80 FR 68286 - Securities Investor Protection Corporation
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 213 (November 4, 2015)
Federal Register Volume 80, Issue 213 (November 4, 2015)
| Page Range | 68286-68288 | |
| FR Document | 2015-27921 |
[Federal Register Volume 80, Number 213 (Wednesday, November 4, 2015)] [Proposed Rules] [Pages 68286-68288] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-27921] ======================================================================= ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION 17 CFR Part 300 [Release No. SIPA-173; File No. SIPC-2015-01] Securities Investor Protection Corporation AGENCY: Securities and Exchange Commission. ACTION: Proposed rule. ----------------------------------------------------------------------- SUMMARY: The Securities Investor Protection Corporation (``SIPC'') filed proposed rules with the Securities and Exchange Commission (``Commission''). SIPC proposes to adopt the SIPC Series 600 Rules, entitled ``Rules Relating to Supplemental Report of SIPC Membership,'' in accordance with paragraph (e)(4) of Rule 17a-5 under the Securities Exchange Act of 1934 (``Exchange Act''). The Commission is publishing the proposed rules for public comment. Because SIPC rules have the force and effect as if promulgated by the [[Page 68287]] Commission, those rules are published in Title 17 of the Code of Federal Regulations. DATES: Comments are to be received on or before November 25, 2015. ADDRESSES: Interested persons are invited to submit written data, views, and arguments concerning the foregoing by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/other.shtml); or Send an email to [email protected]. Please include File Number SIPC-2015-01 on the subject line. Paper Comments Send paper comments to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All comments should refer to File Number SIPC-2015-01. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/other.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. FOR FURTHER INFORMATION CONTACT: Michael A. Macchiaroli, Associate Director, at (202) 551-5525; Thomas K. McGowan, Associate Director, at (202) 551-5521; Randall W. Roy, Deputy Associate Director, at (202) 551-5522; Rose Russo Wells, Senior Counsel, at (202) 551-5527; Office of Financial Responsibility, Division of Trading and Markets, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-7010. SUPPLEMENTARY INFORMATION: Pursuant to Section 3(e)(2)(A) of the Securities Investor Protection Act of 1970 (``SIPA''),\1\ notice is hereby given that SIPC filed with the Commission on April 17, 2015, proposed rules, and subsequently filed amendments to the proposed rules on June 23, 2015, July 24, 2015, and September 29, 2015 as described in Item I below, which item has been substantially prepared by SIPC. The Commission is publishing this notice to solicit comments on the proposed rules from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78ccc(e)(2)(A). --------------------------------------------------------------------------- I. SIPC's Statement of the Purpose of, and Statutory Basis for, the Proposed Rules In its filing with the Commission, SIPC included statements concerning the purpose of and basis for the proposed rules. The text of these statements may be examined at the places specified above. Pursuant to 15 U.S.C. 78ddd(c), and SIPC Bylaws, broker-dealers that are SIPC members pay assessments into the SIPC Fund. As long as the assessment is a percentage of revenue, each member must file with SIPC a Form SIPC-6 (General Assessment Payment Form) and a Form SIPC-7 (General Assessment Reconciliation Form) which show the member's calculation of the assessment.\2\ If the broker-dealer is exempt from having to pay an assessment, it files a Form SIPC-3, which is a certification by the broker-dealer that it is excluded from SIPC membership under 15 U.S.C. 78ccc(a)(2)(A). --------------------------------------------------------------------------- \2\ Form SIPC-6 reflects the assessment calculation for the first half of the fiscal year. Form SIPC-7 is submitted at the end of the member's fiscal year and provides for a deduction of the amount paid with the Form SIPC-6. --------------------------------------------------------------------------- In 1972, as a result of significant discrepancies between the assessment information reported to SIPC and information supplied in reports filed with the Commission on which the calculation of the assessment was based, the Commission amended its broker-dealer reporting rule, Rule 17a-5,\3\ to require every member of a national securities exchange and every broker-dealer subject to the reporting requirements of Rule 17a-5 to file a supplemental report.\4\ The supplemental report must include forms showing a detailed calculation of the member's SIPC assessment payments or the broker-dealer's exclusion from membership, and be accompanied by a report of the independent public accountant of the broker-dealer. The independent public accountant must be engaged to perform certain procedures specified in Rule 17a-5.\5\ --------------------------------------------------------------------------- \3\ 17 CFR 240.17a-5. \4\ See Report of Securities Investor Protection Corporation Assessments, Exchange Act Release No. 9766 (Sep. 15, 1972), 37 FR 18909 (Sep. 16, 1972). \5\ The items that must be included in the report and the procedures to be performed by the accountant are listed in paragraphs (e)(4)(ii)(A), (B), and (C) of Rule 17a-5. --------------------------------------------------------------------------- The annual reports that broker-dealers file with the Commission under paragraph (d) of Rule 17a-5 contain detailed information regarding the financial condition of the broker-dealer. On July 30, 2013, the Commission, among other things, made significant amendments to Rule 17a-5 (``the 2013 amendments'').\6\ Effective December 31, 2013, the Commission's amendments to paragraph (d)(6) of Rule 17a-5 require that a copy of the annual reports also be provided to SIPC if the broker-dealer is a member of SIPC.\7\ In addition, effective June 1, 2014, the Commission's amendments to paragraph (e)(4) of Rule 17a-5 provide that the broker-dealer must file with SIPC a report on the SIPC annual general assessment reconciliation or exclusion from membership forms that contains such information and is in such format as determined by SIPC by rule and approved by the Commission.\8\ The Commission determined that because Forms SIPC-3 and SIPC-7 are used solely by SIPC for purposes of levying its assessments, SIPC should prescribe by rule the form of the report. Under the amendments to paragraph (e)(4), broker-dealers are required to file the SIPC supplemental reports using the existing formats for the reports until the earlier of the Commission approving a rule adopted by SIPC or two years from the effective date of the amendment and if, after two years, no such rule has been approved, broker-dealers would no longer be required to file the reports.\9\ The proposed rule change would add SIPC Rule 600 (``Rule 600''), entitled ``Rules Relating to Supplemental Report of SIPC Membership.'' \10\ The purpose of the proposed rule is to prescribe the information that must be included in, and the format of, a broker-dealer's supplemental report to SIPC. --------------------------------------------------------------------------- \6\ See Broker-Dealer Reports, Exchange Act Release No. 70073 (Jul. 30, 2013), 78 FR 51910 (Aug. 21, 2013) (``Broker-Dealer Reports''). \7\ See Broker-Dealer Reports, 78 FR 51990. \8\ See Broker-Dealer Reports, 78 FR 51926-7, 51991. Under 15 U.S.C. 78ccc(e)(2)(A), to be final, rules proposed by SIPC must be approved by the Commission. \9\ See Broker-Dealer Reports, 78 FR 51927, 51991. \10\ 17 CFR 300.600. --------------------------------------------------------------------------- In a letter to SIPC dated January 9, 1989, Commission staff advised that it would not recommend action by the Commission if a SIPC member reporting $500,000 or less in total revenue did not [[Page 68288]] file the supplemental report.\11\ The proposed SIPC rules incorporate this relief by providing that a SIPC member broker-dealer is exempt from filing the supplemental report if the broker-dealer reports $500,000 or less in total revenue in its ``annual audited statement of income'' filed with the Commission. The proposed rules also provide that the independent public accountant must be independent in accordance with the provisions of 17 CFR 240.2-01 and that the accountant must be engaged to perform the enumerated agreed-upon procedures in accordance with standards of the Public Company Accounting Oversight Board. Finally, under paragraph (e) of Rule 17a-5, a broker-dealer's annual reports must be prepared and filed in accordance with certain enumerated requirements. Paragraph (e)(4) of Rule 17a-5 requires the broker-dealer to file the supplemental report, and paragraph (e)(5) of Rule 17a-5 requires that a broker-dealer's annual reports be filed not more than 60 calendar days after the fiscal year end of the broker-dealer. Accordingly, the proposed rules provide that a broker-dealer must file the supplemental report within 60 days after the end of its fiscal year. In other respects, the proposed rules largely mirror the text of paragraphs (e)(4)(ii)(A), (B), and (C) of Rule 17a-5. --------------------------------------------------------------------------- \11\ See Letter dated January 9, 1989 from Michael A. Macchiaroli, SEC, to Theodore H. Focht, President and General Counsel, SIPC (SEC No-Action Letter 1989 WL 245631). --------------------------------------------------------------------------- II. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within thirty-five days of the date of publication of this notice in the Federal Register, or within such longer period (i) as the Commission may designate of not more than ninety days after such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which SIPC consents, the Commission shall: (A) By order approve such proposed rule change or (B) Institute proceedings to determine whether such proposed rule change should be disapproved. To allow public access to SIPC's rules, SIPC rules that are approved by the Commission are published under Part 300 of 17 CFR Chapter II. III. Statutory Authority Pursuant to SIPA, 15 U.S.C. 78aaa et seq., and particularly, section 3(e) (15 U.S.C. 78ccc(e), SIPC proposes to adopt 300.600 of Title 17 of the Code of Federal Regulations. List of Subjects in 17 CFR Part 300 Brokers, Securities. Text of the Amendments In accordance with the foregoing, Title 17, Chapter II of the Code of Federal Regulations is proposed to be amended as follows: PART 300--RULES OF THE SECURITIES INVESTOR PROTECTION CORPORATION 0 1. The authority citation for part 300 continues to read as follows: Authority: 15 U.S.C. 78ccc. 0 2. An undesignated center heading and Sec. 300.600 are added to read as follows: Rules Relating to Supplemental Report on SIPC Membership Sec. 300.600 Rules relating to supplemental report on SIPC membership. (a)(i) Who must file the supplemental report. Except as provided in paragraph (a)(ii) of this section, a broker or dealer must file with SIPC, within 60 days after the end of its fiscal year, a supplemental report on the status of its membership in SIPC (commonly referred to as the ``Independent Accountants' Report on Applying Agreed-Upon Procedures'') if a rule of the Securities and Exchange Commission (SEC) requires the broker or dealer to file audited financial statements annually. (ii) If the broker or dealer is a member of SIPC, the broker or dealer is not required to file the supplemental report for any year in which it reports $500,000 or less in total revenues in its annual audited statement of income filed with the SEC. (b) Requirements of the supplemental report. The supplemental report must cover the SIPC Annual General Assessment Reconciliation Form (Form SIPC-7) or the Certification of Exclusion From Membership Form (Form SIPC-3) for each year for which an SEC Rule requires audited financial statements to be filed. The supplemental report must include the following: (i) A copy of the form filed or a schedule of assessment payments showing any overpayments applied and overpayments carried forward, including payment dates, amounts, and name of SIPC collection agent to whom mailed; or (ii) If exclusion from membership was claimed, a statement that the broker or dealer qualified for exclusion from membership under the Securities Investor Protection Act of 1970, as amended, and the date the Form SIPC-3 was filed with SIPC; and (iii) An independent public accountant's report. The independent public accountant, who must be independent in accordance with the provisions of 17 CFR 240.210.2-01, must be engaged to perform the following agreed-upon procedures in accordance with standards of the Public Company Accounting Oversight Board (PCAOB): (A) Compare assessment payments made in accordance with the General Assessment Payment Form (Form SIPC-6) and applied to the General Assessment calculation on the Form SIPC-7 with respective cash disbursements record entries; (B) For all or any portion of a fiscal year, compare amounts reflected in the audited financial statements required by SEC Rule with amounts reported in the Form SIPC-7; (C) Compare adjustments reported in the Form SIPC-7 with supporting schedules and working papers supporting the adjustments; (D) Verify the arithmetical accuracy of the calculations reflected in the Form SIPC-7 and in the schedules and working papers supporting any adjustments; and (E) Compare the amount of any overpayment applied with the Form SIPC-7 on which it was computed; or (F) If exclusion from membership is claimed, compare the income or loss reported in the audited financial statements required by SEC Rule with the Form SIPC-3. * * * * * For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\12\ --------------------------------------------------------------------------- \12\ 17 CFR 200.30-3(f)(3). Dated: October 28, 2015. Robert W. Errett, Deputy Secretary. [FR Doc. 2015-27921 Filed 11-3-15; 8:45 am] BILLING CODE 8011-01-P
![68288 Federal Register / Vol. 80, No. 213 / Wednesday, November 4, 2015 / Proposed Rules
file the supplemental report.11 The List of Subjects in 17 CFR Part 300 (iii) An independent public
proposed SIPC rules incorporate this Brokers, Securities. accountant’s report. The independent
relief by providing that a SIPC member public accountant, who must be
broker-dealer is exempt from filing the Text of the Amendments independent in accordance with the
supplemental report if the broker-dealer In accordance with the foregoing, provisions of 17 CFR 240.210.2–01,
reports $500,000 or less in total revenue Title 17, Chapter II of the Code of must be engaged to perform the
in its ‘‘annual audited statement of Federal Regulations is proposed to be following agreed-upon procedures in
income’’ filed with the Commission. amended as follows: accordance with standards of the Public
The proposed rules also provide that the Company Accounting Oversight Board
independent public accountant must be PART 300—RULES OF THE (PCAOB):
independent in accordance with the SECURITIES INVESTOR PROTECTION (A) Compare assessment payments
provisions of 17 CFR 240.2–01 and that CORPORATION made in accordance with the General
the accountant must be engaged to Assessment Payment Form (Form SIPC–
perform the enumerated agreed-upon ■ 1. The authority citation for part 300 6) and applied to the General
procedures in accordance with continues to read as follows: Assessment calculation on the Form
standards of the Public Company Authority: 15 U.S.C. 78ccc. SIPC–7 with respective cash
Accounting Oversight Board. Finally, ■ 2. An undesignated center heading disbursements record entries;
under paragraph (e) of Rule 17a–5, a and § 300.600 are added to read as (B) For all or any portion of a fiscal
broker-dealer’s annual reports must be follows: year, compare amounts reflected in the
prepared and filed in accordance with audited financial statements required by
certain enumerated requirements. Rules Relating to Supplemental Report SEC Rule with amounts reported in the
Paragraph (e)(4) of Rule 17a–5 requires on SIPC Membership Form SIPC–7;
the broker-dealer to file the § 300.600 Rules relating to supplemental
(C) Compare adjustments reported in
supplemental report, and paragraph report on SIPC membership. the Form SIPC–7 with supporting
(e)(5) of Rule 17a–5 requires that a schedules and working papers
(a)(i) Who must file the supplemental
broker-dealer’s annual reports be filed supporting the adjustments;
report. Except as provided in paragraph
not more than 60 calendar days after the (D) Verify the arithmetical accuracy of
(a)(ii) of this section, a broker or dealer
fiscal year end of the broker-dealer. the calculations reflected in the Form
must file with SIPC, within 60 days after
Accordingly, the proposed rules provide SIPC–7 and in the schedules and
the end of its fiscal year, a supplemental
that a broker-dealer must file the working papers supporting any
report on the status of its membership
supplemental report within 60 days adjustments; and
in SIPC (commonly referred to as the
after the end of its fiscal year. In other (E) Compare the amount of any
‘‘Independent Accountants’ Report on
respects, the proposed rules largely overpayment applied with the Form
Applying Agreed-Upon Procedures’’) if
mirror the text of paragraphs SIPC–7 on which it was computed; or
a rule of the Securities and Exchange
(e)(4)(ii)(A), (B), and (C) of Rule 17a–5. (F) If exclusion from membership is
Commission (SEC) requires the broker
claimed, compare the income or loss
II. Date of Effectiveness of the Proposed or dealer to file audited financial
reported in the audited financial
Rule Change and Timing for statements annually.
(ii) If the broker or dealer is a member statements required by SEC Rule with
Commission Action
of SIPC, the broker or dealer is not the Form SIPC–3.
Within thirty-five days of the date of * * * * *
required to file the supplemental report
publication of this notice in the Federal
for any year in which it reports For the Commission, by the Division of
Register, or within such longer period
$500,000 or less in total revenues in its Trading and Markets, pursuant to delegated
(i) as the Commission may designate of authority.12
annual audited statement of income
not more than ninety days after such
filed with the SEC. Dated: October 28, 2015.
date if it finds such longer period to be (b) Requirements of the supplemental
appropriate and publishes its reasons Robert W. Errett,
report. The supplemental report must Deputy Secretary.
for so finding or (ii) as to which SIPC cover the SIPC Annual General
consents, the Commission shall: [FR Doc. 2015–27921 Filed 11–3–15; 8:45 am]
Assessment Reconciliation Form (Form
(A) By order approve such proposed SIPC–7) or the Certification of Exclusion
BILLING CODE 8011–01–P
rule change or From Membership Form (Form SIPC–3)
(B) Institute proceedings to determine for each year for which an SEC Rule
whether such proposed rule change requires audited financial statements to DEPARTMENT OF THE TREASURY
should be disapproved. be filed. The supplemental report must
To allow public access to SIPC’s rules, include the following: Internal Revenue Service
SIPC rules that are approved by the (i) A copy of the form filed or a
Commission are published under Part schedule of assessment payments 26 CFR Part 1
300 of 17 CFR Chapter II. showing any overpayments applied and
overpayments carried forward, [REG–139483–13]
III. Statutory Authority
including payment dates, amounts, and
Pursuant to SIPA, 15 U.S.C. 78aaa et RIN 1545–BL87
name of SIPC collection agent to whom
rmajette on DSK7SPTVN1PROD with PROPOSALS
seq., and particularly, section 3(e) (15
mailed; or Treatment of Certain Transfers of
U.S.C. 78ccc(e), SIPC proposes to adopt (ii) If exclusion from membership was
300.600 of Title 17 of the Code of Property to Foreign Corporations;
claimed, a statement that the broker or Correction
Federal Regulations. dealer qualified for exclusion from
membership under the Securities AGENCY: Internal Revenue Service (IRS),
11 SeeLetter dated January 9, 1989 from Michael
Investor Protection Act of 1970, as Treasury.
A. Macchiaroli, SEC, to Theodore H. Focht,
President and General Counsel, SIPC (SEC No- amended, and the date the Form SIPC–
Action Letter 1989 WL 245631). 3 was filed with SIPC; and 12 17 CFR 200.30–3(f)(3).
VerDate Sep<11>2014 13:42 Nov 03, 2015 Jkt 238001 PO 00000 Frm 00021 Fmt 4702 Sfmt 4702 E:\FR\FM\04NOP1.SGM 04NOP1](https://thefederalregister.org/doc/80_FR_68499/page/3.svg)
Document Created: 2018-03-01 11:27:47
Document Modified: 2018-03-01 11:27:47
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Proposed Rules | |
| Action | Proposed rule. | |
| Dates | Comments are to be received on or before November 25, 2015. | |
| Contact | Michael A. Macchiaroli, Associate Director, at (202) 551-5525; Thomas K. McGowan, Associate Director, at (202) 551-5521; Randall W. Roy, Deputy Associate Director, at (202) 551-5522; Rose Russo Wells, Senior Counsel, at (202) 551-5527; Office of Financial Responsibility, Division of Trading and Markets, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-7010. | |
| FR Citation | 80 FR 68286 | |
| CFR Associated | Brokers and Securities |
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