equity securities

SEC Proposes Rules for Disclosure of Hedging Policies

On February 9, the SEC issued proposed rules that are intended to enhance disclosure of company hedging policies for directors and employees, as mandated by Dodd-Frank. The proposal would require disclosure about whether directors, officers and other employees are permitted to hedge or offset any decrease in the market value of equity securities held, directly or indirectly, by employees or directors. The proposed rules would require disclosure in proxy and information statements for the election of directors and apply to companies subject to the federal proxy rules, including smaller reporting companies, emerging growth companies, business development companies, and registered closed-end investment companies with shares listed and registered on a national securities exchange.  ReleaseProposed Rule.

SEC Amendments to OTC Equity Trade Reporting Rules

On May 23, the SEC approved amendments to FINRA trade reporting Rules 6282, 6380A, 6380B, 6622, 7130, 7230A and 7230B to require member firms to report over-the-counter transactions in equity securities to FINRA as soon as practicable, but no later than 10 seconds following execution.  The amendments also apply to trade cancellations as well as stop stock and prior reference price trades.  The amendments will become effective on November 4.  FINRA NoticeFINRA Amendments.

Rating Agency Developments

On December 7, Fitch revised surveillance criteria for rating CDOs exposed to corporate debt. Fitch Release.

On December 9, S&P published methodology for analyzing rating confirmation requests for amendments to CDO documents which would allow subsidiary SPEs to be formed to hold equity securities received as part of a workout. S&P Release.

On December 10, S&P announced that it will no longer rate obligations with variable principal payments linked to commodity prices, equity prices, or indices linked to either commodity or equity prices. S&P Release.

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