures while minimizing impacts to community services and filled positions. Consistent with prior City Council direction, staff evaluated both expenditure reductions and potential revenue enhancements to support long-term fiscal sustainability. Staff will continue to return to City Council with revenue and funding options for future discussion and policy consideration, allowing for a deliberate evaluation of opportunities to strengthen the City's financial position while maintaining service levels.
Background:
The FY 2026-2027 budget process identified a structural deficit resulting from expenditures outpacing ongoing revenue growth. Over the past several years, the City has relied on one-time funding solutions and operational adjustments to maintain balanced budgets. However, increasing personnel costs, contractual obligations, County service costs, and infrastructure needs have created ongoing fiscal pressures requiring both expenditure management and evaluation of future revenue opportunities.
City Council previously directed staff to pursue budget balancing strategies that minimize impacts to filled positions and community services while evaluating options to improve the City's long-term financial sustainability.
Past Board, Commission, and Council Actions
Meeting Date Description
March 24, 2026
City Council received an initial overview of the FY 27 budget framework and provided direction to address an emerging structural deficit through a mix of revenue and expenditure strategies.
April 28, 2026
City Council reviewed the FY 27 fiscal outlook, including a projected ~$3.2M deficit, and the need to shift from one-time solutions to long-term structural balance.
May 26, 2026 City Council reviewed potential revenue options.
May 28, 2026 City Council held an FY 27 Capital Improvement Program (CIP) Study Session
Analysis:
FY 2026-2027 Budget Balancing Strategy
To address the immediate structural deficit while minimizing service impacts, staff implemented several citywide budget-balancing measures, including:
Deferral of Equipment Replacement Fund contributions and vehicle replacement funding.
Reduction of planned General Fund reserve contributions while maintaining reserves above recommended industry best-practice levels. Operational efficiencies and expenditure controls across departments.
These actions provided approximately $3.2 million in budget relief and allowed the City to achieve a balanced FY 2026-2027 budget without immediate reductions to core services.
Departmental General Fund Reductions
Departments identified approximately $1.3 million in ongoing expenditure reductions and operational efficiencies designed to minimize impacts to filled positions and maintain core service levels. These reductions include vacancy management, contractual service reductions, operational efficiencies, and targeted expenditure controls. Please see Attachment 1 for a detailed summary of departmental reductions and associated savings.
The combined citywide and departmental actions provide approximately $4.5 million in General Fund expenditure reductions and deferrals. This strategy balances the FY 2026- 2027 budget while preserving core municipal services and avoiding impacts to filled staff positions.
Department Supplemental Requests
In addition to the budget reduction strategies outlined above, departments submitted supplemental requests to address critical operational, technology, facility maintenance, organizational, and infrastructure needs. These requests support service delivery, operational efficiency, employee development and succession planning, public safety, and the maintenance of City facilities and assets. Staff carefully evaluated each request during the budget development process and incorporated approved supplemental requests into the proposed budget. The costs associated with these requests have been accounted for and are supported by the structural savings and expenditure management strategies described in this report. A detailed summary of departmental supplemental requests is provided in Attachment 2.
Future Revenue and Funding Opportunities
Staff reviewed potential revenue enhancement opportunities with the City Council during the May 26, 2026 budget discussion. These opportunities generally focus on visitorgenerated revenues, consumer-based revenues, parking and mobility-related revenues, and optimization of City-owned assets and resources. The purpose of evaluating these opportunities is to improve long-term fiscal sustainability, diversify revenue sources, and reduce reliance on future expenditure reductions while maintaining community service levels. Attachment 3 summarizes the options that were presented to City Council.
Staff will return to City Council at a future meeting to discuss potential ballot measure initiatives, associated implementation considerations, and citation penalty opportunities.
Department Estimated Savings
Administrative Services $424,000
City Clerk $121,000
City Manager's Office $75,000
Community Development $21,000
Parks and Recreation $150,000
Police $310,000
Public Works $225,000
Total Departmental Reductions $1.33 Million
Additional revenue strategies will continue to be evaluated and presented to City Council over the coming months for further discussion and policy consideration.
Conclusion
The FY 2026-2027 budget strategy reflects a balanced approach that addresses immediate fiscal challenges through approximately $4.5 million in expenditure reductions and deferrals while minimizing impacts to community services and filled positions.
Although these actions address the current-year structural deficit, ongoing cost pressures and infrastructure needs require continued evaluation of long-term funding solutions. Staff will continue working with City Council to identify and evaluate revenue opportunities and fiscal strategies that support the City's long-term financial sustainability and service objectives.
Fiscal Impact:
The proposed FY 2026-2027 budget includes approximately $4.5 million in General Fund expenditure reductions and deferrals to address the City's structural deficit while minimizing impacts to filled positions and community services. Department supplemental requests have been incorporated into the proposed budget and are supported by the expenditure management strategies outlined in this report. Future revenue enhancement proposals will be presented separately for City Council consideration.
Attachments:
1. FY 27 General Fund Budget Reductions
2. FY 27 General Fund Supplemental Requests
3. Future Revenue Options
Respectfully Submitted by: Brandon Walker, Administrative Services Director Noted for Fiscal Impact: Brandon Walker, Administrative Services Director Approved: Steve Napolitano, City Manager
Budget Reductions
001 General Fund
Department / Division Reduction Account # Amount Reduction Strategy City Wide - All
Departments
Communication
and Equipment
Replacement
Charges
001-XXXX-4395 001-XXXX-4390 $ (2,052,711)
Preliminary balanced budget strategy to address City's projected $3.2M structural deficit that avoids immediate service reductions. Delayed department contributions to Equipment Replacement Fund for departments share of City wide IT hardware and software costs, pool for vehicle purchases to be deferred and the Equipment Services Division due to relatively healthy fund balance reserves.
City Wide Contingency 001-2539 $ (1,156,106) Preliminary balanced budget strategy to address City's projected $3.2M structural deficit that avoids immediate service reductions. Reduces planned reserve contributions by approximately $1.1 million, lowering the General Fund reserve level from its 20% target to approximately 18%, which remains above the Government Finance Officers Association best-practice recommendation of 16%. $ (3,208,817) Total of Preliminary General Fund Reductions
001 General Fund
Department / Division Reduction Account # Amount Reduction Administrative Services
Eliminate (1.0 FTE)
Account Clerk from
Revenue Services
Division
001-1204-41XX $ (95,412)
Currently, the Administrative Services Department's organizational structure includes a vacant Account Clerk position. Staff has evaluated and determined that an Account Clerk position is not currently needed to due to operational efficiencies.
Administrative Services /
Downgrade HR
Analyst Position to
HR Technician
001-1203-41XX $ (49,426)
Staff has evaluated and determined that an HR Technician role is better suited for current operational needs as the role would focus on performing specialized administrative and technical support activities rather than complex program management or city-wide policy development that would be performed by the current HR Manager.
Administrative Services
Eliminate (0.5 FTE)
HR Intern from HR
Division
001-4601-41XX $ (25,331) Staff has evaluated and determined that an HR Intern is not needed for current operations.
Administrative Services Reduce Sign On Bonuses 001-1203-4192 $ (100,000) The sign on bonus budget is reduced from prior fiscal years to only cover existing sign on bonuses the City is contractually obligated to cover, sworn Police Officer and other highly market competitive positions on a case by case basis.
Administrative Services
Reduce
Contractual
Services
001-1203-4201 $ (95,000) Reduction of contractual services from resolutions of City bargaining group negotiations, resolution of ongoing HR personnel legal cases.
Administrative Services
Reduce
Contractual
Services
001-1203-4201 $ (30,000) Reduction of recruitment advertising budget as executive management positions have been filled.
Administrative Services
Reduce
Contractual
Services
001-1203-4201 $ (18,000) Reduction in employee recognition events.
Administrative Services
Reduce
Contractual
Services
001-1202-4201 $ (11,000) Staff has evaluated and determined the vendor self service would not be widely used as part of the upcoming Munis upgrade. $ (424,169) Administrative Services Reductions
City Clerk
Eliminate (1.0 FTE)
Senior Office
Assistant position
001-3104-4309 $ (80,294) Staff has evaluated and determined that a Senior Office Assistant position is not needed for current City Clerk operations.
City Clerk
Reduce
Contractual
Services
001-4204-4201 $ (36,000) Elimination of contractual services for organizational physical record support from technology and digital workflow efficiencies.
City Clerk Reduce Public Noticing 001-1121-4323 $ (5,000) Reduction of Public Noticing from $18,000 to $13,000 based on prior year historical changes and planned digitized noticing. $ (121,294) City Clerk Reductions
City Manager
Reduce
Contractual
Services
001-1201-4201 $ (36,400) Reduce 3rd Party Public Information Officer Services from $86,400 to $50,000.
City Manager
Reduce
Contractual
Services
001-4601-41XX $ (5,000) Reduce Printed Communications / Promotions by half from $10,000 to $5,000.
City Manager
Reduce
Contractual
Services
001-4204-4201 $ (3,000) Eliminate budget for Economic Development Events.
City Manager
Reduce
Contractual
Services
001-6101-4201 $ (12,400) Eliminate budget for Management Team Executive Retreat in previous budgets.
City Manager
Reduce
Contractual
Services
001-4204-4309 $ (7,300)
Eliminate budget for 3rd party Emergency Operations Plan Development. It is intended the City Emergency Management Coordinator will create a plan instead of an external vendor.
City Manager Reduce Training 001-1201-4317 $ (10,550)
Reduce training budget by reducing the California Municipal Parking Association (CMPA) Conference by $1,675 due to the conference being held locally and reduce the International City/County Management Association (ICMA) conference budget by $3,000. Reduce $5,875 of emergency management conference and other associated training budget related to the eliminated Deputy City Manager position. $ (74,650) City Manager Reductions
Community Development
Eliminate (0.5 FTE)
Intern position from
Building Division
001-4201-41XX $ (21,110) Staff has evaluated and determined that a Building Department Intern previously budgeted is not needed for current operations. $ (21,110) Community Development Reductions
Parks and Recreation Reduce Contract Services Budget 001-4601-4201 $ (110,500) Reduction in contractual services budget as the City switched vendors for recreation management software for FY 2027 resulting in budget savings. Parks and Recreation Reduce Part Time / Temporary Budget 001-4601-4112 $ (39,566) Reduce Part Time budget by $39,566 due to reassignment of recreational leader duties to proposed recreational supervisors. $ (150,066) Parks and Recreation Reductions
Police
Reduce
Contractual
Services
001-2101-4201 $ (9,900) Reduced background investigations from $19,900 to $10,000 due to filled positions in the PD Department.
Police
Reduce
Contractual
Services
001-2101-4201 $ (7,570) Reduction of Quantfit budget due to staff evaluation of needing only annual maintenance vs replacement.
Police
Reduce
Contractual
Services
001-2101-4201 $ (20,000) Reduced internal affair investigations budget from $45,000 to $20,000 due to filled positions in the PD Department.
Police
Reduce
Contractual
Services
001-2101-4201 $ (35,000) Reduce Fiesta Hermosa Special Event budget after evaluation of prior year expenditures and current operational needs.
Police
Reduce
Contractual
Services
001-2101-4201 $ (8,816) Reduce Securitas Contract for Panic Alarms as the Department has selected and budgeted for a more cost competitive vendor.
Police
Reduce
Contractual
Services
001-2101-4201 $ (15,225) General reductions in Contract Services identified by Staff. Contractual Services reduced in total by $96,511.
Police
Reduce General
Overhead Costs,
Uniform and
Memberships
001-2101-4304 001-2101-4305 001-2101-4306 001-2101-4309 $ (29,711) General budget reductions with department phone, operating supplies, uniforms and memberships based on prior year historical usage trends.
Police
Reduce Travel &
Conference /
Training
001-2101-4312 001-2101-4317 $ (100,981)
Reduce conference training budget from $233,630 to $132,649 to accommodate only mandated training. Suspension of career development / specialty training.
Police - Comm. Services
Eliminate (0.5 FTE)
Intern position from
Community
Services
001-3302-41XX $ (21,110) Staff has evaluated and determined that a Community Services Intern previously budgeted is not needed for current operations.
Police - Comm. Services
Reduce
Contractual
Services
001-3302-4201 $ (20,000) Reduction in projected IPS City parking meter repairs.
Police - Comm. Services
Reduce
Contractual
Services
001-3302-4201 $ (7,500) Reduction in planned FY 2027 Community Events.
Police - Comm. Services
Reduce
Contractual
Services
001-3302-4201 $ (3,720) General reductions in Contract Services identified by Staff. Contractual Services reduced in total by $31,220.
Police - Comm. Services
Reduce General
Overhead Costs,
Uniform and
Memberships
001-3302-4304 001-3302-4314 001-3302-4315
$ (7,555) General budget reductions with department phone, uniforms and memberships based on prior year historical usage trends.
Police - Comm. Services
Reduce Travel &
Conference /
Training
001-3302-4317 $ (23,095)
Reduce conference training budget from $36,750 to $13,655 to accommodate only mandated training. Suspension of career development / specialty training. $ (310,183) Police Department Reductions
Public Works
Reduce
Contractual
Services
001-3104-4201 $ (35,000) Reduction of 3rd party Traffic Engineering services, Public Works Staff will handle services in house.
Public Works Reduce
Contractual
001-3301-4201 $ (2,000) Quarterly Palm Tree Fertilization - Pier Avenue (already included in Merchants contract)
Services
Public Works
Reduce
Contractual
Services
001-3301-4201 $ (1,000) Quarterly Palm Tree Fertilization - Plaza (already included in merchants contract) Public Works
Reduce
Contractual
Services
001-3304-4201 $ (10,500) Reduction in monthly credit card transaction fee budget for North Pier Parking Lot due to switching to a more cost effective vendor.
Public Works
Reduce
Contractual
Services
001-3305-4201 $ (15,700) Reduction in monthly credit card transaction fee budget for Parking Lot A due to switching to a more cost effective vendor.
Public Works
Reduce
Contractual
Services
001-4202-4201 $ (25,000) Reduction of 3rd party General Plan Check Services, Public Works Staff will distribute workload to handle services in house.
Public Works
Reduce
Contractual
Services
001-4202-4201 $ (45,000) Reduction of ADA Consultant Services, Public Works Staff will distribute workload to handle services in house.
Public Works
Reduce
Contractual
Services
001-4202-4201 $ (6,500) General reduction of an expected decrease in Arborist contractual services.
Public Works
Reduce
Contractual
Services
001-4202-4201 $ (55,000) General reduction of Trees and Plants Contractual Services.
Public Works Reduce Office Supplies 001-4202-4305 $ (6,000) General budget reduction of office, maintenance, and supply purchases. Public Works Reduce Travel &
Conference /
Training
001-4202-4317 $ (13,000) General reduction in conference attendance for Public Works staff.
Public Works Reduce Utilities 001-6101-4303 $ (10,720)
Staff plans to perform a Parks Irrigation audit by engaging the Cal Water Irrigation Efficiency Program (free service) to identify over-watered zones.
Staff estimates a 5 to 10% reduction in water consumption which would equate to $10,000 to $20,000 per year in utility savings. $ (225,420) Public Works Reductions
$ (1,326,892) Total General Fund Departmental Specific Reductions $ (4,535,709) Total General Fund Reductions
Includes reduction in Contingency, Communication and Equipment Replacement Charges and Departmental Specific Reductions.
1/5
Department Supplemental Requests2026-2027 Supplemental Requests 001 General Fund
Department / Division Proposal Frequency Account # Recommended Justification Administrative Services
Reclass (3.0 FTE) Account Clerk to Account Specialist
Recurring 001-1204-41XX $ 6,262
The proposal is intended to modernize the current existing outdated job classifications and align job specifications with comparable agencies and labor market practices. This change is a proactive step to strengthen the Department’s organizational structure, ensuring that experienced staff are positioned to take on expanded leadership responsibilities as service demands continue to grow, as well as further support recruitment, employee retention, and succession planning. Funding of the reclass will come from the approximately $95,000 savings by eliminating a vacant full time Account Clerk position in the Administrative Services - Revenue Services Division.
Administrative Services Reclass (1.0 FTE)
Account Clerk to Lead Account Specialist
Recurring 001-1204-41XX $ 8,937 The proposal is intended to budget to provide a competitive promotional opportunity for a current account clerk to serve as a lead worker, coordinating daily workflow, providing technical support to staff, and assisting the Revenue Services Supervisor with program activities and delinquent
2/5
account management. While the Account Specialist focuses on routine clerical and fiscal support, the Lead Account Specialist serves as a primary point of contact for troubleshooting system issues and resolving the most complex account discrepancies. Funding of the reclass will come from the approximately $95,000 savings by eliminating a vacant full time Account Clerk position in the Administrative Services - Revenue Services Division.
Administrative Services
Reclass (1.0 FTE) Accountant to Senior Accountant
Recurring 001-1202-41XX $ 13,075
Currently, the Administrative Services Department's organizational structure includes an Accountant position. However, the position classification does not fully reflect the responsibilities, level of complexity of assignments in accordance with specific governmental accounting practices, policies and procedures. In many comparable municipal organizations, the Senior Accountant is distinguished from the Accountant position by the complexity of assignments, degree of independence exercise and general ledger maintenance. The proposal is intended to provide a promotional recruitment opportunity to recognize the current duties of the Accountant which includes the complex financial analysis of budgetary support, budgetary monitoring, and year end City required ACFR (Annual Comprehensive Financial Report) audit support to the Finance Manager and Administrative Services Director, independence exercised with serving as a primary liaison to the City Treasurer, City Banking and Investment Services and demonstrated process and modernization improvements to the City's Capital Asset policies. These duties are typically classified as a Senior Accountant position, reflecting a higher level of administrative, operational, and policy responsibility. This change is a proactive step to strengthen the Department’s organizational structure, ensuring that experienced staff are positioned to take on expanded leadership responsibilities as service demands continue to grow, as well as further support recruitment, employee retention, and succession planning. Funding of the reclass will come from the approximately $95,000 savings by eliminating a vacant full time Account Clerk position in the Administrative Services - Revenue Services Division.
3/5
Parks and Recreation
Reclass (1.0 FTE) Senior Recreation Supervisor to Parks and Recreation Manager Recurring 001-4601-41XX $ 18,510
Currently, the Department’s organizational structure includes a Senior Recreation Supervisor position that functions as the second-in-command to the Director. This position provides critical operational oversight; however the classification does not fully reflect the responsibilities, level of decision-making authority, or strategic leadership required to support the Department’s current and future needs. In many comparable municipal organizations, the position directly supporting a Department Director is typically classified as a Deputy Director or Manager-level role, reflecting a higher level of administrative, operational, and policy responsibility. This gap between classification and actual responsibilities presents several challenges: Organizational Alignment: The current title does not align with industry standards for second-in-command roles within municipal Parks and Recreation departments, which may impact clarity both internally and externally. Operational Efficiency: A Manager-level classification would more clearly allow authority for decision-making, project oversight, and staff management across divisions. Recruitment, Retention and Succession Planning: Competitive classifications are critical to attracting and retaining high-level talent. Creating a Parks and Recreation Manager classification would better reflect the current operational reality and provide a structure consistent with similarly sized and serviceoriented agencies.
Parks and Recreation Reclass (2.0 FTE)
Recreation Coordinator to Recreation Supervisor
Recurring 001-4601-41XX $ 24,824 Currently, the Department’s organization structure also includes two Recreation Coordinators under the supervision of the Senior Recreation Supervisor. These positions serve on the Department’s leadership team, along with the Senior Recreation Supervisor and Parks and Recreation Director. The Recreation Coordinator positions have developed into integral supervisory roles within the Department, with strong familiarity with operations, community needs, and service delivery expectations. As the Department continues to grow in both scope and complexity, there is an opportunity to build upon this existing foundation by formally expanding the level
4/5
of responsibility and authority associated with these roles. The proposed reclassifications from Recreation Coordinator to Recreation Supervisor are intended to both recognize the current level of experience within these roles and strategically position the Department to meet increasing operational demands. This reclassification would: 1. Acknowledge the depth of knowledge and operational involvement already established within these positions, while formalizing a higher level of responsibility 2. Expand authority for program and facility oversight, including increased ownership of assigned service areas 3. Provide enhanced capacity for supervision of part-time staff and instructors, supporting more effective day-to-day operations 4. Allow for the delegation of more complex operational and administrative responsibilities, improving overall efficiency within the Department 5. Support higher-level involvement in program planning, evaluation, and continuous improvement efforts This change is a proactive step to strengthen the Department’s organizational structure, ensuring that experienced staff are positioned to take on expanded leadership responsibilities as service demands continue to grow, as well as further support recruitment, retention, and succession planning.
Public Works
Street Light Pole Replacement and Repairs (Priority 1)
One Time 001-6101-4201 $ 85,000
The City has various locations throughout the City which are missing street light poles due to collisions and other incidents. Staff is requesting to request to purchase replacement light poles and make electrical repairs with contingency.
Public Works
Fire Extinguisher Monthly Inspection (Priority 2)
Recurring 001-4204-4201 $ 7,200
Inspection of the fire extinguisher's citywide monthly. Monthly inspections of the fire extinguishers are required.
Budget reductions from other Public Works Contract Services is intended to cover the recurring cost to perform monthly inspections of the fire extinguishers citywide.
Public Works Pier Ave Led
Conversion (Priority 3)
One Time 001-3104-4309 $ 15,000 Existing incandescent lights on Pier Avenue are obsolete and can not be replaced. The Community has also complained about darkness along the Pier Ave corridor. The one-time project would convert existing streetlights on Pier Ave from incandescent to LED. The new lighting will allow staff to easily replace lights when necessary, save on
5/5
energy cost and enhance lighting conditions along the Pier Avenue corridor.
Public Works
Community Center Theater Entrance Flooring (Priority 4) One Time 001-4204-4201 $ 39,390
The existing Community Center main theater hallway floor tiles have become detached from the sub flow creating a safety issue for victors and residents. Staff recommends flooring removal and replacement to address the safety issue.
Public Works
Community Center Classroom Painting (Priority 5)
One Time 001-4204-4201 $ 30,968 Classrooms on the 2nd Floor of the Community Center are in need of new fresh coat of paint.
Public Works
Community Center Senior Center Flooring (Priority 6)
One Time 001-4204-4201 $ 9,712
The current Community Center Senior Center flooring is wood flooring. The wood flooring is at its end of life and staff recommends replacing the wood flooring with laminate flooring. Approve a one-time request to replace the flooring with contingency.
Public Works
Community Center Restroom Repairs (Priority 7)
One Time 001-4204-4201 $ 5,000 The Community Center Restrooms are in need of general repairs. The repair including contingency would consist of repairing or replacing tiles, repairing walls, restroom window frames and repainting.
Public Works
Clark Field Restrooms Security Fencing (Priority 8)
One Time 001-6101-4201 $ 40,793
Existing Clark Field restrooms are currently not properly secured after operating hours in the evening which is a public safety and maintenance issue. Staff is requesting a one-time request to install a fence and gate with contingency to secure the Clark Field restrooms after operating hours.
Public Works
Pier Ave Palm Tree String Lights Wrap (Priority 9)
One Time 001-3104-4309 $ 14,000
Staff has received requests from the City Business Community for aesthetic lighting on Pier Ave to beautify the corridor. The project would involve an install new LED string lights on median palm trees year-round. Staff has determined the new string lights is a low cost / cost effective solution to add more lighting.
Public Works
Community Center Tennis Courts Windscreens (Priority 10) One Time 001-4204-4309 $ 21,985
Existing windscreens at the Community Center Tennis Courts are damaged and need replacement or have been removed from recent storm events. Staff is requesting a one-time request to install windscreens with contingency. $ 340,656 Total General Fund Supplementals
Future Revenue Options
City of Hermosa Beach | Page 1 of 6
Meeting Date: June 9, 2026
Staff Report No. 26-AS-063
Honorable Mayor and Members of the Hermosa Beach City Council
AWARD OF PROFESSIONAL SERVICES AGREEMENTS FOR ON-CALL
BROKER/DEALER SERVICES
(City Treasurer David Pedersen and Administrative Service Director Brandon Walker Recommended Action:
Staff recommends City Council:
1. Award and authorize the City Manager to enter into an agreement for on-call broker/dealer services with Academy Securities, Inc. for a term of three years ending June 30, 2029, and the option for two one-year extensions at the City's discretion;
2. Award and authorize the City Manager to enter into an agreement for on-call broker/dealer services with Great Pacific Securities for a term of three years ending June 30, 2029, and the option for two one-year extensions at the City's discretion;
3. Award and authorize the City Manager to enter into an agreement for on-call broker/dealer services with Higgins Capital Management, Inc. for a term of three years ending June 30, 2029, and the option for two one-year extensions at the City's discretion;
4. Award and authorize the City Manager to enter into an agreement for on-call broker/dealer services with Multi-Bank Securities, Inc. for a term of three years ending June 30, 2029, and the option for two one-year extensions at the City's discretion;
5. Award and authorize the City Manager to enter into an agreement for on-call broker/dealer services with Raymond James & Associates, Inc. for a term of three years ending June 30, 2029, and the option for two one-year extensions at the City's discretion;
6. Award and authorize the City Manager to enter into an agreement for on-call broker/dealer services with Stife Nicolaus & Company, Inc., for a term of three years ending June 30, 2029, and the option for two one-year extensions at the City's discretion;
7. Award and authorize the City Manager to enter into an agreement for on-call broker/dealer services with U.S. Bancorp Advisors, Inc., for a term of three years ending June 30, 2029, and the option for two one-year extensions at the City's discretion;
City of Hermosa Beach | Page 2 of 6
Executive Summary:
The City of Hermosa Beach maintains an investment portfolio ranging from approximately $40 million to $55 million and annually adopts an Investment Policy governing the management and investment of public funds. To support implementation of the City's investment program and provide access to a diverse and competitive marketplace for authorized investments, the City issued Request for Qualifications (RFQ) No. 26-002 seeking qualified broker/dealer firms to provide investment transaction services consistent with California Government Code Section 53600 et seq. and the City's adopted Investment Policy.
This solicitation represents the City's first comprehensive review and update of its approved broker/dealer pool since the original broker/dealer Request for Proposals process conducted in 2013. The updated broker/dealer bench will ensure the City maintains a current, competitive, and well-qualified roster of firms eligible to participate in future investment transactions.
Following a competitive Request for Qualifications process, staff recommends the City Council approve professional services agreements with seven qualified broker/dealer firms to serve on the City's approved broker/dealer list. The selected firms will provide market information, investment transaction execution services, and related support on an as-needed basis for a term of three years with the option for two one-year extensions at the City's discretion. Inclusion on the approved list does not guarantee any minimum volume of transactions or compensation.
Background:
The City annually adopts an Investment Policy that establishes the objectives, standards, and procedures governing the investment of public funds. The Investment Policy identifies safety of principal as the City's primary objective, liquidity as the secondary objective, and market rate return as the third objective while maintaining compliance with California Government Code Section 53600 et seq.
The Investment Policy further requires that broker/dealers conducting investment transactions with the City be approved by the City Council and maintain all required registrations, certifications, and financial qualifications. The City Treasurer is responsible for establishing and maintaining a list of approved broker/dealers and conducting periodic reviews of each firm's qualifications and financial condition.
The City's current approved broker/dealer pool was established following a competitive Request for Proposals process conducted in 2013. Since that time, the City's investment portfolio, regulatory environment, financial markets, and broker/dealer industry have evolved significantly. While the existing approved firms have continued to provide valuable services to the City, the approved list has not undergone a comprehensive competitive review in more than a decade.
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The City's investment portfolio is generally invested in U.S. Treasury securities, federal agency securities, negotiable certificates of deposit, commercial paper, and other investment vehicles authorized under the City's Investment Policy. Maintaining a diversified pool of qualified broker/dealers promotes competition, improves market access, and supports prudent portfolio management.
Accordingly, the City elected to conduct a new Request for Qualifications process to establish an updated approved broker/dealer pool for the next three to five years.
Past Board, Commission, and Council Actions
Meeting Date Description
2013
In 2013, the City conducted a competitive Request for Proposals process to establish its current approved broker/dealer pool.
The approved firms resulting from that solicitation have served as the City's authorized broker/dealers for investment
transactions since that time.
Analysis:
Reissuing the broker/dealer solicitation provides several important benefits to the City.
First, it allows the City to evaluate the qualifications, financial condition, regulatory standing, and municipal market expertise of firms currently conducting business with the City as well as firms that may not have participated in the original 2013 solicitation.
Second, a refreshed broker/dealer pool increases competition among firms providing investment transaction services. Increased competition improves pricing transparency, expands market access, and enhances the City's ability to obtain competitive execution on authorized investments.
Third, the solicitation process enables the City to confirm that approved firms possess current registrations, maintain adequate capital and compliance controls, and understand the requirements of the City's Investment Policy and California Government Code Section 53600 et seq.
Finally, expanding and modernizing the City's approved broker/dealer list reduces concentration risk by providing the City Treasurer with access to a broader range of qualified counterparties and investment opportunities while preserving the City's primary objectives of safety, liquidity, and prudent portfolio management.
On March 10, 2026, the City issued RFQ No. 26-002 for On-Call Broker/Dealer Services through the City's PlanetBids procurement platform (Attachment 1). The RFQ invited
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qualified broker/dealers to submit Statements of Qualifications demonstrating their ability to provide investment transaction services for California municipal investment portfolios.
Consistent with the requirements of the City's Investment Policy, respondents were required to provide:
• Current audited financial statements;
• Proof of registration with applicable state and federal regulatory agencies; • Evidence of FINRA registration and regulatory compliance; • Experience serving California public agencies;
• Qualifications of assigned representatives;
• Certification that the firm's representatives had reviewed and would comply with the City's Investment Policy; and
• Information regarding institutional fixed-income trading capabilities and publicsector experience.
The RFQ expressly stated that the City intended to establish an approved broker/dealer list and that inclusion on the list would not guarantee any minimum transaction volume.
Rather, approved firms would be eligible to participate in future investment transactions at the sole discretion of the City.
Statements of Qualifications were independently reviewed by staff from the Office of the City Treasurer and Administrative Services Department.
The proposals were evaluated based on the following criteria:
• Financial strength and organizational stability;
• Experience serving California municipalities and other public agencies; • Qualifications and experience of assigned representatives; • Regulatory compliance history;
• Understanding of public-sector investment requirements and California Government Code restrictions;
• Ability to provide competitive market access, pricing transparency, and authorized investment products; and
• Responsiveness and completeness of the Statement of Qualifications.
A total of ten firms submitted responses to the solicitation. Following a comprehensive review of the Statements of Qualifications, staff recommends award of contracts to the seven most qualified highest-ranking firms (in no particular order) based upon the established evaluation criteria. The review considered each firm's qualifications, experience, service capabilities, local presence, and ability to meet the City's investment and financial advisory needs. The selected firms demonstrated the strongest combination of relevant public-sector experience, professional expertise, responsiveness, and overall
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capacity to provide the specialized services required. The remaining firms were not selected because their qualifications, experience, or proposed services were determined to be less aligned with the City's needs and evaluation criteria. (Reponses in Attachments 2-8)
No. Company Name
1 Academy Securities, Inc.
2 Great Pacific Securities
3 Higgins Capital Management, Inc.
4 Multi-Bank Securities, Inc.
5 Raymond James & Associates, Inc.
6 Stifel Nicolaus & Company Incorporated
7 U.S. Bancorp Advisors
These seven firms demonstrated the strongest qualifications, financial stability, institutional fixed-income expertise, public-sector experience, and understanding of the City's investment objectives and regulatory requirements.
If approved, the selected broker/dealers will comprise the City's approved broker/dealer bench for an initial three-year term ending June 30, 2029, with the option for two one-year extensions at the City's discretion. The City Treasurer may solicit market quotations, investment opportunities, and transaction support from any approved firm. Investment transactions will be executed based upon market conditions, pricing, diversification requirements, and compliance with the City's Investment Policy.
Approval of these agreements does not guarantee any specific volume of transactions, revenue, or compensation. The City retains sole discretion regarding all investment decisions and transaction allocations.
Options for Council Consideration:
Option 1 – Approve Staff Recommendation
Approve agreements with the seven recommended broker/dealer firms.
Pros:
• Updates the City's broker/dealer pool for the first time since 2013. • Increases competition, market access, and pricing transparency. • Supports prudent investment management and implementation of the Investment Policy.
Cons:
• Requires administration and oversight of multiple approved firms.
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Option 2 – Take No Action
Continue utilizing the existing broker/dealer pool.
Pros:
• No changes to current practices.
Cons:
• Maintains a broker/dealer pool established in 2013.
• Does not provide the benefits of a competitive solicitation process or expanded market access.
Fiscal Impact:
There is no direct fiscal impact associated with approval of the proposed agreements.
Broker/dealers are compensated through transaction spreads and market pricing associated with individual investment purchases and sales. No annual retainer, minimum compensation, or guaranteed transaction volume is contemplated under the agreements.
The use of multiple approved broker/dealers is expected to enhance competition, improve pricing transparency, increase market access, and support the City's ability to achieve its investment objectives while maintaining compliance with applicable laws and the City's Investment Policy.
Attachments:
1. RFQ 26-002 – On-Call Broker Dealer Services
2. Proposal – Academy Securities, Inc.
3. Proposal – Great Pacific Securities
4. Proposal – Higgins Capital Management, Inc.
5. Proposal – Multi-Bank Securities, Inc.
6. Proposal – Raymond James & Associates, Inc.
7. Proposal – Stifel Nicolaus & Company, Inc.
8. Proposal – U.S. Bancorp Advisors
Respectfully Submitted by: Brandon Walker, Administrative Services Director Concur: David Pedersen, City Treasurer
Noted for Fiscal Impact: Brandon Walker, Administrative Services Director Legal Review: Jason Baltimore, Interim City Attorney
Approved: Steve Napolitano, City Manager
REQUEST FOR QUALIFICATIONS (RFQ) NO. 26-002
ON-CALL BROKER/DEALER
IN THE CITY OF HERMOSA BEACH, CALIFORNIA
CITY OF HERMOSA BEACH
1315 Valley Drive
Hermosa Beach, CA 90254
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RFQ NUMBER: RFQ# 26-002
RFQ TITLE: ON-CALL BROKER/DEALER
REQUESTING DEPARTMENT: Office of the City Treasurer
RELEASE DATE: March 10, 2026
DUE DATE: Tuesday, April 7, 2026 @ 5:00 p.m.
Notice is hereby given that the City of Hermosa Beach will receive statements of qualification for:
RFQ# 26-002, ON-CALL BROKER/DEALER
Statements of qualification must be submitted as PDF via the PlanetBids Portal (pbsystem.planetbids.com/portal/51313/portal-home) and will be received until 5:00 p.m. PST, Thursday, April 7, 2026.
Statements of qualification will not be opened at that time but will be submitted for verification and compliance with specifications and subsequent recommendation to City Council for award of a contract or rejection of the responses, as deemed appropriate. The City reserves the right to make no award.
All questions regarding the content of the RFQ may be submitted on the PlanetBids Portal.
Dated: March 10, 2026
www.hermosabeach.gov
CITY OF HERMOSA BEACH
1315 Valley Drive, Hermosa Beach, CA, 90254
Phone: (310) 318-0210, FAX: (310) 937-5015
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Table of Contents
1 Introduction............................................................................................................................4
1.1 Invitation for Qualifications.............................................................................................4
1.2 RFQ Timeline ....................................................................................................................4
1.3 Submittal Procedures ......................................................................................................5
1.4 Protest Procedures...........................................................................................................5
1.5 Contact ............................................................................................................................6
1.6 General RFQ Conditions ................................................................................................. 6
2. Scope of Services ...............................................................................................................11
2.1 City Characteristics.......................................................................................................11
2.2 Description.....................................................................................................................11
3. Submittal Instructions..........................................................................................................11
3.1 Format ............................................................................................................................11
3.2 Content ..........................................................................................................................11
4. Evaluation and Selection ...................................................................................................11
4.1 Review Process..............................................................................................................11
5. Contract Expectations........................................................................................................12
5.1 Contract Period .............................................................................................................12
5.2 Professional Services Agreement.................................................................................12
5.3 Standards of Work .........................................................................................................12
5.4 Invoicing and Payment................................................................................................. 12
6. Attachments and Required Forms.....................................................................................13
6.1 Sample Profession Services Agreement......................................................................13
6.2.1 Certification of Qualifications................................................................................38
6.2.2 Non-Collusion Affidavit...........................................................................................40
6.2.3 Compliance with Insurance Requirements..........................................................41
6.2.4 Acknowledgement of Professional Services Agreement....................................42
6.2.5 Statement of Qualifications...................................................................................43
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1 Introduction
1.1 Invitation for Qualifications
The City of Hermosa Beach (“City”) is seeking Statements of Qualifications from qualified individuals or firms (“Consultant”) to provide on-call Broker/Dealer Services. The City is a General Law city, operating under the council-manager form of government. The City manages an investment portfolio ranging in size from $40 – 55 million. The portfolio is mainly comprised of Treasuries, Negotiable CDs and deposits in the State of California Local Agency Investment Fund (LAIF). Please visit https://www.hermosabeach.gov/ourgovernment/city-officials/city-treasurer to view the City’s latest Investment Report.
The City annually adopts a written Investment Policy, which regulates the standards and procedures used in its cash management activities. A copy of the City's Investment Policy (updated in 2025) is provided with this document. Each broker/dealer must certify that they have read the Policy and will incorporate due diligence in conforming to the provisions of the City's Investment Policy, as well as all applicable State and Federal regulations as they apply to the investment activities of California municipalities.
City personnel will review and substantiate all information and references requested in the document; therefore, please answer all questions as thoroughly as possible.
Based on City’s review, a select number of firms will be incorporated into Hermosa’s approved Broker/Dealer List. We will seek to incorporate a robust selection of broker/dealers to our list, while noting that practical considerations may limit the number that are included. Inclusion on our approved list does not guarantee any minimum volume and all decisions are at the sole discretion of the City of Hermosa Beach.
1.2 RFQ Timeline
RFQ posted March 10, 2026
Deadline to submit written questions March 23, 2026
Posting of responses to questions March 25, 2026
Deadline to submit qualifications April 7, 2026 - 5 PM
Interviews for selected firms if the City
wishes to do so
TBD
Tentative award TBD
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1.3 Submittal Procedures
Respondents shall submit one copy of the statement of qualification in PDF format on the PlanetBids Portal.
No responses will be accepted after the listed date and time. The format, content, and procedures for submitting a statements of qualification are provided in further detail within the RFQ (see Section 3).
1.4 Protest Procedures
Proposers may file a “protest” of a proposal/statement of qualification with the City’s City Manager. In order for a Proposer’s protest to be considered valid, the protest must:
A. Be filed in writing within five (5) calendar days after submittal deadline, or where the Protest relates solely to events occurring thereafter, within five (5) calendar days after the event or occurrence giving rise to the protest; B. Clearly identify the specific irregularity or accusation; C. Clearly identify the specific City staff determination or recommendation being protested;
D. Specify in detail the grounds for protest and the facts supporting the protest; E. Include all relevant supporting documentation with the protest at time of filing; and
F. Be transmitted concurrently to all other parties with a direct financial interest that may be adversely affected by the outcome of the protest. Such parties shall include all other Proposers or proposers who appear to have a reasonable prospect of receiving an award depending upon the outcome of the protest.
If the protest does not comply with each of these requirements, the City may reject the protest with or without further review.
If the protest is timely and complies with the above requirements, the City Manager, or other designated City staff member, shall review the protest, any response from the challenged Proposer(s), and all other relevant information, and will provide a written decision to the protestor.
This administrative procedure and the time limits set forth herein are mandatory. Failure to comply with these mandatory procedures shall constitute a waiver of any right to pursue the protest, including filing a Government Code claim or any legal proceedings or actions.
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1.5 Contact
All questions regarding the content of the RFQ shall be submitted in writing directly on the PlanetBids Portal.
1.6 General RFQ Conditions
The following instructions and conditions apply to this RFQ:
Pre-Contractual Expenses
The City of Hermosa Beach shall not, in any event, be liable for any pre-contractual expenses incurred by any consultant. In addition, no consultant shall include any such expenses as part of the price proposed. Pre-contractual expenses are defined as expenses incurred by bidders in:
• Preparing a statement of qualifications in response to this RFQ. • Submitting that response to the City of Hermosa Beach. • Negotiating with the City of Hermosa Beach any matter related to this RFQ, proposal, and/or contractual agreement.
• Any other expenses incurred by the consultant prior to the date of an executed contract.
Authority to Withdraw RFQ and/or Not Award Contract
The City of Hermosa Beach reserves the right to withdraw this RFQ at any time for any reason without prior notice. Further, the City makes no representations that any agreement will be awarded to any consultant responding to this RFQ. The City expressly reserves the right to reject any and all responses to this RFQ without indicating any reasons for such rejection(s).
The release of this RFQ does not obligate or compel the City to enter into a contract or agreement.
Authority to Revise RFQ and Request Additional Information The City reserves the rights to amend the RFQ at any time, to determine the successful respondent(s), and to reject any or all responses or their components. Should it be necessary for the City to issue addendums to this RFQ during the advertisement period, the City will post addendums to the PlanetBids Portal. It is the responsibility of all prospective respondents to check PlanetBids regularly to see whether any addenda or supplemental materials have been issued. Statements of qualifications shall acknowledge that the consultant is aware of all addendums which have been issued and has incorporated their provisions in their response by completing the Certification of Qualifications Form.
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The City reserves the right, to request additional information or clarifications from consultants where it may serve the City’s best interest.
Other Conditions
• ADDITIONAL SERVICES. The Scope of Work describes the minimum work to be accomplished. Upon final selection of the firm(s), the Scope of Work may be modified and refined during negotiations with the City. Any proposer that provides additional services can include those services in the statement of qualifications and list them as additional services.
• AUTHORIZED SIGNATURES. Every statement of qualifications must be signed by the person or persons legally authorized to bind the consultant to a contract for the execution of the work. Upon request of the City, any agent submitting a statement of qualifications on behalf of a consultant shall provide a current power of attorney certifying the agent’s authority to bind the consultant. • AWARD OF QUALIFICATIONS. City reserves the right to negotiate final terms with the selected consultant, if any. Award may be made to the consultant offering the most advantageous statement of qualifications after consideration of all criteria.
• COMPLIANCE WITH LAWS. All statement of qualifications shall comply with current federal, state, and other laws relative thereto.
• CONFLICT OF INTEREST. By signing the Certification of Qualifications , the consultant declares and warrants that no elected or appointed official, officer or employee of the City has been or shall be compensated, directly or indirectly, in connection with this statement of qualifications or any work connected with this statement of qualifications. Should any agreement be approved in connection with this Request for Qualifications, consultant declares and warrants that no elected or appointed official, officer or employee of the City, during the term of his/her service with the City shall have any direct interest in that agreement, or obtain any present, anticipated or future material benefit arising therefrom. • DISQUALIFICATION OF PROPOSER. If there is reason to believe that collusion exists among the consultants, the City may refuse to consider statement of qualifications from participants in such collusion. No person, firm, or corporation under the same or different name, shall make, file, or be interested in more than one statement of qualifications for the same work unless alternate statement of qualifications are called for. Reasonable grounds for believing that any consultant is interested in more than one statement of qualifications for the same work will cause the rejection of all statement of qualifications for the work in which a consultant is interested. Consultants shall submit as part of their statement of qualifications documents the completed Non-Collusion Affidavit.
• EXAMINATION OF DOCUMENTS. It is the responsibility of the consultant to carefully and thoroughly examine and be familiar with these RFQ documents, general
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conditions, all forms, specifications, drawings, plans, and addendums (if any).
Consultants shall satisfy themselves as to the character, quantity, and quality of work to be performed and materials, labor, supervision necessary to perform the work as specified by these documents. The failure or neglect of the consultant to examine documents shall in no way relieve the consultant from any obligations with respect to the solicitation for and subsequent contract that may be awarded.
The submission of a statement of qualifications shall constitute an acknowledgment upon which the City may rely that the consultant has thoroughly examined and is familiar with the RFQ documents. The failure or neglect of a consultant to receive or examine any of the documents shall in no way relieve the consultant from any obligations with respect to the statement of qualifications. No claim will be allowed for additional compensation that is based upon a lack of knowledge of any solicitation document.
• INTERPRETATION OF RFQ DOCUMENTS. City reserves the right to make corrections or clarifications of the information provided in this RFQ. If any person is in doubt as to the true meaning of any part of this RFQ documents, or finds discrepancies or omissions in the document, the person may submit to the City a written request for an interpretation or correction. Oral statement(s), interpretations or clarifications concerning meaning or intent of the contents of this RFQ by any person are unauthorized and invalid. Modifications to the RFQ, including, but not limited to the scope of work, can be made only by written addendum issued by the City.
Proposers shall submit all questions in writing to the contact listed in the announcement or submitted on the PlanetBids Portal. Proposers may not contact any other staff members with questions. The requesting party is responsible for prompt delivery of any requests. When the City considers interpretations necessary, interpretations will be in the form of an addendum to the RFQ documents, and when issued, will be sent as promptly as is practical to all parties recorded by the City as having received RFQ documents. All such addenda shall become a part of the RFQ document. It is the responsibility of each consultant to ensure the City has their correct business name, mailing address and e-mail address on file through the PlanetBids online portal. Any prospective consultants who obtained a set of RFQ documents from the PlanetBids online portal are responsible for checking PlanetBids to verify if any subsequent Addendums were issued.
• IRREGULARITIES. City reserves the right to waive non-material irregularities if such would be in the best interest of the City as determined by the City Manager. • NON-DISCRIMINATION. Consultant represents and warrants that it does not and will not discriminate against any employee or applicant for employment because of race, religion, gender, color, national origin, sexual orientation, ancestry, marital status, physical condition, pregnancy or pregnancy-related condition, political affiliation or opinion, age or medical condition.
• NON-EXCLUSIVE. Should the City make an award, the successful consultant will enter into a NON-EXCLUSIVE professional services agreement and the City reserves the right to enter into agreements with other firms.
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• OFFERS OF MORE THAN ONE PRICE. Consultants are NOT allowed to submit more than one rate schedule.
• OWNERSHIP. All data, documents and other products used or developed during the RFQ process become the property of the City upon submission. All documents submitted in response to this RFQ shall become the property of the City and a matter of public record pursuant to Government Code sections 7920 et seq.
Statement of qualifications should not be marked as confidential or proprietary, and City may refuse to consider a statement of qualifications so marked. All information contained within the statement of qualifications will become a matter of public record. It is the responsibility of each bidder to clearly identify any and all information contained within its statement of qualifications that it considers to be confidential and/or proprietary. To the extent that the City agrees with that designation, such information will be held in confidence whenever possible. All other information will be considered public.
• PROFESSIONAL SERVICES AGREEMENT. Prior to awarding any work, the selected Consultant will be required to execute a professional services agreement (sample attached) with the City. Any proposed change to the agreement shall be identified in the response to the Request for Qualifications (RFQ) and shall be subject to the sole approval of the City. The City requires the Consultant to obtain and maintain a policy of professional liability and other insurance as indicated in the agreement.
• NO PUBLIC OPENING/PUBLIC RECORDS ACT. Statement of qualifications shall be opened and its contents secured by City staff to prevent disclosure during the evaluative process and the process of negotiating with competing consultants.
Adequate precautions shall be taken to treat each consultant fairly and to insure that information gleaned from competing statement of qualifications is not disclosed to other Consultants. Prices and other information concerning the statement of qualifications shall not be disclosed until a recommendation for award is made to the awarding authority.
• PUBLIC RECORD. All statement of qualifications submitted in response to this RFQ will become the property of the City upon submittal and a matter of public record when the City selects a proposer for recommendation to the City Council for its consideration pursuant to applicable law.
• REPRESENTATIONS. Consultant understands and acknowledges that the representations made in their submitted statement of qualifications are material and important, and will be relied on by the City in evaluation of the statement of qualifications . Consultant misrepresentation shall be treated as fraudulent concealment from the City of the facts relating to the statement of qualifications. • SEVERABILITY. If any provisions or portion of any provision, of this Request for Qualifications are held invalid, illegal or unenforceable, they shall be severed from the Request for Qualifications and the remaining provisions shall be valid and enforceable.
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• SUBCONTRACTOR INFORMATION. If the statement of qualifications includes the use of sub consultants, consultant must identify specific sub consultants and the specific requirements of this RFQ for which each proposed sub consultant would perform services. All sub consultant for work services must follow all required provisions of the prime contract.
• VALIDITY. Statement of qualifications must be valid for a period of 90 days from the due date.
• WITHDRAWAL OF STATEMENT OF QUALIFICATIONS. Consultants’ authorized representative may withdraw statement of qualifications only by written request received by this RFQ contact personal before the Submittal Deadline. • BUSINESS LICENSE. The selected firm(s) must obtain a City of Hermosa Beach Business license and maintain a current certificate of insurance with the City for the duration of the Professional Service Agreement.
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2. Scope of Services
2.1 City Characteristics
The City is a General Law city, operating under the council-manager form of government. The City manages an investment portfolio ranging in size from $40 – 55 million. The portfolio is mainly comprised of Treasuries, Negotiable CDs and deposits in the State of California Local Agency Investment Fund (LAIF). Please visit https://www.hermosabeach.gov/our-government/city-officials/city-treasurer to view the City’s latest Investment Report.
2.2 Description
The City annually adopts a written Investment Policy, which regulates the standards and procedures used in its cash management activities. A copy of the City's Investment Policy (updated in 2025) is provided with this document.
2.2 General Scope of Work
Each broker/dealer must certify that they have read the City's Investment Policy and will incorporate due diligence in conforming to the provisions of the City's Investment Policy, as well as all applicable State and Federal regulations as they apply to the investment activities of California municipalities.
3. Submittal Instructions
3.1 Format
Proposers shall submit one copy of the statement of qualifications in PDF format on the PlanetBids Portal.
3.2 Content
See Section 6.2.5 for the statement of qualifications that must be filled out and answered.
4. Evaluation and Selection
4.1 Review Process
City personnel will review and substantiate all information and references requested in the statement of qualifications; therefore, please answer all questions as thoroughly as possible.
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5. Contract Expectations
5.1 Contract Period
The City anticipates the contract term would begin in April 2026.
5.2 Professional Services Agreement
The selected consultant will be expected to comply with and sign the City’s Professional Services Agreement.
5.3 Standards of Work
In case of conflicts, ambiguities, discrepancies, errors, or omissions, Consultant shall submit the matter to City for clarification. Any work affected by such conflicts, ambiguities, discrepancies, errors or omissions which is performed by Consultant prior to clarification by City shall be at Consultant's risk and expense.
5.4 Invoicing and Payment
Each invoice shall contain a progress report describing the work completed during the billing period and shall also include cost information by task regarding: previous work billed to date, work billed during the reporting period, percent of task completed and amount remaining by task.
Invoices are to be submitted monthly. The invoices shall reference the project title, and list charges by task, worker classification, hours, billing rate, and totals.
Each invoice shall contain a progress report describing the work completed during the billing period and the following summary information:
Contract
Amount
Total Prior
Contract Billings
Contract Work
Performed this
Period
Total Contract
Amount
Performed To
Date
Contract
Percent
Complete
Total Amount
Remaining for the
Contract
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6. Attachments and Required Forms
6.1 Sample Profession Services Agreement
PROFESSIONAL SERVICES AGREEMENT
FOR ON-CALL [TYPE OF SERVICES] SERVICES
BETWEEN
THE CITY OF HERMOSA BEACH
AND
[________________]
This professional services agreement (“Agreement”) is made and entered into as of [________] (“Effective Date”), by and between the City of Hermosa Beach (a municipal corporation organized and operating under the laws of the State of California with its principal place of business at 1315 Valley Drive, Hermosa Beach, California 90254) (“City”) and [_________] (a [________] with its principal place of business at [________]) (“Consultant”). City and Consultant are hereinafter sometimes referred to individually as “Party” and collectively as the “Parties”.
RECITALS
A. City is a public agency of the State of California and is in need of Consultant’s [_________] services (“Services”); and
B. Consultant is duly licensed and has the necessary qualifications to provide such Services; and
C. The Parties desire by this Agreement to establish the terms for City to retain Consultant to provide the Services described herein.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
AGREEMENT
1. Incorporation of Recitals. The recitals above are true and correct, and are hereby incorporated herein by this reference.
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2. Services. Consultant shall provide the City with the Services as set forth in in Exhibit A, attached hereto and incorporated herein by reference. In the event of any inconsistency between the terms of Exhibit A and this Agreement, the terms of this Agreement shall govern. City may order changes in the services within the general scope of this Agreement, consisting of additions, deletions, or other revisions, and the contract sum and the contract time will be adjusted accordingly. All such changes must be authorized in writing, and executed by Consultant and City. The cost or credit to City resulting from changes in services will be determined in accordance with the written agreement between the parties.
3. Professional Practices. All professional services to be provided by Consultant pursuant to this Agreement shall be provided by personnel identified in their proposal, more particularly described in Exhibit B, Consultant’s Statement of Qualifications. Consultant warrants that Consultant is familiar with all laws that may affect its performance of this Agreement and shall advise City of any changes in any laws that may affect Consultant’s performance of this Agreement. Consultant further represents that no City employee will provide any services under this Agreement.
4. Compensation
a. Subject to paragraph 4b below, the City shall pay for the services listed in Exhibit A with specific tasks assigned to Consultant through issuance of Task Orders.
b. In no event shall the total amount paid for services rendered by Consultant under this Agreement exceed the sum of [________] dollars ($[_______]). This amount is to cover all related costs for the duration of the term, and the City will not pay any additional fees for printing expenses. Consultant shall submit invoices to City no later than thirty (30) calendar days after the performance of work for which Consultant is billing, invoices shall detail the work performed on each milestone and each project as applicable. All invoices for City’s approved task(s) and or deliverable(s) shall include the following in order for payments to be processed:
(1) Consultant’s name,
(2) Contract number,
(3) Task order number,
(4) Purchase order number,
(5) Project name,
(6) Invoice number,
(7) Invoice date,
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(8) Billing period,
(9) For work performed on a lump sum basis, the deliverables provided during the billing period or the percentage of each task completed during the billing period,
(10) For work performed on a time and materials basis, the name of the staff member working on the task and/or deliverable, the specific task or subtask performed, the date of performance, the number of hours performed on that date, the staff member’s billing rate per Exhibit D, Consultant’s Rate Sheets, and the description of work performed for that time entry. Any charges for approved direct expenditures (e.g., mileage, parking, etc.) shall be accompanied by receipts or other documentation. (11) Total budgeted task order amount,
(12) Percentage of total task order amount billed to date, and (13) Other information as required by a specific task order. c. Said invoice shall be based on the total of all Consultant’s services which have been completed to City’s sole satisfaction. City shall pay Consultant’s invoice within forty-five (45) days from the date City receives said invoice. The invoice shall describe in detail the services performed, the method of compensation subject to paragraph 4d below, and the associated time for completion. Any additional services approved and performed pursuant to this Agreement shall be designated as “Additional Services” and shall identify the number of the authorized change order, where applicable, on all invoices.
d. Compensation for services under this Agreement shall be based on one of the following methods of compensation:
(1) Lump Sum Method: whereby the Consultant is compensated for meeting designed project milestones for a specific Task Order. All of the Consultant’s costs, including employee salaries, overhead, other direct costs, subcontract expenses, and profit are included in the Lump Sum amount;
(2) Time and Materials Method: whereby the Consultant is compensated based upon the agreed upon rates as stated in Exhibit D, Rate Sheets, and other approved direct costs, subject to Engineer’s approval, with a total not to exceed amount as stated in the Task Order Notice to Proceed. Rate Sheets shall be in effect for the duration of the Agreement;
(3) Combination of Method 1 or 2 above: whereby the Consultant is compensated for some line items in their proposal based upon the Lump Sum Method and other line items in their proposal based on Time and Materials Method.
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5. Additional or Removed Work. If changes in the work seem merited by the Parties and informal consultations with the other Party indicate that a change is warranted, it shall be processed by the Consultant forwarding a letter to the City outlining the changes with a statement of estimated changes in fee and/or time schedule. An amendment to this Agreement shall be prepared by the City and executed by both Parties before performance of such services, or the City will not be required to pay for the changes in the scope of work. Such amendment shall not render ineffective or invalidate unaffected portions of this Agreement. In the absence of an amendment, the City may order such changes and equitably adjust compensation as necessary.
6. Term. This Agreement shall commence on the Effective Date and continue until [________], unless the Agreement is previously terminated as provided for herein (“Term”).
7. Maintenance of Records; Audits
a. Records of Consultant’s services relating to this Agreement shall be maintained in accordance with generally recognized accounting principles and shall be made available to City for inspection and/or audit at mutually convenient times for a period of four (4) years from the Effective Date.
b. Books, documents, papers, accounting records, and other evidence pertaining to costs incurred shall be maintained by Consultant and made available at all reasonable times during the contract period and for four (4) years from the date of final payment under the contract for inspection by City.
8. Time of Performance. Consultant shall perform its services in a prompt and timely manner and shall commence performance upon receipt of each individual Task Order issued from the City to proceed. The term for each such Task Order shall be specified therein, and Consultant shall perform the services described in the Task Order in accordance with the schedule set forth in the applicable scope of work. Consultant shall complete the services required hereunder within Term.
9. Delays in Performance
a. Neither Party shall be considered in default of this Agreement for delays in performance caused by circumstances beyond the reasonable control of the non-performing Party. For purposes of this Agreement, such circumstances include a Force Majeure Event. A Force Majeure Event shall mean an event that materially affects the Consultant’s performance and is one or more of the following: (1) Acts of God or other natural disasters occurring at the project site; (2) terrorism or other acts of a public enemy; (3) orders of governmental authorities (including, without limitation, unreasonable and unforeseeable delay in the issuance of permits or approvals by governmental authorities that are required for the services); and (4) pandemics, epidemics, or quarantine restrictions. “Orders of governmental authorities” includes ordinances; emergency proclamations and orders; and rules to protect the public
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health, welfare, and safety.
b. Should a Force Majeure Event occur, the non-performing Party shall (within a reasonable time of being prevented from performing) give written notice to the other Party describing the circumstances preventing continued performance and the efforts being made to resume performance. Delays shall not entitle Consultant to any additional compensation regardless of the Party responsible for the delay.
10. Compliance with Law
a.Consultant shall comply with all applicable laws, ordinances, codes, and regulations of the Federal, state, and local government (including California Division of Occupational Safety and Health Administration requirements). b.Consultant shall provide the City with a Taxpayer Identification Number. c.Consultant shall assist the City as requested in obtaining and maintaining all permits required of Consultant by Federal, state, and local regulatory agencies. d.If applicable, Consultant is responsible for all costs of clean up and / or removal of hazardous and toxic substances spilled as a result of his or her services or operations performed under this Agreement.
11. Standard of Care. Consultant’s services will be performed in accordance with generally accepted professional practices and principles; and in a manner consistent with the level of care and skill ordinarily exercised by members of the profession currently practicing under similar conditions. Consultant’s performance shall conform in all material respects to the requirements of the scope of Services as described in Exhibit A.
12. Conflicts of Interest. During the term of this Agreement, Consultant shall at all times maintain a duty of loyalty and a fiduciary duty to the City; and shall not accept payment from or employment with any person or entity which will constitute a conflict of interest with the City.
13. Assignment and Subconsultant. Consultant shall not assign, sublet, or transfer this Agreement or any rights under or interest in this Agreement without the written consent of the City (which may be withheld for any reason). Any attempt to so assign or so transfer without such consent shall be void and without legal effect and shall constitute grounds for termination. Subcontracts, if any, shall contain a provision making them subject to all provisions stipulated in this Agreement. Nothing contained herein shall prevent Consultant from employing independent associates and subconsultants as Consultant may deem appropriate to assist in the performance of services hereunder.
14. Independent Consultant. Consultant is retained as an independent
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contractor and is not an employee of City. No employee or agent of Consultant shall become an employee of City. The work to be performed shall be in accordance with the work described in this Agreement, subject to such directions and amendments from City as herein provided. Any personnel performing the work governed by this Agreement on behalf of Consultant shall at all times be under Consultant’s exclusive direction and control. Consultant shall pay all wages, salaries, and other amounts due such personnel in connection with their performance under this Agreement and as required by law.
Consultant shall be responsible for all reports and obligations respecting such personnel (including but not limited to social security taxes, income tax withholding, unemployment insurance, and workers’ compensation insurance).
15. Insurance. Consultant shall not commence work for the City until it has provided evidence satisfactory to the City it has secured all insurance required under this section. In addition, Consultant shall not allow any subcontractor to commence work on any subcontract until it has secured all insurance required under this section. a. Additional Insured. The City (its officials, officers, employees, agents, and volunteers) shall be named as additional insureds on Consultant’s and its subconsultants’ policies of commercial general liability and automobile liability insurance using the endorsements and forms specified herein or exact equivalents. b. Commercial General Liability
(i) The Consultant shall take out and maintain (during the performance of all work under this Agreement, in amounts not less than specified herein) Commercial General (“CG”) Liability Insurance in a form and with insurance companies acceptable to the City.
(ii) Coverage for CG Liability insurance shall be at least as broad as Insurance Services Office (“ISO”) CG Liability coverage (Occurrence Form CG 00 01) or exact equivalent.
(iii) Commercial General Liability Insurance must include coverage for the following:
(1) Bodily Injury and Property Damage
(2) Personal Injury/Advertising Injury
(3) Premises/Operations Liability
(4) Products/Completed Operations Liability
(5) Aggregate Limits that Apply per Project
(6) Explosion, Collapse, and Underground (UCX)
exclusion deleted
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(7) Contractual Liability with respect to this Agreement (8) Property Damage
(9) Independent Consultants Coverage
(iv) The policy shall contain no endorsements or provisions limiting coverage for (1) contractual liability; (2) cross liability exclusion for claims or suits by one insured against another; (3) products/completed operations liability; or (4) contain any other exclusion contrary to the Agreement.
(v) The policy shall give City (its elected and appointed officials, officers, employees, agents, and City-designated volunteers) additional insured status using ISO endorsement forms CG 20 10 10 01 and 20 37 10 01, or endorsements providing the exact same coverage.
(vi) The general liability program may utilize either deductibles or provide coverage excess of a self-insured retention, subject to written approval by the City; and provided that such deductibles shall not apply to the City as an additional insured.
c. Automobile Liability
(i) At all times during the performance of the work under this Agreement, the Consultant shall maintain Automobile Liability Insurance for bodily injury and property damage (including coverage for owned, non-owned, and hired vehicles in a form and with insurance companies acceptable to the City). (ii) Coverage for automobile liability insurance shall be at least as broad as Insurance Services Office Form Number CA 00 01 covering automobile liability (Coverage Symbol 1, any auto).
(iii) The policy shall give City (its elected and appointed officials, officers, employees, agents, and City-designated volunteers) additional insured status. (iv) Subject to written approval by the City, the automobile liability program may utilize deductibles; provided that such deductibles shall not apply to the City as an additional insured, but not a self-insured retention. d. Workers’ Compensation/Employer’s Liability
(i) Consultant certifies that he/she is aware of the provisions of Section 3700 of the California Labor Code which requires every employer to be insured against liability for workers’ compensation or to undertake self-insurance in accordance with the provisions of that code; and he/she will comply with such provisions before commencing work under this Agreement.
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(ii) To the extent Consultant has employees at any time during the term of this Agreement (at all times during the performance of the work under this Agreement), the Consultant shall maintain full compensation insurance for all persons employed directly by him/her to carry out the work contemplated under this Agreement (all in accordance with the “Workers’ Compensation and Insurance Act”, Division IV of the Labor Code of the State of California and any acts amendatory thereof, and Employer’s Liability Coverage in amounts indicated herein). Consultant shall require all subconsultants to obtain and maintain (for the period required by this Agreement) workers’ compensation coverage of the same type and limits as specified in this section. e. Professional Liability (Errors and Omissions). At all times during the performance of the work under this Agreement, the Consultant shall maintain professional liability or Errors and Omissions insurance appropriate to its profession in a form and with insurance companies acceptable to the City and in an amount indicated herein. This insurance shall be endorsed to include contractual liability applicable to this Agreement and shall be written on a policy form coverage specifically designed to protect against acts, errors, or omissions of the Consultant. “Covered Professional Services” as designated in the policy must specifically include work performed under this Agreement. The policy must “pay on behalf of” the insured and must include a provision establishing the insurer's duty to defend.
f. Privacy/Network Security (Cyber). At all times during the performance of the work under this Agreement, the Consultant shall maintain privacy/network security insurance for: (1) privacy breaches; (2) system breaches; (3) denial or loss of service; and (4) the introduction, implantation, or spread of malicious software code in a form and with insurance companies acceptable to the City. g. Minimum Policy Limits Required
(i) The following insurance limits are required:
Combined Single Limit
Commercial General Liability $2,000,000 per occurrence/$4,000,000 aggregate for bodily injury, personal
injury, and property damage
Automobile Liability $1,000,000 per occurrence for bodily injury and property damage
Employer’s Liability $1,000,000 per occurrence
Professional Liability $1,000,000 per claim and aggregate (errors and omissions)
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Cyber Liability $1,000,000 per occurrence and
aggregate
(ii) Defense costs shall be payable in addition to the limits. (iii) Requirements of specific coverage or limits contained in this section are not intended as a limitation on coverage, limits, or other requirement; or a waiver of any coverage normally provided by any insurance. Any available coverage shall be provided to the Parties required to be named as Additional Insured pursuant to this Agreement.
h. Evidence Required. Prior to execution of the Agreement, the Consultant shall file with the City evidence of insurance from an insurer or insurers certifying to the coverage of all insurance required herein. Such evidence shall include original copies of the ISO CG 00 01 (or insurer’s equivalent) signed by the insurer’s representative and Certificate of Insurance (Acord Form 25-S or equivalent), together with required endorsements. All evidence of insurance shall be signed by a properly authorized officer, agent, or qualified representative of the insurer and shall certify the names of the insured, any additional insureds (where appropriate) the type and amount of the insurance, the location and operations to which the insurance applies, and the expiration date of such insurance.
i. Policy Provisions Required
(i) Consultant shall provide the City at least thirty (30) days prior written notice of cancellation of any policy required by this Agreement; except that the Consultant shall provide at least ten (10) days prior written notice of cancellation of any such policy due to non-payment of the premium. If any of the required coverage is cancelled or expires during the term of this Agreement, the Consultant shall deliver renewal certificate(s) including the General Liability Additional Insured Endorsement to the City at least ten (10) days prior to the effective date of cancellation or expiration.
(ii) The Commercial General Liability Policy and Automobile Policy shall each contain a provision stating that Consultant’s policy is primary insurance and that any insurance, self-insurance, or other coverage maintained by the City or any named insureds shall not be called upon to contribute to any loss.
(iii) The retroactive date (if any) of each policy is to be no later than the effective date of this Agreement. Consultant shall maintain such coverage continuously for a period of at least three (3) years after the completion of the work under this Agreement. Consultant shall purchase a one (1) year extended reporting period (a) if the retroactive date is advanced past
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the effective date of this Agreement; (b) if the policy is cancelled or not renewed; or (c) if the policy is replaced by another claims-made policy with a retroactive date subsequent to the effective date of this Agreement. (iv) All required insurance coverages (except for the
professional liability coverage) shall contain or be endorsed to provide waiver of subrogation in favor of the City (its officials, officers, employees, agents, and volunteers) or shall specifically allow Consultant or others providing insurance evidence in compliance with these specifications to waive their right of recovery prior to a loss. Consultant hereby waives its own right of recovery against City; and shall require similar written express waivers and insurance clauses from each of its subconsultants.
(v) The limits set forth herein shall apply separately to each insured against whom claims are made or suits are brought, except with respect to the limits of liability. Further the limits set forth herein shall not be construed to relieve the Consultant from liability in excess of such coverage, nor shall it limit the Consultant’s indemnification obligations to the City and shall not preclude the City from taking such other actions available to the City under other provisions of the Agreement or law.
j. Qualifying Insurers. All policies required shall be issued by acceptable insurance companies (as determined by the City) which satisfy the following minimum requirements: Each such policy shall be from a company or companies with a current A.M. Best's rating of no less than A:VII and admitted to transact in the business of insurance in the State of California, or otherwise allowed to place insurance through surplus line brokers under applicable provisions of the California Insurance Code or any Federal law. k. Additional Insurance Provisions
(i) The foregoing requirements as to the types and limits of insurance coverage to be maintained by Consultant; and any approval of said insurance by the City is not intended to and shall not in any manner limit or qualify the liabilities and obligations otherwise assumed by the Consultant pursuant to this Agreement (including but not limited to the provisions concerning indemnification).
(ii) If at any time during the life of the Agreement, any policy of insurance required under this Agreement does not comply with these specifications or is canceled and not replaced, the City has the right but not the duty to obtain the insurance it deems necessary and any premium paid by City will be promptly reimbursed by Consultant or City will withhold amounts sufficient
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to pay premium from Consultant payments. In the alternative, City may cancel this Agreement.
(iii) The City may require the Consultant to provide
complete copies of all insurance policies in effect for the duration of the Project. (iv) The City (City Council, any member of the City Council, officials, officers, employees, agents, or volunteers) shall not be personally responsible for any liability arising under or by virtue of this Agreement. l. Subconsultant Insurance Requirements. Consultant shall not allow any subcontractors or subconsultants to commence work on any subcontract until they have provided evidence satisfactory to the City that they have secured all insurance required under this section. Policies of commercial general liability insurance provided by such subcontractors or subconsultants shall be endorsed to name the City as an additional insured using ISO form CG 20 38 04 13 or an endorsement providing the exact same coverage. If requested by Consultant, the City may approve different scopes or minimum limits of insurance for particular subcontractors or subconsultants.
16. Indemnification. To the fullest extent permitted by law, Consultant shall defend (with counsel reasonably approved by the City), indemnify, and hold the City (its elected and appointed officials, officers, employees, agents, and authorized volunteers) free and harmless from any and all claims (demands, causes of action, suits, actions, proceedings, costs, expenses, liability, judgments, awards, decrees, settlements, loss, damage or injury of any kind in law or equity to property or persons including wrongful death (“Claims”)) in any manner arising out of, pertaining to, or incident to any alleged acts (errors, omissions, or willful misconduct) of Consultant (its officials, officers, employees, subcontractors, consultants, or agents) in connection with the performance of the Consultant’s services, the Project, or this Agreement (including without limitation the payment of all damages, expert witness fees, attorneys’ fees, and other related costs and expenses). This indemnification clause excludes Claims arising from the sole negligence or willful misconduct of the City. Consultant's obligation to indemnify shall not be restricted to insurance proceeds, if any, received by the City (the City Council, members of the City Council, its employees, or authorized volunteers). Consultant’s indemnification obligation shall survive the expiration or earlier termination of this Agreement.
17. California Labor Code Requirements
a. Consultant is aware of the requirements of California Labor Code Sections 1720 et seq. and 1770 et seq. (as well as California Code of Regulations, Title 8, Section 16000, et seq.) ("Prevailing Wage Laws"), which require the payment of prevailing wage rates and the performance of other requirements on certain “public works” and “maintenance” projects. If the Services are being performed as part of an applicable
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“public works” or “maintenance” project as defined by the Prevailing Wage Laws, Consultant agrees to fully comply with such Prevailing Wage Laws if applicable.
Consultant shall defend, indemnify, and hold the City (its elected officials, officers, employees, and agents) free and harmless from any claims (liabilities, costs, penalties, or interest) arising out of any failure or alleged failure to comply with the Prevailing Wage Laws. It shall be mandatory upon the Consultant and all subcontractors to comply with all California Labor Code provisions which include but are not limited to prevailing wages (Labor Code Sections 1771, 1774 and 1775), employment of apprentices (Labor Code Section 1777.5), certified payroll records (Labor Code Sections 1771.4 and 1776), hours of labor (Labor Code Sections 1813 and 1815), and debarment of contractors and subcontractors (Labor Code Section 1777.1). The requirement to submit certified payroll records directly to the Labor Commissioner under Labor Code section 1771.4 shall not apply to work performed on a public works project that is exempt pursuant to the small project exemption specified in Labor Code Section 1771.4. b. If the Services are being performed as part of an applicable “public works” or “maintenance” project, then pursuant to Labor Code Sections 1725.5 and 1771.1, the Consultant and all subconsultants performing such Services must be registered with the Department of Industrial Relations. Consultant shall maintain registration for the duration of the Project and require the same of any subconsultants, as applicable. This Project may also be subject to compliance monitoring and enforcement by the Department of Industrial Relations. It shall be Consultant’s sole responsibility to comply with all applicable registration and labor compliance requirements. Notwithstanding the foregoing, the contractor registration requirements mandated by Labor Code Sections 1725.5 and 1771.1 shall not apply to work performed on a public works project that is exempt pursuant to the small project exemption specified in Labor Code Sections 1725.5 and 1771.1.
18. Verification of Employment Eligibility. By executing this Agreement, Consultant verifies that it fully complies with all requirements and restrictions of state and Federal law respecting the employment of undocumented aliens (including but not limited to the Immigration Reform and Control Act of 1986 as may be amended from time to time), and shall require all subconsultants and subsubconsultants to comply with the same.
19. Laws and Venue. This Agreement shall be interpreted in accordance with the laws of the State of California. If any action is brought to interpret or enforce any term of this Agreement, the action shall be brought in a state or Federal court situated in the County of Los Angeles, State of California.
20. Termination or Abandonment
a. The City has the right to terminate or abandon any portion or all of the work under this Agreement by giving ten (10) calendar days’ written notice to Consultant. In such event, City shall be immediately given title and possession to all
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original field notes, drawings and specifications, written reports, and other documents produced or developed for that portion of the work completed and/or being abandoned. The City shall pay Consultant the reasonable value of services rendered for any portion of the work completed prior to termination. If said termination occurs prior to completion of any task for the Project for which a payment request has not been received, the charge for services performed during such task shall be the reasonable value of such services (based on an amount mutually agreed to by the Parties of the portion of such task completed but not paid prior to said termination). The City shall not be liable for any costs other than the charges or portions thereof which are specified herein. Consultant shall not be entitled to payment for unperformed services, and shall not be entitled to damages or compensation for termination of work. b. Consultant may terminate its obligation to provide further services under this Agreement upon thirty (30) calendar days’ written notice to City only in the event of substantial failure by City to perform in accordance with the terms of this Agreement through no fault of Consultant.
c. If the Agreement is terminated prior to its completion for any reason, Consultant shall refund the monthly prorated cost of the incomplete term.
21. Responsibility for Errors. Consultant shall be responsible for its work and results under this Agreement. Consultant (when requested) shall furnish clarification and/or explanation as may be required by the City’s representative, regarding any services rendered under this Agreement at no additional cost to City. In the event that an error or omission attributable to Consultant’s professional services occurs, Consultant shall (at no cost to City) provide all other services necessary to rectify and correct the matter to the sole satisfaction of the City and to participate in any meeting required with regard to the correction.
22. Prohibited Employment. Consultant shall not employ any current employee of City to perform the work under this Agreement while this Agreement is in effect.
23. Costs. Each Party shall bear its own costs and fees incurred in the preparation and negotiation of this Agreement; and in the performance of its obligations hereunder except as expressly provided herein.
24. Ownership of Documents and Confidential Information a. All deliverables and other documents generated by Consultant in the performance of the Services (including all work papers, work-in-progress, designs, drawings, documents, data, computations, specifications, studies and reports prepared by Consultant as a part of the Services or authorized Additional Services (“Consultant Work Product”)) shall belong to and be subject to the sole ownership and use of City. b. Consultant may receive written or verbal information from City (its
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representatives or agents) not in the public domain during the course of the performance of this Agreement. Such information may include City’s know how, trade secrets, and other proprietary and confidential information; and Consultant agrees to treat such information as confidential information belonging to City. Consultant agrees that neither it (nor its officers, employees, representatives, agents, successors, or assigns) will disclose such information to any third party or use the same in any manner without the prior written consent of City. Consultant further agrees to safeguard such proprietary and confidential information from unauthorized disclosure and/or use using the same degree of care it uses to protect its own proprietary and confidential information, but not less than a reasonable standard of care. In the event that disclosure of such information is sought pursuant to any law or regulation, Consultant shall promptly notify City of such fact to allow City to assert whatever exclusions or exemptions may be available to it under applicable law or regulation.
25. Organization. Consultant shall assign [______] as Project Manager.
Consultant shall provide City fifteen (15) days written notice before removing or reassigning the Project Manager from the performance of the Services.
26. Limitation of Agreement. This Agreement is limited to and includes only the work included in the scope of Services described in Exhibit A
27. Notice. Any notice or instrument required to be given or delivered by this Agreement may be given or delivered by depositing the same in any United States Post Office (certified mail, return receipt requested, postage prepaid, and addressed to the following addresses) and shall be effective upon receipt thereof:
CITY:
City of Hermosa Beach
1315 Valley Drive
Hermosa Beach, California 90254
Attn: [______]
CONSULTANT:
[Name]
[Address]
[Address]
Attn: [_______]
28. Third Party Rights. Nothing in this Agreement shall be construed to give any rights or benefits to anyone other than the City and the Consultant.
29. Equal Opportunity Employment. Consultant represents that it is an equal opportunity employer and that it shall not discriminate against any employee or applicant for employment because of race, religion, color, national origin, ancestry, sex,
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age, or other interests protected by the State or Federal Constitutions. Such nondiscrimination shall include but not be limited to all activities related to initial employment, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff, or termination.
30. City’s Right to Employ Other Consultants. City reserves its right to employ other consultants, including engineers, in connection with the scope of Services as listed in Exhibit A or other scopes of Services.
31. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the successors in interest, executors, administrators, and assigns of each Party to this Agreement. However, Consultant shall not assign or transfer by operation of law or otherwise any or all of its rights, burdens, duties, or obligations without the prior written consent of City. Any attempted assignment without such consent shall be invalid and void.
32. Prohibited Interests. Consultant maintains and warrants that it has neither employed nor retained any company or person (other than a bona fide employee working solely for Consultant) to solicit or secure this Agreement. Further, Consultant warrants that it has not paid nor has it agreed to pay any company or person (other than a bona fide employee working solely for Consultant) any fee, commission, percentage, brokerage fee, gift, or other consideration contingent upon or resulting from the award or making of this Agreement. For breach or violation of this warranty, City shall have the right to rescind this Agreement without liability. No official, officer, or employee of City (during the term of his or her service with City) shall have any direct interest in this Agreement; or obtain any present or anticipated material benefit arising therefrom for the term of this Agreement.
33. Non-Waiver. The delay or failure of either Party at any time to require performance or compliance by the other Party of any of its obligations or agreements shall in no way be deemed a waiver of those rights to require such performance or compliance. No waiver of any provision of this Agreement shall be effective unless in writing and signed by a duly authorized representative of the Party against whom enforcement of a waiver is sought. The waiver of any right or remedy with respect to any occurrence or event shall not be deemed a waiver of any right or remedy with respect to any other occurrence or event, nor shall any waiver constitute a continuing waiver.
34. Severability. If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal, or unenforceable for any reason, such determination shall not affect the validity or enforceability of the remaining terms and provisions hereof or of the offending provision in any other circumstance; and the remaining provisions of this Agreement shall remain in full force and effect.
35. Time of Essence. Time is of the essence for each and every provision of this Agreement.
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36. Headings. Paragraphs and subparagraph headings contained in this Agreement are included solely for convenience and are not intended to modify, explain, or to be a full or accurate description of the content thereof; and shall not in any way affect the meaning or interpretation of this Agreement.
37. Amendments. Only a writing executed by all of the Parties hereto or their respective successors and assigns may amend this Agreement.
38. Authority. The persons executing this Agreement on behalf of the Parties hereto warrant that they are duly authorized to execute this Agreement on behalf of said Parties; and that by doing so, the Parties hereto are formally bound to the provisions of this Agreement.
39. Entire Agreement. This Agreement (including the Exhibits) represents the entire understanding of the Parties as to those matters contained herein; and supersedes and cancels any prior or contemporaneous oral or written understanding, promises, or representations with respect to those matters covered hereunder. Each Party acknowledges that no representations, inducements, promises, or agreements have been made by any person which are not incorporated herein, and that any other agreements shall be void. This is an integrated Agreement.
40. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original. All counterparts shall be construed together and shall constitute one single Agreement.
41. Electronic Signature. Each Party acknowledges and agrees that this Agreement may be executed by electronic or digital signature, which shall be considered as an original signature for all purposes and shall have the same force and effect as an original signature.
42. Key Personnel. Consultant has represented to the City that certain additional key personnel and consultants will perform the Services under this Agreement.
Should one or more of such personnel or consultants become unavailable, Consultant may substitute others of at least equal competence upon written approval of the City. In the event the Parties cannot agree as to the substitution of key personnel, engineers, or consultants, the City shall be entitled to terminate this Agreement for cause. Any personnel, engineers, or consultants who fail or refuse to perform the Services in a manner acceptable to the City (or who are determined by the City to be uncooperative, incompetent, a threat to the adequate or timely completion of the Services, or a threat to the safety of persons or property) shall be promptly removed from the Services by the Consultant at the request of the City. The key additional personnel, engineers, and consultants for performance of this Agreement are as follows: [INSERT NAMES, AND TITLES OF KEY PERSONNEL, AND LICENSE NUMBERS, IF APPLICABLE].
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43. Licenses and Permits. Consultant shall obtain all licenses and permits necessary for the performance of the Services at no cost to the City, except with respect to the following licenses and permits if so identified which the City shall obtain at its own cost: None.
[SIGNATURES ON FOLLOWING PAGE]
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SIGNATURE PAGE
FOR PROFESSIONAL SERVICES AGREEMENT
FOR ON-CALL [TYPE OF SERVICES] SERVICES BETWEEN
THE CITY OF HERMOSA BEACH
AND
[___________]
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.
CITY OF HERMOSA BEACH
APPROVED BY:
Steve Napolitano
City Manager
ATTESTED BY:
City Clerk
APPROVED AS TO FORM:
Jason Baltimore
Interim City Attorney
[___________]
Taxpayer Identified Number:
EXHIBIT A
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SERVICES
TASK ORDER
Specific tasks will be assigned to Consultant through issuance of Task Orders.
No services shall be performed unless authorized by a written Task Order Notice to Proceed for an individual Task Order assignment, issued by the CITY, in the form attached hereto as Exhibit C, Sample Task Order Notice to Proceed. Consultant shall commence performance upon receipt of a Task Order from City to proceed and perform its services in a prompt and timely manner and within the schedule set forth in the Task Order Notice to Proceed. No Task Order will extend beyond the expiration date of this Agreement.
The total amount payable by City for an individual Task Order shall not exceed the amount agreed to in the Task Order, unless authorized by written agreement between the City and Consultant.
Task Orders may not be used to amend the language (or the terms) of this Agreement nor to exceed the scope of work under this Agreement.
The total amount payable by City for all Task Orders resulting from this Agreement shall not exceed [CONTRACT AMOUNT]. It is understood and agreed that there is no guarantee, either expressed or implied, that the entire contract amount will be authorized under this Agreement through the issuance of Task Orders.
Consultant’s substantial failure to comply with the provisions of the Task Order, including deadlines (if any) set forth above, may constitute a default of the Task Order if not corrected by Consultant within seven (7) calendar days. In the event Consultant is in default, City shall provide written notice to Consultant setting forth the nature of the default and the City may terminate the Task Order after the time period for correction has elapsed. The City shall have no obligation or duty to compensate Consultant for any work performed after the date of termination.
However, notwithstanding the foregoing, the schedule and deadlines in an approved Task Order may be amended upon written agreement of both City and Consultant.
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RFQ 26-002 City of Hermosa Beach
EXHIBIT B
CONSULTANT’S STATEMENT OF QUALIFICATIONS
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RFQ 26-002 City of Hermosa Beach
EXHIBIT C
SAMPLE TASK ORDER NOTICE TO PROCEED
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RFQ 26-002 City of Hermosa Beach
TASK ORDER NOTICE TO PROCEED
Dear [CONSULTANT], Date: [DATE]
Task Order #: [NO.]
Company Name: [CONSULTANT]
Service Type: [TYPE OF SERVICE]
Task Cost: $[COST]
Method(s) of
Payment (may be
more than one):
☐Lump Sum: [AMOUNT]
☐Time and Material: [AMOUNT]
Total: [AMOUNT]
Project Title: [PROJECT TITLE]
On-Call Contract #: PW-PSA [CONTRACT NO.]
Purchase Order #: [PO #]
Estimated Task Start
Date: [START_DATE] Estimated Task End Date: [END_DATE]
Scope of Work: [INSERT S.O.W.]
This letter shall serve as Notice to Proceed (“NTP”) based on the attached proposal, dated [PROPOSAL DATE].
You are authorized to proceed with performing the task order in accordance with the project documents in the City’s solicitation, your proposal, and subsequent amendments.
The total authorization for PW-[CONTRACT NO.] to date is $[TOTAL AUTHORIZATION AMOUNT] tabulated below:
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RFQ 26-002 City of Hermosa Beach
Task
Orde
r #
PO # NTP Date Description Status Payme
nt Type
Amount Balance
Original Authorized Contract Amount per Agreement dated [DATE OF AGREEMENT]
[CONTRACT
AMOUNT]
1 [PO#
]
[DATE] [DESC.] [STATUS
]
[AMOUN
T]
[CONTRACT
BALANCE]
2 [PO#
]
[DATE] [DESC.] [STATUS
]
[AMOUN
T]
[CONTRACT
BALANCE]
Total Amount Authorized Under PW-[CONTRACT NO.] [TOTAL
AUTHORI
ZATION
AMOUNT
]
You are not authorized to exceed this amount unless additional authorization is received from the City.
Please send all invoices to:
[CONTRACT MANAGER NAME], Contract Manager at [CONTRACT MANAGER EMAIL] [PROJECT MANAGER NAME], Project Manager at [PROJECT MANAGER EMAIL] Accounts Payable at [email protected]
All charges must be assigned to a Contract Number, a Task Order Number, and a Purchase Order number.
[CONSULTANT NAME]’s substantial failure to comply with the provisions of this Task Order, including deadlines (if any) set forth above, shall constitute a default. In the event [CONSULTANT NAME] is in default, City shall provide written notice to [CONSULTANT NAME] setting forth the nature of the default and the City may terminate this Task Order.
The City shall have no obligation or duty to compensate [CONSULTANT NAME] for any work performed after the date of termination.
However, notwithstanding the foregoing, the schedule and deadlines in this Task Order may be equitably adjusted as the project progresses upon written agreement of both City and [CONSULTANT NAME] or if a delay in [CONSULTANT NAME]’s performance of its services is due to circumstances beyond [CONSULTANT NAME]’s reasonable control.
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RFQ 26-002 City of Hermosa Beach
[CONSULTANT NAME] shall perform its services consistent with the professional skill and care ordinarily provided by professionals providing similar services under similar circumstances. [CONSULTANT NAME]. shall perform its services as expeditiously as is consistent with such professional skill and care and the orderly progress of the project.
Should you have any questions, please contact me at [CONTRACT MANAGER’S TELEPHONE NUMBER] or via email at [CONTRACT MANAGER’S EMAIL] Sincerely,
[CONTRACT MANAGER’S NAME]
[CONTRACT MANAGER’S TITLE]
Attachment:
[PROPOSAL]
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RFQ 26-002 City of Hermosa Beach
EXHIBIT D
CONSULTANT’S RATE SHEET
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RFQ 26-002 City of Hermosa Beach
6.2 Required Forms
6.2.1 Certification of Qualifications
RFQ #: _________
The undersigned hereby submits its statement of qualifications and agrees to be bound by the terms and conditions of this Request for Qualifications (RFQ).
1. Proposer declares and warrants that no elected or appointed official, officer or employee of the City has been or shall be compensated, directly or indirectly, in connection with this statement of qualifications or any work connected with this statement of qualifications. Should any agreement be approved in connection with this Request for Qualifications, Proposer declares and warrants that no elected or appointed official, officer or employee of the City, during the term of his/her service with the City shall have any direct interest in that agreement, or obtain any present, anticipated or future material benefit arising therefrom.
2. By submitting the response to this request, Proposer agrees, if selected to furnish services to the City in accordance with this RFQ.
3. Proposer has carefully reviewed its statement of qualifications and understands and agrees that the City is not responsible for any errors or omissions on the part of the Proposer and that the Proposer is responsible for them.
4. It is understood and agreed that the City reserves the right to accept or reject any or all statement of qualifications and to waive any informality or irregularity in any statement of qualifications received by the City.
5. The statement of qualifications response includes all of the commentary, figures and data required by the Request for Qualifications.
6. The statement of qualifications shall be valid for 90 days from the date of submittal.
7. Proposer acknowledges that the City may issue addendums related to this RFQ and that the proposer has reviewed the following addendums which have been issued:
Addendum: _____________________________
Addendum: _____________________________
Addendum: _____________________________
Addendum: _____________________________
8. Proposer further acknowledges the provisions of any addendums issued have been incorporated into their statement of qualifications.
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RFQ 26-002 City of Hermosa Beach
Signature of Authorized Representative:
____________________________________________
Printed Name and Title:
____________________________________________
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RFQ 26-002 City of Hermosa Beach
6.2.2 Non-Collusion Affidavit
RFQ #: _________
The undersigned declares states and certifies that:
1. This statement of qualifications is not made in the interest of or on behalf of any undisclosed person, partnership, company, association, organization or corporation.
2. This statement of qualifications is genuine and not collusive or sham.
3. I have not directly or indirectly induced or solicited any other Proposer to put in a false or sham statement of qualifications and I have not directly or indirectly colluded, conspired, connived, or agreed with any other Proposer or anyone else to put in a sham statement of qualifications or to refrain from submitting to this RFQ.
4. I have not in any manner, directly or indirectly, sought by agreement, communication, or conference with anyone to fix the rate schedule price or to fix any overhead, profit or cost element of the rate schedule price or to secure any advantage against the City of Hermosa Beach or of anyone interested in the proposed contract.
5. All statements contained in the statement of qualifications and related documents are true.
6. I have not directly or indirectly submitted the rate schedule price or any breakdown thereof, or the contents thereof, or divulged information or data relative thereto, or paid, and will not pay, any fee to any person, corporation, partnership, company, association, organization, RFQ depository, or to any member or agent thereof, to effectuate a collusive or sham statement of qualifications.
7. I have not entered into any arrangement or agreement with any City of Hermosa Beach public officer in connection with this statement of qualifications .
8. I understand collusive bidding is a violation of State and Federal law and can result in fines, prison sentences, and civil damage awards.
Signature of Authorized Representative:
____________________________________________
Printed Name and Title:
____________________________________________
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RFQ 26-002 City of Hermosa Beach
6.2.3 Compliance with Insurance Requirements
RFQ #: _________
The selected consultant will be expected to comply with the City s insurance requirements contained within this RFQ.
The undersigned declares states and certifies that:
1. Proposer agrees, acknowledges and is fully aware of the insurance requirements as specified in the Request for Qualifications.
2. If selected, proposer agrees to accept all conditions and requirements as contained therein.
Signature of Authorized Representative:
____________________________________________
Printed Name and Title:
____________________________________________
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RFQ 26-002 City of Hermosa Beach
6.2.4 Acknowledgement of Professional Services Agreement RFQ #: _________
The selected consultant will be expected to comply with and sign the City s Professional Services Agreement. Proposers should identify and/or indicate any exceptions to the Sample Professional Services Agreement included in Section 6.2. The City Attorney or their designee retains the discretion to accept or reject proposed exceptions or modifications to the City s Professional Services Agreement.
1. Proposer agrees, acknowledges and is fully aware of the conditions specified in the City’s Sample Professional Services Agreement.
2. Proposer agrees to accept all conditions and requirements as contained therein with exceptions noted as follows:
______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ________________________________________________
Signature of Authorized Representative:
____________________________________________
Printed Name and Title:
____________________________________________
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RFQ 26-002 City of Hermosa Beach
6.2.5 Statement of Qualifications
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Section I. General Information
Name of Firm
Local Address
Main Address
Telephone No.
Primary Representative Manager/Partner-in-Charge
Name
Title
Telephone
No. of Yrs. in Institutional Sales
No. of Yrs. with Firm
Section II. Questionnaire
1. Are you a Primary Dealer in U.S. Government Securities?
2. Are you a Regional Dealer in U.S. Government Securities? A. Please attach most recent Financial and Operational Combined Uniform Single (FOCUS) report.
3. Are you a Broker instead of a Dealer, i.e. you DO NOT own positions of Securities?
4. What is the net capitalization of your Firm?
5. What is the date of your Firm's fiscal year-end?
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6. If you are a depository institution, please provide the following and most current certified and audited information specific to your Tangible, Core, and Risk-Based Capital Ratios:
7. Is your Firm owned by a Holding Company? If so, what is its name and net capitalization?
8. a) Identify California public sector clients who are directly comparable to the City of Hermosa Beach and who we may contact as part of our review and verification process.
Entity Contact Person Telephone No. Client Since
b) Please describe your institutional trading practices and experience.
c) Please describe your familiarity with the California Government Code as it relates to investments by a public entity.
9. Have any of your public-sector clients ever sustained a loss on a securities transaction arising from a misunderstanding or misrepresentation of the risk characteristics of the instrument?
Yes No
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If yes, please explain:
10. Please provide your Wiring and Delivery Instructions.
11. Which of the following instruments are offered regularly by your local desk? T-Bills
Treasury Notes/Bonds
Discount Notes
Certificates of Deposit
Agencies (specify) FHLB, FNMA, FHLMC, FFCB, GNMA, TVA, and SLMA BAs (Domestic)
BAs (Foreign)
Commercial Paper
Medium Term Notes
Repurchase Agreements
Reverse Repurchase Agreements
CMO's
Asset Backed Investments
Mutual Funds
Other Investments as Authorized by Section 53600 of the Government Code
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12. Which of the instruments listed above does your Firm specialize in Marketing?
13. What reports, transactions, confirmations and documents would we receive? Will they be in electronic form?
14. Please include sample of research reports or market information that your firm regularly provides to local agency clients. Please include sample Daily Offering sheets or similar with your proposal amd indicate your ability to provide this electronically with real-time pricing.
15. What precautions are taken by your Firm to protect the interest of the public when dealing with government agencies as investors?
16. Have you or your Firm been censured, sanctioned or disciplined by a Regulatory, State or Federal Agency for improper or fraudulent activities, related to the sale of securities within the last five years?
Yes No
If yes, please explain:
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17. Please indicate and provide evidence of the current licensing status of the City’s representatives:
Agent: Licenses or Registration:
Agent: Licenses or Registration:
18. Is your Firm a member of NASD/FINRA? Yes No
Does your firm subscribe to the “Rules of Fair Practice?”
19. Please supply the following supplemental documents:
Most recent audited Annual Financial Statement
FOCUS Report, if applicable
Proof of FINRA registration
Trading Resolution
Proof of State of California registrations
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Section III. Certification
I have completed and am returning the following, including requested supplemental documents:
1) Broker/Dealer Questionnaire
2) Certification of Understanding, and
3) Receipt of Investment Policy.
Electronic Submission should be sent through the City’s PlanetBids portal.
City of Hermosa Beach
David Pedersen, City Treasurer [email protected] Brandon Walker, Administrative Services Director [email protected] 1315 Valley Drive
Hermosa Beach, CA 90254
Broker/Dealer
Date
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CITY OF HERMOSA BEACH
CERTIFICATION OF UNDERSTANDING
The City of Hermosa Beach Investment Policy as approved by the City Council requires that all Financial Institutions and Investment Managers doing business with the City sign a Certification of Understanding acknowledging that:
1. You have read and are familiar with the City’s Investment Policy and Guidelines as well as applicable Federal and State laws.
2. You meet the requirements as outlined in the City’s Investment Policy.
3. You agree to make every reasonable effort to protect the assets of the City from loss.
4. You agree to notify the City in writing of any potential conflicts of interest.
5. You agree to notify the City in writing of any changes in personnel with decision-making authority over the City’s funds within 24 hours of such event.
Failure to submit a Certification of Understanding shall result in the withdrawal by the City of all funds held by the financial institution or investment manager and the immediate revocation of any rights to act as an agent of the City for the purchase of securities or investment of funds on behalf of the City.
SIGNED: DATE:
Print Name and Title:
City of Hermosa Beach use only:
Approved:______ Disapproved:______ Date:
Signature:_________________________
Date Notification sent:___________ Sent by:
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CITY OF HERMOSA BEACH
BROKER-DEALER RECEIPT OF INVESTMENT POLICY
We are in receipt of the City of Hermosa Beach’s Investment Policy.
We have read the policy and understand the provisions and guidelines of the policy. All representatives covering the City’s account will be made aware of this policy and will be directed to give consideration to its provisions and constraints in selecting investment opportunities to present to the City.
Signed:
Name Name
Title Title
Firm Name
Date
City of Hermosa Beach use only:
Approved:______ Disapproved:______ Date:
Signature:_________________________
Date Notification sent:___________ Sent by:
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CITY OF HERMOSA BEACH
OFFICE OF THE CITY TREASURER
BROKER/DEALER QUESTIONNAIRE AND CERTIFICATION
DUE TUESDAY, APRIL 7, 2026 AT 5:00 PM
The City of Hermosa Beach (hereinafter referred to as the “City") is a General Law city, operating under the council-manager form of government. The City manages an investment portfolio ranging in size from $40 – 55 million. The portfolio is mainly comprised of Treasuries, Negotiable CDs and deposits in the State of California Local Agency Investment Fund (LAIF). Please visit https://www.hermosabeach.gov/our-government/city-officials/city-treasurer to view the City’s latest Investment Report.
The City annually adopts a written Investment Policy, which regulates the standards and procedures used in its cash management activities. A copy of the City's Investment Policy (updated in 2025) is provided with this document. Each broker/dealer must certify that they have read the Policy and will incorporate due diligence in conforming to the provisions of the City's Investment Policy, as well as all applicable State and Federal regulations as they apply to the investment activities of California municipalities.
City personnel will review and substantiate all information and references requested in the document; therefore, please answer all questions as thoroughly as possible.
Based on our review, a select number of firms will be incorporated into Hermosa’s approved Broker/Dealer List. We will seek to incorporate a robust selection of broker/dealers to our list, while noting that practical considerations may limit the number that are included. Inclusion on our approved list does not guarantee any minimum volume and all decisions are at the sole discretion of the City of Hermosa Beach.
Per our investment policy, the City Treasurer will submit our approved list to City Council for their approval.
Section I. General Information
Name of Firm
Local Address
Main Address
Telephone No.
Primary Representative Manager/Partner-in-Charge
Name
Title
Telephone
No. of Yrs. in Institutional Sales
No. of Yrs. with Firm
Section II. Questionnaire
1. Are you a Primary Dealer in U.S. Government Securities?
2. Are you a Regional Dealer in U.S. Government Securities? A. Please attach most recent Financial and Operational Combined Uniform Single (FOCUS) report.
3. Are you a Broker instead of a Dealer, i.e. you DO NOT own positions of Securities?
4. What is the net capitalization of your Firm?
5. What is the date of your Firm's fiscal year-end?
Academy Securities, Inc
622 Third Avenue, 12th Floor, New York, NY 10017
1302 Camino Del Mar, Del Mar, CA 92014
(646) 341-6869
Susan Munson
Managing Director
(949) 669-2780
Michael Boyd
(646) 736-3995
2+ 13+
No
Yes
Academy is a Broker and a Dealer (FINRA 17433)
30+
12/31
$62,127,961
Chief Compliance Officer
6. If you are a depository institution, please provide the following and most current certified and audited information specific to your Tangible, Core, and Risk-Based Capital Ratios:
7. Is your Firm owned by a Holding Company? If so, what is its name and net capitalization?
8. a) Identify California public sector clients who are directly comparable to the City of Hermosa Beach and who we may contact as part of our review and verification process.
Entity Contact Person Telephone No. Client Since
b) Please describe your institutional trading practices and experience. c) Please describe your familiarity with the California Government Code as it relates to investments by a public entity.
9. Have any of your public-sector clients ever sustained a loss on a securities transaction arising from a misunderstanding or misrepresentation of the risk characteristics of the instrument?
Yes No
City of Los Angeles Tom Juarez
City and County of San Francisco
N/A
N/A
Santa Barbara County
951-928-3777 x4248
310-468-3391
805-568-2925
415-554-4776
213-978-4039
10+ Years
5+ Years
5+ Years
25+ Years
2 Years
Eastern Municipal Water District
City of Manhattan Beach Tim Lilligren
Dan Chandler
Bret Black
Hubie White
The senior coverage team, Susan Munson and Andrew Davidoff, have served public entities in the Western United States for a combined 60+ years.
Please see attached Appendix A
If yes, please explain:
10. Please provide your Wiring and Delivery Instructions.
11. Which of the following instruments are offered regularly by your local desk? T-Bills
Treasury Notes/Bonds
Discount Notes
Certificates of Deposit
Agencies (specify) FHLB, FNMA, FHLMC, FFCB, GNMA, TVA, and SLMA BAs (Domestic)
BAs (Foreign)
Commercial Paper
Medium Term Notes
Repurchase Agreements
Reverse Repurchase Agreements
CMO's
Asset Backed Investments
Mutual Funds
Other Investments as Authorized by Section 53600 of the Government Code Please attached SSI
12. Which of the instruments listed above does your Firm specialize in Marketing?
13. What reports, transactions, confirmations and documents would we receive? Will they be in electronic form?
14. Please include sample of research reports or market information that your firm regularly provides to local agency clients. Please include sample Daily Offering sheets or similar with your proposal amd indicate your ability to provide this electronically with real-time pricing.
15. What precautions are taken by your Firm to protect the interest of the public when dealing with government agencies as investors?
16. Have you or your Firm been censured, sanctioned or disciplined by a Regulatory, State or Federal Agency for improper or fraudulent activities, related to the sale of securities within the last five years?
Yes No
If yes, please explain:
Please see attached Appendix A
Please see attached Appendix A
Please see attached Appendix A
Please see attached Appendix A
17. Please indicate and provide evidence of the current licensing status of the City’s representatives:
Agent: Licenses or Registration:
Agent: Licenses or Registration:
18. Is your Firm a member of NASD/FINRA? Yes No
Does your firm subscribe to the “Rules of Fair Practice?”
19. Please supply the following supplemental documents:
Most recent audited Annual Financial Statement
FOCUS Report, if applicable
Proof of FINRA registration
Trading Resolution
Proof of State of California registrations
Yes. Our internal written supervisory procedures are reviewed, updated, and tested at least annually per FINRA rules.
Andrew Davidoff
Susan Munson CRD# 2009836
CRD# 1121622
Agent: Caroline Mixon Licenses or Registration: CRD# 7898495
Section III. Certification
I have completed and am returning the following, including requested supplemental documents:
1) Broker/Dealer Questionnaire
2) Certification of Understanding, and
3) Receipt of Investment Policy.
Electronic Submission is encouraged and should be sent jointly to the contacts below or through the City’s PlanetBids portal:
City of Hermosa Beach
David Pedersen, City Treasurer [email protected] Brandon Walker, Administrative Services Director [email protected] 1315 Valley Drive
Hermosa Beach, CA 90254
Broker/Dealer
Date
Academy Securities, Inc
Michael Boyd, Chief Compliance Officer
04/06/2026
CITY OF HERMOSA BEACH
CERTIFICATION OF UNDERSTANDING
The City of Hermosa Beach Investment Policy as approved by the City Council requires that all Financial Institutions and Investment Managers doing business with the City sign a Certification of Understanding acknowledging that:
1. You have read and are familiar with the City’s Investment Policy and Guidelines as well as applicable Federal and State laws.
2. You meet the requirements as outlined in the City’s Investment Policy.
3. You agree to make every reasonable effort to protect the assets of the City from loss.
4. You agree to notify the City in writing of any potential conflicts of interest.
5. You agree to notify the City in writing of any changes in personnel with decision-making authority over the City’s funds within 24 hours of such event.
Failure to submit a Certification of Understanding shall result in the withdrawal by the City of all funds held by the financial institution or investment manager and the immediate revocation of any rights to act as an agent of the City for the purchase of securities or investment of funds on behalf of the City.
SIGNED: DATE:
Print Name and Title:
City of Hermosa Beach use only:
Approved:______ Disapproved:______ Date:
Signature:_________________________
Date Notification sent:___________ Sent by:
Susan Munson, Managing Director
CITY OF HERMOSA BEACH
CERTIFICATION OF UNDERSTANDING
The City of Hermosa Beach Investment Policy as approved by the City Council requires that all Financial Institutions and Investment Managers doing business with the City sign a Certification of Understanding acknowledging that:
1. You have read and are familiar with the City’s Investment Policy and Guidelines as well as applicable Federal and State laws.
2. You meet the requirements as outlined in the City’s Investment Policy.
3. You agree to make every reasonable effort to protect the assets of the City from loss.
4. You agree to notify the City in writing of any potential conflicts of interest.
5. You agree to notify the City in writing of any changes in personnel with decision-making authority over the City’s funds within 24 hours of such event.
Failure to submit a Certification of Understanding shall result in the withdrawal by the City of all funds held by the financial institution or investment manager and the immediate revocation of any rights to act as an agent of the City for the purchase of securities or investment of funds on behalf of the City.
SIGNED: DATE:
Print Name and Title:
City of Hermosa Beach use only:
Approved:______ Disapproved:______ Date:
Signature:_________________________
Date Notification sent:___________ Sent by:
Andrew Davidoff, Managing Director
CITY OF HERMOSA BEACH
CERTIFICATION OF UNDERSTANDING
The City of Hermosa Beach Investment Policy as approved by the City Council requires that all Financial Institutions and Investment Managers doing business with the City sign a Certification of Understanding acknowledging that:
1. You have read and are familiar with the City’s Investment Policy and Guidelines as well as applicable Federal and State laws.
2. You meet the requirements as outlined in the City’s Investment Policy.
3. You agree to make every reasonable effort to protect the assets of the City from loss.
4. You agree to notify the City in writing of any potential conflicts of interest.
5. You agree to notify the City in writing of any changes in personnel with decision-making authority over the City’s funds within 24 hours of such event.
Failure to submit a Certification of Understanding shall result in the withdrawal by the City of all funds held by the financial institution or investment manager and the immediate revocation of any rights to act as an agent of the City for the purchase of securities or investment of funds on behalf of the City.
SIGNED: DATE:
Print Name and Title:
City of Hermosa Beach use only:
Approved:______ Disapproved:______ Date:
Signature:_________________________
Date Notification sent:___________ Sent by:
Caroline Mixon, Fixed Income Analyst
CITY OF HERMOSA BEACH
BROKER-DEALER RECEIPT OF INVESTMENT POLICY
We are in receipt of the City of Hermosa Beach’s Investment Policy.
We have read the policy and understand the provisions and guidelines of the policy. All representatives covering the City’s account will be made aware of this policy and will be directed to give consideration to its provisions and constraints in selecting investment opportunities to present to the City.
Signed:
Name Name
Title Title
Firm Name
Date
City of Hermosa Beach use only:
Approved:______ Disapproved:______ Date:
Signature:_________________________
Date Notification sent:___________ Sent by:
Susan Munson, Managing Director Andrew Davidoff, Managing Director Academy Securities, Inc
CITY OF HERMOSA BEACH
BROKER-DEALER RECEIPT OF INVESTMENT POLICY
We are in receipt of the City of Hermosa Beach’s Investment Policy.
We have read the policy and understand the provisions and guidelines of the policy. All representatives covering the City’s account will be made aware of this policy and will be directed to give consideration to its provisions and constraints in selecting investment opportunities to present to the City.
Signed:
Name Name
Title Title
Firm Name
Date
City of Hermosa Beach use only:
Approved:______ Disapproved:______ Date:
Signature:_________________________
Date Notification sent:___________ Sent by:
Academy Securities, Inc
Caroline Mixon, Fixed Income Analyst
California Office: 151 Kalmus Drive, Suite H8 Costa Mesa, CA 92626 Certified Minority Business & Small Business Enterprise Member FINRA/SIPC/MSRB
(714) 619-3000
March 25th, 2026
Office of the City Treasurer
City of Hermosa Beach
1315 Valley Drive
Hermosa Beach, CA, 90254
Dear Whomever this may concern and Members of the City of Hermosa Beach, Thank you for the opportunity to submit our qualifications to be an approved broker-dealer for City of Hermosa Beach. Great Pacific Securities (GPS) is a broker-dealer specializing in institutional investing, with trade volumes topping $14 Billion monthly. We actively trade Treasury, Agency, mortgage-backed, corporate and municipal bonds, and brokered CDs for some of the largest public sector clients in the US.
GPS is also a direct underwriter for the Federal Agencies including Freddie Mac, Fannie Mae, Farmer Mac and the Federal Home Loan Bank System. As one of the largest minorities owned underwriters in the sector, we access the Discount note windows, MTN programs and Global/Reference and Benchmark Notes for our public sector clients. Our skills and understanding of these markets can help you add value to your portfolios.
In addition, choosing Great Pacific Securities as part of your investment team can help you meet most internal goals and guidelines regarding the use of Minority-Owned Business Enterprises (MBE) and/or Small Business Enterprises (SBE). The firm is recognized as a certified SBE and MBE by many federal government agencies, state governments, large pension funds and organizations.
If you have any questions or require any additional information, please do not hesitate to contact me.
Sincerely,
Christopher Vinck-Luna
CEO
CITY OF HERMOSA BEACH
OFFICE OF THE CITY TREASURER
BROKER/DEALER QUESTIONNAIRE AND CERTIFICATION
DUE TUESDAY, APRIL 7, 2026 AT 5:00 PM
The City of Hermosa Beach (hereinafter referred to as the “City") is a General Law city, operating under the council-manager form of government. The City manages an investment portfolio ranging in size from $40 – 55 million. The portfolio is mainly comprised of Treasuries, Negotiable CDs and deposits in the State of California Local Agency Investment Fund (LAIF). Please visit https://www.hermosabeach.gov/our-government/city-officials/city-treasurer to view the City’s latest Investment Report.
The City annually adopts a written Investment Policy, which regulates the standards and procedures used in its cash management activities. A copy of the City's Investment Policy (updated in 2025) is provided with this document. Each broker/dealer must certify that they have read the Policy and will incorporate due diligence in conforming to the provisions of the City's Investment Policy, as well as all applicable State and Federal regulations as they apply to the investment activities of California municipalities.
City personnel will review and substantiate all information and references requested in the document; therefore, please answer all questions as thoroughly as possible.
Based on our review, a select number of firms will be incorporated into Hermosa’s approved Broker/Dealer List. We will seek to incorporate a robust selection of broker/dealers to our list, while noting that practical considerations may limit the number that are included. Inclusion on our approved list does not guarantee any minimum volume and all decisions are at the sole discretion of the City of Hermosa Beach.
Per our investment policy, the City Treasurer will submit our approved list to City Council for their approval.
Section I. General Information
Name of Firm Great Pacific Securities
Local Address 151 Kalmus Drive, Suite H-8, Costa Mesa, CA 92626 Main Address 151 Kalmus Drive, Suite H-8, Costa Mesa, CA 92626 Telephone No. (714) 619-3000
Primary Representative Manager/Partner-in-Charge
Name Peter Li Christopher Vinck-Luna
Title Senior Vice President CEO
Telephone (714) 619-3000 (714) 619-3000
No. of Yrs. in Institutional Sales 14 32
No. of Yrs. with Firm 14 30
Section II. Questionnaire
1. Are you a Primary Dealer in U.S. Government Securities? No
2. Are you a Regional Dealer in U.S. Government Securities? Yes Great Pacific Securities is a direct underwriter for many Government Sponsored Enterprises (GSEs) including Freddie Mac, Fannie Mae, Farmer Mac and the Federal Home Loan Bank System.
A. Please attach most recent Financial and Operational Combined Uniform Single (FOCUS) report.
Please see most recent FOCUS report as Appendix A.
3. Are you a Broker instead of a Dealer, i.e. you DO NOT own positions of Securities? No Great Pacific Securities is a direct underwriter for many of the GSE’s and creates New Issue Agency Debt for many of its clients.
4. What is the net capitalization of your Firm? 12,083,084 Great Pacific Securities also has a fulling disclosed clearing arrangement with Pershing, the Bank of New York.
5. What is the date of your Firm's fiscal year-end? December 31st , 2026
6. If you are a depository institution, please provide the following and most current certified and audited information specific to your Tangible, Core, and Risk-Based Capital Ratios:
Great Pacific Securities is not a depository institution
7. Is your Firm owned by a Holding Company? If so, what is its name and net capitalization? Great Pacific Securities is not owned by a Holding Company.
8. a) Identify California public sector clients who are directly comparable to the City of Hermosa Beach and who we may contact as part of our review and verification process.
Entity Contact Person Telephone No. Client Since
City of Glendale Rafi Manoukian 818-548-2066 2013
City of Burbank Krystle Palmer 818-238-5880 2012
City of La Quinta Rosemary Hallick 760-777-7058 2020
City of Torrance Jasmine Allen 310-781-7612 2024
City of Roseville Dennis Kauffman 916-774-5313 2016
b) Please describe your institutional trading practices and experience.
Great Pacific Securities (GPS) specializes in serving public sector clients, providing institutional fixed income trading with over $200 billion in annual volume. As an active participant and direct underwriter for Fannie Mae, Freddie Mac, the Federal Home Loan Bank System, and Farmer Mac, GPS delivers tailored solutions, reliable access to new issue supply, and disciplined, transparent execution to meet the unique needs of public sector investors.
The firm is also a direct counterparty with many commercial paper (CP) issuers, trading over $125 billion in CP annually. GPS actively engages in reverse inquiry with issuers on behalf of clients when a desired date is not listed.
c) Please describe your familiarity with the California Government Code as it relates to investments by a public entity.
Great Pacific Securities (GPS) serves as a trusted counterparty to the State of California and many of its counties, including Los Angeles County, providing institutional fixed income trading and investment solutions. The firm has extensive knowledge of California Government Code Section 53601, which defines the types of investments authorized for public agencies, and is experienced in structuring portfolios to optimize Safety, Liquidity, and Yield (SLY) while remaining fully compliant. GPS leverages this expertise to help public entities meet their investment objectives, manage risk, and access market opportunities efficiently.
12. Which of the instruments listed above does your Firm specialize in Marketing? Great Pacific Securities (GPS) specializes in serving public sector clients and the products they trade most often: U.S Treasury Notes/Bonds and T-Bills, Agency bullets and callables, Agency Discount Notes, Commercial Paper, and Brokered CDs. In 2025, Great Pacific Securities traded over $80bn in short-dated product, excluding CP.
As a direct underwriter for Freddie Mac, Farmer Mac, Fannie Mae, and Federal Home Loan Bank System (FHLB), the firm can access the window for any posting or perform a reverse inquiry should a date that is not posted be desired. If the appropriate security is not readily available, the firm will also structure and create the necessary security for our customers.
GPS is also a member of the Global Group for the FHLB, Benchmark Pool for Fannie Mae, and the Reference Note Pool for Freddie Mac. This gives the firm access to many of the large deals directly with these agencies. In 2025, GPS participated in over $26Bn in Government Agency debt for public sector clients. When a suitable investment could not be found in the secondary market, GPS would create it for our clients as an underwriter for the Agencies.
The firm also has a robust Treasury desk, executing in excess of $76Bn in US Treasury securities. GPS trades the entire curve of Treasury securities, with a majority of the executions taking place on the short end of the curve.
GPS has an in-house CD underwriting desk that assist banks across the country in issuing Brokered CDs. The desk underwrites upwards of $3Bn a month in Brokered CDs with maturities ranging from 1 month to 20 years.
GPS has a comprehensive distribution network for corporate CP. Focusing on short-term investments for state and municipal accounts, the firm traded over $120bn in commercial paper last year.
As a direct underwriter to many issuers and accessing others through our network, the firm’s clients experience excellent access to products. The firm will often preform a “reverse inquiry” into the issuers if a customer requires a specific maturity date that is not being posted.
13. What reports, transactions, confirmations and documents would we receive? Will they be in electronic form?
Trade confirmations are made available on the online portal directly from the firm’s clearing firm, Perishing, Bank of New York the day after trade date. Hard copies can be set-up to be sent after every trade if requested. Monthly statements are mailed to the clients directly from the firm’s clearing firm, Perishing, Bank of New York. In addition, historic confirms and statements are available to GPS clients via the online portal so clients can easily pull historic information about any trade done with the firm. Each confirm has a FINRA Bond Facts link that brings you to a site that provides additional information regarding the security traded.
To facilitate the ease of clearing, Great Pacific also uses Bloomberg to provide a trade ticket (VCON) for immediate confirmation. This trade ticket can be customized for each client to include internal account numbers or other desired information. After reviewing the document, a money manager can simply pass this electronic confirmation to its custodian as evidence of the trade. This makes trade processing for customers much simpler. If a client does not have access to a Bloomberg, the firm will email a copy of the Bloomberg trade ticket (VCON). The client can also request a Bloomberg description page that includes ratings, any call features, dated date, etcetera, to accompany the trade ticket. The firm can also send a cash flow statement that details when each coupon payment will be delivered to the client’s account.
14. Please include sample of research reports or market information that your firm regularly provides to local agency clients. Please include sample Daily Offering sheets or similar with your proposal and indicate your ability to provide this electronically with real-time pricing.
Great Pacific Securities provides its clients with a variety of research products, delivered electronically via email, to keep them informed on daily news and economic announcements, interest rate outlooks, new products, investment ideas, and monthly pricing and valuation updates.
The firm also provides bespoke offering sheets tailored to each client’s needs. Copies of commercial paper (CP) and Agency offerings attached in appendix C. Many of our CP and Agency Discount Note offerings are also available through Bloomberg’s BOOM function.
DAILY NOTES: “Morning Bites” is a concise, bullet-format snapshot delivered each morning, providing insight on market-moving news and a summary of overnight market activity.
WEEKLY NOTES: “Events in Focus” is sent every Monday and highlights global releases, meetings, events, and speeches that GPS’s trade desk believes may impact the markets. Each event is hand-selected by GPS Traders and includes the scheduled time of the release or event.
CREDIT SPREADS: GPS’s proprietary “Credit Spread Analysis Book” provides insight into relative corporate spread movements within sectors. Tracking over 650 benchmark bonds, the dynamic book allows users to select a sector tab and view spread changes over the past 30 days.
ECONOMIC RESEARCH: GPS provides third-party macroeconomic research from Laffer Associates, offering outlooks on interest rates, the political climate, and the global economy. Dr.
Arthur Laffer, founder of Laffer Associates and a member of Ronald Reagan’s Economic Policy Advisory Board, is best known for the Laffer Curve, an illustration of tax elasticity Please see attached Great Pacific Securities' Sample Research reports as Appendix C.
15. What precautions are taken by your Firm to protect the interest of the public when dealing with government agencies as investors?
The firm works diligently to protect the safety of principal for all of its public sector clients. The firm serves a broad base of public clients, including but not limited to States, cities, counties, water districts, and transportation authorities. Though each client receives tailored service depending on their specific needs, the old investing acronym SLY (Safety, Liquidity and Yield – in that order) is utilized for all public sector clients. While yield is important, the firm believes that increases in yield should come from a well-structured portfolio, not from additional principal risk.
All registered representatives, traders, and principals of the firm are deeply familiar with the general guidelines for these types of clients. All transactions are approved by a trader prior to execution. In addition, a principal of the firm reviews all transactions. Safety of principal is the firm’s most important criteria for government institutions.
On a monthly basis, a principal of the firm also compares a random sample of all trades against the investment policies that the firm maintains on file to ensure that any trade is in-line with the accounts written investment policy.
Section III. Certification
I have completed and am returning the following, including requested supplemental documents:
1) Broker/Dealer Questionnaire
2) Certification of Understanding, and
3) Receipt of Investment Policy.
Electronic Submission is encouraged and should be sent jointly to the contacts below or through the City’s PlanetBids portal:
City of Hermosa Beach
David Pedersen, City Treasurer [email protected] Brandon Walker, Administrative Services Director [email protected] 1315 Valley Drive
Hermosa Beach, CA 90254
Broker/Dealer
Great Pacific Securities
3/23/26
Date
CITY OF HERMOSA BEACH
CERTIFICATION OF UNDERSTANDING
The City of Hermosa Beach Investment Policy as approved by the City Council requires that all Financial Institutions and Investment Managers doing business with the City sign a Certification of Understanding acknowledging that:
1. You have read and are familiar with the City’s Investment Policy and Guidelines as well as applicable Federal and State laws.
2. You meet the requirements as outlined in the City’s Investment Policy.
3. You agree to make every reasonable effort to protect the assets of the City from loss.
4. You agree to notify the City in writing of any potential conflicts of interest.
5. You agree to notify the City in writing of any changes in personnel with decision-making authority over the City’s funds within 24 hours of such event.
Failure to submit a Certification of Understanding shall result in the withdrawal by the City of all funds held by the financial institution or investment manager and the immediate revocation of any rights to act as an agent of the City for the purchase of securities or investment of funds on behalf of the City.
SIGNED: DATE:
Print Name and Title:
City of Hermosa Beach use only:
Approved: Disapproved: Date:
Signature:
Date Notification sent: Sent by:
Peter Li
3/24/2026
CITY OF HERMOSA BEACH
BROKER-DEALER RECEIPT OF INVESTMENT POLICY
We are in receipt of the City of Hermosa Beach’s Investment Policy.
We have read the policy and understand the provisions and guidelines of the policy. All representatives covering the City’s account will be made aware of this policy and will be directed to give consideration to its provisions and constraints in selecting investment opportunities to present to the City.
Signed:
Name Name
Title Title
Firm Name
Date
City of Hermosa Beach use only:
Approved: Disapproved: Date:
Signature:
Date Notification sent: Sent by:
Peter Li - Senior Vice President Christopher Vinck-Luna - CEO 3/24/2026
Great Pacific Securities
Appendix A: Financial and Operational
Combined Uniform Single (FOCUS) Report
GREAT PACIFIC SECURITIES
8-44398
29251
X 16 17 18
19 151 KALMUS DRIVE, BUILDING H8
COSTA MESA CA 92626
01/01/26
26 CHRIS VINCK 714-619 3000
40 X 41
42 01/31/26
FORM
FOCUS REPORT
X-17A-5
(FINANCIAL AND OPERATIONAL COMBINED UNIFORM SINGLE REPORT) PART IIA 12
(Please read instructions before preparing Form)
This report is being filed pursuant to (Check Applicable Block(s)):
1) Rule 17a-5(a) 2) Rule 17a-5(b) 3) Rule 17a-11
4) Special request by designated examining authority 5) Other NAME OF BROKER-DEALER SEC. FILE NO.
ADDRESS OF PRINCIPAL PLACE OF BUSINESS (Do not use P.O. Box No.)
FIRM ID NO.
FOR PERIOD BEGINNING (MM/DD/YY)
(No. and Street)
AND ENDING (MM/DD/YY)
(City) (State) (Zip Code)
NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT(Area code) - Telephone No.
NAME(S) OF SUBSIDIARIES OR AFFILIATES CONSOLIDATED IN THIS REPORT
YES NO
EXECUTION:
The registrant/broker or dealer submitting this Form and its attachments and the person(s) by whom
it is executed represent hereby that all information contained therein is true, correct and complete.
It is understood that all required items, statements, and schedules are considered integral parts of
this Form and that the submisson of any amendment represents that all unamended items, statements
and schedules remain true, correct and complete as previously submitted.
Dated the day of 20
Manual Signatures of:
1)
Principal Executive Officer or Managing Partner
2)
Principal Financial Officer or Partner
3)
Principal Operations Officer or Partner
ATTENTION - Intentional misstatements or omissions of facts constitute Federal
Criminal Violations. (See 18 U.S.C. 1001 and 15 U.S.C. 78:f (a) )
FINRA
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
OFFICIAL USE
CHECK HERE IF RESPONDENT IS FILING AN AUDITED REPORT
DOES RESPONDENT CARRY ITS OWN CUSTOMER ACCOUNTS ?
13 14
15 20
21 22 23
24 30 31
32 33
34 35
36 37
38 39
25 2026-02-25 05:33PM EST
Status: Accepted
X
185,454
5,213
868,310 1,828
10,477,090
5,036
112,776
4,000,000
5,324,248
GREAT PACIFIC SECURITIES
65,355
01/31/26
8-44398
4,000,000
65,355
15,721,062
10,594,902
185,454
875,351
15,653,879 67,183
at market value
affiliates, subsidiaries and
under lease agreements, at cost-net
and amortization. ........................
of accumulated depreciation
..............................................
..............................................
$ $
market $
associated partnerships .......................
leasehold improvements and rights
...........................
........................
9. Investment in and receivables from
10. Property, furniture, equipment,
11. Other assets
12. Total Assets
...................................
.........................
as of (MM/DD/YY)
SEC FILE NO.
Consolidated
Unconsolidated
ASSETS
...............
130
$ $
STATEMENT OF FINANCIAL CONDITION FOR NONCARRYING, NONCLEARING AND
.......................
................................
.....................
$
$
$
...............................
............................
.............................
..........................
$
securities accounts, at market value:
securities $
securities
securities
securities
Allowable Non-Allowable Total
$
and partners' individual and capital
1. Cash
7. Secured demand notes:
2. Receivables from brokers or dealers:
3. Receivables from non-customers
4. Securities and spot commodities owned, at market value:
5. Securities and/or other investments not readily marketable:
8. Memberships in exchanges:
6. Securities borrowed under subordination agreements
N 3
PART IIA
BROKER OR DEALER
CERTAIN OTHER BROKERS OR DEALERS
FINANCIAL AND OPERATIONAL COMBINED UNIFORM SINGLE REPORT Market value of collateral:
$
OMIT PENNIES
A. Owned, at
B. Owned, at cost
C. Contributed for use of the company,
A. Exempted
B. Other
A. Exempted
B. Other
A. Exempted securities
B. Debt securities
C. Options
D. Other securities
E. Spot commodities
A. At cost
B. At estimated fair value
A. Clearance account
B. Other
890
850
860
880
810
830
550
600
610
418
419
420
424
430
440
470
460
490
535
540
480
190
......................
170
180
160
150
640
630
650
200
355
660
680
735
740
670
900
920
930
940
910
295
300
750
100
99 98
198
199
2026-02-25 05:33PM EST
Status: Accepted
3,651
3,245,064
4,000,000
3,651
3,245,064
4,000,000
7,248,715
9,180
5,220,000
3,243,167
3,248,715
4,000,000
4,000,000
15,721,062
8,472,347
8,472,347
GREAT PACIFIC SECURITIES 01/31/26
..............................................................
PART IIA
OMIT PENNIES
...................
..............
.......................
........................
................................
..............................
.........................
.....................
.................................
........................
.......................... $ $
$
$
$
$
...............
....................... $ $
$
FINANCIAL AND OPERATIONAL COMBINED UNIFORM SINGLE REPORT $
$
$
Ownership Equity
...........................
( )
$
$
................................................................... .................................................................... ..................................................................... .................................................................. ........................................................... ......................................................... .............................................
........................................................................... $
BROKER OR DEALER
as of
A.I. Non-A.I.
STATEMENT OF FINANCIAL CONDITION FOR NONCARRYING,
NONCLEARING AND CERTAIN OTHER BROKERS OR DEALERS
LIABILITIES AND OWNERSHIP EQUITY
Liabilities Liabilities Liabilities
Total
1255
1315
1305
1355
1385
1390
1400
1420
1360
1410
1205
1210
1211
1114
1115
1155
1045
980
970
990
1000
1010
1740
1760
1770
1791
1792
1793
1794
1780
1750
1796
1810
1800
1795
1430
1440
1450
1220
1230
1020
of general creditors:
expenses and other
collateral agreements
of
......
use of company, at market value
of
......
qualified for net capital purposes
at market value
16. Securities sold not yet purchased,
17. Accounts payable, accrued liabilities,
18. Notes and mortgages payable:
19. Liabilities subordinated to claims
14. Payable to brokers or dealers:
15. Payable to non-customers
13. Bank loans payable
20. TOTAL LIABILITIES
from outsiders
B. Other
A. Clearance account
B. Securities borrowings, at market value
B. Secured
A. Unsecured
C. Pursuant to secured demand note
A. Cash borrowings:
2. Includes equity subordination (15c3-1(d))
1. from outsiders
2. includes equity subordination (15c3-1(d))
1. from outsiders
D. Exchange memberships contributed for
E. Accounts and other borrowings not
23. Corporation:
21. Sole proprietorship
22. Partnership (limited partners)
24. TOTAL OWNERSHIP EQUITY
25. TOTAL LIABILITIES AND OWNERSHIP EQUITY
B. Common stock
C. Additional paid-in capital
D. Retained earnings
G. Less capital stock in treasury
F. Total
A. Preferred stock
1470
1560
1540
1610
1685
1690
1700
1710
1730
1620
1720
E. Accumulated other comprehensive income ............................................. 1797 2026-02-25 05:33PM EST
Status: Accepted
GREAT PACIFIC SECURITIES 01/31/26
8,472,347
77,236
12,395,111
8,472,347
4,000,000
12,472,347
2,269
12,392,842
2,256
13 67,183
10,053
3600
3590
3736
3650
3730
3734
3733
3735
3670
3660
3490
3500
3520
3525
3530
3620
3630
3640
3740
3750
)
)
)
OMIT PENNIES
(
(
$ 3480
3540
...............
3610
$
$
$
.................................................
..........................................
............................................
.................................................
.............................................
.........................................
...............................
................................
..............................................
..............................................
...............................................
..........................................
.....................................
................................................
.............................................
....................................................................... $
...................... $
.................................
.....................................
.................................
proprietary capital charges
pursuant to 15c3-1(f)) :
A. Total non-allowable assets from
C. Commodity futures contracts and spot commoditiesStatement of Financial Condition (Notes B and C) B. Secured demand note deficiency
4. Other securities
3. Options
2. Debt securities
1. Exempted securities
4. Add:
6. Deductions and/or charges:
7. Other additions and/or allowable credits (List)
9. Haircuts on securities (computed, where appliicable,
2. Deduct ownership equity not allowable for Net Capital
3. Total ownership equity qualified for Net Capital
5. Total capital and allowable subordinated liabilities
10. Net Capital
8. Net Capital before haircuts on securities positions
1. Total ownership equity from Statement of Financial Condition as of
COMPUTATION OF NET CAPITAL
FINANCIAL AND OPERATIONAL COMBINED UNIFORM SINGLE REPORT
PART IIA
BROKER OR DEALER
(
A. Liabilities subordinated to claims of general creditors allowable in computation of net capital
B. Other (deductions) or allowable credits (List)
D. Other deductions and/or charges
C. Trading and investment securities:
B. Subordinated securities borrowings
A. Contractual securities commitments
D. Undue concentration
E. Other (List)
2026-02-25 05:33PM EST
Status: Accepted
GREAT PACIFIC SECURITIES 01/31/26
100,000
3,248,715
12,067,971
216,581
216,581
12,176,261
0.00 26.21
3,248,715
FINANCIAL AND OPERATIONAL COMBINED UNIFORM SINGLE REPORT
PART IIA
BROKER OR DEALER
as of
Part A
COMPUTATION OF BASIC NET CAPITAL REQUIREMENT
COMPUTATION OF AGGREGATE INDEBTEDNESS
NOTES:
(A) The minimum net capital requirement should be computed by adding the minimum dollar net capital requirement
of the reporting broker dealer and, for each subsidiary to be consolidated, the greater of:
(B) Do not deduct the value of securities borrowed under subordination agreements or secured demand notes
included in non-allowable assets.
(C) For reports filed pursuant to paragraph (d) of Rule 17a-5, respondent should provide a list of material
non-allowable assets.
equivalent value is paid or credited
%
%
of subsidiaries computed in accordance with Note (A)
A. Drafts for immediate credit
B. Market value of securities borrowed for which no
C. Other unrecorded amounts (List)
$
$
$
................................................
............................................
................................................
......................................................... ..........................................
..........................................
.........................................
...................................
.....................................
........................................................... .........................
....................
1. Minimum dollar net capital requirement, or
2. 6-2/3% of aggregate indebtedness or 4% of aggregate debits if alternative method is used.
3800
3810
3820
exchanges contributed for use of company (contra to item 1740) and partners' securities which were
covered by subordination agreements not in satisfactory form and the market values of the memberships in
$
$
$
$
$
$
$
$
COMPUTATION OF ALTERNATE NET CAPITAL REQUIREMENT
to Rule 15c3-3 prepared as of the date of net capital computation including both
21. 2% of combined aggregate debit items as shown in Formula for Reserve Requirements pursuant Part B
22. Minimum dollar net capital requirement of reporting broker or dealer and minimum net capital
25. Net capital in excess of the greater of:
brokers or dealers and consolidated subsidiaries' debits requirement of subsidiaries computed in accordance with Note (A)
24. Excess net capital (line 10 less 24)
5% of combined aggregate debit items or 120% of minimum net capital requirement
23. Net capital requirement (greater of line 22 or 23)
.........................................
.................................
...............................................
........................................................ ...................... $
$
$
$
$
12. Minimum dollar net capital requirement of reporting broker or dealer and minimum net capital requirement
17. Add:
18. Total aggregate indebtedness
19. Percentage of aggregate indebtedness to net capital (line 19 divided by line 10)
20. Percentage of debt to debt-equity total computed in accordance with Rule 15c-3-1(d)
13. Net capital requirement (greater of line 11 or 12)
14. Excess net capital (line 10 less 13)
15. Net capital less greater of 10% of line 18 or 120% of line 12
11. Minimum net capital required (6-2/3% of line 19)
16. Total A.I. liabilities from Statement of Financial Condition 3870
3880
3910
3920
3760
3840
3850
3860
3830
3790
3758
3760
3770
3756
3780
2026-02-25 05:33PM EST
Status: Accepted
GREAT PACIFIC SECURITIES
16,665
24,152
788,519
812,671
(2,969)
144,626
48,272
517,242
44,254
16,665
3,489
94,214
675,864
365,591
365,591
365,591
1 38,855
1,041,455
01/01/26 01/31/26
365,591
REVENUE
STATEMENT OF INCOME (LOSS) or STATEMENT OF COMPREHENSIVE INCOME (as defined in §210.1-02 of Regulation S-X), as applicable
BROKER OR DEALER
MONTHLY INCOME
4070
18. Provision for Federal income taxes (for parent only) 4238
25. Income (current month only) before provision for Federal income taxes ...........................................
.................
3935
3938
3939
3940
3945
3949
3950
3952
3955
3970
3990
3975
3995
4030
4120
4115
4140
4075
4195
4100
4200
4210
4220
4222
4230
4211
....................................................
............................
....................................................................... ............................................................. ...................................................................... ....................................................
....................................................
....................
......................................................................... ........................................................................ ............................
................................................................... ...............................................
..............................................
............................................
...................................................................... .................................................................. .....................................
............................................................. ........................................................... ....................................................
.................
....................................................................... ........................
..............................................
.............................
FINANCIAL AND OPERATIONAL COMBINED UNIFORM SINGLE REPORT
PART IIA
Number of months included in this statement 3931
For the period (MMDDYY) from 3932 to 3933
$
$
$
$
$
a. Includes interest on accounts subject to subordination agreements a. [RESERVED]
a. After Federal income taxes of
a. Commissions on transactions in exchange listed equity securities executed on an exchange b. Commissions on listed option transactions
c. All other securities commissions
d. Total securities commissions
a. From market making in options on a national securities exchange b. From all other trading
c. Total gain (loss)
EXPENSES
NET INCOME/COMPREHENSIVE INCOME
14. Regulatory fees and expenses
15. Other expenses
16. Total expenses
17. Net Income (loss) before Federal income taxes and items below (Item 9 less Item 16)
19. Equity in earnings (losses) of unconsolidated subsidiaries not included above
20. [RESERVED]
21. [RESERVED]
22. Net income (loss) after Federal income taxes
12. Commissions paid to other brokers-dealers
13. Interest expense
11. Other employee compensation and benefits
10. Salaries and other employment costs for general partners and voting stockholder officers
1. Commissions:
2. Gains or losses on firm securities trading accounts
5. Revenue from sale of investment company shares
6. Commodities revenue
7. Fees for account supervision, investment advisory and administrative services
8. Other revenue
9. Total revenue
4. Profits (losses) from underwriting and selling groups
3. Gains or losses on firm securities investment accounts
23. Other Comprehensive income (loss) ..................................................... 4226 a. After Federal income taxes of ........................................... 4227
24. Comprehensive income (loss) ......................................................... 4228 $
$
2026-02-25 05:33PM EST
Status: Accepted
GREAT PACIFIC SECURITIES
01/01/26 01/31/26
8,472,347
4,000,000
8,106,756
365,591
4,000,000
BROKER OR DEALER
For the period (MMDDYY) from to
FINANCIAL AND OPERATIONAL COMBINED UNIFORM SINGLE REPORT
PART IIA
3. Balance, beginning of period 4300
4310
4272 )
4262 )
1. Balance, beginning of period
4320
STATEMENT OF CHANGES IN OWNERSHIP EQUITY
(SOLE PROPRIETORSHIP, PARTNERSHIP OR CORPORATION)
STATEMENT OF CHANGES IN LIABILITIES SUBORDINATED
TO CLAIMS OF GENERAL CREDITORS
2. Balance, end of period (from item 1800)
4. Balance, end of period (from item 3520) 4330
............................................................... ..................................................................... ........................................................ ............................................................... ......................................................................... ......................................................................... ........................................................ $
$
OMIT PENNIES
...........................
............................ $
$
$
$
4290
4270
4260
4250
4240
A. Net income (loss)
B. Additions (includes non-conforming capital of
C. Deductions (includes non-conforming capital of
A. Increases
B. Decreases
2026-02-25 05:33PM EST
Status: Accepted
01/31/26
Pershing LLC X
GREAT PACIFIC SECURITIES
TOTAL
Ownership Equity and Subordinated Liabilities maturing or proposed to be
withdrawn within the next six months and accruals, (as defined below),
which have not been deducted in the computation of Net Capital.
C. (k) (2) (ii) - All customer transactions cleared through another broker-dealer on a fully disclosed basis.
25. If an exemption from Rule 15c3-3 is claimed, identify below the section upon which such exemption is based :
Name(s) of Clearing Firm(s) - Please separate multiple names with a semi-colon
A. (k) (1) - Limited business (mutual funds and/or variable annuities only)
..................................
$ 4550
B. (k) (2) (i) - "Special Account for the Exclusive
Benefit of customers" maintained .............................. 4560 D. (k) (3) - Exempted by order of the Commission .......................................................... 4580 4335 4570
Name of Lender or Contributor
$
FINANCIAL AND OPERATIONAL COMBINED UNIFORM SINGLE REPORT
PART IIA
Exemptive Provision Under Rule 15c3-3
BROKER OR DEALER
as of
Type of Proposed
Expect
to
Renew
(Yes or No)
4605
4615
4625
4635
4645
4655
4665
4675
4685
4695
4604
4614
4624
4634
4644
4654
4664
4674
4684
4694
(MMDDYY)
Withdrawal
or Maturity
Date
4603
4613
4623
4633
4643
4653
4663
4673
4683
4693
4699
OMIT PENNIES
Amount to be withdrawn (cash amount
and/or Net Capital
Value of Securities)
4692
4682
4672
4662
4652
4642
4632
4622
4612
4602
Insider or
Outsider ?
(In or Out)
Detail listing must include the total of items maturing during the six month period following the
report date, regardless of whether or not the capital
contribution is expected to be renewed. The
schedule must also include proposed capital withdrawals scheduled within the six month
period following the report date including the proposed redemption of stock and payments of
liabilities secured by fixed assets (which are considered allowable assets in the capital computation
pursuant to Rule 15c3-1(c) (2) (iv)), which could be required by the lender on demand or in less
than six months.
4601
4611
4621
4631
4641
4651
4661
4671
4681
4691
Withdrawal or
Accrual
(See below for
code to enter)
Instructions:
WITHDRAWAL CODE: DESCRIPTION
1. Equity Capital
2. Subordinated Liabilities
3. Accruals
4. 15c3-1(c) (2) (iv) Liabilities
4600
4610
4620
4630
4640
4650
4660
4670
4680
4690
2026-02-25 05:33PM EST
Status: Accepted
Appendix B: Wire and Delivery
Instructions
Appendix C: Sample Research Reports
Events in FOCUS
Monday March16
US: Industrial Production & Capacity Utilization - 9:15 am AU: RBA Interest Rate Decision
Tuesday March17
US: Pending Home Sales - 10 am
US: 20-Year Bond Auction - 1 pm
Wednesday March18
EU: Inflation Rate
US: PPI - 8:30 am
CA: BoC Interest Rate Decision
US: Factory Orders - 10 am
US: Crude Oil Inventories - 10:30 am
US: FOMC Interest Rate Decision - 2 pm
US: FOMC Press Conference - 2:30 pm
US: Earnings - MU
JP: BoJ Interest Rate Decision
Thursday March19
UK: BoE Interest Rate Decision
US: Initial & Continuing Jobless Claims - 8:30 am
EU: ECB Interest Rate Decision
US: New Home Sales - 10 am
Friday March 20
JP: Holiday
US: Triple Witch Expiration
US: S&P Indexes Rebalance
*Times are Eastern Standard
Agencies
800-284-4804
Most recent changes in spreads on comparable Agencies
Federal Home Loan
Bank (FHLB) Recent Issue Moody's S&P CUSIP Yield Price Issue Date Issue Spread Spread as of 04/30/2024
Spread as of
5/31/2024 Change
2 year FHLB 4.75 12/12/2025 Aaa AA+ 3130AWKM1 5.03% $99.588 6/29/2023 -8 VS T (4.625 6/30/25) 13 16 -3 3 year FHLB 4.125 1/15/2027 Aaa AA+ 3130AYPN0 4.73% $98.524 1/25/2024 6 VS ( T 4.00 1/15/27) 45 -1 5 year FHLB 4.75 12/8/2028 Aaa AA+ 3130AXQK7 4.62% $100.535 11/1/2023 6.5 VS (T 4.875 10/31/28) 9 11 -2 Fannie Mae Recent Issue Moody's S&P CUSIP Yield Price Issue Date Issue Spread Spread as of 04/30/2024
Spread as of
5/31/2024 Change
2 year FNMA 0.375 8/25/2025 Aaa AA+ 3135G05X7 5.07% $94.475 8/25/2020 18 vs (T 4.875 05/31/2026) 16 20 -4 3 year FNMA 1.875 9/24/2026 Aaa AA+ 3135G0Q22 4.96% $93.340 9/23/2016 33 vs (T 4.875 05/31/2026) 89 -1 5 year FNMA 6.25 5/15/2029 Aaa AA+ 31359MEU3 4.56% $107.424 5/19/1999 81 vs (T 4.500 05/31/2029) 45 -1 Freddie Mac Recent Issue Moody's S&P CUSIP Yield Price Issue Date Spread as of 04/30/2024
Spread as of
5/31/2024 Change
2 year FHLMC 0.375 9/23/2025 Aaa AA+ 3137EAEX3 5.09% $94.112 9/23/2020 17 vs (T 4.875 05/31/2026) 15 22 -7 5 year FHLMC 6.75 9/15/2029 Aaa AA+ 3134A3U46 4.56% $110.185 11/18/1999 127.5 vs (T 4.500 05/31/2029) 5 50 10 year FHLMC 6.25 7/15/2032 Aaa AA+ 3134A4KX1 4.59% $111.144 2/14/2002 64.5 vs (T 4.375 05/15/2034) 8 9 -1 This report is for informational purposes only and does not constitute a solicitation or an offer to buy or sell any securities mentioned herein. Pricing and other information generated through the use of data or services made available herein may not reflect actual prices or values that would be available in the market at the time provided or at the time that the user may want to purchase or sell a particular security or other instrument. Information contained in this report has been obtained from sources believed to be reliable, but Great Pacific Securities makes no representation as to its accuracy or completeness. Any opinions expressed herein reflect our judgment as of the date of the materials and are subject to change without notice.
May 31, 2024
Appendix D: Licenses and
Trading Authorization
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FCGCDH6;5/I/JJKLMNOPKQPQKRQSI5QTUKOVWUXO<VKKQOO1I;MI E
Trading Authorization
To: Whom It May Concern
We hereby certify to you that the following person or persons each is hereby authorized and empowered to purchase, sell, assign, deal in or transfer securities for cash or forward settlement and future commitments and enter into repurchase agreements and transactions in securities on our behalf with your firm.
The authorities and powers herein provided with respect to each person shall remain in effect until your receipt of written notice of change from us.
Name Title
Christopher Vinck-Luna CEO
James Voight Director of Trading
Peter Li Agent
Garrett Ng Agent
Sincerely,
Name: Christopher Vinck-Luna
Title: CEO
Date: 7/18/24
City of Hermosa Beach
Broker/Dealer Questionnaire
Response
Submitted By
Higgins Capital Management, Inc.
March 30, 2026
Table of Contents
2 5
15 78
80 98
114
Cover Letter
Attachment A: Broker Dealer Questionnaire Response and Certifications Attachment B: RBC Comfort Letter, Focus, and Audited Financials Attachment C: Delivery Instructions
Attachment D: Sample Research and Newsletters
Attachment E: Proof of FINRA Certification
Attachment F: Trading Authorization
Attachment G: Proof of Registration with State of California 116
1 March 30, 2026
To: City of Hermosa Beach
From: Higgins Capital Management, Inc. (HCM)
Subject: Broker Dealer Questionnaire
Thank you for giving our firm the opportunity to participate in your broker dealer selection process. Higgins Capital brings value-added to helping the City meet their investment goals while adhering to safety, liquidity and return on investment, in that order. We appreciate the opportunity to work with the City.
We have specialized in working with California public agencies for 41 years, 30 years at Higgins Capital.
We have dedicated ourselves to knowing and understanding the California public agency space. We recognize that public officials are tasked with multiple objectives. We are aware that you are on a very public stage where constituents hold you to a higher standard.
The experience we've gained means that we can do more for you because we have a greater appreciation of your challenges. We have a better understanding of your environment and can be proactive in providing help and advice.
RBC Clearing & Custody (RBC), a division of RBC Capital Markets, LLC has cleared for Higgins Capital for 22 years. All trades submitted by Higgins Capital to RBC are compared and accepted by RBC and contra firm by settlement date. RBC is responsible for the settlement of the City’s transactions, via DVP to your custodian bank.
Both Higgins Capital and RBC have strong operational controls. We work together to ensure settlements go smoothly. We have provided you with an RBC Comfort Letter as well as the 2025 RBC Annual Audited Financials.
Higgins Capital is a regional institutional broker dealer. Deborah M. Higgins, President, and your representative, has more than 41 years of experience in working with California Local Agencies. Our experience benefits our clients.
We are a riskless principal broker dealer. We do not maintain inventory. This means we do not experience the daily mark-to-market inventory risk. As a riskless principal broker dealer, we simultaneously buy and sell a security in two separate offsetting transactions with the aim of facilitating a customer’s trade without taking on any market risk.
We Shop The Street®. Higgins Capital provides clients with access to more than 36 of Wall Street's other dealers.
Rather than see a wider variety of inventory and pricing. We are constantly scanning for investment opportunities that suit your needs in accordance with your Investment Policy.
2 Our clients benefit from a wider market perspective on investment opportunities, interest rates and the economy.
We email a daily Morning Run of our counterparties’ secondary inventories in agencies and corporates.
We act as additional staff for you. Our President, Deborah M. Higgins, was a member of the technical advisory committee that created CDIAC’s Local Agency Investment Guidelines (LAIG). She is a recognized authority on Investment Policies for California Local Agencies.
We provide ongoing expertise and advice on writing, reviewing and amending your Investment Policy.
Over the years, Higgins Capital has been an active member of CACTTC, CMTA, CSMFO, APT, GFOA and GIOA. We are regular presenters at professional conferences, seminars, and webinars. We are available to educate your staff on both the fundamentals of investing and advanced methods of investing. We are available to our clients for meetings, including Board presentations and investment oversight committee meetings.
We did not see a DEI mandate in this broker dealer questionnaire. However, if it's a subject for consideration by your board or your constituents, Higgins Capital is certified as both woman-owned and minority-owned firm.
3 Attachment A
Broker Dealer Questionnaire
And Certifications
4 CITY OF HERMOSA BEACH
OFFICE OF THE CITY TREASURER
BROKER/DEALER QUESTIONNAIRE AND CERTIFICATION
DUE TUESDAY, APRIL 7, 2026 AT 5:00 PM
The City of Hermosa Beach (hereinafter referred to as the “City") is a General Law city, operating under the council-manager form of government. The City manages an investment portfolio ranging in size from $40 – 55 million. The portfolio is mainly comprised of Treasuries, Negotiable CDs and deposits in the State of California Local Agency Investment Fund (LAIF). Please visit https://www.hermosabeach.gov/our-government/city-officials/city-treasurer to view the City’s latest Investment Report.
The City annually adopts a written Investment Policy, which regulates the standards and procedures used in its cash management activities. A copy of the City's Investment Policy (updated in 2025) is provided with this document. Each broker/dealer must certify that they have read the Policy and will incorporate due diligence in conforming to the provisions of the City's Investment Policy, as well as all applicable State and Federal regulations as they apply to the investment activities of California municipalities.
City personnel will review and substantiate all information and references requested in the document; therefore, please answer all questions as thoroughly as possible.
Based on our review, a select number of firms will be incorporated into Hermosa’s approved Broker/Dealer List. We will seek to incorporate a robust selection of broker/dealers to our list, while noting that practical considerations may limit the number that are included. Inclusion on our approved list does not guarantee any minimum volume and all decisions are at the sole discretion of the City of Hermosa Beach.
Per our investment policy, the City Treasurer will submit our approved list to City Council for their approval.
5 Section I. General Information
Name of Firm Higgins Capital Management, Inc.
Local Address 2223 Avenida de la Playa, Ste. 210
La Jolla, CA 92037
Main Address 2223 Avenida de la Playa, Ste. 210
La Jolla, CA 92037
Telephone No. 858-459-2993
Primary Representative Manager/Partner-in-Charge
Name Deborah M. Higgins Deborah M. Higgins
Title President President
Telephone 858-459-2993 858-459-2993
41 years No. of Yrs. in Institutional Sales
30 years No. of Yrs. with Firm
Section II. Questionnaire
1. Are you a Primary Dealer in U.S. Government Securities? No.
2. Are you a Regional Dealer in U.S. Government Securities? Yes.
A. Please attach most recent Financial and Operational Combined Uniform Single (FOCUS) report. See Attachment B.
3. Are you a Broker instead of a Dealer, i.e. you DO NOT own positions of Securities? Yes.
4. What is the net capitalization of your Firm?
$238,490
5. What is the date of your Firm's fiscal year-end? 12/31/2025
6 6. If you are a depository institution, please provide the following and most current certified and audited information specific to your Tangible, Core, and Risk-Based Capital Ratios:
Not Applicable.
7. Is your Firm owned by a Holding Company? If so, what is its name and net capitalization? No.
8. a) Identify California public sector clients who are directly comparable to the City of Hermosa Beach and who we may contact as part of our review and verification process.
Entity Contact Person Telephone No. Client Since
City of El Segundo Dino Marsocci 310-524-2310 2000 (26 yrs) City of Downey Marlon Ramirez 526-869-7331 1985 (41 yrs) City of Huntington Beach Jason Schmitt 657-502-6351 2026 (Jan ’26) City of Manhattan Beach Tim Lilligren 310-802-5553 2017 (9 yrs) County of Nevada County Michelle Bodley 530-265-1516 2012 (14 yrs) b) Please describe your institutional trading practices and experience.
EXPERTISE. We have specialized in working with California Local Agencies for 41 years. We have dedicated ourselves to knowing and understanding the California public agency space, particularly government code 53601 et al. We are active members of CMTA, CSMFO and CACTTC. We give back in volunteering our time and expertise by participating in leadership positions and committee memberships. We are currently members of conference committees, education committees and the Investment Policy Certification Committee. You are dealing with a broker dealer that truly understands the California Local Agency environment. We recognize that public officials are tasked with multiple objectives. We are aware that you are on a very public stage where constituents hold you to a higher standard. The experience we have gained means that we can do more for you because we have a greater understanding of your challenges. c) Please describe your familiarity with the California Government Code as it relates to investments by a public entity.
Deborah M. Higgins was appointed to the Technical Advisory Committee for CDIAC for the development of the Local Agency Investment Guidelines (LAIG). She continues to work with CDIAC annually on updates. She serves on the CMTA Investment Policy Certification Committee. She presents annually at CMTA’s Educational preconference on Investment Policies.
7 9. Have any of your public-sector clients ever sustained a loss on a securities transaction arising from a misunderstanding or misrepresentation of the risk characteristics of the instrument?
Yes NoX
If yes, please explain:
10. Please provide your Wiring and Delivery Instructions.
See Attachment C.
11. Which of the following instruments are offered regularly by your local desk? T-Bills
x Treasury Notes/Bonds
Discount Notes
x Certificates of Deposit
x Agencies (specify) FHLB, FNMA, FHLMC, FFCB, GNMA, TVA, and SLMA BAs (Domestic)
BAs (Foreign)
x Commercial Paper
x Medium Term
Notes
Repurchase Agreements
Reverse Repurchase Agreements
CMO's
Asset Backed Investments
Mutual Funds
Other Investments as Authorized by Section 53600 of the Government Code Municipals and Supranationals
8 12. Which of the instruments listed above does your Firm specialize in Marketing? Treasuries, GSEs, Negotiable CDs, Corporates
13. What reports, transactions, confirmations and documents would we receive? Will they be in electronic form?
We provide Bloomberg trade information; ticket(s), yield analysis, Option Adjusted Spread (OAS), descriptions, and cash flow analysis. Hard copy confirms and statements are provided by our clearing firm, RBC. Higgins Capital provides in-depth research to each of its clients, depending upon their needs. As an independent broker dealer and registered investment advisor, the firm has access to research from a wide variety of Wall Street dealers.
14. Please include sample of research reports or market information that your firm regularly provides to local agency clients. Please include sample Daily Offering sheets or similar with your proposal amd indicate your ability to provide this electronically with real-time pricing.
See Attachment D.
15. What precautions are taken by your Firm to protect the interest of the public when dealing with government agencies as investors?
Higgins Capital’s fundamental approach to risk management is to not maintain inventory with its inherent associated risks. Higgins Capital does not have to maintain markets that are not applicable to our business. We are a riskless principal broker dealer that simultaneously buys and sells security in two separate yet offsetting transactions, with the aim of facilitating customer trade without taking on any market risk. Both Higgins Capital and RBC have procedures to ensure delivery of securities on settlement date. Both Higgins Capital and RBC monitor transactions for settlement. Ms. Higgins has 41 years of experience in the institutional fixed income space. She was tapped to help create CDIAC's Local Agency Investment Guidelines (LAIG) and continues to work with CDIAC annually to update. She's on CMTA's Investment Policy Certification Committee. She is known as an expert in Code 53601, et al.
16. Have you or your Firm been censured, sanctioned or disciplined by a Regulatory, State or Federal Agency for improper or fraudulent activities related to the sale of securities within the last five years?
Yes No X
If yes, please explain:
9 17. Please indicate and provide evidence of the current licensing status of the City’s representatives:
Agent: Deborah M. Higgins Licenses or Registration: CRD #1220543
18. Is your Firm a member of NASD/FINRA? X Yes No
Does your firm subscribe to the “Rules of Fair Practice?” Yes.
19. Please supply the following supplemental documents:
Most recent audited Annual Financial Statement
FOCUS Report, if applicable
Proof of FINRA registration
Trading Resolution
Proof of State of California registrations
10 Section Ill. Certification
X I have completed and am returning the following, including requested supplemental documents:
1) Broker/Dealer Questionnaire
2) Certification of Understanding, and
3) Receipt of Investment Policy.
Electronic Submission is encouraged and should be sent jointly to the contacts below or through the City's PlanetBids portal:
City of Hermosa Beach
David Pedersen, City Treasurer [email protected] Brandon Walker, Administrative Services Director [email protected] 1315 Valley Drive
Hermosa Beach, CA 90254
Broker/Dealer 0£/mtJ, }tz.
Higgins Capital Management, Inc. By: Deborah M. Higgins/Presi 03/25/2026
Date
11 CITY OF HERMOSA BEACH
CERTIFICATION OF UNDERSTANDING
The City of Hermosa Beach Investment Policy as approved by the City Council requires that all Financial Institutions and Investment Managers doing business with the City sign a Certification of Understanding acknowledging that:
1. You have read and are familiar with the City's Investment Policy and Guidelines as well as applicable Federal and State laws.
2. You meet the requirements as outlined in the City's Investment Policy.
3. You agree to make every reasonable effort to protect the assets of the City from loss.
4. You agree to notify the City in writing of any potential conflicts of interest.
5. You agree to notify the City in writing of any changes in personnel with decision-making authority over the City's funds within 24 hours of such event.
Failure to submit a Certification of Understanding shall result in the withdrawal by the City of all funds held by the financial institution or investment manager and the immediate revocation of behalf o,!)R�ty. Ii \11,
any rights to act as an agent of;;;;::
the City for the purch of securities or investment of funds on SIGNEd: �,d.J) 'l DATE: 3/30/2026
Print Name and Title: Deborah M. Higgins - President
City of Hermosa Beach use only:
Approved: Disapproved: __ _ Date: _______ _
Signature:. ____________________ _
Date Notification sent: _____ Sent by: _______ _
12 CITY OF HERMOSA BEACH
BROKER-DEALER RECEIPT OF INVESTMENT POLICY
We are in receipt of the City of Hermosa Beach's Investment Policy.
We have read the policy and understand the provisions and guidelines of the policy. All representatives covering the City's account will be made aware of this policy and will be directed to give consideration to its provisions and constraints in selecting investment opportunities to present to the City.
Sign�KW)/U =z:s:=
Name
President
Title
Firm Name:
Higgins Capital Management, Inc.
Date 3/30/2026
Name
Title
- ---------------------------------
City of Hermosa Beach use only:
Approved: Disapproved: ___ Date: _______ _
Signature:. ____________________ _
Date Notification sent:._____ Sent by:
13 Attachment B
RBC Comfort Letter - HCM Focus -
Combined Audited Financials
14 Dustin Aamodt
Chief Operating Officer
RBC Gateway
250 Nicollet Mall
Minneapolis, MN 55401
(612) 371-2857
[email protected]
www.rbcclearingandcustody.com
February 26, 2025
City of Hermosa Beach
Attn: David Pedersen
Treasure
1315 Valley Drive
Hermosa Beach, CA 90254
To Whom It May Concern:
RBC Clearing & Custody, a division of RBC Capital Markets, LLC (“Clearing Broker”), provides clearing services for Higgins Capital Management, Inc. (“Higgins Capital”) under a fully-disclosed clearing agreement that has been in place since July 21, 2004.
Higgins Capital is a broker-dealer in good standing with Clearing Broker as of the date of this letter, and Clearing Broker clears all trades submitted by Higgins Capital to Clearing Broker that are compared and accepted by Clearing Broker and the contra firm by settlement date, provided the trade is not cancelled or altered subsequent to the comparison and not re-compared.
Please contact me at (612) 371-2857 if you have any questions or concerns.
Sincerely,
Dustin Aamodt
Docusign Envelope ID: 064E59FD-5010-47ED-B9DD-859CC9204296
15 Certificate Of Completion
Envelope Id: 064E59FD-5010-47ED-B9DD-859CC9204296 Status: Completed Subject: Complete with Docusign: Higgins Capital Management, Inc. Comfort Letter (03.11.26).pdf Source Envelope:
Document Pages: 1 Signatures: 1 Envelope Originator:
Certificate Pages: 1 Initials: 0 Marie Rodriguez
AutoNav: Enabled
EnvelopeId Stamping: Enabled
Time Zone: (UTC-06:00) Central Time (US & Canada)
250 Nicollet Mall
Suite 1700
Minneapolis, MN 55401
[email protected]
IP Address: 199.250.8.35
Record Tracking
Status: Original
3/11/2026 11:24:35 AM
Holder: Marie Rodriguez
[email protected]
Location: DocuSign
Signer Events Signature Timestamp
Dustin Aamodt
[email protected]
COO, RBC Clearing & Custody
RBC Clearing & Custody, a division of RBC Capital
Markets
Security Level: Email, Account Authentication
(None)
Signature Adoption: Uploaded Signature Image
Using IP Address: 199.250.8.34
Sent: 3/11/2026 11:26:14 AM
Viewed: 3/11/2026 11:44:25 AM
Signed: 3/11/2026 11:44:53 AM
Electronic Record and Signature Disclosure:
Not Offered via Docusign
In Person Signer Events Signature Timestamp
Editor Delivery Events Status Timestamp
Agent Delivery Events Status Timestamp
Intermediary Delivery Events Status Timestamp
Certified Delivery Events Status Timestamp
Carbon Copy Events Status Timestamp
Witness Events Signature Timestamp
Notary Events Signature Timestamp
Envelope Summary Events Status Timestamps
Envelope Sent Hashed/Encrypted 3/11/2026 11:26:14 AM
Certified Delivered Security Checked 3/11/2026 11:44:25 AM Signing Complete Security Checked 3/11/2026 11:44:53 AM Completed Security Checked 3/11/2026 11:44:53 AM
Payment Events Status Timestamps
16
17
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24 HIGGINS CAPITAL MANAGEMENT, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 2025
25 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORTS
FORM X-17 A-5
PART Ill
FACING PAGE
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SEC FILE NUMBER
8-48921
Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 FILING FOR THE PERIOD BEGINNING ----=0-'-1/-=
0-'-1/2-=5 -=-__ AND ENDING ----'-1=2/-=-3..:..:.1/.::.25=----
MM/DD/YY MM/DD/YY
A. REGISTRANT IDENTIFICATION
NAME OF FIRM: Higgins Capital Management, Inc.
TYPE OF REGISTRANT (check all applicable boxes):
0 Broker-dealer □ Security-based swap dealer
D Check here if respondent is also an OTC derivatives dealer D Major security-based swap participant
ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) 2223 Avenida De La Playa, Suite 210
La Jolla
(City)
(No. and Street)
California
(State)
PERSON TO CONTACT WITH REGARD TO THIS FILING
Deborah M. Higgins (800) 716-6510
(Name) (Area Code - Telephone Number)
B. ACCOUNTANT IDENTIFICATION
92037-3218
(Zip Code)
[email protected]
(Email Address)
INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing* Dylan Floyd Accounting & Consulting
(Name - if individual, state last, first, and middle name) 20909 Judah Lane Los Angeles California 91321
(Address) (City) (State) (Zip Code)
March 1 2016 6235
FOR OFFICIAL USE ONLY
(PCAOB R,g;m,uoo N"mbe<, ;f appHcable)
I
• 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-S(e)(l)(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 0MB control number.
26 OATH OR AFFIRMATION
I, Deborah M. Higgins , swear (or affirm) that, to the best of my knowledge and belief, the financial report pertaining to the firm of Higgins Capital Management. Inc. , as of ________ ..,,D,..,e...,c=e,_,_m'""""be=r.....,.,3�1, 2� is true and correct. I further swear (or affirm) that neither the company nor any 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.
This filing*"' contains (check all applicable boxes):
0 (a) Statement of financial condition.
□ (b) Notes to consolidated statement of financial condition. �.#P1,tA '!l1 . rz:s----
Title:
President
1-21 (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-Xl. !Y1 (d) Statement of cash flows.
� (e) Statement of changes in stockholders' or partners' or sole proprietor's equity.
D (fl Statement of changes in liabilities subordinated to claims of creditors. [y'f (g) Notes to consolidated financial statements.
M' (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable.
D (i) Computation of tangible net worth under 17 CFR 240.18a-2. !Y1 (j) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3.
D (kl 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.
D (I) Computation for Determination of PAS Requirements under Exhibit A to§ 240.1Sc3-3. :'?f (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3.
D (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.
56' (o) Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capital or tangible net worth under 17 CFR 240.15c3-l, 17 CFR 240.18a-l, 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.
:J (p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition. [y'f (q) Oath or affirmation in accordance with 17 CFR 240.17a-5, 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable.
D (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
M' (s) Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable.
D (t) Independent public accountant's report based on an examination of the statement of financial condition. !Y1 (u) Independent public accountant's report based on an examination of the financial report or financial statements under 17 CFR 240.17a-S, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable. :::J (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.
0 (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.15c3-le or 17 CFR 240.17a-12, as applicable.
D (y) Report describing any material inadequacies found to exist or 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:---------------------------------------
**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.
27 HIGGINS CAPITAL MANAGEMENT, INC.
TABLE OF CONTENTS
Report of Independent Registered Public Accounting Firm 1 Statement of Financial Condition 2
Statement of Income 3
Statement of Changes in Stockholders’ Equity 4
Statement of Changes in Financial Condition 5
Notes to the Financial Statements 6 - 11
Supporting Schedules 12
Schedule I: 13
Computation of Net Capital Under Rule 15c3-1
of the Securities and Exchange Commission
Reconciliation with Company's Net Capital Computation
Schedule II: 14
Computation for Determination of Reserve Requirements
Under Rule 15c3-3 of the Securities and Exchange Commission Information Relating to Possession or Control Requirements Under Rule 15c3-3 of the Securities and Exchange Commission Review Report of the Independent Registered Public Accounting Firm 15 SEA Rule 15c3-3 Exemption Report 16
28 2
D y l a n F l o y d Ac c o u n t i n g & C o n s u l t i n g Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders
Higgins Capital Management Inc
Opinion on the Financial Statements
I have audited the accompanying statement of financial condition of Higgins Capital Management Inc. as of December 31, 2025, the related statements of income, changes in shareholders’ equity, and cash flows for the 2025 then ended, and the related notes and schedules. In my opinion, the financial statements present fairly, in all material respects, the financial position of Higgins Capital Management Inc. as of December 31, 2025 and the results of its operations and its cash flows for the 2025 then ended in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of Higgins Capital Management Inc. My responsibility is to express an opinion on Higgins Capital Management Inc. financial statements based on my audit. I am a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to Higgins Capital Management Inc. in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
I conducted my audit in accordance with the standards of the PCAOB. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. My audit included performing procedures to assess the risks of material misstatement of the financial statements, 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 statements. My audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. I believe that my audit provides a reasonable basis for my opinion.
Auditor’s Report on Supplemental Information
The supplemental information consist of schedules I & II has been subjected to audit procedures performed in conjunction with the audit Higgins Capital Management, Inc.’s financial statements. The supplemental information is the responsibility of Higgins Capital Management, Inc.’s management. My audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming my opinion on the supplemental information, I evaluated whether the supplemental information, including its form and content, is presented in conformity with 17 C.F.R. §240.17a-5. In my opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.
DylanFloyd Accounting & Consulting
Newhall, California
February 23, 2026
I have served as the Company's auditor since 2022.
29 Cash $ 87,493
Cash at clearing organization 722
Investment in securities 105,495
Due from broker 21,958
Deposits at clearing organization 50,000
Prepaid expense 1,885
Operating lease right-of-use asset 36,652
Total Assets $ 304,205
Liabilities
Accounts payable $ 9,261
Operating lease liability 37,577
Total Liabilities 46,838
Stockholders' Equity
Common stock stated at $1 per share;
authorized 1,000,000 shares; issued and outstanding 10,000 shares 27,875 Retained earnings 229,492
Total Stockholders' Equity 257,367
Total Liabilities and Stockholders' Equity $ 304,205
HIGGINS CAPITAL MANAGEMENT, INC.
STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 2025
ASSETS
LIABILITIES AND STOCKHOLDERS' EQUITY
The accompanying notes are an integral part of these financial statements. 2
30 Revenue
Commissions and fees $ 347,722
Interest income 98
Realized and unrealized gains, net 35,834
Total Revenue 383,654
Operating Expenses
Compensation and benefits 81,708
Communication and data 64,403
Rent 41,723
Clearing fees and other trading charges 35,423
Professional fees 18,140
Regulatory fees 10,799
Other operating expenses 74,110
Total Operating Expenses 326,306
Income before tax 57,348
Tax provision 10,895
Net Income $ 46,453
HIGGINS CAPITAL MANAGEMENT, INC.
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2025
The accompanying notes are an integral part of these financial statements. 3
31 Total
Stockholders' equity as of December 31, 2024 27,875$ -$ $ 183,039 $ 210,914 Net income 46,453 46,453
Stockholders' equity as of December 31, 2025 27,875$ -$ $ 229,492 $ 257,367
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
HIGGINS CAPITAL MANAGEMENT, INC.
FOR THE YEAR ENDED DECEMBER 31, 2025
Common
Stock
Retained
Earnings
Additional
Paid in
Capital
The accompanying notes are an integral part of these financial statements. 4
32 Cash Flows from Operating Activities
Net income $ 46,453
Adjustments to reconcile net income
to net cash used in operating activities:
Realized and unrealized gains, net (78,970)
Amortization of operating right-of-use asset 27,700
(Increase) decrease in:
Due from broker 12,690
Increase (decrease) in:
Accounts payable 2,103
Operating lease liability (27,496)
Net Cash Used in Operating Activities (17,520)
Net Decrease in Cash (17,520)
Cash at beginning of year 155,735
Cash at End of Year $ 138,215
Supplemental Cash Disclosures
Taxes paid $ 10,895
HIGGINS CAPITAL MANAGEMENT, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2025
The accompanying notes are an integral part of these financial statements. 5
33 HIGGINS CAPITAL MANAGEMENT, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2025
6 1. Organization
Higgins Capital Management, Inc., (the Company), is a registered broker dealer incorporated under the laws of the State of California maintaining its principal office in La Jolla, California. The Company operates as a registered broker dealer in securities under the provisions of the Securities and Exchange Act of 1934. The Company acts as an introducing broker dealer and clears transactions with and for customers on a fully disclosed basis through a clearing broker dealer. The Company’s business consists of the retail of corporate debt and equity securities, United States government securities, municipal securities and investment advisory services. The Company is registered with the Securities and Exchange Commission (“SEC”) and is a member of the Financial Industry Regulatory Authority (“FINRA”).
2. Significant Accounting Policies
Single Reportable Segment
The Company is engaged in a single line of business as a securities broker-dealer which is comprised of investment and municipal advisory services described in Note 7. The Company has identified its President as the 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. Additionally, the CODM uses excess net capital (see Note 8), which is not a measure of profit and loss, to make operational decisions while maintaining capital adequacy, such as whether to maintain profits or modify officer compensation. The Company’s operations constitute a single operating segment and therefore, a single reportable segment, because the CODM manages the business activities using information of the Company as a whole. The accounting policies used to measure the profit and loss of the segment are the same as those described in the policies listed below.
Basis of Accounting
The financial statements have been prepared on the accrual basis in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates and may have impact on future periods.
Fair Value of Financial Instruments
Unless otherwise indicated, the fair value of all reported assets and liabilities that represent financial instruments approximate the carrying value of such amount.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three months or less from the date of purchase, other than those held for sale in the ordinary course of business, to be cash equivalents. There were no cash equivalents as of December 31, 2025.
Commissions Receivable
Accounts receivable represents commissions due to the Company from the sale of securities. The Company accounts for estimated credit losses on financial assets measured at an amortized cost basis and certain off-balance sheet credit exposures in accordance with FASB ASC 326-20, Financial Instruments - Credit Losses. FASB ASC 326-20 requires the Company to estimate expected credit losses over the life of its financials assets and certain off-balance sheet exposures as of the reporting date based on relevant information about past events, current conditions, and reasonable and supportable forecasts.
34 HIGGINS CAPITAL MANAGEMENT, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2025
7 2. Significant Accounting Policies (continued)
Commissions Receivable (continued)
The Company records the estimate of expected credit losses as an allowance for credit losses. For financial assets measured at an amortized cost basis, the allowance for credit losses is reported as a valuation account on the balance sheet that is deducted from the asset’s amortized cost basis. Changes in the allowance for credit losses are reported as bad debt expense on the Statement of Income. Per management’s analysis, no allowance for doubtful accounts was considered necessary as of December 31, 2025.
Revenue Recognition
Revenue is earned through services related to brokerage and management. Brokerage commissions and related clearing and floor brokerage expenses are recorded at a point in time on either the trade or settlement date basis, which are not materially different. Mutual fund fees and mutual fund trails are recognized upon the settlement date of the related transaction which is not materially different than trade date. Management fees are received at the beginning of each quarter and the performance obligation is considered met by the end of each quarter.
Leases
At inception, the Company determines if an agreement constitutes a lease and, if so, whether the lease is an operating or finance lease. Leases that have terms of one year or less are deemed short term and are expensed on a straight-line basis over the term of the lease. Operating leases that exceed one year are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities on the Statement of Financial Condition. Finance leases that exceed one year are included in property and equipment and other liabilities on the Statement of Financial Condition. For the year ended December 31, 2025, the Company had one long term operating lease.
Income Taxes
Income taxes provide for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes. Deferred taxes are recognized for differences between the basis of assets and liabilities for financial statement and income tax purposes. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be deductible or taxable when the assets and liabilities are recovered or settled. Deferred tax assets and liabilities are not significant for the Company.
The Company evaluates its tax positions for any potential uncertain tax positions. If applicable, the Company accrues for those positions identified which are not deemed more likely than not to be sustained if challenged and recognizes interest and penalties on any unrecognized tax benefits as a component of the provision for the income taxes. As of December 31, 2025, there are no uncertain tax positions.
For the year ended December 31, 2025, the provision for income taxes shown consists of the Company’s share of state income taxes of $3,886 and federal income taxes of $7,009. The Company is no longer subject to federal and state income tax examinations by tax authorities for years before 2021 and 2020, respectively.
3. Deposits with Clearing Organizations
The Company’s clearing broker, RBC Correspondent Services (“RBC”), requires the Company maintain a minimum of $50,000 in cash deposits.
35 HIGGINS CAPITAL MANAGEMENT, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2025
8 4. Cash
For the purpose of preparing the statement of cash flows, cash consists of the following:
December 31, 2025
Cash $ 87,493
Cash at clearing organization 722
Deposits with clearing organization 50,000
Total cash shown in the Statement of Cash Flows $ 138,215
5. Fair Value Measurements
The Fair Value Measurements Topic of the FASB Accounting Standards Codification establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level l measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 Unobservable inputs for the asset or liability.
Determination of Fair Value
Under the Fair Value Measurements Topic of the FASB Accounting Standards Codification, the Company bases its fair value on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between participants at the measurement date. It is the Company's policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements, in accordance with the fair value hierarchy. Fair value measurements for assets and liabilities where there exists limited or no observable market data and, therefore, are based primarily upon management's own estimates, are often calculated based on current pricing policy, the economic and competitive environment, the characteristics of the asset or liability and other such factors. Therefore, the results cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the asset or liability. Additionally, there may be inherent weaknesses in any calculation technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, that could significantly affect the results of current or future value.
As of December 31, 2025, the Company’s assets measured at fair value on a recurring basis consist of the following:
Level 1 Level 2 Level 3 Total
Assets at fair value:
Exchange traded fund $105,495 - - $105,495
36 HIGGINS CAPITAL MANAGEMENT, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2025
9 6. Lease
Operating lease ROU assets represent the Company’s right to use an underlying asset for the lease term. Lease liabilities represent the Company’s obligation to make lease payments arising from the operating lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Payments made for lease incentives are excluded. Since the Company’s lease does not provide an implicit rate, the Company’s uses the incremental borrowing rate. The incremental borrowing rate is based on the estimated rate of interest for a collateralized borrowing over a similar term of the lease payments at commencement date. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. As of December 31, 2025, no such option to extend existed. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has a lease agreement with lease and non-lease components. Such non-lease components are accounted for separately.
On February 11, 1999, the Company entered into a lease for office space in La Jolla, California that commenced on April 1, 1999. On February 12, 2025, the lease was amended to extend the lease term thirty-six months to expire on March 31, 2027. Therefore, the Company remeasured its ROU liability as of March 1, 2025. For the year ended December 31, 2025, information pertaining to the operating lease was as follows:
Supplemental Information
Operating Lease ROU Asset
ROU asset on January 1, 2025 $ 64,352
Amortization of ROU asset ( 27,700)
ROU asset as of December 31, 2025 $ 36,652
Total operating lease cost included in rent on the Statement of Income $ 30,209 Payments made on operating lease liability $ 30,004
Remaining lease term 15 months
Discount rate 5.0%
Maturity of Operating Lease Liability
2026 $ 30,904
2027 7,783
Less discount ( 1,110)
Total operating lease liability $ 37,577
37 HIGGINS CAPITAL MANAGEMENT, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2025
10 7. Revenue from Customers
In accordance with ASU 2014-09, an entity should 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 following provides detailed information on the recognition of revenues:
Commissions, Mutual Fund Fees, Mutual Fund Trails, and Fees from Trading (“Fees”) The Company enters into arrangements with managed accounts or other pooled investment vehicles (funds) to distribute shares to investors. The Company may receive Fees paid by the fund up front, over time, upon the investor’s exit from the fund, or as a combination thereof. The Company believes that its performance obligation is the sale of securities to investors and as such this is fulfilled on the trade date. Any fixed amounts are recognized on the trade date and variable amounts are recognized to the extent it is probable that a significant revenue reversal will not occur once the uncertainty is resolved. For variable amounts, as the uncertainty is dependent on the value of the shares at future points in time as well as the length of time the investor remains in the fund, both of which are highly susceptible to factors outside the Company’s influence, the Company does not believe that it can overcome this constraint until the market value of the fund and the investor activities are known, which are usually monthly or quarterly. Fees recognized in the current period are primarily related to performance obligations that have been satisfied in prior periods.
In accordance with ASU 2014-09, an entity should 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 following provides detailed information on the recognition of revenues:
Disaggregation of Revenue
The following table presents the Company’s revenue from customers by business activity and other sources of revenue for the year ended December 31, 2025:
Institutional Private
Investors Client Other Total
Revenue from customers:
Commissions $ 264,084 $ 8,592 $ - $ 272,676
Management fees - 73,666 - 73,666
Mutual fund trails - 180 - 180
Consulting 1,200 - - 1,200
Total revenue from customers $ 265,284 $ 82,438 $ - $ 347,722 Other source of revenue:
Interest income - - 98 98
Total other source of revenue - - 98 98
Total revenue $ 265,284 $ 82,438 $ 98 $ 347,820
Contract Balances
Income is recognized upon completion of the related performance obligation and when an unconditional right to payment exists. The timing of revenue recognition may differ from the timing of payments. A receivable is recognized when a performance obligation is met prior to receiving payment. At January 1, 2025 and December 31, 2025, receivables related to revenue from RBC and were $34,648 and $21,958, respectively. There was no significant impairment related to these receivables during the year ended December 31, 2025.
38 HIGGINS CAPITAL MANAGEMENT, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2025
11 7. Revenue from Customers (continued)
Contract Balances (continued)
Alternatively, fees received prior to the completion of the performance obligation would be recorded as deferred revenue on the Statement of Financial Condition until such time when the performance obligation is met. Since the Company does not collect any fees in advance at quarter end, there is no deferred revenue as of January 1, 2025 and December 31, 2025.
Customer Costs
Expenses associated with the Company’s revenue streams are recognized as incurred as related performance obligations are satisfied over time.
8. Net Capital Requirements
The Company is subject to the SEC’s uniform net capital rule (Rule 15c3-1) which requires the Company to maintain a minimum net capital equal to or greater than $5,000 and a ratio of aggregate indebtedness to net capital not exceeding 15 to 1, both as defined. At December 31, 2025, the Company’s net capital was $243,490, which exceeded the requirement by $238,490. At December 31, 2025, the Company’s net capital ratio computed in accordance with Rule 15c3-1(d) was 4.18%.
9. Financial Instruments with Off-Balance-Sheet Credit Risk As a securities broker, the Company executes transactions with and on the behalf of customers. The Company introduces these transactions for clearance to a clearing firm on a fully disclosed basis. In the normal course of business, the Company's customer activities involve the execution of securities transactions and settlement by its clearing broker. The agreement between the Company and its clearing broker provides that the Company is obligated to assume any exposure related to nonperformance by its customers. These activities may expose the Company to off-balance-sheet risk in the event the customer is unable to fulfill its contracted obligations. In the event the customer fails to satisfy its obligations, the Company may be required to purchase or sell financial instruments at the prevailing market price in order to fulfill the customer's obligation. The Company seeks to control off-the-balance-sheet credit risk by monitoring its customer transaction and reviewing information it receives from its clearing broker on a daily basis and reserving for doubtful accounts when necessary.
10. Subsequent Events
The Company has evaluated subsequent events through the date of the Report of the Independent Registered Public Accounting Firm which is also the date the financial statements were issued.
39 SUPPORTING SCHEDULES
PURSUANT TO RULE 17a-5 OF THE SECURITIES EXCHANGE ACT
40 Net capital
Total stockholders' equity $ 257,367
Less: Non-allowable assets
Prepaid expense 1,885
Net capital before haircut $ 255,482
Haircut on investment in securities 11,992
Net capital $ 243,490
Net minimum capital requirement of 6 2/3% of aggregate
indebtedness of $10,186 or $5,000, whichever is greater 5,000 Excess Net Capital $ 238,490
HIGGINS CAPITAL MANAGEMENT, INC.
SCHEDULE I
COMPUTATION OF NET CAPITAL UNDER RULE 15c3-1
OF THE SECURITIES AND EXCHANGE COMMISSION
AS OF DECEMBER 31, 2025
RECONCILIATION WITH COMPANY'S NET CAPITAL COMPUTATION
INCLUDED IN PART II OF FORM X-17A-5
AS OF DECEMBER 31, 2025
There were no material differences between the Computation of Net Capital included in this report and the corresponding schedule included in the Company’s audited December 31, 2025 Part IIA FOCUS filing. 13
41 An exemption from Rule 15c3-3 is claimed, based upon section (k)(2)(ii).
In addition, the Company provides investment and municipal advisory services that are not based upon section (k)(2)(ii). The Company does not accept customer funds or securities and does not have possession of any customer funds or securities in connnection with these activities. Therefore, in reliance on Footnote 74 to SEC Release 34- 70073 and, as discussed in Q & A 8 of the related FAQ issued by SEC staff, the Company does not claim an exemption from SEA Rule 15c3-3 as it does not effect transactions for anyone defined as a customer under Rule 15c3- 3 and there are no items to report under the requirement of this Rule.
HIGGINS CAPITAL MANAGEMENT, INC.
SCHEDULE II
FOR THE YEAR ENDED DECEMBER 31, 2025
COMPUTATION FOR DETERMINATION OF RESERVE REQUIREMENTS
AND INFORMATION RELATING TO POSSESSION OR CONTROL
REQUIREMENTS UNDER RULE 15C3-3 OF THE SECURITIES AND
EXCHANGE COMMISSION
14
42 2
D y l a n F l o y d Ac c o u n t i n g & C o n s u l t i n g
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Exemption Report Review—No Exceptions to Exemption Provisions To the Board of Directors and Shareholders
Higgins Capital Management Inc.
I have reviewed management's statements, included in the accompanying Rule 15c3-3 Exemption Report pursuant to SEC Rule 17a-5, in which:
(1) The Company claimed an exemption from 17 C.F.R § 240.15c3-3 under the following provisions of 17 C.F.R. § 240.15c3-3 (k)(2)(ii)
(2) The Company met the identified exemption provisions in 17 C.F.R. § 240.15c3-3 (k) throughout the most recent fiscal year without exception.
(3) The Company is also filing this Exemption Report because the Company’s other business activities contemplated by Footnote 74 of the SEC Release No 34-70073 adopting amends to 17 C.F.R. § 240.17a-5 are limited to investment advisory fees and municipal advisory fees, and the Company (1) did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers (other than money or other consideration received and promptly transmitted in compliance with paragraph (a) or (b)(2) of Rule 15c2-4 and/ or funds received and promptly transmitted for effecting transactions via subscriptions on a subscription way basis where the funds are payable to the issuer or its agent and not to the Company); (2) did not carry accounts of or for customers; and (3) did not carry PAB accounts (as defined in Rule 15c3-3) throughout the most recent fiscal year.
Higgins Capital Management Inc.’s management is responsible for compliance with exemption provisions and its statements.
My review was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) and, accordingly, included inquiries and other required procedures to obtain evidence about Higgins Capital Management Inc.’s compliance with the exemption provisions. A review is substantially less in scope than an examination, the objective of which is the expression of an opinion on management's statements. Accordingly, I do not express such an opinion.
Based on my review, I am not aware of any material modifications that should be made to management's statements referred to above for them to be fairly stated, in all material respects, based on the Company’s business activities contemplated by Footnote 74 of SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5, and related SEC staff Frequently Asked Questions.
DylanFloyd Accounting & Consulting
Newhall, California
February 23, 2026
I have served as the Company's auditor since 2022.
43
44 RBC CAPITAL MARKETS, LLC & SUBSIDIARIES
(An indirect wholly-owned subsidiary of Royal Bank of Canada) (SEC I.D. No. 8-45411)
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
AS OF OCTOBER 31, 2025
AND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Filed pursuant to Rule 17a-5(e)(3) under the
Securities Exchange Act of 1934
As a PUBLIC DOCUMENT
45 RBC CAPITAL MARKETS, LLC & SUBSIDIARIES
TABLE OF CONTENTS
Page
Report of Independent Registered Public Accounting Firm Consolidated Statement of Financial Condition 3
Notes to the Consolidated Statement of Financial Condition 4-31
46 PricewaterhouseCoopers LLP, 300 Madison Avenue, New York, New York 10017 T: (646) 471 3000, www.pwc.com/us
Report of Independent Registered Public Accounting Firm To the Board of Directors and Member of RBC Capital Markets, LLC Opinion on the Financial Statement – Statement of Financial Condition We have audited the accompanying consolidated statement of financial condition of RBC Capital Markets, LLC and its subsidiaries (the “Company”) as of October 31, 2025, including the related notes (collectively referred to as 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 October 31, 2025 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
The consolidated financial statement is the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company's consolidated 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 of this consolidated financial statement 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 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 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.
December 12, 2025
We have served as the Company's auditor since 2016.
47 RBC CAPITAL MARKETS, LLC & SUBSIDIARIES
Consolidated Statement of Financial Condition
- 3 -
As at
$ in thousands October 31, 2025
Assets
Cash $ 471,042
Cash segregated for regulatory purposes 5,726,227
Collateralized agreements:
Securities purchased under agreements to resell, at fair value 11,985,250 Securities borrowed (includes $113,013 at fair value) 12,770,584 Securities received as collateral 1,425,492
Receivable from broker-dealers and clearing organizations 3, 040,260 Receivable from clients and counterparties 16,505,244
Financial instruments owned, at fair value (includes securities pledged of $523,218 and securities in consolidated VIE of $10,853) 12,039,001 Goodwill and intangible assets, net 1,749,886
Fixed assets, net 1,170,263
Other assets (includes $36 in consolidated VIE) 3,415,695 Total assets $ 70,298,944
Liabilities and member's equity
Borrowings:
Short-term borrowings (includes $5,987,568 at fair value and $12,000 of beneficial interests issued by consolidated VIE) 11,413,917 $ Long-term borrowings 4,100,000
Collateralized agreements:
Securities sold under agreements to repurchase, at fair value 20,057,017 Securities loaned 3,194,844
Obligation to return securities received as collateral 1, 425,492 Payable to broker-dealers and clearing organizations 780,884 Payable to clients and counterparties 9,235,135
Financial instruments sold, but not yet purchased, at fair value 4,434,681 Accrued compensation 3,690,903
Accounts payable and accrued liabilities (includes $36 in consolidated VIE) 1,782,419 60,115,292
Subordinated borrowings 1,386,000
Total liabilities 61,501,292
Member's equity 8,797,652
Total liabilities and member's equity 70,298,944 $
The accompanying notes are an integral part of this Consolidated Statement of Financial Condition.
48 RBC CAPITAL MARKETS, LLC & SUBSIDIARIES
Notes to the Consolidated Statement of Financial Condition In thousands, unless otherwise noted
- 4 -
Note 1. Organization and nature of business
RBC Capital Markets, LLC, a Minnesota limited liability company, and its subsidiaries (collectively, the Company) is a wholly-owned subsidiary of RBC USA Holdco Corporation (Holdco), a Delaware corporation. Holdco is a whollyowned subsidiary of RBC US Group Holdings LLC, a Delaware limited liability company (US Group Holdings). US Group Holdings is Royal Bank of Canada (RBC)’s United States Intermediate Holding Company (IHC) and is whollyowned by RBC.
The Company is a registered broker-dealer and investment adviser with the Securities and Exchange Commission (SEC) and a Futures Commission Merchant (FCM) with the Commodities Futures Trading Commission (CFTC). The Company is also a member of the New York Stock Exchange and other securities and commodities exchanges. The Company offers full-service brokerage, investment banking, and asset management services to retail and institutional clients, including correspondent firms and affiliates.
The accompanying Consolidated Statement of Financial Condition includes the accounts of RBC Capital Markets, LLC, its wholly owned subsidiaries, including RBC Municipal Products, LLC (MPLLC), and consolidated variable interest entities (VIEs). MPLLC is primarily engaged in structuring tender-option municipal bond (TOB) securitizations.
MPLLC acquires municipal bonds primarily underwritten by the Company, wraps them with a guarantee issued by an affiliated RBC entity, and sells the floating certificates to third parties through securitization transactions while retaining a residual interest in the issuing trusts. The municipal bond securitization entities are considered VIEs and are consolidated by MPLLC.
Note 2. Basis of presentation
The Company’s Consolidated Statement of Financial Condition conforms to accounting principles generally accepted in the United States of America (GAAP). The Consolidated Statement of Financial Condition includes the accounts of the Company, its wholly-owned subsidiaries (Subsidiaries) and consolidated VIEs. Intercompany transactions have been eliminated in consolidation.
Note 3. Significant accounting policies
Consolidation
The Company consolidates entities in which the Company has a controlling financial interest. The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity (VOE) or a VIE.
Voting interest entities
A VOE is an entity in which (i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently and (ii) the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity, and the right to receive the residual returns of the entity. The usual condition for a controlling financial interest in a VOE is ownership of a majority voting interest. If the Company has a majority voting interest in a VOE, the entity is consolidated.
Variable interest entities
A VIE is an entity that lacks one or more of the characteristics of a VOE. The Company consolidates a VIE as the primary beneficiary when the Company has a variable interest or interests that provide it with (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. See Note 15 for further information about VIEs.
Use of estimates
The preparation of the Consolidated Statement of Financial Condition in conformity with GAAP requires management to make estimates and assumptions which affect the amounts reported in the Consolidated Statement of Financial Condition and accompanying notes. These include the valuation of certain financial instruments owned and financial instruments sold, but not yet purchased, the outcome of litigation, income taxes, and the recoverability of the carrying
49 RBC CAPITAL MARKETS, LLC & SUBSIDIARIES
Notes to the Consolidated Statement of Financial Condition - 5 -
amounts of goodwill. Although these and other estimates and assumptions are based on the best available information, actual results could be different from these estimates.
Segment reporting
The Company’s operations represent a single operating and reportable segment, as the Company’s activities which include investment banking, wealth management, and trading activities are interrelated, and is consistent with the approach used by the Company’s Chief Financial Officer, who is the Chief Operating Decision Maker (CODM) to evaluate the Company’s activities and make business decisions using the information about the Company as a whole.
The information includes net income including revenues and non-interest expense, and is used to make strategic business decisions. The CODM also uses excess net capital, which is not a measure of profit or loss, to make operating decisions while maintaining the Company’s capital adequacy, such as whether to reinvest profits or distribute to Holdco. Refer to Note 20 for more information on net capital.
The Company adopted ASU No. 2023-07 Improvements to Reportable Segment Disclosures, which requires enhanced reportable segment disclosures. Adoption of the ASU did not have a material impact on the Company’s Consolidated Statement of Financial Condition.
Expected credit losses
In accordance with ASC 326, Financial Instruments – Credit Losses, the Company records the estimate of expected losses over the life of financial assets as of the reporting date as an allowance for credit losses, a contra-asset, within the applicable line on the Consolidated Statement of Financial Condition. The estimate of expected credit losses is based on relevant information about past events, current conditions, and reasonable and supportable forecasts.
The Company determines its eligibility for the collateral maintenance provision practical expedient and considers the credit quality of these assets, and the related need for an allowance for credit losses, based on several factors. For assets collateralized by highly-liquid collateral, when the fair value of the collateral is equal to or exceeds the amortized cost basis of the financial asset and the Company reasonably expects the counterparty to continue to replenish the collateral as necessary to meet the requirements of the contract, the practical expedient permits the Company to consider that the expectation of nonpayment of the amortized cost basis is zero. When the fair value of the collateral is less than the amortized cost basis of the financial assets, and the Company reasonably expects the counterparty to continue to replenish the collateral as necessary to meet the requirements of the contract, the Company establishes an allowance for credit losses for the unsecured amount of the amortized cost basis. The allowance for credit losses on the collateralized financial asset is limited to the difference between the fair value of the collateral at the reporting date and the amortized cost basis of the financial assets.
Cash
Cash includes cash on hand and cash in depository accounts with other financial institutions.
Cash and securities segregated for regulatory purposes
The Company is required by its primary regulators, the SEC and CFTC, to segregate cash and/or securities to satisfy rules regarding the protection of customer assets. Securities segregated for regulatory purposes may consist of securities owned by the Company or securities received from resale agreements. Should the Company segregate securities owned by the Company, those securities are reported at fair value in Financial instruments owned, at fair value on the Consolidated Statement of Financial Condition. Should the Company segregate securities received from resale agreements, the value of these resale agreements is reported in Securities purchased under agreements to resell, at fair value, on the Consolidated Statement of Financial Condition. Cash and securities segregated for regulatory purposes are considered restricted assets. Refer to Note 19 for further information.
Collateralized agreements
The Company enters into various collateralized financing agreements to facilitate client activities, acquire securities to cover short positions, invest excess cash, and finance certain firm activities. Collateralized financing agreements are presented on the Consolidated Statement of Financial Condition based on the agreements and nature of transactions.
Transactions subject to a Master Repurchase Agreement are presented as Securities purchased under agreements to resell, at fair value and Securities sold under agreements to repurchase, at fair value on the Consolidated Statement of Financial Condition. Transactions subject to Master Securities Lending Agreements are presented as Securities borrowed and Securities loaned on the Consolidated Statement of Financial Condition. The Company has elected the fair value option on resale and repurchase agreements and certain securities lending agreements because it evaluates
50 RBC CAPITAL MARKETS, LLC & SUBSIDIARIES
Notes to the Consolidated Statement of Financial Condition - 6 -
financial performance associated with these transactions on a fair value basis. In addition, the Company has elected the fair value option for certain short-term borrowings, which are subject to other collateralized agreements and are discussed in Note 11.
Resale and repurchase agreements
The Company purchases securities under agreements to resell (resale agreements) and takes possession of these securities. Resale agreements are treated as collateralized lending transactions whereby the Company monitors the market value of the securities purchased and additional collateral is obtained when appropriate. The Company also has the right to liquidate the collateral held in the event of counterparty default. The Company also sells securities under agreements to repurchase (repurchase agreements), which are treated as collateralized borrowing transactions.
The Company nets certain resale and repurchase agreements with the same counterparty on the Consolidated Statement of Financial Condition when the requirements of ASC 210-20-45-11, Offsetting of Amounts Related to Certain Repurchase and Reverse Repurchase Agreements, are met. However, the Company generally does not net resale and repurchase agreements if the collateral received in connection with resale agreements is used to satisfy certain regulatory segregation requirements. Refer to Note 4 for further information.
Resale and repurchase agreements may fail to settle on the expected settlement date. Transactions failed on start dates are not reported on the Consolidated Statement of Financial Condition. Transactions failed on the end date are not derecognized from the Consolidated Statement of Financial Condition. Refer to Note 16 for additional information around resale agreements that fail to settle on the expected settlement start date.
Securities borrowed and securities loaned
Securities borrowed and securities loaned transactions are recorded at the amount of cash collateral advanced or received and carried at amortized cost or at fair value, on the Consolidated Statement of Financial Condition. The Company has elected the fair value option for certain transactions because the Company monitors financial performance associated with these transactions on a fair value basis.
Securities borrowed transactions require the Company to deposit cash, securities, or other collateral with the lender.
With respect to securities loaned, it is the policy of the Company to receive collateral in the form of cash, securities or other collateral in an amount equal to or in excess of the market value of securities loaned. The Company monitors the market value of securities borrowed and loaned on a daily basis, with additional collateral obtained or refunded as appropriate. Refer to Note 4 for further information.
Securities borrowed and securities loaned also include transactions where the Company acts as a lender in securities lending agreements and receives securities as collateral. In accordance with ASC 860, Transfers and Servicing, the market value of securities received is recognized as an asset in Securities received as collateral and a corresponding liability in Obligation to return securities received as collateral on the Consolidated Statement of Financial Condition.
Financial instruments
Financial instruments owned, at fair value and Financial instruments sold, but not yet purchased, at fair value include securities and the market value of derivatives transactions.
Securities transactions may be settled regular-way or on a delayed basis. Regular-way transactions provide for delivery of securities within a period of time (after trade date) established by regulations or conventions in the market in which the trade occurs. The Company records the purchase and sale of an existing security on trade date when the commitment to purchase or sell the existing security is expected to settle within the “settlement period” that is customary in the market in which those trades take place. Since expected settlements for new issues and pool securities have varying settlement periods in the markets, the Company records the purchase and sale of these securities as regular-way transactions. The fair value of unsegregated regular-way securities are reported as either a net long (by security) in Financial instruments owned, at fair value or as a net short (by security) in Financial instruments sold, but not yet purchased, at fair value on the Consolidated Statement of Financial Condition. Amounts receivable and payable for regular-way securities transactions that have not reached their contractual settlement date are reported net in Receivable from broker-dealers and clearing organizations or Payable to broker-dealers and clearing organizations on the Consolidated Statement of Financial Condition.
The Company does not apply the scope exceptions for regular-way trades and records delayed delivery transactions, including To-be-announced (TBA), When Issued, and Extended Settlements, as derivatives until settled. The principal
51 RBC CAPITAL MARKETS, LLC & SUBSIDIARIES
Notes to the Consolidated Statement of Financial Condition - 7 -
of these transactions are not reported on the Consolidated Statement of Financial Condition until settlement. These transactions are reflected as forward agreements within Financial instruments owned, at fair value or Financial instruments sold, but not yet purchased, at fair value on the Consolidated Statement of Financial Condition, as well as in the derivative disclosure in Note 7.
Financial instruments owned, at fair value and Financial instruments sold, but not yet purchased, at fair value are recorded at fair value.
Fair value measurement
Assets and liabilities are measured at fair value, either in accordance with standard fair value requirements or through election of the fair value option.
ASC 820, Fair Value Measurement, defines fair value, establishes a framework for measuring fair value, and establishes a fair value hierarchy which prioritizes the inputs to valuation techniques. Fair value is 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.
ASC 825, Financial Instruments, provides a fair value option that allows entities to irrevocably elect fair value as the initial and subsequent measurement attribute for certain financial assets and liabilities. The election is made on an instrument-by-instrument basis at initial recognition of an asset or liability or upon an event that gives rise to a new basis of accounting for that instrument. The Company has elected the fair value option for securities purchased under agreements to resell, securities sold under agreements to repurchase, certain securities lending agreements, and certain short-term borrowings.
In determining fair value, a hierarchy is used which prioritizes the inputs to valuation techniques. The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The fair value hierarchy consists of three broad levels:
• Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date.
• Level 2 inputs include quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active, and model inputs that are either observable, or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3 inputs are one or more inputs that are unobservable and significant to the fair value of the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available at the measurement date.
The classification of financial instruments in the fair value hierarchy for disclosure purposes is based upon the lowest level of input that is significant to the measurement of fair value. Where observable inputs are not available, management judgment is required to determine fair values by assessing other relevant sources of information such as historical data, proxy information from similar transactions, and through extrapolation and interpolation techniques. For more complex or illiquid instruments, significant judgment is required to determine the model used, select the model inputs, and in some cases, apply valuation adjustments to the model value or quoted price for inactively traded financial instruments.
The selection of model inputs may be subjective and the inputs may be unobservable. Unobservable inputs are inherently uncertain as there is little or no market data available from which to determine the level at which the transaction would occur under normal business circumstances. Appropriate parameters of uncertainty and market risk valuation adjustments for such inputs and other model risk valuation adjustments are assessed in such instances.
Valuation adjustments may be subjective as they require significant judgment in the input selection, such as the probability of default and recovery rate, and are intended to arrive at a fair value that is determined based on assumptions that market participants would use in pricing the financial instrument. The realized price for a transaction may be different from its recorded value that was previously estimated using management judgment.
52 RBC CAPITAL MARKETS, LLC & SUBSIDIARIES
Notes to the Consolidated Statement of Financial Condition - 8 -
Valuation process and structure
The Company’s business units are responsible for valuing their respective portfolio of financial assets and liabilities.
The Global Valuation Committee, established by RBC, is an independent group responsible for providing oversight on financial instruments fair value policies and practices, escalating significant valuation issues, and reviewing and approving valuation adjustment methodologies.
The Valuation Group (VG) is responsible for the Company’s valuation policies, processes and procedures. VG is independent of the business units. It implements valuation control processes to validate the fair value of the Company’s financial instruments measured at fair value including those derived from pricing models. These control processes are designed to assure that the values used for financial reporting are based on observable inputs, wherever possible. In the event that observable inputs are not available, the control processes are designed to ensure the valuation approach utilized is appropriate and consistently applied and the assumptions are reasonable.
The Company’s control processes apply to financial instruments categorized in Level 1, Level 2 or Level 3 of the fair value hierarchy, unless otherwise noted. These control processes include, but are not limited to, profit and loss decomposition, independent price verification (IPV) and model validation standards. These control processes are managed by either Finance or Group Risk Management (GRM) and are independent of the relevant businesses and their trading functions. Profit and loss decomposition is a process to explain the fair value changes of certain positions and is performed daily for trading portfolios.
IPV is a monthly control process by which system market prices or model inputs are verified for accuracy or reasonableness. The level of accuracy is determined over time by comparing third-party price values to trader’s or system values, other pricing service values and, when available, actual trade data. Quoted prices for identical instruments from pricing services or brokers are generally not adjusted unless there are issues such as stale prices. If multiple quotes for identical instruments are received, fair value is based on an average of the prices received or the quote from the most reliable vendor, after the outlier prices that fall outside of the pricing range are removed. Other valuation techniques are used when a price or quote is not available. The availability of inputs relevant to the asset or liability and the relative reliability of the inputs could affect the selection of appropriate valuation techniques.
Some valuation processes use models to determine fair value. The Company has a systematic and consistent approach to control model use. Valuation models are approved for use within the RBC model risk management framework. The framework addresses, among other things, model development standards, validation processes and procedures and approval authorities. Model validation ensures that a model is suitable for its intended use and sets parameters for its use. All models are revalidated regularly by qualified personnel who are independent of the model design and development. Annually the model risk profile is reported to the RBC Board of Directors.
The relevance and reliability of the IPV process is dependent on the quality of the inputs used. Assessing data sources and input factors is a judgmental process in which all facts and circumstances have to be taken into account. For example, the use of observable prices from active markets is maximized and the use of unobservable inputs minimized.
Conversely, when a market is deemed to be inactive, observable inputs may not be available, and in such circumstances compensating controls are employed.
Goodwill and intangible assets
Through various acquisitions, the Company recognized goodwill and intangible assets. Goodwill was measured as the amount by which the consideration paid for the acquisition exceeds the fair value of assets acquired.
Intangible assets consist of exchange membership seats and purchased client relationships. Exchange membership seats, which provide the Company with rights to trade on certain exchanges, are carried at cost. If the recoverable amount of the asset is less than its carrying amount, the carrying amount of the intangible asset is written down to its recoverable amount.
ASC 350, Intangibles — Goodwill and Other, requires, at a minimum, an annual assessment of the recoverability of goodwill by comparing the fair value of a reporting unit with its carrying amount. Goodwill is required to be tested more frequently when there are indications of impairment. If the carrying value of a reporting unit is higher than the fair value or there is an indication that impairment may exist, an impairment charge must be recorded, not to exceed the carrying amount of goodwill. The Company last performed its annual assessment as of July 31, 2025. Refer to Note 8 for further information.
53 RBC CAPITAL MARKETS, LLC & SUBSIDIARIES
Notes to the Consolidated Statement of Financial Condition - 9 -
Fixed assets
Fixed assets mainly consist of internally developed software, right-of-use (ROU) assets, computer and equipment, and leasehold improvements. Refer to Note 9 for further information.
Leases
The Company accounts for leases in accordance with ASC 842, Leases. The Company is a lessee in several noncancellable operating leases, relating to office space and equipment. The Company determines if an arrangement includes or contains a lease at contract inception and recognizes an ROU asset and a lease liability at the commencement date. For each arrangement which contains a lease, the Company has made an accounting policy election to account for each separate lease component of a contract and its associated non-lease components as a single lease component.
ROU assets represent the Company’s right to use an underlying asset for the lease term and are reported as Fixed assets, net on the Consolidated Statement of Financial Condition. Lease liabilities represent the obligation to make lease payments arising from the lease and are reported as Accounts payable and accrued liabilities on the Consolidated Statement of Financial Condition. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. An incremental borrowing rate is used in determining the present value of lease payments, as the implicit rate is not available for most leases. The incremental borrowing rate for a lease is the rate of interest the Company would have to pay to borrow an amount equal to the lease payments under similar terms and in a similar economic environment. The operating lease ROU asset also includes any lease payments made and excludes any lease inducements. Although leases may include options to extend the lease beyond the initial term, the lease term only includes the renewal period when the Company is reasonably certain that the option will be exercised. Refer to Note 9 and Note 16 for further information.
Employee benefits and deferred compensation plans
The Company sponsors a defined contribution retirement plan, the RBC-U.S.A. Retirement and Savings Plan (the Plan), available to substantially all full-time employees. Participants may contribute both on a pre-tax and/or Roth 401(k) basis, up to 50% of their eligible compensation subject to certain aggregate limitations. Participants who are at least age 50 may make additional pre-tax contributions subject to certain aggregate limits. Additionally, all participants may contribute up to another 5% of eligible compensation on an after-tax basis.
The Company generally matches employee contributions up to a maximum of 6% of eligible pre-tax and/or Roth 401(k) compensation, which is invested at the direction of the participant. Employees must complete one year of service to be eligible to receive this contribution with at least 1,000 hours of service. Company matching contributions gradually vest over the first five years of service with RBC or any of its subsidiaries, with immediate vesting of contributions after five years. The Company’s policy is to fund the plan costs.
The Company maintains a non-qualified deferred compensation plan for key employees under an arrangement called the RBC U.S. Wealth Accumulation Plan (WAP). Under the WAP, employees may elect to index their deferred compensation with various mutual funds and RBC common shares. The Company records an obligation for the vested portion of the amounts owed to employees and the liability is indexed to the market value of the mutual funds or RBC common shares at the end of the reporting period. See Note 13 for further information on the Company’s deferred compensation plans.
Deferred compensation is forfeited when an employee leaves the organization, with limited exceptions, such as pursuing higher education/working for a not-for-profit, considered for exemption at the discretion of management. The policy also includes a provision for retirement departures, similar to other RBC deferred compensation plans.
The Company has a deferred bonus plan for certain key employees. Under this plan, a percentage of each employee’s annual incentive bonus is deferred and accumulates dividend equivalents at the same rate as dividends on RBC common shares. The value of the deferred bonus paid will be equivalent to the original deferred bonus adjusted for dividends and changes in the market value of RBC common shares at the time the bonus is paid.
Client transactions
The Company executes and clears securities, futures and other derivative transactions for clients. The Company also provides custody services for retail and institutional clients and as such receives and holds clients’ cash and securities.
In the capacity as a clearing and carrying broker, the Company maintains brokerage accounts for clients, including client and proprietary accounts of correspondent brokers. In accordance with SEC Customer Protection Rule – SEC Rule