• John Parmigiani

Calling on the Network, From the Network

Leaders Working to Make Difference.

PCAOB Small Firm Exemption Bill - Democratic Co- Sponsor Needed- Now

Senator Tom Cotton (R-AR) has drafted a PCAOB-exemption bill and would like to attach it to Senator Crapo's current banking and small business bill that will be in mark-up next Tuesday. Senator Cotton's bill will exempt privately-held, non-custodial brokers and dealers from the PCAOB audit requirement and from the DFA-imposed compliance and exemption reporting requirement.

We need a Democratic Senator to co-sponsor our bill! The opportunity to submit our 300-word bill materialized just this week and is incredibly time sensitive. Can you help us get this done?

Do you, by any chance, personally know a Democratic Senator? If so, would you be willing to contact them by phone and email, brief them on the issue, and ask them to co-sponsor Senator Cotton's bill?

If you do not know your Senator/s, would you be willing to immediately contact (call/email) your Senator's office, ask for the staff member responsible for advising the Senator on economic & financial issues, brief them on the PCAOB matter, and ask the Senator to 1) co-sponsor the bill (if they are a Dem) and 2) support/not oppose the bill?

Here are some talking points for those of you who can help us:

Please co-sponsor a bill today that helps small broker-dealers and the communities they serve. Legislative text is on the way, but the upcoming bill corrects this issue:

Privately held, non-custodial broker dealers (those who don’t take custody of client assets/funds) were included in Dodd-Frank’s requirement that every registered broker-dealer has to have an annual audit done by a PCAOB-registered firm rather than the CPA firms they formerly used. This requirement is sensible for custodial broker dealer firms, but doesn’t make sense for privately-held non-custodial (“introducing”) broker dealers.

The original well-intentioned rule was, in part, in response to the Madoff scandal, but the definition used in Dodd-Frank wound up including privately-held, noncustodial broker dealers that can’t, by definition, put clients at risk in the manner that the rule is intended to address. Meanwhile it’s making it hard for small broker-dealers to compete, and all for a rule that wasn’t truly about them.

These privately-held, non-custodial broker dealers are paying PCAOB-registered audit firms much higher fees than would otherwise be necessary. In this bill, privately-held, non-custodial broker dealers would still have to submit audited financial statements to the SEC and FINRA.

This new bill will amend section 101 of Sarbanes-Oxley and 982 of the Dodd-Frank Act, which itself amends Sarbanes-Oxley. Senator Cotton of Arkansas is looking for co-sponsors for this bill, ideally by Friday(12/1/17) so it can be included in next week’s Banking Committee markup. Cotton’s office can be reached at 202.224.3774 (Kyle Hauptman).

Thank you so much for your immediate attention to this and for your assistance in trying to get this done for small firms all across the country!

Please contact me to let me know if you are calling and/or emailing your Senators -- and feel free to call me for any support I can lend your efforts.This is a HUGE opportunity for small firms! Let's get this done!

PaigePaige W. Pierce

President, PSP Consulting

SVP, Larimer Capital Corp


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