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Bill to Provide Regulatory Relief to Small BDs Passes House Committee

A bill that would modify the Sarbanes-Oxley Act of 2002 to provide regulatory relief for small investment broker-dealers passed the House Financial Services Committee in a 36-16 vote last Thursday.

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A bill that would modify the Sarbanes-Oxley Act of 2002 to provide regulatory relief for small investment broker-dealers passed the House Financial Services Committee in a 36-16 vote last Thursday.

The Small Business Audit Correction Act (H.R. 6021), introduced by Rep. French Hill (R-AR), would no longer require small, privately-owned non-custodial broker-dealers in good standing to hire a Public Company Accounting Oversight Board-registered audit firm to meet their annual reporting obligations.

Currently, all investment broker-dealers, irrespective of size, must hire an PCAOB-registered audit firm to conduct audits using complex guidelines that Rep. Hill claims are designed for larger, public companies.

“Often when we discuss regulatory relief in the financial services arena, we are talking about it in the vein of community banking, but so many other types of financial institutions are in need of regulatory relief, including privately-held, small non-custodial broker-dealers, which are often the gateway to the markets for Main Street businesses,” said Rep. Hill.

“That is why I am pleased the Financial Services Committee advanced my bill to provide relief to these small businesses because the current regulatory one-size-fits-all requirements has heaped additional costs and has inhibited growth for these small firms with limited human and financial resources,” he added.

House and Senate votes are required before the bill is passed. Senator Tom Cotton (R-AR) has the companion legislation in the U.S. Senate, S. 3004.

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