Compliance
Compliance Corner: SEC, Broker-Dealer Industry

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SEC
The Securities
and Exchange Commission has updated a rule that exempts
certain smaller broker-dealers from specific reporting
requirements.
The SEC said earlier this week that it had issued an order to
update the filing threshold for broker-dealers’ Form 17-H
filings. The threshold hasn’t been updated in nearly 30 years.
The SEC will continue to obtain data about the financial
condition of covered broker-dealers and their affiliates.
The exemption applies to broker-dealers with capital of between
$20 million to $50 million so long as the firm maintains less
than $1 billion in total assets. Firms maintaining $50 million or
more in capital, including subordinated debt, currently account
for approximately 98 per cent of the total capital of the
broker-dealers subject to the 17h Rules; these firms will
continue to remain subject to the rules, the SEC said.
The order follows the recommendation of the SEC’s Office of
Inspector General, published earlier this year, that raising the
reporting threshold would, among other things, make filing more
efficient and cut burdens on smaller firms.
“This Commission order will reduce the regulatory burden for
certain smaller broker-dealers in a targeted, measured manner
that preserves reporting by firms representing approximately 98
per cent of the total capital of firms currently subject to our
17h Rules,” Brett Redfearn, director of the SEC’s Division of
Trading and Markets, said.
The SEC initially adopted the rules in 1992.