On May 6, 2016 the Securities and Exchange Commission (“SEC”) joined the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency and the National Credit Union Administration in approving substantially identical proposed rules pursuant to Section 956 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Proposed Rule”). The Proposed Rule imposes significant restrictions on incentive-based compensation arrangements at large financial institutions. The SEC’s version of the Proposed Rule, which differs significantly from the original rule as proposed in 2011, applies specifically to investment advisers and broker-dealers.

This memorandum focuses on how the Proposed Rule will affect investment advisers. For a more general discussion of the Proposed Rule, please see the May 12, 2016 Davis Polk Visual Memorandum, “Incentive Compensation for Financial Institutions: Reproposal .”

If you have any questions regarding the matters covered in this publication, please reach out to any of the lawyers listed below or your usual Davis Polk contact.

This communication, which we believe may be of interest to our clients and friends of the firm, is for general information only. It is not a full analysis of the matters presented and should not be relied upon as legal advice. This may be considered attorney advertising in some jurisdictions. Please refer to the firm's privacy notice for further details.

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