I 
116TH CONGRESS 
2D SESSION 
H. R. 8983 
To amend the Sarbanes-Oxley Act of 2002 to exclude the audits of privately 
held, non-custody brokers and dealers that are in good standing from 
certain requirements under title I of that Act, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 16, 2020 
Mr. HILL of Arkansas introduced the following bill; which was referred to the 
Committee on Financial Services 
A BILL 
To amend the Sarbanes-Oxley Act of 2002 to exclude the 
audits of privately held, non-custody brokers and dealers 
that are in good standing from certain requirements 
under title I of that Act, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Small Business Audit 
Correction Act of 2020’’. 
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SEC. 2. EXEMPTION. 
(a) AMENDMENTS TO THE SARBANES-OXLEY ACT OF 
2002.—Section 110 of the Sarbanes-Oxley Act of 2002 
(15 U.S.C. 7220) is amended— 
(1) in paragraph (3), by inserting ‘‘, except that 
the term does not include a non-custody broker or 
dealer that is privately held and in good standing’’ 
after ‘‘registered public accounting firm’’; 
(2) in paragraph (4), by inserting ‘‘, except that 
the term does not include a non-custody broker or 
dealer that is privately held and in good standing’’ 
after ‘‘registered public accounting firm’’; 
(3) by redesignating paragraphs (5) and (6) as 
paragraphs (8) and (9), respectively; and 
(4) by inserting after paragraph (4) the fol-
lowing: 
‘‘(5) IN GOOD STANDING.—The term ‘in good 
standing’ means, with respect to a broker or dealer 
(as those terms are defined in section 3(a) of the Se-
curities Exchange Act of 1934 (15 U.S.C. 78c(a))), 
that, as of the last day of the most recently com-
pleted fiscal year of the broker or dealer, as applica-
ble, the broker or dealer— 
‘‘(A) is registered with the Commission; 
‘‘(B) is a member of an association that is 
registered as a national securities association 
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under section 15A of the Securities Exchange 
Act of 1934 (15 U.S.C. 78o–3); 
‘‘(C) is compliant with the minimum dollar 
net 
capital 
requirements 
under 
section 
240.15c3–1 of title 17, Code of Federal Regula-
tions, or any successor regulation; 
‘‘(D) has not, during the 10-year period 
preceding that date, been convicted of a felony 
under Federal or State law; 
‘‘(E) does not have a person associated 
with the broker or dealer, as defined in section 
3(a) of the Securities Exchange Act of 1934 
(15 U.S.C. 78c(a)), that, during the 10-year pe-
riod preceding that date, has been convicted of 
a felony for fraudulent conduct under Federal 
or State law; and 
‘‘(F) is not subject to statutory disquali-
fication by reason of being— 
‘‘(i) expelled or suspended from— 
‘‘(I) an association that is reg-
istered as described in subparagraph 
(B); or 
‘‘(II) an association that is reg-
istered as a registered futures associa-
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tion under section 17 of the Com-
modity Exchange Act (7 U.S.C. 21); 
‘‘(ii) subject to an order of the Com-
mission, other appropriate regulatory agen-
cy, or foreign financial regulatory authority 
denying, suspending, or revoking the reg-
istration of the broker or dealer as a regu-
lated entity; 
‘‘(iii) subject to an order of the Com-
modity Futures Trading Commission, or 
other appropriate regulatory entity, deny-
ing, suspending, or revoking the registra-
tion of the broker or dealer under the 
Commodity Exchange Act (7 U.S.C. 1 et 
seq.) or the authority of the broker or deal-
er to engage in any transaction; or 
‘‘(iv) subject to a restraining order en-
tered by a court. 
‘‘(6) NON-CUSTODY BROKER OR DEALER.—The 
term ‘non-custody broker or dealer’ means a broker 
or dealer (as those terms are defined in section 3(a) 
of the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a))), as applicable, that— 
‘‘(A) as of the last day of the most recently 
completed fiscal year of the broker or dealer— 
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‘‘(i) has not less than one and not 
more than 150 persons registered with an 
association that is registered as a national 
securities association under section 15A of 
the Securities Exchange Act of 1934 (15 
U.S.C. 78o–3); 
‘‘(ii) is not a high frequency trading 
broker or dealer, as that term is defined by 
the Commission with respect to a par-
ticular registered firm type; and 
‘‘(iii) is not affiliated with an invest-
ment advisor that— 
‘‘(I) is registered with the Com-
mission or a State entity; and 
‘‘(II) acts as the custodian for 
customer assets; 
‘‘(B) with respect to the average of the 
three most recently completed fiscal years of 
the broker or dealer, has gross revenue that en-
ables the broker or dealer to qualify as a small 
business concern for the purposes of a program 
administered by the Small Business Adminis-
tration; and 
‘‘(C) throughout the most recently com-
pleted fiscal year of the broker or dealer— 
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‘‘(i) does not, as a matter of ordinary 
business practice in connection with the ac-
tivities of the broker or dealer, receive cus-
tomer checks, drafts, or other evidence of 
indebtedness made payable to the broker 
or dealer; 
‘‘(ii) if required under section 3(a)(2) 
of the Securities Investor Protection Act of 
1970 (15 U.S.C. 78ccc(a)(2)), is a member 
of the Securities Investor Protection Cor-
poration; and 
‘‘(iii) either— 
‘‘(I) if the broker or dealer is 
subject to section 240.15c3–3 of title 
17, Code of Federal Regulations, or 
any successor regulation, is in compli-
ance with that section; or 
‘‘(II) is not subject to such sec-
tion 240.15c3–3, or any successor 
regulation, because the broker or deal-
er does not maintain custody over any 
customer securities or cash. 
‘‘(7) PRIVATELY
HELD.—The term ‘privately 
held’ means, with respect to a broker or dealer (as 
those terms are defined in section 3(a) of the Securi-
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ties Exchange Act of 1934 (15 U.S.C. 78c(a))), that 
the broker or dealer, as applicable, is not an 
issuer.’’. 
(b) AMENDMENTS TO REGULATIONS.— 
(1) DEFINITIONS.—In this subsection, the 
terms ‘‘in good standing’’, ‘‘non-custody broker or 
dealer’’, and ‘‘privately held’’ have the meanings 
given the terms in section 110 of the Sarbanes-Oxley 
Act of 2002 (15 U.S.C. 7220), as amended by sub-
section (a). 
(2) AMENDMENTS.—Not later than 180 days 
after the date of enactment of this Act, the Securi-
ties and Exchange Commission shall make any nec-
essary amendments to regulations of the Commis-
sion that are in effect as of the date of enactment 
of this Act in order to— 
(A) carry out this Act and the amend-
ments made by this Act; and 
(B) exclude the auditors of non-custody 
brokers or dealers that are privately held and in 
good standing from the audit requirements of 
the Public Company Accounting Oversight 
Board. 
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(c) EFFECTIVE DATE.—This Act, and the amend-
ments made by this Act, shall take effect on the date that 
is 180 days after the date of enactment of this Act. 
Æ 
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