Posted On: June 28, 2013 by Shepherd Smith Edwards & Kantas LTD LLP

Lawmakers Address Securities Bills Regarding Audit Rotation Requirements, Dodd-Frank, M & A Business Broker Registration, & Senior Fraud

New Bill Pushes to Modify Registration of Certain Brokers Involved in Mergers & Acquisitions
A newly introduced bill in the US House of Representatives is seeking simplified registration with the Securities and Exchange Commission for brokers that facilitate acquisition and mergers for private companies with yearly earnings below $25 million and annual gross revenues of under $250 million. Currently, these brokers have to register as broker-dealers with the SEC and seek FINRA membership, but many of them don’t know about these requirements. The bill would exempt these broker-dealers from

Having to become a FINRA member, which means they would not be subject to regulation under the SRO. HR 2274 would amend 1934 Securities Exchange Acts Section 15(b). It seeks to lower regulator expenses of sellers and buyers of privately held companies that are smaller and need professional business brokerage services.

Lawmakers Move Forward Bills that Tackle Dodd-Frank Act
Meantime, the House Financial Services Committee has voted to move three bills dealing with Dodd-Frank Wall Street Reform and Consumer Protection Act mandates and another bill that would prohibit the Public Company Accounting Oversight Board from making public companies rotate auditors. Committee Chairman Jeb Ensnarling (R-Texas) said that while Dodd-Frank is supposed to push for “Wall Street reform,” it is now clear that several provisions are proving too expensive for thousands of public companies that didn’t play any part in the economic crisis.

HR 1105 would allow for greater flow of public capital while no longer requiring 98% of private equity funds to have to pay the expense of registering with the SEC. The second bill, HR 1135 would repeal the Dodd-Frank requirement that public companies have to reveal the median income of everyone that works for them (except for the CEO’s), the CEO’s salary, and the ratio for both. HR 2374 would make the SEC promulgate a rule unifying broker-dealers and advisers under a uniform fiduciary standard before the US Labor Department amends its rules about the term “fiduciary.” Meantime, HR 1564 would prevent the PCAOB from making companies rotate auditors or require that specific auditors perform the audits.

New Bill Would Mean Tougher Penalties for Senior Fraud Perpetrators
In the US Senate, Sen. Robert P. Casey Jr. (D-Pa.) has introduced S. 1185, which would amend the 1933 Securities Act, the 1940 Investment Company Act, the 1934 Securities Exchange Act, and the 1940 Investment Advisers Act. If passed into law, the SEC would be paid get up to another $50,000 penalty for violations of these acts that implicate seniors in the 62 and over age group. As Casey pointed out, seniors are represented disproportionately in all fraud cases. He said that it is necessary to make the consequences harsh to discourage financial scammers. S. 1185 also tells the US Sentencing Commission to look at and modify its guidelines to make sure that appropriate punishment is meted out for violations of criminal securities law.

Contact SSEK Partners Group to schedule your free consultation with one of our experienced institutional investor fraud lawyers.

House Panel Clears Bills Addressing Dodd-Frank, Audit Rotation Requirements, Bloomberg/BNA, June 20, 2013

H.R. 2274

S. 1185


More Blog Posts:
FINRA Delays Audit Trail Plan, Proposes Arbitration Rule Changes, Asks for Firm’s Social Media Use Data, Warns About Cybersecurity Breaches, Stockbroker Fraud Blog, June 28, 2013

CBOE Will Pay $6M Penalty Over SEC Charges Alleging Failure to Enforce Trading Rules, Institutional Investor Securities Blog, June 12, 2013

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