February 24, 2016
Clawbacks: SEC Brings Section 304 Action to Recoup $11k
– Broc Romanek, CompensationStandards.com
Here’s a blog by Steve Quinlivan:
The SEC alleges that Marrone Bio Innovations, Inc. misstated its revenue. The SEC recently brought a settled enforcement action against its former CFO. The SEC alleges the CFO received bonuses during the 12-month periods following the filings containing financial results that MBI was required to restate. The settlement requires the former CFO to reimburse MBI for a total of $11,789 pursuant to Section 304(a) of the Sarbanes-Oxley Act of 2002. The SEC did not allege that the former CFO participated in the misconduct giving rise to the restatement.
Section 304 of SOX requires the chief executive officer or chief financial officer of any issuer required to prepare an accounting restatement due to material noncompliance with the securities laws as a result of misconduct to reimburse the issuer for: (i) any bonus or incentive-based or equity-based compensation received by that person from the issuer during the 12-month periods following the false filings; and (ii) any profits realized from the sale of securities of the issuer during that 12-month periods. According to the SEC, Section 304 does not require that a chief executive officer or chief financial officer engage in misconduct to trigger the reimbursement requirement.
According to the SEC the former CFO violated SOX by not voluntarily tendering a check to MBI. The settlement also orders the former CFO to cease and desist from committing or causing any violations and any future violations of Section 304 of the Sarbanes-Oxley Act. The former CFO did not admit or deny the facts in the SEC order.