SEC Grants 30-Day Extension to Annual Report Deadline for Small Broker-Dealers

In an effort to ease compliance burdens and promote better financial reporting for smaller broker-dealers, the U.S. Securities and Exchange Commission (SEC) approved a 30-day extension for broker-dealers with capital of less than $50 million to file their annual reports. The SEC granted the extension in Release No. 34-91128 in response to a request from the Financial Industry Regulatory Authority (FINRA).

Broker-dealers registered with the SEC are generally required to file their annual reports within 60 calendar days after the end of the fiscal year. Annual reports include the broker-dealer’s financial report and either a compliance or exemption report, as well as reports prepared by an independent public accountant covering these reports.

The 30-day extension would give small broker-dealers 90 days to file their annual audited reports, setting a March 31, 2021 deadline for calendar year-end broker-dealers.

Conditions for the Extension

The extension is available only to broker-dealers that meet these four requirements:

1. The broker-dealer is in compliance with Rule 15c3-1 of the Exchange Act as of the date of its most recent fiscal year end and has less than $50 million in total capital and allowable subordinated liabilities, as reported in box 3530 of Part II or IIA of its most recent year-end FOCUS Report;
2. The broker-dealer is eligible to file an exemption report as part of its most recent fiscal year-end annual reports;
3. The broker-dealer submits written notification to FINRA of its intent to avail itself of the additional 30 calendar days for filing its annual reports on an ongoing basis for as long as it meets these conditions; and
4. The broker-deal submits the annual reports electronically to the SEC using an appropriate process.

Reasons for Extension Request

FINRA requested the additional 30 days for filing the annual reports to improve the availability of auditors and reduce burdens in obtaining audit services. FINRA noted a number of capacity restrictions smaller broker-dealers face in obtain auditing services.

For more information, contact a Weaver professional today.

Authored by Phil MacFarlane.

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