us securities and exchange commission sec chair gary gensler testifies before a senate banking housing and urban affairs committee oversight hearing on the sec on capitol hill in washington september 14 2021 the securities and exchange commission on thursday said it is reigniting efforts to crack down on wall street bonuses when companies report incorrect financial information wall streets top regulator announced that it will renew attempts to draft rules that would claw back executive pay as part of longstalled regulations made mandatory under the historic doddfrank act wall street executives are often paid based on how their company performs on key business metrics including net sales subscriber growth vehicle shipments or earnings per share occasionally however the numbers the companies reported as the basis of that compensation arent accurate sec chairman gary gensler said in statement in these cases companies may have to go back and revise or restate prior financial reporting as a result an executive may have been paid for meeting certain milestones that the company didnt in fact hit us companies have for decades awarded longterm cash and stock incentives to ceos that may not pay out for years those incentives are designed to keep executives focused on growing the business from year to year with the promise of a big windfall down the road annual bonuses however arent usually deferred and are often doled out in cash early in the new year the size of those bonuses fluctuates based on the financial figures a companys ceo or chief financial officer report to the sec as part of their quarterly earnings reports currently when the sec finds errors on a companys statements corporate boards decide whether to punish the companys top brass by reclaiming some of their compensation the 2010 doddfrank act charged the sec with drafting new rules that would strip a boards jurisdiction in such cases in aftermath of the 2008 financial crisis the sec first published its proposed changes in 2015 a collection of penalties that would force companies to penalize accounting errors by clawing back pay from a broader collection of executives that proposal has teeth failure to do so could cost a company its stock listing regulators hoped the steep repercussions would discourage fraud and excessive risk taking now after another multiyear delay the sec is picking up where it left off and is seeking public input on those rules for 30 days the regulator could move forward with the proposed rule changes following the comment period but it did not provide a timeline for finishing the longdelayed rules i support todays action to reopen comment on the doddfrank act rule regarding clawbacks of incentivebased executive compensation gensler added in a press release i believe we have an opportunity to strengthen the transparency and quality of corporate financial statements as well as the accountability of corporate executives to their investors the vast majority of sp 500 companies already have clawback provisions in place according to institutional shareholder services which advises companies on governance policies the sec one of several government agencies that would have to sign off on the rule changes did not respond to cnbcs questions about a prospective timeline or input its received from fellow financial regulators