Broker-Dealer Conference Summary In NYC

This past week the New York State Society of CPAs held their annual Broker-Dealer Conference at the New York Marriot Marquis.  I was unable to attend as I had an AICPA Peer Review Board meeting in North Carolina.  One of my partners, Brian Wallace, who heads up the WS+B Broker-Dealer Services Team, was able to attend. 

The keynote speaker was Peter Latmann, a journalist from the New York Times. Peter discussed the public perception of CPAs and how accountants are targeted when things go wrong. He is currently working on a story about the collapse of top 20 law firm, Dewey & LeBoeuf.

In keeping with the spirit of this blog to be “frank and to the point”, what follows is Brian’s summary of the hot topics at the conference.  In future blogs we will expand upon some of these areas to give our views on these issues.

FINOP and Regulatory Matters – 2 outsourced FINOPS

  • Example of FINRA coming in and requiring a BD to record an adjustment to AI to include the entire amount available under a line of credit that it has guaranteed.  Parent has the line, can draw on it at any time without notifying the BD.  Because the BD has no ability to control the use of the line, regulators wanted entire amount included in AI
  • Expense sharing arrangements, 3 ways to handle:
    • BD reimburses Parent
    • BD records expenses and corresponding capital contribution – potential trap that could impact BD ability to make distributions within the next 12 months. May need to obtain permission from regulators
    • BD and parent maintain a separate schedule detailing the expenses that are being allocated to the BD
    • Note – if BD is contractually liable for the expense, it must reflect it on its books
    • “Keep It Simple”
      • If the revenue is not required to be in the BD, don’t put it through the BD – FINRA and SIPC charge fee based on gross revenue
      • Don’t let the BD guarantee anything
      • Don’t pledge BD assets to secure anything
      • Okay to pledge BD stock to secure debt of parent
      • Auditor cannot issue if PCAOB fees are unpaid (this was mentioned by at least 2 other presenters)


Brian can be reached at 732-828-1614


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