By Stephen A. Keen and Andrew P. Cross 

Our last two posts surveyed what Rule 18f-4 and its adopting release (the “Release”) tell us about excluding currency and interest-rate derivatives from the derivatives exposure of a fund seeking to comply with the Limited Derivatives User requirements of Rule 18f-4(c)(4). The Release indicates that

We have published an update on the recent disclosure proposals under Section 14(j) of the Securities Exchange Act of 1934 (the “Exchange Act”).  The update can be accessed here.

In summary, the Securities and Exchange Commission (SEC) recently released long-awaited proposed rules, as mandated by Section 955 of the Dodd-Frank Act, that would require a public company to disclose whether the company permits its employees, officers or directors to purchase financial instruments or otherwise engage in transactions that “hedge” their exposure to risk related to the company’s equity securities that they hold.

This posting augments our update by providing an overview of the different types of hedging transactions referenced in Section 14(j) of the Exchange Act, as well as the SEC’s rule proposal and related preamble, proposed rule and related preamble, Disclosure of Hedging by Employees, Officers and Directors; Proposed Rule, 17 Fed. Reg. 8486 (February 17, 2015) (the “Proposing Release”).  The Proposing Release is available here.

The Use of Financial Instruments for Hedging Purposes

Continue Reading SEC Proposes Dodd-Frank Hedging Policy Disclosures and A Closer Look at Common Hedging Transactions