Only SEC Can Seek CEO Bonuses Under Sarbanes-Oxley, Federal Court Rules

Law360, New York (October 3, 2005, 12:00 AM EDT) -- Only the Securities and Exchange Commission can take legal aim at bonuses received by corporate executives when an accounting scandal leads to a restatement of earnings, according to a much-watched interpretation of the Sarbanes-Oxley Act.

The decision stems from an October 2004 shareholder derivative action brought against Pennsylvania-based logistics management company Stonepath Group Inc. and its top management. The suit cited provision 304 of the Act to force the defendants to turn over their bonuses.

Section 304 requires, upon finding of liability, that a company’s chief...
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