Oversight of brokers and dealers

(a)

Definitions

Title I of the Sarbanes-Oxley Act of 2002 is amended by adding at the end the following new section:

110.

Definitions

For the purposes of this title, and notwithstanding section 2: (1)

Audit

The term audit means an examination of the financial statements of any issuer, broker, or dealer by an independent public accounting firm in accordance with the rules of the Board or the Commission (or, for the period preceding the adoption of applicable rules of the Board under section 103, in accordance with then-applicable generally accepted auditing and related standards for such purposes), for the purpose of expressing an opinion on such statements. (2)

Audit report

The term audit report means a document or other record— (A)prepared following an audit performed for purposes of compliance by an issuer, broker, or dealer with the requirements of the securities laws; and (B)in which a public accounting firm either— (i)sets forth the opinion of that firm regarding a financial statement, report, or other document; or (ii)asserts that no such opinion can be expressed. (3)

Professional standards

The term professional standards means— (A)accounting principles that are— (i)established by the standard setting body described in section 19(b) of the Securities Act of 1933, as amended by this Act, or prescribed by the Commission under section 19(a) of that Act (15 U.S.C. 17a(s)) or section 13(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78a(m)); and (ii)relevant to audit reports for particular issuers, brokers, or dealers, or dealt with in the quality control system of a particular registered public accounting firm; and (B)auditing standards, standards for attestation engagements, quality control policies and procedures, ethical and competency standards, and independence standards (including rules implementing title II) that the Board or the Commission determines— (i)relate to the preparation or issuance of audit reports for issuers, brokers, or dealers; and (ii)are established or adopted by the Board under section 103(a), or are promulgated as rules of the Commission. (4)

Broker

The term broker means a broker (as such term is defined in section 3(a)(4) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(4))) that is required to file a balance sheet, income statement, or other financial statement under section 17(e)(1)(A) of such Act (15 U.S.C. 78q(e)(1)(A)), where such balance sheet, income statement, or financial statement is required to be certified by a registered public accounting firm. (5)

Dealer

The term dealer means a dealer (as such term is defined in section 3(a)(5) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(5))) that is required to file a balance sheet, income statement, or other financial statement under section 17(e)(1)(A) of such Act (15 U.S.C. 78q(e)(1)(A)), where such balance sheet, income statement, or financial statement is required to be certified by a registered public accounting firm. (6)

Self-regulatory organization

The term self-regulatory organization has the same meaning as in section 3(a)(26) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(26)).

(b)

Establishment and Administration of the Public Company Accounting Oversight Board

Section 101 of such Act is amended— (1)by striking issuers each place it appears and inserting issuers, brokers, and dealers; (2)in subsection (a), by striking public companies and inserting companies; and (3)in subsection (a), by striking for companies the securities of which are sold to, and held by and for, public investors. (c)

Registration with the Board

Section 102 of such Act is amended— (1)by striking Beginning 180 days after the date of the determination of the Commission under section 101(d), it and inserting It; (2)in subsections (a) and (b)(2)(G), by striking issuer each place it appears and inserting issuer, broker, or dealer; and (3)by striking issuers and inserting issuers, brokers, and dealers. (d)

Auditing and independence

Section 103(a) of such Act is amended— (1)in paragraph (1), by striking and such ethics standards and inserting such ethics standards, and such independence standards; (2)in paragraph (2)(A)(iii), by striking describe in each audit report and inserting in each audit report for an issuer, describe; and (3)in paragraph (2)(B)(i), by striking issuers and inserting issuers, brokers, and dealers. (e)

Inspections of registered public accounting firms

Section 104 of such Act is amended— (1)in subsection (a), by striking issuers and inserting issuers, brokers, and dealers; (2)in subsection (b)(1)(A), by inserting before the semicolon the following or more than 100 brokers and dealers; and (3)in subsection (b)(1)(B), by striking 100 or fewer issuers and inserting issuers, brokers, or dealers, but is not described in subparagraph (A). (f)

Investigations and disciplinary proceedings

Section 105(c)(7)(B) of such Act is amended— (1)by striking any issuer each place it appears and inserting any issuer, broker, or dealer; and (2)by striking an issuer under this subsection and inserting a registered public accounting firm under this subsection. (g)

Foreign public accounting firms

Section 106 of such Act is amended— (1)by striking issuer and inserting issuer, broker, or dealer; and (2)by striking issuers and inserting issuers, brokers, or dealers. (h)

Funding

Section 109 of such Act is amended— (1)in subsection (c)(2), by striking subsection (i) and inserting subsection (j); (2)in subsection (d)(2), by striking allowing for differentiation among classes of issuers, as appropriate and inserting and among brokers and dealers that are not issuers, in accordance with subsection (h), and allowing for differentiation among classes of issuers and brokers and dealers, as appropriate; (3)by redesignating subsections (h), (i), and (j) as subsections (i), (j), and (k), respectively; and (4)by inserting after subsection (g) the following new subsection:

(h)

Allocation of accounting support fees among brokers and dealers

(1)

In general

Any amount due from brokers and dealers that are not issuers (or a particular class of such brokers and dealers) under this section to fund the budget of the Board shall be allocated among and payable by such brokers and dealers (or such brokers and dealers in a particular class, as applicable). A broker or dealer’s allocation shall be in proportion to the broker or dealer’s net capital compared to the total net capital of all brokers and dealers that are not issuers, in accordance with the rules of the Board. (2)

Obligation to pay

Every broker or dealer shall pay the share of a reasonable annual accounting support fee or fees allocated to such broker or dealer under this section.

(i)

Referral of investigations to a self-regulatory organization

Section 105(b)(4)(B) of the Sarbanes-Oxley Act of 2002 is amended— (1)by redesignating clauses (ii) and (iii) as clauses (iii) and (iv), respectively; and (2)by inserting after clause (i) the following new clause:

(ii)to a self-regulatory organization, in the case of an investigation that concerns an audit report for a broker or dealer that is subject to the jurisdiction of such self-regulatory organization;

(j)

Use of documents related to an inspection or investigation

Section 105(b)(5)(B)(ii) of such Act is amended— (1)in subclause (III), by striking and; (2)in subclause (IV), by striking the comma and inserting ; and; and (3)by inserting after subclause (IV) the following new subclause:

(V)a self-regulatory organization, with respect to an audit report for a broker or dealer that is subject to the jurisdiction of such self-regulatory organization,