Court Rules Settlement Provision Releasing and Indemnifying Former CEO and CFO Against Liability Under Section 304 Violates Act

Earlier today, the US Court of Appeals for the Second Circuit joined the Ninth Circuit and the Court of Appeals for the District of Columbia in holding that there is no private right of action under Section 304 of the Sarbanes-Oxley Act. The Second Circuit also held that the district court erred by approving the settlement of shareholder litigation brought against a company and a number of its former officers and directors because the settlement agreement impermissibly released and indemnified the former Chief Executive Officer and Chief Financial Officer against all liability arising under Section 304 of the act.

The full opinion by the Second Circuit may be read by clicking here.