Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Thursday, May 23, 2024 | Back issues
Courthouse News Service Courthouse News Service

SEC Offers Rule on Incentive-Based Pay

WASHINGTON (CN) - The SEC on Wednesday proposed a rule that would require some financial institutions to disclose the structure of their incentive-based pay, and prohibit them from basing pay on arrangements that encourage inappropriate risks. The SEC-regulated financial institutions affected by the rule include broker-dealers and investment advisers with $1 billion or more in assets.

The proposed rule stems from Section 956 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires the SEC and other agencies to write such rules and guidelines.

The rules would require reports on incentive-based compensation to be filed annually with SEC;

Prohibit incentive-based compensation that encourages inappropriate risk-taking through excessive compensation or that could lead to financial loss to the firm;

Provide additional requirements for financial institutions with $50 billion or more in assets, including deferral of incentive-based compensation of executive officers and approval of compensation for people whose jobs give them the ability to expose the firm to a substantial amount of risk; and

Require them to develop policies and procedures that ensure and monitor compliance.

The SEC announced the rule in a statement on Wednesday. Public comments on it must be received within 45 days after it is published in the Federal Register.

Categories / Uncategorized

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.