115 S3004 IS: Small Business Audit Correction Act of 2018 U.S. Senate 2018-06-06 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

II 115th CONGRESS2d Session S. 3004 IN THE SENATE OF THE UNITED STATES June 6, 2018 Mr. Cotton (for himself and Mr. Jones) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To amend the Sarbanes-Oxley Act of 2002 to exclude privately held, non-custody brokers and dealers that are in good standing from certain requirements under title I of that Act, and for other purposes.

1.

Short title

This Act may be cited as the Small Business Audit Correction Act of 2018.

2.

Exemption

(a)

Amendments to the Sarbanes-Oxley Act of 2002

Title I of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7211 et seq.) is amended— (1)in section 101(e)(1) (15 U.S.C. 7211(e)(1)), by striking brokers, and dealers and inserting brokers, dealers, and non-custody brokers or dealers that are privately held and in good standing; and (2)in section 110 (15 U.S.C. 7220)— (A)in paragraph (3)— (i)by striking The term and inserting Except as otherwise expressly provided, the term; and (ii)by inserting , except that the term does not include a non-custody broker or dealer that is privately held and in good standing after registered public accounting firm; (B)in paragraph (4)— (i)by striking The term and inserting Except as otherwise expressly provided, the term; and (ii)by inserting , except that the term does not include a non-custody broker or dealer that is privately held and in good standing after registered public accounting firm; (C)by redesignating paragraphs (5) and (6) as paragraphs (8) and (9), respectively; and (D)by inserting after paragraph (4) the following: (5)

In good standing

The term in good standing means, with respect to a broker or dealer (as those terms are defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))), that, as of the last day of the most recently completed fiscal year of the broker or dealer, as applicable, the broker or dealer— (A)was registered with the Commission; (B)was licensed by, and registered with, the Financial Industry Regulatory Authority or a national securities exchange that is registered with the Commission under section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f); (C)was compliant with the minimum dollar net capital requirements under section 240.15c3–1 of title 17, Code of Federal Regulations, or any successor regulation; (D)had not, during the 10-year period preceding that date, been convicted of a felony under Federal or State law; and (E)was not barred from registering, or had not been expelled from registration, with the Commission, the Financial Industry Regulatory Authority, the Commodity Futures Trading Commission, or any State regulatory agency, without regard to whether the broker or dealer had, as of that date, filed an appeal challenging such a bar or expulsion, as applicable. (6)

Non-custody broker or dealer

The term non-custody broker or dealer means a broker or dealer (as those terms are defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))), as applicable, that— (A)as of the last day of the most recently completed fiscal year of the broker or dealer— (i)had not less than 1 and not more than 150 registered persons holding a securities license registered with the broker or dealer; (ii)cleared each eligible transaction with and for a consumer on a fully disclosed basis with a clearing broker or dealer or a member of a national securities exchange that is registered with the Commission under section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f); (iii)did not, as a matter of ordinary business practice in connection with the activities of the broker or dealer, elect to receive customer checks, drafts, or other evidence of indebtedness made payable to the broker or dealer or a person other than the requisite registered broker or dealer carrying the account of a customer, escrow agent, issuer, underwriter, sponsor, or other distributor of securities; (iv)did not otherwise hold funds or securities for customers; and (v)if required under section 3(a)(2) of the Securities Investor Protection Act of 1970 (15 U.S.C. 78ccc(a)(2)), was a member of the Securities Investor Protection Corporation; and (B)during the most recently completed fiscal year of the broker or dealer, claimed exemption from section 240.15c3–3 of title 17, Code of Federal Regulations, or any successor regulation. (7)

Privately held

The term privately held means, with respect to a broker or dealer (as those terms are defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))), that the broker or dealer, as applicable, is not an issuer.. (b)

Amendments to regulations

Not later than 60 days after the date of enactment of this Act, the Securities and Exchange Commission shall make any necessary amendments to regulations of the Commission that are in effect as of the date of enactment of this Act in order to carry out this Act and the amendments made by this Act. (c)

Effective date

This Act, and the amendments made by this Act, shall take effect on the date that is 60 days after the date of enactment of this Act.