ACI FinOps for broker dealers

SEC Grants Additional 30 Days for Certain Broker-Dealers to File Annual Reports

Certain broker-dealers received much-needed relief this month when the Securities and Exchange Commission agreed to extend the annual audit filing deadline by 30 calendar days, cementing 90 days as the new regulatory obligation.

The extension, issued in a February 12th order, allows broker-dealers who meet certain criteria to file the reports within 90 calendar days after the end of their fiscal year. Previously, the reports were due within 60 calendar days.

The SEC extended the deadline in response to a request from the Financial Industry Regulatory Authority, accepting FINRA’s position that the extra 30 calendar days would reduce the burdens that certain smaller broker-dealers face in obtaining audit services. The extension also provides needed time for their PCAOB registered independent public accountants to perform the audit work necessary to comply.

Full details of the SEC order are included here, but in general the deadline for filing the annual reports is extended 30 calendar days for broker-dealers who:

1) Are in compliance with Rule 15c3-1;

2) Have total capital and allowable subordinated liabilities of less than $50 million, as reported in box 3530 of Part II or Part IIA of its FOCUS Report;

3) Are permitted to file an exemption report as part of their most recent fiscal year-end annual reports;

4) Submit written notification to their designated examining authority of their intent to rely on this order on an ongoing basis for as long as they meets the conditions of the order;

5) File the annual report electronically with the Commission using an appropriate process.

Jay Gettenberg, ACI Managing Partner, has been advocating for this change since being elected to the FINRA Small Firm Advisory Committee (SFAC) effective January 1, 2020.  He has stressed the need for the 30-day extension to senior FINRA staff, citing increasing audit costs, availability of PCAOB registered auditors, and logistical challenges of completing an audit within only one month of the regulatory Focus filing deadline. 

Mr. Gettenberg said, “We believe this rule change will ease the time pressures broker-dealers face, while simultaneously ensuring higher-quality audits and providing the readers of the financial statements with both greater transparency and an increased likelihood of accuracy in the representations being made by senior management.”

Gettenberg, as a member of SFAC, assisted in laying the groundwork for FINRA’s request.  His efforts to ensure a successful implementation will continue, and will include having other regulatory organizations, most notably SIPC, NFA/CFTC and the various states, accept similar 90-day filing deadlines.

ACI will continue to provide updates on our Resources page as more information becomes available.