Small Business Audit Correction Act of 2026

respectively, in section 3 of the Securities Exchange Act of 1934; ``(II) an investment adviser, as defined in section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)); ``(III) a depository institution, as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813); ``(IV) a State credit union or Federal credit union, as such terms are defined, respectively, in section 101 of the Federal Credit Union Act (12 U.S.C. 1752); or ``(V) an insurance company, as defined in section 201(a) of the Dodd- Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5381(a)); and ``(G) is not-- ``(i) expelled or suspended from-- ``(I) an association that is registered as described in subparagraph (B); or ``(II) an association that is registered as a registered futures association under section 17 of the Commodity Exchange Act (7 U.S.C. 21); ``(ii) subject to an order of the Commission, other appropriate regulatory agency, or foreign financial regulatory authority denying, suspending, or revoking the registration of the broker or dealer as a regulated entity; or ``(iii) subject to an injunction or order entered by a Federal or State court restraining or enjoining the broker or dealer from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security or in connection with any securities business. ``(6) Non-carrying broker or dealer.--The term `non- carrying broker or dealer' means a broker or dealer (as those terms are defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))), as applicable, that-- ``(A) as of the last day of the most recently completed fiscal year of the broker or dealer-- ``(i) has not more than 150 persons registered with an association that is registered as a national securities association under section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 78o-3); and ``(ii) is not an affiliate (as defined in section 2 of the Bank Holding Company Act of 1956) of an investment advisor that acts as the custodian for customer assets; ``(B) throughout the most recently completed fiscal year of the broker or dealer-- ``(i) does not-- ``(I) receive, directly or indirectly, or hold funds or securities for, or owe funds or securities to, customers; ``(II) carry accounts of, or for, customers; or ``(III) engage in any of the activities described in paragraphs (i) through (v) of section 240.15c3-1(a)(2) of title 17, Code of Federal Regulations; and ``(ii) if required under section 3(a)(2) of the Securities Investor Protection Act of 1970 (15 U.S.C. 78ccc(a)(2)), is a member of the Securities Investor Protection Corporation; and ``(C) filed an exemption report pursuant to section 240.17a-5(d)(4) of title 17, Code of Federal Regulations, covering the broker or dealer's most recent fiscal year. ``(7) Privately held.--The term `privately held' means, with respect to a broker or dealer (as those terms are defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))), that the broker or dealer, and any ultimate parent or other affiliate (as defined in section 2 of the Bank Holding Company Act of 1956) of the broker or dealer-- ``(A) do not have a class of securities registered under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 78l); and ``(B) are not required to file reports under section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(d)).''. (b) Amendments to Regulations.-- (1) Definitions.--In this subsection, the terms ``in good standing'', ``non-carrying broker or dealer'', and ``privately held'' have the meanings given the terms in section 110 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7220), as amended by subsection (a). (2) Amendments.--Not later than 180 days after the effective date described in subsection (d)-- (A) the Securities and Exchange Commission and the Public Company Accounting Oversight Board (``PCAOB'') shall make any necessary amendments to regulations of the Commission and the PCAOB, respectively, that are in effect as of the date of enactment of this Act in order to carry out this Act and the amendments made by this Act; and (B) the Securities and Exchange Commission shall amend the audit and attestation requirements of Rule 17a-5 (17 CFR 240.17a-5) to the extent necessary to reflect the exclusion of a non-carrying broker or dealer that is privately held and in good standing from the audit requirements of the PCAOB under title I of the Sarbanes-Oxley Act of 2002, including by providing that such broker or dealer satisfies the broker or dealer's annual audit obligation under Rule 17a-5 through an audit conducted in accordance with generally accepted auditing standards. (c) Rule of Construction.--Nothing in this Act or the amendments made by this Act may be construed to authorize the Securities and Exchange Commission to amend, waive, or otherwise modify-- (1) the requirement that the auditor of a non-carrying broker or dealer that is privately held and in good standing be qualified and independent in accordance with Regulation S-X (17 CFR 210.2-01); or (2) the requirement to file an exemption report pursuant to paragraph (d)(4) of Rule 17a-5. (d) Effective Date.--The provisions added by the amendments made by this Act shall take effect on the date that is 180 days after the date of enactment of this Act. <all>