§7217 Commission Oversight of the Board

Summary

The Commission must oversee and enforce the Board. The rules in sections 78q(a)(1) and 78q(b)(1) apply to the Board the same way they apply to a “registered securities association.” A “proposed rule” means any new Board rule or any change to a Board rule. No Board rule can take effect until the Commission approves it, except for initial or transitional standards under section 7213(a)(3)(B). The Commission will approve a rule if it finds the rule follows this Act and the securities laws, or if the rule is needed or proper for the public interest or to protect investors. The procedures in section 78s(b) and 78s(c) that govern rule approval and the Commission changing Board rules apply to the Board too, but those procedures are read to include the requirements of Title I of the Sarbanes-Oxley Act of 2002 where the law says to do so. The Board must quickly tell the Commission about any final sanction against a registered public accounting firm or its associated person, in the form the Commission sets. The Commission reviews Board disciplinary actions under the same rules it uses for self-regulatory groups, with some specific changes (for example, stays are governed by section 7215(e), “members” means registered public accounting firms, and references are read to include Title I of Sarbanes-Oxley; see section 7217(c)(3) for one cross-reference). After a review hearing, the Commission can change, cancel, reduce, or require repayment of a sanction if it finds the sanction is not appropriate. The Commission can also relieve the Board of enforcement duties, formally reprimand or limit the Board, or remove or reprimand Board members after notice and a hearing if they willfully broke the law, abused power, or failed to enforce rules without a good reason.