Lawyers Ask Federal Court to Strike Down Sarbanes Oxley 304 Clawbacks as Applied to Innocent Executive

more+
less-

On July 13, 2012, two defendants in an SEC enforcement action moved to dismiss the SEC's complaint, in part on the grounds that Section 304 of SOX was unconstitutional as applied to them. According to the complaint, the SEC sued the two defendants for not reimbursing their company for compensation they received after two separate employees engaged in a scheme that caused the company to issue inaccurate financial reports. Importantly, the SEC did not allege that either of the two defendants participated in, or even knew about, the underlying misconduct that caused the inaccurate financial reporting. Section 304 of SOX allows the SEC to require reimbursement when a material noncompliance with financial reporting requirements is "result of misconduct," but the statute does not specify whose misconduct, or what kind of misconduct triggers the reimbursement obligation.

 

Written by:

Published In:

SEC

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Holland & Knight LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.
×
Loading...
×
×