Sweeping Federal Financial Reform Act Enacted: What the Dodd-Frank Wall Street Reform and Consumer Protection Act Means for Public Companies.

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Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

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Sweeping Federal Financial Reform Act Enacted: What the Dodd-Frank Wall Street Reform and Consumer Protection Act Means for Public Companies.

Corporate and Securities Update

On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act"). The Act provides the most sweeping overhaul of the regulation of the U.S. financial services industry and financial markets since the aftermath of the Great Depression. The Act represents Congress' attempt to address the myriad of issues arising out of the financial crisis and marks the conclusion of over a year's effort to craft a legislative solution designed to avoid another financial crisis. The legislation requires an overhaul of the regulatory landscape and establishes a new regulatory scheme to govern certain public companies, banks, insurance companies, hedge funds, as well as other companies in the financial services industry.

The new legislation is designed to address systemic risk in the U. S. financial system and remediate the "too big to fail" issues which required government bailouts of several large financial services companies during the financial crisis. The legislation also implements new corporate governance and disclosure requirements applicable to public companies, increases the regulatory requirements applicable to banks, insurance companies and hedge funds and subjects certain large financial services companies to regulation by the Federal Reserve Board (the "FRB").

The new legislation adds several new corporate governance and disclosure requirements applicable to companies listed on U.S. stock exchanges and in some instances, other publicly-traded companies, including:

a requirement for having a non-binding shareholder vote on compensation of specified executive officers and in certain instances golden parachute provisions;

a requirement for more stringent rules and disclosure applicable to compensation committees;

a requirements for additional disclosure requirements related to executive compensation;

the elimination of discre...

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