,,ii  #aaith ,,congress  #b;d ,session  
,s4 #eded  ,,in ,,the ,,senate ,,of     
,,the ,,united ,,states  ,september #bb1
 #bjbf,mr4 ,cotton introduced the       
following bill2 which was read twice and
 referred to the ,committee on ,banking1
 ,housing1 and ,urban ,affairs  ,a      
,,bill  ,to amend the ,sarbanes-,oxley  
,act of #bjjb to exclude the audits of  
privately held1 non-carrying brokers and
 dealers that are in good standing from 
certain requirements under title ,i of  
that ,act1 and for other purposes4  #a4 
,short title ,this ,act may be cited as 
the ,small ,business ,audit ,correction 
,act of #bjbf4  #b4 ,exemption  7a7     
,amendments to the ,sarbanes-,oxley ,act
 of #bjjb ,section #aaj of the          
,sarbanes-,oxley ,act of #bjjb 7#ae     
,u4,s4,c4 #gbbj7 is amended-- 7#a7 in   
paragraph 7#c71 by inserting 1 except   
that the term does not include a        
non-carrying broker or dealer that is   
privately held and in good standing     
after registered public accounting firm2

  7#b7 in paragraph 7#d71 by inserting 1
 except that the term does not include a
 non-carrying broker or dealer that is  
privately held and in good standing     
after registered public accounting firm2
  7#c7 by redesignating paragraphs 7#e7 
and 7#f7 as paragraphs 7#h7 and 7#i71   
respectively2 and  7#d7 by inserting    
after paragraph 7#d7 the following3     
7#e7 ,in good standing ,the term in good
 standing means1 with respect to a      
broker or dealer 7as those terms are    
defined in section #c7;a7 of the        
,securities ,exchange ,act of #aicd 7#ae
 ,u4,s4,c4 #gh;c7a7771 that1 as of the  
last day of the most recently completed 
fiscal year of the broker or dealer1 as 
applicable1 the broker or dealer-- 7,a7 
is registered with the ,commission2     
7,b7 is a member of an association that 
is registered as a national securities  
association under section #ae;,a of the 
,securities ,exchange ,act of #aicd 7#ae
 ,u4,s4,c4 #gho-#c72  7,c7 as reflected 
in the most recent financial and        

operational report filed with the       
,commission pursuant to section #ag of  
the ,securities ,exchange ,act of #aicd 
7#ae ,u4,s4,c4 #ghq71 is in compliance  
with section #bdj4ae;c#c-a of title #ag1
 ,code of ,federal ,regulations1 or any 
successor regulation1 including-- 7i7   
the minimum dollar net capital          
requirement2 and  7ii7 the aggregate    
indebtedness ratio requirement2  7,d7   
has not1 during the #aj-year period     
preceding that date1 been the subject of
 a ,commission order or administrative  
proceeding with respect to section      
#ae7;c77#c7 of the ,securities ,exchange
 ,act of #aicd 7#ae ,u4,s4,c4           
#gho7c77#c77 or section #bdj4ae;c#c-c of
 title #ag1 ,code of ,federal           
,regulations1 or any successor          
regulation2  7,e7 has not1 during the   
#aj-year period preceding that date1    
been convicted of a felony under        
,federal or ,state law2  7,f7 does not  
have a person associated with the broker
 or dealer1 as defined in section #c7;a7

 of the ,securities ,exchange ,act of   
#aicd 7#ae ,u4,s4,c4 #gh;c7a771 that1   
during the #aj-year period preceding    
that date1 has been convicted of a      
,state or ,federal felony-- 7i7         
involving any securities1 insurance1    
banking1 savings association1 or credit 
union law2  7ii7 involving mail or wire 
fraud2  7iii7 involving fraud in        
connection with a purchase or sale of   
any security or commodity 7as defined in
 section #a;a of the ,commodity         
,exchange ,act 7#g ,u4,s4,c4 #a;a772 or 
7iv7 arising out of the conduct of the  
business of-- 7,i7 a broker1 dealer1    
municipal securities broker1 municipal  
securities dealer1 government securities
 broker1 or government securities       
dealer1 as those terms are defined1     
respectively1 in section #c7;a7 of the  
,securities ,exchange ,act of #aicd 7#ae
 ,u4,s4,c4 #gh;c7a772  7,,ii7 an        
investment adviser1 as defined in       
section #bjb7;a7 of the ,investment     
,advisers ,act of #aidj 7#ae ,u4,s4,c4  

#hj;b-#b7;a772  7,,iii7 a depository    
institution1 as defined in section #c of
 the ,federal ,deposit ,insurance ,act  
7#ab ,u4,s4,c4 #ahac72  7,,iv7 a ,state 
credit union or ,federal credit union1  
as those terms are defined1             
respectively1 in section #aja of the    
,federal ,credit ,union ,act 7#ab       
,u4,s4,c4 #ageb72 or  7,v7 an insurance 
company1 as defined in section #bja7;a7 
of the ,dodd-,frank ,wall ,street       
,reform and ,consumer ,protection ,act  
7#ab ,u4,s4,c4 #echa7;a772 and  7,g7 is 
not-- 7i7 expelled or suspended from--  
7,i7 an association that is registered  
as described in subparagraph 7,b72 or   
7,,ii7 an association that is registered
 as a registered futures association    
under section #ag of the ,commodity     
,exchange ,act 7#g ,u4,s4,c4 #ba72  7ii7
 subject to an order of the ,commission1
 other appropriate regulatory agency1 or
 foreign financial regulatory authority 
denying1 suspending1 or revoking the    
registration of the broker or dealer as 

a regulated entity2 or  7iii7 subject to
 an injunction or order entered by a    
,federal or ,state court restraining or 
enjoining the broker or dealer from     
engaging in or continuing any conduct or
 practice in connection with the        
purchase or sale of any security or in  
connection with any securities business4
  7#f7 ,non-carrying broker or dealer   
,the term non-carrying broker or dealer 
means a broker or dealer 7as those terms
 are defined in section #c7;a7 of the   
,securities ,exchange ,act of #aicd 7#ae
 ,u4,s4,c4 #gh;c7a7771 as applicable1   
that-- 7,a7 as of the last day of the   
most recently completed fiscal year of  
the broker or dealer-- 7i7 has not more 
than #aej persons registered with an    
association that is registered as a     
national securities association under   
section #ae;,a of the ,securities       
,exchange ,act of #aicd 7#ae ,u4,s4,c4  
#gho-#c72 and  7ii7 is not an affiliate 
7as defined in section #b of the ,bank  
,holding ,company ,act of #aief 7#ab    

,u4,s4,c4 #ahda77 of an investment      
advisor that acts as the custodian for  
customer assets2  7,b7 throughout the   
most recently completed fiscal year of  
the broker or dealer-- 7i7 does not--   
7,i7 receive1 directly or indirectly1 or
 hold funds or securities for1 or owe   
funds or securities to1 customers2      
7,,ii7 carry accounts of1 or for1       
customers2 or  7,,iii7 engage in any of 
the activities described in clauses 7i7 
through 7v7 of section                  
#bdj4ae;c#c-a7;a77#b7 of title #ag1     
,code of ,federal ,regulations2 and     
7ii7 if required under section          
#c7;a77#b7 of the ,securities ,investor 
,protection ,act of #aigj 7#ae ,u4,s4,c4
 #gh;ccc7a77#b771 is a member of the    
,securities ,investor ,protection       
,corporation2 and  7,c7 filed an        
exemption report pursuant to section    
#bdj4ag;a-#e7;d77#d7 of title #ag1 ,code
 of ,federal ,regulations1 or any       
successor regulation1 covering the most 
recent fiscal year of the broker or     

dealer4  7#g7 ,privately held ,the term 
privately held means1 with respect to a 
broker or dealer 7as those terms are    
defined in section #c7;a7 of the        
,securities ,exchange ,act of #aicd 7#ae
 ,u4,s4,c4 #gh;c7a7771 that the broker  
or dealer1 and any ultimate parent or   
other affiliate 7as defined in section  
#b of the ,bank ,holding ,company ,act  
of #aief 7#ab ,u4,s4,c4 #ahda77 of the  
broker or dealer-- 7,a7 do not have a   
class of securities registered under    
section #ab of the ,securities ,exchange
 ,act of #aicd 7#ae ,u4,s4,c4 #ghl72 and
  7,b7 are not required to file reports 
under section #ae7;d7 of the ,securities
 ,exchange ,act of #aicd 7#ae ,u4,s4,c4 
#gho7d774  4  7b7 ,amendments to        
regulations  7#a7 ,definitions ,in this 
subsection1 the terms in good standing1 
non-carrying broker or dealer1 and      
privately held have the meanings given  
the terms in section #aaj of the        
,sarbanes-,oxley ,act of #bjjb 7#ae     
,u4,s4,c4 #gbbj71 as amended by         

subsection 7a74  7#b7 ,amendments ,not  
later than #ahj days after the effective
 date described in subsection 7d7-- 7,a7
 the ,securities and ,exchange          
,commission and the ,public ,company    
,accounting ,oversight ,board 7referred 
to in this subsection as the ,,pcaob7   
shall make any necessary amendments to  
regulations of the ,commission and the  
,,pcaob1 respectively1 that are in      
effect as of the date of enactment of   
this ,act in order to carry out this    
,act and the amendments made by this    
,act2 and  7,b7 the ,securities and     
,exchange ,commission shall amend the   
audit and attestation requirements of   
section #bdj4ag;a-#e of title #ag1 ,code
 of ,federal ,regulations1 to the extent
 necessary to reflect the exclusion of a
 non-carrying broker or dealer that is  
privately held and in good standing from
 the audit requirements of the ,,pcaob  
under title ,i of the ,sarbanes-,oxley  
,act of #bjjb 7#ae ,u4,s4,c4 #gbaa et   
seq471 including by providing that such 

broker or dealer satisfies the annual   
audit obligation of the broker or dealer
 under such section #bdj4ag;a-#e through
 an audit conducted in accordance with  
generally accepted auditing standards4  
7c7 ,rule of construction ,nothing in   
this ,act1 or any amendment made by this
 ,act1 may be construed to authorize the
 ,securities and ,exchange ,commission  
to amend1 waive1 or otherwise modify--  
7#a7 the requirement that the auditor of
 a non-carrying broker or dealer that is
 privately held and in good standing be 
qualified and independent in accordance 
with part #baj of title #ag1 ,code of   
,federal ,regulations1 as in effect on  
the date of enactment of this ,act2 or  
7#b7 the requirement to file an         
exemption report pursuant to paragraph  
7d77#d7 of section #bdj4ag;a-#e of title
 #ag1 ,code of ,federal ,regulations1 as
 in effect on the date of enactment of  
this ,act4  7d7 ,effective date ,the    
provisions added by the amendments made 
by this ,act shall take effect on the   

date that is #ahj days after the date of
 enactment of this ,act4