Section 982 — Oversight of Bokers and Dealers

SEC. 982. OVERSIGHT OF BROKERS AND DEALERS.

(a) Definitions.--

(1) Definitions amended.--Title I of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201 et seq.) is amended by adding at the end the following new section:
"SEC. 110. <<NOTE: 15 USC 7220.>> DEFINITIONS.

"For the purposes of this title, the following definitions shall apply:

"(1) Audit.--The term `audit' means an examination of the financial statements, reports, documents, procedures, controls, or notices of any issuer, broker, or dealer by an independent public accounting firm in accordance with the rules of the Board or the Commission, for the purpose of expressing an opinion on the financial statements or providing an audit report.
"(2) Audit report.--The term `audit report' means a document, report, notice, or other record--

"(A) prepared following an audit performed for purposes of compliance by an issuer, broker, or dealer with the requirements of the securities laws; and
"(B) in which a public accounting firm either--

"(i) sets forth the opinion of that firm regarding a financial statement, report, notice, or other document, procedures, or controls; or
"(ii) asserts that no such opinion can be expressed.

"(3) Broker.--The term `broker' means a broker (as such term is defined in section 3(a)(4) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(4))) that is required to file a balance sheet, income statement, or other financial statement under section 17(e)(1)(A) of such Act (15 U.S.C. 78q(e)(1)(A)), where such balance sheet, income statement, or financial statement is required to be certified by a registered public
accounting firm.
"(4) Dealer.--The term `dealer' means a dealer (as such term is defined in section 3(a)(5) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(5))) that is required to file a balance sheet, income statement, or other financial statement under section 17(e)(1)(A) of such Act (15 U.S.C. 78q(e)(1)(A)), where such balance sheet, income statement, or financial statement is required to be certified by a registered public
accounting firm.
"(5) Professional standards.--The term `professional standards' means--

"(A) accounting principles that are--

"(i) established by the standard setting body described in section 19(b) of the Securities Act of 1933, as amended by this Act, or prescribed by the Commission under section 19(a) of that Act (15 U.S.C. 17a(s)) or section 13(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78a(m)); and
"(ii) relevant to audit reports for particular issuers, brokers, or dealers, or dealt with in the quality control system of a particular
registered public accounting firm; and

"(B) auditing standards, standards for attestation engagements, quality control policies and procedures, ethical and competency standards, and independence standards (including rules implementing title II) that the Board or the Commission determines--

"(i) relate to the preparation or issuance of audit reports for issuers, brokers, or dealers; and
"(ii) are established or adopted by the Board under section 103(a), or are promulgated as rules of the Commission.

"(6) Self-regulatory organization.--The term `self-regulatory organization' has the same meaning as in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).''.

(2) Conforming amendment.--Section 2(a) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201(a)) is amended in the matter preceding paragraph (1), by striking "In this'' and inserting "Except as otherwise specifically provided in this Act, in this''.

(b) Establishment and Administration of the Public Company Accounting Oversight Board.--Section 101 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7211) is amended--

(1) by striking "issuers'' each place that term appears and inserting "issuers, brokers, and dealers''; and
(2) in subsection (a)--

(A) by striking "public companies'' and inserting "companies''; and
(B) by striking "for companies the securities of which are sold to, and held by and for, public investors''.

(1) in subsection (a)--

(A) by striking "Beginning 180'' and all that follows through "101(d), it'' and inserting "It''; and
(B) by striking "issuer'' and inserting "issuer, broker, or dealer'';

(2) in subsection (b)--

(A) in paragraph (2)(A), by striking "issuers'' and inserting "issuers, brokers, and dealers''; and
(B) by striking "issuer'' each place that term appears and inserting "issuer, broker, or dealer''.

(d) Auditing and Independence.--Section 103(a) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7213(a)) is amended--

(1) in paragraph (1), by striking "and such ethics standards'' and inserting "such ethics standards, and such independence standards'';
(2) in paragraph (2)(A)(iii), by striking "describe in each audit report'' and inserting "in each audit report for an issuer, describe''; and
(3) in paragraph (2)(B)(i), by striking "issuers'' and inserting "issuers, brokers, and dealers''.

(e) Inspections of Registered Public Accounting Firms.--

(1) Amendments.--Section 104(a) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7214(a)) is amended--

(A) by striking "The Board shall'' and inserting the following:

"(1) Inspections generally.--The Board shall''; and

(B) by adding at the end the following:

"(2) Inspections of audit reports for brokers and dealers.--

"(A) The Board may, by rule, conduct and require a program of inspection in accordance with paragraph (1), on a basis to be determined by the Board, of registered public accounting firms that provide one or more audit reports for a broker or dealer. The Board, in establishing such a program, may allow for differentiation among classes of brokers and dealers, as appropriate.
"(B) If the Board determines to establish a program of inspection pursuant to subparagraph (A), the Board shall consider in establishing any inspection schedules whether differing schedules would be appropriate with respect to registered public accounting firms that issue audit reports only for one or more brokers or dealers that do not receive, handle, or hold customer securities
or cash or are not a member of the Securities Investor Protection Corporation.
"(C) Any rules of the Board pursuant to this paragraph shall be subject to prior approval by the Commission pursuant to section 107(b) before the rules become effective, including an opportunity for public notice and comment.
"(D) Notwithstanding anything to the contrary in section 102 of this Act, a public accounting firm shall not be required to register with the Board if the public accounting firm is exempt from the inspection program which may be established by the Board under subparagraph (A).''.

(2) Conforming amendment.--Section 17(e)(1)(A) of the Securities Exchange Act of 1934 (15 U.S.C. 78q(e)(1)(A)) is amended by striking "registered public accounting firm'' and inserting "independent public accounting firm, or by a registered public accounting firm if the firm is required to be
registered under the Sarbanes-Oxley Act of 2002,''.

(f) Investigations and Disciplinary Proceedings.--Section 105(c)(7)(B) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(c)(7)(B)) is amended--

(1) in the subparagraph heading, by inserting ", broker, or dealer'' after "issuer'';
(2) by striking "any issuer'' each place that term appears and inserting "any issuer, broker, or dealer''; and
(3) by striking "an issuer under this subsection'' and inserting "a registered public accounting firm under this subsection''.

(g) Foreign Public Accounting Firms.--Section 106(a) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7216(a)) is amended--

(1) in paragraph (1), by striking "issuer'' and inserting "issuer, broker, or dealer''; and
(2) in paragraph (2), by striking "issuers'' and inserting "issuers, brokers, or dealers''.

(h) Funding.--Section 109 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7219) is amended--

(1) in subsection (c)(2), by striking "subsection (i)'' and inserting "subsection (j)'';
(2) in subsection (d)--

(A) in paragraph (2), by striking "allowing for differentiation among classes of issuers, as appropriate'' and inserting "and among brokers and
dealers, in accordance with subsection (h), and allowing for differentiation among classes of issuers, brokers and dealers, as appropriate''; and
(B) by adding at the end the following:

"(3) Brokers and dealers.-- <<NOTE: Fees.>> The Board shall begin the allocation, assessment, and collection of fees under paragraph (2) with respect to brokers and dealers with the payment of support fees to fund the first full fiscal year beginning after the date of enactment of the Investor Protection and Securities Reform Act of 2010.'';
(3) <<NOTE: 15 USC 78m.>> by redesignating subsections (h), (i), and (j) as subsections (i), (j), and (k), respectively; and (4) by inserting after subsection (g) the following:

"(h) Allocation of Accounting Support Fees Among Brokers and Dealers.--

"(1) Obligation to pay.--Each broker or dealer shall pay to the Board the annual accounting support fee allocated to such broker or dealer under this section.
"(2) Allocation.--Any amount due from a broker or dealer (or from a particular class of brokers and dealers) under this section shall be allocated among brokers and dealers and payable by the broker or dealer (or the brokers and dealers in the particular class, as applicable).
"(3) Proportionality.--The amount due from a broker or dealer shall be in proportion to the net capital of the broker or dealer (before or after any adjustments), compared to the total net capital of all brokers and dealers (before or after any adjustments), in accordance with rules issued by the Board.''.

(i) Referral of Investigations to a Self-regulatory Organization.--Section 105(b)(4)(B) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(b)(4)(B)) is amended--

(1) by redesignating clauses (ii) and (iii) as clauses (iii) and (iv), respectively; and
(2) by inserting after clause (i) the following:

"(ii) to a self-regulatory organization, in the case of an investigation that concerns an audit report for a broker or dealer that is under the jurisdiction of such self-regulatory organization;''.

(j) Use of Documents Related to an Inspection or Investigation.--Section 105(b)(5)(B)(ii) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(b)(5)(B)(ii)) is amended--

(1) in subclause (III), by striking "and'' at the end;
(2) in subclause (IV), by striking the comma and inserting "; and''; and
(3) by inserting after subclause (IV) the following:

"(V) a self-regulatory organization, with respect to an audit report for a broker or dealer that is under the jurisdiction of such self-regulatory organization,''.

Section 982 — Oversight of Bokers and Dealers

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