[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 4292 Introduced in Senate (IS)]
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117th CONGRESS
2d Session
S. 4292
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.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 24, 2022
Mr. Cotton (for himself and Ms. Sinema) introduced the following bill;
which was read twice and referred to the Committee on Banking, Housing,
and Urban Affairs
_______________________________________________________________________
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.
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 2022''.
SEC. 2. EXEMPTION.
(a) Amendments to 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
registered as a national 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, during the 10-year period preceding
that date, been convicted of a felony under Federal or
State law;
``(E) does not have a person associated with the
broker or dealer, as defined in section 3(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)),
that, during the 10-year period preceding that date,
has been convicted of a felony for fraudulent conduct
under Federal or State law; and
``(F) is not subject to statutory disqualification
by reason of being--
``(i) expelled or suspended from--
``(I) an association that is
registered as described in subparagraph
(B); or
``(II) an association that is
registered as 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, other appropriate regulatory
agency, or foreign financial regulatory
authority denying, suspending, or revoking the
registration of the broker or dealer as a
regulated entity;
``(iii) subject to an order of the
Commodity Futures Trading Commission, or other
appropriate regulatory entity, denying,
suspending, or revoking the registration of the
broker or dealer under the Commodity Exchange
Act (7 U.S.C. 1 et seq.) or the authority of
the broker or dealer to engage in any
transaction; or
``(iv) subject to a restraining order
entered by a court.
``(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) has not less than 1 and not more than
150 persons registered with an association that
is registered as a national securities
association under section 15A of the Securities
Exchange Act of 1934 (15 U.S.C. 78o-3);
``(ii) is not a high frequency trading
broker or dealer, as that term is defined by
the Commission with respect to a particular
registered firm type; and
``(iii) is not affiliated with an
investment adviser that--
``(I) is registered with the
Commission or a State entity; and
``(II) acts as a custodian for
customer assets;
``(B) with respect to the average of the 3 most
recently completed fiscal years of the broker or
dealer, has gross revenue that enables the broker or
dealer to qualify as a small business concern for the
purposes of a program administered by the Small
Business Administration; and
``(C) throughout the most recently completed fiscal
year of the broker or dealer--
``(i) does 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) if required under section 3(a)(2) of
the Securities Investor Protection Act of 1970
(15 U.S.C. 78ccc(a)(2)), is a member of the
Securities Investor Protection Corporation; and
``(iii) either--
``(I) if the broker or dealer is
subject to section 240.15c3-3 of title
17, Code of Federal Regulations, or any
successor regulation, is in compliance
with that section; or
``(II) is not subject to such
section 240.15c3-3, or any successor
regulation, because the broker or
dealer does not maintain custody over
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 the terms in section 110 of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7220), as amended by
subsection (a).
(2) 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.--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.
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