Skip to main content

New York Times financial writer Gretchen Morgenson writes on Saturday, 28 December this year, that a bank executive, Daniel T. Poston, former chief financial officer of Fifth Third Bank based in Cincinnati, paid $100,000 in penalties to satisfy an SEC contention that both the bank and Mr. Poston improperly delayed writing down the value of $1.5 billion of nonperforming loans in 2008

Both the bank and Mr. Poston, who became chief strategy and administrative officer at Fifth Third in October, neither admit nor deny the S.E.C.’s allegations.

Unfortunately, the regulatory action did not involve an executive pay clawback under provisions of the Sarbanes-Oxley law. The case illustrates how challenging it is for regulators to pursue such penalties.

SEC filings show that Mr. Poston received incentive pay — stock and option awards — of almost $350,000 the year after the misstatements, the period subject to clawbacks under Section 304 of Sarbanes-Oxley.

There are a multitude of requirements to be met in enforcing this provision: first a restatement of earnings, where a company goes back and adjusts previous results to reflect the accounting errors. These actions must also have been reckless or intentional and, there must be recoverable executive compensation, such as a bonus received or stock sales made within one year.

There is, however, a glimmer of good news -- Don Whalen, director of research at Audit Analytics, thinks Sarbanes-Oxley forced companies to tighten controls over financial reporting, leading to fewer and less severe financial restatements.

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site