SEC Approves Clawback Rules
An interesting SEC fact: The first Commissioner of the SEC was Joseph Kennedy (the father of Jack, Bobby, and Ted). FDR tapped him since he knew how to manipulate markets, and FDR wanted him to take that knowledge and figure out how to protect the U.S. markets after the Great Depression. The ’33 and ’34 Acts, which are the foundations of the SEC today, were a result of that hire and the first Commission.
What Commissioner Kennedy started back then is truly a powerful entity today.
Some additional facts:
1. It is an independent regulatory agency
2. It is tasked with protecting our U.S. Capital markets
3. Overseeing the stock market, and
4. Proposing and enforcing federal securities laws.
In the aftermath of our recent Great Depression that ended in 2009, the Dodd-Frank Act was enacted. Specifically on July 21, 2010. The law was intended to overhaul financial regulation and communication. Further included in the law was an entire section dealing with executive pay and corporate governance that applies to most publicly traded companies.
One of the more controversial provisions centers around the clawback policy providing for the recovery of executive compensation in the event of a restatement of financials. One can only imagine all the ramifications – especially concerning the “Law of Unintended Consequences.” Over 12 years later, they finally decided to finalize.
This article is an excellent write-up on it for all involved. Thankful to Frank Glassner of Veritas for sending out, and Bryan Cave for an excellent summary.
Enjoy the read.