Federal Register: August 8, 2003 (Volume 68, Number 153)
DOCID: FR Doc 03-20221
SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission
DOCUMENT ID: [Release No. 34-48281]
NOTICE: NOTICES
ACTION: Securities Exchange Act:
SUBJECT CATEGORY:
Broker-Dealer Financial Statement Requirements Under Section 17 of the Exchange Act
DOCUMENT SUMMARY:
August 4, 2003.
Section 17(e)(1)(A) of the Securities Exchange Act of 1934
(``Exchange Act'') requires that every registered brokerdealer
annually file with the Commission a certified balance sheet and income
statement, and section 17(e)(1)(B) requires that the brokerdealer
annually send to its customers its ``certified balance sheet.'' \1\ The
SarbanesOxley Act of 2002 (``Act'') \2\ established the Public Company
Accounting Oversight Board (``Board'') \3\ and amended section 17(e) to
replace the words ``an independent public accountant'' with ``a registered public accounting firm.'' \4\
\1\ Exchange Act Rule 17a5 requires registered brokerdealers
to provide to the Commission and to customers of the brokerdealer other specified financial information.
\2\ Public Law 107204.
\3\ Section 101 of the Act.
\4\ 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.\5\ The Act does not provide a deadline for
registration of auditors of brokerdealers that are not issuers (``non
public brokerdealers''). Application of registration requirements and
procedures to auditors of nonpublic brokerdealers is still being considered.
\5\ 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 is October 22, 2003. See Exchange Act Release No. 48180 (July 16, 2003).
Accordingly, we believe that it is consistent with the public interest and the protection of investors that nonpublic brokerdealers file with the Commission and send to their customers the documents and information required by section 17(e) certified by an independent public accountant instead of a registered public accounting firm until January 1, 2005, unless rules are in place regarding Board registration of auditors of nonpublic brokerdealers that set an earlier date.\6\ \6\ We note the continued applicability of Exchange Act Rule 17a5. We wish to highlight Exchange Act Rule 17a5(g), which requires, among other things, that audits of brokerdealers be made in accordance with generally accepted auditing standards (GAAS). GAAS requires, for example, that audits be conducted with due professional care by independent persons with adequate technical training and proficiency as an auditor.
It is therefore ordered, pursuant to section 17(e) of the Exchange
Act, that nonpublic brokerdealers 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
certified by a registered public accounting firm until January 1, 2005,
unless rules are in place regarding Board registration of auditors of nonpublic brokerdealers that set an earlier date.
[[Page 47376]]
By the Commission.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 0320221 Filed 8703; 8:45 am]
BILLING CODE 801001P
SUMMARY:
Broker-dealer financial statement requirements,
DOCUMENT BODY 2:
August 4, 2003.
Section 17(e)(1)(A) of the Securities Exchange Act of 1934
(``Exchange Act'') requires that every registered brokerdealer
annually file with the Commission a certified balance sheet and income
statement, and section 17(e)(1)(B) requires that the brokerdealer
annually send to its customers its ``certified balance sheet.'' \1\ The
SarbanesOxley Act of 2002 (``Act'') \2\ established the Public Company
Accounting Oversight Board (``Board'') \3\ and amended section 17(e) to
replace the words ``an independent public accountant'' with ``a registered public accounting firm.'' \4\
\1\ Exchange Act Rule 17a5 requires registered brokerdealers
to provide to the Commission and to customers of the brokerdealer other specified financial information.
\2\ Public Law 107204.
\3\ Section 101 of the Act.
\4\ 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.\5\ The Act does not provide a deadline for
registration of auditors of brokerdealers that are not issuers (``non
public brokerdealers''). Application of registration requirements and
procedures to auditors of nonpublic brokerdealers is still being considered.
\5\ 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 is October 22, 2003. See Exchange Act Release No. 48180 (July 16, 2003).
Accordingly, we believe that it is consistent with the public interest and the protection of investors that nonpublic brokerdealers file with the Commission and send to their customers the documents and information required by section 17(e) certified by an independent public accountant instead of a registered public accounting firm until January 1, 2005, unless rules are in place regarding Board registration of auditors of nonpublic brokerdealers that set an earlier date.\6\ \6\ We note the continued applicability of Exchange Act Rule 17a5. We wish to highlight Exchange Act Rule 17a5(g), which requires, among other things, that audits of brokerdealers be made in accordance with generally accepted auditing standards (GAAS). GAAS requires, for example, that audits be conducted with due professional care by independent persons with adequate technical training and proficiency as an auditor.
It is therefore ordered, pursuant to section 17(e) of the Exchange
Act, that nonpublic brokerdealers 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
certified by a registered public accounting firm until January 1, 2005,
unless rules are in place regarding Board registration of auditors of nonpublic brokerdealers that set an earlier date.
[[Page 47376]]
By the Commission.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 0320221 Filed 8703; 8:45 am]
BILLING CODE 801001P