Resources/ Updates - August 2013

The SDDco Client Update

The SDDco Client Update is an action oriented email prepared in-house, tailored to client needs, and sent as an adjunct to our online newsletter.  Verified newsletter subscribers receive our Client Update once each month.

The SDDco Client Update is intended to provide general information only. It is not intended as, and should not be taken as, financial, tax, accounting, legal, consulting or any other type of advice specific to you or your firm. Users of the SDDco Client Update should not act or refrain from acting on the basis of information provided on the website. Always check with your accountant and/or attorney.


Issues Persist with Broker-Dealer Audits

Second round results were no better than the first in the interim inspection program conducted by the Public Company Accounting Oversight Board (“PCAOB” or the “Board”).  Again, deficiencies were noted in all of the auditing firms inspected. August 19th, the PCAOB shared its round two reporting on inspections spanning March to December of 2012. Inspectors

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FINRA Updates Private Placement Form & FAQs

To gather information, FINRA updated the form that member broker-dealer firms must use to file offering documents pursuant to Rule 5123 (Private Placement of Securities) and Rule 5122 (Private Placements of Securities Issued by Members). The form contains six new questions designed to aid FINRA in prioritizing its review of private placement filings: Is this

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PCAOB Proposes New Audit Standards

The Public Company Accounting Oversight Board (“PCAOB” or the “Board”) proposed new standards for auditors on August 13th, revising the current reporting model that has undergone little change since the 1940s.  Two new PCAOB standards and related amendments aim to make the audit more serviceable to investors and other users of financial statements and reports.

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SEC Loosens Custody Rule for Advisers

To increase customer protection, The Dodd-Frank Act requires SEC registration of most advisers to hedge funds, private equity funds, and other private pooled investment vehicles.  As a result, SEC-registered investment advisers with custody of client assets must comply with the Custody Rule 206(4)-2 (“Custody Rule”) under the Investment Advisers Act of 1940.  On August 1st, the SEC’s

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DOMA Decision Tax Impact

In a landmark decision (United States v. Windsor), the US Supreme Court overturned Section 3 of the Defense of Marriage Act (“DOMA”), deciding it violated the Fifth Amendment’s due process clause as it applied to same-sex persons legally married under the laws of their state.  Due process, per the US Constitution, requires that, “No person

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SEC Adopts New Broker-Dealer Reporting Rules

To increase protections for investors whose assets are held by a broker-dealer, the Securities and Exchange Commission (“SEC”) adopted new broker-dealer (“BD”) reporting rules on July 31st.  These amendments include additional reporting for both audit and oversight purposes. The SEC significantly increased the reporting, compliance and audit requirements for broker-dealers that custody client assets to improve BD adherence

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SEC Amends Rules on Broker-Dealer Financial Responsibility

By unanimous vote, the SEC adopted amendments to financial responsibility rules for securities brokers (Final Rule 34-70072), including net capital, customer protection, books and records, and notification rules, to better protect customers and prevent unsound business practices.  Amendments are effective 60 days after their publication in the Federal Register. Per the Securities Exchange Act of 1934, broker-dealers must

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IRS Revises FATCA Timeline for FFIs

The Foreign Account Tax Compliance Act of 2010 (“FATCA”), targeting non-compliance by taxpayers with foreign accounts, will require online registration and the reporting of foreign financial assets but later than initially projected.  The IRS has delayed, by just one month, the launch of the registration portal for Foreign Financial Institutions (“FFIs”) but more significantly revised the timeline of FATCA compliance, extending

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What’s the Proper Timing of AML Testing?

An anti-money laundering (“AML”) audit assesses if a firm’s AML compliance program is current with regulatory requirements and is functioning as the policies and procedures intended.  Independent testing may be conducted by a knowledgeable employee—unassociated with the firm’s AML compliance program—or a qualified outside party. FINRA Rule 3310 requires that every member broker-dealer have an

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FINRA Ups the Transparency of Mortgage-backed Securities Market

FINRA announced that, as of July 22, 2013, far greater trade info is available through TRACE (the Trade Reporting and Compliance Engine) on mortgage-backed securities issued by Fannie Mae, Freddie Mac, Ginnie Mae, and SBA-backed securities. Transparency: New TRACE procedures increase transparency by fully disseminating transaction info related to trades, including the time, price and volume;

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