Revenue Recognition

SEC Claws Back $500G from Two Silicon Valley CFOs

Under the “clawback” provision of the Sarbanes-Oxley Act, executives can return to the company and its shareholders money earned during a fraud.
David KatzFebruary 10, 2015
SEC Claws Back $500G from Two Silicon Valley CFOs

The Securities and Exchange Commission  revealed on Tuesday that it will claw back nearly $500,00 in bonuses and stock sale profits two former finance chiefs received while their Silicon Valley software company was committing accounting fraud.

sec logo According to the SEC’s settled administrative order, William Slater and Peter E. Williams III received about $337,000 and $142,000 respectively during a period when Saba Software, a talent management technology firm “presented materially false and misleading financial statements.”

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Although they weren’t personally charged in connection with the company’s misconduct, Slater and Williams are still required under the Sarbanes-Oxley Act to reimburse the company for bonuses and stock sale profits they received while the fraud occurred.  Saba had overstated its pre-tax earnings and materially misstated its revenue recognition practices while Slater was CFO from December 2008 to October 2011 and Williams served as finance chief from October 2011 to January 2012.

Under the “clawback” provision of the Sarbanes-Oxley Act, executives can be compelled to return to the company and its shareholders certain money they earned while their company was misleading investors.

In 2014, the SEC charged Saba Software and two other former executives responsible for the accounting fraud, which involved the falsification of timesheets to meet quarterly financial targets.  As part of that settlement, the commission reached a settlement with the former CEO to reimburse the company $2.5 million in bonuses and stock profits that he received while the accounting fraud was occurring. He also wasn’t charged with misconduct.