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Sarbanes-Oxley Does Not Authorize Private Claims For Alleged Excessive Exec Compensation

In the first-of-its-kind ruling, Sarbanes-Oxley was interpreted yesterday not to authorize suits for the return of what some perceive as excessive executive compensation.  A court in Pennsylvania ruled that Ronald Jeffrey Neer could not sue Stonepath, Inc. to seek the return of an untold amount paid to the executives of the company.

It was a relatively easy ruling, according to the judge:  "Because Congress explicitly created a private right of action in Section 306 and did not do so in Section 304, the natural inference is that Congress did not intend to create a private right of action in Section 304," Judge Dalzell wrote.  Section 306, as enacted by Congress, allows investors to sue directors or executives if they buy or sell their company stock during a pension-fund blackout.  Section 304, on the other hand, prevents excessive executive compensation, but apparently only the U.S. Attorney General has the right to make claims under that section. 

Stonepath also succeeded in dismissing Neer's other claims.  Neer can still appeal.

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Printer friendly page Permalink Email to a friend Posted by J. Craig Williams on Saturday, October 15, 2005 at 15:05 Comments Closed (0) |
 
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