Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Thursday, July 21, 2011

SEC Rejects Enforcement's Proposed Settlement of Clawback Case

The Washington Post reports that the SEC Commissioners rejected a proposed settlement negotiated by its enforcement division that would have resolved an enforcement action brought against Maynard Jenkins, the former CEO of CSK Auto, in 2009 to claw back about $4 million received by Jenkins during the period when its financial statements misstated the company's profitability.  The enforcement action occasioned some publicity because it is the first time the SEC has sought to claw back compensation from an executive who is not personally accused of wrongdoing.  (SOX 304 requires executives to return to their company bonus-based compensation if the company subsequently has to restate its financials, without a finding of wrongdoing on the part of the CEO.)  The enforcement division reportedly recommended a settlement for less than half the amount originally demanded.  WPost, SEC rejects proposal by its enforcement staff to settle landmark ‘clawback’ suit

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