SEC Issues Final Rules On Audits Of Broker-Dealers

The SEC has amended certain broker-dealer annual reporting, audit, and notification requirements. The amendments include a requirement that broker-dealer audits be conducted in accordance with standards of the Public Company Accounting Oversight Board, or PCAOB, in light of explicit oversight authority provided to the PCAOB by the DoddFrank Wall Street Reform and Consumer Protection Act  to oversee these audits. The amendments further require a broker-dealer that clears transactions or carries customer accounts to agree to allow representatives of the Commission or the broker-dealer’s designated examining authority, or DEA, to review the documentation associated with certain reports of the broker-dealer’s independent public accountant and to allow the accountant to  discuss the findings relating to the reports of the accountant with those representatives when  requested in connection with a regulatory examination of the broker-dealer. Finally, the  amendments require a broker-dealer to file a new form with its DEA that elicits information  about the broker-dealer’s practices with respect to the custody of securities and funds of  customers and non-customers.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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