The D&O Diary

The D&O Diary

A PERIODIC JOURNAL CONTAINING ITEMS OF INTEREST FROM THE WORLD OF DIRECTORS & OFFICERS LIABILITY, WITH OCCASIONAL COMMENTARY

Tag Archives: Sarbanes Oxley Act

Looking at the Costs and Benefits of SOX

Posted in SOX (Generally)
The Sarbanes Oxley Act was enacted nearly twelve years ago in the midst of profusion of corporate scandals. Despite the passage of time, the Act has remained controversial. In order to evaluate the Act’s impact, Harvard Law Professor John C. Coates and Harvard Business School Professor Suraj Srinivasan undertook to review over 120 studies of … Continue Reading

District Court Affirms SEC’s SOX Section 304 Right to Recoup Bonus Compensation from Executives of Companies Restating Financials

Posted in Securities Litigation
In a November 13, 2012 opinion (here), Western District of Texas Judge Sam Sparks has upheld the right of the SEC under Section 304 of Sarbanes Oxley to seek to clawback bonus compensation paid to the CEO and CFO of Arthrocare, after the company restated its prior financial statements., even though the CEO and CFO … Continue Reading

The Word is “Whistleblower”

Posted in SOX Whistleblower
A number of different organizations  generate annual publicity for themselves by designating a word (or words) of the year. We are not yet half way through 2011 but I am already prepared to propose my own candidate for this year’s word of the year – the word is “whistleblower.” From the provisions of the Dodd-Frank Act … Continue Reading

Supreme Court Rules PCAOB Removal Provisions Unconstitutional, Upholds SOX

Posted in PCAOB, SOX (Generally)
In a June 28, 2010 decision (here), the Supreme Court issued its opinion in Free Enterprise Fund v. Public Company Accounting Oversight Board case. This case had been widely followed because the petitioners challenged the constitutionality of the Sarbanes-Oxley Act and of the Public Company Accounting Oversight Board (PCAOB).   The petitioners prevailed before the … Continue Reading

Sarbanes-Oxley Act Clawbacks and D&O Insurance

Posted in D & O Insurance
The SEC has made it clear that it intends to use Section 304 of the Sarbanes-Oxley Act to "clawback" compensation from CEOs and CFOs of companies that restate their financial statements, even if the individuals are not alleged to have engaged in any wrongdoing. A recent district court opinion confirms that the statute gives the … Continue Reading

Restatements Decline – Again

Posted in Corporate Governance
Both the number of restatements and the number of companies reporting restatements are declining according to a new study. The number of restatements has been declining for three years now, and the number has declined materially since the figures peaked in 2006, both because of better controls and changing standards.     The study, by … Continue Reading

Restatements, Clawbacks and CFO Career Consequences

Posted in Corporate Governance, Executive Compensation
If the facts don’t fit, you must remit. That seems to be the view of an increasing number of companies, as they have adopted provisions requiring repayment of executive compensation found to have been based on incorrect financial statements. The concept of compensation clawbacks was actually built into the Sarbanes Oxley Act. Section 304 requires … Continue Reading