[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6021 Introduced in House (IH)]

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115th CONGRESS
  2d Session
                                H. R. 6021

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.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              June 6, 2018

    Mr. Hill (for himself and Mr. Gonzalez of Texas) introduced the 
   following bill; which was referred to the Committee on Financial 
                                Services

_______________________________________________________________________

                                 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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

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

SEC. 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.
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