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Financial Services Law Insights and Observations

SEC approves PCAOB Rule under the Holding Foreign Companies Accountable Act

Securities SEC Of Interest to Non-US Persons Investigations Agency Rule-Making & Guidance

Securities

On November 5, the SEC announced it approved the Public Company Accounting Oversight Board’s (PCAOB) Rule 6100, Board Determinations Under the Holding Foreign Companies Accountable Act, which establishes a framework for the PCAOB’s determinations under that act “that the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by an authority in that jurisdiction.” According to the Commission order, PCAOB Rule 6100 establishes, among other things: (i) the factors the PCAOB will evaluate and the information the PCAOB will consider when assessing if a determination is warranted; (ii) the form, public availability, effective date, and duration of such determinations; and (iii) the process by which the board will reaffirm, modify, or vacate any such determinations. According to a statement released by SEC Chair Gary Gensler, the rule is an “important step to protect U.S. investors,“ and it is “critical that the Commission and the PCAOB work together to ensure that the auditors of foreign companies accessing U.S. capital markets play by the same rules.”

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