United States

SEC and Other Agencies Re-Propose Rule about Incentive-Based Compensation Plans

May 23, 2016
From the Financial Reporting Network

The SEC and five other agencies jointly proposed an updated rule, Incentive-Based Compensation Arrangements, which would implement Section 956 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 956 generally requires the agencies to issue regulations or guidelines that (1) prohibit certain financial institutions from offering incentive-based payment arrangements that encourage inappropriate risks by providing excessive compensation or that could lead to material financial loss and (2) require those financial institutions to disclose to the appropriate regulator information about incentive-based compensation arrangements. The agencies issued the original proposal in April 2011.

The proposal would apply to a covered institution with average total consolidated assets greater than or equal to $1 billion that offers incentive-based compensation to covered persons. Covered institutions include depository institutions, broker-dealers, credit unions, investment advisers, and certain other financial institutions.

The comment period ends July 22.

Read Proposed SEC Rule