I wrote at MarketWatch about the SEC’s proposed Dodd-Frank clawback rule.
“If accounting errors were felonies in California, Fannie Mae would already be serving life under Three Strikes.” That’s what GoingConcern.com said. See what I told TheStreet.com about Fannie Mae’s latest multi-billion dollar “adjustments”.
The Sarbanes-Oxley Act of 2002 and Dodd-Frank’s clawback provision both require a restatement. The restatement of financial results to correct material errors – whether those errors occurred by default or by design – is a necessary condition for enforcing both the Sarbanes-Oxley Section 304 provision and the new Dodd-Frank law.
Leaders of public companies, like policemen or firemen that do a job for money, also sign up for a public duty. As stewards of a public company, the CEO and CFO’s job is not a reward for years of service, an entitlement after achieving career objectives but a responsibility and honor that should be earned every day by setting an example for all those who work under them. The auditors serve the role of independent watchdog, guardian of shareholders’ interests in the capital markets. Their relationship to management should be adversarial – not friendly, cozy and comfortable.
Picture Source Well, this was news to me. I have written before about incentive compensation and the crime of giving executives bonuses based on targets they set and numbers they have the power to manipulate. So I am excited, tickled pink and delirious over the possibility that the SEC may start to enforce this provision. […]