October 16, 2019

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October 14, 2019

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SEC's Final Rule for Disclosure of Hedging Policies Approved

The Securities and Exchange Commission recently approved final rules to require disclosure of hedging practices, implementing a Dodd-Frank Act mandate.  New Item 407(i) of Regulation S-K requires a company to describe in its proxy statement any employee or director hedging practices or policies or to state that it does not have any such policies.

Issuers (including emerging growth companies and smaller reporting companies) must include the required disclosure in proxy or information statements for the election of directors during fiscal years beginning on or after July 1, 2019.

We note that new Item 407(i) does not mandate the adoption of hedging policies or otherwise prohibit hedging transactions.  Additionally, the rule does not define the term “hedge,” and the adopting release makes clear that the term should be applied broadly.  The rule requires a fair and accurate summary of the applicable practices and policies, including the categories of persons they affect and any categories of hedging transactions that are specifically permitted or specifically disallowed.

The full text of the Commission’s adopting release and guidance is available here.

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About this Author

Troy L. Harder, Bracewell, SEC Representation Lawyer, Finance, Capital Markets Attorney

Troy Harder advises clients in all aspects of corporate and securities law, with an emphasis on corporate finance transactions. He has experience representing both issuers and investment banks in a wide range of capital markets transactions, including initial public offerings, public and private offerings of debt and equity securities, tender offers, consent solicitations and exchange offers. He also counsels clients in connection with SEC reporting and corporate governance and compliance matters, including insider reporting and compliance with the rules of the New York...


Tyler Lohse represents clients in general corporate matters, including private and public offerings of debt and equity securities and other capital markets transactions, as well as reporting and compliance obligations. He also provides advice in mergers and acquisitions, such as stock and asset purchases and sales, private equity investments, and joint ventures.

Prior to joining Bracewell, Tyler served as an honors extern to the Asset Management Unit in the Enforcement Division of the U.S. Securities and Exchange Commission in New York City.