SEC Proposes Disclosure Of Stock-Linked Loan Collateral

The Securities and Exchange Commission has proposed requiring the disclosure of how many shares of a company’s stock the five top corporate executives use as collateral to secure personal loans.

The Securities and Exchange Commission has proposed requiring the disclosure of how many shares of a company’s stock the five top corporate executives use as collateral to secure personal loans. The proposal, which is open for comment until mid-March, was made out of concern that the executives may be tempted to manipulate share price if the loan goes bad. “We believe that the existence of these [pledged shares] could be material to stockholders,” the SEC wrote in its proposal, which may have had in mind the alleged activities by WorldCom‘s Bernard Ebbers and Enron Corp.‘s Kenneth Lay, who headed their respective companies at the time of accounting scandals and allegedly used their corporate shares as collateral for loans.