The U.S. Court of Appeals for the Ninth Circuit held today that the Sarbanes-Oxley Act’s disgorgement provision – which requires disgorgement of certain CEO and CFO compensation when an issuer restates its financial statements “as a result of misconduct” – applies even if the CEO and CFO were not personally involved in the misconduct. Although several district courts had previously reached that conclusion, the Ninth Circuit’s decision in SEC v. Jensen appears to be the first appellate ruling on the issue.

The Ninth Circuit also held in Jensen that the SEC’s Rule 13a-14 – which requires CEOs and CFOs to certify the accuracy of the issuer’s financial statements – provides the SEC with a right of action against officers who certify false or misleading financial statements.