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SEC-RPT-Panel

UNITED STATES OF AMERICA
 
before the 
SECURITIES AND EXCHANGE COMMISSION
 
SECURITIES EXCHANGE ACT OF 1934 
Rel. No. 66260 / January 26, 2012 
ACCOUNTING AND AUDITING ENFORCEMENT 
Rel. No. 3357 / January 26, 2012 
Admin. Proc. File No. 3-14629 
In the Matter of ORDER DENYING A 
STAY OR POSTPONEMENT OF 
PAUL FREE, CPA PROCEEDINGS 
On November 16, 2011, we issued an order instituting proceedings ("OIP") against Paul 
Free, a certified public accountant and former Controller and Chief Accounting Officer of Delphi 
Corporation from 1998 through 2002, pursuant to Commission Rule of Practice 102(e)(3)(i),
1 
that temporarily suspended him from appearing or practicing before the Commission as an 
1 Rule of Practice 102(e)(3)(i), 17 C.F.R. § 201.102(e)(3)(i), provides, in pertinent 
part, that: 
(i) The Commission, with due regard to the public interest and without preliminary 
hearing, may, by order, temporarily suspend from appearing or practicing before it any . . . 
accountant . . . who has been by name: 
(A)  permanently enjoined by any court of competent jurisdiction, by reason of his 
or her misconduct in an action brought by the Commission, from violating or 
aiding and abetting the violation of any provision of the Federal securities laws or 
of the rules and regulations thereunder; or 
(B)  found by any court of competent jurisdiction in an action brought by the 
Commission to which he or she is a party or found by the Commission in any 
administrative proceeding to which he or she is a party to have violated (unless the 
violation was found not to have been willful) or aided and abetted the violation of 
any provision of the Federal securities laws or of the rules and regulations 
thereunder. 
 
2
 
accountant.2   The OIP finds that Free was enjoined on October 31, 2011 by the United States 
District Court for the Eastern District of Michigan from violating and/or aiding and abetting 
violations of Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 13(b)(5) of the Securities 
Exchange Act of 1934 and Rules 10b-5, 12b-20, 13a-1, 13a-13, 13b2-1, and 13b2-2 thereunder.
3 
The underlying complaint alleged that Free, while Delphi's Controller and Chief Accounting 
Officer, engaged in conduct that resulted in the Company materially misstating its financial 
condition and operating results in filings with the Commission, in offering documents, and in 
other statements to investors.  The complaint alleged, for example, that Free, among others, was 
responsible for Delphi having improperly accounted for and disclosed a payment that it made to 
its former parent company, pursuant to a settlement agreement.   
On December 15, 2011, following our issuance of the OIP, Free filed a document titled, 
"Motion Pursuant to Rule 401 of the Commission's Rules of Practice for Stay of Rule 102(e) 
Proceedings."  In his motion, Free states that the time for him to appeal the district court's 
judgment has not yet run.  He asserts that he will be entitled to reinstatement to appear and 
practice before the Commission upon appropriate application to the Commission under Rule 
102(e)(5) if he is successful in an appeal of that judgment.  Free believes that "[i]t would be an 
inefficient use of both the Commission's and [his] resources for [him] to petition the Commission 
now to lift or limit his suspension, and to do so again after the conclusion of an appeal."  Free 
therefore requests, pursuant to Rule 401, that "the 102(e) proceedings against him be stayed 
pending the outcome of any appeal that he may file." 
The Division of Enforcement opposes the motion.  The Division asserts that "such a stay 
would significantly delay the outcome of these proceedings," and Free "fails to show that denial 
of his motion would substantially prejudice his case."  The Division states that, should Free 
appeal the district court judgment, a resolution may not occur for one to two years and that a 
delay of the Rule 102(e) proceedings here would be significant and "would not serve the public 
interest." 
Rule 401(c) permits motions for stays by persons aggrieved by a Commission order "who 
would be entitled to review in a federal court of appeals."
4   However, Rule 401(c) is inapplicable 
2 Paul Free, CPA, Securities Exchange Act Rel. No. 65759 (Nov. 16, 2011), 
http://www.sec.gov/litigation/admin/2011/34-65759.pdf. 
3 Free, http://www.sec.gov/litigation/admin/2011/34-65759.pdf, at 2. 
4 17 C.F.R. § 201.401(c). 
 
  
3
 
here because the Commission has not yet entered a final order, reviewable by an appellate court, 
that we could consider staying.5 
Although Rule 401 is inapplicable, we will consider Free's motion as a request for an 
extension of time, postponement, or adjournment under Rule 161.6   That rule provides that "the 
Commission, at any time, . . . may, for good cause shown . . . postpone or adjourn any hearing" 
so long as any such postponement or adjournment meets certain requirements.
7 When deciding 
whether to grant such a motion, we "adhere to a policy of strongly disfavoring such requests, 
except in circumstances where the requesting party makes a strong showing that the denial of the 
request or motion would substantially prejudice" his or her case.
8   We find that Free has not made 
the requisite showing under Rule 161. 
As we have previously stated, the pendency of an appeal generally is an insufficient basis 
upon which to prolong a Commission proceeding.9   A postponement in these circumstances 
could delay significantly the outcome of these proceedings.  The inefficient use of resources that 
Free cites in having to petition the Commission twice is a potential inconvenience that does not 
override the strong public interest in the prompt enforcement of the federal securities laws.
10 
5 See Eric S. Butler, Order Denying a Stay or Postponement of Administrative 
Proceedings, Admin. Proc. File No. 3-13986 (Mar. 31, 2011), at 3 & n.7 (citing Michael J. 
Markowski, Order Denying Request for a Stay and Granting Extension of Time for Filing Briefs, 
Exchange Act Rel. No. 4748 (Dec. 4, 1998), 68 SEC Docket 2156, 2159 ("Neither the initial 
decision of the law judge nor our order scheduling briefing in this proceeding is a Commission 
order entitling [respondent] to appellate review.")). 
6 17 C.F.R. § 201.161. In determining whether to postpone a proceeding under 
Rule 161, we consider such factors as the length of the proceeding to date, the number of 
postponements previously granted, the stage of the proceeding at the time of the request for a 
postponement, the efficient and timely administration of justice, and any other matters justice 
requires.  17 C.F.R. § 201.161(b)(1). 
7 Id. 
8 Id. 
9 See James E. Franklin, Exchange Act Rel. No. 56649 (Oct. 12, 2007), 91 SEC 
Docket 2708, 2714 n.15 (stating that "it is well established that a pending appeal does not affect 
the injunction's status as a basis for this administrative proceeding") (citing cases). 
10 See Butler, at 4 n.12 (citing Jon Edelman, 52 S.E.C. 789, 790 (1996)). 
 
4 
Under Rule 102(e)(3)(ii), Free could have appealed his temporary suspension within 
thirty days of being served with the OIP.  It does not appear that Free has filed such an appeal. 
The suspension therefore has become permanent pursuant to Rule 102(e)(3)(ii).11 
Accordingly, IT IS ORDERED that Paul Free's request for a stay or postponement of this 
proceeding be, and hereby is, denied; and 
IT IS FURTHER ORDERED that the temporary suspension imposed upon Paul Free has 
become permanent pursuant to Rule 102(e)(3)(ii). 
By the Commission. 
Elizabeth M. Murphy 
Secretary 
11 17 C.F.R. § 201.102(e)(3)(ii).  As Free notes, he may apply to the Commission for 
reinstatement pursuant to Rule 102(e)(5)(i).  See 17 C.F.R. § 201.102(e)(5)(i) (stating that an 
"application for reinstatement of a person permanently suspended or disqualified under paragraph 
(e)(1) or (e)(3) of this rule may be made at any time"). 

	UNITED STATES OF AMERICA

	before the
	SECURITIES AND EXCHANGE COMMISSION

	SECURITIES EXCHANGE ACT OF 1934
	Rel. No. 66260 / January 26, 2012
	ACCOUNTING AND AUDITING ENFORCEMENT
	Rel. No. 3357 / January 26, 2012
	Admin. Proc. File No. 3-14629
	In the Matter of ORDER DENYING A
	STAY OR POSTPONEMENT OF
	PAUL FREE, CPA PROCEEDINGS
	On November 16, 2011, we issued an order instituting proceedings ("OIP") against Paul
	Free, a certified public accountant and former Controller and Chief Accounting Officer of Delphi
	Corporation from 1998 through 2002, pursuant to Commission Rule of Practice 102(e)(3)(i),
	1
	that temporarily suspended him from appearing or practicing before the Commission as an
	1 Rule of Practice 102(e)(3)(i), 17 C.F.R. § 201.102(e)(3)(i), provides, in pertinent
	part, that:
	(i) The Commission, with due regard to the public interest and without preliminary
	hearing, may, by order, temporarily suspend from appearing or practicing before it any . . .
	accountant . . . who has been by name:
	(A) permanently enjoined by any court of competent jurisdiction, by reason of his
	or her misconduct in an action brought by the Commission, from violating or
	aiding and abetting the violation of any provision of the Federal securities laws or
	of the rules and regulations thereunder; or
	(B) found by any court of competent jurisdiction in an action brought by the
	Commission to which he or she is a party or found by the Commission in any
	administrative proceeding to which he or she is a party to have violated (unless the
	violation was found not to have been willful) or aided and abetted the violation of
	any provision of the Federal securities laws or of the rules and regulations
	thereunder.

	2

	accountant.2 The OIP finds that Free was enjoined on October 31, 2011 by the United States
	District Court for the Eastern District of Michigan from violating and/or aiding and abetting
	violations of Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 13(b)(5) of the Securities
	Exchange Act of 1934 and Rules 10b-5, 12b-20, 13a-1, 13a-13, 13b2-1, and 13b2-2 thereunder.
	3
	The underlying complaint alleged that Free, while Delphi's Controller and Chief Accounting
	Officer, engaged in conduct that resulted in the Company materially misstating its financial
	condition and operating results in filings with the Commission, in offering documents, and in
	other statements to investors. The complaint alleged, for example, that Free, among others, was
	responsible for Delphi having improperly accounted for and disclosed a payment that it made to
	its former parent company, pursuant to a settlement agreement.
	On December 15, 2011, following our issuance of the OIP, Free filed a document titled,
	"Motion Pursuant to Rule 401 of the Commission's Rules of Practice for Stay of Rule 102(e)
	Proceedings." In his motion, Free states that the time for him to appeal the district court's
	judgment has not yet run. He asserts that he will be entitled to reinstatement to appear and
	practice before the Commission upon appropriate application to the Commission under Rule
	102(e)(5) if he is successful in an appeal of that judgment. Free believes that "[i]t would be an
	inefficient use of both the Commission's and [his] resources for [him] to petition the Commission
	now to lift or limit his suspension, and to do so again after the conclusion of an appeal." Free
	therefore requests, pursuant to Rule 401, that "the 102(e) proceedings against him be stayed
	pending the outcome of any appeal that he may file."
	The Division of Enforcement opposes the motion. The Division asserts that "such a stay
	would significantly delay the outcome of these proceedings," and Free "fails to show that denial
	of his motion would substantially prejudice his case." The Division states that, should Free
	appeal the district court judgment, a resolution may not occur for one to two years and that a
	delay of the Rule 102(e) proceedings here would be significant and "would not serve the public
	interest."
	Rule 401(c) permits motions for stays by persons aggrieved by a Commission order "who
	would be entitled to review in a federal court of appeals."
	4 However, Rule 401(c) is inapplicable
	2 Paul Free, CPA, Securities Exchange Act Rel. No. 65759 (Nov. 16, 2011),
	http://www.sec.gov/litigation/admin/2011/34-65759.pdf.
	3 Free, http://www.sec.gov/litigation/admin/2011/34-65759.pdf, at 2.
	4 17 C.F.R. § 201.401(c).


	3

	here because the Commission has not yet entered a final order, reviewable by an appellate court,
	that we could consider staying.5
	Although Rule 401 is inapplicable, we will consider Free's motion as a request for an
	extension of time, postponement, or adjournment under Rule 161.6 That rule provides that "the
	Commission, at any time, . . . may, for good cause shown . . . postpone or adjourn any hearing"
	so long as any such postponement or adjournment meets certain requirements.
	7 When deciding
	whether to grant such a motion, we "adhere to a policy of strongly disfavoring such requests,
	except in circumstances where the requesting party makes a strong showing that the denial of the
	request or motion would substantially prejudice" his or her case.
	8 We find that Free has not made
	the requisite showing under Rule 161.
	As we have previously stated, the pendency of an appeal generally is an insufficient basis
	upon which to prolong a Commission proceeding.9 A postponement in these circumstances
	could delay significantly the outcome of these proceedings. The inefficient use of resources that
	Free cites in having to petition the Commission twice is a potential inconvenience that does not
	override the strong public interest in the prompt enforcement of the federal securities laws.
	10
	5 See Eric S. Butler, Order Denying a Stay or Postponement of Administrative
	Proceedings, Admin. Proc. File No. 3-13986 (Mar. 31, 2011), at 3 & n.7 (citing Michael J.
	Markowski, Order Denying Request for a Stay and Granting Extension of Time for Filing Briefs,
	Exchange Act Rel. No. 4748 (Dec. 4, 1998), 68 SEC Docket 2156, 2159 ("Neither the initial
	decision of the law judge nor our order scheduling briefing in this proceeding is a Commission
	order entitling [respondent] to appellate review.")).
	6 17 C.F.R. § 201.161. In determining whether to postpone a proceeding under
	Rule 161, we consider such factors as the length of the proceeding to date, the number of
	postponements previously granted, the stage of the proceeding at the time of the request for a
	postponement, the efficient and timely administration of justice, and any other matters justice
	requires. 17 C.F.R. § 201.161(b)(1).
	7 Id.
	8 Id.
	9 See James E. Franklin, Exchange Act Rel. No. 56649 (Oct. 12, 2007), 91 SEC
	Docket 2708, 2714 n.15 (stating that "it is well established that a pending appeal does not affect
	the injunction's status as a basis for this administrative proceeding") (citing cases).
	10 See Butler, at 4 n.12 (citing Jon Edelman, 52 S.E.C. 789, 790 (1996)).

	4
	Under Rule 102(e)(3)(ii), Free could have appealed his temporary suspension within
	thirty days of being served with the OIP. It does not appear that Free has filed such an appeal.
	The suspension therefore has become permanent pursuant to Rule 102(e)(3)(ii).11
	Accordingly, IT IS ORDERED that Paul Free's request for a stay or postponement of this
	proceeding be, and hereby is, denied; and
	IT IS FURTHER ORDERED that the temporary suspension imposed upon Paul Free has
	become permanent pursuant to Rule 102(e)(3)(ii).
	By the Commission.
	Elizabeth M. Murphy
	Secretary
	11 17 C.F.R. § 201.102(e)(3)(ii). As Free notes, he may apply to the Commission for
	reinstatement pursuant to Rule 102(e)(5)(i). See 17 C.F.R. § 201.102(e)(5)(i) (stating that an
	"application for reinstatement of a person permanently suspended or disqualified under paragraph
	(e)(1) or (e)(3) of this rule may be made at any time").