The SEC has asked a federal court in Arizona to order the former CEO of CSK Auto Corporation to reimburse the company and its shareholders more than $4 million. The SEC alleges that the CEO, Maynard L. Jenkins, received the money in bonuses and stock sale profits while CSK was committing accounting fraud. According to the SEC, its action against Jenkins charging him with violations of the Sarbanes-Oxley Act

is the first action seeking reimbursement under the SOX "clawback" provision (Section 304) from an individual who is not alleged to have otherwise violated the securities laws. The SOX "clawback" provision deprives corporate executives of money that they earned while their companies were misleading investors.

Section 304 of SOX ("Forfeiture of Certain Bonuses and Profits") provides that

If an issuer is required to prepare an accounting restatement due to the material noncompliance of the issuer, as a result of misconduct, with any financial reporting requirement under the securities laws, the chief executive officer and chief financial officer of the issuer shall reimburse the issuer for

1. any bonus or other incentive-based or equity-based compensation received by that person from the issuer during the 12-month period following the first public issuance or filing with the Commission (whichever first occurs) of the financial document embodying such financial reporting requirement; and

2. any profits realized from the sale of securities of the issuer during that 12-month period.

According to the SEC's complaint, CSK filed two restatements related to its overstated vendor allowances while Jenkins served as CEO. The SEC alleges that in violation of Section 304, Jenkins failed to reimburse CSK for bonuses, or other incentive-based or equity-based compensation, and profits from the sale of CSK stock he received during the 12-month periods following the filing of each of CSK's fraudulent financial statements. Notably, the SEC's complaint does not allege that Jenkins engaged in the fraudulent conduct.