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Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Rules and Regulations Similarly, with respect to the imposition of a subsequent trading prohibition, the Commission would issue an order prohibiting the trading of an issuers securities on a national securities exchange and in the over-thecounter market as soon as practicable after the issuer is again identified as a Commission-Identified Issuer. An order issuing a subsequent trading prohibition would provide that the trading prohibition will be effective on the fourth business day after the order is published by the Commission.86 As with the process for issuing an initial trading prohibition, we believe that this procedure appropriately addresses concerns regarding the risk to investors in U.S. markets of continued trading of Commission-Identified Issuers that have previously been subject to an initial trading prohibition while also providing appropriate notice to investors and other market participants in order to make investment decisions. We believe that the application of a prior trading prohibition, the ability of an issuer to dispute its status as a CommissionIdentified Issuer, the public availability of the provisional list of CommissionIdentified Issuers,87 and an issuers repeat use of a registered public accounting firm that the PCAOB is unable to inspect or investigate completely warrant the same short delay in the effectiveness of a subsequent trading prohibition as in an initial trading prohibition. In addition, we believe this procedure will inform investors when a subsequent trading prohibition will be imposed and become effective.88
3. Process for Terminating Trading Prohibitions; Required Certification Section 104i3B of the SarbanesOxley Act provides that the Commission shall terminate an initial trading prohibition if a Commission-Identified Issuer certifies to the Commission that the issuer has retained a registered public accounting firm that the PCAOB
has inspected to the satisfaction of the Commission.89 Section 104i3D of 86 See
supra note 84.
note that a provisional list of issuers that may be identified as Commission-Identified Issuers will be made publicly available before it is finalized. Accordingly, investors and other market participants would have access to the provisional list and would therefore have notice that a subsequent trading prohibition may be forthcoming.
See supra Section II.E.
88 While the HFCA Act does not address the delisting of securities from a national securities exchange, the existing rules of national securities exchanges that list issuers that are subject to a subsequent trading prohibition are applicable to delisting of such issuers securities, as appropriate.
89 See Section 104i3B of the Sarbanes-Oxley Act.

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the Sarbanes-Oxley Act also provides that the Commission shall terminate a subsequent trading prohibition if the Commission-Identified Issuer certifies to the Commission that the issuer will retain a registered public accounting firm that the PCAOB is able to inspect under this section.90
As a general matter, the retention of a registered public accounting firm does not guarantee that the newly engaged accounting firm will be the firm that issues an audit report on the financial statements of the issuer. Specifically, an issuer could retain more than one audit firm or retain a non-PCAOB-Identified Firm and subsequently replace the nonPCAOB-Identified Firm with a PCAOBIdentified Firm. Thus, in order to achieve the result that the retained nonPCAOB-Identified Firm is actually performing the audit, we believe it appropriate and consistent with the protection of investors that, for a Commission-Identified Issuer to certify consistent with Section 104i3B of the Sarbanes-Oxley Act, a CommissionIdentified Issuer must file financial statements that include an audit report signed by a non-PCAOB-Identified Firm.
Such a certification made by a Commission-Identified Issuer subject to an initial trading prohibition will terminate an initial trading prohibition.
Accordingly, a Commission-Identified Issuer subject to an initial trading prohibition can make the required certification that it has retained a non-PCAOB-Identified Firm to the satisfaction of the Commission only if such certification is preceded or accompanied by the filing of an annual report or an amended annual report with financial statements that include an audit report on the consolidated financial statements signed by a nonPCAOB-Identified Firm. We believe that lifting the trading prohibition prior to the Commission-Identified Issuer filing financial statements that include such an audit report would place investors at risk by commencing trading in a security for which the latest three annual reports filed with the Commission are audited by a PCAOBIdentified Firm. In addition, lifting the trading prohibition prior to the issuer filing financial statements that include an audit report on the consolidated financial statements signed by a nonPCAOB-Identified Firm could place investors at risk by commencing trading in a security that could potentially become subject to a subsequent trading prohibition lasting a minimum of five years if the issuer does in fact use a 90 See
Section 104i3D of the Sarbanes-Oxley
Act.

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PCAOB-Identified Firm to perform its audit for its next annual report.
Therefore, we believe it would be appropriate to terminate an initial trading prohibition only after investors and regulators have access to financial statements that include an audit report on the consolidated financial statements signed by a non-PCAOB-Identified Firm.
Similarly, we believe that a Commission-Identified Issuer that is subject to a subsequent trading prohibition should make at least the same showing to end trading prohibition as a Commission-Identified Issuer that is subject to an initial trading prohibition. Accordingly, for a Commission-Identified Issuer to certify consistent with Section 104i3D of the Sarbanes-Oxley Act, a CommissionIdentified Issuer must file, either with or prior to its certification, an annual report or amended annual report with financial statements that include an audit report signed by a non-PCAOBIdentified Firm. Such a certification made by a Commission-Identified Issuer subject to a subsequent trading prohibition will terminate a subsequent trading prohibition.91 We believe that the concerns described above with respect to an initial trading prohibition are even greater with CommissionIdentified Issuers subject to a subsequent trading prohibition as a result of a repeated reliance on a PCAOB-Identified Firm. Further, an issuer subject to a subsequent trading prohibition would have at least five years to retain a non-PCAOB-Identified Firm to audit its financials before a subsequent trading prohibition could be terminated by the Commission.
As described above, a CommissionIdentified Issuer subject to an initial or subsequent trading prohibition must certify that it has or will retain a nonPCAOB-Identified Firm for the Commission to end a trading prohibition,92 and such certification would be submitted at the same time as, or after, the issuer files an annual or amended annual report with financial statements that include an audit report signed by a non-PCAOB-Identified Firm.93 Once the Commission receives the certification and has verified that the issuer has in fact filed an annual or 91 The certification could be signed by any individual that is duly authorized to execute and deliver such a certification on behalf of the Commission-Identified Issuer.
92 See Sections 104i3B and D of the Sarbanes-Oxley Act. Section 104i3D of the Sarbanes-Oxley Act further provides that, with respect to a subsequent trading prohibition, the issuer may not submit such certification until after the end of the five-year period.
93 Any certification should be submitted in accordance with the EDGAR Filer Manual.

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