US securities regulators issued a proposal yesterday to curb bonuses at brokerage and investment advisory firms over the objections of Republicans on the panel and even some doubts expressed by chairman Mary Schapiro.
The Securities and Exchange Commission (SEC) 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 last month 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 schemes and in some cases deferral of bonus money to later years.
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.
The plan would also likely hit some advisers of large hedge funds as well, although the SEC did not elaborate on which particular companies might be impacted.