[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 3004 Introduced in Senate (IS)]
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115th CONGRESS
2d Session
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.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 6, 2018
Mr. Cotton (for himself and Mr. Jones) 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 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 the Sarbanes-Oxley Act of 2002.--Title I of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7211 et seq.) is amended--
(1) in section 101(e)(1) (15 U.S.C. 7211(e)(1)), by
striking ``brokers, and dealers'' and inserting ``brokers,
dealers, and non-custody brokers or dealers that are privately
held and in good standing''; and
(2) in section 110 (15 U.S.C. 7220)--
(A) in paragraph (3)--
(i) by striking ``The term'' and inserting
``Except as otherwise expressly provided, the
term''; and
(ii) 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'';
(B) in paragraph (4)--
(i) by striking ``The term'' and inserting
``Except as otherwise expressly provided, the
term''; and
(ii) 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'';
(C) by redesignating paragraphs (5) and (6) as
paragraphs (8) and (9), respectively; and
(D) 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 licensed by, and registered with, the
Financial Industry Regulatory Authority or a national
securities exchange that is registered with the
Commission under section 6 of the Securities Exchange
Act of 1934 (15 U.S.C. 78f);
``(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; and
``(E) was not barred from registering, or had not
been expelled from registration, with the Commission,
the Financial Industry Regulatory Authority, the
Commodity Futures Trading Commission, or any State
regulatory agency, without regard to whether the broker
or dealer had, as of that date, filed an appeal
challenging such a bar or expulsion, as applicable.
``(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) had not less than 1 and not more than
150 registered persons holding a securities
license registered with the broker or dealer;
``(ii) cleared each eligible transaction
with and for a consumer on a fully disclosed
basis with a clearing broker or dealer or a
member of a national securities exchange that
is registered with the Commission under section
6 of the Securities Exchange Act of 1934 (15
U.S.C. 78f);
``(iii) did not, as a matter of ordinary
business practice in connection with the
activities of the broker or dealer, elect to
receive customer checks, drafts, or other
evidence of indebtedness made payable to the
broker or dealer or a person other than the
requisite registered broker or dealer carrying
the account of a customer, escrow agent,
issuer, underwriter, sponsor, or other
distributor of securities;
``(iv) did not otherwise hold funds or
securities for customers; and
``(v) 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
``(B) during the most recently completed fiscal
year of the broker or dealer, claimed exemption from
section 240.15c3-3 of title 17, Code of Federal
Regulations, or any successor regulation.
``(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 60 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
carry out this Act and the amendments made by this Act.
(c) Effective Date.--This Act, and the amendments made by this Act,
shall take effect on the date that is 60 days after the date of
enactment of this Act.
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