Tag: clawback

SEC enforces a clawback for accounting violations

Remember the clawback provision of SOX 304? That provision provides a reimbursement remedy against CEOs and CFOs when the issuer has restated its financial statements as a result of misconduct. Although the provision was enacted in 2002, it wasn’t until 2007 that an executive was successfully hit with a clawback claim (and a big one it was—the executive returned approximately $600 million in cash and options). And since then, SOX 304 hasn’t gotten all that much of a workout. As reflected in this Order, the SEC has just brought settled charges against the former CEO and CFO of WageWorks Inc., alleging that they made false and misleading statements and omissions, including to the company’s outside audit firm, that led to improper revenue recognition and ultimately resulted in a financial restatement. The settlements with both former executives included reimbursement of incentive-based compensation under SOX 304.

Undo Dodd-Frank?

by Cydney Posner With Congress and the Presidency soon in Republican control, look for the Financial CHOICE Act (or perhaps an enhanced version) to be re-introduced in the next Congress.  The bill, sponsored by Jeb Hensarling, Chair of the House Financial Services Committee, was framed as a Republican proposal to […]

Ninth Circuit addresses SOX 304 clawback requirements and liability for Rule 13a-14 false certifications

by Cydney Posner A new case from the 9th Circuit, SEC v. Jensen, is the first circuit court case to confirm the SEC’s position that the “clawback” provisions of SOX 304 provide for a disgorgement remedy against CEOs and CFOs when the issuer has restated its financial statements as a […]

Discussion Draft of the Financial CHOICE Act

by Cydney Posner A discussion draft for the Financial CHOICE Act is now publicly available.  Many of the provisions of interest from a corporate standpoint are in Title  IV—Capital Markets Improvements and Title X—Unleashing Opportunities for Small Business, Innovators, and Job Creators by Facilitating Capital Formation. (It doesn’t exactly unleash […]

Will clawbacks have an unintended consequence?

by Cydney Posner A recent  study, “Why Do Restatements Decrease in a Clawback Environment? An Investigation into Financial Reporting Executives’ Decision-Making during the Restatement Process,” shows that clawbacks may have unintended consequences.  The study, conducted by an academic at Miami University of Ohio and published in The Accounting Review, showed […]

Cooley Alert: SEC Proposes Long-Awaited Compensation Clawback Rule

by Cydney Posner See our Cooley Alert on the SEC’s new rule proposal regarding recovery of erroneously awarded compensation, the so-called clawback rule.  It’s called SEC Proposes Long-Awaited Compensation Clawback Rule.

SEC on the verge of proposal to implement Dodd-Frank clawback provision

by Cydney Posner The WSJ is reporting that the SEC is on the verge (July 1) of proposing clawback rules designed to implement Section 954 of Dodd-Frank, “recovery of erroneously awarded compensation.” Of course, actual implementation could still be a long way off, as the proposal would be subject to […]