Since CEOs and CFOs of public companies have been required under Sarbanes-Oxley to sign off on their companies' financial statements, executives have been concerned that they could be held liable for frauds that they don't know about. While few corporate fraud cases have cited those signatures, one case in federal court in Arizona could signal a change. The Securities and Exchange Commission is suing Maynard Jenkins of Scottsdale, retired CEO of Arizona-based auto parts retailer CSK Automotive, seeking to "claw back" more than $4 million in bonuses paid to Jenkins in years in which CSK fraudulently overstated its earnings by manipulation of vendor allowances, false journal entries and "other tricks." (The company admitted to filing false statements and settled in 2009.) The SEC is not alleging Jenkins was involved in or even knew of the fraud, but argues he was "captain of the ship" and certified the company's 10-K filings and restatements, which the SEC claims overstated income by $66 million over three years.

"This is a test case for the SEC," says Daniel Hurson, a private securities law attorney in Washington who served with the SEC. "I think if they succeed in this effort to claw back Jenkins' bonus, then you'll see more of these kinds of cases brought."

Robert Kugel, a senior vice president at Ventana Research, an IT consultancy specializing in SOX compliance, argues that only if the SEC both wins and survives an appeal would such clawback cases take off.

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