Certain Smaller Broker-Dealers Have Opportunity to Extend Filing Deadline of Annual Reports

On February 12, 2021, the Securities and Exchange Commission (SEC) issued an order that extends the filing deadline for annual audit and related reports an additional 30 days for smaller broker-dealers that meet certain conditions. These filings are normally required to be completed within 60 calendar days after the fiscal year-end. With this new order, qualifying broker-dealers now have 90 calendar days to complete the filings.

The order was issued to provide firms and auditors additional time to prepare and audit the annual reports required within a compressed time period, when professional service providers are at their greatest demand. It was also noted that the 30 day extension could result in better quality of annual reports.

A broker-dealer must meet all of the following conditions in order to be granted the 30 calendar day extension:

  • As of its most recent fiscal year-end, be in compliance with rule 15c3-1 and have total capital and allowable subordinated liabilities of less than $50 million, as reported in box 3530 of Part II or Part IIA of its FOCUS Report
  • Be permitted to file an exemption report as part of its most recent fiscal year-end annual reports
  • Submit a written notification to its designated examining authority of its intent to rely on this order on an ongoing basis for as long as it meets the conditions of the order
  • Files the annual report electronically with the Commission using an appropriate process

This comes as welcome news for some smaller broker-dealers who are challenged to meet a higher standard with limited resources at their disposal. Based on the order’s interpretation, as long as the conditions noted in the order are met and the submitted written notification is accepted, the deadline will be extended on an ongoing basis, allowing for 90 days to file the required audit and related reports with the SEC. To reiterate, broker-dealers that meet the criteria summarized above, must submit a written notification to FINRA of its intent to rely on this order on an ongoing basis for as long as it meets the conditions of the order.

The text of the SEC’s order is available here.

We would be pleased to provide further information related to this subject. For more information, contact Frank L. Varanavage, Manager, Audit & Accounting at fvaranavage@kmco.com


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