WASHINGTON, D.C.— Stephen Hall, Legal Director and Securities Specialist, issued the following statement in response to the Securities and Exchange Commission’s (SEC) adoption of a final rule on Listing Standards for Recovery of Erroneously Awarded Compensation:

“This rule is a big win for investors. When companies distort their financial statements, regardless of whether it’s through mistakes or intentional manipulation, executives shouldn’t be allowed to keep any inflated and undeserved compensation they received.  That outcome isn’t fair to the shareholders and it can even incentivize risky and destabilizing corporate behavior. The rule will help deter and prevent this behavior.

“Although we’ll study the rule in greater detail, it clearly appears to be well-framed and subject to only narrow exceptions.  We are particularly gratified to see that it will cover a broad range of accounting restatements, not only those necessary to correct the very worst accounting abuses, which is what Better Markets has advocated for over the past seven years.  This rule is necessary because evidence has surfaced that some companies have been mischaracterizing their accounting restatements to avoid having to claw back their executives inflated and undeserved compensation.

“This rule will go far to upgrade the quality of accounting processes, promote fairness for shareholders, and deter corporate misconduct. It was an important part of the Dodd-Frank reforms, and although it took far too long to finalize, we support the resulting rule and applaud Chair Gensler for getting the job done.”

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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.