Despite controversy over a proposal to reign in the bonuses of Wall Street executives, the Securities and Exchange Commission voted 3-2 to issue for comment a plan to reduce incentives and prohibit institutions from maintaining compensation arrangements that encourage “inappropriate risks.”
The plan is similar to one proposed by the Federal Deposit Insurance Corp last month and stems from the Dodd-Frank Wall Street Reform and Consumer Protection Act. At financial institutions, as well as hedge funds, with total assets of $1 billion or more these firms are required to disclose the structure of their incentive-based compensation arrangements so the regulator can decide whether the bonus is excessive or could lead losses to the firm, the SEC said in meeting notes on Wednesday.
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