The former Chief Financial Officer/General Counsel of a technology company settled an enforcement action which included requiring him to pay over $400,000 in disgorgement and interest. The CFO/GC avoided a civil penalty by agreeing to cooperate in a related enforcement action. The SEC charges the CFO/GC with turning a blind eye to inflated financial statements prepared by the CEO to help sell insider shares in secondary market transactions. The CEO recently settled charges by agreeing to pay more than $17 Million. Although the respondent did not have a financial background, the SEC asserts that he knew or should have known that the financial statements were misleading based on internal communications with the CEO and internal accounting professionals.
Corporate executives cannot avoid accountability by claiming that they were just following orders. The SEC has maintained that senior executives have a duty to investors and the markets to stop financial wrongdoing at the companies they steward. Once charged, the SEC will often use its leverage to encourage cooperation in cases against others in the C-Suite.