Main Menu

SEC Amends Broker-Dealer Reporting Requirements


SEC Amends Broker-Dealer Reporting RequirementsThe SEC Final Rule–Broker-Dealer Reports was recently released and included several significant updates and effective dates.

By December 10, 2013:

Paragraph (f)(2) of 17a-5 has required that a broker-dealer file a statement with the SEC and its DEA called “Notice pursuant to Rule 17a-5(f)(2)” designating an independent public accountant responsible for performing the annual audit of the broker-dealer.

This section and corresponding rule has been amended and provides that all broker-dealers must file a new “Statement regarding the independent public accountant under Rule 17a-5(f)(2)” that contains:

  1. Representation that the accountant has undertaken to provide a report regarding the broker-dealer’s financial reports and a report regarding the broker-dealer’s compliance report or exemption report, as applicable.
  2. (For Clearing/Carrying Broker-Dealer’s Only) Representations regarding access to the broker-dealer’s independent public accountant and the audit documentation of the independent public accountant.

Note: As specified in the new rule, if the engagement covered by the new statement is of a continuing nature, no subsequent filing would be required unless and until the broker-dealer changes its independent public accountant or amends the engagement with the accountant.

Effective December 31, 2013:

  • “Form Custody” is a new form that is required to be filed by the broker-dealer (although not subject to examination or review by the independent accountant) with its designated examining authority (“DEA”) at the same time it files its periodic FOCUS Report with the DEA under paragraph (a) of Rule 17a-5. A copy of this form has been included with the SEC’s Final Rule.
  • Amendment requiring that broker-dealers file their annual reports with the SIPC. It is noted within the SEC's Final Rule that this will “assist the SIPC in monitoring the financial strength of broker-dealers and, therefore, in assessing the adequacy of the SIPC Fund.”

For fiscal years ending on or after June 1, 2014:

  • A “Compliance Report” (Clearing/Carrying broker-dealers) or “Exemption Report” (Non-Carrying broker-dealers) must be filed for broker-dealer engagements. Once issuance of the Compliance Report or Exemption Report becomes effective, the current Material Inadequacy Report that accompanies broker-dealer financial statements will no longer be issued.
  • The SEC’s Final Rule states that “…PCAOB standards, rather than GAAS, apply to examinations of financial reports for fiscal years ending on or after June 1, 2014. For broker-dealers with fiscal years that end before June 1, 2014, applicable reports must be filed in accordance with the provisions of Rule 17a-5 as they existed before today’s amendments.” The SEC’s Final Rule provides that there will be corresponding guidance issued by the SEC and the PCAOB between now and the effective dates of implementation.

Access the SEC Final Rule–Broker-Dealer Reports here.


For more information on broker-dealer and investment advisor developments, and to explore how Brown Smith Wallace can assist you and your team with these and other regulatory matters, please contact Lincoln K. Gray, CPA, at 314.983.1235,


Back to Page