Business Law

Michael Baker and Michael Gluk were the CEO and CFO of ArthroCare Corporation, a public company. Due to fraud committed by two senior vice presidents of ArthroCare, John Raffle and David Applegate, ArthoCare misstated its earnings in various SEC filings from $2006$ to $2008.$ Pursuant to the Sarbanes$$Oxley Act and acting on behalf of ArthroCare, the SEC sought recovery from Baker and Gluk in the amount of cash bonuses, incentives, and equity$-$based compensation that Baker and Gluk earned during the affected periods. The SEC argued that Baker and Gluk were liable because they were the CEO and CFO at the time and thus signed the filings that required restatements. Baker and Gluk argued that they did not commit any conscious wrongdoing and did not themselves commit any violation of securities law. Did the trial court agree not to require Baker and Gluk to disgorge their compensation?