In this week’s roundup, we look at two key bills that recently passed through the House Financial Services Committee. On the regulatory front, SEC Chairman Jay Clayton distinguished between agency staff views and law, clarifying that staff guidance is not binding.
Financial Services Committee Advances Bills on Broker-Dealer Audits and SEC Enforcements
On Sept. 13, the House Financial Services Committee held a markup and vote on 12 different bills, all of which passed through the committee, allowing for further consideration by the full U.S. House of Representatives. Two of these bills are relevant to ACG members:
H.R. 6021, the “Small Business Audit Correction Act of 2018,” was introduced by Rep. French Hill, R-Ariz., and garnered the votes of four Democrats and all Republicans on the committee. The bill would amend the Sarbanes-Oxley Act of 2002 to exclude small brokers or dealers “in good standing” from the requirement that their audits be done by an accounting firm registered with the Public Company Accounting Oversight Board. In addition, to qualify for the exclusion, the broker or dealer must be non-custodial and privately held.
H.R. 2128, the “Due Process Restoration Act,” was introduced by Rep. Warren Davidson, R-Ohio, and passed on purely partisan lines with all Republicans in favor and all Democrats against. The bill would allow individuals who are respondents in Securities and Exchange Commission enforcement cases to require that the SEC bring forth the case in federal district court rather than the SEC’s administrative in-house tribunal.
SEC Chairman Clarifies Staff Guidance Is Not Binding
On Sept. 13, SEC Chairman Jay Clayton issued a statement clarifying that the views of the agency’s staff are non-binding, and do not create obligations or enforceable legal rights on behalf of the SEC.
On Sept. 13, SEC Chairman Jay Clayton issued a statement clarifying that the views of the agency’s staff are non-binding, and do not create obligations or enforceable legal rights on behalf of the SEC. The views include those expressed via written statements, compliance guides, letters, speeches, responses to frequently asked questions, and responses to requests for assistance.
According to Clayton, all of the SEC’s divisions and offices, “including but not limited to the Division of Corporation Finance, the Division of Investment Management and the Division of Trading and Markets, have been and will continue to review whether prior staff statements and staff documents should be modified, rescinded or supplemented in light of market or other developments.”
As ACG and its members engage with the SEC, it is important to remember this distinction between staff views and law.
Maria Wolvin is ACG Global’s vice president and senior counsel, public policy.
Ben Marsico is ACG Global’s manager of legislative and regulatory affairs.