Section 304 of the Sarbanes-Oxley act gives the SEC the ability to clawback money that executives "earned" during periods when their companies were misleading investors. It had never been invoked until recently. In July, the SEC decided to go after Maynard Jenkins, the former CEO of CSK Auto. The SEC charges he made more than $4 million in bonuses and stock sales that should have been reimbursed to CSK due to fraudulent activity at the company. That was the first time they invoked section 304 for a clawback.

Just recently, another case has arisen. The SEC is attempting to force Ian McCarthy, the CEO to give up some money earned in 1998-2006 and for a few later quarters; the firm restated earnings after reporting internal controls weaknesses. In neither case was the CEO accused of any wrongdoing.  This robust use of section 304 certainly seems to fit with the regulatory tenor of the times. One could argue that these men do not deserve massive paychecks if they were based on a false sense of prosperity. The executives' best bet would be to settle by agreeing to give up some but perhaps not all of what will be painted as ill-gotten gains, it's dicey PR territory to be sure. 

For more:
- here's a Reuters article

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