October 29, 2009
A Pushback in the SEC’s Section 304 Clawback Case
– Broc Romanek, CompensationStandards.com
As could be expected given the nebulous wording in Section 304 of Sarbanes-Oxley, former CEO of CSK Auto Corp. has filed a motion to dismiss in the clawback case that the SEC brought against him a few months ago (I also recommend John Kelsh’s article in “The Business Lawyer” cited in the brief). Here is the SEC’s complaint.
As I blogged back then, this is one of the first times the SEC has used Section 304 – and it’s the first one where the “clawee” isn’t alleged to have violated the securities laws. The motion to dismiss asserts that the SEC’s complaint fails to allege any causal connection between CSK’s accounting restatements and the bonus payments and stock proceeds the SEC seeks to have forfeited – and that the SEC’s interpretation of Section 304 has constitutional defects.