Hot Topics: Dodd-Frank Act Hedging Policy Disclosures Begin

Although final rules were published in December of 2018, July 1^st marked the date that issuers (other than smaller reporting companies and emerging growth companies) must begin complying with the Dodd-Frank Act’s hedging policy disclosure rules.

Background

The final hedging disclosure rules require issuers to describe all practices or policies they have adopted regarding the ability of employees or directors to engage in financial transactions that hedge or offset any decrease in the market value of the issuer’s equity securities granted as compensation to, or otherwise held, directly or indirectly, by the employee or director. If an issuer does not have a hedging policy, that fact must also be disclosed. For additional details as to the requirements of the final rule, please see our client memo that was published at the time the final rule was promulgated in December 2018, New Year, New Rules: Arrival of the Final Hedging Disclosure Rules.”