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

<DOC>





                                                 Union Calendar No. 834
115th CONGRESS
  2d Session
                                H. R. 6021

                         [Report No. 115-1075]

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

                           December 12, 2018

                     Additional sponsor: Mr. Beyer

                           December 12, 2018

Reported with amendments, committed to the Committee of the Whole House 
          on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
[For text of introduced bill, see copy of bill as introduced on June 6, 
                                 2018]


_______________________________________________________________________

                                 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 Title I of the Sarbanes-Oxley Act of 2002.--
Section 110 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7220) is 
amended--
            (1) in paragraph (3), 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'';
            (2) in paragraph (4), 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'';
            (3) by redesignating paragraphs (5) and (6) as paragraphs 
        (8) and (9), respectively; and
            (4) 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 a member of a registered securities 
                association (as defined under section 15A of the 
                Securities Exchange Act of 1934 (15 U.S.C. 78o-3));
                    ``(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;
                    ``(E) does not have an associated person (as that 
                term is defined in section 3(a) of the Securities 
                Exchange Act of 1934 (15 U.S.C. 78c(a))) who, during 
                the 10-year period preceding that date, was convicted 
                of a felony under Federal or State laws for fraudulent 
                conduct; and
                    ``(F) was not, as provided by section 3(a)(39) of 
                the Securities Exchange Act of 1934 (15 U.S.C. 
                78c(a))--
                            ``(i) expelled or suspended from membership 
                        or participation in any self-regulatory 
                        organization (as provided in section 3(a)(26) 
                        of the Securities Exchange Act of 1934 (15 
                        U.S.C. 78c(a)(26))) or a registered futures 
                        association (as provided in section 17 of the 
                        Commodity Exchange Act (7 U.S.C. 21));
                            ``(ii) subject to an order of the 
                        Commission, or other appropriate regulatory 
                        agency, denying, suspending, or revoking its 
                        registration as any regulated entity; or
                            ``(iii) subject to an order of the 
                        Commodity Futures Trading Commission, or other 
                        appropriate regulatory agency, denying, 
                        suspending, or revoking its registration under 
                        the Commodity Exchange Act (7 U.S.C. 1 et seq.) 
                        or its authority to engage in any transactions.
            ``(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 had not 
                less than 1 and not more than 150 associated persons 
                (as that term is defined in section 3(a) of the 
                Securities Exchange Act of 1934 (15 U.S.C. 78c(a))) 
                registered with a self-regulatory organization (as 
                provided in section 3(a)(26) of the Securities Exchange 
                Act (15 U.S.C. 78c(a)(26))) of which the broker or 
                dealer is a member; and
                    ``(B) throughout the most recently completed fiscal 
                year of the broker or dealer--
                            ``(i) did not, as a matter of ordinary 
                        business practice in connection with the 
                        activities of the broker or dealer, receive 
                        customer checks, drafts, or other evidence of 
                        indebtedness made payable to the broker or 
                        dealer;
                            ``(ii) promptly forwarded customer 
                        securities and customer checks, drafts, or 
                        other evidence of indebtedness payable to a 
                        third party, including a clearing broker or 
                        dealer, in compliance with section 240.15c3-3 
                        of title 17, Code of Federal Regulations, or 
                        any successor regulation;
                            ``(iii) did not otherwise hold customer 
                        securities or cash;
                            ``(iv) 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
                            ``(v) either--
                                    ``(I) claimed exemption from 
                                section 240.15c3-3 of title 17, Code of 
                                Federal Regulations, or any successor 
                                regulation; or
                                    ``(II) claimed no exemption from 
                                such section 240.15c3-3, or any 
                                successor regulation, or was not 
                                otherwise subject to such, because the 
                                broker or dealer did not maintain 
                                custody over any customer securities or 
                                cash.
            ``(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 180 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--
            (1) carry out this Act and the amendments made by this Act; 
        and
            (2) to exclude the auditors of non-custody brokers and 
        dealers that are privately held and in good standing (as such 
        terms are defined under section 110 of the Sarbanes-Oxley Act 
        of 2002) from the audit requirements of the Public Company 
        Accounting Oversight Board.
    (c) Effective Date.--This Act, and the amendments made by this Act, 
shall take effect on the date that is 180 days after the date of 
enactment of this Act.
            Amend the title so as to read: ``A bill to amend the 
        Sarbanes-Oxley Act of 2002 to exclude the audits of 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.''.
                                                 Union Calendar No. 834

115th CONGRESS

  2d Session

                               H. R. 6021

                         [Report No. 115-1075]

_______________________________________________________________________

                                 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.

_______________________________________________________________________

                           December 12, 2018

Reported with amendments, committed to the Committee of the Whole House 
          on the State of the Union, and ordered to be printed