IN THE SENATE OF THE UNITED STATES
June 18, 2019
Mr. Reed introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs
To ensure that irresponsible corporate executives, rather than shareholders, pay fines and penalties.
This Act may be cited as the
Corporate Management Accountability Act of 2019.
Fine, penalty, and settlement accountability
In this section—
the term Commission means the Securities and Exchange Commission;
the term covered fine or similar penalty—
means a fine or similar penalty, as that term is defined in Treasury Regulation section 1.162–21(b); and
includes any fine or penalty—
that is paid by a reporting company; and
with respect to which the Commission determines disclosure under subsection (b)(1) is appropriate;
the term issuer has the meaning given the term in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a));
the term named executive officer—
means an individual for whom disclosure is required under section 229.402(a)(3) of title 17, Code of Federal Regulations; and
includes any other employee of a reporting company with respect to whom the Commission determines disclosure under subsection (b)(1) is appropriate; and
the term reporting company means an issuer—
the securities of which are registered under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 78l); or
that is required to file reports under section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(d)).
Requirement To issue rules
Not later than 360 days after the date of enactment of this Act, the Commission shall issue final rules to require each reporting company, in each annual report submitted under section 13 or section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m and 78o(d)), or in each proxy statement filed pursuant to section 14(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78n(a)) for an annual meeting of shareholders, to—
disclose whether the reporting company, in order to align the incentives of those managing the reporting company with the incentives of the shareholders of the reporting company, has established procedures to recoup from compensation paid to, and to withhold from future compensation paid to, any named executive officer all or a portion of the cost of any covered fine or similar penalty that has been paid by the reporting company;
if the reporting company has established procedures described in paragraph (1)—
provide a description of those procedures; and
disclose the amount that the reporting company has recouped from each named executive officer under those procedures during each of the 3 most recent fiscal years; and
if the reporting company has not established procedures described in paragraph (1), provide an explanation of why no such procedures are necessary for the benefit of the shareholders of the reporting company.