[Federal Register Volume 71, Number 242 (Monday, December 18, 2006)]
[Notices]
[Page 75779]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-21475]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54920]


Extension of Order Regarding Broker-Dealer Financial Statement 
Requirements Under Section 17 of the Exchange Act

December 12, 2006.
    The Securities and Exchange Commission (``Commission'') is 
extending its Order, originally issued on August 4, 2003,\1\ and 
extended on July 14, 2004 \2\ and on December 7, 2005 (the ``2005 
Order'') \3\ under Section 17(e) of the Securities Exchange Act of 1934 
(``Exchange Act''), regarding audits of financial statements of broker-
dealers that are not issuers (``non-public broker-dealers''). The 2005 
Order provided that non-public broker-dealers may file with the 
Commission and may send to their customers documents and information 
required by Section 17(e) certified by an independent public 
accountant, instead of by a registered public accounting firm, for 
fiscal years ending before January 1, 2007.
---------------------------------------------------------------------------

    \1\ Exchange Act Release No. 48281, 68 FR 47375 (August 8, 
2003).
    \2\ Exchange Act Release No. 50020, 69 FR 43482 (July 20, 2004).
    \3\ Exchange Act Release No. 52909, 70 FR 73809 (December 13, 
2005).
---------------------------------------------------------------------------

    Section 17(e)(1)(A) of the Exchange Act requires that every 
registered broker-dealer annually file with the Commission a certified 
balance sheet and income statement, and Section 17(e)(1)(B) requires 
that the broker-dealer annually send to its customers its ``certified 
balance sheet.'' \4\ The Sarbanes-Oxley Act of 2002 (``Act'') \5\ 
established the Public Company Accounting Oversight Board (``Board'') 
\6\ and amended Section 17(e) to replace the words ``an independent 
public accountant'' with ``a registered public accounting firm.'' \7\
---------------------------------------------------------------------------

    \4\ Exchange Act Rule 17a-5 requires registered broker-dealers 
to provide to the Commission and to customers of the broker-dealer 
other specified financial information.
    \5\ Public Law 107-204.
    \6\ Section 101 of the Act.
    \7\ Section 205(c)(2) of the Act.
---------------------------------------------------------------------------

    The Act establishes a deadline for registration with the Board of 
auditors of financial statements of ``issuers,'' as that term is 
defined in the Act.\8\ The Act does not provide a deadline for 
registration of auditors of non-public broker-dealers.
---------------------------------------------------------------------------

    \8\ Section 2 of the Act defines ``issuer.'' Section 102 of the 
Act establishes a specific deadline by which auditors of issuers 
must register with the Board. Based on the statutory deadline of 180 
days after the Commission determined the Board was ready to carry 
out the requirements of the Act, that date was October 22, 2003. See 
Exchange Act Release No. 48180 (July 16, 2003).
---------------------------------------------------------------------------

    The 2005 Order expires January 1, 2007. Application of registration 
requirements and procedures to auditors of non-public broker-dealers is 
still being considered. The Commission has therefore determined that 
extending the Order for two years is consistent with the public 
interest and the protection of investors.
    Accordingly,
    It is ordered, pursuant to Section 17(e) of the Exchange Act, that 
non-public broker-dealers may file with the Commission a balance sheet 
and income statement and may send to their customers a balance sheet 
certified by an independent public accountant, instead of by a 
registered public accounting firm, for fiscal years ending before 
January 1, 2009.

    By the Commission.
Nancy M. Morris,
Secretary.
[FR Doc. E6-21475 Filed 12-15-06; 8:45 am]
BILLING CODE 8011-01-P