[Congressional Record Volume 164, Number 154 (Monday, September 17, 2018)]
[Senate]
[Pages S6193-S6194]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 4020. Mr. COTTON (for himself and Mr. Jones) submitted an
amendment intended to be proposed by him to the bill S. 3004, 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; which was referred
to the Committee on Banking, Housing, and Urban Affairs; as follows:
Strike all after the enacting clause and insert the
following:
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) is registered with the Commission;
``(B) is a member of an association that is a registered
securities association under section 15A of the Securities
Exchange Act of 1934 (15 U.S.C. 78o-3);
``(C) is 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) has not been, during the 10-year period preceding
that date, convicted of a felony under Federal or State law;
``(E) does not employ a registered representative who,
during the 10-year period preceding that date, has been
convicted of a felony under Federal or State law for
fraudulent conduct; and
``(F) is not, as described in part in section 3(a)(39) of
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(39))--
``(i) expelled or suspended from membership or
participation in a self-regulatory organization or an
association that is a registered futures association under
section 17 of the Commodity Exchange Act (7 U.S.C. 21);
``(ii) subject to an order of the Commission, or another
appropriate regulatory agency, denying, suspending, or
revoking the registration of the broker or dealer as a
regulated entity; or
``(iii) subject to an order of the Commodity Futures
Trading Commission, or another appropriate regulatory agency,
denying, suspending, or revoking--
[[Page S6194]]
``(I) the registration of the broker or dealer under the
Commodity Exchange Act (7 U.S.C. 1 et seq.); or
``(II) the authority of the broker or dealer to engage in
any transaction.
``(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, has not less than 1 and
not more than 150 associated persons of the broker or dealer
(as that term is defined in section 3(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a))) that are registered
with a self-regulatory organization 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 section 240.15c3-3 of
title 17, Code of Federal Regulations, or any successor
regulation (or was not otherwise subject to that section)
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.--
(1) Definitions.--In this subsection, the terms ``in good
standing'', ``non-custody broker or dealer'', and ``privately
held'' have the meanings given those terms in section 110 of
the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7220), as amended
by subsection (a).
(2) Required amendments.--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--
(A) carry out this Act and the amendments made by this Act;
and
(B) exclude the auditors of non-custody brokers or dealers
that are privately held and in good standing from the audit
requirements of the Public Company Accounting Oversight
Board.
(c) Effective Date.--Except as provided in subsection (b),
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.
____________________