U.S. securities regulators issued a proposal in March to curb bonuses at brokerage and investment advisory firms.
The Securities and Exchange Commission voted 3-2 to issue for comment a plan for the wealth management industry that is substantially similar to one proposed by the Federal Deposit Insurance Corp in April for banks.
The measures, required by last year’s Dodd-Frank financial law, are aimed at reducing incentives for executives and other top employees to take excessive risks. They require more disclosure of pay plans and in some cases deferral of bonus money to later years.
The proposed rule “would require the reporting of incentive-based compensation arrangements by a covered financial institution and prohibit incentive-based compensation arrangements at a covered financial institution that provide excessive compensation or 
that could expose the institution to inappropriate risks that could lead to material financial loss.”
Some SEC members were concerned by how the agency’s pay proposal would affect the largest brokerage firms and financial advisory companies, which would include units of large banks such as Morgan Stanley and Bank of America, although the SEC did not elaborate on which particular companies might be impacted.
The proposal was passed over the objections of Republicans on the panel and even some doubts expressed by Chairman Mary Schapiro: “This is an area where we want to be very attuned to unintended consequences,” she said.
The final plan awaits approval by the Office of the Comptroller of the Currency, Treasury (OCC); Board of Governors of the Federal Reserve System (Board); Federal Deposit Insurance Corporation (FDIC); Office of Thrift Supervision, Treasury (OTS); National Credit Union Administration (NCUA); U.S. Securities and Exchange Commission (SEC); and Federal Housing Finance Agency (FHFA).
Phil Robertson, Editor
