The SEC settled an enforcement action in which a CEO agreed to a "clawback" of prior compensation and stock sale profits pursuant to Section 304 of the Sarbanes-Oxley Act. Under Section 304, a CEO or CFO must forfeit incentive-based compensation to the issuer when a financial restatement occurs as a result of misconduct. This settlement represents the second time the SEC has obtained "clawback" relief without any evidence that the CEO in question had personally engaged in any misconduct. The SEC's view is that issuer misconduct by itself is sufficient to support a claim for "clawback" relief.
SEC v. McCarthy, No. 1:11-CV-667-CAP (N.D. Ga. March 3, 2011)