Securities Law Prof Blog

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

Tuesday, August 30, 2011

Former Beazer CFO Agrees to Give Up Bonus Compensation

The SEC announced a settlement with James O'Leary, the former chief financial officer of Beazer Homes USA, to recover his bonus compensation and stock sale profits from the period when the Atlanta-based homebuilder was committing accounting fraud.  According to the SEC’s complaint, O’Leary is not personally charged with misconduct, but is required under Section 304 of the Sarbanes-Oxley Act to reimburse Beazer more than $1.4 million that he got after Beazer filed fraudulent financial statements during fiscal year 2006.

Without admitting or denying the SEC’s allegations, O’Leary agreed to reimburse Beazer $1,431,022 in cash within 30 days of entry of the court order approving the settlement. This amount includes O’Leary’s entire fiscal year 2006 incentive bonus: $1,024,764 in cash incentive compensation and $131,733 previously received from Beazer in exchange for all restricted stock units he received as additional incentive compensation for fiscal year 2006. The settlement amount also includes $274,525 in stock sale profits. The SEC’s settlement with O’Leary is subject to court approval.

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Yay! Fantastic. I so hope the SEC starts doing this more consistently. The CFO made $1.4 million during a year when the company was committing accounting fraud? You've got to be kidding me. At a minimum, he should at least give the money back to the company, which is exactly what this rule requires, and exactly what the SEC made him do.

Although it's sort of a sad state of affairs when we jump up and down with glee on the rare occasions when the SEC and DOJ actually enforce our securities laws...

Posted by: James | Aug 30, 2011 6:21:17 PM

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