The standard view of the Biden Administration SEC under the leadership of Gary Gensler is that the agency will take a more active enforcement approach than was the case during the prior administration. Two developments in the past few days certainly support this standard view. First, in a speech last week, new SEC Enforcement Division Director Gurbir Grewal indicated that the agency will be requiring admissions of wrongdoing in some enforcement settlements. Second, in a statement the next day, SEC Chair Gensler announced that the agency would revitalize the rulemaking process with respect to rules regarding clawbacks of erroneously awarded compensation. As discussed below, these moves evidence a more aggressive approach to the enforcement of the securities laws. The text of Grewal’s October 13, 2021 speech can be found here. Gensler’s October 14, 2021 statement about the compensation clawback rules can be found here.
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Thinking About McDonald’s Lawsuit Against its Former CEO
The news that McDonald’s had filed a lawsuit against its former CEO, Stephen Easterbrook, to recoup severance compensation the company had paid Easterbrook, made the front page of the Wall Street Journal. The company contends that Easterbrook had only been terminated last November “without cause” – entitling him to a full severance package – because he had lied to investigators about the nature and extent of his relationship with company employees. The lawsuit contends — based on evidence of three additional sexual relationships Easterbrook had with company employees that only came to light this summer — that Easterbrook should have been terminated for cause. As discussed below, the lawsuit raises a number of interesting issues. A copy of the company’s August 10, 2020 filing on Form 8-K about the lawsuit can be found here, and a copy of the complaint, which was attached to the 8-K, can be found here.
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