SEC Commissioner Expects Changes to Broker-Dealer Auditing
In a recent speech, SEC Commissioner Elisse B. Walter said that she expects additional rules governing broker-dealer accounting. She indicated that because of the “concerning” results of the interim inspection program required by Dodd-Frank, the SEC will expand its inspection program and issue a broader report, which may lead to additional rules. Ms. Walter also indicated that she wants the SEC to make progress on Rule 17a-5 with respect to financial and custodial requirements. Separately, Ms. White advocated for revisions to MD&A and disclosure for all SEC registrants.
OUR TAKE: The initial progress report did show systemic weakness with broker-dealer auditing. Expect the SEC to tighten the rules, which will probably reduce the number of permitted auditors and raise costs.