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Bloggers Quiet on New SEC Rules

"No issue in the 72 years of the Commission's history has generated such interest." That remark came last week from Securities and Exchange Commission Chairman Christopher Cox. The issue of interest was the SEC's sweeping new disclosure rules for executive and director compensation. His reference was to the more than 20,000 comments the SEC received after it proposed the changes.

But in the days since the SEC's adoption of the rules, the legal blogosphere has had little comment of its own. BeSpacific noted the new rules, but little else was said among legal bloggers. This is surprising given that these were the first major revisions to the disclosure rules since 1992 and that they squarely address the corporate scandal du jour -- backdating of stock options. As CCH Wall Street reports,

"Firms will be required to not only list the dates options were granted, but they must also include why they were granted and for whom."

Another key provision of the new rules requires that disclosure statements be written in plain English. That's all well and good, says Kathleen Pender in the San Francisco Chronicle, if only the SEC would write in plain English. She explains:

"The SEC issued a press release summarizing the new proxy rules, presumably for a general audience. But you'd need a law degree to understand parts of it. To paraphrase a quote by former SEC Chairman Arthur Levitt, who championed the plain-English movement, it rolled off the tongue like peanut butter."

As Professor Bainbridge predicted a week before release of the final rule, the SEC dropped what has been called the Katie Couric provision. It would have required disclosure of the compensation paid to a company's three most highly paid nonexecutives. Instead, the SEC will revise the proposal and resubmit it for public comment. The revision will require disclosure of a company's three most highly paid employees, whether or not they are executives, unless the employee has no significant role in setting company policies.

Posted by Robert J. Ambrogi on July 31, 2006 at 03:49 PM | Permalink | Comments (1)


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