U.S regulators are proposing new rules that would require companies to disclose whether they allow insiders to hedge their holdings.
The U.S. Securities and Exchange Commission (SEC) Monday proposed rules that would enhance corporate disclosure of company hedging policies for directors and employees. It would require disclosure about whether directors, officers and other employees are permitted to hedge any decrease in the market value of equity securities that are granted by the company as compensation; or, securities that are held, directly or indirectly, by employees or directors.
“The proposed rules would provide investors with additional information about the governance practices of the companies in which they invest,” said SEC chair, Mary Jo White. “Increasing transparency into hedging policies will help investors better understand the alignment of the interests of employees and directors with their own.”
The proposed rules, which are out for comment for a 60-day period, would require disclosure in proxy and information statements for director elections. They would apply to all companies that are subject to the federal proxy rules, including smaller companies, emerging growth firms, business development companies, and registered closed-end investment companies that are listed on a national securities exchange.