SEC proposes stricter rules for hedging disclosures

The Securities and Exchange Commission is considering stricter rules for publicly traded companies to disclose hedging policies.

The new rules would require companies to disclose whether their director, officers and other employees are allowed to hedge or offset any decreases in the market value of stock shares that are granted to them by the company as compensation or held directly or indirectly by employees or directors.

{mosads}“The proposed rules would provide investors with additional information about the governance practices of the companies in which they invest,” SEC Chair Mary Jo White said in a release. “Increasing transparency into hedging policies will help investors better understand the alignment of the interests of employees and directors with their own.”

The proposal would tighten Dodd-Frank rules and require disclosure statements for the election of directors. It would apply to company stock, as well as stock in a parent company, subsidiary company or any of the parent company’s subsidiary companies.

The rule would apply to companies that are subject to federal proxy rules, emerging growth companies, business development companies, and registered closed-end investment companies with shares listed and registered on a national securities exchange.

The public has 60 days to comment.