116STAT.760 PUBLIC LAW 107-204-JULY 30,2002 rd ter tha on: other doc er domiciled,that the poard consider accuracy any c cuments or duction t or ma al t an inve of. and production 0g m,that th d public accounting firm or any ection.the Board ma atcdirnth nd or bar such pers ng assoc accouing rm to end such nd or revoke the registration of the public other l Com ATION. d investiga t,as neces sary to protect an ongoing on i under this tothe Commission
116 STAT. 760 PUBLIC LAW 107–204—JULY 30, 2002 (2) TESTIMONY AND DOCUMENT PRODUCTION.—In addition to such other actions as the Board determines to be necessary or appropriate, the rules of the Board may— (A) require the testimony of the firm or of any person associated with a registered public accounting firm, with respect to any matter that the Board considers relevant or material to an investigation; (B) require the production of audit work papers and any other document or information in the possession of a registered public accounting firm or any associated person thereof, wherever domiciled, that the Board considers relevant or material to the investigation, and may inspect the books and records of such firm or associated person to verify the accuracy of any documents or information supplied; (C) request the testimony of, and production of any document in the possession of, any other person, including any client of a registered public accounting firm that the Board considers relevant or material to an investigation under this section, with appropriate notice, subject to the needs of the investigation, as permitted under the rules of the Board; and (D) provide for procedures to seek issuance by the Commission, in a manner established by the Commission, of a subpoena to require the testimony of, and production of any document in the possession of, any person, including any client of a registered public accounting firm, that the Board considers relevant or material to an investigation under this section. (3) NONCOOPERATION WITH INVESTIGATIONS.— (A) IN GENERAL.—If a registered public accounting firm or any associated person thereof refuses to testify, produce documents, or otherwise cooperate with the Board in connection with an investigation under this section, the Board may—(i) suspend or bar such person from being associated with a registered public accounting firm, or require the registered public accounting firm to end such association; (ii) suspend or revoke the registration of the public accounting firm; and (iii) invoke such other lesser sanctions as the Board considers appropriate, and as specified by rule of the Board. (B) PROCEDURE.—Any action taken by the Board under this paragraph shall be subject to the terms of section 107(c). (4) COORDINATION AND REFERRAL OF INVESTIGATIONS.— (A) COORDINATION.—The Board shall notify the Commission of any pending Board investigation involving a potential violation of the securities laws, and thereafter coordinate its work with the work of the Commission’s Division of Enforcement, as necessary to protect an ongoing Commission investigation. (B) REFERRAL.—The Board may refer an investigation under this section— (i) to the Commission; Notification. VerDate 11-MAY-2000 18:56 Aug 07, 2002 Jkt 099139 PO 00204 Frm 00016 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL204.107 APPS24 PsN: PUBL204
PUBLIC LAW 107-204-JULY 30,2002 116STAT.761 deoa:othtgPeea&rntinlagtrAe (15U.s.C.6809 such regulator:and (ini)at e Attorney General of t and the ry general Stat the appropriate State regulatory 6 accumente ang mormato阴。 provided in subpara nt h al and ng nsha the loss of its retion of the Board,whe rmined lato of t the y with 5s80 to an audit rep ort fo any appropriate State regulatory maintain such information as confiden- 6)R ivil liabi the and out (e)D n similar circumstances shal。 rovide that
PUBLIC LAW 107–204—JULY 30, 2002 116 STAT. 761 (ii) to any other Federal functional regulator (as defined in section 509 of the Gramm-Leach-Bliley Act (15 U.S.C. 6809)), in the case of an investigation that concerns an audit report for an institution that is subject to the jurisdiction of such regulator; and (iii) at the direction of the Commission, to— (I) the Attorney General of the United States; (II) the attorney general of 1 or more States; and (III) the appropriate State regulatory authority. (5) USE OF DOCUMENTS.— (A) CONFIDENTIALITY.—Except as provided in subparagraph (B), all documents and information prepared or received by or specifically for the Board, and deliberations of the Board and its employees and agents, in connection with an inspection under section 104 or with an investigation under this section, shall be confidential and privileged as an evidentiary matter (and shall not be subject to civil discovery or other legal process) in any proceeding in any Federal or State court or administrative agency, and shall be exempt from disclosure, in the hands of an agency or establishment of the Federal Government, under the Freedom of Information Act (5 U.S.C. 552a), or otherwise, unless and until presented in connection with a public proceeding or released in accordance with subsection (c). (B) AVAILABILITY TO GOVERNMENT AGENCIES.—Without the loss of its status as confidential and privileged in the hands of the Board, all information referred to in subparagraph (A) may— (i) be made available to the Commission; and (ii) in the discretion of the Board, when determined by the Board to be necessary to accomplish the purposes of this Act or to protect investors, be made available to— (I) the Attorney General of the United States; (II) the appropriate Federal functional regulator (as defined in section 509 of the GrammLeach-Bliley Act (15 U.S.C. 6809)), other than the Commission, with respect to an audit report for an institution subject to the jurisdiction of such regulator; (III) State attorneys general in connection with any criminal investigation; and (IV) any appropriate State regulatory authority, each of which shall maintain such information as confidential and privileged. (6) IMMUNITY.—Any employee of the Board engaged in carrying out an investigation under this Act shall be immune from any civil liability arising out of such investigation in the same manner and to the same extent as an employee of the Federal Government in similar circumstances. (c) DISCIPLINARY PROCEDURES.— (1) NOTIFICATION; RECORDKEEPING.—The rules of the Board shall provide that in any proceeding by the Board to determine VerDate 11-MAY-2000 18:56 Aug 07, 2002 Jkt 099139 PO 00204 Frm 00017 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL204.107 APPS24 PsN: PUBL204
116STAT.762 PUBLIC LAW 107-204-JULY 30,2002 person th with 30 espect to the firm or ass ociated ne caus G STATEMENT Of (A)each acor practice n which the registered public violated; ar nes has b cation for (4)SANCTIONSances,that a registered public accounting there of as en this Act.n act o securities la pect 2 ard may im such dis it determi don on th ddit on (othe onal prof penaltyfor each such )1n qadditional profeso ducation rules o ppopriate santion provided forn the
116 STAT. 762 PUBLIC LAW 107–204—JULY 30, 2002 whether a registered public accounting firm, or an associated person thereof, should be disciplined, the Board shall— (A) bring specific charges with respect to the firm or associated person; (B) notify such firm or associated person of, and provide to the firm or associated person an opportunity to defend against, such charges; and (C) keep a record of the proceedings. (2) PUBLIC HEARINGS.—Hearings under this section shall not be public, unless otherwise ordered by the Board for good cause shown, with the consent of the parties to such hearing. (3) SUPPORTING STATEMENT.—A determination by the Board to impose a sanction under this subsection shall be supported by a statement setting forth— (A) each act or practice in which the registered public accounting firm, or associated person, has engaged (or omitted to engage), or that forms a basis for all or a part of such sanction; (B) the specific provision of this Act, the securities laws, the rules of the Board, or professional standards which the Board determines has been violated; and (C) the sanction imposed, including a justification for that sanction. (4) SANCTIONS.—If the Board finds, based on all of the facts and circumstances, that a registered public accounting firm or associated person thereof has engaged in any act or practice, or omitted to act, in violation of this Act, the rules of the Board, the provisions of the securities laws relating to the preparation and issuance of audit reports and the obligations and liabilities of accountants with respect thereto, including the rules of the Commission issued under this Act, or professional standards, the Board may impose such disciplinary or remedial sanctions as it determines appropriate, subject to applicable limitations under paragraph (5), including— (A) temporary suspension or permanent revocation of registration under this title; (B) temporary or permanent suspension or bar of a person from further association with any registered public accounting firm; (C) temporary or permanent limitation on the activities, functions, or operations of such firm or person (other than in connection with required additional professional education or training); (D) a civil money penalty for each such violation, in an amount equal to— (i) not more than $100,000 for a natural person or $2,000,000 for any other person; and (ii) in any case to which paragraph (5) applies, not more than $750,000 for a natural person or $15,000,000 for any other person; (E) censure; (F) required additional professional education or training; or (G) any other appropriate sanction provided for in the rules of the Board. VerDate 11-MAY-2000 18:56 Aug 07, 2002 Jkt 099139 PO 00204 Frm 00018 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL204.107 APPS24 PsN: PUBL204
PUBLIC LAW 107-204-JULY 30,2002 116STAT.763 (C)and D h (4)shall on that thep of Board may impo 益m益 sanctions to quality controlatic or purposes c vise any other person tablished dure and that wou沿 and at ste for that of the Boar ent and andct any su the and had ich procedures ot be ing compli FIRM to become a or for that i uspen hall be aw with an nded or bar in suer anaaee rema ancial nent
PUBLIC LAW 107–204—JULY 30, 2002 116 STAT. 763 (5) INTENTIONAL OR OTHER KNOWING CONDUCT.—The sanctions and penalties described in subparagraphs (A) through (C) and (D)(ii) of paragraph (4) shall only apply to— (A) intentional or knowing conduct, including reckless conduct, that results in violation of the applicable statutory, regulatory, or professional standard; or (B) repeated instances of negligent conduct, each resulting in a violation of the applicable statutory, regulatory, or professional standard. (6) FAILURE TO SUPERVISE.— (A) IN GENERAL.—The Board may impose sanctions under this section on a registered accounting firm or upon the supervisory personnel of such firm, if the Board finds that— (i) the firm has failed reasonably to supervise an associated person, either as required by the rules of the Board relating to auditing or quality control standards, or otherwise, with a view to preventing violations of this Act, the rules of the Board, the provisions of the securities laws relating to the preparation and issuance of audit reports and the obligations and liabilities of accountants with respect thereto, including the rules of the Commission under this Act, or professional standards; and (ii) such associated person commits a violation of this Act, or any of such rules, laws, or standards. (B) RULE OF CONSTRUCTION.—No associated person of a registered public accounting firm shall be deemed to have failed reasonably to supervise any other person for purposes of subparagraph (A), if— (i) there have been established in and for that firm procedures, and a system for applying such procedures, that comply with applicable rules of the Board and that would reasonably be expected to prevent and detect any such violation by such associated person; and (ii) such person has reasonably discharged the duties and obligations incumbent upon that person by reason of such procedures and system, and had no reasonable cause to believe that such procedures and system were not being complied with. (7) EFFECT OF SUSPENSION.— (A) ASSOCIATION WITH A PUBLIC ACCOUNTING FIRM.— It shall be unlawful for any person that is suspended or barred from being associated with a registered public accounting firm under this subsection willfully to become or remain associated with any registered public accounting firm, or for any registered public accounting firm that knew, or, in the exercise of reasonable care should have known, of the suspension or bar, to permit such an association, without the consent of the Board or the Commission. (B) ASSOCIATION WITH AN ISSUER.—It shall be unlawful for any person that is suspended or barred from being associated with an issuer under this subsection willfully to become or remain associated with any issuer in an accountancy or a financial management capacity, and for any issuer that knew, or in the exercise of reasonable VerDate 11-MAY-2000 18:56 Aug 07, 2002 Jkt 099139 PO 00204 Frm 00019 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL204.107 APPS24 PsN: PUBL204
116STAT.764 PUBLIC LAW 107-204-JULY 30,2002 such sa The information reported under paragraph theaaepafhe。nt8onndebaoaindthe basis for r information as the Board deems appro (e)spriate ENERA 01 action of the Bo ard shall o stay of any s unt a entation of oral argu ments)that no suc he Commission shall estab a9ay,of anydipco品o品d ion of the 15USC7216. SEC.106.FOREIGN PUBLIC ACCOUNTING FIRMS this Act it r with respec the mission iss I under thi the same m anne ander the laws of th United by it ebasis for bie ctin f the Fed foreig courts d the tha with respect to controversies between CRecounheBoaoaadeeamm udit report ess 设n appr such
116 STAT. 764 PUBLIC LAW 107–204—JULY 30, 2002 care should have known, of such suspension or bar, to permit such an association, without the consent of the Board or the Commission. (d) REPORTING OF SANCTIONS.— (1) RECIPIENTS.—If the Board imposes a disciplinary sanction, in accordance with this section, the Board shall report the sanction to— (A) the Commission; (B) any appropriate State regulatory authority or any foreign accountancy licensing board with which such firm or person is licensed or certified; and (C) the public (once any stay on the imposition of such sanction has been lifted). (2) CONTENTS.—The information reported under paragraph (1) shall include— (A) the name of the sanctioned person; (B) a description of the sanction and the basis for its imposition; and (C) such other information as the Board deems appropriate. (e) STAY OF SANCTIONS.— (1) IN GENERAL.—Application to the Commission for review, or the institution by the Commission of review, of any disciplinary action of the Board shall operate as a stay of any such disciplinary action, unless and until the Commission orders (summarily or after notice and opportunity for hearing on the question of a stay, which hearing may consist solely of the submission of affidavits or presentation of oral arguments) that no such stay shall continue to operate. (2) EXPEDITED PROCEDURES.—The Commission shall establish for appropriate cases an expedited procedure for consideration and determination of the question of the duration of a stay pending review of any disciplinary action of the Board under this subsection. SEC. 106. FOREIGN PUBLIC ACCOUNTING FIRMS. (a) APPLICABILITY TO CERTAIN FOREIGN FIRMS.— (1) IN GENERAL.—Any foreign public accounting firm that prepares or furnishes an audit report with respect to any issuer, shall be subject to this Act and the rules of the Board and the Commission issued under this Act, in the same manner and to the same extent as a public accounting firm that is organized and operates under the laws of the United States or any State, except that registration pursuant to section 102 shall not by itself provide a basis for subjecting such a foreign public accounting firm to the jurisdiction of the Federal or State courts, other than with respect to controversies between such firms and the Board. (2) BOARD AUTHORITY.—The Board may, by rule, determine that a foreign public accounting firm (or a class of such firms) that does not issue audit reports nonetheless plays such a substantial role in the preparation and furnishing of such reports for particular issuers, that it is necessary or appropriate, in light of the purposes of this Act and in the public interest or for the protection of investors, that such firm (or class of firms) should be treated as a public accounting firm 15 USC 7216. VerDate 11-MAY-2000 18:56 Aug 07, 2002 Jkt 099139 PO 00204 Frm 00020 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL204.107 APPS24 PsN: PUBL204