Securities Litigation Update - SEC v. Jenkins: SOX 304 Clawback Requires Innocent CEOs and CFOs to Return Incentive-Based Compensation

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In a case of first impression, the United States District Court for the District of Arizona recently ruled that Section 304 of the Sarbanes-Oxley Act of 2002 (“SOX”), the so-called “Clawback Provision,” does not require personal misconduct by a company’s CEO or CFO to trigger reimbursement obligations after an accounting restatement. Rather, a restatement caused by the misconduct of any officer, agent or employee acting within the scope of his or her employment is sufficient to require the CEO or CFO to disgorge funds under Section 304.

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Published In: Antitrust & Trade Regulation Updates, Business Organization Updates, Civil Remedies Updates, Securities Updates

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.

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