Are Corporate Executives Playing Russian Roulette?

Are Corporate Executives Playing Russian Roulette?

SEC v. Jenkins, Case No. CV-09-01510 (D. Ariz. Filed July 22, 2009), discussed here, alleges a violation of Section 304(a) by the defendant CEO. The case raises fundamental questions about the purpose of SOX and the vision of SEC enforcement in its application of the Act. Until Jenkins, the SEC had invoked Section 304 in enforcement actions to obtain disgorgement where the CEO or CFO engaged in misconduct. Jenkins is different. There, the SEC filed an action claiming that Maynard Jenkins, who was the CEO of CSK Auto Corporation, failed to repay his incentive compensation and stock trading profits. Mr. Jenkins was in fact the CEO of the company during a period when there was a massive accounting fraud resulted in a restatement as discussed here. What makes Jenkins different? The SEC acknowledges that Mr. Jenkins did nothing wrong. None of the enforcement actions brought by the SEC and DOJ even suggest that Mr. Jenkins was involved in or responsible for wrong doing. The complaint is simple strict liability: if it happened on the watch of CEO Jenkins, so he must pay.

Read the full article at SEC Actions