The Securities and Exchange Commission is returning to debating how to enforce a rule that would allow it to claw back pay from Wall Street leaders who misreport firms’ financial information.

The SEC announced Thursday that it was seeking public feedback for a draft rule that would empower it to retrieve pay given to executives of financial companies that submit erroneous information to regulators.

In the statement, SEC Chairman Gary Gensler expressed his support for the decision, saying that he believes the agency has "an opportunity to strengthen the transparency and quality of corporate financial statements, as well as the accountability of corporate executives to their investors.”

The proposal is not a new one for the SEC, one of the primary federal regulators for the financial industry. Under the 2010 Dodd-Frank Act that emerged in the wake of the Great Recession, the SEC is permitted to penalize companies that misreport financial information by allowing it to “claw back” pay from a range of executives.

The new SEC proposal would expand the range of restatements by companies that would be subject to clawbacks.

To add further teeth to the rule, it would also require stock exchanges to compel listed firms to apply these policies or risk a delisting. The rule would also apply to current and former executives at the company in question.

Successfully instituting a new rule on clawbacks has been a challenge that has bedeviled the SEC in the decade since Dodd-Frank was passed by Congress.

Where applying a rule becomes difficult is the fact that a clear definition of what would be covered as actual pay meant was never set forth in the law.

Under Dodd-Frank, the SEC can require companies to publish tables showing their executives’ actual compensation alongside the company’s financial performance over the previous five years, as measured by stock performance and dividends, as well as the returns of similar companies. However, without clarity, regulators remain uncertain of how some of these incentives fall under their regulations on executive pay.

The SEC and other Wall Street regulators were left to decide for themselves on how to enforce this provision, but the agency has been hobbled by internal disagreements. The last time the SEC discussed the rule in 2015 resulted in a split board vote that may have prevented it from moving any further.

According to experts interviewed by the Wall Street Journal, the new rule may run the risk of discouraging executives from avoiding any restatement of financial information in the first place.

Minor restatements for accounting errors had made up the bulk of reporting, the Journal notes, but those for major ones have become less common in the decade since Dodd-Frank passed. One reason for this has been speculation that executives may be reluctant to initiate a change because they fear having their pay clawed back as a result.

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