In July 2015, the SEC proposed rules to implement Section 954 of the Dodd-Frank Act. The proposed clawback rules would, among other things:
- Require national securities exchanges and associations to establish listing standards that would require listed companies to adopt and comply with a “clawback policy,” meeting the requirements of Section 10D of the Exchange Act;
- Delineate the incentive-based compensation that is subject to recovery; and
- Require each listed company to disclose its recovery of excess incentive-based compensation and file its compensation recovery policy.
The SEC stated in a fact sheet that it received “numerous comment letters on the 2015 proposal,” and that, “due to regulatory and market developments since 2015,” it is reopening the public comment period to address additional questions posed in staff memo, issued June 8.
The memo “contains additional analyses and data that has the potential to be informative for evaluating the proposals,” the SEC stated. Specifically, the memo:
- Discusses the increase in voluntary adoption of compensation recovery policies by issuers;
- Provides estimates of the number of additional restatements that would trigger a compensation recovery analysis if, as the Commission described in the October 2021 reopening release, the rules were extended to include all required restatements made to correct an error in previously issued financial statements; and
- Briefly discusses some potential implications for the costs and benefits of the proposed clawback rules.
The SEC said it’s requesting comment on, among other things, “whether ‘an accounting restatement due to the material noncompliance of the issuer with any financial reporting requirement under the securities laws’ as used in the Dodd-Frank Act should be read more broadly than initially proposed, and whether the proposed ‘reasonably should have concluded’ standard for triggering a lookback should be revised.”
The comment period will be open for 30 days after publication of the release in the Federal Register. 
Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.