SEC eases path for filing annual broker-dealer reports

Broker-dealer compliance teams received some good news recently when the SEC took steps to make it easier for them to meet their annual reporting obligations.

The agency’s staff on January 27 wrote to the Financial Industry Regulatory Authority (Finra) outlining changes to the SEC’s Edgar system intended to ease the filing process. The changes took effect January 30.

In December 2015, officials with the SEC’s division of trading and markets stated in a letter to Finra that they would not recommend enforcement be taken if a broker-dealer or over-the-counter derivatives dealer filed the annual and supplemental reports required under Rule 17a-5 or Rule 17a-12 electronically via Edgar – provided they followed certain instructions and conditions – rather than filing in paper form.

Since then, a number of broker-dealers have filed reports with the commission electronically in accordance with the 2015 no-action letter, writes Michael Macchiaroli, associate director of the division, in the latest letter.

‘However, filers commented that the process was complicated and time-consuming because it required that broker-dealers upload each of the components of the annual reports (for example, the statement of financial condition, the statement of income and the statement of cash flows) as a separate attachment,’ he writes.

Edgar has been updated in response to these issues, Macchiaroli says. Specifically, the new process allows a broker-dealer filing its reports under paragraph (d) of Rule 17a-5 electronically on Edgar to do so in one of two ways:

• The broker-dealer can attach one document containing all of the annual reports as a public document
• It can attach two documents to its submission: a public document containing the statement of financial condition, the notes to the statement of financial condition and the accountant’s report that covers the statement of financial condition, and a non-public document containing all of the components of the annual reports.

The SEC also issued detailed instructions for filing broker-dealer annual reports under paragraph (d) of Rule 17a-5 with the commission electronically, including instructions for using the new process, as well as instructions for obtaining Edgar access credentials.

A Finra spokesperson said both the 2017 and 2015 letters were in response to firms contacting the SEC, not the self-regulatory organization contacting the SEC.