SEC Could Propose New Dodd-Frank Bonus Plan Next Month

Representing Investors Nationwide

On Friday, the U.S. Securities and Exchange Commission (SEC) announced it may have a new proposal for implementing the Dodd-Frank Act’s limits on incentive compensation at financial institutions. The 2010 financial reform law mandated that the SEC, along with five other federal banking, credit union and housing regulators, implement rules that require banks and other financial institutions set up deferred compensation schemes that both reward executives for good conduct that both benefits the firm but also punishes them for conduct that ends up harming the company. The SEC’s Division of Trading and Markets said it expects to have a new proposal out for the regulation by the end of December.

Critics have said that the bonus structure and other compensation practices at financial firms helped spur some of the risk-taking and other practices that lead to the 2008 financial crisis. The rules would address those concerns by forcing subject financial institutions to set levels of deferred payments and compensation issued in the form of stock or company debt intended to better align the interests of employees with those of the firm.

The long-delayed rule has been a source of consternation both among financial reform advocates and with the five other federal regulators — the Fed, FDIC, the Office of The Comptroller of Currency, the National Credit Union Administration (NCUA) and the Federal Housing Finance Agency (FHFA) - charged with writing it.  Some observers have  commented the delay could be the result of too many cooks in the kitchen.

But critics both in Congress — Democratic members of the House Financial Services Committee recently pressed SEC Chair Mary Jo White on the issue — and have laid blame for the delays at the feet of the SEC.  The bureau released its first version of the proposal in 2013. The agency said in a filing with the OMB last spring that it hoped to have a new proposal out in June but it never happened.  Time will tell if it happens in December.

The experienced securities fraud attorneys at Colling Gilbert Wright & Carter represent investors in all types of investment negligence and fraud.  If you have lost money as a result of an investment in foreign currencies or other commodities, please contact us for a free case evaluation

 

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