How SEC officer and director bars work in the United States
In SEC enforcement cases a federal court can bar a person from serving as an officer or director of a public company, for a set period or permanently.
- Section 21(d)(2) of the Securities Exchange Act lets a court in an SEC action prohibit a person who violated the antifraud rules from serving as an officer or director of a reporting company, "permanently or for such period of time as it shall determine."1
- The test in the statute is whether the person's conduct demonstrates unfitness to serve as an officer or director of such an issuer.1
- Bars can come from settlements in which the defendant consents to a judgment without admitting or denying the SEC's allegations. Theranos founder Elizabeth Holmes agreed to a 10 year bar in 2018 on those terms.2
- Bars are often combined with penalties and injunctions. In 2019 the SEC announced a 10 year bar and a 1 million dollar penalty for Carlos Ghosn and a five year bar for former Nissan director Greg Kelly.3
- Settlements can be split, with the court later setting the length of the bar. In December 2025 the SEC filed proposed final consent judgments with a 10 year bar for Caroline Ellison and 8 year bars for Gary Wang and Nishad Singh.4
- A bar applies to public companies, meaning issuers with securities registered under section 12 or required to report under section 15(d) of the Exchange Act. It is not a general ban on being a director of private companies.1
Sources
- Legal Information Institute, Cornell Law School, 15 U.S. Code 78u, Investigations and actions (Securities Exchange Act section 21)
- US Securities and Exchange Commission, Press Release 2018-41, Theranos, CEO Holmes, and Former President Balwani Charged With Massive Fraud (14 March 2018)
- US Securities and Exchange Commission, Press Release 2019-183, SEC charges Nissan, former CEO and former director with concealing compensation from investors (23 September 2019)
- US Securities and Exchange Commission, Litigation Release No. 26450, SEC Obtains Final Consent Judgments Against Two Former FTX Executives and a Former Alameda Executive (19 December 2025)