SEC Proposes Clawback Rules

On July 1, 2015, the Securities and Exchange Commission ("SEC") proposed long-awaited rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") requiring the national securities exchanges to adopt listing standards mandating that listed companies have a policy to recover from current and former executive officers any incentive-based compensation based on financial information that was subsequently corrected in an accounting restatement.

The highlights of the proposed rules are as follows:

• The rules would apply to almost all categories of listed issuers, including smaller reporting companies, emerging growth companies, foreign private issuers, and controlled companies, with limited exceptions for registered investment companies that do not use incentive compensation and unit investment trusts.