Time To Dig In: SEC Issues Final Clawback Rules For Incentive Compensation

Section 10D of the Securities Exchange Act of 1934 (the "Act") finally has some teeth, or "claws," as the case may be. Originally added to the Act by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Section 10D required the Securities and Exchange Commission (SEC) to issue rules directing the national security exchanges and associations to adopt listing standards that require issuers to develop and implement a so-called "clawback" policy. Following proposed rules in 2015 and several comment periods, the SEC adopted the final implementing rules–New Exchange Act Rule 10D-1–on October 26, 2022 (the "Final Rules"). The Final Rules generally apply to all listed issuers, including foreign private issuers, smaller reporting companies, emerging growth companies, controlled group companies, and debt-only filers.