The Sarbanes-Oxley Act of 2002 (SOX), enacted in the wake of several high-profile accounting frauds at public companies, implemented a variety of measures designed to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws. Among the reforms adopted by SOX were: (1) a requirement that the chief executive officer (CEO) and chief financial officer (CFO) of each company filing periodic reports under the Securities Exchange Act of 1934 (the Exchange Act) certify the accuracy of the issuer’s financial reports; and (2) a mandate that in the event of “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 CEO and CFO must reimburse the issuer for any incentive- or equity-based compensation they received. In SEC v. Jensen, the U.S. Court of Appeals for the Ninth Circuit recently provided needed guidance on the scope of these distinct requirements, adopting an expansive view of liability for CEOs and CFOs under SOX.1

The Certification Requirement

Promulgated pursuant to SOX Section 302, Exchange Act Rule 13a-14 provides that each report filed on Forms 10-Q, 10-K, 20-F or 40-F must include a certification signed by the issuer’s CEO and CFO, “or persons performing similar functions, at the time of the filing of the report.”

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