Bipartisan legislation proposed by U.S. Rep. French Hill (R-AR) to give regulatory relief to small investment broker-dealers on Sept. 13 passed the U.S. House Financial Services Committee.
“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,” Rep. Hill said following the 36-16 vote in favor of the measure.
The Small Business Audit Correction Act of 2018, H.R. 6021, would amend the Sarbanes-Oxley Act of 2002 to exclude privately held, non-custody brokers and dealers that are in good standing from certain audit requirements, among other purposes, according to the text of the bill.
Specifically, H.R. 6021 would not require small broker-dealers to hire an auditing firm registered with the Public Company Accounting Oversight Board (PCAOB), which was created by the Sarbanes-Oxley Act to improve audits of public companies following several national accounting scandals.
Currently, regulations require all investment broker-dealers to hire a PCAOB-registered audit firm to conduct audits using guidelines that the congressman said are designed for larger, public companies, not for the small broker-dealers that don’t handle customer assets.
“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 last week.
Rep. Hill introduced H.R. 6021 on June 6 with original cosponsor U.S. Rep. Vicente Gonzalez (D-TX). The identical S. 3004 was introduced the same day in the U.S. Senate by U.S. Sen. Tom Cotton (R-AR) and original cosponsor Sen. Doug Jones (D-AL).
H.R. 6021 now advances to the full House for a vote. S. 3004 is under consideration by the Senate Banking, Housing, and Urban Affairs Committee, which on June 26 and 28 held hearings related to the measure.