SEC rule amends certain broker/dealer reporting, audit and notification requirements

The amendments issued by the Securities and Exchange Commission (the “SEC”) last month include:

• a requirement that broker-dealer audits be conducted in accordance with standards of the Public Company Accounting Oversight Board (the “PCAOB”) “in light of explicit oversight authority provided to the PCAOB by the Dodd-Frank Wall Street Reform and Consumer Protection Act  to oversee these audits;”
• a requirement that  a broker-dealer that clears transactions or carries customer accounts agree to allow representatives of the Commission or the broker-dealer’s designated examining authority (“DEA”) to review the documentation associated with certain reports of the broker-dealer’s independent public accountant, and to allow the accountant to  discuss the findings relating to the reports with those representatives when requested in connection with a regulatory examination of the broker-dealer;  and
• a requirement that a broker-dealer file a new form with its DEA that elicits information about the broker-dealer’s practices with respect to the custody of securities and funds of customers and non-customers.