By Deborah Meshulam, Grayson Stratton
In a case of first impression, a federal district court has endorsed the SEC’s interpretation of the clawback provision (Section 304) of the Sarbanes-Oxley Act (SOX) and held that the SEC can seek to clawback incentive-based compensation awarded to the CEO or CFO of a public company that restates its financial statements even when that CEO or CFO is not alleged to be involved in any misconduct associated with the restatement.