Acting SEC Chair takes aim at Dodd-Frank CEO pay ratio rule

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By Sarah N. Lynch | WASHINGTON

WASHINGTON The head of the U.S. Securities and
Exchange Commission took steps on Monday to delay a
controversial rule that will require companies to disclose a
ratio comparing their chief executive’s pay with the median

Acting SEC Chairman Michael Piwowar said he wants companies
to submit comments that outline “any unexpected challenges” that
they are facing as they prepare to comply with the rule later
this year.

He also asked the SEC’s staff to “reconsider the
implementation of the rule” to determine “whether additional
guidance or relief is appropriate.”

The SEC’s CEO pay ratio rule is a requirement in the 2010
Dodd-Frank Wall Street reform law.

The rule is championed by unions and worker advocacy groups
who say it provides a helpful metric to keep track of income
inequality and excessive CEO pay.

But business groups such as the U.S. Chamber of Commerce
have staunchly opposed the measure, saying it is “misleading,
politically-inspired and costly.”

This marks the second time now that Piwowar has sought to
beat back or delay Dodd-Frank disclosure rules.

Last week, he instructed SEC staff to conduct a similar
review for “conflict minerals,” another rule hated by business
groups that requires companies to tell investors if their
products contain certain minerals mined from a war-torn part of

The SEC cannot officially remove a rule from the books
without a formal rulemaking process, which entails a public
comment period and economic analysis.

Until the U.S. Senate confirms SEC Chairman nominee Jay
Clayton, any such effort would likely fail because the
five-member SEC only has two commissioners right now – Piwowar
and Stein, a Democrat who would likely vote against killing
Dodd-Frank rules.

In the case of a split vote among two commissioners, the
measure automatically fails by default.

However, the SEC has fairly broad exemptive powers that it
can use to grant compliance delays or opt not to enforce certain

Piwowar’s actions come on the heels of an executive order
issued on Friday by President Donald Trump that aims to lay the
groundwork for making major changes to the Dodd-Frank law.

The order directed the heads of the Financial Stability
Oversight Council, a regulatory body of which Piwowar is an
acting member, to consult with the Treasury Secretary about
which rules and laws may run afoul of core principles that call
for fostering economic growth and advancing American interests.

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