---
kind: "section"
citation: "15 U.S.C. § 78j–4"
title: "15"
title_heading: "Commerce and Trade"
number: "78j–4"
heading: "Recovery of erroneously awarded compensation policy"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/15/78j-4"
units:
  - "Chapter 2B — Securities Exchanges"
---

# §78j–4. Recovery of erroneously awarded compensation policy

- (a) **Listing standards—** The [Commission](/usc/15/78c.md?p=a-15) shall, by rule, direct the national [securities](/usc/15/78c.md?p=a-10) [exchanges](/usc/15/78c.md?p=a-1) and national [securities](/usc/15/78c.md?p=a-10) associations to prohibit the listing of any [security](/usc/15/78c.md?p=a-10) of an [issuer](/usc/15/78c.md?p=a-8) that does not comply with the requirements of this section.
- (b) **Recovery of funds—** The rules of the [Commission](/usc/15/78c.md?p=a-15) under [subsection (a)](#a) shall require each [issuer](/usc/15/78c.md?p=a-8) to develop and implement a policy providing—
  - (1) for disclosure of the policy of the [issuer](/usc/15/78c.md?p=a-8) on incentive-based compensation that is based on financial information required to be reported under the [securities laws](/usc/15/78c.md?p=a-47); and
  - (2) that, in the event that the [issuer](/usc/15/78c.md?p=a-8) is required to prepare an accounting restatement due to the material noncompliance of the [issuer](/usc/15/78c.md?p=a-8) with any financial reporting requirement under the [securities laws](/usc/15/78c.md?p=a-47), the [issuer](/usc/15/78c.md?p=a-8) will recover from any current or former executive officer of the [issuer](/usc/15/78c.md?p=a-8) who received incentive-based compensation (including stock options awarded as compensation) during the 3-year period preceding the date on which the [issuer](/usc/15/78c.md?p=a-8) is required to prepare an accounting restatement, based on the erroneous data, in[^1] excess of what would have been paid to the executive officer under the accounting restatement.

## Footnotes

[^1]: So in original. Probably should be “compensation in”.

## Source credit

(June 6, 1934, ch. 404, title I, § 10D, as added Pub. L. 111–203, title IX, § 954, July 21, 2010, 124 Stat. 1904.)

## Notes

### Statutory Notes and Related Subsidiaries

### Effective Date

Section effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as a note under section 5301 of Title 12, Banks and Banking.