SEC Proposed Amendments to Broker-Dealer Financial Reporting Rule

On June 15, the SEC proposed several amendments to Rule 17a-5. The first set of amendments would: (i) require a broker-dealer acting as a custodian to undergo examination by a registered public accounting firm to ensure compliance with custody Rule 17a-5; (ii) facilitate the ability of the PCAOB to implement oversight of independent public accountants of broker-dealers pursuant to Section 982 of the Dodd-Frank Act; and (iii) eliminate redundant requirements for broker-dealers affiliated with, or dually-registered as, investment advisers. The second set of amendments would require a broker-dealer that clears transactions or carries customer accounts to allow the SEC and designated examining authorities (DEAs) to have access to the independent public accountant that audits such broker-dealer to discuss their audit findings and to review related audit documentation. The third set of amendments would require a broker-dealer to file a new Form Custody, providing the SEC and DEAs increased oversight over the broker-dealer’s custody practices. Comments must be submitted within 60 days of publication in the Federal Register. SEC Release. Proposed Amendments.