SEC Proposes Hedging Disclosure Rules

Key Takeaways:

• SEC has proposed hedging disclosure rules required by the Dodd-Frank Act  
• Proposed rules require disclosure of policies permitting or prohibiting directors, officers and other employees to hedge their company's equity securities  
• Purpose of the rules is to provide transparency to shareholders about whether directors, officers or other employees are permitted to engage in transactions that mitigate or avoid the incentive alignment associated with equity ownership  
• Disclosure would be required in proxy statements relating to the election of directors  
• Proposed rules do not require companies to limit or prohibit hedging or to adopt formal policies

On February 9, 2015, the Securities and Exchange Commission proposed rules requiring companies to disclose whether directors, officers and other employees, or any of their designees, are permitted to hedge or otherwise engage in transactions to offset any decrease in the market value of