On February 9, 2015, the U.S. Securities and Exchange Commission (SEC) issued a proposed rule that, if adopted, would require public companies to disclose in annual proxy statements whether their employees and board members may hedge or otherwise offset any decrease in the market value of such companies’ equity securities. The proposed rule implements Section 955 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and covers a much broader range of transactions than hedging policies adopted at most public companies. The proposed rule would not require a public company to prohibit hedging type transactions.

It is appropriate for issuers at this time to consider the extent to which the scope of their existing hedging policies differs from the proposed rule. The SEC has solicited comments on the proposed rule prior to April 14, 2015. Specific areas that are requested for comment may be found in an appendix at the end of this On the Subject.