Beware The Claw! SEC Finalizes Dodd Frank Clawback Rules

Just in time for Halloween, on October 26, 2022, the Securities and Exchange Commission (SEC) finalized long-awaited rules implementing the clawback provision mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The SEC describes the clawback provision as a sort of "scared straight" program, designed to "maintain investor confidence in markets and improve liquidity by incentivizing executive officers to provide more accurate financial reporting." Under the new rules, the national securities exchanges (including Nasdaq and the NYSE) must establish listing standards that will, with very limited exceptions, require all listed companies, including emerging growth companies, smaller reporting companies, foreign private issuers, and controlled companies, as well as companies whose only listed securities are debt securities, to: