SEC Division of Trading and Markets no-action letter: Lincoln Financial Distributors, Inc.

DIVISION OF
TRACING AND MARKETS
Carl Pawsat, CPA
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
February 17, 2017
Director, Broker-Dealer Accounting and Reporting Lincoln Financial Distributors, Inc. 130 N. Radnor-Chester Rd. Radnor, PA 19087 Re: Exemption from Requirement to Engage Independent Public Accountant Dear Mr. Pawsat:
I received your letter dated February 13, 2017 on behalf of Lincoln Financial Distributors, Inc. ("LFD") regarding the applicability of the exemption provided to broker￾dealers in paragraph (e)(l)(i)(A) of Rule 17a-5 (17 CFR 240.l 7a-5). That self-executing provision exempts broker-dealers from the requirement to engage an independent public accountant if, among other things, the sectµities business of the broker-dealer has been limited to acting as broker (agent) for a single issuer in soliciting subscriptions for securities of the issuer, the broker has promptly transmitted the issuer all funds and promptly delivered to the subscriber all securities received in connection with the transaction, and the broker has not otherwise held funds or securities for or owed money or securities to customers. I understand from your letter that LFD's business is limited to acting as agent solely on behalf of Lincoln National Life Company ("LNL") and its wholly-owned subsidiary, Lincoln Life and Annuity Company of New York (''LNY"). I further understand that LNY conducts business exclusively in New York state, and that LNL conducts business exclusively outside of New York. In subsequent correspondence, you have represented that structures such as these are designed to avoid the application of the extraterritorial effect of several New York insurance laws to the business that is conducted outside of New York. Based upon your representations, the staff of the Division of Trading and Markets (the "Division") does not believe that LFD is disqualified from applying the exemption provided under paragraph (e)(l)(i)(A) on the basis that LFD is acting on behalf of more than one issuer.

Mr. Carl Pawsat
February 17, 2017
You should wtderstand that this letter expresses a staff position and does not purport to state any legal conclusion or factual finding on this matter. The Division's position is confined to the facts as described herein. Any material change in circumstances may warrant a different conclusion and should be brought immediately to the Division's attention. Sincerely, //l,;.4~ ~ Michael A. Macchiaroli cc: Roberta Devorsky, FINRA

• Lincoln
  Financial Distributors® A mt mber of Lincoln F/nancl•I Group rebruaty 13, 201 7 Thomas K . .McGowan Associate Director Division of Trading llnd Markets Securities and Exchange Commission 100 F Street, N.E. Wllshington, D C 20549 J .i11 col11 Financial Distributorn, Inc.
• 130 N. Radnm-Chcstcr Road
  Radnor, ]>_,\ 19087-522 1
  Carl lt Pawsat
  Dirccl J .inc:
  l•:-mail:
  (336) 69'1-3486 carl.pmvsa t@ Ifg.com
  RE: Confirmation to Not E ngage an Independent Public Accountant to Provid e Reports under Securities Exchange Act Rule 17a-5 Dear Mr. McGowan:
  Lincoln Financial Distributors ("LfD") requests confurnation that the staff of the D ivision of Trading l\nd Markets ("Division") of the Secmities :111d Exchange Commission ("Commission") would not recommend enforcement action to the Commission if LFD does not engage an independent public accountllnt to provide the reports required under Rule 17a-5, paragraph (d)(l)(i)(C), of the Securities .Exchllnge Act of 1934 ("Exchange Act").<ll LFD, the wholesale broker-dealer of Lincoln Na tional Corporation ("LNC"), is a Commission￾registered broker-dealer under Section 1 S(b) of the Exchange Act and is a member of the Finllncial Industry Regulatory Authority, Inc. Pursuant to Exchange Act Ruic 17a-5(e)(1 )(i)(A),(2l LFD is not required to engage an independent public accountant to provide the reports required under Exchange Act Ruic 17a-S(<l)(l)(i)(C),Cll as LFD, since its inception, has had its securities business limited solely to "acting l\S broker (agent) for the issuer in soliciting subscriptions for securities of the issuer." The issuer for llll non-New York sccmicies business is The Lincoln National Life Company ("LNL"), a subsidiary of LNC, and for all New York securities business is The Lincoln Life and Annuity Company of New York, " subsidiary of LNL. Furthermore, LFD opcrntes in th e busincss-to-business, not the business-to-consumer, space llncl is a wholes:ile, not :i retail, broker-dealer. LFD has never had any retail customers or accounts, nor has it ever collected fu nds from :111}' retail customers. As such, (i) the prompt transmitt:il of funds to the issuer, (ii) the prompt delivery of securities co the subscriber of all securities rcccive<l in connection with the transaction, and (iii) not otherwise holding funds or securities fo r or owing money or securities to customers l\re inapplicable to LFD. <•> 17 CF!l 240 . l?o-S(d) <'> 17 CFll 2•10. 170-S(c) 1

Lincoln
Financial Distributors® A mtmbcr of llncoln Flnonc/al Group I .incoln i"''ina1icial Distributors, Inc. 130 N. Radnor .. ( hcstc l' Road Radnor, PJ\ ·19087-5221 Cad R. Pawsat Direct Linc:
E-mail:
(336) 691-3486 carl.pawsat@lfg.com
Accordingly, we request that the Division not recommend enforcement action to the Commission if LFD does not engage an independent public accountant to provide the reports required under paragraph (d)(l)(i)(C) of Exchange Act Rule 17a-S.< 1 > We appreciate your assistance with this matter and please contact me at (336) 691-3486 if you have any questions. Sincerely, Director c~& Interim ~ Financial and Operations Principal cc: Timothy C. Fox, SEC Roberta D evorsky, FINRA Patrick]. Caulfield, LFD Kristine H. Toscano, LFD 2