The SEC will debate whether or not to limit executive pay for misrepresenting financials once more.
The Securities and Exchange Commission is discussing how to enforce a rule that would allow it to recoup pay from Wall Street executives who misreport their companies’ financial data.
The Securities and Exchange Commission (SEC) stated on Thursday that it was seeking public input on a proposed rule that would allow it to recover pay paid to executives of financial firms who submit false information to regulators.
Chairman Gary Gensler of the Securities and Exchange Commission (SEC) expressed his support for the decision in a statement, saying that the agency has “an opportunity to strengthen the transparency and quality of corporate financial statements, as well as corporate executives’ accountability to their investors.”
@SECGov, we just finalized a clawback regulation.
The core premise is that if a company’s previous financial reporting needs to be revised or restated due to erroneous statistics, CEOs should not gain.
The proposal has been made available for public discussion. To leave a comment, go to https://t.co/NdoQzJcv8r. pic.twitter.com/GlXEo5fQcO The SEC, as one of the key federal regulators of the financial industry, has made similar proposals in the past. The SEC is allowed to penalize corporations that misreport financial information under the 2010 Dodd-Frank Act, which was passed in the aftermath of the Great Recession and allows it to “claw back” pay to a variety of CEOs.
The new SEC plan would broaden the scope of company restatements that could result in clawbacks.
To give the law more legs, it would require stock exchanges to compel listed companies to follow these principles or face being delisted. Current and past executives of the company would be subject to the rule.
In the ten years since Congress passed Dodd-Frank, the SEC has struggled to implement a new clawback rule.
The fact that no clear definition of what constitutes actual pay was ever put forth in the law makes it impossible to apply a rule.
The SEC can require corporations to publish tables detailing their leaders’ real compensation alongside the company’s financial performance over the previous five years, as measured by stock performance and dividends, as well as similar companies’ returns, under Dodd-Frank. Regulators, on the other hand, are unsure how some of these incentives fall within existing executive pay regulations in the absence of clarity.
The SEC and other Wall Street authorities were left to decide how to apply this rule on their own, but the agency has been hampered by it. The Washington Newsday Brief News is a daily newspaper published in Washington, D.C.