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+ UNITED STATES OF AMERICA 
+ Before the 
+ SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 91186 / February 23, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4205 / February 23, 2021 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-20230 
+ 
+In the Matter of 
+ 
+JENNIFER M. STEWART, CPA, 
+ 
+Respondent. 
+ 
+ORDER INSTITUTING PUBLIC 
+ADMINISTRATIVE PROCEEDINGS 
+PURSUANT TO SECTION 4C OF THE 
+SECURITIES EXCHANGE ACT OF 
+1934 AND RULE 102(e) OF THE 
+COMMISSION’S RULES OF 
+PRACTICE, MAKING FINDINGS, 
+AND IMPOSING REMEDIAL 
+SANCTIONS 
+ 
+ 
+   
+I. 
+ The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
+public interest that public administrative proceedings be, and hereby are, instituted against Jennifer 
+M. Stewart (“Stewart” or “Respondent”) pursuant to Section 4C of the Securities Exchange Act of 
+1934 (“Exchange Act”) and Rule 102(e)(1)(ii) of the Commission’s Rules of Practice. 
+II. 
+ In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
+of Settlement (the “Offer”), which the Commission has determined to accept.  Solely for the 
+purpose of these proceedings and any other proceedings brought by or on behalf of the 
+Commission, or to which the Commission is a party, and without admitting or denying the findings 
+herein, except as to the Commission’s jurisdiction over them and the subject matter of these 
+proceedings, which are admitted, Respondent consents to the entry of this Order, as set forth 
+below. 
+ 
+ 
+ 
+2 
+ 
+III. 
+ On the basis of this Order and the Respondent’s Offer, the Commission finds1 that: 
+A. SUMMARY 
+1. Starting as early as 2013, the College of New Rochelle (the “College”) began 
+experiencing considerable financial challenges resulting from declining student enrollment and 
+decreasing tuition revenues.  During fiscal year 2015, the College’s then current Controller, Keith 
+Borge (“Borge”), engaged in a fraudulent scheme that involved numerous fraudulent 
+misrepresentations and omissions in order to conceal the College’s financial challenges.  
+2. KPMG LLP (“KPMG”) was the College’s independent auditor during the relevant 
+period.  For fiscal year 2015, Stewart was the engagement manager assigned to the College’s audit.  
+In that capacity, Stewart failed to comply with American Institute of Certified Public Accountants 
+(“AICPA”) auditing standards (“AICPA Standards”) during the College’s fiscal year 2015 audit.  
+Specifically, Stewart’s violations of the auditing standards stemmed from her failures to: (1) obtain 
+sufficient appropriate audit evidence; (2) properly prepare audit documentation; (3) properly 
+examine journal entries for evidence of fraud due to management override; (4) adequately assess 
+the risk of material misstatement; and, (5) exercise due professional care and professional 
+skepticism.  These numerous and pervasive audit failures significantly reduced the audit team’s 
+ability to detect Borge’s fraud. 
+3. Notwithstanding these audit failures, Stewart authorized, and the engagement 
+partner provided final approval for, the issuance of an audit report for fiscal year 2015 stating that 
+the audit was performed in accordance with generally accepted auditing standards2 (“GAAS”).  
+This statement was false in that the audit was not performed in accordance with GAAS. 
+4. Pursuant to a 1999 bond offering, the College was contractually obligated to 
+provide annual continuing disclosure information to investors, including audited financial 
+statements.  Stewart should have known that the audit report, along with the College’s fiscal year 
+2015 financial statements, would be submitted to the Municipal Securities Rulemaking Board 
+(“MSRB”) for posting in its Electronic Municipal Market Access (“EMMA”) system pursuant to 
+the College’s annual continuing disclosure requirements. 
+                                                
+1  The findings herein are made pursuant to the Respondent’s Offer of Settlement and are 
+not binding on any other person or entity in this or any other proceeding. 
+2 Generally accepted auditing standards for audits of entities not subject to the oversight authority of the 
+Public Company Accounting Oversight Board (PCAOB) are promulgated by the AICPA. 
+3 
+ 
+B. RESPONDENT 
+5. Jennifer M. Stewart, age 34, of North Hempstead, New York, is a Certified Public 
+Accountant (“CPA”) licensed to practice in New York.  Stewart began her employment at KPMG 
+in 2008 as an Associate and was subsequently promoted to Senior Associate in 2010, Manager in 
+2013 and Senior Manager in 2015.  Stewart’s employment with KPMG ended in March 2020.  
+Stewart served as the KPMG engagement manager on, and authorized the issuance of the audit 
+report for, the College’s fiscal year 2015 audit engagement.  Stewart also served as the KPMG 
+engagement manager on the College’s audit engagements for fiscal years 2013 and 2014. 
+C. OTHER RELEVANT ENTITIES 
+6. KPMG LLP is a Delaware limited liability partnership headquartered in New York 
+City.  KPMG is registered with the PCAOB and is the U.S. member firm of the KPMG global 
+network of independent member firms affiliated with KPMG International Limited, a private 
+English company limited by guarantee.  KPMG was the College’s auditor for fiscal year 2015. 
+7. The College of New Rochelle was a private, not-for-profit education corporation 
+based in New Rochelle, New York, with additional locations in New York City.  The College 
+ceased operations and filed for bankruptcy in September 2019 as a result of its financial challenges. 
+8. Keith Borge, age 64, of Brooklyn, New York, served as Controller of the College 
+during fiscal year 2015 and began employment with the College in 1979 as Assistant Controller.  
+Borge was responsible for perpetrating the fraud described herein.  Borge pled guilty to criminal 
+securities fraud charges on March 28, 2019 and is currently serving a 3-year sentence in federal 
+prison.  On the same day the SEC filed a complaint in the U.S. District Court for the Southern 
+District of New York against Borge which was subsequently settled on July 2, 2019. 
+D. FACTS 
+ Borge’s Fraud 
+9. Starting as early as spring 2013, the College began experiencing financial 
+challenges resulting from decreases in student enrollment and tuition revenues.  To bridge the 
+increasing gap between the College’s revenues and expenses, Borge began using funds in the 
+College’s endowment to pay for operating expenses.  The consumption of these funds resulted in a 
+rapid decrease in the College’s net assets, from approximately $30.5 million at the conclusion of 
+fiscal year 2012 to negative $8.8 million at the conclusion of fiscal year 20153. 
+10. In order to conceal the precipitous decline in the College’s net assets, Borge 
+engaged in a fraudulent scheme, the result of which overstated assets and understated liabilities of 
+the College.  For example, Borge intentionally withheld payroll tax remittances from federal, state 
+and local authorities starting as early as fiscal year 2013.  However, instead of reporting the payroll 
+tax liabilities in the College’s financial statements, Borge recorded a series of improper and 
+                                                
+3 The College’s fiscal year ended on June 30. 
+4 
+ 
+unsupported journal entries, which concealed the payroll tax liabilities in the College’s general 
+ledger and financial statements.  Borge also hid numerous past due vendor invoices in his office, 
+thereby preventing them from being recorded in the College’s financial statements, and allowed 
+receivables to be reported at inflated values. 
+11. As a result of Borge’s fraud, the College’s fiscal year 2015 net assets were 
+overstated by $33.8 million, an overstatement which impacted virtually every amount reported on 
+the College’s balance sheet. 
+ KPMG’s Audit of the College’s Fiscal Year 2015 Financial Statements 
+12. KPMG performed the College’s financial statement audits during the relevant 
+period culminating with the fiscal year 2015 engagement.  Stewart was the engagement manager 
+for the fiscal year 2015 audit responsible for the day-to-day supervision of the audit team and 
+executing the audit plan, with a focus on completing work papers and resolving open items.  
+Stewart was a member of KPMG’s Higher Education, Research and Other Not-For-Profit 
+(“HERON”) dedicated practice group and had extensive experience auditing higher education and 
+not-for-profit entities. 
+13. In the spring of 2015, the KPMG audit team assigned to complete the College’s 
+2015 audit, including Stewart, met with the College’s management team and presented the audit 
+plan to the College’s Audit Committee.  KPMG’s presentation to the Audit Committee included, 
+among other things, an audit timeline with fieldwork scheduled to begin in August 2015 and an 
+expected audit report issuance date of September 2015.   
+14. Almost from inception, the KPMG audit team encountered significant challenges 
+primarily due to Borge’s untimely and inaccurate responses to the requests of the audit team.  First, 
+when the audit team arrived to begin fieldwork in August 2015 they discovered large amounts of 
+information which was scheduled to be available, including the critical trial balance, was not yet 
+ready.  In addition, the information that the College was able to provide, such as supporting 
+documentation for the College’s investment balances, contained reconciling issues and 
+contradictions.   
+15. The significant challenges encountered by the audit team worsened as the audit 
+progressed.  For example, the reconciling issues with the College’s investment balances continued 
+to persist even after Stewart and the KPMG engagement partner unsuccessfully attempted to 
+resolve the issue.  In other instances Borge, who was the audit team’s primary contact at the 
+College, took extended periods of leave during critical times in the audit leaving audit team 
+members without the information necessary to complete the audit.   
+16. On September 24, 2015, the KPMG engagement partner discussed a draft of the 
+College’s fiscal year 2015 financial statements with the Audit Committee.  Included in the 
+presentation was a slide explaining that there were still open items and questions that needed to be 
+addressed prior to KPMG’s issuance of the audit report.  Following the Audit Committee 
+5 
+ 
+presentation, Borge failed to provide the audit team with a timely response to the open items and 
+questions and, as a result, work on the audit stalled. 
+17. The significant challenges related to Borge’s untimely and inaccurate responses 
+continued throughout October and November 2015.  The challenges to complete the audit became 
+so significant and pervasive throughout October and November 2015 that audit team members sent 
+emails to Stewart that Borge “just makes up numbers from his head” and that the financial 
+statements “are never going to get issued because [Borge] doesn’t care.”  Stewart concluded that 
+these comments were not serious, but failed to communicate the audit team’s escalating concerns 
+to the engagement partner.   
+18. Despite the fact that he had not met the audit team’s requests for information, on 
+November 30, 2015, Borge emailed Stewart notifying her that the College had a deadline to 
+provide its audited financial statements to its bank and that the College needed KPMG to issue the 
+audit report that day.  In response, Stewart informed Borge that the audit team was still waiting on 
+open items and questions and that the financial statements needed to be reviewed by the 
+engagement partner.  Stewart also suggested that they schedule a time the following day to resolve 
+the outstanding issues. 
+19. Also during the morning of November 30, 2015, the engagement partner received a 
+telephone voicemail from the President of the College informing him of the bank deadline and the 
+need for KPMG to issue the College’s audit report that day.  Following receipt of that voicemail, 
+the engagement partner approached Stewart to ask her what needed to be done in order for KPMG 
+to issue its audit report.  During the next few hours Stewart and the engagement partner reviewed 
+the outstanding open items and unanswered questions and unreasonably concluded that none of the 
+outstanding items or questions should prevent KPMG from issuing its audit report.  As a result, 
+KPMG issued its audit report containing an unmodified audit opinion on the College’s fiscal year 
+2015 financial statements by mid-afternoon on November 30, 2015. 
+20. Although KPMG issued its audit report on November 30, 2015, the audit evidence 
+at that time was not sufficient to support the audit opinion.  The audit team, under Stewart’s 
+supervision, failed to verify the existence of assets or the completeness of liabilities.  In addition, 
+KPMG’s electronic work paper repository (the “eAudit file”) did not contain any indication that 
+approximately a third of the work papers had been prepared or reviewed as of November 30, 2015.   
+21. KPMG’s work on the College’s financial statement audit continued through 
+January 2016.  One audit team member spent 2 ½ days in December 2015 unsuccessfully trying to 
+locate work papers and address open items and questions.  In early January 2016, a new senior 
+associate was assigned to take over the responsibility to clean-up the audit file but was also unable 
+to locate all of the missing work papers or address all of the open items and questions.  Four 
+business days before the audit file was required to be closed pursuant to KPMG policies, the new 
+senior associate emailed Stewart a list of 39 open items as well as 81 additional work papers that 
+required Stewart’s review.  Stewart then marked the work papers as “reviewed” and closed the 
+audit file on the last day. 
+6 
+ 
+22. A few months after the College’s audit file was closed, the new senior associate 
+exchanged text messages with Stewart concerning an unrelated audit, saying “at least they are 
+close to truly done too, and not fake done like the . . . CNR audit.”  In November 2016, after 
+Borge’s fraud was discovered, KPMG withdrew its audit opinion on the College’s FY15 
+financial statements. 
+ Failure to Obtain Sufficient Appropriate Audit Evidence 
+23. GAAS require that auditors should design and perform audit procedures that are 
+appropriate in the circumstances for the purpose of obtaining sufficient appropriate audit evidence 
+(AU-C §500).  Stewart failed to obtain sufficient appropriate audit evidence during the College’s 
+fiscal year 2015 audit in multiple areas. 
+24. For instance, Stewart failed to obtain sufficient appropriate audit evidence to 
+support the College’s investment balances.  During fieldwork the audit team identified reconciling 
+issues where investment schedules provided by Borge did not tie to the College’s brokerage 
+statements or the financial statements.  In response, Borge informed the audit team that the 
+reconciling issues were probably due to trades in transit at fiscal year-end.  However, the audit 
+team, under Stewart’s supervision, was never able to successfully reconcile nor did it perform 
+alternative procedures to substantiate the College’s investment balances reported in the College’s 
+financial statements.     
+25. Stewart also failed to obtain sufficient appropriate audit evidence to confirm the 
+completeness of the College’s accounts payable balance.  The College’s accounts payable balance 
+decreased by 59% in fiscal year 2015.  This was due to Borge fraudulently preventing vendor 
+invoices from being recorded in the College’s accounts payable system.  Despite this decrease, the 
+audit team determined the risk of material misstatement for the College’s accounts payables to be 
+low, based on its conclusion that “there was very little, if any, change to the characteristics of the 
+account compared to the prior year.”  As a result, the audit team’s ability to detect the fact that 
+Borge was withholding vendor invoices was significantly reduced. 
+26. Finally, Stewart failed to obtain sufficient appropriate audit evidence to support the 
+College’s other accounts receivable balance.  Notwithstanding annual increases in the College’s 
+other accounts receivable balance going back multiple years, KPMG did not test any of the other 
+accounts receivable to verify its existence during the fiscal year 2015 audit.  Instead, KPMG’s 
+work papers document that $3.9 million of other accounts receivable had been tested in prior years 
+(some of which dated back to fiscal year 2011) and that the audit team passed on testing the 
+remaining $1.8 million because the amount was below the performance materiality threshold.  It 
+was later determined that supporting documentation for most of the College’s $5.7 million other 
+accounts receivable reported in fiscal year 2015 did not exist.   
+ Failure to Properly Prepare Audit Documentation 
+27. GAAS require that the auditor should prepare audit documentation on a timely 
+basis.  An auditor is required to prepare audit documentation that is sufficient to enable an 
+7 
+ 
+experienced auditor, having no previous connection with the audit, to understand the nature, 
+timing, and extent of the audit procedures performed, the results of the procedures performed, the 
+audit evidence obtained and conclusions reached, who performed and reviewed the work and the 
+date such work was completed (AU-C §230).  Finally, AICPA Standards require the auditor’s 
+opinion to be in written form and dated no earlier than the date on which the auditor has obtained 
+sufficient appropriate audit evidence on which to base the auditor’s opinion on the financial 
+statements, including evidence that the audit documentation has been reviewed (AU-C §700). 
+28. Stewart failed to prepare adequate audit documentation during the College’s fiscal 
+year 2015 engagement.  KPMG manages and monitors the status of its audit documentation 
+through its eAudit program.  As explained above, as of November 30, 2015, the date of the audit 
+report, approximately a third of the audit work papers were not documented as either being 
+prepared or reviewed in the eAudit program.  In addition, there was no audit evidence outside of 
+the eAudit program that the work papers that were lacking documentation were in fact reviewed 
+prior to the date of the audit report.  Instead, the process of preparing and reviewing the work 
+papers that lacked proper documentation as of November 30, 2015 was completed subsequent to 
+the audit report date.  
+Failure to Properly Examine Journal Entries for Evidence of Fraud Due to 
+Management Override 
+29. GAAS require that the auditor maintain professional skepticism throughout the 
+audit by recognizing that, regardless of the auditor’s prior experience with the client, the possibility 
+of a material misstatement due to fraud always exists.  As such, the risk of a material misstatement 
+due to management override is present in all entities and is a significant risk.  As a result, auditors 
+are required to, among other things, select and test journal entries and other adjustments made at 
+the end of a reporting period (AU-C §240). 
+30. Stewart failed to comply with this requirement.  During the College’s fiscal year 
+2015 audit, the audit team did not obtain sufficient appropriate audit evidence with respect to 
+journal entries posted at the end of the fiscal year.  As a result, the audit team’s ability to detect the 
+numerous fraudulent journal entries that Borge posted during the College’s year-end financial 
+closing process was significantly reduced. 
+Failure to Adequately Assess the Risks of Material Misstatement  
+31. GAAS require that the auditor perform risk assessment procedures to provide a 
+basis for the identification and assessment of risks of material misstatement.  Additionally, auditors 
+are required to revise the risk assessment in circumstances in which the auditor obtains audit 
+evidence that is inconsistent with the audit evidence on which the auditor originally based the risk 
+assessment (AU-C §315). 
+32. Stewart failed to adequately assess and reassess the risks of material misstatement 
+during the College’s fiscal year 2015 audit.  The audit team’s risk analysis appears to have been 
+performed during previous audits without taking into consideration the College’s current operating 
+8 
+ 
+environment.  For example, as described above, despite a 59% decrease in the College’s accounts 
+payable balance, the audit team assessed a low risk of material misstatement based on its 
+assessment that “there was very little, if any, change to the characteristics of the account compared 
+to the prior year.”  In addition, amidst increasing challenges primarily related to receiving timely 
+and credible information from Borge, the audit team never reassessed the risk of material 
+misstatement during the College’s fiscal year 2015 audit.   
+Failure to Exercise Due Professional Care and Professional Skepticism 
+33. GAAS require that the auditor exercise due professional care and professional 
+skepticism during the planning and performance of an audit (AU-C §200).  Professional skepticism 
+is an attitude that includes a questioning mind, being alert to conditions that may indicate possible 
+misstatement due to fraud or error, and a critical assessment of audit evidence. 
+34. Stewart failed to maintain professional skepticism during the planning and 
+performance of the College’s audit.  As previously discussed, Stewart failed to exercise 
+professional skepticism with respect to the numerous reconciling issues that the audit team had 
+encountered including the receipt of unreliable audit evidence from Borge.  In addition, Stewart 
+failed to communicate the escalating concerns of the audit team to the engagement partner which 
+should have prompted additional inquiry, corroboration or analysis.  As the audit progressed, and 
+the audit team continued to encounter challenges with the timing and reliability of the information 
+received from Borge, Stewart did not respond appropriately in order to obtain sufficient 
+appropriate audit evidence. 
+E. VIOLATIONS 
+35. Section 4C of the Exchange Act and Rule 102(e)(1)(ii) of the Commission’s Rules 
+of Practice provide, in pertinent part, that the Commission may censure or deny, temporarily or 
+permanently, the privilege of appearing or practicing before the Commission to any person who is 
+found by the Commission to have engaged in improper professional conduct.  Section 4C(b)(2) 
+and Rule 102(e)(1)(iv)(B) define improper professional conduct to include the following two types 
+of negligent conduct: (1) a single instance of highly unreasonable conduct that results in a violation 
+of applicable professional standards in circumstances in which an accountant knows, or should 
+know, that heightened scrutiny is warranted; or (2) repeated instances of unreasonable conduct, 
+each resulting in a violation of applicable professional standards, that indicate a lack of competence 
+to practice before the Commission.   
+36. As a result of the conduct described above, Stewart engaged in improper 
+professional conduct under Section 4C(a)(2) of the Exchange Act and Rule 102(e)(1)(ii) as defined 
+in Rule 102(e)(1)(iv)(B) of the Commission’s Rules of Practice. 
+ 
+ 
+ 
+ 
+9 
+ 
+F. UNDERTAKING 
+ 
+37. Stewart undertakes that she shall not serve as the engagement manager, engagement 
+partner or engagement quality control reviewer in connection with any audit expected to be posted 
+in EMMA until reinstated to appear before the Commission as an independent accountant.  
+ 
+38. In determining whether to accept the Offer, the Commission has considered 
+Stewart’s undertaking. 
+ 
+IV. 
+ 
+ In view of the foregoing, the Commission deems it appropriate and in the public interest to 
+impose the sanctions agreed to in Stewart’s Offer. 
+ 
+ Accordingly, it is hereby ORDERED that: 
+ 
+ A. Stewart is suspended from appearing or practicing before the Commission as an 
+accountant. 
+ 
+1. After one year from the date of this order, Stewart may request that the 
+Commission consider her reinstatement by submitting an application (attention: Office of 
+the Chief Accountant) to resume appearing or practicing before the Commission as: 
+ 
+a. a preparer or reviewer, or a person responsible for the preparation or 
+review, of any public company’s financial statements that are filed 
+with the Commission (other than as a member of an audit committee, 
+as that term is defined in Section 3(a)(58) of the Exchange Act).  
+Such an application must satisfy the Commission that Stewart’s work 
+in her practice before the Commission as an accountant will be 
+reviewed either by the independent audit committee of the public 
+company for which she works or in some other acceptable manner, as 
+long as she practices before the Commission in this capacity; and/or 
+ 
+b. a preparer or reviewer, or a person responsible for the preparation or 
+review, of any public company’s financial statements that are filed 
+with the Commission as a member of an audit committee, as that term 
+is defined in Section 3(a)(58) of the Exchange Act.  Such an 
+application will be considered on a facts and circumstances basis with 
+respect to such membership, and the applicant’s burden of 
+demonstrating good cause for reinstatement will be particularly high 
+given the role of the audit committee in financial and accounting 
+matters; and/or 
+ 
+c. an independent accountant. 
+10 
+ 
+ 
+ Such an application must satisfy the Commission that: 
+ 
+(1) Stewart, or the public accounting firm with which she is 
+associated, is registered with the PCAOB in accordance 
+with the Sarbanes-Oxley Act of 2002, and such registration 
+continues to be effective; 
+ 
+(2) Stewart, or the registered public accounting firm with 
+which she is associated, has been inspected by the PCAOB 
+and that inspection did not identify any criticisms of or 
+potential defects in Stewart’s or the firm’s quality control 
+system that would indicate that Stewart will not receive 
+appropriate supervision; 
+ 
+(3) Stewart has resolved all disciplinary issues with the 
+PCAOB, and has complied with all terms and conditions of 
+any sanctions imposed by the PCAOB (other than 
+reinstatement by the Commission); and  
+ 
+(4) Stewart acknowledges her responsibility, as long as she 
+appears or practices before the Commission as an 
+independent accountant, to comply with all requirements of 
+the Commission and the PCAOB, including, but not limited 
+to, all requirements relating to registration, inspections, 
+concurring partner reviews and quality control standards. 
+ 
+2. The Commission will consider an application by Stewart to resume 
+appearing or practicing before the Commission provided that her state CPA license is 
+current and she has resolved all other disciplinary issues with the applicable state boards 
+of accountancy.  However, if state licensure is dependent on reinstatement by the 
+Commission, the Commission will consider an application on its other merits.  The 
+Commission’s review may include consideration of, in addition to the matters referenced 
+above, any other matters relating to Stewart’s character, integrity, professional conduct or 
+qualifications to appear or practice before the Commission as an accountant.  Whether an 
+application demonstrates good cause will be considered on a facts and circumstances 
+basis with due regard for protecting the integrity of the Commission’s processes. 
+  By the Commission. 
+ 
+ 
+ 
+       Vanessa A. Countryman 
+       Secretary 

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+ UNITED STATES OF AMERICA 
+ before the 
+ SECURITIES AND EXCHANGE COMMISSION 
+March 22, 2021 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 91381 / March 22, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No.4206 / March 22, 2021 
+ 
+Admin. Proc. File No. 3-18292 
+ 
+ 
+ 
+In the Matter of  
+ 
+GREGORY A. WAHL, CPA 
+MICHAEL DEUTCHMAN, CPA, and 
+GEORGIA CHUNG, CPA 
+ 
+ 
+ORDER 
+GRANTING 
+PETITION 
+FOR REVIEW 
+AND SCHEDULING 
+BRIEFS 
+ 
+ 
+ 
+ 
+Pursuant to Commission Rule of Practice 411,
+1 the petition of Gregory A. Wahl, CPA, 
+Michael Deutchman, CPA, and Georgia Chung, CPA for review of the administrative law 
+judge's initial decision2 is granted. Pursuant to Rule of Practice 411(d),3 the Commission will 
+determine what sanctions, if any, are appropriate in this matter. 
+Accordingly, IT IS ORDERED, pursuant to Rule of Practice 450(a),4 that a brief in 
+support of the petition for review shall be filed by April 21, 2021.  A brief in opposition 
+  
+                                                 
+1  17 C.F.R. § 201.411. 
+2   Gregory A. Wahl, CPA, Michael Deutchman, CPA, and Georgia Chung, CPA , Initial 
+Decision Release No. 1407 (Feb. 8, 2021), 2021 WL 517421.   
+3  17 C.F.R. § 201.411(d). 
+4  17 C.F.R. § 201.450(a). 
+2 
+ 
+shall be filed by May 21, 2021, and any reply brief shall be filed by June 4, 2021.5  P ursuant to 
+Rule of Practice 180(c),6 failure to file a brief in support of the petition may result in dismissal 
+of this review proceeding. 
+ 
+For the Commission, by the Office of the General Counsel, pursuant to delegated 
+authority. 
+ 
+ 
+ 
+ 
+Vanessa A. Countryman 
+Secretary 
+ 
+                                                 
+5 As provided by Rule 450(a), no briefs in addition to those specified in this schedule may be 
+filed without leave of the Commission.  Attention is called to Rule of Practice 450(b) and (c), 17 
+C.F.R. § 201.450(b) & (c), with respect to content and length limitations, and Rules of Practice 
+150–153, 17 C.F.R. § 201.150–153, with respect to form and service, as well as the 
+Commission’s March 18, 2020 order providing further instructions regarding the filing and 
+service of papers in appeals of initial decision.  See In re: Pending Administrative Proceedings, 
+Exchange Act Release No. 88415, https://www.sec.gov/litigation/opinions/2020/33-10767.pdf
+.  
+Also, the Commission’s Rules of Practice were recently amended to include new e-filing 
+requirements, which take effect on April 12, 2021.  Amendments to the Commission’s Rules of 
+Practice, Exchange Act Release No. 90442, 2020 WL 7013370 (Nov. 17, 2020), 85 Fed. Reg. 
+86,464, 86,474 (Dec. 30, 2020), 
+https://www.govinfo.gov/content/pkg/FR-2020-12-30/pdf/2020-
+25747.pdf; see also Instructions for Electronic Filing and Service of Documents in SEC 
+Administrative Proceedings and Technical Specifications, 
+https://www.sec.gov/efapdocs/instructions.pdf.  The amendments al so impose other obligations 
+on parties to administrative proceedings such as a new redaction and omission of sensitive 
+personal information requirement.  Amendments to the Commission’s Rules of Practice, 85 Fed. 
+Reg. at 86,465–81. 
+6  17 C.F.R. § 201.180(c).  

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+UNITED STATES OF AMERICA 
+before the  
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 91540 / April 12, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4209 / April 12, 2021 
+ 
+Admin. Proc. File No. 3-20256 
+ 
+ 
+In the Matter of 
+ 
+CHRISTOPHER E. KNAUTH, CPA 
+ 
+ 
+ 
+ 
+ORDER REGARDING SERVICE 
+ 
+ 
+On April 5, 2021, t he Securities and Exchange Commission issued an order instituting an 
+administrative proceeding (“OIP”) against Christopher E. Knauth, CPA (“Respondent”), 
+pursuant to Sections 4C and 21C of the Securities Exchange Act of 1934 and Rules 102(e)(1)(ii) 
+and (iii) of the Commission’s Rules of Practice. 1  It appears that there have been no other filings 
+in this proceeding since issuance of the OIP, including as to whether the OIP was served upon 
+Respondent.  Accordingly, IT IS ORDERED that the Division of Enforcement file a status report 
+concerning service of the OIP by April 19, 2021, and every 28 days thereafter until service is 
+accomplished. 
+The parties’ attention is called to the Commission’s March 18, 2020 order regarding the 
+filing and service of papers, which provides that pending further order of the Commission parties 
+to the extent possible shall submit all filings electronically at apfilings@sec.gov.2  Also, the 
+Commission’s Rules of Practice were recently amended to include new e -filing requirements, 
+                                              
+1  Christopher E. Knauth, CPA , Exchange Act Release No. 91475, 2021 WL 1297855 (Apr. 
+5, 2021). 
+2  Pending Administrative Proceedings , Exchange Act Release No. 88415, 2020 WL 
+1322001 (Mar. 18, 2020), https://www.sec.gov/litigation/opinions/2020/33-10767.pdf. 
+2 
+ 
+which take effect on April 12, 2021.3  For the Commission, by the Office of General Counsel, 
+pursuant to delegated authority. 
+ 
+        Vanessa A. Countryman 
+              Secretary 
+                                              
+3  Amendments to the Commission’s Rules of Practice , 85 Fed. Reg. 86,464, 86,474 (Dec. 
+30, 2020); see also Amendments to the Commission’s Rules of Practice , Exchange Act Release 
+No. 90442, 2020 WL 7013370 (Nov. 17, 2020); Instructions for Electronic Filing and Service of 
+Documents in SEC Administrative Proceedings and Technical Specifications , 
+https://www.sec.gov/efapdocs/instructions.pdf.  The amendments also impose other obligations 
+on parties to administrative proceedings such as a new redaction and omission of sensitive 
+personal information requirement.  Amendments to the Commission’s Rules of Practice,  85 Fed. 
+Reg. at 86,465–81. 

raw/aaer/2021/AAER-4210.txt

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+ 
+ 
+ UNITED STATES OF AMERICA 
+ Before the 
+ SECURITIES AND EXCHANGE COMMISSION 
+ 
+INVESTMENT ADVISERS ACT OF 1940 
+Release No.  5723 / April 19, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No.  4210 / April 19, 2021 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-20263 
+ 
+ 
+ 
+In the Matter of 
+ 
+Martin Silver, CPA 
+ 
+Respondent. 
+ 
+ 
+ 
+ 
+ 
+ 
+ORDER INSTITUTING  
+ADMINISTRATIVE PROCEEDINGS 
+PURSUANT TO SECTION 203(f) OF THE 
+INVESTMENT ADVISERS ACT OF 1940 AND 
+RULE 102(e)(2) OF THE COMMISSION’S 
+RULES OF PRACTICE, MAKING FINDINGS, 
+AND IMPOSING REMEDIAL SANCTIONS  
+ 
+ 
+I. 
+ 
+ The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
+public interest that public administrative proceedings be, and hereby are, instituted pursuant to 
+Section 203(f) of the Investment Advisers Act of 1940 (“Advisers Act”) against Martin Silver 
+(“Respondent”). The Commission also deems it appropriate to issue an order of forthwith 
+suspension of Respondent pursuant to Rule 102(e)(2) of the Commission’s Rules of Practice [17 
+C.F.R. § 201.102(e)(2)].1 
+ 
+II. 
+  
+ In anticipation of the institution of these proceedings, Respondent has submitted an Offer of 
+Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the purpose of 
+these proceedings and any other proceedings brought by or on behalf of the Commission, or to which 
+the Commission is a party, Respondent admits the Commission’s jurisdiction over him and the 
+                                              
+1  Rule 102(e)(2) provides in pertinent part: “Any…person who has been convicted of a felony or a 
+misdemeanor involving moral turpitude shall be forthwith suspended from appearing or practicing before the 
+Commission.” 
+ 2 
+subject matter of these proceedings, and the findings contained in paragraphs III(2) and (4) below, 
+and consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Section 
+203(f) of the Investment Advisers Act of 1940 and Rule 102(e)(2) of the Commission’s Rules of 
+Practice, Making Findings, and Imposing Remedial Sanctions (“Order”), as set forth below.   
+ 
+III. 
+ 
+ On the basis of this Order and Respondent’s Offer, the Commission finds that: 
+ 
+1. Silver was the founder, chief operating officer, and a fifty-percent owner of 
+International Investment Group, LLC (“IIG”), a New York-based former registered investment 
+adviser.  Silver has been a certified public accountant licensed in the State of New York. 
+ 
+2. On April 16, 2021, a judgment was entered by consent against Silver, permanently 
+enjoining him from future violations of Sections 206(1) and 206(2) of the Advisers Act, Section 
+17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and 
+Rule 10b-5 thereunder in the civil action entitled Securities and Exchange Commission v. Martin 
+Silver, Civil Action Number 21-cv-3179 (DLC), in the United States District Court for the 
+Southern District of New York. 
+ 
+3. The Commission’s complaint alleged that Silver engaged in a scheme to defraud 
+IIG’s investment advisory clients.  Specifically, the complaint alleged that Silver concealed losses 
+in the portfolio of its flagship hedge fund by overstating the value of certain defaulted trade finance 
+loans and by replacing defaulted loans with fake loans.  In addition, the complaint alleged that IIG 
+engaged in a pattern of selling overvalued and/or fake trade finance loans to other investment 
+advisory clients in order to generate liquidity to meet various payment obligations of the fund, 
+including redemption requests from earlier investors. 
+ 
+4.  On April 13, 2021, Silver pleaded guilty to one count of securities fraud (15 U.S.C. 
+§ 78j(b) and 78ff; 17 C.F.R. § 240.10b-5), one count of wire fraud (18 U.S.C. §§ 1343 and 2), and 
+one count of conspiracy to commit investment adviser fraud, securities fraud, and wire fraud (18 
+U.S.C. § 371) in United States v. Martin Silver, Crim. No. 20-cr-360 (AKH) (S.D.N.Y.). 
+ 
+5.  The count of the criminal information to which Silver pled guilty alleged, inter alia, 
+that Silver engaged in a pattern of selling overvalued and/or fake trade finance loans to investment 
+advisory clients in order to generate liquidity to meet various payment obligations, including 
+redemption requests from earlier investors, and that Silver used the mails and other means and 
+instrumentalities of interstate commerce to execute his scheme.    
+ 
+  
+ 3 
+IV. 
+ 
+ In view of the foregoing, the Commission deems it appropriate and in the public interest to 
+impose the sanctions agreed to in Respondent Silver’s Offer.  
+ 
+ Accordingly, it is hereby ORDERED pursuant to Section 203(f) of the Advisers Act, that 
+Respondent Silver be, and hereby is barred from association with any investment adviser, broker, 
+dealer, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized 
+statistical rating organization. 
+ 
+Any reapplication for association by the Respondent will be subject to the applicable laws 
+and regulations governing the reentry process, and reentry may be conditioned upon a number of 
+factors, including, but not limited to, compliance with the Commission’s order and payment of any 
+or all of the following:  (a) any disgorgement or civil penalties ordered by a Court against the 
+Respondent in any action brought by the Commission; (b) any disgorgement amounts ordered 
+against the Respondent for which the Commission waived payment; (c) any arbitration award 
+related to the conduct that served as the basis for the Commission order; (d) any self-regulatory 
+organization arbitration award to a customer, whether or not related to the conduct that served as 
+the basis for the Commission order; and (e) any restitution order by a self-regulatory organization, 
+whether or not related to the conduct that served as the basis for the Commission order. 
+ 
+ In view of the foregoing, the Commission also finds that Respondent has been convicted of 
+a felony within the meaning of Rule 102(e)(2) of the Commission’s Rules of Practice.  
+ 
+ Accordingly, it is hereby ORDERED that Respondent Silver is forthwith suspended from 
+appearing or practicing before the Commission pursuant to Rule 102(e)(2) of the Commission’s 
+Rules of Practice. 
+ 
+ By the Commission. 
+ 
+ 
+Vanessa A. Countryman 
+Secretary 
+ 
+ 

raw/aaer/2021/AAER-4211.txt

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+UNITED STATES OF AMERICA 
+before the  
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 91615 / April 20, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4211 / April 20, 2021 
+ 
+Admin. Proc. File No. 3-20256 
+ 
+ 
+In the Matter of 
+ 
+CHRISTOPHER E. KNAUTH, CPA 
+ 
+ 
+ 
+ORDER 
+ 
+On April 5, 2021, the Securities and Exchange Commission issued an order instituting an 
+administrative proceeding (“OIP”) against Christopher E. Knauth, CPA (“Respondent”), 
+pursuant to Sections 4C and 21C of the Securities Exchange Act of 1934 and Rules 102(e)(1)(ii) 
+and (iii) of the Commission’s Rules of Practice. 1  In compliance with the statutory provision 
+governing cease -and-desist proceedings, the OIP specified that a “public hearing before the 
+Commission for the purpose of taking evidence . . . shall be convened not earlier than 30 days 
+and not later than 60 days” from service of the OIP.2  The statute also provides that “an earlier or 
+later date” for the hearing may be “set by the Commission with the consent of any respondent so 
+served.”3 
+Respondent was served with the OIP on April 13, 2021.  As a consequence, in the 
+absence of Respondent’s consent regarding a later hearing date, a public hearing will be set for a 
+date on or before June 11, 2021.4  To facilitate the orderly and expeditious resolution of this 
+matter, it is ORDERED that the parties shall file a statement advising the Commission of any 
+agreement to a later hearing date (or a statement that no agreement could be reached) by April 
+27, 2021.  In the event the parties do not reach an agreement by that date, this order does not 
+                                              
+1  Christopher E. Knauth, CPA , Exchange Act Release No. 91475, 2021 WL 1297855 (Apr. 
+5, 2021). 
+2  Id. at *9. 
+3  15 U.S.C. § 78u-3(b). 
+4  June 12, 2021 is a Saturday.  
+2 
+ 
+preclude the parties from reaching such an agreement subsequently.  The Commission will 
+specify further proceedings by subsequent order. 
+For the Commission, by the Office  of the General Counsel, pursuant to delegated 
+authority. 
+ 
+ 
+        Vanessa A. Countryman 
+              Secretary 
+ 

raw/aaer/2021/AAER-4213.txt

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+UNITED STATES OF AMERICA 
+Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 91716 / April 29, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4213 / April 29, 2021 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-20269 
+ 
+ 
+In the Matter of 
+ 
+TRUTANKLESS, INC.,  
+ 
+Respondent. 
+ 
+ 
+ 
+ORDER INSTITUTING CEASE-AND-
+DESIST PROCEEDINGS PURSUANT TO 
+SECTION 21C OF THE SECURITIES 
+EXCHANGE ACT OF 1934, MAKING 
+FINDINGS, AND IMPOSING A CEASE-
+AND-DESIST ORDER 
+  
+I. 
+ 
+ The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
+and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 
+Exchange Act of 1934 (“Exchange Act”), against TruTankless, Inc. (“TruTankless” or 
+“Respondent”). 
+ 
+II. 
+ 
+ In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
+of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
+purpose of these proceedings and any other proceedings brought by or on behalf of the 
+Commission, or to which the Commission is a party, and without admitting or denying the findings 
+herein, except as to the Commission’s jurisdiction over it and the subject matter of these 
+proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
+and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 
+Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.  
+ 
+ 
+ 
+ 
+ 
+ 
+ 2 
+ 
+ 
+III. 
+ 
+ On the basis of this Order and Respondent’s Offer, the Commission finds1 that:  
+ 
+Summary 
+ 
+ 1. These proceedings arise out of the violation of Exchange Act Rule 12b-25, which 
+requires that issuers that fail to file timely a periodic report shall file a Form 12b-25 “Notification of 
+Late Filing,” commonly known as “Form NT,” which contains, among other things, reasonable 
+detail as to why the issuer’s periodic report could not be filed on time and an explanation of any 
+anticipated, significant changes in the issuer’s results of operations.  
+ 
+ 2. In August 2019, TruTankless violated Rule 12b-25 by filing a Form 12b-25 with the 
+Commission in which TruTankless failed to disclose why, in sufficient detail under the 
+circumstances presented, its second-quarter, fiscal year (“FY”) 2019 Form 10-Q could not be timely 
+filed.  TruTankless’s Form 12b-25 also failed to acknowledge anticipated, significant changes in 
+TruTankless’s results of operations for the second quarter of FY2019, compared with TruTankless’s 
+operating results in the second quarter of FY2018, and to provide an explanation of the changes, as 
+required under the rule.  Four days after filing its Form 12b-25, TruTankless filed its second-quarter 
+FY2019 Form 10-Q disclosing to investors and the market a restatement of its financial statements 
+for the first quarter of FY2019.  TruTankless, however, had failed to include in its Form 12b-25 
+any disclosure that the discovery, and ongoing correction, of errors in its first-quarter FY2019 
+financial statements were among the principal reasons that it was unable to file timely the subject 
+second-quarter FY2019 Form 10-Q. 
+ 
+Respondent 
+ 
+3. TruTankless, a Nevada corporation based in Scottsdale, Arizona, manufactures and 
+sells whole-house, electric tankless water heaters.  TruTankless common stock is registered under 
+Section 12(g) of the Exchange Act and is quoted on the OTCQB Venture Market. 
+ 
+Legal Framework and Facts 
+ 
+ 4. Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder require 
+issuers with a security registered pursuant to Section 12 of the Exchange Act to file with the 
+Commission annual reports on Form 10-K and quarterly reports on Form 10-Q. 
+ 
+ 5. Rule 12b-25 provides that if an issuer fails to file a Form 10-K or 10-Q within the 
+time period prescribed for such report, the issuer, no later than one business day after the due date 
+                                                            
+1  The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any 
+other person or entity in this or any other proceeding. 
+ 
+ 3 
+for such report, shall file a Form 12b-25 with the Commission, disclosing the issuer’s inability 
+to file the report timely and the reasons therefore in reasonable detail.2  Form 12b-25 requires the 
+issuer to affirm, among other things, that the subject periodic report will be filed within fifteen 
+calendar days, for a Form 10-K, or within five calendar days, for a Form 10-Q, of the report’s 
+prescribed due date, and requires that the report actually be filed within such period.  Form 12b-25 
+also requires the issuer to confirm whether or not it anticipates that any significant change in 
+results of operations from the corresponding period for the prior fiscal year will be reflected by the 
+earnings statements to be included in the subject periodic report.  If such change is anticipated, the 
+issuer must attach a narrative and quantitative explanation of the anticipated change and, if 
+appropriate, state the reasons why a reasonable estimate of the results cannot be made.   
+ 
+  6. On August 15, 2019, TruTankless filed with the Commission a Form 12b-25 
+disclosing that TruTankless could not file timely its Form 10-Q for its FY2019 second quarter, 
+ended June 30, 2019, because it had “encountered some difficulty in compiling necessary 
+disclosures and compilation of its financial statements for review by its independent public 
+accountant for the quarter ended June 30, 2019.”   
+ 
+ 7. Furthermore, in its Form 12b-25, TruTankless affirmed that it would file the subject 
+Form 10-Q within the five-calendar-day extension period and indicated that it did not anticipate 
+that any significant change in results of operations from the corresponding period for the prior 
+fiscal year would be reflected in the subject Form 10-Q.   
+ 
+ 8. On August 19, 2019, TruTankless filed with the Commission a Form 10-Q for its 
+FY2019 second-quarter, ended June 30, 2019, disclosing the following restatement: “[TruTankless] 
+has restated the financial statements for the three months ended March 31, 2019 to correct the 
+accounting for the conversion of the convertible promissory notes…. [T]he notes holders of 
+$110,000 of convertible notes originally convertible at $1.00 agreed to convert the notes and 
+accrued interest of the notes at $0.25.  The Company evaluated the adjustment of the conversion 
+price under ASC 470, and recorded a loss on conversion of $126,813.”  This materially increased 
+TruTankless’s net loss for the first quarter of FY2019 to $1,261,643. 
+ 
+9. TruTankless’s inability to meet the filing deadline for its second-quarter FY2019 
+Form 10-Q was due, in large part, to the discovery, and ongoing correction, of errors in its first-
+quarter FY2019 financial statements.  In its Form 12b-25, however, TruTankless failed to disclose 
+this information and failed to provide the detailed narratives and quantitative explanation 
+specifically called for by the form.  The company anticipated that its second-quarter FY2019 
+financial results, when reported, would differ significantly from its second-quarter FY2018 
+financial results, including a 55% increase in quarterly loss versus second quarter FY2018.   
+ 
+ 
+ 
+ 
+ 
+                                                            
+2  Form 12b-25 specifies a “narrative” disclosure.  (See Form 12b-25, Part III.) 
+ 4 
+Violations 
+ 
+ 10. As a result of the conduct described above, TruTankless violated Section 13(a) of 
+the Exchange Act and Rule 12b-25 thereunder. 
+ 
+IV. 
+ 
+ In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
+agreed to in Respondent TruTankless’s Offer. 
+ 
+ Accordingly, it is hereby ORDERED that: 
+ 
+ A. Pursuant to Section 21C of the Exchange Act, Respondent TruTankless cease and 
+desist from committing or causing any violations and any future violations of Section 13(a) of the 
+Exchange Act and Rule 12b-25 thereunder. 
+ 
+B. Respondent shall pay civil penalties of $25,000 to the Securities and Exchange 
+Commission for transfer to the general fund of the United States Treasury, subject to Exchange Act 
+Section 21F(g)(3).  Payment shall be made in the following four installments: (1) $5,000 within 14 
+days of entry of this order; (2) $7,500 within 180 days of entry of this order; (3) $6,250 within 270 
+days of entry of this order; and (4) $6,250 within 360 days of entry of this order.  Payments shall 
+be applied first to post order interest, which accrues pursuant to 31 U.S.C. 3717.  Prior to making 
+the final payment set forth herein, Respondent shall contact the staff of the Commission for the 
+amount due.  If Respondent fails to make any payment by the date agreed and/or in the amount 
+agreed according to the schedule set forth above, all outstanding payments under this Order, 
+including post-order interest, minus any payments made, shall become due and payable 
+immediately at the discretion of the staff of the Commission without further application to the 
+Commission. 
+ 
+Payment must be made in one of the following ways:   
+ 
+(1) Respondent may transmit payment electronically to the Commission, which 
+will provide detailed ACH transfer/Fedwire instructions upon request;  
+ 
+(2) Respondent may make direct payment from a bank account via Pay.gov 
+through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
+ 
+(3) Respondent may pay by certified check, bank cashier’s check, or United 
+States postal money order, made payable to the Securities and Exchange 
+Commission and hand-delivered or mailed to:  
+ 
+Enterprise Services Center 
+Accounts Receivable Branch 
+HQ Bldg., Room 181, AMZ-341 
+6500 South MacArthur Boulevard 
+ 5 
+Oklahoma City, OK 73169 
+ 
+Payments by check or money order must be accompanied by a cover letter identifying 
+TruTankless as a Respondent in these proceedings, and the file number of these proceedings; a 
+copy of the cover letter and check or money order must be sent to Anita B. Bandy, Associate 
+Director, Division of Enforcement, Securities and Exchange Commission, 100 F St., NE, 
+Washington, DC 20549.   
+ 
+ C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
+treated as penalties paid to the government for all purposes, including all tax purposes.  To 
+preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
+Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
+award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
+penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 
+Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 
+the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the 
+Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 
+an additional civil penalty and shall not be deemed to change the amount of the civil penalty 
+imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 
+private damages action brought against Respondent by or on behalf of one or more investors based 
+on substantially the same facts as alleged in the Order instituted by the Commission in this 
+proceeding. 
+ 
+ 
+ By the Commission. 
+ 
+ 
+ 
+Vanessa A. Countryman 
+Secretary 
+ 
+ 
+ 

raw/aaer/2021/AAER-4215.txt

@@ -0,0 +1,217 @@
+UNITED STATES OF AMERICA 
+Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 91718 / April 29, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4215 / April 29, 2021 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-20271 
+ 
+ 
+In the Matter of 
+ 
+ASTA FUNDING, INC.,  
+ 
+Respondent. 
+ 
+ 
+ 
+ORDER INSTITUTING CEASE-AND-
+DESIST PROCEEDINGS PURSUANT TO 
+SECTION 21C OF THE SECURITIES 
+EXCHANGE ACT OF 1934, MAKING 
+FINDINGS, AND IMPOSING A CEASE-
+AND-DESIST ORDER 
+  
+I. 
+ 
+ The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
+and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 
+Exchange Act of 1934 (“Exchange Act”), against Asta Funding, Inc. (“Asta” or “Respondent”). 
+ 
+II. 
+ 
+ In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
+of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
+purpose of these proceedings and any other proceedings brought by or on behalf of the 
+Commission, or to which the Commission is a party, and without admitting or denying the findings 
+herein, except as to the Commission’s jurisdiction over it and the subject matter of these 
+proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
+and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 
+Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.  
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 2 
+ 
+III. 
+ 
+ On the basis of this Order and Respondent’s Offer, the Commission finds1 that:  
+ 
+Summary 
+ 
+ 1. These proceedings arise out of the violation of Exchange Act Rule 12b-25, which 
+requires that issuers that fail to file timely a periodic report shall file a Form 12b-25 “Notification of 
+Late Filing,” commonly known as “Form NT,” which contains, among other things, reasonable 
+detail as to why the issuer’s periodic report could not be filed on time and an explanation of any 
+anticipated, significant changes in the issuer’s results of operations.  
+ 
+ 2. In May 2020, Asta violated Rule 12b-25 by filing a Form 12b-25 with the 
+Commission in which Asta failed to disclose why, in sufficient detail under the circumstances 
+presented, its second-quarter, fiscal year (“FY”) 2020 Form 10-Q could not be timely filed.  Asta’s 
+Form 12b-25 also failed to acknowledge anticipated, significant changes in Asta’s results of 
+operations for the second quarter of FY2020, compared with Asta’s operating results in the second 
+quarter of FY2019, and to provide an explanation of the changes, as required under the rule.  Eleven 
+days after filing its Form 12b-25, Asta filed a Form 10-Q disclosing to investors and the market that 
+the company’s previously issued FY2019 year-end financial statements required corrections.  Asta, 
+however, had failed to include in its Form 12b-25 any disclosure that the discovery, and ongoing 
+correction, of errors in its FY2019 year-end financial statements were among the principal reasons 
+that it was unable to file timely the subject Form 10-Q for the second quarter of FY2020.  Asta 
+further failed to file the subject Form 10-Q within the extension period provided by Rule 12b-25. 
+ 
+Respondent 
+ 
+3. Asta, a Delaware corporation based in Englewood Cliffs, New Jersey, engages in 
+the consumer receivables business in the United States, Puerto Rico, and South America.  Prior to a 
+September 2020 going-private transaction, Asta common stock was registered under Section 12(b) 
+of the Exchange Act and traded on the NASDAQ Global Select Market. 
+ 
+Legal Framework and Facts 
+ 
+ 4. Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder require 
+issuers with a security registered pursuant to Section 12 of the Exchange Act to file with the 
+Commission annual reports on Form 10-K and quarterly reports on Form 10-Q. 
+ 
+ 5. Rule 12b-25 provides that if an issuer fails to file a Form 10-K or 10-Q within the 
+time period prescribed for such report, the issuer, no later than one business day after the due date 
+                                                            
+1  The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any 
+other person or entity in this or any other proceeding. 
+ 
+ 3 
+for such report, shall file a Form 12b-25 with the Commission, disclosing the issuer’s inability 
+to file the report timely and the reasons therefore in reasonable detail.2  Form 12b-25 requires the 
+issuer to affirm, among other things, that the subject periodic report will be filed within fifteen 
+calendar days, for a Form 10-K, or within five calendar days, for a Form 10-Q, of the report’s 
+prescribed due date, and requires that the report actually be filed within such period.  Form 12b-25 
+also requires the issuer to confirm whether or not it anticipates that any significant change in 
+results of operations from the corresponding period for the prior fiscal year will be reflected by the 
+earnings statements to be included in the subject periodic report.  If such change is anticipated, the 
+issuer must attach a narrative and quantitative explanation of the anticipated change and, if 
+appropriate, state the reasons why a reasonable estimate of the results cannot be made.   
+ 
+  6. On May 18, 2020, Asta filed with the Commission a Form 12b-25 disclosing that 
+Asta could not file timely its Form 10-Q for its second fiscal quarter, ended March 31, 2020, “due 
+to delays experienced in the collection, compilation and analysis of certain information that may be 
+included in the Quarterly Report.”    
+ 
+ 7. Furthermore, in its Form 12b-25, Asta affirmed that it would file the subject Form 
+10-Q within the five-calendar-day extension period, i.e., by May 20, 2020, and indicated that it did 
+not anticipate that any significant change in results of operations from the corresponding period for 
+the prior fiscal year would be reflected in the subject Form 10-Q.   
+ 
+ 8. On May 29, 2020, i.e., nine days after the five-day extension period had ended, 
+Asta filed with the Commission its Form 10-Q for the second quarter of FY2020, disclosing that, 
+“[d]uring the preparation of its Quarterly Report on Form 10-Q for the three and six months ended 
+March 31, 2020, Asta … determined that certain adjustments were needed to correct the previously 
+issued September 30, 2019 consolidated financial statements.  Specifically, management 
+determined that it had understated its income taxes payable and related income tax expense from 
+foreign operations and understated accrued professional fees and related professional fee expense 
+as of and for the year ended September 30, 2019.”     
+ 
+9. Asta’s inability to meet the filing deadline for its second-quarter FY2020 Form  
+10-Q was due, in large part, to the discovery, and ongoing correction, of errors in its FY2019 year-
+end financial statements.  In its Form 12b-25, however, Asta failed to disclose this information and 
+failed to provide the detailed narratives and quantitative explanation specifically called for by the 
+form.  The company anticipated that its second-quarter FY2020 financial results, when reported, 
+would differ significantly from its second-quarter FY2019 financial results, including a 26% 
+decrease in quarterly revenue and a 96% decrease in quarterly income before income tax versus 
+second quarter FY2019.   
+ 
+ 10. Additionally, although Asta affirmed in its May 18, 2020 Form 12b-25 that it 
+would file its third-quarter FY2019 Form 10-Q within five calendar days of the original due date, it 
+ultimately failed to do so.  In fact, Asta did not file the subject Form 10-Q until fourteen calendar 
+days after the original due date, on May 29, 2020. 
+                                                            
+2  Form 12b-25 specifies a “narrative” disclosure.  (See Form 12b-25, Part III.) 
+ 4 
+ 
+Violations 
+ 
+ 11. As a result of the conduct described above, Asta violated Section 13(a) of the 
+Exchange Act and Rule 12b-25 thereunder. 
+ 
+IV. 
+ 
+ In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
+agreed to in Respondent Asta’s Offer. 
+ 
+ Accordingly, it is hereby ORDERED that: 
+ 
+ A. Pursuant to Section 21C of the Exchange Act, Respondent Asta cease and desist 
+from committing or causing any violations and any future violations of Section 13(a) of the 
+Exchange Act and Rule 12b-25 thereunder. 
+ 
+B. Respondent shall, within 14 days of the entry of this Order, pay a civil money 
+penalty in the amount of $50,000.00 to the Securities and Exchange Commission for transfer to the 
+general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If timely 
+payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717.   
+ 
+Payment must be made in one of the following ways:   
+ 
+(1) Respondent may transmit payment electronically to the Commission, which 
+will provide detailed ACH transfer/Fedwire instructions upon request;  
+ 
+(2) Respondent may make direct payment from a bank account via Pay.gov 
+through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
+ 
+(3) Respondent may pay by certified check, bank cashier’s check, or United 
+States postal money order, made payable to the Securities and Exchange 
+Commission and hand-delivered or mailed to:  
+ 
+Enterprise Services Center 
+Accounts Receivable Branch 
+HQ Bldg., Room 181, AMZ-341 
+6500 South MacArthur Boulevard 
+Oklahoma City, OK 73169 
+ 
+Payments by check or money order must be accompanied by a cover letter identifying Asta 
+as a Respondent in these proceedings, and the file number of these proceedings; a copy of the 
+cover letter and check or money order must be sent to Anita B. Bandy, Associate Director, 
+Division of Enforcement, Securities and Exchange Commission, 100 F St., NE, Washington, DC 
+20549.   
+ 5 
+ 
+ C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
+treated as penalties paid to the government for all purposes, including all tax purposes.  To 
+preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
+Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
+award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
+penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 
+Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 
+the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the 
+Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 
+an additional civil penalty and shall not be deemed to change the amount of the civil penalty 
+imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 
+private damages action brought against Respondent by or on behalf of one or more investors based 
+on substantially the same facts as alleged in the Order instituted by the Commission in this 
+proceeding. 
+ 
+ 
+ By the Commission. 
+ 
+ 
+ 
+Vanessa A. Countryman 
+Secretary 
+ 
+ 
+ 

raw/aaer/2021/AAER-4216.txt

@@ -0,0 +1,218 @@
+UNITED STATES OF AMERICA 
+Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 91719 / April 29, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4216 / April 29, 2021 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-20272 
+ 
+ 
+In the Matter of 
+ 
+IGEN NETWORKS CORP.,  
+ 
+Respondent. 
+ 
+ 
+ 
+ORDER INSTITUTING CEASE-AND-
+DESIST PROCEEDINGS PURSUANT TO 
+SECTION 21C OF THE SECURITIES 
+EXCHANGE ACT OF 1934, MAKING 
+FINDINGS, AND IMPOSING A CEASE-
+AND-DESIST ORDER 
+  
+I. 
+ 
+ The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
+and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 
+Exchange Act of 1934 (“Exchange Act”), against Igen Networks Corp. (“Igen” or “Respondent”). 
+ 
+II. 
+ 
+ In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
+of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
+purpose of these proceedings and any other proceedings brought by or on behalf of the 
+Commission, or to which the Commission is a party, and without admitting or denying the findings 
+herein, except as to the Commission’s jurisdiction over it and the subject matter of these 
+proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
+and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 
+Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.  
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 2 
+ 
+III. 
+ 
+ On the basis of this Order and Respondent’s Offer, the Commission finds1 that:  
+ 
+Summary 
+ 
+ 1. These proceedings arise out of the violation of Exchange Act Rule 12b-25, which 
+requires that issuers that fail to file timely a periodic report shall file a Form 12b-25 “Notification of 
+Late Filing,” commonly known as “Form NT,” which contains, among other things, reasonable 
+detail as to why the issuer’s periodic report could not be filed on time and an explanation of any 
+anticipated, significant changes in the issuer’s results of operations.  
+ 
+ 2. In May 2020, Igen violated Rule 12b-25 by filing a Form 12b-25 with the 
+Commission in which Igen failed to disclose why, in sufficient detail under the circumstances 
+presented, its fiscal year (“FY”) 2019 Form 10-K could not be timely filed.  Igen’s Form 12b-25 
+also failed to acknowledge anticipated, significant changes in Igen’s results of operations for the 
+fourth quarter of FY2019, compared with Igen’s operating results in the fourth quarter of FY2018, 
+and to provide an explanation of the changes, as required under the rule.  Two weeks after filing its 
+Form 12b-25, Igen filed its FY2019 Form 10-K disclosing to investors and the market a restatement 
+of the company’s year-end financial statements for FY2018.  Igen, however, had failed to include 
+in its Form 12b-25 any disclosure that the discovery, and ongoing correction, of errors in its 
+FY2018 year-end financial statements were among the principal reasons that it was unable to file 
+timely the subject FY2019 Form 10-K. 
+ 
+Respondent 
+ 
+3. Igen, a Nevada corporation based in Murrieta, California, provides cloud-based 
+automotive services that include stolen-vehicle protection and real-time updates on driver behavior.  
+Igen common stock is registered under Section 12(g) of the Exchange Act and is quoted on the 
+OTCQB Venture Market. 
+ 
+Legal Framework and Facts 
+ 
+ 4. Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder require 
+issuers with a security registered pursuant to Section 12 of the Exchange Act to file with the 
+Commission annual reports on Form 10-K and quarterly reports on Form 10-Q. 
+ 
+ 5. Rule 12b-25 provides that if an issuer fails to file a Form 10-K or 10-Q within the 
+time period prescribed for such report, the issuer, no later than one business day after the due date 
+for such report, shall file a Form 12b-25 with the Commission, disclosing the issuer’s inability 
+                                                            
+1  The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any 
+other person or entity in this or any other proceeding. 
+ 
+ 3 
+to file the report timely and the reasons therefore in reasonable detail.2  Form 12b-25 requires the 
+issuer to affirm, among other things, that the subject periodic report will be filed within fifteen 
+calendar days, for a Form 10-K, or within five calendar days, for a Form 10-Q, of the report’s 
+prescribed due date, and requires that the report actually be filed within such period.  Form 12b-25 
+also requires the issuer to confirm whether or not it anticipates that any significant change in 
+results of operations from the corresponding period for the prior fiscal year will be reflected by the 
+earnings statements to be included in the subject periodic report.  If such change is anticipated, the 
+issuer must attach a narrative and quantitative explanation of the anticipated change and, if 
+appropriate, state the reasons why a reasonable estimate of the results cannot be made.   
+ 
+  6. On May 15, 2020, Igen filed with the Commission a Form 12b-25 disclosing that it 
+could not file timely its Form 10-K for its 2019 fiscal year, ended December 31, 2019, because 
+Igen was “unable to complete the required compilation, dissemination, and review of all 
+information required for filing its Form 10-K … within the prescribed time period without undue 
+hardship and expense.”   
+ 
+ 7. Furthermore, in its Form 12b-25, Igen affirmed that it would file the subject Form 
+10-K within the fifteen-calendar-day extension period and indicated that it did not anticipate that 
+any significant change in results of operations from the corresponding period for the prior fiscal 
+year would be reflected in the subject Form 10-K.   
+ 
+ 8. On May 29, 2020, Igen filed with the Commission its FY2019 Form 10-K, which 
+disclosed that Igen was restating its 2018 consolidated financial statements because, “[d]uring 
+2019, we discovered that an accounting error had been made related to the Company not properly 
+recording contract assets as required under the relevant accounting guidance for revenue 
+recognition.”  The aforementioned restatement resulted in, among other things, material decreases 
+in Igen’s current and total liabilities.   
+ 
+9. Igen’s inability to meet the filing deadline for its FY2019 Form 10-K was due, in 
+large part, to the discovery, and ongoing correction, of errors in its FY2018 year-end financial 
+statements.  In its Form 12b-25, however, Igen failed to disclose this information and failed to 
+provide the detailed narratives and quantitative explanation specifically called for by the form.  The 
+company anticipated that its fourth-quarter FY2019 financial results, when reported, would differ 
+significantly from its fourth-quarter FY2018 financial results, including a 158% reduction in 
+quarterly loss versus fourth quarter FY2018.   
+ 
+Violations 
+ 
+ 10. As a result of the conduct described above, Igen violated Section 13(a) of the 
+Exchange Act and Rule 12b-25 thereunder. 
+ 
+ 
+                                                            
+2  Form 12b-25 specifies a “narrative” disclosure.  (See Form 12b-25, Part III.) 
+ 4 
+IV. 
+ 
+ In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
+agreed to in Respondent Igen’s Offer. 
+ 
+ Accordingly, it is hereby ORDERED that: 
+ 
+ A. Pursuant to Section 21C of the Exchange Act, Respondent Igen cease and desist 
+from committing or causing any violations and any future violations of Section 13(a) of the 
+Exchange Act and Rule 12b-25 thereunder. 
+ 
+B. Respondent shall pay civil penalties of $25,000 to the Securities and Exchange 
+Commission for transfer to the general fund of the United States Treasury, subject to Exchange Act 
+Section 21F(g)(3).  Payment shall be made in the following four installments: (1) $5,000 within 14 
+days of entry of this order; (2) $7,500 within 180 days of entry of this order; (3) $6,250 within 270 
+days of entry of this order; and (4) $6,250 within 360 days of entry of this order.  Payments shall 
+be applied first to post order interest, which accrues pursuant to 31 U.S.C. 3717.  Prior to making 
+the final payment set forth herein, Respondent shall contact the staff of the Commission for the 
+amount due.  If Respondent fails to make any payment by the date agreed and/or in the amount 
+agreed according to the schedule set forth above, all outstanding payments under this Order, 
+including post-order interest, minus any payments made, shall become due and payable 
+immediately at the discretion of the staff of the Commission without further application to the 
+Commission. 
+ 
+Payment must be made in one of the following ways:   
+ 
+(1) Respondent may transmit payment electronically to the Commission, which 
+will provide detailed ACH transfer/Fedwire instructions upon request;  
+ 
+(2) Respondent may make direct payment from a bank account via Pay.gov 
+through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
+ 
+(3) Respondent may pay by certified check, bank cashier’s check, or United 
+States postal money order, made payable to the Securities and Exchange 
+Commission and hand-delivered or mailed to:  
+ 
+Enterprise Services Center 
+Accounts Receivable Branch 
+HQ Bldg., Room 181, AMZ-341 
+6500 South MacArthur Boulevard 
+Oklahoma City, OK 73169 
+ 
+Payments by check or money order must be accompanied by a cover letter identifying Igen 
+as a Respondent in these proceedings, and the file number of these proceedings; a copy of the 
+cover letter and check or money order must be sent to Anita B. Bandy, Associate Director, 
+ 5 
+Division of Enforcement, Securities and Exchange Commission, 100 F St., NE, Washington, DC 
+20549.   
+ 
+ C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
+treated as penalties paid to the government for all purposes, including all tax purposes.  To 
+preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
+Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
+award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
+penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 
+Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 
+the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the 
+Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 
+an additional civil penalty and shall not be deemed to change the amount of the civil penalty 
+imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 
+private damages action brought against Respondent by or on behalf of one or more investors based 
+on substantially the same facts as alleged in the Order instituted by the Commission in this 
+proceeding. 
+ 
+ 
+ By the Commission. 
+ 
+ 
+ 
+Vanessa A. Countryman 
+Secretary 
+ 
+ 
+ 

raw/aaer/2021/AAER-4217.txt

@@ -0,0 +1,223 @@
+UNITED STATES OF AMERICA 
+Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 91721 / April 29, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4217 / April 29, 2021 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-20273 
+ 
+ 
+In the Matter of 
+ 
+ROKK3R, INC.,  
+ 
+Respondent. 
+ 
+ 
+ 
+ORDER INSTITUTING CEASE-AND-
+DESIST PROCEEDINGS PURSUANT TO 
+SECTION 21C OF THE SECURITIES 
+EXCHANGE ACT OF 1934, MAKING 
+FINDINGS, AND IMPOSING A CEASE-
+AND-DESIST ORDER 
+  
+I. 
+ 
+ The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
+and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 
+Exchange Act of 1934 (“Exchange Act”), against Rokk3r, Inc. (“Rokk3r” or “Respondent”). 
+ 
+II. 
+ 
+ In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
+of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
+purpose of these proceedings and any other proceedings brought by or on behalf of the 
+Commission, or to which the Commission is a party, and without admitting or denying the findings 
+herein, except as to the Commission’s jurisdiction over it and the subject matter of these 
+proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
+and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 
+Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.  
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 2 
+ 
+III. 
+ 
+ On the basis of this Order and Respondent’s Offer, the Commission finds1 that:  
+ 
+Summary 
+ 
+ 1. These proceedings arise out of the violation of Exchange Act Rule 12b-25, which 
+requires that issuers that fail to file timely a periodic report shall file a Form 12b-25 “Notification of 
+Late Filing,” commonly known as “Form NT,” which contains, among other things, reasonable 
+detail as to why the issuer’s periodic report could not be filed on time and an explanation of any 
+anticipated, significant changes in the issuer’s results of operations.  
+ 
+ 2. In November 2019, Rokk3r violated Rule 12b-25 by filing a Form 12b-25 with the 
+Commission in which Rokk3r failed to disclose why, in sufficient detail under the circumstances 
+presented, its third-quarter, fiscal year (“FY”) 2019 Form 10-Q could not be timely filed.  Rokk3r’s 
+Form 12b-25 also failed to acknowledge anticipated, significant changes in Rokk3r’s results of 
+operations for the third quarter of FY2019, compared with Rokk3r’s operating results in the third 
+quarter of FY2018, and to provide an explanation of the changes, as required under the rule.  Four 
+days after filing its Form 12b-25, Rokk3r filed a Form 8-K disclosing to investors and the market 
+that the company’s financial statements for the first and second quarters of FY2019 could no 
+longer be relied upon and would be restated.  Rokk3r, however, had failed to include in its Form 
+12b-25 any disclosure that the discovery, and ongoing correction, of errors in prior FY2019 
+quarterly financial statements were among the principal reasons that it was unable to file timely the 
+subject Form 10-Q for the third quarter of FY2019.  Additionally, Rokk3r failed to file its Form 8-
+K within the required period for filing a Form 8-K under Exchange Act Rule 13a-11. 
+ 
+Respondent 
+ 
+3. Rokk3r, a Nevada corporation based in Miami, Florida, provides consulting 
+services to startup companies.  Prior to a May 2020 going-private transaction, Rokk3r common 
+stock was registered under Section 12(g) of the Exchange Act and quoted on the Pink Open 
+Market. 
+ 
+Legal Framework and Facts 
+ 
+ 4. Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder require 
+issuers with a security registered pursuant to Section 12 of the Exchange Act to file with the 
+Commission annual reports on Form 10-K and quarterly reports on Form 10-Q. 
+ 
+                                                            
+1  The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any 
+other person or entity in this or any other proceeding. 
+ 
+ 3 
+ 5. Rule 12b-25 provides that if an issuer fails to file a Form 10-K or 10-Q within the 
+time period prescribed for such report, the issuer, no later than one business day after the due date 
+for such report, shall file a Form 12b-25 with the Commission, disclosing the issuer’s inability 
+to file the report timely and the reasons therefore in reasonable detail.2  Form 12b-25 requires the 
+issuer to affirm, among other things, that the subject periodic report will be filed within fifteen 
+calendar days, for a Form 10-K, or within five calendar days, for a Form 10-Q, of the report’s 
+prescribed due date, and requires that the report actually be filed within such period.  Form 12b-25 
+also requires the issuer to confirm whether or not it anticipates that any significant change in 
+results of operations from the corresponding period for the prior fiscal year will be reflected by the 
+earnings statements to be included in the subject periodic report.  If such change is anticipated, the 
+issuer must attach a narrative and quantitative explanation of the anticipated change and, if 
+appropriate, state the reasons why a reasonable estimate of the results cannot be made.   
+ 
+ 6. Section 13(a) and Rule 13a-11 of the Exchange Act require issuers with a security 
+registered pursuant to Section 12 of the Exchange Act to file or furnish, as applicable, current 
+reports with the Commission on Form 8-K.  Issuers are required to file a Form 8-K within four 
+business days after the occurrence of certain events specified in the Form 8-K.  Section 4, Item 
+4.02 of the Form 8-K specifies that if an issuer concludes, or is advised by its auditor, that any 
+previously issued financial statements required to have been provided should no longer be relied 
+upon, the issuer shall disclose the event and certain enumerated information on a Form 8-K.   
+ 
+  7. On November 14, 2019, Rokk3r filed with the Commission a Form 12b-25 
+disclosing that Rokk3r could not file timely its Form 10-Q for its third fiscal quarter, ended 
+September 30, 2019, “due to its delay in compiling financial information required to be included in 
+its Quarterly Report on Form 10-Q, which delay could not be eliminated by Registrant without 
+unreasonable effort and expense.”  Rokk3r’s disclosure contained no further details regarding the 
+cited delay. 
+ 
+ 8. Furthermore, in its Form 12b-25, Rokk3r indicated that it did not anticipate that any 
+significant change in results of operations from the corresponding period for the prior fiscal year 
+would be reflected in the subject Form 10-Q.   
+ 
+ 9. On November 18, 2019, Rokk3r filed with the Commission a Form 8-K disclosing 
+that, “[o]n November 8, 2019, the Board of Directors of [Rokk3r] concluded, after review and 
+discussion with management, that [Rokk3r’s] unaudited condensed consolidated financial 
+statements for the periods ended March 31, 2019 and June 30, 2019 [i.e., the first and second 
+quarters of FY2019] … should no longer be relied upon” because Rokk3r had incorrectly 
+accounted, in those financial statements, for variable interest entities.  The November Form 8-K 
+disclosed material changes to Rokk3r’s total assets, total revenues, net loss, and stockholders’ 
+equity.  Rokk3r’s auditor, on November 5, 2019, had raised the issue which led to Rokk3r’s 
+restatement of financial results.  Rokk3r failed to file its Form 8-K within the required statutory 
+period.   
+ 
+                                                            
+2  Form 12b-25 specifies a “narrative” disclosure.  (See Form 12b-25, Part III.) 
+ 4 
+10. Rokk3r’s inability to meet the filing deadline for its third-quarter FY2019 Form  
+10-Q was due, in large part, to the discovery, and ongoing correction, of errors in its first-quarter 
+and second-quarter FY2019 financial statements.  In its Form 12b-25, however, Rokk3r failed to 
+disclose this information and failed to provide the detailed narratives and quantitative explanation 
+specifically called for by the form.  The company anticipated that its third-quarter FY2019 
+financial results, when reported, would differ significantly from its third-quarter FY2018 financial 
+results, including a greater than 60% increase in quarterly loss versus third quarter FY2018.   
+ 
+Violations 
+ 
+ 11. As a result of the conduct described above, Rokk3r violated Section 13(a) of the 
+Exchange Act and Rules 12b-25 and 13a-11 thereunder. 
+ 
+IV. 
+ 
+ In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
+agreed to in Respondent Rokk3r’s Offer. 
+ 
+ Accordingly, it is hereby ORDERED that: 
+ 
+ A. Pursuant to Section 21C of the Exchange Act, Respondent Rokk3r cease and desist 
+from committing or causing any violations and any future violations of Section 13(a) of the 
+Exchange Act and Rules 12b-25 and 13a-11 thereunder. 
+ 
+B. Respondent shall, within 14 days of the entry of this Order, pay a civil money 
+penalty in the amount of $50,000.00 to the Securities and Exchange Commission for transfer to the 
+general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If timely 
+payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717.   
+ 
+Payment must be made in one of the following ways:   
+ 
+(1) Respondent may transmit payment electronically to the Commission, which 
+will provide detailed ACH transfer/Fedwire instructions upon request;  
+ 
+(2) Respondent may make direct payment from a bank account via Pay.gov 
+through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
+ 
+(3) Respondent may pay by certified check, bank cashier’s check, or United 
+States postal money order, made payable to the Securities and Exchange 
+Commission and hand-delivered or mailed to:  
+ 
+Enterprise Services Center 
+Accounts Receivable Branch 
+HQ Bldg., Room 181, AMZ-341 
+6500 South MacArthur Boulevard 
+ 5 
+Oklahoma City, OK 73169 
+ 
+Payments by check or money order must be accompanied by a cover letter identifying 
+Rokk3r as a Respondent in these proceedings, and the file number of these proceedings; a copy of 
+the cover letter and check or money order must be sent to Anita B. Bandy, Associate Director, 
+Division of Enforcement, Securities and Exchange Commission, 100 F St., NE, Washington, DC 
+20549.   
+ 
+ C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
+treated as penalties paid to the government for all purposes, including all tax purposes.  To 
+preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
+Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
+award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
+penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 
+Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 
+the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the 
+Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 
+an additional civil penalty and shall not be deemed to change the amount of the civil penalty 
+imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 
+private damages action brought against Respondent by or on behalf of one or more investors based 
+on substantially the same facts as alleged in the Order instituted by the Commission in this 
+proceeding. 
+ 
+ 
+ By the Commission. 
+ 
+ 
+ 
+Vanessa A. Countryman 
+Secretary 
+ 
+ 
+ 

raw/aaer/2021/AAER-4219.txt

@@ -0,0 +1,252 @@
+UNITED STATES OF AMERICA 
+Bef or e the 
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 91723 / April 29, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4219 / April 29, 2021 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-20275 
+ 
+ 
+In the Matter of 
+ 
+HQDA ELDERLY LIFE 
+NETWORK, CORP.,  
+ 
+Respondent. 
+ 
+ 
+CORRECTED ORDER INSTITUTING 
+CEASE-AND-DESIST PROCEEDINGS 
+PURSUANT TO SECTION 21C OF THE 
+SECURITIES EXCHANGE ACT OF 1934, 
+MAKING FINDINGS, AND IMPOSING A 
+CEASE-AND-DESIST ORDER 
+  
+I. 
+ 
+ The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
+and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 
+Exchange Act of 1934 (“Exchange Act”), against HQDA Elderly Life Network, Inc. (“HQDA” or 
+“Respondent”). 
+ 
+II. 
+ 
+ In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
+of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
+purpose of these proceedings and any other proceedings brought by or on behalf of the 
+Commission, or to which the Commission is a party, and without admitting or denying the findings 
+herein, except as to the Commission’s jurisdiction over it and the subject matter of these 
+proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
+and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 
+Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.  
+ 
+ 
+ 
+ 
+ 
+ 
+ 2 
+ 
+ 
+III. 
+ 
+ On the basis of this Order and Respondent’s Offer, the Commission finds1 that:  
+ 
+Summary 
+ 
+ 1. These proceedings arise out of the violation of Exchange Act Rule 12b-25, which 
+requires that issuers that fail to file timely a periodic report shall file a Form 12b-25 “Notification of 
+Late Filing,” commonly known as “Form NT,” which contains, among other things, reasonable 
+detail as to why the issuer’s periodic report could not be filed on time and an explanation of any 
+anticipated, significant changes in the issuer’s results of operations.  
+ 
+ 2. In November 2019 and again in February 2020, HQDA violated Rule 12b-25 by 
+filing a Form 12b-25 with the Commission in which HQDA failed to disclose why, in sufficient 
+detail under the circumstances presented, its Form 10-Q could not be timely filed.  In both instances, 
+HQDA’s Form 12b-25 also failed to acknowledge anticipated, significant changes in HQDA’s 
+results of operations for the fiscal quarter covered by the Form 10-Q compared with HQDA’s 
+operating results in the same quarter of the prior fiscal year, and to provide an explanation of the 
+changes, as required under the rule.  Also, in both instances, days after filing its Form 12b-25, 
+HQDA filed a Form 10-Q disclosing to investors and the market a restatement of the company’s 
+financial statements for a prior fiscal quarter.  HQDA, however, had failed to include in its Form 
+12b-25 any disclosure that the discovery, and ongoing correction, of errors in prior quarterly 
+financial statements were among the principal reasons that it was unable to file timely the subject 
+Forms 10-Q. 
+ 
+Respondent 
+ 
+3. HQDA, a Nevada corporation based in Rosemead, California, focuses on senior 
+housing and retirement services and products in China.  HQDA common stock is registered under 
+Section 12(g) of the Exchange Act and is quoted on the OTCQB Venture Market. 
+ 
+Le gal Frame work and Facts 
+ 
+ 4. Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder require 
+issuers with a security registered pursuant to Section 12 of the Exchange Act to file with the 
+Commission annual reports on Form 10-K and quarterly reports on Form 10-Q. 
+ 
+ 5. Rule 12b-25 provides that if an issuer fails to file a Form 10-K or 10-Q within the 
+time period prescribed for such report, the issuer, no later than one business day after the due date 
+                                                             
+1  The findings herein are m ade pursuant to Respondent's Offer of Settlem ent and are not binding on any 
+other person or entity in this or any other proceeding. 
+ 
+ 3 
+for such report, shall file a Form 12b-25 with the Commission, disclosing the issuer’s inability 
+to file the report timely and the reasons therefore in reasonable detail.2  Form 12b-25 requires the 
+issuer to affirm, among other things, that the subject periodic report will be filed within fifteen 
+calendar days, for a Form 10-K, or within five calendar days, for a Form 10-Q, of the report’s 
+prescribed due date, and requires that the report actually be filed within such period.  Form 12b-25 
+also requires the issuer to confirm whether or not it anticipates that any significant change in 
+results of operations from the corresponding period for the prior fiscal year will be reflected by the 
+earnings statements to be included in the subject periodic report.  If such change is anticipated, the 
+issuer must attach a narrative and quantitative explanation of the anticipated change and, if 
+appropriate, state the reasons why a reasonable estimate of the results cannot be made.   
+ 
+  6. On November 13, 2019, HQDA filed with the Commission a Form 12b-25 
+disclosing that HQDA could not file timely its Form 10-Q for its fiscal quarter, ended September 
+30, 2019, because it “was unable to compile the necessary financial information required to prepare 
+a complete filing. Thus, the Company would be unable to file the periodic report in a timely 
+manner without unreasonable effort or expense.”   
+ 
+ 7. Furthermore, in its Form 12b-25, HQDA affirmed that it would file the subject 
+Form 10-Q within the five-calendar-day extension period and indicated that it did not anticipate 
+that any significant change in results of operations from the corresponding period for the prior 
+fiscal year would be reflected in the subject Form 10-Q.   
+ 
+ 8. On November 19, 2019, HQDA filed with the Commission a Form 10-Q for its 
+fiscal year (“FY”) 2020 first quarter, ended September 30, 2019, disclosing the following 
+restatement: “On September 4, 2018, the Company completed an issuance of 41,731,867 shares at 
+$0.15 per share for total proceeds of $6,259,780 to a Chinese company by a private placement.  
+Following the completion of the transaction, … the Company recorded $27,125,714 of stock-based 
+compensation….  However, since the private placement agreement was signed in April 2018 when 
+the share price value was $0.15 and could not be closed until September 2018 when the share price 
+was $0.80, this should not be a stock-based compensation.  The Company also recorded $68,613 in 
+expenses for payments made to a vendor for development of the Company’s website for the three 
+months ended September 30, 2018.  This should have been classified as prepaid asset and not an 
+expense.  The Company determined that it would be appropriate to correct those errors.”   
+ 
+9. HQDA’s inability to meet the filing deadline for its first-quarter FY2020 Form 
+10-Q was due, in large part, to the discovery, and ongoing correction, of errors in its first-quarter 
+FY2019 financial statements.  In its Form 12b-25, however, HQDA failed to disclose this 
+information and failed to provide the detailed narratives and quantitative explanation specifically 
+called for by the form.  The company anticipated that its first-quarter FY2020 financial results, 
+when reported, would differ significantly from its first-quarter FY2019 financial results, including 
+a 310% increase in revenue and a 97% decrease in loss versus the newly-restated first-quarter 
+FY2018 results.   
+ 
+                                                             
+2  Form 12b-25 specifies a “narrative” disclosure.  (See Form 12b-25, Part III.) 
+ 4 
+ 10. On February 14, 2020, HQDA filed with the Commission a second Form 12b-25, 
+disclosing that HQDA could not file timely its Form 10-Q for its fiscal quarter, ended September 
+30, 2019, because, using language identical to that used in the first Form 12b-25, HQDA “was 
+unable to compile the necessary financial information required to prepare a complete filing. Thus, 
+the Company would be unable to file the periodic report in a timely manner without unreasonable 
+effort or expense.”   
+ 
+ 11. Furthermore, in the second Form 12b-25, HQDA again affirmed that it would file 
+the subject Form 10-Q within the five-calendar-day extension period and indicated that it did not 
+anticipate that any significant change in results of operations from the corresponding period for the 
+prior fiscal year would be reflected in the subject Form 10-Q.   
+ 
+ 12. On February 19, 2020, HQDA filed with the Commission a Form 10-Q for its 
+FY2020 second quarter, ended December 31, 2019, disclosing the following restatement: “For 
+three and six months ended December 31, 2018, the Company did not record the loss generated 
+from foreign currency transactions in the amounts of $460,133. The Company determined that they 
+would be appropriate to correct those errors.”   
+ 
+ 13. HQDA’s inability to meet the filing deadline for its second-quarter FY2020 Form 
+10-Q was due, in large part, to the discovery, and ongoing correction, of errors in its second-
+quarter FY2019 financial statements.  In its Form 12b-25, however, HQDA failed to disclose this 
+information and failed to provide the detailed narratives and quantitative explanation specifically 
+called for by the form.  The company anticipated that its second-quarter FY2020 financial results, 
+when reported, would differ significantly from its second-quarter FY2019 financial results, 
+including a 224% increase in revenue and an 87% decrease in loss versus the newly-restated 
+second-quarter FY2018 results. 
+ 
+Violations 
+ 
+ 14. As a result of the conduct described above, HQDA violated Section 13(a) of the 
+Exchange Act and Rule 12b-25 thereunder. 
+ 
+IV. 
+ 
+ In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
+agreed to in Respondent HQDA’s Offer. 
+ 
+ Accordingly, it is hereby ORDERED that: 
+ 
+ A. Pursuant to Section 21C of the Exchange Act, Respondent HQDA cease and desist 
+from committing or causing any violations and any future violations of Section 13(a) of the 
+Exchange Act and Rule 12b-25 thereunder. 
+ 
+B. Respondent shall, within 14 days of the entry of this Order, pay a civil money 
+penalty in the amount of $50,000 to the Securities and Exchange Commission for transfer to the 
+ 5 
+general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3).  Payment 
+shall be made in the following four installments: (1) $10,000 within 14 days of entry of this order; 
+(2) $15,000 within 180 days of entry of this order; (3) $12,500 within 270 days of entry of this 
+order; and (4) $12,500 within 360 days of entry of this order.  Payments shall be applied first to 
+post order interest, which accrues pursuant to 31 U.S.C. 3717.  Prior to making the final payment 
+set forth herein, Respondent shall contact the staff of the Commission for the amount due.  If 
+Respondent fails to make any payment by the date agreed and/or in the amount agreed according to 
+the schedule set forth above, all outstanding payments under this Order, including post-order 
+interest, minus any payments made, shall become due and payable immediately at the discretion of 
+the staff of the Commission without further application to the Commission. 
+ 
+Payment must be made in one of the following ways:   
+ 
+(1) Respondent may transmit payment electronically to the Commission, which 
+will provide detailed ACH transfer/Fedwire instructions upon request;  
+ 
+(2) Respondent may make direct payment from a bank account via Pay.gov 
+through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
+ 
+(3) Respondent may pay by certified check, bank cashier’s check, or United 
+States postal money order, made payable to the Securities and Exchange 
+Commission and hand-delivered or mailed to:  
+ 
+Enterprise Services Center 
+Accounts Receivable Branch 
+HQ Bldg., Room 181, AMZ-341 
+6500 South MacArthur Boulevard 
+Oklahoma City, OK 73169 
+ 
+Payments by check or money order must be accompanied by a cover letter identifying 
+HQDA as a Respondent in these proceedings, and the file number of these proceedings; a copy of 
+the cover letter and check or money order must be sent to Anita B. Bandy, Associate Director, 
+Division of Enforcement, Securities and Exchange Commission, 100 F St., NE, Washington, DC 
+20549.   
+ 
+ C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
+treated as penalties paid to the government for all purposes, including all tax purposes.  To 
+preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
+Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
+award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
+penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 
+Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 
+the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the 
+Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 
+ 6 
+an additional civil penalty and shall not be deemed to change the amount of the civil penalty 
+imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a  
+private damages action brought against Respondent by or on behalf of one or more investors based 
+on substantially the same facts as alleged in the Order instituted by the Commission in this 
+proceeding. 
+ 
+ 
+ By the Commission. 
+ 
+ 
+ 
+Vanessa A. Countryman 
+Secretary 
+ 
+ 
+ 

raw/aaer/2021/AAER-4220.txt

@@ -0,0 +1,468 @@
+UNITED STATES OF AMERICA 
+Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES ACT OF 1933  
+Release No. 10940 / May 3, 2021 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 91741 / May 3, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4220 / May 3, 2021   
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-20278 
+  
+ 
+In the Matter of 
+ 
+UNDER ARMOUR, INC., 
+ 
+Respondent.   
+ 
+ 
+ 
+ORDER INSTITUTING CEASE-AND-
+DESIST PROCEEDINGS PURSUANT TO 
+SECTION 8A OF THE SECURITIES ACT 
+OF 1933 AND SECTION 21C OF THE 
+SECURITIES EXCHANGE ACT OF 1934, 
+MAKING FINDINGS, AND IMPOSING A 
+CEASE-AND-DESIST ORDER 
+   
+I.   
+The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
+and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act of 
+1933 (“Securities Act”) and Section 21C of the Securities Exchange Act of 1934 (“Exchange Act”) 
+against Under Armour, Inc. (“Under Armour” or “Respondent”). 
+II.   
+In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
+of Settlement (the “Offer”), which the Commission has determined to accept.  Solely for the 
+purpose of these proceedings and any other proceedings brought by or on behalf of the 
+Commission, or to which the Commission is a party, and without admitting or denying the 
+findings herein, except as to the Commission’s jurisdiction over it and the subject matter of these 
+proceedings, which is admitted, Respondent consents to the entry of this Order Instituting Cease-
+and-Desist Proceedings Pursuant to Section 8A of the Securities Exchange Act of 1933 and 
+Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-
+and-Desist Order (“Order”), as set forth below. 
+  
+ 2 
+III.  
+On the basis of this Order and Respondent’s Offer, the Commission finds1 that: 
+Summary  
+1. This matter concerns Under Armour’s failure to disclose material information 
+about its revenue management practices that rendered statements it made misleading. Since 
+becoming a publicly traded company, Under Armour has emphasized its consistent revenue 
+growth, and regularly reported revenue and revenue growth that exceeded analysts’ consensus 
+estimates (“analysts’ revenue estimates”). For 26 consecutive quarters, beginning in the second 
+quarter of 2010, Under Armour’s reported year-over-year revenue growth exceeded 20%, and 
+Under Armour repeatedly highlighted this growth streak in earnings calls and earnings releases. 
+2. By the second half of 2015, Under Armour’s internal revenue and revenue growth 
+forecasts for the third and fourth quarters of 2015 began to indicate shortfalls from analysts’ 
+revenue estimates. Concerned about the possible negative impact on the company’s stock price 
+that could result from missing these estimates, Under Armour sought to accelerate, or “pull 
+forward,” existing orders that customers had requested be shipped in future quarters that could be 
+completed in the current quarter to close the gap between its internal forecasts and analysts’ 
+revenue estimates. To effectuate this, Under Armour typically asked customers to accept 
+shipment of certain products in the current quarter that they had already ordered for delivery in 
+the next quarter.   
+3. For six consecutive quarters from the third quarter of 2015 through the fourth 
+quarter of 2016 (the “Relevant Period”), Under Armour used pull forwards to help it meet 
+analysts’ revenue estimates. During the Relevant Period, Under Armour pulled forward 
+approximately $408 million in orders. Under Armour’s failure to disclose to investors the impact 
+of its pull forward practices was misleading.2 Without these pull forwards each quarter, Under 
+Armour would have missed analysts’ revenue estimates throughout the Relevant Period, and 
+would have missed its better than 20% revenue growth streak in the fourth quarter of 2015 and 
+the third quarter of 2016. On January 31, 2017, the day Under Armour announced that it missed 
+analysts’ revenue estimates for the fourth quarter and full-year 2016, the company’s stock price 
+dropped by approximately 23%. Under Armour’s year-over-year growth rate for each quarter has 
+remained in the single digits or negative since that time. 
+4. As a result of Under Armour’s failure to disclose the impact of its pull forward 
+practice on revenue growth, Under Armour’s public statements were materially misleading. In 
+particular, throughout the Relevant Period, Under Armour made positive statements regarding its 
+revenue growth rate and the factors contributing to the revenue growth rate, without disclosing 
+the significant impact on revenue from its use of pull forwards. Under Armour also failed to 
+                                                 
+1 The findings herein are made pursuant to Respondent’s Offer and are not binding on any other 
+person or entity in this or any other proceeding. 
+2 This Offer does not make any findings that revenue from these sales was not recorded in 
+accordance with generally accepted accounting principles (“GAAP”). 
+ 3 
+disclose that the sales that had been pulled forward were no longer available in the future quarter. 
+This practice raised significant uncertainty that Under Armour would meet its revenue guidance 
+in future quarters. 
+5. As a result of such conduct, and as described in more detail below, Under Armour 
+violated Sections 17(a)(2) and 17(a)(3) of the Securities Act and Section 13(a) of the Exchange 
+Act and Rules 13a-1, 13a-11, 13a-13, and 12b-20 thereunder.  
+Respondent 
+6. Under Armour, Inc., a Maryland corporation headquartered in Baltimore, is 
+primarily engaged in the development, marketing, and wholesale and retail distribution of 
+branded performance apparel, footwear, and accessories. Under Armour is a reporting company 
+with two classes of common stock registered with the Commission under Section 12(b) of the 
+Exchange Act. Both classes of common stock are listed on the New York Stock Exchange under 
+the current ticker symbols “UA” and “UAA.”  
+Under Armour Used Pull Forwards to Meet Analysts’ Revenue Estimates 
+ 
+7. For 26 consecutive quarters, beginning in the second quarter of 2010 through the 
+third quarter of 2016, Under Armour reported year-over-year revenue growth in excess of 20%. 
+  
+8. However, by mid-2015, Under Armour’s Financial Planning & Analysis group 
+(“FP&A group”) identified that the revenue growth rate in the company’s largest market, North 
+America, was not as strong as in previous years. For example, in April and May 2015, the FP&A 
+group alerted senior management that sales projections for the year in wholesale apparel, which 
+was Under Armour’s largest product category in North America, had declined by $120 million 
+compared to the internal projections generated in late 2014. By the third quarter of 2015, Under 
+Armour’s senior management also understood that warmer weather was negatively impacting 
+sales of higher priced cold weather apparel within North America.  
+ 
+9. Starting in the third quarter of 2015, Under Armour’s internally projected 
+company-wide revenue began to fall short of analysts’ revenue estimates. To close the emerging 
+revenue gap, Under Armour’s senior management directed the FP&A group and senior sales 
+personnel, among other things, to identify existing orders that customers had requested be 
+shipped in the next quarter that could instead be shipped in the current quarter.  
+ 
+10. For each quarter during the Relevant Period, Under Armour’s projected revenue 
+growth from sales for which shipment was originally requested in the quarter continued to miss 
+analysts’ revenue estimates, and senior management reacted by directing the FP&A group and 
+sales personnel to execute additional pull forward sales to meet analysts’ revenue estimates. This 
+resulted in, among other things, Under Armour’s periodic use of sales incentives, such as 
+extended payment terms and discounts, to convince customers to agree to take Under Armour 
+product the quarter before the customer had requested shipment.   
+ 
+ 4 
+11. During each quarter of the Relevant Period, Under Armour would have missed 
+analysts’ revenue estimates without its use of pull forwards. In addition, without the use of pull 
+forwards, Under Armour’s year-over-year revenue growth would not have exceeded 20% in the 
+fourth quarter of 2015, the first time this would have occurred since 2010, and the third quarter 
+of 2016.  
+ 
+12. Under Armour used pull forwards in the following quarters, and in the following 
+ways: 
+ 
+Third Quarter 2015  
+13. By the third quarter of 2015, Under Armour knew that its full-year internal 
+projections for company-wide revenue had declined from its late 2014 forecast, including a $120 
+million decline in sales projections for its largest market category, North American wholesale 
+apparel. In September 2015, senior management and the FP&A group decided to close the gap 
+between internally forecasted revenue and analysts’ revenue estimates, in part, by using pull 
+forwards, so the FP&A group directed sales personnel to reach out to customers to request that 
+they take delivery of product earlier than originally scheduled.     
+14. Ultimately, Under Armour pulled forward approximately $45 million in orders 
+from the fourth quarter of 2015 into the third quarter of 2015. On October 22, 2015, Under 
+Armour announced revenue of $1.204 billion for the third quarter of 2015, beating analyst 
+consensus by $29 million. 
+15. In its third quarter 2015 earnings call, earnings release (included in the Form 8-K 
+Under Armour filed with the Commission on October 22, 2015), and Form 10-Q, Under Armour 
+highlighted its reported 28% revenue growth that beat analysts’ revenue estimates, attributing the 
+growth primarily to innovative new product offerings, “a growing interest in performance 
+products and the strength of the Under Armour brand in the marketplace,” and increased sales in 
+footwear and apparel.  
+16. Under Armour did not disclose that it used pull forwards, despite the fact that 
+nearly 4% of its total revenue for the third quarter of 2015 (approximately $45 million) resulted 
+from the practice. Without the pull forwards from the fourth quarter of 2015, Under Armour’s 
+growth rate for the third quarter of 2015 would have been below analysts’ revenue estimates and 
+the lowest quarterly growth rate in more than two years.  
+Fourth Quarter 2015 
+17. During the fourth quarter of 2015, Under Armour’s internal projections for 
+quarterly and full-year company-wide revenue continued to decline. Senior management knew 
+that this decline in projected revenue meant the company could fall below analysts’ revenue 
+estimates, and directed sales personnel to pull forward 2016 orders into 2015.   
+18. Ultimately, Under Armour pulled forward approximately $99 million in orders 
+from the first quarter of 2016 into the fourth quarter of 2015, again representing the largest 
+ 5 
+amount Under Armour had pulled forward in one quarter to date. On January 28, 2016, Under 
+Armour announced revenue of $1.171 billion for the fourth quarter of 2015, beating consensus 
+estimates by $53 million.  
+19. In its fourth quarter 2015 earnings call and earnings release, and 2015 Form 10-K, 
+Under Armour highlighted its 31% revenue growth that beat consensus estimates, attributing it 
+primarily to “growth in training, running, golf and basketball,” and increased sales and new 
+offerings in footwear and apparel, but did not mention the significant impact of pull forwards. In 
+its earnings call, Under Armour highlighted its streak of quarters with 20%-plus revenue growth, 
+stated that its growth drivers had not changed since it went public ten years prior, and denied that 
+warmer weather was materially impacting its revenue. Downplaying the revenue impact of 
+warmer weather in the earnings call, a senior Under Armour executive stated that weather had 
+only impacted the company’s business by a couple percentage points, while another senior 
+executive stated: “Did [weather] affect our business in the way some thought it would? No, it did 
+not. . . . Our business is more diversified than it has ever been, we do not let weather play a 
+decisive role in dictating our success.” These statements and omissions were misleading. In 
+December 2015, Under Armour senior management discussed internally that the company was 
+going to finish with lower-than-expected revenue for the year, and that warmer weather had 
+negatively impacted revenue.  
+20. Under Armour did not disclose the fact that it used pull forwards, despite the fact 
+that pull forwards accounted for nearly 8.5% of its total fourth quarter 2015 revenue 
+(approximately $99 million) and approximately 35% of its fourth quarter of 2015 revenue 
+growth. Without the pull forwards from the first quarter of 2016, Under Armour’s growth rate in 
+the fourth quarter of 2015 would have been less than 20% for the first time in more than five 
+years. 
+First Quarter 2016 
+21. In January 2016, the FP&A group advised Under Armour senior management that 
+the company’s internal revenue forecast for the first quarter of 2016 was lower than analysts’ 
+revenue estimates due, in part, to the pull forwards into 2015. By February 2016, the gap 
+between internal forecasts and external revenue guidance was so significant that Under Armour 
+considered revising its public revenue guidance for the quarter – something the company had 
+never done before. An Under Armour senior executive acknowledged the challenges caused by 
+the 2015 pull forwards by stating in an email: “Let’s see how of [sic] this goes and if we can get 
+enough pull-forwards or extra business to close the Q1 gap. The issue is that we pulled forward a 
+lot in Q4 and there is not as much room in Q2 but we will see.”    
+22. Ultimately, Under Armour pulled forward $17.5 million in orders from the second 
+quarter of 2016 into the first quarter of 2016. On April 21, 2016, Under Armour announced 
+revenue of $1.048 billion for the first quarter of 2016, beating analyst consensus by $12 million. 
+Under Armour did not disclose that $17.5 million of its total first quarter 2016 revenue was 
+comprised of pull forwards. Without these pull forwards, Under Armour’s revenue and growth 
+rate would have been below analysts’ revenue estimates.    
+ 6 
+Second Quarter 2016 
+23. Under Armour also pulled forward revenue into the second quarter of 2016 to 
+meet analysts’ revenue estimates. Under Armour senior management was aware as early as May 
+2016 that the forecasted revenue for the quarter had declined by $11 million, and that Under 
+Armour would likely need to use pull forwards to close the gap.  
+24. Under Armour pulled forward $10 million in orders from the third quarter of 2016 
+into the second quarter 2016. On July 26, 2016, Under Armour announced revenue of $1.001 
+billion for the second quarter of 2016 that met analysts’ revenue estimates. Under Armour did 
+not disclose that $10 million of its total second quarter 2016 revenue was comprised of pull 
+forwards. Without these pull forwards from the third quarter of 2016, Under Armour’s second 
+quarter 2016 revenue would have been below analysts’ revenue estimates.   
+    
+Third Quarter 2016 
+25. Throughout the third quarter of 2016, Under Armour senior management directed 
+the FP&A group and sales personnel to use pull forwards to close an increasing gap between 
+internal revenue forecasts and analysts’ revenue estimates. In July 2016, the FP&A group 
+forecast that Under Armour would need to pull forward approximately $65 million in orders to 
+meet analysts’ revenue estimates and achieve a revenue growth rate of greater than 20%. At that 
+point, senior management emphasized that a growth rate of less than 20% “would be an 
+extremely difficult story,” and urged the FP&A group and sales personnel to continue to press 
+customers to accept shipment of product earlier than originally requested.  
+26. Under Armour’s increasing reliance on pull forwards often resulted in it making 
+multiple requests each quarter to its largest wholesale customers, and periodically offering sales 
+incentives such as price discounts and extended payment terms. For example, in September 
+2016, Under Armour requested additional pull forwards from a key customer, after already 
+having asked to move more than $30 million in sales from the fourth quarter of 2016 to the third 
+quarter of 2016. The customer responded by saying: “We just brought a bunch of your goods in 
+early to help out your quarter. . . Now you want more. . . More..More..more..30% [price 
+discount] please.” Under Armour ultimately agreed to a 25% price discount and an extra 30 days 
+to pay to secure an additional $6.7 million of pull forwards. 
+27. Under Armour pulled forward approximately $65 million in orders from the 
+fourth quarter of 2016 into third the quarter of 2016. On October 25, 2016, Under Armour 
+announced revenue of $1.472 billion for the third quarter of 2016, beating analysts’ revenue 
+estimates by $18 million. Under Armour did not disclose that $65 million of its total third quarter 
+2016 revenue was comprised of pull forwards.  
+28. In its third quarter 2016 earnings call, earnings release, and Form 10-Q, Under 
+Armour highlighted its reported 22% revenue growth that beat analysts’ revenue estimates, 
+attributing the growth primarily to “growth in men’s training, women’s training, golf and team 
+sports,” “strong growth in running and basketball,” “growing interest in performance products 
+and the strength of the Under Armour brand in the marketplace,” and increased sales in footwear 
+ 7 
+and apparel. In its earnings call, Under Armour highlighted its streak of 26 consecutive quarter 
+of 20%-plus revenue growth, and a senior Under Armour executive stated: “I want to be clear . . . 
+that the growth remains intact.” 
+29. Under Armour did not disclose the fact that it engaged in pull forwards, despite 
+the fact that nearly 4.5% of its total third quarter of 2016 revenue ($65 million) or approximately 
+25% of its third quarter of 2016 revenue growth was attributable to pull forwards. Without these 
+pull forwards from the fourth quarter of 2016, Under Armour’s growth rate in the third quarter of 
+2016 would have been less than 20%, and the company would not have reported revenue and 
+revenue growth that beat analysts’ revenue estimates.  
+Fourth Quarter 2016 
+30. Anticipating a revenue shortfall in the fourth quarter 2016, in September 2016 
+Under Armour senior management discussed a plan to ship a large dollar amount (ultimately 
+over $50 million) of orders to a new customer in December 2016, rather than in 2017 as the 
+customer had initially contemplated. An Under Armour senior executive acknowledged that the 
+desire to ship the product early was being driven by pressure to meet analysts’ revenue estimates, 
+saying that the customer “isn’t setting [Under Armour product in its stores] until February, so 
+whether we thought it was $20 or $53 [million] or whatever, really [the customer] doesn’t want 
+any of that product in December but we are shipping it and they are absolutely taking it from us 
+as a favor. If we were a privately held company, we would not ship that product to them in 
+December.”    
+31. By mid-October 2016, Under Armour’s senior management knew that a 
+significant and increasing revenue shortfall for both the fourth quarter and full-year of 2016 was 
+being met with an increasing amount of pull forwards. The FP&A group estimated to senior 
+management that the company would have to pull forward over $160 million of orders to close 
+this gap, and that the pull forwards would negatively impact first quarter 2017 revenue.   
+32. During the remainder of the fourth quarter, Under Armour’s sales increasingly 
+lagged prior forecasts. By mid-December 2016, despite having already pulled forward 
+approximately $170 million in sales, senior management realized the company would not be able 
+to meet analysts’ revenue estimates for the fourth quarter of 2016, or meet its full year revenue 
+guidance of $4.925 billion. Under Armour’s senior management also was becoming more 
+concerned about the negative impact additional pull forwards would have on revenue for the first 
+quarter of 2017.  
+33. Because Under Armour could not meet analysts’ revenue estimates even with the 
+$170 million in pull forward sales, a senior Under Armour executive made the decision to limit 
+additional pull forwards from 2017 into 2016. Notes from a December 15, 2016 meeting of the 
+company’s top executives reflect that, while discussing his decision, the senior executive stated 
+that the company had “been living in this bubble for a while,” that pulling forward revenue in 
+each quarter was not healthy, and that the company was “not going to compromise 2017 . . . 
+we’re not going to take from next year.” 
+ 8 
+34. After additional internal discussions, Under Armour senior management reversed 
+some planned pull forwards, (e.g., by pushing some apparel sales back to the first quarter of 
+2017), but moved ahead with pull forwards of footwear orders because it was a high visibility 
+product segment where the company sought to demonstrate strong revenue growth. This fine-
+tuning of pull forwards was reflected in a December 2016 internal email between senior 
+management which noted that footwear, along with international sales, “are the big growth 
+drivers we have talked about over and over and are the only areas giving people confidence in 
+our future.”  
+35. Although Under Armour did not pull forward enough sales to meet analysts’ 
+revenue estimates and sustain its better than 20% year-over-year revenue growth streak, it still 
+pulled forward approximately $172 million (approximately 13% of its quarterly revenue) in 
+orders from the first quarter of 2017 into the fourth quarter of 2016.  
+36. On January 31, 2017, Under Armour announced revenue of $1.308 billion for the 
+fourth quarter of 2016, which reflected year-over-year revenue growth of 12%. Under Armour 
+did not meet analysts’ revenue estimates for the fourth quarter of 2016, and it did not report year-
+over-year revenue growth of over 20%. That day, the company’s stock price dropped by 
+approximately 23%. 
+37. In its fourth quarter 2016 earnings call and earnings release, and 2016 Form 10-K, 
+Under Armour highlighted its 12% revenue growth, attributing it primarily to “growth in 
+training, running, golf and basketball,” growing interest in performance products, the strength of 
+the Under Armour brand in the marketplace, and increased sales and new offerings in footwear 
+and apparel. In its fourth quarter 2016 earnings call, a senior Under Armour executive stated: “I 
+want to be clear. Our growth story is intact. Our brand is truly stronger than it’s ever been.”  
+38. Under Armour did not disclose the fact that it engaged in pull forwards, despite 
+the fact that approximately 13% of its total fourth quarter of 2016 revenue ($172 million) was 
+derived from pull forwards. Moreover, Under Armour’s statements about its “growth story” 
+being intact and its brand being “stronger than it’s ever been” were made misleading by omitting 
+disclosure of pull forwards because without its aggressive use of pull forwards there would have 
+been no reportable growth in the fourth quarter of 2016.   
+Under Armour’s Use of Pull-Forwards Was Having or Was Reasonably Expected to Have 
+an Adverse Impact on Under Armour’s Future Revenue 
+39. Under Armour’s reliance on pull forwards to meet financial targets was 
+compromising the company’s future revenue and revenue growth rate. When Under Armour 
+convinced customers to accept shipment of product earlier than forecasted, Under Armour could 
+record the sale as occurring in the earlier quarter but, all things being equal, would lose that 
+particular sale in the later quarter when it had been originally scheduled.  
+40. The impact of these shifting sales was especially pronounced for Under Armour 
+because prior reported revenue, particularly in the third and fourth quarters of 2015, included a 
+significant amount of pull forwards. Therefore, to meet analysts’ revenue estimates for 2016, 
+ 9 
+Under Armour had to replace the sales it had previously taken from 2016 through additional 
+customer demand and new products, but also demonstrate the same percentage revenue growth 
+when compared to the 2015 revenue totals (which in turn had been enhanced with pull forwards). 
+In internal emails, Under Armour acknowledged this “double impact on the growth rate” 
+resulting from pull forwards because they “take the base up” in the earlier year and down in the 
+later year. Compared to the same quarters in 2015, Under Armour greatly increased pull 
+forwards during the third and fourth quarters of 2016 in an attempt to continue to meet analysts’ 
+revenue estimates. 
+41. Under Armour knew or should have known that its use of pull forwards concealed 
+its failure to meet analysts’ revenue estimates without such pull forward sales. Under Armour 
+also knew that its increasing reliance on pull forwards to meet analysts’ revenue estimates was 
+having, or was reasonably likely to have, a material negative impact on future revenue. Under 
+Armour’s reported financial results during the Relevant Period did not reflect its natural revenue 
+and revenue growth, and were not indicative of its future financial results. 
+Investors Were Misled by Under Armour 
+42. Under Armour reported its financial results for the Relevant Period in earnings 
+calls and in reports filed with the Commission, identifying various factors as responsible for its 
+sustained and consistent revenue growth, but without disclosing that a significant portion of its 
+revenue and revenue growth had resulted from the use of pull forwards.  
+43. By failing to disclose this information during the Relevant Period, investors were 
+left with a misleading impression of how Under Armour was meeting or beating analysts’ 
+revenue estimates. Internally, Under Armour knew that the company relied heavily on pull 
+forwards to meet analysts’ revenue estimates, and the company’s senior management implicitly 
+admitted the unsustainability of this practice by describing pull forward revenue as “bad,” 
+“unnatural,” and “unhealthy.” Without the same information, investors did not have the ability to 
+fully evaluate Under Armour’s financial results in context and compare results across periods.     
+44. Under Armour’s misleading statements and omissions were material.  Investors 
+were unaware that Under Armour’s use of pull forwards was compromising its future revenue by 
+shifting revenue from future quarters to the current quarter, and causing the company to report 
+strong revenue growth results that Under Armour knew were increasingly difficult to replicate in 
+the future. Without this information, investors also lacked the ability to evaluate Under Armour’s 
+future revenue and ability to meet future guidance and analysts’ revenue expectations. Investors 
+also were unaware of the reasonable likely negative impact Under Armour’s pull forward 
+practices would have on future periods. 
+Under Armour Offered and Sold Securities During the Relevant Period 
+45. During the Relevant Period, Under Armour offered and sold securities, including 
+selling discounted stock under the company’s employee stock purchase plan and issuing shares 
+as compensation to certain employees under its employee incentive plan.  
+ 10 
+Violations 
+46. As a result of the conduct described above, Under Armour violated Section 
+17(a)(2) and (3) of the Securities Act, which prohibit any person from directly or indirectly 
+obtaining money or property by means of any untrue statement of a material fact or any omission 
+to state a material fact necessary in order to make the statements made, in light of the 
+circumstances under which they were made, not misleading, or engaging in any transaction, 
+practice, or course of business which operates or would operate as a fraud or deceit upon the 
+purchaser, in the offer or sale of securities. A violation of these provisions does not require 
+scienter and may rest on a finding of negligence. See Aaron v. SEC, 446 U.S. 680, 685, 701-02 
+(1980). 
+47. Also as a result of the conduct described above, Under Armour violated Section 
+13(a) of the Exchange Act and Rules 13a-1, 13a-11, and 13a-13 thereunder, which require 
+reporting companies to file with the Commission complete and accurate annual, current, and 
+quarterly reports. Under Armour also violated Rule 12b-20 of the Exchange Act, which requires 
+an issuer to include in a statement or report filed with the Commission any information necessary 
+to make the required statements in the filing not materially misleading. 
+48. In addition, Section 13(a) of the Exchange Act requires issuers such as Under 
+Armour to file periodic reports with the Commission containing such information as the 
+Commission prescribes by rule. Form 10-K and Form 10-Q requires registrants to comply with 
+Regulation S-K Item 303. Item 303(a)(3)(ii) of Regulation S-K requires that reports describe, 
+among other things, “any known trends or uncertainties that have had or that the registrant 
+reasonably expects will have a material favorable or unfavorable impact on net sales or revenues 
+or income from continuing operations” in its annual report on Form 10-K. In addition, this Item 
+requires that reports describe “any other significant components of revenues or expenses that, in 
+the registrant’s judgment, should be described in order to understand the registrant’s results of 
+operations.” Instruction 3 to Item 303(a) of Regulation S-K requires that the “discussion and 
+analysis shall focus specifically on material events and uncertainties known to management that 
+would cause reported financial information not to be necessarily indicative of future operating 
+results or of future financial condition.” Item 303(b) of Regulation S-K requires discussion of 
+material changes in such known trends or uncertainties in quarterly reports on Form 10-Q. Under 
+Armour’s use of pull forwards created an uncertainty or event that was known to Under 
+Armour’s senior management and was reasonably expected to have a material effect on the 
+registrant’s future revenues. Under Armour’s failure to attribute growth in revenue to the use of 
+pull forwards did not provide investors with material information about its revenue necessary for 
+an understanding of its results of operations. As a consequence, Under Armour violated Section 
+13(a) of the Exchange Act and Rules 13a-1, 13a-13, and 12b-20 thereunder.   
+IV.   
+In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
+agreed to in Respondent’s Offer. 
+Accordingly, it is hereby ORDERED that: 
+ 11 
+A. Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, 
+Respondent shall cease and desist from committing or causing any violations and any future 
+violations of Section 17(a)(2) and (a)(3) of the Securities Act and Section 13(a) of the Exchange 
+Act  and Rules 13a-1, 13a-11, 13a-13, and 12b-20 thereunder. 
+B. Respondent shall, within 10 days of the entry of this Order, pay a civil penalty of 
+$9,000,000.00 to the Securities and Exchange Commission for transfer to the general fund of the 
+United States Treasury, subject to Exchange Act Section 21F(g)(3).  If timely payment is not made, 
+interest shall accrue pursuant to 31 U.S.C. § 3717.   
+ 
+Payments must be made in one of the following ways: 
+ 
+(1) Respondent may transmit payment electronically to the Commission, which 
+will provide detailed ACH transfer/Fedwire instructions upon request; 
+ 
+(2) Respondent may make direct payment from a bank account via Pay.gov 
+through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
+ 
+(3) Respondent may pay by certified check, bank cashier’s check, or United 
+States postal money order, made payable to the Securities and Exchange 
+Commission and hand-delivered or mailed to: 
+ 
+Enterprise Service Center 
+Accounts Receivable Branch 
+HQ Bldg., Room 181, AMZ-341 
+6500 South MacArthur Boulevard 
+Oklahoma City, OK 73169 
+Payments by check or money order must be accompanied by a cover letter identifying 
+Under Armour, Inc. as a Respondent in these proceedings, and the file number of these proceedings.  
+A copy of the cover letter and check or money order must be sent to Associate Director Jason Burt, 
+Division of Enforcement, Denver Regional Office, Securities and Exchange Commission, 1961 
+Stout Street, 17th Floor, Denver, CO 80294.  
+C. Amounts ordered to be paid as civil money penalties in this Order shall be treated as 
+penalties paid to the government for all purposes, including all tax purposes. To preserve the 
+deterrent effect of the civil penalty, Respondent agrees that in any Related Investor Action, it shall 
+not argue that it is entitled to, nor shall it benefit by, offset or reduction of any award of 
+compensatory damages by the amount of any part of Respondent’s payment of a civil penalty in this 
+action (“Penalty Offset”). If the court in any Related Investor Action grants such a Penalty Offset, 
+Respondent agrees that it shall, within 30 days after entry of a final order granting the Penalty 
+Offset, notify the Commission’s counsel in this action and pay the amount of the Penalty Offset to 
+the Commission. Such a payment shall not be deemed an additional civil penalty and shall not be 
+deemed to change the amount of the civil penalty imposed in this proceeding. For purposes of this 
+paragraph, a “Related Investor Action” means a private damages action brought against Respondent 
+ 12 
+by or on behalf of one or more investors based on substantially the same facts as alleged in the 
+Order instituted by the Commission in this proceeding. 
+ 
+By the Commission. 
+ 
+       
+ 
+      Vanessa A. Countryman 
+      Secretary 
+ 

raw/aaer/2021/AAER-4221.txt

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+UNITED STATES OF AMERICA 
+before the  
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 91799 / May 7, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4221 / May 7, 2021 
+ 
+Admin. Proc. File No. 3-20256 
+ 
+ 
+In the Matter of 
+ 
+CHRISTOPHER E. KNAUTH, CPA 
+ 
+ 
+ 
+ORDER 
+ 
+On April 5, 2021, the Securities and Exchange Commission issued an order instituting an 
+administrative proceeding (“OIP”) against Christopher E. Knauth, CPA (“Respondent”), 
+pursuant to Sections 4C and 21C of the Securities Exchange Act of 1934 and Rules 102(e)(1)(ii) 
+and (iii) of the Commission’s Rules of Practice. 1  Respondent was served with the OIP on April 
+13, 2021.2  Absent Respondent’s consent regarding a later hearing date, a public hearing was to 
+be held on or before June 11, 2021.3  On April 20, 2021, the parties were directed to file a 
+statement advising the Commission of any agreement to a later hearing date.4  On April 27, 
+2021, the parties filed a joint statement in which Respondent consented to a hearing on February 
+7, 2022.  On May 4, 2021, Respondent filed an answer to the allegations contained in the OIP.   
+The parties must conduct a prehearing conference within 14 days of service of the 
+answer.5   The subjects to be discussed at the prehearing conference include settlement of any 
+                                              
+1  Christopher E. Knauth, CPA , Exchange Act Release No. 91475, 2021 WL 1297855 (Apr. 
+5, 2021). 
+2  Christopher E. Knauth, CPA, Exchange Act Release No. 91615, 2021 WL 1579957 (Apr. 
+20, 2021). 
+3  Id. (citing 15 U.S.C. § 78u-3(b)). 
+4  Knauth, 2021 WL 1579957. 
+5  Id. at *9 (citing 17 C.F.R. § 201.221). 
+2 
+ 
+issues as well as the timing of discovery, the exchange of witness and exhibit lists and copies of 
+exhibits, expert witness disclosures and reports, and prehearing motions or briefs.6   
+Accordingly, it is ORDERED that the parties file a joint prehearing conference statement 
+addressing a proposed prehearing schedule within 21 days of the answer’s service.7  If a 
+prehearing conference is not held, the parties shall file, jointly or separately, a statement advising 
+the Commission of that fact and of the efforts made to meet and confer. 
+The parties’ attention is called to the Commission’s March 18, 2020 order regarding the 
+filing and service of papers, which provides that pending further order of the Commission parties 
+to the extent possible shall submit all filings electronically at apfilings@sec.gov.8  Also, the 
+Commission’s Rules of Practice were recently amended to include new e-filing requirements, 
+which took effect on April 12, 2021.9 
+For the Commission, by the Office of the General Counsel, pursuant to delegated 
+authority. 
+ 
+ 
+        Vanessa A. Countryman 
+              Secretary 
+ 
+                                              
+6  17 C.F.R. § 201.221(c). 
+7  See, e.g. , PLS, CPA, Exchange Act Release No. 4148, 2020 WL 3397782 (June 18, 2020) 
+(reflecting that the parties informed the Commission about their discussion of and agreements on 
+a comprehensive list of procedural issues); LBB & Assocs. Ltd., Exchange Act Release No. 
+85796, 2019 WL 2005646 (May 7, 2019) (same).    
+8  See Pending Administrative Proceedings , Exchange Act Release No. 88415, 2020 WL 
+1322001, https://www.sec.gov/litigation/opinions/2020/33-10767.pdf.  
+9  Amendments to the Commission’s Rules of Practice , 85 Fed. Reg. 86,464, 86,474 (Dec. 
+30, 2020); see also Amendments to the Commission’s Rules of Practice, Exchange Act Release 
+No. 90442, 2020 WL 7013370 (Nov. 17, 2020); Instructions for Electronic Filing a nd Service of 
+Documents in SEC Administrative Proceedings  and Technical Specifications,  
+https://www.sec.gov/efapdocs/instructions.pdf.  The amendments also impose other obligations 
+on parties to administrative proceedings such as a new redaction and omission of sensitive 
+personal information requirement.  Amendments to the Commission’s Rules of Practice , 85 Fed. 
+Reg. at 86,465–81. 

raw/aaer/2021/AAER-4222.txt

@@ -0,0 +1,64 @@
+UNITED STATES OF AMERICA 
+before the 
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 91983 / May 24, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4222 / May 24, 2021 
+ 
+Admin. Proc. File No. 3-19767 
+ 
+ 
+In the Matter of 
+ 
+PLS, CPA, A PROFESSIONAL CORPORATION, 
+A/K/A PLS CPAs; CHANG G. PARK, CPA, A/K/A 
+CHANGGEUN PARK; JOSEPH YONGYUN LEE, 
+CPA, A/K/A YONG YUN LEE; AND JUCHI LEE, 
+CPA, A/K/A JUCHI LEE FERNANDEZ, JUCHI LEE, 
+JU CHI LEE, SUE LEE 
+ 
+ 
+ 
+ 
+ 
+ORDER 
+On April 24, 2020, the Securities and Exchange Commission issued an order instituting 
+an administrative proceeding against PLS, CPA, a Professional Corporation, a/k/a PLS CPAs; 
+Chang G. Park, CPA, a/k/a Changgeun Park; Joseph Yongyun Lee, CPA, a/k/a Yong Yun Lee; 
+and Juchi Lee, CPA, a/k/a Juchi Lee Fernandez, Ju-chi Lee, Ju Chi Lee, Sue Lee (collectively, 
+“Respondents”), pursuant to Sections 4C and 21C of the Securities Exchange Act of 1934 and 
+Rules 102(e)(1)(ii) and (iii) of the Commission's Rules of Practice.1  On March 29, 2021, the 
+Division of Enforcement and Respondents filed a joint motion for a stay based on the parties’ 
+agreement in principle to a settlement on all major terms.  On April 1, 2021, we granted the 
+parties’ motion for a stay contingent on the submission to the Commission of Respondents’ 
+signed offer of settlement and the Division’s accompanying recommendation no later than May 
+27, 2021, and ordered the parties to file a joint status report if that deadline was not met.2   
+On May 17, 2021, the parties filed a joint status report representing that they have made 
+good faith efforts to comply with the April 1, 2021 order and are in the process of finalizing the 
+settlement documentation.  They request that the proceeding remain stayed until June 25, 2021, 
+                                                
+1  PLS, CPA, a Professional Corporation, a/k/a PLS CPAs, Exchange Act Release No. 88739, 
+2020 WL 2039958 (Apr. 24, 2020). 
+2  PLS, CPA, a Professional Corporation, a/k/a PLS CPAs, Exchange Act Release No. 91451, 
+2021 WL 1226197 (Apr. 1, 2021). 
+2 
+ 
+ 
+ 
+to afford them sufficient time to finalize the settlement documentation and submit Respondents’ 
+signed offer of settlement and the Division’s accompanying recommendation to the Commission.  
+Given these representations, it appears appropriate to extend the stay.   
+Accordingly, it is ORDERED that the joint request is GRANTED and that this 
+proceeding is stayed until June 25, 2021, to ensure that the parties have sufficient time to attempt 
+to finalize the settlement.  The stay is contingent on the submission to the Commission of 
+Respondents’ signed offer of settlement and the Division’s accompanying recommendation no 
+later than June 25, 2021.  If this deadline is not met or if the Commission rejects the offer of 
+settlement, the parties shall file another joint status report within 7 days of that event.  
+For the Commission, by the Office of the General Counsel, pursuant to delegated 
+authority.  
+ 
+     Vanessa A. Countryman 
+               Secretary 

raw/aaer/2021/AAER-4223.txt

@@ -0,0 +1,118 @@
+UNITED STATES OF AMERICA 
+before the  
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 92076 / June 1, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4223 / June 1, 2021 
+ 
+Admin. Proc. File No. 3-20256 
+ 
+In the Matter of 
+CHRISTOPHER E. KNAUTH, CPA  
+ 
+ 
+ 
+ 
+ 
+ORDER 
+ 
+On April 5, 2021, the Securities and Exchange Commission issued an order instituting an 
+administrative proceeding (“OIP”) against Christopher E. Knauth, CPA (“Respondent”), 
+pursuant to Sections 4C and 21C of the Securities Exchange Act of 1934 and Rules 102(e)(1)(ii) 
+and (iii) of the Commission’s Rules of Practice. 1  In compliance with the statutory provision 
+governing cease -and-desist proceedings, the OIP specified that a “public hearing before the 
+Commission for the purpose of taking evidence . . . shall be convened not earlier than 30 days 
+and not later than 60 days” from service of the OIP.2  The statute also provides that “an earlier or 
+later date” for the hearing may be “set by the Commission with the consent of any respondent so 
+served.”3 
+Respondent was served with the OIP on April 13, 2021, meaning that in the absence of 
+Respondent’s consent regarding a later hearing date, a public hearing was to be set for a date on 
+or before June 11, 2021.4  On April 20, 2021, the parties were directed to file a statement 
+advising the Commission of any agreement to a later hearing date (or a statement that no 
+agreement could be reached).  On April 27, 2021, the parties filed a joint statement in which the 
+parties proposed a hearing starting on February 7, 2022 and by which Respondent consented to a 
+                                              
+1  Christopher E. Knauth, CPA , Exchange Act Release No. 91475, 2021 WL 1297855 (Apr. 
+5, 2021). 
+2  Id. at *9. 
+3  15 U.S.C. § 78u-3(b). 
+4  Christopher E. Knauth, CPA , Exchange Act Release No. 91615, 2021 WL 1579957 (Apr. 
+20, 2021). 
+2 
+ 
+hearing more than 60 days from service of the OIP.  On May 3, 2021, Respondent filed an 
+answer to the OIP.  On May 7, 2021, the parties were directed to conduct a prehearing 
+conference within 14 days of service of the answer and to file a joint prehearing conference 
+statement addressing a proposed prehearing schedule within 21 days of the answer’s service. 
+The parties filed another joint statement on May 18, 2021.  They stated that, after a 
+prehearing conference, they had reached agreement on a proposed schedule with a hearing to 
+commence on February 7, 2022.  The joint statement also represented that the Division had made 
+documents available for inspection or copying in accordance with Rule of Practice 230.5 
+Accordingly, it is ORDERED, based on the parties’ representations, that the parties 
+adhere to the following procedural schedule: 
+ 
+June 3, 2021 Parties exchange initial witness lists. 
+ 
+September 8, 2021 Close of fact discovery. 
+ 
+October 5, 2021 Last date to serve expert reports. 
+ 
+November 5, 2021 Close of expert discovery. 
+ 
+November 15, 2021 Last date to serve rebuttal expert reports. 
+ 
+Last date to file any motions for summary disposition, if leave for any 
+such motions is granted. 
+ 
+December 10, 2021 Last date to file oppositions to any motions for summary disposition. 
+ 
+December 20, 2021 Last date to file replies to any motions for summary disposition. 
+ 
+January 4, 2022 Parties exchange revised witness lists and initial exhibit lists. 
+ 
+January 11, 2022 Parties to file objections to proposed witnesses and exhibits. 
+ 
+Parties to file any motions in limine or other pre-hearing motions. 
+ 
+Parties to file prehearing briefs. 
+ 
+January 20, 2022 Parties to file any oppositions to motions in limine or other pre-hearing 
+motions. 
+ 
+                                              
+5  17 C.F.R. § 201.230. 
+3 
+ 
+January 27, 2022 Parties to file any reply briefs for motions in limine or other pre-hearing 
+motions. 
+ 
+February 1, 2022 Final prehearing conference including ruling on any motions in limine or 
+other pre-hearing motions. 
+ 
+February 4, 2022 Parties exchange final witness lists and final exhibit lists. 
+  
+ Parties exchange pre-marked exhibits. 
+ 
+February 7, 2022 Hearing commences. 
+ 
+It is further ORDERED that any party shall seek leave to file any motion for summary 
+disposition pursuant to Rule of Practice 250(c) by November 1, 2021, by filing a concise 
+statement not to exceed 500 words, addressing why that party believes that resolution of one or 
+more claims or defenses by summary disposition would be appropriate, and which also addresses 
+whether the parties consent to any modifications of the prehearing schedule as a result of such 
+motion for summary disposition.6  
+ 
+For the Commission, by the Office of the General Counsel, pursuant to delegated 
+authority. 
+ 
+        Vanessa A. Countryman 
+              Secretary 
+                                              
+6  See 17 C.F.R. § 201.250(c) (requiring leave to be sought to file motions for summary 
+disposition in 120-day proceedings and articulating that summary disposition may be granted as 
+to a claim or defense when there is “no genuine issue with regard to any material fact” and “the 
+movant is entitled to summary disposition as a matter of law”); see also Knauth , 2021 WL 
+1297855, at * 10 (designating this proceeding one under the “120-day timeframe”). 

raw/aaer/2021/AAER-4225.txt

@@ -0,0 +1,737 @@
+ UNITED STATES OF AMERICA 
+ Before the 
+ SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No.  92378 / July 13, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No.  4225 / July 13, 2021 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-20394 
+ 
+ 
+ 
+In the Matter of 
+ 
+PAUL L. CHANCEY, 
+JR., CPA,  
+ 
+Respondent. 
+ 
+ 
+ 
+ 
+ORDER INSTITUTING PUBLIC 
+ADMINISTRATIVE AND CEASE- 
+ AND-DESIST PROCEEDINGS PURSUANT TO 
+SECTIONS 4C AND 21C OF THE SECURITIES 
+EXCHANGE ACT OF 1934 AND RULE 102(e) 
+OF THE COMMISSION’S RULES OF 
+PRACTICE AND NOTICE OF HEARING 
+   
+ 
+I. 
+ 
+ The Securities and Exchange Commission (“Commission”) deems it appropriate that public 
+administrative and cease-and-desist proceedings be, and hereby are, instituted against Paul L. 
+Chancey, Jr., CPA (“Respondent” or “Chancey”) pursuant to Sections 4C1 and 21C of the 
+Securities Exchange Act of 1934 (“Exchange Act”) and Rule 102(e)(1)(ii) of the Commission’s 
+Rules of Practice.2 
+                                              
+1 Section 4C provides, in relevant part, that:  
+ 
+The Commission may censure any person, or deny, temporarily or permanently, to any 
+person the privilege of appearing or practicing before the Commission in any way, if that 
+person is found . . . (1) not to possess the requisite qualifications to represent others; (2) 
+to be lacking in character or integrity, or to have engaged in unethical or improper 
+professional conduct; or (3) to have willfully violated, or willfully aided and abetted the 
+violation of, any provision of the securities laws or the rules and regulations issued 
+thereunder. 
+ 
+2 Rule 102(e)(1)(ii) provides, in pertinent part, that:  
+2 
+ 
+II. 
+ 
+After an investigation, the Division of Enforcement and the Office of the Chief Accountant 
+allege that:  
+ 
+A. SUMMARY  
+ 
+1. Paul L. Chancey, Jr., a certified public accountant (“CPA”), engaged in improper 
+professional conduct, within the meaning of Section 4C of the Exchange Act and Rule 102(e) of the 
+Commission’s Rules of Practice, during the audits of the 2015 and 2016 financial statements of 
+MiMedx Group, Inc. (“MiMedx”).  MiMedx later restated these financial statements. 
+ 
+2. For both years, Chancey served as the lead audit engagement partner for Cherry 
+Bekaert, LLP (“CB”), the accounting firm performing these audits, but he ignored evidence 
+indicating that sales between MiMedx and one of its largest distributors (“Distributor”) were made 
+on a consignment basis, and that MiMedx had therefore prematurely recognized revenue for these 
+transactions at the time of shipment.  For the 2015 audit, this evidence included written allegations 
+from MiMedx’s controller that highlighted the consignment nature of these transactions and 
+challenged MiMedx’s revenue recognition.  For the 2016 audit, the Distributor itself explained the 
+contingent payment terms for these transactions, demonstrating their consignment nature, in a 
+confirmation response.   
+ 
+3. However, rather than considering the consignment nature of these transactions or 
+performing additional audit procedures to determine if revenue on Distributor transactions was 
+reported in conformity with generally accepted accounting principles (“GAAP”), and without 
+documenting any analysis of the consignment issue in CB’s workpapers, Chancey improperly relied 
+on MiMedx executives’ false representations that revenue recognition was appropriate.  Chancey’s 
+conduct violated several Public Company Accounting Oversight Board (“PCAOB”) standards, 
+including standards requiring Chancey to act with due professional care and obtain sufficient, 
+appropriate audit evidence.   
+ 
+4. Chancey also caused CB to violate Rule 2-02(b) of Regulation S-X.  In connection 
+with the 2015 and 2016 audits, CB issued audit reports in which it represented that CB had 
+conducted the audits in accordance with the standards of the PCAOB, and further represented that, 
+based on its opinion, MiMedx’s financial statements presented fairly, in all material respects, the 
+company’s financial condition and results of its operations in conformity with GAAP.  Chancey 
+approved the issuance of CB’s audit reports that contained these unqualified opinions when he knew 
+                                              
+ 
+The Commission may . . . deny, temporarily or permanently, the privilege of appearing or 
+practicing before it . . . to any person who is found . . . to have engaged in unethical or 
+improper professional conduct. 
+ 
+3 
+or should have known that CB’s representations were false because CB’s audits were not performed 
+in accordance with PCAOB standards. 
+ 
+B. RESPONDENT 
+ 
+5. Paul L. Chancey, Jr., age 57, resides in Fayetteville, Georgia, and is a CPA 
+licensed in Georgia and Mississippi.  Chancey has been a partner at Cherry Bekaert, LLP, since 
+2006 and has less than a 5% ownership interest in the firm.  Chancey was the lead engagement 
+partner on each audit and interim review of MiMedx’s financial statements from at least the first 
+quarter of 2013 through the second quarter of 2017.   
+ 
+C. OTHER RELEVANT ENTITIES 
+   
+6. Cherry Bekaert, LLP is a limited liability company based in Richmond, Virginia, 
+and a public accounting firm registered with the PCAOB.  CB has 13 offices in the United States 
+and more than 1,250 professional employees providing accounting, advisory, and consulting 
+services.  CB acted as MiMedx’s independent auditor from June 9, 2008, to August 4, 2017.  CB 
+issued audit reports on the financial statements of MiMedx for each fiscal year from 2008-2016. 
+ 
+7. MiMedx Group, Inc. is a Florida corporation with its primary operations in 
+Marietta, Georgia.  MiMedx’s stock is currently registered with the Commission under Section 
+12(g) of the Exchange Act and trades on the NASDAQ exchange under the symbol MDXG.  The 
+Commission previously charged MiMedx for, among other things, fraudulently misstating its 2015 
+and 2016 financial statements in violation of GAAP.  The Commission accepted MiMedx’s offer 
+of settlement, whereby MiMedx consented to an order permanently enjoining future violations of 
+certain securities laws and imposing a civil penalty of $1.5 million.  The district court entered final 
+judgment against MiMedx on December 4, 2019.  See SEC v. MiMedx Group, In., et. al., No. 1:19-
+cv-10927-NRB (S.D.N.Y.).  
+  
+D. FACTS 
+ 
+ Background 
+ 
+8. MiMedx is a public company that sells medical products made from human 
+placental tissue.  MiMedx’s 2015 and 2016 audited financial statements were included in filings 
+MiMedx made with the Commission on Form 10-K.  MiMedx’s sales to customers in 2015 and 
+2016 included direct sales to distributors.  MiMedx generally recognized revenue on those sales at 
+the time of shipment.   
+ 
+9. CB was engaged by MiMedx as its independent auditor to conduct the annual 
+audits of the 2015 and 2016 financial statements.  CB’s 2015 and 2016 audit reports contained 
+unqualified opinions in which CB represented that it had conducted the audits in accordance with 
+PCAOB audit standards, that MiMedx’s financial statements fairly presented the financial condition 
+and results of operations in all material respects, and that the financial statements had been prepared 
+in conformity with GAAP.  
+4 
+ 
+10. As the lead audit engagement partner, Chancey had responsibility for the conduct of 
+the audits, including planning, supervising team members, and ensuring compliance with PCAOB 
+standards.  
+ 
+MiMedx Improperly Recognized Revenue on Transactions with Distributor 
+ 
+11. Distributor arranged sales of MiMedx product to the U.S. Department of Veterans 
+Affairs and U.S. Department of Defense medical facilities (collectively, the “VA”).  MiMedx and 
+Distributor had a written distribution agreement that provided that risk of loss passed to Distributor 
+upon shipment of product, that Distributor had a specific number of days to pay invoices, and that 
+Distributor could return product only if it was defective. 
+ 
+12. When Distributor and MiMedx first entered into this distribution agreement, 
+Distributor purchased very limited quantities of MiMedx product and followed the terms of the 
+written distribution agreement.  MiMedx issued an invoice to Distributor upon shipment of product 
+and recognized revenue at that time. 
+ 
+13. However, in late 2012, MiMedx asked Distributor to make bulk orders of product 
+to stock at the VA.  Distributor was willing to make bulk orders based on an arrangement that 
+ensured Distributor would not be liable for payment to MiMedx until the VA used the products and 
+committed to pay Distributor.  As a result, MiMedx excused Distributor from payment until the 
+VA issued a purchase order (“PO”) to Distributor for the product, which occurred after the VA 
+used the product.  This side arrangement was contrary to and replaced the terms of the written 
+distribution agreement. 
+ 
+14. MiMedx also did not transfer risk of loss to Distributor until Distributor received a 
+PO from the VA.  Instead, MiMedx managed the inventory held at VA facilities and credited 
+Distributor for any lost, dropped, or missing products stocked at the VA. 
+ 
+15. The side agreement between MiMedx and Distributor effectively transformed 
+MiMedx’s arrangement with Distributor into one where the product was shipped on a consignment 
+basis.  As a result, under GAAP, MiMedx should have delayed recognizing revenue until it was 
+realized or realizable and earned, which occurs only when each of the following conditions is met:  
+(i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services have been 
+rendered; (iii) the seller’s price to the buyer is fixed or determinable; and (iv) collectibility is 
+reasonably assured.  However, MiMedx improperly continued recognizing revenue upon shipment 
+of the product, rather than delaying revenue recognition until Distributor was obligated to purchase 
+the product. 
+ 
+16. The side arrangement, which lasted from at least late 2012 through 2017, was well 
+known at MiMedx.  MiMedx had a “Reconciliation Group” that closely tracked Distributor’s 
+receipt of POs from the VA, which obligated the VA to pay Distributor for products used.  Under 
+the side arrangement, Distributor’s obligation to pay arose later than the MiMedx invoice date, 
+which was contrary to the terms of the written distribution agreement. 
+5 
+ 
+ 
+17. Every weekday from late 2012 to the end of the relationship between MiMedx and 
+Distributor in 2017, Distributor sent the Reconciliation Group a daily report listing each tissue for 
+which the VA submitted a PO to Distributor.  The Reconciliation Group then sent a daily email to 
+MiMedx management providing the dollar value of the POs the VA had submitted to the 
+Distributor.  The Reconciliation Group then compiled the daily figures into a “Weekly Revenue” 
+table circulated each Monday to MiMedx management and the accounting department.   
+ 
+18. Approximately 10 days after the close of each week, Distributor paid MiMedx the 
+exact total cash amount identified in the Weekly Revenue table.  The Reconciliation Group 
+confirmed that Distributor’s payment matched the anticipated amount.  Distributor paid MiMedx 
+only the value of Distributor’s sales to the VA, its end customer. 
+ 
+19. MiMedx and Distributor agreed that Distributor’s payments would be applied to the 
+oldest outstanding invoice, regardless of which specific products Distributor had sold through. 
+ 
+20. As a result of the side arrangement, MiMedx prematurely recognized revenue on 
+transactions with Distributor for several years, including 2015 and 2016.  Distributor was one of 
+MiMedx’s largest customers, and sales to Distributor represented roughly 24% and 9% of 
+MiMedx’s total revenue in 2015 and 2016, respectively.   
+ 
+21. In 2020, MiMedx restated its financial statements for several reporting periods due 
+to its nonconformance with GAAP.  MiMedx’s restatements included material changes for revenue 
+prematurely recognized on sales to Distributor in 2015 and 2016.    
+ 
+Chancey Violated PCAOB Audit Standards When Conducting the 2015 and 2016 
+Audits 
+ 
+22. During the audits of MiMedx’s 2015 and 2016 financial statements, CB and 
+Chancey identified revenue as one of MiMedx’s most significant financial statement accounts and 
+an area with heightened risk of material misstatement due to both error and fraud.  PCAOB 
+standards required CB to presume that improper revenue recognition was a fraud risk.  Since 
+revenue recognition was an area that required heightened scrutiny, CB had enhanced obligations 
+under PCAOB standards to perform additional audit procedures. 
+ 
+23. MiMedx management made false representations to CB during each audit, in 
+management representation letters and other documents, denying that MiMedx had a side 
+arrangement with Distributor.  During both the 2015 and 2016 audits, Chancey improperly relied 
+on these management representations without appropriate corroboration, even though these 
+representations directly contradicted information Chancey had received from reliable sources, 
+including MiMedx’s controller and Distributor itself.   
+ 
+24. Chancey did not perform additional substantive audit procedures or obtain 
+sufficient, appropriate audit evidence to reduce the risk of material misstatement to an 
+6 
+appropriately low level as required by PCAOB standards.  Chancey’s conduct demonstrated the 
+following audit failures in violation of PCAOB standards: (1) failure to exercise due professional 
+care; (2) failure to obtain an understanding of MiMedx’s business; (3) failure to plan the audits 
+based on assessment of risk; (4) failure to obtain sufficient appropriate audit evidence; (5) failure to 
+evaluate audit results; and (6) failure to document audit work. 
+ 
+25. As a result of these violations, Chancey engaged in (1) a single instance of highly 
+unreasonable conduct in circumstances for which heightened scrutiny is warranted; and (2) 
+repeated instances of unreasonable conduct that indicate his lack of competence. 
+2015 Audit Failures 
+ 
+26. Early in the 2015 audit, MiMedx’s chief financial officer showed Chancey and 
+MiMedx’s Audit Committee an email from MiMedx’s controller alleging improper revenue 
+recognition relating to transactions with Distributor and others. 
+ 
+27. The controller alleged that Distributor “implicitly doesn’t pay MiMedx until the 
+tissue has been implanted, so revenue should be recognized on a consignment model.”  The 
+controller referenced in his email “information[,]” “sales and collections data[,]” and “accounting 
+research” that he had collected to support his conclusions.  
+ 
+28. Chancey read the email and knew about the controller’s specific allegations, but 
+Chancey made the decision not to obtain a copy of the controller’s email for inclusion in the CB 
+workpapers.  Chancey also did not document, or ensure documentation of, the controller’s 
+allegations, or any related evaluation or resolution of the allegations, in the CB workpapers. 
+ 
+29. Chancey also knew that the controller declined to sign the management 
+representation letter that CB had requested as part of its 2015 audit procedures.  However, Chancey 
+also did not document, or ensure documentation of, this significant fact in the CB workpapers. 
+ 
+30. Chancey never attempted to contact the controller to gain a better understanding of 
+the controller’s allegations, nor did Chancey request the supporting information the controller 
+referenced in his email, even though CB was in regular contact with the controller in the course of 
+performing 2015 audit procedures.  
+ 
+31. Chancey also did not attempt to obtain information about the possible consignment 
+arrangement from Distributor, the VA, or even MiMedx personnel involved in collecting payments 
+from Distributor. 
+ 
+32. While CB performed some testing during its audits, this testing was insufficient to 
+allow CB to conclude whether MiMedx was appropriately recognizing revenue for its sales to 
+Distributor.  In particular, CB’s procedures to test sales transactions, accounts receivable, the Days 
+Sales Outstanding (“DSO”) metric, the sales returns allowance, and sales commissions either failed 
+to provide sufficient appropriate evidence that was relevant to the consignment issue or, instead, 
+raised additional red flags or contradictory evidence suggesting that the arrangement with 
+Distributor could be a consignment.  
+7 
+ 
+33. The DSO analysis, for example, reflected that Distributor was paying much later 
+than, and in a manner that was not consistent with, the terms of the written distribution agreement.  
+Additionally, the sales return allowance procedures reflected that the risk of loss had not 
+transferred to Distributor upon shipment because MiMedx incurred losses for tissue that was 
+subsequently lost, dropped, or missing.  Further, the sales commissions procedures showed that 
+MiMedx paid commissions to sales personnel only after the VA had implanted tissue, suggesting 
+that the transaction was incomplete until that time. 
+ 
+34. MiMedx’s Audit Committee conducted a limited review of the controller’s 
+allegations and concluded that MiMedx’s accounting was appropriate based largely on the written 
+distribution agreement, which MiMedx’s management misrepresented as controlling the terms of 
+the transactions with Distributor.  Chancey attended an Audit Committee meeting where the Audit 
+Committee reported the conclusions of its review, but he did not know what investigative steps the 
+Audit Committee took in its review.  Chancey did not implement any additional audit procedures 
+to verify or corroborate the Audit Committee’s work.  Chancey also did not document, or ensure 
+documentation of, the Audit Committee’s review of the controller’s allegations.   
+ 
+35. Despite the evidence he had, Chancey did not plan, perform, or document any 
+additional substantive procedures for the 2015 audit to test whether a side arrangement with 
+Distributor existed.   
+ 
+36. CB’s 2015 workpapers did include a memo CB created as part of its audit 
+procedures to summarize sales to Distributor.  However, rather than documenting evidence 
+obtained from substantive procedures performed to test the existence of a consignment 
+arrangement, the memo referenced amendments to the written agreement that were not relevant 
+and sales commission expense procedures that indicated a consignment arrangement might exist.  
+The memo concluded, without sufficient basis, that “[c]onsistent with prior years, CB considers all 
+four revenue recognition criteria to have been met on [Distributor’s] sales.”  
+ 
+37. At the conclusion of the 2015 audit, Chancey caused CB to issue an audit report 
+that inaccurately stated that the audit was performed in accordance with PCAOB standards.  
+MiMedx filed CB’s inaccurate audit report with MiMedx’s 2015 Form 10-K on February 29, 2016.   
+ 
+2016 Audit Failures 
+ 
+38. During the 2016 audit, Chancey obtained new evidence, this time directly from 
+Distributor, that further demonstrated MiMedx’s consignment arrangement with Distributor. 
+ 
+39. In its 2016 accounts receivable audit confirmation response to CB, Distributor 
+specifically stated that Distributor “does not pay MiMedx for tissues until such a time as the [VA] 
+issues a purchase order to [Distributor].”  
+ 
+40. Also during the 2016 audit, Chancey learned that Distributor made the same 
+representation (of payment due to MiMedx only upon the issuance of a PO from the VA) during a 
+8 
+MiMedx Audit Committee internal investigation into allegations of fictitious sales.  As a result of 
+that investigation, Chancey also learned that Distributor further represented that:  (1) MiMedx had 
+historically given Distributor credit for lost, dropped, and missing inventory; and (2) MiMedx 
+applied Distributor’s payments to the oldest invoices first, regardless of whether the VA made 
+payments to Distributor for the products reflected in those invoices. 
+ 
+41. In addition, consistent with the evidence obtained in the 2015 audit, CB’s 
+procedures to test sales transactions, accounts receivable, the DSO metric, the sales returns 
+allowance, and sales commissions either failed to provide sufficient appropriate evidence that was 
+relevant to the consignment issue or, instead, raised additional red flags or contradictory evidence 
+suggesting that the arrangement with Distributor was a consignment. 
+ 
+42. Despite this evidence, and the evidence from the 2015 audit, Chancey did not plan, 
+perform, or document any additional substantive procedures for the 2016 audit to test whether a 
+side arrangement existed.  For example, he did not ask Distributor about the existence of a side 
+arrangement or for any evidence Distributor might have to support its position that its obligation to 
+pay MiMedx was contingent on a PO from the VA.  Chancey also did not speak with anyone else 
+at MiMedx or the VA who was involved in the sales and collection processes. 
+ 
+43. As part of its 2016 audit procedures, CB requested and obtained a revenue 
+recognition memo from MiMedx management that supported MiMedx’s revenue recognition for 
+transactions with Distributor at the time of shipment.  However, that memo did not provide 
+sufficient appropriate evidence about revenue recognition considering the side agreement.  
+Chancey improperly relied on management’s representations that the written distribution 
+agreement established the terms of the transactions, rather than performing incremental audit 
+procedures specifically directed at testing the alleged side agreement. 
+ 
+44. At the conclusion of the 2016 audit, Chancey again caused CB to issue an audit 
+report that inaccurately stated that the audit was performed in accordance with PCAOB standards.  
+MiMedx filed CB’s inaccurate audit report with MiMedx’s 2016 Form 10-K on March 1, 2017. 
+ 
+PCAOB Audit Standards3 Chancey Violated During the 2015 and 2016 Audits 
+ 
+Failure to Exercise Due Professional Care 
+ 
+45. PCAOB AS 1015 (AU 230) Due Professional Care in the Performance of Work 
+states, “the exercise of due professional care allows the auditor to obtain reasonable assurance 
+about whether the financial statements are free of material misstatement, whether caused by error 
+                                              
+3  Effective after the 2015 audit of MiMedx’s financial statements, the PCAOB reorganized        
+the structure and numbering of auditing standards.  The reorganized standards did not impose 
+new requirements or change the substance of the requirements on auditors.  This document 
+references the reorganized PCAOB auditing standards in effect during the audit of MiMedx’s 
+2016 financial statements with the pre-reorganization references (related to the 2015 audit) 
+provided parenthetically. 
+9 
+or fraud” and “[a]lthough not absolute assurance, reasonable assurance is a high level of 
+assurance.”  The standard requires the auditor to:  
+a. exercise professional skepticism, “an attitude that includes a questioning mind and 
+a critical assessment of audit evidence”;  
+b. “consider the competency and sufficiency of the [audit] evidence”;   
+c. neither assume that management is dishonest nor assume “unquestioned honesty” 
+and “the auditor should not be satisfied with less than persuasive evidence because 
+of a belief that management is honest”; and 
+d. adhere to the standard during the planning and throughout the audit process. 
+ 
+46. PCAOB AS 2401 (AU 316) Considera tion of Fraud in a Financial Statement Audit 
+requires that the auditor exercise professional skepticism when considering fraud risks and 
+“conduct the engagement with a mindset that recognizes the possibility that a material 
+misstatement due to fraud could be present, regardless of any past experience with the entity and 
+regardless of the auditor’s belief about management’s honesty and integrity.  Furthermore, 
+professional skepticism requires an ongoing questioning of whether the information and evidence 
+obtained suggests that a material misstatement due to fraud has occurred.”  
+ 
+47. During both the 2015 and 2016 audits, Chancey had evidence that contradicted 
+management representations about MiMedx’s transactions with Distributor.  Yet , he improperly 
+relied on management representations when concluding that MiMedx’s financial statements were 
+free of material misstatement.  Furthermore, Chancey failed to corroborate management 
+representations or perform any additional substantive procedures to reconcile the contradictory 
+evidence he had received from reliable sources and CB’s other audit procedures, and thus failed to 
+reduce the risk of material misstatement to an appropriately low level.  
+ 
+48. As a result, Chancey failed to exercise due professional care, which was required by 
+PCAOB standards, during the audits of MiMedx’s 2015 and 2016 financial statements.   
+ 
+Failure to Obtain an Understanding of MiMedx’s Business 
+ 
+49. PCAOB AS 1015 (AU 230) Due Professional Care in the Performance of Work 
+requires that the engagement partner “be knowledgeable about the client.”  
+ 
+50. PCAOB AS 2110 (AS 12) Identifying and Assessing Risks of Material 
+Misstatement requires the auditor to “obtain an understanding of the company and its environment 
+(‘understanding of the company’) to understand the events, conditions, and company activities that 
+might reasonably be expected to have a significant effect on the risks of misstatement.”  
+ 
+51. Chancey failed to become knowledgeable about MiMedx’s relationship with 
+Distributor, which was one of MiMedx’s most significant customers.  Among other things, 
+Chancey failed to obtain an understanding of the following significant events, conditions, and 
+activities impacting MiMedx’s transactions with Distributor:  
+a. During the 2015 audit, the controller’s allegations about MiMedx’s consignment 
+arrangement; 
+10 
+b. During both the 2015 and the 2016 audits, Distributor’s practice of paying much 
+later than the contract terms allowed; 
+c. During both the 2015 and the 2016 audits, MiMedx’s practice of incurring losses 
+for sales of tissue to Distributor, contra ry to terms of the distribution agreement, 
+when tissues were lost, dropped, or missing after shipment; and 
+d. During the 2016 audit, Distributor’s representations that payment terms with 
+MiMedx were contingent on sales to the VA. 
+ 
+52. As a result, Chancey failed to obtain an understanding of MiMedx’s business, 
+which was required by PCAOB standards, during the audits of MiMedx’s 2015 and 2016 financial 
+statements.  
+ 
+Failure to Plan the Audits Based on Assessment of Risk 
+ 
+53. PCAOB AS 2101 (AS 9) Audit Planning states that “[p]lanning the audit includes 
+establishing the overall audit strategy for the engagement and developing an audit plan, which 
+includes, in particular, planned risk assessment procedures and planned responses to the risks of 
+material misstatement.  Planning is not a discrete phase of an audit but, rather, a continual and 
+iterative process that might begin shortly after (or in connection with) the completion of the 
+previous audit and continues until the completion of the current audit.”  Moreover, “[t]he auditor 
+should modify the overall strategy and the audit plan as necessary if circumstances change 
+significantly during the course of the audit, including changes due to a revised assessment of the 
+risks of material misstatement or the discovery of a previously unidentified risk of material 
+misstatement.”  
+ 
+54. PCAOB AS 2110 (AS 12) Identifying and Assessing Risks of Material 
+Misstatement requires the auditor to “presume that there is fraud risk involving improper revenue 
+recognition and evaluate which types of revenue, revenue transactions, or assertions may give 
+rise to such risks.” 
+ 
+55. PCAOB AS 1101 (AS 8) Audit Risk provides that “reasonable assurance is obtained 
+by reducing audit risk to an appropriately low level through applying due professional care, 
+including obtaining sufficient appropriate audit evidence.”  
+ 
+56. During both the 2015 and 2016 audits, Chancey learned of red flags and 
+contradictory evidence indicating that a side arrangement with Distributor existed, but CB did not 
+perform additional procedures to determine if revenue was misstated.  Even after Chancey learned 
+during the 2015 audit that the controller had challenged MiMedx’s revenue recognition for 
+transactions with Distributor and that the controller would not sign the management representation 
+letter, and, during the 2016 audit, that Distributor had described its contingent payment terms with 
+MiMedx in its audit confirmation response, Chancey did not modify CB’s audit plan to respond to 
+the increased risk of material misstatement.  This was true even though CB had previously 
+identified revenue as an area with heightened risk of material misstatement due to error or fraud.  
+ 
+11 
+57. As a result, Chancey failed to plan the audits and revise risk assessments 
+appropriately, as required by PCAOB standards, during the audits of MiMedx’s 2015 and 2016 
+financial statements. 
+ 
+Failure to Obtain Sufficient Appropriate Audit Evidence 
+ 
+58. PCAOB AS 1105 (AS 15) Audit Evidence  states that, “[t]o be appropriate, audit 
+evidence must be both relevant and reliable in providing support for the conclusions on which the 
+auditor’s opinion is based.”  Relevance depends on “whether [the audit procedure] is designed to 
+(1) test the assertion or control directly and (2) test for understatement or overstatement and the 
+timing of the audit procedure used to test the assertion or control.”  Additionally, “the reliability of 
+evidence depends on the nature and source of the evidence and the circumstances under which it is 
+obtained.…Evidence obtained from a knowledgeable source that is independent of the company is 
+more reliable than evidence obtained only from internal company sources.”  Furthermore, the 
+standard requires the auditor to:  
+a. “plan and perform audit procedures to obtain sufficient appropriate audit evidence 
+to provide a reasonable basis for his or her opinion”; 
+b. “test the accuracy and completeness of the information” produced by the company; 
+and 
+c. “perform audit procedures necessary to resolve the matter” when “audit evidence 
+obtained from one source is inconsistent with that obtained from another, or if the 
+auditor has doubts about the reliability of information to be used as audit evidence” 
+(emphasis added). 
+ 
+59. PCAOB AS 2805 (AU 333) Management Representations states that management 
+representations “are not a substitute for the application of auditing procedures necessary to afford a 
+reasonable basis for an opinion regarding the financial statements under audit” and, “[i]f a 
+representation made by management is contradicted by other audit evidence, the auditor should 
+investigate the circumstances and consider the reliability of the representation made” (emphasis 
+added).  
+ 
+60. PCAOB AS 2310 (AU 330) The Confirmation Process explains that the purpose of 
+confirmation is to obtain evidence from “third parties about financial statement assertions made by 
+management.”  The auditor should evaluate the evidence provided in the confirmation to obtain an 
+understanding about the existence and details of significant oral modifications to written 
+agreements and perform alternative procedures and additional testwork to obtain sufficient 
+evidence.  Further, nonresponses “do not provide audit evidence about the financial statement 
+assertions being addressed.”  
+ 
+61. PCAOB AS 2301 (AS 13)  The Auditor’s Responses to the Risks of Material 
+Misstatement states that “assessed risks of material misstatement, particularly fraud risks, should 
+involve the application of professional skepticism in gathering and evaluating audit evidence[,]” 
+which includes “obtaining sufficient appropriate evidence to corroborate management’s 
+explanations or representations concerning important matters.”  The standard also requires the 
+auditor to:  
+12 
+a. design the audit procedures performed to “[o]btain more persuasive evidence the 
+higher the auditor’s assessment of risk [and] [t]ake into account the types of 
+potential misstatements that could result from the identified risks and the likelihood 
+and magnitude of potential misstatement”;  
+b. “perform substantive procedures for each relevant assertion of each significant 
+account”; 
+c. obtain more evidence from substantive procedures “as the assessed risk of material 
+misstatement increases”; and 
+d. modify the planned audit procedures, in response to fraud risk, “to obtain more 
+reliable evidence regarding relevant assertions.” 
+ 
+62. PCAOB AS 2401 (AU 316) Consideration of Fraud in a Financial Statement Audit 
+indicates that, if there is a risk of improper revenue recognition, the auditor consider “[c]onfirming 
+with customers certain relevant contract terms and the absence of side agreements, because the 
+appropriate accounting often is influenced by such terms or agreements.  For example, acceptance 
+criteria, delivery and payment terms, the absence of future or continuing vendor obligations, the 
+right to return product, guaranteed resale amounts, and cancellation or refund provisions often are 
+relevant in such circumstances.” 
+ 
+63. Chancey obtained reliable evidence from MiMedx’s controller during the 2015 
+audit, and from Distributor’s confirmation response during the 2016 audit, indicating that MiMedx 
+and Distributor had a side arrangement.  Additionally, during both audits, CB’s procedures 
+concerning the DSO metric, the sales returns allowance, and sales commissions provided evidence 
+suggesting that the arrangement MiMedx had with Distributor could be a consignment.  This 
+evidence contradicted MiMedx management’s representations claiming that the written distribution 
+agreement controlled the terms of the transactions with Distributor.   
+ 
+64. Chancey failed to perform any incremental procedures to investigate the 
+circumstances of this contradictory evidence or appropriately test the reliability of the 
+representations made by MiMedx management.  Chancey further failed to evaluate the 
+contradictory audit evidence to obtain sufficient appropriate evidence for CB’s audit conclusions.  
+ 
+65. As a result, Chancey failed to obtain sufficient appropriate audit evidence, as 
+required by PCAOB standards, during the audits of MiMedx’s 2015 and 2016 financial 
+statements. 
+ 
+Failure to Evaluate Audit Results 
+ 
+66. PCAOB AS 2810 (AS 14) Evaluating Audit Results requires the auditor to “obtain 
+corroboration for management’s explanations regarding significant, unusual, or unexpected 
+transactions, events, amounts, or relationships.  If management’s responses to the auditor’s 
+inquiries appear to be implausible, inconsistent with other audit evidence, imprecise, or not a 
+sufficient level of detail to be useful, the auditor should perform procedures to address the matter” 
+(emphasis added).  
+ 
+13 
+67. Because Distributor was one of MiMedx’s largest distributors at the time, 
+MiMedx’s transactions with Distributor were significant.  Despite the significance of the 
+transactions, Chancey relied on management representations that were inconsistent with other audit 
+evidence, without obtaining appropriate corroboration from other sources, during the audits of 
+MiMedx’s 2015 and 2016 financial statements.  Although Chancey obtained contradictory 
+evidence in two consecutive audits, he still failed to take action to reduce audit risk to an 
+appropriately low level.  
+ 
+68. As a result, Chancey failed to evaluate audit results properly, as required by 
+PCAOB standards, during the audits of MiMedx’s 2015 and 2016 financial statements. 
+ 
+Failure to Document Audit Work 
+ 
+69. PCAOB AS 1215 (AS 3) Audit Documentation requires the auditor to document:  
+a. “significant findings or issues, actions taken to address them (including additional 
+evidence obtained), and the basis for the conclusions reached in connection with 
+each engagement”;  
+b. “information the auditor has identified relating to significant findings or issues that 
+is inconsistent with or contradicts the auditor’s final conclusions” (emphasis 
+added); and 
+c. “risks of material misstatement that are determined to be significant risks and the 
+results of the auditing procedures performed in response to those risks.” 
+ 
+70. During both the 2015 and 2016 audits, CB had reliable information that was 
+inconsistent with CB’s audit conclusions and raised significant risks about material misstatements 
+in MiMedx’s financial statements.  However, Chancey failed to document, or ensure the 
+documentation of, any analysis of the consignment issues raised and the basis for CB’s audit 
+conclusions in light of those issues.  Notably, Chancey failed completely to document the 
+controller’s allegations and refusal to sign the management representation letter, much less any 
+audit response to these issues, in CB’s 2015 audit workpapers.  He also failed to document in the 
+2016 audit workpapers any analysis or response to Distributor’s representations about contingent 
+sales terms.  Futhermore, for both audits, he failed to document any analysis of the consignment 
+issues raised by additional red flags and contradictory evidence obtained from the DSO analysis, 
+the sales return allowance testwork, and the sales commission testwork. 
+ 
+71. As a result, Chancey failed to document audit work, as required by PCAOB 
+standards, during the audits of MiMedx’s 2015 and 2016 financial statements. 
+ 
+CB’s Inaccurate Audit Reports 
+72. Despite Chancey’s multiple departures from PCAOB audit standards, as described 
+above, CB, through Chancey, issued audit reports that contained unqualified opinions on 
+MiMedx’s 2015 and 2016 financial statements.  Those reports contained CB’s opinion that 
+MiMedx’s financial statements presented fairly, in all material respects, the company’s financial 
+14 
+position and results of operations in conformity with GAAP, and CB’s representation that its audits 
+were conducted in accordance with PCAOB audit standards.  
+ 
+73. As the lead engagement partner on the audits, Chancey approved the issuance of 
+these audit reports.  Chancey knew that MiMedx would file CB’s audit reports with the 
+Commission with MiMedx’s Forms 10-K.   
+ 
+74. Chancey caused CB’s audit reports to inaccurately state that the audits were 
+conducted in accordance with PCAOB audit standards.  
+ 
+E. VIOLATIONS 
+75. As a result of the conduct described above, Chancey engaged in improper 
+professional conduct within the meaning of Exchange Act Section 4C(a)(2) and Rule 102(e)(1)(ii) 
+of the Commission’s Rules of Practice.  Section 4C(a)(2) and Rule 102(e)(1)(ii) provide, in 
+pertinent part, that the Commission may censure or deny, temporarily or permanently, the privilege 
+of appearing or practicing before the Commission to any person who is found by the Commission 
+to have engaged in improper professional conduct.  Exchange Act Section 4C(b) and Rule 
+102(e)(1)(iv) define improper professional conduct with respect to persons associated with public 
+accounting firms and persons licensed to practice as accountants, respectively, as (1) a single 
+instance of highly unreasonable conduct in circumstances for which heightened scrutiny is 
+warranted; or (2) repeated instances of unreasonable conduct that indicate a lack of competence. 
+ 
+76. As a result of the conduct described above, Chancey caused the violation of Rule 2-
+02(b)(1) of Regulation S-X, which requires an audit report to accurately state whether the audit 
+was made in accordance with generally accepted auditing standards.  The phrase “generally 
+accepted auditing standards” refers to the standards issued by the PCAOB.  See Act Rel. No. 33-
+8422.  Under Exchange Act Section 21C, a person is a “cause” of another’s primary violation if the 
+person knew or should have known that his act or omission would contribute to the primary 
+violation.  
+III. 
+ 
+ In view of the allegations made by the Division of Enforcement and the Office of the Chief 
+Accountant, the Commission deems it necessary and appropriate in the public interest that public 
+administrative and cease -and-desist proceedings be instituted to determine:  
+ 
+A. Whether the allegations set forth in Section II hereof are true and, in connection 
+therewith, to afford Respondent an opportunity to establish any defenses to such allegations; 
+ 
+B. What, if any, remedial action is appropriate against Respondent pursuant to Section 
+4C of the Exchange Act and Rule 102(e)(1) of the Commission’s Rules of Practice; and 
+ 
+C. Whether, pursuant to Section 21C of the Exchange Act, Respondent should be 
+ordered to cease and desist from committing or causing violations of and any future violations of 
+15 
+Rule 2-02(b)(1) of Regulation S-X, and whether Respondent should be ordered to pay a civil 
+penalty pursuant to Section 21B(a) of the Exchange Act.   
+  
+IV. 
+ 
+IT IS ORDERED that a public hearing before the Commission for the purposes of taking 
+evidence on the questions set forth in Section III hereof shall be convened not earlier than 30 days 
+and not later than 60 days from service of this Order at a time and place to be fixed by further order 
+of the Commission, pursuant to Rule 110 of the Commission’s Rules of Practice, 17 C.F.R. 
+§ 201.110.  
+  
+IT IS FURTHER ORDERED that Respondent shall file an Answer to the allegations 
+contained in this Order within twenty (20) days after service of this Order, as provided by Rule 
+220(b) of the Commission’s Rules of Practice, 17 C.F.R. § 201.220(b).  
+ 
+IT IS FURTHER ORDERED that the Division of Enforcement and Respondent shall 
+conduct a prehearing conference pursuant to Rule 221 of the Commission’s Rules of Practice, 17 
+C.F.R. § 201.221, within fourteen (14) days of service of the Answer.  The parties may meet in 
+person or participate by telephone or other remote means; following the conference, they shall file 
+a statement with the Office of the Secretary advising the Commission of any agreements reached at 
+said conference.  If a prehearing conference was not held, a statement shall be filed with the Office 
+of the Secretary advising the Commission of that fact and of the efforts made to meet and confer. 
+ 
+If Respondent fails to file the directed Answer, or fails to appear at a hearing or conference 
+after being duly notified, the Respondent may be deemed in default and the proceedings may be 
+determined against him upon consideration of this Order, the allegations of which may be deemed 
+to be true as provided by Rules 155(a), 220(f), 221(f) and 310 of the Commission’s Rules of 
+Practice, 17 C.F.R.  §§ 201.155(a), 201.220(f), 201.221(f), and 201.310. 
+ 
+This Order shall be served forthwith upon Respondent by any means permitted by the 
+Commission’s Rules of Practice. 
+ 
+The Commission finds that it would serve the interests of justice and not result in prejudice 
+to any party to provide, pursuant to Rule 100(c) of the Commission’s Rules of Practice, 17 C.F.R. 
+§ 201.100(c), that notwithstanding any contrary reference in the Rules of Practice to service of 
+paper copies, service to the Division of Enforcement of all opinions, orders, and decisions 
+described in Rule 141, 17 C.F.R. § 201.141, and all papers described in Rule 150(a), 17 C.F.R. 
+§ 201.150(a), in these proceedings shall be by email to the attorneys who enter an appearance on 
+behalf of the Division, and not by paper service . 
+ 
+Attention is called to Rule 151(a), (b) and (c) of the Commission’s Rules of Practice, 17 
+C.F.R. § 201.151(a), (b) and (c), providing that when, as here, a proceeding is set before the 
+Commission, all papers (including those listed in the following paragraph) shall be filed 
+electronically in administrative proceedings using the Commission’s Electronic Filings in 
+Administrative Proceedings (eFAP) system access through the Commission’s website, 
+16 
+www.sec.gov, at http://www.sec.gov/eFAP. Respondent also must serve and accept service of 
+documents electronically.  All motions, objections, or applications will be decided by the 
+Commission.  
+ 
+The Commission finds that it would serve the interests of justice and not result in prejudice 
+to any party to provide, pursuant to Rule 100(c) of the Commission’s Rules of Practice, 17 C.F.R. 
+§ 201.100(c), that notwithstanding any contrary reference in the Rules of Practice to filing with or 
+disposition by a hearing officer, all filings, including those under Rules 210, 221, 222, 230, 231, 
+232, 233, and 250 of the Commission’s Rules of Practice, 17 C.F.R. §§ 201.210, 221, 222, 230, 
+231, 232, 233, and 250, shall be directed to and, as appropriate, decided by the Commission.  This 
+proceeding shall be deemed to be one under the 120-day timeframe specified in Rule of Practice 
+360(a)(2)(i), 17 C.F.R. § 201.360(a)(2)(i), for the purposes of applying Rules of Practice 233 and 
+250, 17 C.F.R. §§ 201.233 and 250. 
+ 
+The Commission finds that it would serve the interests of justice and not result in prejudice 
+to any party to provide, pursuant to Rule 100(c) of the Commission’s Rules of Practice, 17 C.F.R. 
+§ 201.100(c), that the Commission shall issue a decision on the basis of the record in this 
+proceeding, which shall consist of the items listed at Rule 350(a) of the Commission’s Rules of 
+Practice, 17 C.F.R. § 201.350(a), and any other document or item filed with the Office of the 
+Secretary and accepted into the record by the Commission.  The provisions of Rule 351 of the 
+Commission’s Rules of Practice, 17 C.F.R. § 201.351, relating to preparation and certification of a 
+record index by the Office of the Secretary or the hearing officer are not applicable to this 
+proceeding. 
+ 
+The Commission will issue a final order resolving the proceeding after one of the 
+following: (A) The completion of post-hearing briefing in a proceeding where the public hearing 
+has been completed; (B) The completion of briefing on a motion for a ruling on the pleadings or a 
+motion for summary disposition pursuant to Rule 250 of the Commission’s Rules of Practice, 17 
+C.F.R. § 201.250, where the Commission has determined that no public hearing is necessary; or 
+(C) The determination that a party is deemed to be in default under Rule 155 of the Commission’s 
+Rules of Practice, 17 C.F.R. § 201.155, and no public hearing is necessary.   
+ 
+In the absence of an appropriate waiver, no officer or employee of the Commission engaged 
+in the performance of investigative or prosecuting functions in this or any factually related 
+proceeding will be permitted to participate or advise in the decision of this matter, except as witness 
+or counsel in proceedings held pursuant to notice.  Since this proceeding is not “rule making” within 
+the meaning of Section 551 of the Administrative Procedure Act, it is not deemed subject to the 
+provisions of Section 553 delaying the effective date of any final Commission action. 
+ 
+ By the Commission. 
+ 
+ 
+ 
+Vanessa A. Countryman 
+Secretary 

raw/aaer/2021/AAER-4227.txt

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+ 
+  
+ UNITED STATES OF AMERICA 
+ Before the  
+ SECURITIES AND EXCHANGE COMMISSION 
+ 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No.  92447 / July 20, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No.  4227 / July 20, 2021 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-20402 
+______________________________  
+:  
+In the Matter of   : 
+     : ORDER OF SUSPENSION PURSUANT 
+Shaun Greenwald, CPA : TO RULE 102(e)(2) OF THE 
+: COMMISSION’S RULES OF PRACTICE  
+Respondent.    :   
+______________________________: 
+ 
+ 
+ I. 
+ 
+The Securities and Exchange Commission deems it appropriate to issue an order of 
+forthwith suspension of Shaun Greenwald (“Greenwald”) pursuant to Rule 102(e)(2) of the 
+Commission’s Rules of Practice [17 C.F.R.  § 201.102(e)(2)].1 
+ 
+ II. 
+ 
+The Commission finds that:  
+ 
+1. Greenwald, age 44, is a certified public accountant licensed to practice in the 
+State of New York. 
+ 
+2. On February 20, 2018, Greenwald pled guilty to one count of conspiracy to 
+commit securities fraud, in violation of 18 U.S.C. § 371, and one count of conspiracy to defraud 
+the United States, also in violation of 18 U.S.C. § 371, before the United States District Court for 
+the District of New Jersey in United States v. Shaun Greenwald, Crim. No. 18-78 (D.N.J.).  In 
+                        
+1  Rule 102(e)(2) provides in pertinent part: “[A]ny ... person who has been convicted of a felony or a 
+misdemeanor involving moral turpitude shall be forthwith suspended from appearing or practicing before the 
+Commission.” 
+ 
+ 
+ 
+ 
+2 
+ 
+connection with the plea, Greenwald admitted that he made misrepresentations and omissions on 
+account opening forms for certain brokerage accounts that he opened to hide Joseph Taub’s 
+connection to the accounts and that he intended to trick and deceive brokerage firms into 
+believing that Joseph Taub was not associated with the accounts, despite the fact that he, 
+Greenwald, provided log-in and password information to Joseph Taub so that Taub and others 
+could trade in the accounts. 
+ 
+3. On February 23, 2021, a criminal judgment was entered against Greenwald.  He  
+was sentenced to probation for a term of three years, ordered to submit to home detention for a 
+period of eight months, ordered to forfeit all right, title and interest in the contents of a specified 
+bank account, and ordered to pay restitution in the amount of $394,424.00. 
+ 
+III. 
+ 
+In view of the foregoing, the Commission finds that Greenwald has been convicted of a 
+felony within the meaning of Rule 102(e)(2) of the Commission’s Rules of Practice. 
+ 
+Accordingly, it is ORDERED, that Shaun Greenwald is forthwith suspended from 
+appearing or practicing before the Commission pursuant to Rule 102(e)(2) of the Commission’s 
+Rules of Practice. 
+ 
+ 
+By the Commission. 
+ 
+ 
+ 
+Vanessa A. Countryman 
+Secretary 
+ 
+ 
+ 
+ 
+ 
+ 

raw/aaer/2021/AAER-4229.txt

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+UNITED STATES OF AMERICA 
+before the  
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 92458 / July 21, 2021 
+ 
+INVESTMENT ADVISERS ACT OF 1940 
+Release No. 5784 / July 21, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4229 / July 21, 2021 
+ 
+Admin. Proc. File No. 3-20395 
+ 
+ 
+In the Matter of 
+ 
+STOCKMAN KAST RYAN & CO. LLP; 
+ELLEN S. FISHER, CPA; AND 
+DAVID H. KAST, CPA 
+ 
+ 
+ORDER REGARDING SERVICE 
+ 
+On July 13, 2021, the Securities and Exchange Commission issued an order instituting an 
+administrative proceeding (“OIP”) against Stockman Kast Ryan & Co. LLP, Ellen S. Fisher, 
+CPA, and David H. Kast, CPA (collectively, “Respondents”), pursuant to Section 4C of the 
+Securities Exchange Act of 1934, Section 203(k) of the Investment Advisers Act of 1940, and 
+Rule 102(e)(1)(ii) of the Commission’s Rules of Practice.1  It appears that since issuance of the 
+OIP, there have been no filings regarding whether the OIP was served upon Respondents.  
+Accordingly, IT IS ORDERED that the Division of Enforcement file a status report concerning 
+service of the OIP by July 27, 2021, and every 28 days thereafter until service is accomplished. 
+The parties’ attention is directed to the most recent amendments to the Commission’s 
+Rules of Practice, which took effect on April 12, 2021, and which include new e-filing 
+requirements.2 
+                                                 
+1  Stockman Kast Ryan & Co., Exchange Act Release No. 92382, 2021 WL 2953521 (July 
+13, 2021). 
+2  Amendments to the Commission’s Rules of Practice, Exchange Act Release No. 90442, 
+2020 WL 7013370 (Nov. 17, 2020), 85 Fed. Reg. 86,464, 86,474 (Dec. 30, 2020), 
+https://www.sec.gov/rules/final/2020/34-90442a.pdf; Instructions for Electronic Filing and 
+Service of Documents in SEC Administrative Proceedings and Technical Specifications, 
+2 
+ 
+For the Commission, by the Office of the General Counsel, pursuant to delegated 
+authority. 
+ 
+ 
+        Vanessa A. Countryman 
+              Secretary 
+                                                 
+https://www.sec.gov/efapdocs/instructions.pdf.  The amendments impose other obligations such 
+as a new redaction and omission of sensitive personal information requirement.  Amendments to 
+the Commission’s Rules of Practice, 85 Fed. Reg. at 86,465-81.  And the amendments provide 
+further requirements if a person cannot reasonably comply with the electronic filing requirements 
+due to lack of access to electronic transmission devices.  Id. at 86,478-79. 

raw/aaer/2021/AAER-4235.txt

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+UNITED STATES OF AMERICA 
+Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 92514 / July 28, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4235 / July 28, 2021 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-18346 
+ 
+ 
+ 
+In the Matter of 
+ 
+David Britt, CPA,  
+ 
+Respondent. 
+ 
+ 
+ 
+ 
+ 
+ORDER MAKING FINDINGS AND 
+IMPOSING REMEDIAL SANCTIONS 
+AND  AND- AND A CEASE-AND-DESIST ORDER 
+PURSUANT TO SECTIONS 4C AND 21C OF 
+THE SECURITIES EXCHANGE ACT OF 1934 
+AND RULE 102(e) OF THE COMMISSION’S 
+RULES OF PRACTICE 
+   
+ 
+I. 
+ 
+ On January 22, 2018, the Securities and Exchange Commission (“Commission”) deeming 
+it appropriate instituted public administrative and cease-and-desist proceedings against David Britt 
+(“Britt” or “Respondent”) pursuant to Sections 4C1 and 21C of the Securities Exchange Act of 
+1934 (“Exchange Act”) and Rule 102(e)(1)(ii) and 102(e)(1)(iii) of the Commission’s Rules of 
+Practice.2 
+                                                 
+1  Section 4C provides, in relevant part, that:  
+ 
+The Commission may censure any person, or deny, temporarily or permanently, to any person the 
+privilege of appearing or practicing before the Commission in any way, if that person is found . . . 
+(1) not to possess the requisite qualifications to represent others; (2) to be lacking in character or 
+integrity, or to have engaged in unethical or improper professional conduct; or (3) to have willfully 
+violated, or willfully aided and abetted the violation of, any provision of the securities laws or the 
+rules and regulations issued thereunder. 
+ 
+2  Rule 102(e)(1)(ii) provides, in pertinent part, that: 
+ 
+2 
+II. 
+ 
+Respondent has submitted an Offer of Settlement (the “Offer”), which the Commission has 
+determined to accept.  Solely for the purpose of these proceedings and any other proceedings 
+brought by or on behalf of the Commission, or to which the Commission is a party, Respondent 
+admits the Commission’s jurisdiction over him and the subject matter of these proceedings, and 
+consents to the entry of this Order Making Findings and Imposing Remedial Sanctions and a Cease-
+and-Desist Order Pursuant to Sections 4C and 21C of the Securities Exchange Act of 1934 and Rule 
+102(e) of the Commission’s Rules of Practice (“Order”), as set forth below. 
+ 
+III. 
+ 
+ On the basis of this Order and Respondent’s Offer, the Commission finds3 that: 
+ 
+SUMMARY 
+ 
+1. This case involves the unauthorized disclosures of confidential information from 
+the Public Company Accounting Oversight Board (“PCAOB” or “Board”) and a concerted effort 
+by now-former members of KPMG’s Audit Quality and Professional Practice group (“AQPP” or 
+“National Office”) – including David Britt – to use that information to improve the results of the 
+PCAOB’s annual inspections of KPMG audits.   
+2. In 2015, KPMG hired Brian Sweet from the PCAOB to work in its National Office.  
+On his last day at the PCAOB, Brian Sweet took sensitive inspections-related documents to use as 
+a resource in his new job.  After starting at KPMG, Sweet received additional confidential PCAOB 
+materials from Cynthia Holder, then a PCAOB employee.  In 2016 and 2017, a third PCAOB 
+employee, Jeffrey Wada, leaked confidential information relating to the PCAOB’s planned 
+inspections of KPMG to Holder after she had left the PCAOB and joined KPMG.   
+3. Shortly after joining the firm, Sweet provided Britt the names of several KPMG 
+banking clients the PCAOB planned to inspect in 2015, but had not yet announced to the firm.  
+This was valuable information to KPMG, which had experienced a high rate of audit deficiency 
+findings and had made a priority of improving its PCAOB inspection results.  
+                                                 
+The Commission may . . . deny, temporarily or permanently, the privilege of appearing or 
+practicing before it . . . to any person who is found to be lacking in character or integrity or to have 
+engaged in unethical or improper professional conduct. 
+ 
+ Rule 102(e)(1)(iii) provides, in pertinent part, that: 
+ 
+The Commission may . . . deny, temporarily or permanently, the privilege of appearing or 
+practicing before it . . . to any person who is found…to have willfully violated, or willfully aided 
+and abetted the violation of any provision of the Federal securities laws or the rules and 
+regulations thereunder. 
+ 
+3 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any 
+other person or entity in this or any other proceeding.   
+3 
+4. After Wada sent Holder the list of the PCAOB’s planned inspections for 2016, Britt 
+facilitated an effort by other now-former KPMG personnel to review and revise certain audit 
+workpapers after the audit reports had been issued to reduce the likelihood that the PCAOB would 
+find deficiencies in those audits.  This effort resulted in a substantial improvement to KPMG’s 
+2016 inspection results. 
+5. In 2017, Britt and the now-former KPMG personnel again obtained the list of audit 
+engagements that the PCAOB planned to inspect after Wada leaked the information to Holder.  
+However, the misconduct was discovered by others within the firm and reported to KPMG 
+leadership before relevant workpapers could be changed.   
+RESPONDENT 
+ 
+6. David Britt, 57, of Salvo, North Carolina, was a Partner in KPMG’s Department of 
+Professional Practice within AQPP, in which he was the Banking and Capital Markets Group Co-
+Leader until March 2017, and was separated from the firm the following month.  Britt was 
+previously licensed as a CPA in California, the District of Columbia, and New York.   
+OTHER RELEVANT PERSONS AND ENTITY 
+ 
+7. Brian Sweet, 43, of Fresno, California, was a Partner in KPMG’s Department of 
+Professional Practice-Inspections group until March 2017.  He was separated from the firm at the 
+end of March 2017.  Prior to joining KPMG, Sweet was an Associate Director in the PCAOB’s 
+inspections group from March 2014 until April 2015.  Sweet was previously licensed as a CPA in 
+California, Illinois, and New York.  The Commission has charged Sweet for his role in the 
+misconduct described in this Order. 
+8. Cynthia Holder, 55, of Houston, Texas was an Executive Director in KPMG’s 
+Department of Professional Practice-Inspections group from August 2015 until April 2017, when 
+she was separated from the firm.  Prior to joining KPMG, Holder was an Inspections Specialist and 
+Inspections Leader at the PCAOB from December 2011 until August 2015.  Holder was previously 
+licensed as a CPA in New Jersey and Texas.  The Commission has charged Holder for her role in 
+the misconduct described in this Order. 
+9. Jeffrey Wada, 45, of Tustin, California was an Inspections Leader at the PCAOB 
+from February 2012 until February 2017.  Wada is no longer at the PCAOB.  Wada was previously 
+licensed as a CPA in California.  The Commission has filed litigated administrative and cease-and-
+desist proceedings against Wada alleging misconduct related to the events described in this Order. 
+10. David Middendorf, 57, of Marietta, Georgia, was KPMG’s National Managing 
+Partner for AQPP until March 2017, and was separated from the firm the following month.  
+Middendorf was previously licensed as a CPA in Georgia, New York, Ohio, and Texas.  The 
+Commission has filed litigated administrative and cease-and-desist proceedings against 
+Middendorf alleging misconduct related to the events described in this Order.   
+4 
+11. Thomas Whittle, 57, of Gladstone, New Jersey, was KPMG’s National Partner-In-
+Charge for Quality Measurement until March 2017, and was separated from the firm the following 
+month.  Whittle was previously licensed as a CPA in Connecticut, New Jersey, New York and 
+Pennsylvania.  The Commission has charged Whittle for his role in the misconduct described in 
+this Order.   
+12. KPMG LLP is a Delaware limited liability partnership and PCAOB-registered 
+accounting firm.  Headquartered in New York, New York, KPMG is the U.S. member firm of 
+KPMG International Cooperative, a Swiss entity.  The Commission has charged KPMG for its role 
+in the misconduct described in this Order.4 
+FACTS 
+ 
+The PCAOB’s Inspections Process and KPMG’s Efforts to Improve Its Results 
+ 
+13. The PCAOB was created as part of the Sarbanes-Oxley Act of 2002 to oversee the 
+audits of public companies that are subject to the federal securities laws in order to protect the 
+interests of investors and further the public interest in the preparation of informative, accurate, and 
+independent audit reports. 
+14. One of the essential ways in which the PCAOB fulfills this mission is by inspecting 
+audits of public companies conducted by registered public accounting firms.  Through these 
+inspections, the PCAOB assesses the audit firms’ compliance with the statutes, regulations, and 
+professional standards governing the accounting profession.  The PCAOB typically selects the 
+audit engagements it will inspect based on confidential internal analyses and thereafter notifies 
+firms of which audits it will inspect.  The PCAOB typically issues inspection reports, only parts of 
+which are made public, after all the inspections for a firm in a given cycle are complete.  To ensure 
+the integrity of the inspection process, the PCAOB closely guards the confidentiality of both its 
+inspection targets prior to firm notification and its methodology for selecting those targets. 
+15. In September 2014, the PCAOB issued a report regarding its 2013 inspections of 
+KPMG audits.  The report found that out of 50 audits the PCAOB inspected, 23 had deficiencies.  
+This 46 percent deficiency rate reflected a significant increase from KPMG’s 34 percent deficiency 
+rate the previous year. 
+The Use of Confidential PCAOB Information Sweet Misappropriated in 2015 
+ 
+16. As part of its efforts to improve its PCAOB inspection results, KPMG hired Brian 
+Sweet, an Associate Director at the PCAOB who had worked on the team inspecting KPMG 
+audits.  Sweet joined KPMG as a partner in the group within the firm’s National Office responsible 
+for PCAOB inspections.  Sweet reported to Thomas Whittle, who was then the KPMG partner 
+responsible for overseeing the PCAOB’s inspections of the firm.  Whittle, in turn, reported to 
+                                                 
+4 KPMG LLP, Exchange Act Release No. 86118 (June 17, 2019). 
+ 
+5 
+David Middendorf, who then oversaw the National Office’s audit quality and professional practice 
+work. 
+17. In April 2015, shortly before leaving the PCAOB, Sweet copied from an internal 
+database to his office computer various confidential inspection-related materials he believed might 
+be of use to him when he joined KPMG.  On his final day at the PCAOB, Sweet transferred these 
+materials, along with the other files on his PCAOB computer, to a personal hard drive that he took 
+with him.  Sweet also took from the PCAOB hard copy documents and retained other confidential 
+PCAOB documents he had previously brought home.   
+18. The documents Sweet improperly took included PCAOB inspection planning 
+information, inspection guides and manuals, and drafts of confidential inspection comment forms.  
+The planning materials included the confidential list of KPMG audit engagements the PCAOB 
+intended to inspect in 2015, the focus areas for each inspection, and a list of all the quantitative and 
+qualitative criteria the Board used in deciding which KPMG audit engagements to inspect. 
+19. Upon joining KPMG in May 2015, Sweet transferred the PCAOB documents from 
+his personal hard drive to his computer at the firm.    
+20. On his first day at the firm in May 2015, Sweet had lunch with Middendorf and 
+other partners in KPMG’s National Office, including Britt, who was then a Partner in the National 
+Office’s Department of Professional Practice and co-leader of KPMG’s Banking and Capital 
+Markets Group.  Over lunch, Sweet’s new colleagues asked him various questions about the 
+PCAOB’s inspections of KPMG.  Sweet testified that one of the questions Middendorf asked 
+Sweet was whether the PCAOB intended to inspect a specific KPMG banking client that year.  
+Without answering directly, Sweet indicated the PCAOB planned to do so.  Sweet testified that 
+Middendorf told him the next day that Sweet needed “to share insight and add value and be fully 
+open when it came to that type of information,” and to “remember where [your] paycheck came 
+from” and that Sweet had to be “completely loyal to KPMG and KPMG only.” 
+21. On June 15, 2015, Sweet met with Britt and identified a number of KPMG banking 
+clients the PCAOB planned to inspect in 2015, but had not yet announced to the firm.  The next 
+day, Britt asked Sweet to review his notes so he could give Britt the “last 3 Bank names” that 
+Sweet could not recall during their meeting.  After consulting the confidential information Sweet 
+had taken from the PCAOB, Sweet shared this information with Britt later that day, asking Britt to 
+note its sensitivity and to “use your discretion with this info.” 
+The Use of Confidential PCAOB Information Obtained from Wada in 2016 
+ 
+22. On March 28, 2016, Jeffrey Wada, an Inspections Leader at the PCAOB who had 
+previously performed work on KPMG inspections but was then assigned to inspect another audit 
+firm, called Cynthia Holder – a friend and former PCAOB Inspections Leader whom Sweet had 
+recruited to join KPMG’s National Office – and read to her the names of thirteen KPMG clients 
+6 
+the Board planned to inspect.5  Holder provided this information to Sweet, who then immediately 
+relayed the list to Middendorf, Whittle, and Britt, informing them that it had come from a former 
+colleague at the PCAOB. 
+23. Wada sent the list of the PCAOB’s planned inspections at a critical time.  In early 
+February 2016, Middendorf and other members of KPMG’s leadership team had met with staff 
+from the Commission’s Office of the Chief Accountant.  During that meeting, Commission 
+personnel expressed significant concerns about the firm’s audit quality and questioned whether 
+KPMG was adequately addressing these issues.  Middendorf told Whittle, Sweet, and Britt they 
+should use the list of inspection targets Wada had sent to protect KPMG from further criticism by 
+its regulators. 
+24. Middendorf, Whittle, Britt, and Sweet believed they could use Wada’s list in this 
+way because they had learned of the audits that would be inspected at a time when firm personnel 
+were still able to access and revise audit workpapers.  Though KPMG had already issued audit 
+reports for each of these engagements, it was within the 45-day period in which professional audit 
+standards and firm policy allowed audit teams to complete the administrative process of 
+assembling final audit files.6  At the end of this 45-day period, KPMG locked audit workpapers 
+from editing absent special circumstances.7 
+25. Recognizing that the workpapers had not yet been locked per KPMG’s policy, 
+Middendorf, Whittle, and Britt agreed to have Sweet and others conduct an additional review of 
+the audit workpapers for the seven banks on the list Wada had provided that were part of a key 
+monitoring program run by the National Office to determine whether anything could be done to 
+minimize the risk of receiving inspection comments from the PCAOB.8  Middendorf and Whittle 
+                                                 
+5 Of the 13 clients, 11 were bank holding or other financial services companies and 2 were other issuers that 
+Wada appears to have thought were also bank holding or other financial services companies.  It appears that Wada 
+identified these engagements for Holder because her responsibilities at KPMG included advising banking 
+engagement teams. 
+ 
+6  See Auditing Standard No. 3, Audit Documentation, paragraph 15. “Prior to the report release date, the 
+auditor must have completed all necessary auditing procedures and obtained sufficient evidence to support the 
+representations in the auditor’s report.  A complete and final set of audit documentation should be assembled for 
+retention as of a date not more than 45 days after the report release date (documentation completion date).”  
+References to PCAOB standards are to those that were in effect at the time of the relevant conduct.  
+ 
+7 KPMG has since revised its audit documentation policies, requiring electronic workpapers to be assembled 
+and locked within two business days of issuance of the report. 
+ 
+8  As the PCAOB found an increasing number of audit deficiencies by KPMG beginning in 2013, KPMG’s 
+National Office implemented “monitoring programs” that worked with audit engagement teams and reviewed 
+workpapers to improve compliance with professional standards.  One of these programs focused on the audits of 
+certain banking clients’ Allowance for Loan and Lease Losses.  KPMG further developed this monitor ing program 
+in 2015 in response to numerous deficiencies the PCAOB had identified in this area.  The success of this program 
+was especially important to KPMG because the firm had promoted it as proof of the seriousness with which the firm 
+was working to improve its audit quality. 
+ 
+7 
+instructed that no one in the briefing should disclose that they had obtained confidential PCAOB 
+information. 
+26. To conceal the true purpose of their efforts, Britt falsely told others at KPMG that 
+they were performing work in the ordinary course of business on all 35 banking engagements in 
+the Allowance for Loan and Lease Losses (“ALLL”) monitoring program.  On March 28, 2016, 
+Britt sent the engagement partners for these audits an email stating that, “[a]s part of our wrap up 
+and reporting of the results of the ALLL monitoring program we need to gather some additional 
+information” from the audit workpapers.9 
+27. Over the next few weeks, Sweet, Holder, and various partners and managing 
+directors in the National Office engaged in a review of the audit workpapers of the seven banks in 
+the monitoring program that were on the list Wada provided.  The National Office professionals 
+suggested edits and proposed revisions to the engagement teams, which then decided what 
+revisions to incorporate into the final audit workpapers.10   
+28. In contrast to prior years, KPMG’s 2016 inspection results did not include any 
+comments related to the general Allowance for Loan and Lease Losses – an area where KPMG had 
+historically received criticism related to financial services audits.  The PCAOB did not publish the 
+results because KPMG reported the misconduct to the PCAOB before the PCAOB issued the 2016 
+report.  However, the PCAOB had designated two of the bank audits in the ALLL monitoring 
+program whose workpapers Sweet had reviewed as “positive quality events,” which meant they 
+were so successful the PCAOB wanted to understand the factors driving the audit’s quality.  
+Indeed, the level of improvement in the inspection results led Whittle to be concerned that if 
+KPMG could not obtain confidential PCAOB information for the next inspection cycle, there could 
+be a return of audit deficiencies that would be difficult to explain.    
+29. After the misconduct was discovered, the PCAOB conducted inspections of ten 
+additional banks for the 2016 inspection cycle to replace the ones for which improper advance 
+notice had been obtained.  The PCAOB found that six of these audits had deficiencies with respect 
+to auditing the ALLL. 
+The Use of Confidential PCAOB Information Obtained from Wada in 2017 
+ 
+30. In early January 2017, Wada provided Holder a “preliminary” list of PCAOB 
+inspection targets for 2017.  On January 9, Holder relayed the names of the clients on the list to 
+Sweet.  That night, Sweet, Whittle, and Britt discussed this information.  Whittle instructed Sweet 
+                                                 
+9  Britt also asked a subordinate who previously had been in the Department of Professional Practice and was 
+then assigned to an audit engagement on the list to conduct his own “stealth” review of workpapers for one KPMG 
+audit client.   
+ 
+10  Middendorf, Whittle, Sweet, and Britt had agreed that Sweet would lead a team of National Office 
+professionals to review the workpapers of the banks in the monitoring program, and that Middendorf, Whittle, and 
+Britt would handle the other issuers on the list they received from Wada.   
+ 
+8 
+to warn certain engagement partners about the potential inspections, but to be circumspect in how 
+he communicated these matters with KPMG colleagues.  After that meeting, Sweet contacted the 
+engagement partners for two of the audits on the January 2017 list to warn them about the potential 
+inspections.  Whittle also discussed the January 2017 list with Middendorf.  As a result of that 
+discussion, Middendorf and Whittle assigned additional National Office resources to assist with 
+two of the active audits on that list.11 
+31. In early February 2017, Wada conveyed to Holder a list of 47 ticker symbols that 
+Holder understood to be the final list of KPMG audits the PCAOB would inspect that year.  Sweet 
+testified that Wada also provided Holder the inspection focus areas for the banks on the list (as well 
+as for another KPMG engagement), and the PCAOB’s list of KPMG engagement partners with 
+“poor performance evaluations.” 
+32. Holder relayed the information to Sweet, who then shared it with Middendorf, 
+Whittle, and Britt.  Though Sweet questioned what to do with that information, Middendorf 
+replied, “this is information that’s too good not to use.”  Unlike the prior lists of PCAOB 
+inspection targets, the audits on the February 2017 list were ongoing, thus providing substantially 
+greater ability to improve the audit workpapers.   
+33. Sweet’s notice to one KPMG engagement partner that her engagement was on the 
+final list caused her to suspect that the firm may have received confidential PCAOB information.  
+These concerns were subsequently reported to the firm’s management, which then reported the 
+matter to the PCAOB, and KPMG began an investigation. 
+VIOLATIONS 
+ 
+34. As a result of the conduct described above, Respondent willfully violated PCAOB 
+Rule 3500T, which requires members to maintain integrity when performing any professional 
+service in connection with the preparation or issuance of any audit report, within the meaning of 
+Section 4C(a)(3) of the Exchange Act and Rule 102(e)(1)(iii) of the Commission’s Rules of 
+Practice. 
+35. As a result of the conduct described above, Respondent willfully aided and abetted 
+and caused Sweet’s violation of PCAOB Ethics Code Section EC3, which prohibits PCAOB staff 
+from acting in a manner which might reasonably result in or reasonably create the appearance that 
+the employee is using confidential information obtained through service for the Board for the 
+private gain of any person, within the meaning of Section 4C(a)(3) of the Exchange Act and Rule 
+102(e)(1)(iii) of the Commission’s Rules of Practice. 
+36. As a result of the conduct described above, Respondent willfully aided and abetted 
+and caused Sweet’s violation of PCAOB Ethics Code Section EC9, which prohibits PCAOB staff 
+from disseminating or otherwise disclosing any information obtained in the course and scope of his 
+                                                 
+11  Middendorf was the Engagement Quality Review partner on one of those audits.  In this role, he was 
+responsible for evaluating the significant judgments and related conclusions the audit team made in reaching the  
+overall conclusion reflected in the audit report.   
+ 
+9 
+or her employment, and which has not been released, announced, or otherwise made available 
+publicly, within the meaning of Section 4C(a)(3) of the Exchange Act and Rule 102(e)(1)(iii) of 
+the Commission’s Rules of Practice. 
+FINDINGS 
+ 
+37. Based on the foregoing, the Commission finds that Britt willfully violated PCAOB 
+Rule 3500T, and willfully aided and abetted and caused Sweet’s violations of PCAOB Ethics Code 
+Sections EC3 and EC9 within the meaning of Section 4C(a)(3) of the Exchange Act and Rule 
+102(e)(1)(iii) of the Commission’s Rules of Practice. 
+38. Based on the foregoing, the Commission finds that Britt lacks integrity pursuant to 
+Section 4C(a)(2) of the Exchange Act and Rule 102(e)(1)(ii) of the Commission’s Rules of 
+Practice. 
+39. Based on the foregoing, the Commission finds that Britt engaged in improper 
+professional conduct pursuant to Section 4C(a)(2) of the Exchange Act and Rule 102(e)(1)(ii) of 
+the Commission’s Rules of Practice. 
+IV. 
+ 
+ In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
+agreed to in Respondent Britt’s Offer. 
+ 
+ Accordingly, it is hereby ORDERED, effective immediately, that: 
+ 
+A. Britt shall cease and desist from committing or causing any violations and any 
+future violations of PCAOB Rule 3500T and PCAOB Ethics Code Sections EC3 and EC9. 
+ 
+ B. Britt is denied the privilege of appearing or practicing before the Commission as an 
+accountant. 
+ 
+ By the Commission. 
+ 
+ 
+ 
+       Vanessa A. Countryman 
+       Secretary 

raw/aaer/2021/AAER-4237.txt

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+UNITED STATES OF AMERICA 
+before the  
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 92534 / July 30, 2021 
+ 
+INVESTMENT ADVISERS ACT OF 1940 
+Release No. 5811 / July 30, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4237 / July 30, 2021 
+ 
+Admin. Proc. File No. 3-20395 
+ 
+ 
+In the Matter of 
+ 
+STOCKMAN KAST RYAN & CO. LLP; 
+ELLEN S. FISHER, CPA; AND 
+DAVID H. KAST, CPA 
+ 
+ 
+ORDER  
+ 
+On July 13, 2021, t he Securities and Exchange Commission issued an order instituting an 
+administrative proceeding (“OIP”) against Stockman Kast Ryan & Co. LLP, Ellen S. Fisher, 
+CPA, and David H. Kast, CPA (collectively, “Respondents”), pursuant to Section 4C of the 
+Securities Exchange Act of 1934, Section 203(k) of the Investment Advisers Act of 1940, and 
+Rule 102(e)(1)(ii) of the Commission’s Rules of Practice. 1  In compliance with the statutory 
+provision governing cease-and-desist proceedings, the OIP specified that a “public hearing 
+before the Commission for the purpose of taking evidence . . . shall be convened not earlier than 
+30 days and not later than 60 days” from service of the OIP.2  The statute also provides that “an 
+earlier or later date” for the hearing may be “set by the Commission with the consent of any 
+respondent so served.”3 
+                                              
+1  Stockman Kast Ryan & Co. , Exchange Act Release No. 92382, 2021 WL 2953521 (July 
+13, 2021). 
+2  Id. at *35. 
+3  15 U.S.C. § 78u-3(b). 
+2 
+ 
+Respondents were served with the OIP on July 19, 2021.4  As a consequence, in the 
+absence of consent by Respondents regarding a later hearing date, a public hearing will be set for 
+a date on or before September 17, 2021.  To facilitate the orderly and expeditious resolution of 
+this matter, it is ORDERED that the parties shall file a statement advising the Commission of 
+any agreement to a later hearing date (or a statement that no agreement could be reached) by 
+August 6, 2021.  In the event the parties do not reach an agreement by that date, this order does 
+not preclude the parties from reaching such an agreement subsequently.  The Commission will 
+specify further proceedings by subsequent order. 
+The parties’ attention is directed to the most recent amendments to the Commission’s 
+Rules of Practice, which took effect on April 12, 2021, and which include new e-filing 
+requirements.5 
+For the Commission, by the Office of the General Counsel, pursuant to delegated 
+authority. 
+ 
+ 
+        Vanessa A. Countryman 
+              Secretary 
+                                              
+4  The Division of Enforcement sent a copy of its notice of service to the Office of 
+Administrative Law Judges.  We remind the parties that the OIP set the matter down for a 
+hearing before the Commission.  Stockman Kast Ryan , 2021 WL 2953521, at *35.   
+5  Amendments to the Commission’s Rules of Practice , Exchange Act Release No. 90442, 
+2020 WL 7013370 (Nov. 17, 2020), 85 Fed. Reg. 86,464, 86,474 (Dec. 30, 2020), 
+https://www.sec.gov/rules/final/2020/34-90442a.pdf; Instructions for Electronic Filing and 
+Service of Documents in SEC Administrative Proceedings and Technical Specifications , 
+https://www.sec.gov/efapdocs/instructions.pdf.  The amendments impose other obligations such 
+as a new redaction and omission of sensitive personal information requirement.  Amendments to 
+the Commission’s Rules of Practice , 85 Fed. Reg. at 86,465-81. 

raw/aaer/2021/AAER-4241.txt

@@ -0,0 +1,373 @@
+  
+ 
+ UNITED STATES OF AMERICA 
+ Before the 
+ SECURITIES AND EXCHANGE COMMISSION 
+ 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No.   92611 / August 9, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4241 / August 9, 2021 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-20456 
+ 
+ 
+In the Matter of 
+ 
+GARY S. KLEIN  
+ 
+Respondent. 
+ 
+ 
+ORDER INSTITUTING CEASE-AND-
+DESIST PROCEEDINGS, PURSUANT TO 
+SECTION 21C OF THE SECURITIES 
+EXCHANGE ACT OF 1934, MAKING 
+FINDINGS, AND IMPOSING A CEASE-
+AND-DESIST ORDER  
+   
+I. 
+ 
+ The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
+and-desist proceedings be, and hereby are, instituted pursuant to 21C of the Securities Exchange 
+Act of 1934 (“Exchange Act”) against Gary S. Klein (“Klein” or “Respondent”).   
+ 
+II. 
+ 
+ In anticipation of the institution of these proceedings, Respondent has submitted an Offer of 
+Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the purpose of 
+these proceedings and any other proceedings brought by or on behalf of the Commission, or to which 
+the Commission is a party, and without admitting or denying the findings herein, except as to the 
+Commission’s jurisdiction over him and the subject matter of these proceedings, which are admitted, 
+and except as provided herein in Section V, Respondent consents to the entry of this Order Instituting 
+Cease-and-Desist Proceedings, Pursuant to Section 21C of the Securities Exchange Act of 1934, 
+Making Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below. 
+ 
+  
+ 2 
+III. 
+ 
+ On the basis of this Order and Respondent’s Offer, the Commission finds1 that: 
+  
+Summary 
+ 
+1. From the fourth quarter of 2016 through his departure from the Company on August 
+31, 2017 (the “Relevant Period”), Gary S. Klein, the former Chief Financial Officer (“CFO”) of 
+Sequential Brands Group, Inc. (“Sequential” or the “Company”), caused Sequential to file 
+materially inaccurate disclosures in its current and periodic reports and to maintain inaccurate books 
+and records regarding goodwill.  By the fourth quarter of 2016, Sequential’s goodwill was more 
+likely than not impaired, but impairment was not recognized until the fourth quarter of 2017, when 
+Sequential belatedly impaired $304.1 million of goodwill.   
+ 
+2. During the Relevant Period and in accordance with GAAP, Sequential was required 
+to test its goodwill for impairment at least annually.  Sequential was also required to conduct 
+interim goodwill impairment tests to the extent an event occurred or circumstances arose that 
+indicated that it was more likely than not that a goodwill impairment existed.  Accounting guidance 
+references a sustained decrease in stock price as one such event or circumstance to be considered.  
+Sequential passed its annual goodwill impairment test as of October 1, 2016.  However, after the 
+Company lowered its 2016 and 2017 earnings guidance on November 3, 2016, its stock price, 
+which had been declining since at least mid-2015, dropped by approximately 40 percent.   
+Sequential subsequently conducted two internal fair value calculations, as of mid-December 2016 
+and year-end 2016, which showed that the Company’s market capitalization (including a control 
+premium) had declined below its carrying amount.  These internal calculations used the same 
+methodology that Sequential had disclosed in its SEC filings and had used in connection with its 
+annual goodwill impairment testing.  Sequential, however, did not appropriately account for this 
+quantitative evidence of likely impairment and instead performed a qualitative analysis, which 
+omitted consideration of its internal fair value calculations and did not give sufficient consideration 
+to other negative factors relevant to the Company’s business.  As a result, the Company 
+unreasonably concluded that goodwill was not impaired.   
+ 
+3. As CFO, Respondent oversaw Sequential’s assessments of whether its goodwill 
+should be impaired.  During this period, Respondent was aware of information indicating that 
+Sequential’s goodwill was more likely than not impaired and, as a consequence, he should have 
+known that Sequential’s financial disclosures and books and records did not accurately reflect its 
+goodwill.  Respondent also caused Sequential’s failure to implement and maintain adequate 
+internal accounting controls regarding interim assessments of goodwill impairment.   
+ 
+                                              
+1  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 
+binding on any other person or entity in this or any other proceeding. 
+ 
+ 3 
+4. As a result of the conduct described in this Order, Respondent caused Sequential’s 
+violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 
+13a-1, 13a-11, and 13a-13 promulgated thereunder. 
+ 
+Respondent  
+ 
+5. Gary S. Klein, age 45, is a resident of New Jersey, and served as Sequential’s CFO 
+from November 29, 2012 through August 31, 2017.  Klein is not a Certified Public Accountant and 
+does not hold any securities licenses.   
+ 
+Relevant Entity 
+ 
+6. Sequential Brands Group, Inc. is a Delaware corporation headquartered in New 
+York, New York.  Sequential owns a portfolio of consumer brands and promotes, markets, and 
+licenses those brands through retailers, wholesalers and distributors in the United States and 
+abroad.  Sequential’s common stock is registered with the Commission under Section 12(b) of the 
+Exchange Act and traded on the Nasdaq Capital Market under the ticker symbol “SQBG” at all 
+times during the Relevant Period.   
+ 
+Facts 
+ 
+Sequential’s Business, its Declining Stock Price, and its Goodwill 
+ 
+7. During the Relevant Period, Sequential owned and managed a portfolio of 
+consumer brands and promoted, marketed, and licensed those brands through retailers, 
+wholesalers, and distributors in the United States and abroad. 
+ 
+8. While Respondent was Sequential’s CFO, Sequential acquired consumer brands, 
+which created substantial goodwill on its balance sheet.  During the Relevant Period, Sequential’s 
+indefinite-lived intangible assets, including goodwill, constituted the overwhelming majority of the 
+Company’s assets.  As of December 31, 2016, intangible assets, including goodwill, represented 
+$1.3 billion, or 93 percent, of Sequential’s total assets, and goodwill represented $307.7 million, or 
+21.4 percent, of Sequential’s total assets.  
+ 
+9. Sequential’s stock price steadily declined during this period, beginning no later than 
+mid-2015, and continuing through 2017.  Sequential’s stock price was a particularly important 
+consideration in Sequential’s goodwill impairment testing, since the Company’s goodwill 
+impairment testing policy, disclosed throughout 2016 in Sequential’s quarterly and annual reports 
+on Forms 10-Q and 10-K, expressly stated that Sequential considered its market capitalization 
+(calculated as total common shares outstanding multiplied by the common equity price per share, 
+as adjusted for a control premium factor) to represent its estimated fair value.  
+ 
+10. Accounting Standard Codification (“ASC”) 350, Intangibles —Goodwill and Other, 
+addresses the measurement of goodwill subsequent to its acquisition, including testing for 
+impairment to goodwill, which must be conducted at least annually.  ASC 350 also requires entities 
+ 4 
+to conduct interim goodwill impairment testing when certain indicators, or “triggering events,” are 
+present, such as adverse changes in the business climate or market that might negatively affect the 
+value of a reporting unit.  Interim goodwill impairment testing is therefore required “if an event 
+occurs or circumstances exist that indicate that it is more likely than not that a goodwill impairment 
+exists.”  See ASC 350-20-35-30.  A sustained decrease in stock price may be an indicator of 
+impairment under ASC 350.  See ASC 350-20-35-3C. 
+ 
+Sequential’s Annual Goodwill Impairment Testing for 2016 
+ 
+11. Sequential performed its annual goodwill impairment test as of October 1, 2016. In 
+connection with its annual testing, Sequential retained an external valuation consultant (the 
+“Consultant”) to conduct a quantitative assessment of the Company’s fair value, using Sequential’s 
+market capitalization (number of shares of stock outstanding, times stock price), adjusted for a 
+control premium factor.2  
+ 
+12. Sequential’s stock price continued to decline in 2016.  By the end of 2016, 
+Sequential’s stock price was approximately 40 percent lower than its price on October 1, the date 
+of its annual goodwill impairment test.   
+ 
+13. On December 6, 2016, the Consultant provided Sequential with a report showing 
+that its calculation of the Company’s estimated fair value indicated that Sequential’s goodwill was 
+not impaired as of the testing date, October 1, 2016.  At Respondent’s direction, Sequential 
+incorporated the Consultant’s findings into a memorandum documenting its annual impairment 
+testing (the “Goodwill Memorandum”) and concluded that its goodwill was not impaired as of 
+October 1, 2016. 
+ 
+14. On December 14, 2016, Respondent directed senior accounting and finance 
+personnel who reported to him to conduct an analysis using the same quantitative methodology as 
+used by the Consultant in connection with the annual goodwill impairment test.  This analysis 
+showed that Sequential’s estimated fair value as determined by that methodology had fallen below 
+the Company’s carrying amount by approximately $63 million. 
+ 
+15. During the preparation of the Company’s 2016 financial statements, Respondent 
+again directed senior accounting and finance personnel who reported to him to perform this same 
+calculation, this time applying Sequential’s stock price as of December 31, 2016.  This result 
+showed that, as of year-end 2016, Sequential’s estimated fair value as determined by that 
+methodology had fallen below the Company’s carrying amount by approximately $96 million. 
+ 
+16. Under ASC 350, Sequential could not reasonably ignore the objective, quantitative, 
+observable evidence from the December 14 and December 31 calculations that goodwill was more 
+likely than not impaired as of December 2016.  Sequential violated GAAP and the federal 
+                                              
+2 A “control premium” represents the amount that a buyer would be willing to pay over the 
+current market price of a publicly traded company to acquire a controlling share in that company.   
+ 
+ 5 
+securities laws by neither conducting a quantitative assessment to confirm the impairment and to 
+determine its magnitude, nor considering this objective evidence in a qualitative assessment.  
+Rather, in connection with the preparation of the Company’s year-end 2016 financial statements, 
+senior accounting and finance staff documented a qualitative analysis as of December 31, 2016 to 
+“supplement” the Goodwill Memorandum that they had prepared to memorialize the Company’s 
+annual goodwill impairment testing as of October 1, 2016. 
+ 
+17. This qualitative analysis, prepared under Respondent’s oversight and with his 
+approval, omitted consideration of the results of the two goodwill impairment analyses conducted 
+for the fourth quarter of 2016 and did not give sufficient consideration to other negative factors 
+relevant to the Company’s business that pertained specifically to fair value, which were required, 
+under ASC 350-20-35-3F, to be evaluated as potential indicators of impairment in the assessment 
+of impairment under ASC 350. 
+ 
+18. Based on the foregoing, Sequential unreasonably concluded that goodwill was not 
+likely impaired and therefore no further quantitative goodwill impairment testing of goodwill was 
+required. 
+ 
+Sequential Unreasonably Disregarded Triggering  
+Events and Changes in Circumstances in Q1 and Q2 of 2017 
+ 
+19. ASC 350 requires entities to conduct interim goodwill impairment testing when 
+certain indicators, or “triggering events,” are present, such as adverse changes in the business 
+climate or market that might negatively affect the value of a reporting unit.  Interim goodwill 
+impairment testing is therefore required “if an event occurs or circumstances exist that indicate that 
+it is more likely than not that a goodwill impairment exists.”  See ASC 350-20-35-30. 
+ 
+20. Between January 1, 2017 and June 30, 2017, additional indicators, or triggering 
+events, suggested that Sequential’s goodwill was more likely than not impaired, including:  
+ 
+a. Sequential issued downward revised earnings guidance for a second time in a 
+period of three months;  
+ 
+b. Sequential’s stock price declined by another 16 percent in the first quarter of 2017; 
+and 
+ 
+c. Sequential’s Chief Executive Officer was removed. 
+ 
+21. As Sequential’s CFO, Respondent oversaw the Company’s goodwill impairment 
+testing and monitoring for triggering events in interim periods.  Despite the presence of these 
+indicators of impairment in the first half of 2017, Sequential concluded that no interim goodwill 
+impairment testing was necessary and continued to carry over $300 million of goodwill on its 
+financial statements as non-impaired during the first two quarters of 2017. 
+ 
+  
+ 6 
+Sequential’s Internal Accounting Control Failures 
+ 
+22. During the Relevant Period, Sequential lacked adequate internal accounting 
+controls to provide reasonable assurance that the Company would perform and record its interim 
+and annual assessments of goodwill for impairment as necessary to permit preparation of financial 
+statements in conformity with GAAP.   
+ 
+23. Sequential failed to implement internal accounting controls, policies and procedures 
+reasonably designed to identify potential indicators or triggers for impairment and to cause the 
+Company to conduct appropriate interim goodwill impairment testing where, pursuant to ASC 350, 
+indicators of impairment were present.   
+ 
+24. Sequential also failed to implement internal accounting controls, policies and 
+procedures reasonably designed to cause the Company to conduct appropriate impairment testing 
+where, pursuant to ASC 350, it was more likely than not that the carrying amount of Sequential’s 
+reporting unit exceeded its fair value. 
+ 
+Sequential’s Material Misstatements and Omissions in SEC Filings and 
+Financial Statements 
+ 
+25. As a result of the Company’s failure to timely impair goodwill, its financial 
+statements for 2016 contained several material accounting errors, including: (i) an overstatement of 
+income from operations; (ii) an understatement of operating expenses; (iii) an understatement of 
+net loss; (iv) an overstatement of goodwill; and (v) an overstatement of total assets. 
+ 
+26. Sequential carried these errors forward into the first two quarters of 2017.  Its 
+financial statements for the first two quarters of 2017 contained several material accounting errors, 
+including: (i) an overstatement of goodwill; (ii) an overstatement of total assets; (iii) an 
+understatement of accumulated deficit; and (iv) an overstatement of stockholders’ equity.   
+ 
+27. Sequential made additional misstatements and omissions related to its goodwill 
+impairment testing in its periodic and current reports.  These included its failure to disclose that it 
+had conducted objective market capitalization analyses for the fourth quarter of 2016, using the 
+same methodology as used in connection with its annual testing, which showed that its carrying 
+amount likely exceeded fair value.  Sequential also failed to disclose that it omitted the unfavorable 
+results of these calculations from its qualitative goodwill impairment assessment conducted at 
+year-end 2016.   
+ 
+28. These material misstatements and omissions occurred in Sequential’s 2016 annual 
+report on Form 10-K, filed on March 14, 2017, its current reports on Form 8-K reporting its 
+earnings results for 2016 and the first two quarters of 2017, furnished on March 2, May 4 and July 
+27, 2017, respectively, and its quarterly reports on Form 10-Q for the first two quarters of 2017, 
+filed May 10 and August 9, 2017, respectively.  Except for the Form 8-K furnished on July 27, 
+2017, Respondent also signed each of these reports as Sequential’s CFO.  
+ 
+ 7 
+ 
+Violations 
+ 
+As a result of the conduct described above, Respondent caused Sequential’s violations of 
+Section 13(a) of the Exchange Act and Rules 13a-1, 13a-11, 13a-13, and 12b-20 thereunder, which 
+require every issuer of a security registered pursuant to Section 12 of the Exchange Act file with 
+the Commission information, documents, and annual, quarterly, and current reports as the 
+Commission may require and such further material information as may be necessary to make the 
+required statements not misleading. 
+ 
+ As a result of the conduct described above, Respondent caused Sequential’s violations of 
+Section 13(b)(2)(A) of the Exchange Act, which requires reporting companies to make and keep 
+books, records, and accounts which, in reasonable detail, accurately and fairly reflect their 
+transactions and dispositions of their assets. 
+ 
+ Lastly, as a result of the conduct described above, Respondent caused Sequential’s 
+violations of Section 13(b)(2)(B) of the Exchange Act, which requires all reporting companies to 
+devise and maintain a system of internal accounting controls sufficient to provide reasonable 
+assurances that transactions are recorded as necessary to permit preparation of financial statements 
+in accordance with generally accepted accounting principles.  
+ 
+ 
+IV. 
+ In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
+agreed to in Respondent’s Offer. 
+ 
+ Accordingly, pursuant to Section 21C of the Exchange Act, it is hereby ORDERED that: 
+ 
+ A. Respondent cease and desist from committing or causing any violations and any 
+future violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 
+12b-20, 13a-1, 13a-11 and 13a-13 promulgated thereunder.   
+ 
+B. Respondent shall, within 21 days of the entry of this Order, pay a civil money 
+penalty in the amount of $20,000 to the Securities and Exchange Commission for transfer to the 
+general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If timely 
+payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717.   
+ 
+Payment must be made in one of the following ways:   
+ 
+(1) Respondent may transmit payment electronically to the Commission, which 
+will provide detailed ACH transfer/Fedwire instructions upon request;  
+ 
+(2) Respondent may make direct payment from a bank account via Pay.gov 
+through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
+ 
+ 8 
+(3) Respondent may pay by certified check, bank cashier’s check, or United 
+States postal money order, made payable to the Securities and Exchange 
+Commission and hand-delivered or mailed to:  
+ 
+Enterprise Services Center 
+Accounts Receivable Branch 
+HQ Bldg., Room 181, AMZ-341 
+6500 South MacArthur Boulevard 
+Oklahoma City, OK 73169 
+ 
+Payments by check or money order must be accompanied by a cover letter identifying Gary 
+S. Klein as Respondent in these proceedings, and the file number of these proceedings; a copy of 
+the cover letter and check or money order must be sent to Jennifer Leete, Associate Director, 
+Division of Enforcement, Securities and Exchange Commission, 100 F St., NE, Washington, DC 
+20549.   
+ 
+ C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
+treated as penalties paid to the government for all purposes, including all tax purposes.  To 
+preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
+Action, he shall not argue that he is entitled to, nor shall he benefit by, offset or reduction of any 
+award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
+penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 
+Penalty Offset, Respondent agrees that he shall, within 30 days after entry of a final order granting 
+the Penalty Offset, notify the Commission’s counsel in this action and pay the amount of the 
+Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 
+an additional civil penalty and shall not be deemed to change the amount of the civil penalty 
+imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 
+private damages action brought against Respondent by or on behalf of one or more investors based 
+on substantially the same facts as alleged in the Order instituted by the Commission in this 
+proceeding. 
+  
+ 9 
+V. 
+ 
+It is further Ordered that, solely for purposes of exceptions to discharge set forth in Section 
+523 of the Bankruptcy Code, 11 U.S.C. § 523, the findings in this Order are true and admitted by 
+Respondent, and further, any debt for disgorgement, prejudgment interest, civil penalty or other 
+amounts due by Respondent under this Order or any other judgment, order, consent order, decree 
+or settlement agreement entered in connection with this proceeding, is a debt for the violation by 
+Respondent of the federal securities laws or any regulation or order issued under such laws, as set 
+forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. §523(a)(19). 
+ 
+ 
+ By the Commission. 
+ 
+ 
+ 
+Vanessa A. Countryman 
+        Secretary 

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+UNITED STATES OF AMERICA 
+before the 
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 92734 / August 23, 2021  
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4243 / August 23, 2021 
+ 
+Admin. Proc. File No. 3-20394 
+ 
+In the Matter of 
+PAUL L. CHANCEY, JR., CPA 
+ 
+ 
+ 
+ 
+PROTECTIVE ORDER 
+On July 13, 2021, the Securities and Exchange Commission issued an order instituting an 
+administrative proceeding (“OIP”) against Paul L. Chancey, Jr., CPA (“Respondent”), pursuant 
+to Sections 4C and 21C of the Securities Exchange Act of 1934 and Rule 102(e)(1)(ii) of the 
+Commission’s Rules of Practice. 1  On August 16, 2021, Respondent and the Division of 
+Enforcement jointly moved for entry of a protective order concerning the use and disclosure of 
+nonpublic sensitive information that Respondent and the Division will disclose in connection 
+with discovery in this proceeding.  The parties represented that they had stipulated to terms and 
+submitted a proposed order with their motion.  
+Commission Rule of Practice 322 provides that a party may seek a protective order 
+limiting disclosure of a document or testimony that contains confidential information.2  We will 
+grant such a motion “only upon a finding that the harm resulting from disclosure would outweigh 
+the benefits of disclosure.”3  Because the parties represent that portions of the Division’s 
+investigative file to be produced to Respondent, as well as  other documents to be produced in 
+                                              
+1  Paul L. Chancey, Jr., CPA , Exchange Act Release No. 92378, 2021 WL 2953721 (July 13, 
+2021). 
+2  17 C.F.R. § 201.322(a).  
+3  17 C.F.R. § 201.322(b).  
+2 
+ 
+ 
+ 
+discovery, contain personal identifying information or reflect proprietary sales practices or 
+contain business or confidential information, we grant the parties’ motion for a protective order.4   
+Accordingly, it is ORDERED, based on the parties’ stipulated language, but with some 
+minor revisions to that stipulated language throughout, and with alternate redaction procedures 
+from the parties’ proposed procedures, that:  
+1. Persons subject to this order (“Protective Order”) will include, without limitation, 
+(i) Respondent and the Division (together, the “Stipulating Parties”), as well as (ii) the 
+Stipulating Parties’ representatives, agents, counsel, experts, and consultants, (iii) any third 
+parties providing discovery in this proceeding (“Third Parties”), and (iv) all other interested 
+persons with actual or constructive notice of this order. 
+2. Persons subject to this order may be subject to sanctions under Rule of Practice 
+180, 17 C.F.R. § 201.180, for any  breach of the terms of this Protective Order. 
+3. Counsel for the Stipulating Parties or any Third Party may designate any 
+document or other material or information (including interrogatory responses or admissions), 
+regardless of who produced the material, or any deposition testimony given in this proceeding by 
+or on behalf of a Stipulating Party or Third Party (including any transcripts or video recordings 
+thereof and exhibits used in the deposition), as “Confidential” if counsel determines, in good 
+faith, that such material constitutes technical know-how; confidential research, development or 
+commercial information; purchase and/or sales data; proprietary commercial, financial, technical, 
+research, development, or business information; non-public contracts or agreements; or any other 
+confidential, private, or proprietary information such that the designation of that material as 
+confidential is necessary to protect the interests of the client or other third parties such as 
+MiMedx, and its former or current employees, auditors, accountants, and lawyers.  Information, 
+documents, and deposition testimony designated by a Stipulating Party or Third Party as 
+confidential will be labeled “CONFIDENTIAL.  PRODUCED PURSUANT TO PROTECTIVE 
+ORDER.”  Information or documents that have been designated as Confidential under this order 
+may be referred to collectively as “Confidential Information.” 
+4. Regardless of the designation and label provided by the producing Stipulating or 
+Third Party, no information, document, or deposition testimony shall qualify as Confidential 
+Information if that document already has been introduced not under seal in any public 
+proceeding, including but not limited to U.S. v. Parker H. Petit and William Taylor, No. 19-cr-
+850 (S.D.N.Y.) and SEC v. MiMedx , et al., No. 1:19-cv-10927 (S.D.N.Y.).  
+                                              
+4  See, e.g. , Christopher E. Knauth, CPA, Exchange Act Release No. 92482, , 2021 WL 
+3128191 (July 23, 2021) (granting request for a protective order against the disclosure of 
+personal identifiable information and preventing use of such information for business or 
+commercial purposes);  LBB & Assocs. Ltd., Exchange Act Release No. 85569, 2019 WL 
+1531832 (Apr. 9, 2019) (same). 
+3 
+ 
+ 
+ 
+5. Unless ordered by the Commission, or otherwise provided for herein, all 
+documents and other materials disclosed in this proceeding (including, but not limited to 
+Confidential Information), will be held and used by the person receiving such information solely 
+for use in connection with this proceeding.  However, nothing in this Protective Order shall 
+prevent the Division from complying with its obligations under law concerning disclosure of 
+documents, including but not limited to its published Routine Uses of Information in Forms 1661 
+and 1662,5 the Freedom of Information Act, 5 U.S.C. § 552 et seq., and any other statutes or 
+rules applicable to the Division, or interfere with the Division’s use of information for law 
+enforcement activities and to otherwise regulate, administer, and enforce the federal securities 
+laws. 
+6. In the event a party challenges another Stipulating Party’s or Third Party’s 
+Confidential designation, counsel shall make a good faith effort to resolve the dispute, and in the 
+absence of a resolution, the challenging party may thereafter seek resolution by the Commission 
+or by an assigned hearing officer.  Nothing in this Protective Order operates as a waiver of any 
+claim or defense in this proceeding or creates an admission by any party that Confidential 
+Information disclosed in this case is or is not (i) confidential, (ii) privileged, (iii) discoverable, 
+(iv) relevant, or (v) admissible in evidence.  Each party specifically reserves the right to object to 
+the use or admissibility of all Confidential Information disclosed, in accordance with applicable 
+law and Commission rules. 
+7. Subject to Paragraph 5, above, information or documents designated as 
+Confidential Information shall not be disclosed to any person, except: 
+A. The Stipulating Parties and counsel of record; 
+B. Employees of such counsel assigned to and assisting in this proceeding; 
+C. Outside vendors or service providers (such as copy-service providers and 
+document-management consultants) that counsel engage to assist in this 
+proceeding; 
+D. Mock jurors and related service providers that counsel engage to assist in 
+this proceeding; 
+E. As to any document, its author, its addressee, and any other person 
+indicated on the face of the document as having received a copy; 
+                                              
+5  See https://www.sec.gov/files/sec1661.pdf (describing principal and routine uses of 
+information obtained other than pursuant to Commission subpoena); 
+https://www.sec.gov/files/sec1662.pdf (same as to information obtained voluntarily or pursuant 
+to Commission subpoena). 
+4 
+ 
+ 
+ 
+F. Stenographers and videographers engaged to transcribe depositions the 
+Stipulating Parties conduct in this proceeding;   
+G. Consultants or experts to the extent deemed necessary by counsel to assist 
+in this proceeding; 
+H. Any person who counsel for a Stipulating Party in good faith believes may 
+be called to testify at trial or deposition in this proceeding (as well as 
+counsel for such person).  Such persons and/or their counsel may retain 
+Confidential Information that counsel for a Stipulating Party in good faith 
+believes is necessary for such persons to prepare for testimony; such 
+retention is subject to Paragraph 14, below; 
+I. The Commission or an assigned hearing officer, at the hearing or as 
+exhibits to motions; 
+J. Any other person to whom the Stipulating Parties have agreed in writing 
+disclosure may be made or to whom disclosure has been authorized by 
+order of the Commission. 
+8. Subject to Paragraph 5, above, prior to disclosing or displaying Confidential 
+Information to any person, counsel shall: 
+A. inform the person of the confidential nature of the information or 
+documents; and 
+B. inform the person that the Commission has enjoined the use of the 
+information or documents by him/her for any purpose other than in 
+connection with this proceeding and has enjoined the disclosure of that 
+information or documents to any other person except as permitted by this 
+Protective Order. 
+9. Subject to Paragraph 5, above, Confidential Information may be displayed to and 
+discussed with the persons identified in Paragraphs 7.D and 7.H, above, only on the condition 
+that, prior to any such display or discussion, each such person shall be asked to sign an 
+agreement to be bound by this Protective Order in the form attached to this Protective Order as 
+“Model Non-Disclosure Agreement.”  In the event such person refuses to sign an agreement in 
+the form of this Model Non-Disclosure Agreement, the party desiring to disclose the 
+Confidential Information may seek appropriate relief from the Commission or from a hearing 
+officer, if the proceeding has been assigned to a hearing officer. 
+10. In making any Commission filings, the Stipulating Parties may describe or attach 
+as exhibits any documents or information produced in this matter, regardless of whether such 
+materials are designated Confidential.  Such a filing shall not constitute a violation of this 
+5 
+ 
+ 
+ 
+Protective Order.  A filing that contains Confidential Information will be filed under the sealing 
+and redaction procedures of Rule of Practice 322(b), 17 C.F.R. § 201.322(b).6 
+11. Any Stipulating Party who discovers that it inadvertently produced material 
+containing Confidential Information without designating that information as Confidential may, 
+within a reasonable time following its discovery of the inadvertent production, retroactively 
+designate that material as Confidential Information, by providing notice of its designation in 
+writing to all Stipulating Parties. 
+12. During the course of deposition testimony in this proceeding, the transcript of 
+such deposition may be designated on the record as Confidential Information.  Alternatively, 
+within 30 days of receiving a transcript of deposition testimony taken in this proceeding, any 
+Stipulating Party or Third Party (where applicable) providing the testimony may designate the 
+transcript as Confidential Information by notifying all Stipulating Parties in writing that the 
+transcript is to be designated as Confidential Information. 
+13. The foregoing is entirely without prejudice to the right of any party to apply to the 
+Commission or to an assigned hearing officer for any further protective order relating to 
+Confidential Information; or to object to the production of documents or information; or to apply 
+to the Commission or to an assigned hearing officer for an order compelling production of 
+documents or information; or for modification of this Protective Order; or to seek any other relief 
+from the Commission or from an assigned hearing officer. 
+14. Within 60 days of the final disposition (including all appeals) of this proceeding, 
+whichever is later, all recipients of Confidential Information must either return it, including all 
+copies thereof, to the producing party, or destroy such material, including all copies thereof.  
+Notwithstanding this provision, attorneys that the Stipulating Parties have specifically retained 
+for this proceeding may retain an archival copy of all pleadings, motion papers, transcripts, 
+expert reports, legal memoranda, correspondence, or attorney work product, even if such 
+materials contain Confidential Information.  Any such archival copies that contain or constitute 
+Confidential Information remain subject to this Protective Order. 
+15. This Protective Order will survive the termination of the proceeding and will 
+continue to be binding upon all persons to whom Confidential Information is produced or 
+disclosed. 
+ 
+                                              
+6  See also https://www.sec.gov/efapdocs/instructions.pdf at §§ 4.1.4, 5.2 (addressing the 
+submission of sealed and redacted materials to the Commission’s Office of the Secretary through 
+the Electronic Filings in Administrative Proceedings (eFAP) system).  
+6 
+ 
+ 
+ 
+16. The Commission or an assigned hearing officer will retain jurisdiction over all 
+persons subject to this Protective Order to the extent necessary to enforce any obligations arising 
+hereunder or to impose sanctions for any contempt thereof.  
+For the Commission, by the Office of the General Counsel, pursuant to delegated 
+authority.      
+ 
+ 
+              Vanessa A. Countryman 
+   Secretary 
+ 
+UNITED STATES OF AMERICA 
+before the 
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+Admin. Proc. File No. 3-20394 
+ 
+In the Matter of 
+PAUL L. CHANCEY, JR., CPA 
+ 
+MODEL NON-DISCLOSURE AGREEMENT 
+ 
+ 
+I, [_______ full name_______ ], of [_______ full address_______ ], declare under penalty 
+of perjury that I have read in its entirety and understand the Protective Order that was issued in 
+the above captioned Administrative Proceeding of the U.S. Securities and Exchange 
+Commission. 
+I agree to comply with and be bound by all the terms of the Protective Order and I 
+understand and acknowledge that failure to so comply could expose me to sanctions.  I will not 
+disclose in any manner any information or item that is subject to the Protective Order to any 
+person or entity except in strict compliance with the provisions of the Protective Order.  I will 
+not use any information or item that is subject to the Protective Order for any purpose except in 
+strict compliance with the terms of the Protective Order. 
+I further agree to submit to the Commission’s jurisdiction, including to that of an 
+assigned hearing officer, for the limited purpose of enforcing the terms of the Protective Order, 
+even if such proceedings occur after termination of this action. 
+Signature: ____________________________  
+Printed name: __________________________  
+Date: ________________________________  

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+UNITED STATES OF AMERICA 
+before the  
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 92859 / September 2, 2021 
+ 
+INVESTMENT ADVISERS ACT OF 1940 
+Release No. 5844 / September 2, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4246 / September 2, 2021 
+ 
+Admin. Proc. File No. 3-20395 
+ 
+ 
+In the Matter of 
+ 
+STOCKMAN KAST RYAN & CO. LLP; 
+ELLEN S. FISHER, CPA; AND 
+DAVID H. KAST, CPA 
+ 
+ 
+ORDER  
+ 
+On July 13, 2021, the Securities and Exchange Commission issued an order instituting an 
+administrative proceeding (“OIP”) against Stockman Kast Ryan & Co. LLP, Ellen S. Fisher, 
+CPA, and David H. Kast, CPA (collectively, “Respondents”), pursuant to Section 4C of the 
+Securities Exchange Act of 1934, Section 203(k) of the Investment Advisers Act of 1940, and 
+Rule 102(e)(1)(ii) of the Commission’s Rules of Practice.1  Respondents were served with the 
+OIP on July 19, 2021.2  On August 5, 2021, the parties filed a joint statement in which 
+Respondents consented to a hearing date no earlier than March 2022.  On August 6, 2021, 
+Respondents filed an answer to the allegations contained in the OIP.   
+The OIP ordered the parties to conduct a prehearing conference within 14 days of service 
+of the answer and required that they report on such a conference after its completion.3  The 
+                                                 
+1  Stockman Kast Ryan & Co., Exchange Act Release No. 92382, 2021 WL 2953521 (July 
+13, 2021). 
+2  See Stockman Kast Ryan & Co., Exchange Act Release No. 92534, 2021 WL 3265873 
+(July 30, 2021). 
+3  Stockman Kast Ryan & Co, 2021 WL 2953521, at *36 (citing 17 C.F.R. § 201.221) 
+(“[F]ollowing the conference, they shall file a statement with the Office of the Secretary advising 
+the Commission of any agreements reached at said conference.  If a prehearing conference was 
+2 
+ 
+subjects to be discussed at the prehearing conference include settlement of any issues as well as 
+the timing of discovery, the exchange of witness and exhibit lists and copies of exhibits, expert 
+witness disclosures and reports, and prehearing motions or briefs.4   
+Accordingly, it is ORDERED that the parties file a joint prehearing conference statement 
+addressing a proposed prehearing schedule within 14 days of the date of this order.5  If a 
+prehearing conference is not held, the parties shall file, jointly or separately, a statement advising 
+the Commission of that fact and of the efforts made to meet and confer. 
+For the Commission, by the Office of the General Counsel, pursuant to delegated 
+authority. 
+ 
+ 
+        Vanessa A. Countryman 
+              Secretary 
+                                                 
+not held, a statement shall be filed with the Office of the Secretary advising the Commission of 
+that fact and of the efforts made to meet and confer.”). 
+4  17 C.F.R. § 201.221(c). 
+5  See, e.g., Christopher E. Knauth, CPA, Exchange Act Release No. 92076, 2021 WL 
+2210578 (Apr. 5, 2021) (reflecting that the parties informed the Commission about their 
+discussion of and agreements on a comprehensive list of procedural issues); PLS, CPA, 
+Exchange Act Release No. 4148, 2020 WL 3397782 (June 18, 2020) (same).    

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+ 
+ 
+ 
+UNITED STATES OF AMERICA 
+Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES ACT OF 1933 
+Release No. 10977 / September 3, 2021 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 92874 / September 3, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4248 / September 3, 2021 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-20523 
+ 
+ 
+In the Matter of 
+ 
+THE KRAFT HEINZ CO., 
+and 
+EDUARDO PELLEISSONE, 
+ 
+Respondents. 
+ 
+CORRECTED ORDER INSTITUTING CEASE-
+AND-DESIST PROCEEDINGS, PURSUANT 
+TO SECTION 8A OF THE SECURITIES ACT 
+OF 1933 AND SECTION 21C OF THE 
+SECURITIES EXCHANGE ACT OF 1934, 
+MAKING FINDINGS AND IMPOSING A 
+CEASE-AND-DESIST ORDER  
+ 
+I. 
+ 
+The Securities and Exchange Commission (“Commission”) deems it appropriate that 
+cease-and-desist proceedings be, and hereby are, instituted against The Kraft Heinz Co. 
+(“KHC”) and against Eduardo Pelleissone (“Pelleissone”), pursuant to Section 8A of the 
+Securities Act and Section 21C of the Exchange Act. 
+ 
+II. 
+ 
+In anticipation of the institution of these proceedings, KHC and Pelleissone (collectively 
+“Respondents”) have submitted Offers of Settlement (the “Offers”) which the Commission has 
+determined to accept.  Solely for the purpose of these proceedings and any other proceedings 
+brought by or on behalf of the Commission, or to which the Commission is a party, and without 
+admitting or denying the findings herein, except as to the Commission’s jurisdiction over them and 
+the subject matter of these proceedings, which are admitted, and except as provided herein in 
+Section V, Respondents consent to the entry of this Order Instituting Cease- And-Desist 
+Proceedings Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, 
+Making Findings and Imposing a Cease-And-Desist Order (“Order”), as set forth below. 
+ 
+ 
+2 
+ 
+III. 
+ 
+On the basis of this Order and Respondents’ Offers, the Commission finds1 that: 
+ 
+Summary 
+ 
+1. This matter concerns a multi-year expense management scheme by KHC’s 
+procurement division to improperly reduce KHC’s cost of goods sold and achieve cost savings that 
+were externally touted to the market and internally tied to performance-based targets.  The 
+misconduct resulted in KHC reporting inflated earnings before interest, taxes, depreciation and 
+amortization (“EBITDA”), a key performance metric for investors.  From the fourth quarter of 
+2015 through the end of 2018 (the “Relevant Period”), procurement employees negotiated 
+agreements with numerous suppliers to obtain upfront cash payments and discounts, in exchange 
+for future commitments to be undertaken by KHC, while improperly documenting the agreements 
+in ways that caused the company to prematurely and improperly recognize the expense savings. 
+ 
+2. In accordance with accounting principles generally accepted in the United States 
+(“Generally Accepted Accounting Principles” or “U.S. GAAP”), if the upfront cash and 
+discounts are tied to future commitments, then the expense savings must be recognized over the 
+period the future obligations are satisfied.  Procurement division employees, however, negotiated 
+and maintained false and misleading supplier contracts that made it appear as if expense savings 
+were provided in exchange for past or same-year events performed by KHC, when, in reality, 
+they were upfront payments in exchange for a future benefit from KHC, in order to improperly 
+recognize costs savings prematurely. 
+ 
+3. Over the Relevant Period, KHC entered into approximately 59 transactions which 
+were improperly recognized as a result of the false and misleading documentation negotiated and 
+generated by procurement division employees. Had these transactions been properly documented 
+and accounted for, KHC’s cost of goods sold during that period would have been approximately 
+$50 million higher than reported. 
+ 
+4. These misleading transactions, along with numerous other misstated accounting 
+entries, led KHC, in June 2019, to restate its financial statements on Form 10-K. The restatement 
+included financial data reported for fiscal year (“FY”) 2015, as well as the financial statements 
+contained in Forms 10-Q and 10-K for FYs 2016 and 2017 and the first three quarters of FY 2018 
+that were filed with the Commission.  KHC corrected a total of $208 million in cost savings 
+arising from 295 transactions, and also corrected its Adjusted EBITDA during the relevant 
+period, as reflected in the restatement. 
+ 
+5. Pelleissone, KHC’s then Chief Operating Officer and Global Head of Operations, 
+was presented with several warning signs indicating that expenses were being managed through 
+manipulating supplier agreements, imposed pressures  on the procurement division to deliver 
+unrealistic savings targets, and, as a member of the company’s disclosure committee,  
+                                                      
+1 The findings herein are made pursuant to Respondents’ Offers of Settlement and are not binding on any  other person 
+or entity in this or any other proceeding. 
+ 
+3 
+ 
+unreasonably approved KHC financial statements that he should have known were materially false 
+and misleading. 
+ 
+6. A procurement executive who reported to Pelleissone (“Procurement Executive”), 
+managed the procurement division, approved certain of KHC contracts with suppliers, and had 
+sub-certification responsibilities in 2018.  Despite numerous warning signs that should have 
+alerted him that procurement division employees were circumventing KHC’s internal controls in 
+order to achieve cost savings targets, the Procurement Executive approved and failed to prevent 
+several supplier contracts that masked the true nature of the underlying transactions.  The 
+Procurement Executive also should have known that this false and misleading contract 
+documentation was provided to KHC’s finance and controller groups, thus causing KHC to 
+prematurely recognize cost savings in contravention of U.S. GAAP. 
+ 
+RESPONDENTS 
+ 
+7. KHC is a food and beverage manufacturing company co-headquartered in 
+Chicago, Illinois, and Pittsburgh, Pennsylvania. The company has a class of shares registered 
+with the Commission pursuant to Exchange Act Section 12(b), which trades on NASDAQ under  
+the symbol “KHC.”  KHC was created in July 2015 through the merger of public company Kraft 
+Foods Group Inc. (“Kraft”) with and into private company H.J. Heinz Co. (“Heinz”).  
+ 
+8. Pelleissone, age 47, resides in Chicago, Illinois.  Pelleissone was KHC’s Global 
+Head of Operations and Chief Operating Officer between July 2015 and November 2018, and its 
+Head of Strategic Projects from November 2018 until June 2019, when he left the company. 
+During the period of 2016 through 2018, Pelleissone served as a member of KHC’s disclosure 
+committee, which was tasked with reviewing and affirming the accuracy and completeness of the 
+company’s quarterly and annual filings. Before the merger with Kraft, Pelleissone was the 
+Global Head of Operations for Heinz.  Pelleissone is currently the president of operations in a 
+regional subsidiary of a different publicly traded company. 
+ 
+FACTS 
+Background 
+ 
+9. Following the Kraft-Heinz merger in July 2015, newly-formed KHC made 
+concerted efforts to eliminate redundancies and reduce operational costs.  As part of its merger 
+strategy, KHC disclosed to investors that the company would deliver on certain cost savings  
+results throughout the company, including in the procurement division, a large cost center for 
+KHC. The cost savings strategy, including its impact on costs of goods sold, was widely covered 
+by analysts at the time.  Although the company achieved the promised cost savings, individual 
+procurement employees had key performance targets tied to additional cost savings from the 
+procurement division.  
+ 
+10. To implement this cost savings strategy, the company set performance targets for 
+procurement division employees tied to savings realized through negotiations with suppliers.  
+For a period immediately following the merger between Kraft and Heinz, these targets were 
+ 
+4 
+ 
+generally achieved, due to, among other things, synergies from renegotiating supplier contracts 
+in light of the newly-combined company’s increased purchasing power. 
+ 
+11. By 2017, however, the procurement division had largely exhausted its ability to 
+extract synergies from the merger.  In addition, the cost of many ingredient and packaging 
+supplies increased significantly due to adverse inflation and unfavorable foreign exchange rates.  
+ 
+12. The combined impact of the increased raw material costs and savings already 
+realized in prior years made it more difficult for procurement division employees to achieve 
+additional, incremental savings in 2017 and 2018.  The procurement division, under the 
+Procurement Executive’s direction and with Pelleissone’s oversight, implemented overly 
+ambitious annual budget and division-level savings targets, based on corporate KHC targets.  
+They, in turn, pushed procurement division employees to come up with ideas to generate 
+additional immediate, same-year, savings, and did not adjust the internal targets. 
+ 
+Expense Management Misconduct  
+ 
+13. The expense management misconduct was carried out by KHC’s procurement 
+division employees, across multiple geographic zones, and involved several strategies employed to 
+misrepresent the true nature of transactions, resulting in accounting errors and misstatements. Out 
+of the 295 transactions that KHC ultimately corrected in connection with the  restatement, 
+approximately 59 were part of the procurement division’s expense management misconduct, 
+including the following types of transactions: 
+ 
+• “Prebate Transactions” – KHC procurement division employees agreed to future- 
+year commitments, like contract extensions and future-year volume purchases, in 
+exchange for savings discounts and credits by suppliers (“Prebates”), but 
+mischaracterized the savings in contract documentation, which stated that they 
+were for past or same-year purchases made by KHC (“Rebates”); 
+ 
+• “Clawback Transactions” – KHC procurement division employees agreed to take                
+upfront payments subject to repayment through future price increases or volume 
+commitments, but documented the transaction in ways which obscured the 
+repayment obligation; and 
+ 
+• “Price Phasing Transactions” – Suppliers agreed to reduce their prices during a 
+certain period in exchange for an offsetting price increase in a future period, but 
+the full nature of the arrangement was not communicated by KHC procurement 
+division employees to KHC controller group employees. 
+14. In accordance with U.S. GAAP,2  KHC should have recognized the savings 
+                                                      
+2 GAAP requires that a “rebate or refund of a specified amount of cash consideration that is payable pursuant  to a 
+binding arrangement only if the entity completes a specified cumulative level of purchases or remains a customer 
+for a specified time period shall be recognized as a reduction of the cost of sales based on a systematic and   rational 
+ 
+5 
+ 
+provided in exchange for future commitments over the period of time that KHC performed the 
+commitments.  Accordingly, when a prebate was provided in exchange for a contract extension 
+or future-year volume commitment, the savings should have been recognized over the life of the 
+extension, or the future period in which KHC purchased the goods from the supplier.  
+Conversely, rebate savings from past or same-year commitments should have been recognized 
+ratably over the period in which they were earned.  Finally, clawback transactions should have 
+been recognized ratably over the clawback period—when it was reasonably estimable that KHC 
+would satisfy its repayment obligation.  
+2014-2015: Early Expense Management Misconduct 
+15. In the months leading up to the merger with Kraft, the procurement division of 
+Heinz was faced with a $10 million year-end cost savings gap.  This gap created pressure for the 
+division to come up with ideas to generate additional same-year savings.  As a result, the 
+Procurement Executive, who worked at Heinz at the time, took steps with regard to a previously-
+negotiated transaction with a packaging supplier to improperly recognize additional cost savings 
+in 2015.  Pelleissone received monthly performance reports of these negotiations. 
+16. The original agreement, which the Procurement Executive signed the year earlier 
+on behalf of Heinz, provided that the supplier would make a $3.5 million upfront payment 
+(commonly referred to as a “prebate”) to Heinz in exchange for the parties’ signing a new three-
+year contract      in 2015.  The letter of intent further stated that the supplier was not obligated to 
+provide the $3.5 million prebate payment if the parties failed to execute the new contract.  
+Consistent with this contract language, the Procurement Executive delivered a presentation to 
+Pelleissone which communicated that the  cost savings from the $3.5 million prebate transaction 
+was linked to the three-year period covered by the new contract. 
+ 
+17. In late 2015, following the merger, KHC renegotiated the language describing the 
+$3.5 million prebate, entered into a new contract which stated the payment was “a non-refundable 
+2015 payment . . .  for purchases made in 2015,” and prematurely recognized the cost savings in 
+2015. 
+ 
+18. This accounting treatment was improper because the final contract, which the 
+Procurement Executive approved and signed, mischaracterized the true nature of the supplier 
+payment by concealing the fact that the $3.5 million prebate payment remained linked to a three-
+year contract.  
+ 
+19. Planning documents that the Procurement Executive presented to Pelleissone 
+acknowledged that Heinz was in the process of negotiating a new supplier contract for the 
+purpose of generating “improved, backdated impact for CY15” in the form of a “rebate.”  The 
+                                                      
+allocation of the cash consideration offered to each of the underlying transactions that results in progress by  the 
+entity toward earning the rebate or refund provided the amounts are probable and can be re asonably estimated.  If  
+the rebate or refund is not probable and cannot be reasonably estimated, it shall be recognized as the milestones are 
+achieved.” Accounting Standards Codification (“ASC”) 705-20 Accounting for Certain Consideration Received 
+from a Vendor. 
+ 
+ 
+6 
+ 
+document stated that the parties needed to “align on wording,” without which, the company 
+could “book only 1/3 of benefit” in 2015.  The Procurement Executive also met with the CEO of 
+the supplier in order to determine if the supplier would be “open to reword” the description of 
+the payment to “allow [Heinz] to book” the full “3,5 Mi[llio]n USD into 2015”, and discussed 
+internally that wording of the $3.5 million payment would enable Heinz to book the amount in 
+2015.  Finally, Pelleissone and the Procurement Executive understood that a final board 
+presentation regarding procurement, unlike prior drafts, did not contain the details  surrounding 
+the $3.5 million prebate payment from the supplier. 
+ 
+20. In a separate transaction involving the same supplier, the Procurement Executive 
+and Pelleissone discussed the restructuring of a $2 million retention bonus that the supplier had 
+awarded to legacy Kraft before the merger, in order for newly merged KHC to recognize the full 
+amount in 2015, resulting in a credit to the savings targets of Heinz procurement personnel.  The 
+Procurement Executive and Pelleissone had access to information that was not communicated to 
+the controller group that would have caused the controller group to question whether immediate 
+recognition of the $2 million was appropriate.  In this transaction, procurement division 
+employees negotiated two new contracts with the supplier—one in which legacy Kraft returned 
+the bonus back to the supplier, and another, in which the supplier re-conveyed the $2 million 
+rebate, but this time, to legacy Heinz, and purportedly in exchange for purchase volumes in 
+2015.  Recharacterizing the $2 million retention bonus as a supposed purchase volume rebate 
+enabled KHC to improperly recognize the full $2 million in 2015.  The Procurement Executive 
+and Pelleissone were provided a global operations presentation that discussed the transaction as 
+part of a plan to recognize cost savings in 2015, but did not take steps to address whether the 
+rebate was accurately reflected in the new contract with legacy Heinz. 
+ 
+21. These rebate transactions at legacy Heinz and KHC following the merger should 
+have placed Pelleissone and the Procurement Executive on notice of the appropriate accounting 
+treatment for these types of transactions, that procurement division employees misrepresented 
+the true economic nature of rebate transactions, and the importance placed on not linking 
+payments from suppliers to future contract obligations in order to achieve premature costs 
+savings.  For instance, in a pre-merger transaction involving a potato supplier, Heinz’s 
+procurement division tried to improperly recognize $10 million in cost savings in 2014 by 
+drafting side credit notes which improperly stated that a total of $10 million was being provided 
+in exchange for 2014 purchases of potatoes and other vegetables, rather than for the new multi-
+year contract (the real reason for the $10 million payment).  Although this payment was 
+ultimately recorded correctly—and spread over the life of the contract — the Procurement 
+Executive and Pelleissone should have understood through this transaction that pre-merger 
+Heinz’s controllers were being presented agreements with suppliers that mischaracterized the 
+true nature of the transactions.  In an email communication, for example, the Procurement 
+Executive informed Pelleissone of the need to align on a “story” for the Heinz global controller 
+regarding the purpose of the supplier payments and the importance of not linking payments from 
+suppliers to future obligations. 
+ 
+ 
+ 
+ 
+7 
+ 
+2017-2018 Expense Management Misconduct 
+ 
+22. Beginning in 2017 and continuing into 2018, KHC encountered significant 
+headwinds in its effort to meet annual budget and savings targets, principally due to inflation and 
+unfavorable foreign exchange rates, the exhaustion of merger-related savings, and the 
+incremental, year-over-year nature of the procurement division savings targets.  The expense 
+management misconduct was more limited in 2016 because the procurement division exceeded its 
+gross savings targets that year.   
+ 
+23. However, from 2017 on, as market conditions deteriorated, Pelleissone should 
+have known that continued incremental savings were unrealistic, but he failed to adjust expense 
+reduction expectations for the procurement division, creating a high-pressure environment 
+focused on obtaining same-year cost savings.  Procurement division employees discussed 
+internally that Pelleissone “push[ed] like crazy” for them to meet cost savings goals, and 
+increased cost savings targets to unreasonable levels.  At least in part due to this pressure, in 2017 
+and 2018, members of the procurement division—across multiple  geographic zones—
+manipulated 54 supplier transactions (out of approximately 59 during the Relevant Period) to 
+improperly obtain premature recognition of cost savings. 
+ 
+24. Pelleissone and the Procurement Executive had access to information, including 
+from their involvement  in the earlier transactions described above, that should have alerted them 
+to the fact that certain contracts with suppliers submitted by procurement division employees to 
+KHC’s controllers did not reflect the true nature of the underlying agreements and would result 
+in improper accounting treatment.  Similarly, the Procurement Executive and Pelleissone also 
+should have known that certain agreements with suppliers did not generate any new costs 
+savings, despite purported cost savings being reflected in the company’s accounting books and 
+records and public disclosures. 
+ 
+25. In 2017, for example, procurement division employees negotiated a $2 million 
+prebate to  KHC from a sugar supplier in exchange for a three-year contract extension and future 
+sugar purchases.  In addition, the agreement called for KHC to return the $2 million back to the 
+supplier, in the form of paying higher prices for sugar over the three-year period.  Thus, the 
+agreement did not produce any actual cost savings.  The Procurement Executive and Pelleissone 
+should have known the true structure of the transaction, including through their participation in 
+monthly performance reviews, during which it was disclosed that the $2 million was tied to a 
+contract extension and future volume purchases, but that KHC planned to recognize the full cost 
+savings in August 2017. 
+ 
+26. The Procurement Executive also provided Pelleissone with a “risk mitigation 
+plan,” which listed $2 million in 2017 savings from the transaction and identified three other 
+transactions that were part             of the expense management misconduct.  The Procurement Executive 
+highlighted in the email attaching the plan that he would     “need to find a way to make them count 
+in 2017 by getting them signed off by the controllers.”  Nonetheless, Pelleissone, as a member of 
+KHC’s disclosure committee, raised no questions or concerns, and affirmed the accuracy and 
+completeness of KHC’s quarterly filings spanning the recognition of this transaction.  
+ 
+ 
+8 
+ 
+27. During the Relevant Period, as a member of the disclosure committee, Pelleissone 
+failed to review the quarterly and annual SEC filings provided to him as part of his disclosure 
+committee responsibilities, yet he still certified that he was unaware of inaccuracies or omissions 
+in those filings.  Pelleissone, thus, failed to implement the internal accounting control of 
+disclosure committee review of SEC filings. 
+ 
+28. In 2018, the agreement with the sugar supplier was extended to provide KHC with 
+more time to repay the supplier for the 2017 prebate, through inflated sugar prices. To accomplish 
+this, KHC was given an immediate sugar price reduction, but later in the year, the inflated prices 
+resumed, and thereafter, continued over a longer future period in order to effectuate full 
+repayment.  However, KHC recognized an immediate price reduction of $500,000 as purported 
+new cost savings.  In an email message from a procurement division employee to colleagues 
+(though not Pelleissone), the employee stated that Pelleissone proposed procurement “re-open [the 
+sugar supplier] deal and extend contract in exchange for longer amortization of pre-payment.”  
+Thereafter, the Procurement Executive was informed of the deal’s structure, and both Pelleissone 
+and the Procurement Executive received presentations communicating the anticipated and 
+improper 2018 savings recognition. 
+ 
+29. In 2017 and 2018, KHC’s procurement division entered into additional agreements 
+with suppliers which provided KHC with upfront payments that were recognized prematurely, 
+even though they were tied to future commitments and allowed the suppliers to “clawback” an 
+agreed-upon percentage of the upfront prebate.  In one such transaction, the Procurement 
+Executive was sent a presentation reflecting that KHC obtained a $4 million price reduction and 
+$7.5 million in other efficiencies in exchange for committing to a new contract with a “5 year 
+term” for the purchase of new cardboard grades from the supplier, and the supplier could “claw 
+back a portion if any of the implementation is delayed after 2018.”  According to the presentation 
+provided to the Procurement Executive, the supplier could recoup the prebate through increased 
+pricing on 2019 KHC purchases. 
+ 
+30. The Procurement Executive acknowledged that the cost savings from the 
+agreement would be “booked in July [2018]” in his self-evaluation that he provided to 
+Pelleissone in connection with his performance review.  He also was informed by one of his 
+subordinates that there was potential “upside in the year [] if we get the wording correct[].”  
+Thereafter, the Procurement Executive had a call with the CEO of the supplier, during which they 
+discussed contract wording for the two supplier payments which did not link either of the 
+prebates to a contract extension or a clawback obligation.  The Procurement Executive approved 
+the final contract, which did not reflect the true nature of the transaction, while understanding that 
+KHC’s controllers would rely on the contract to make an accounting determination. 
+ 
+31. Thereafter, the Procurement Executive signed, and along with Pelleissone, 
+submitted, a sub-certification of the accuracy and completeness of the financial statements 
+generated by global procurement over the first three quarters of 2018, during which the majority 
+of the savings from  this transaction were improperly recognized.  KHC then relied on this sub-
+certification in making representations to its auditor regarding the completeness and accuracy of 
+its financial statements. 
+ 
+ 
+9 
+ 
+32. The Procurement Executive also approved “price phasing” transactions, which 
+created the illusion of immediate cost savings through price decreases from suppliers, but, in 
+reality, were structured  to include an offsetting price increase later in time.  These “price 
+phasing” transactions violated GAAP because they purported to generate cost savings that did 
+not exist.  
+ 
+33.  In 2017, for example, KHC improperly reduced its costs by $600,000 in earlier 
+quarters through a price phasing deal with a sugar supplier.  The transaction produced no real 
+savings, however, because it required KHC to remit the same amount back to the supplier in the 
+form of higher pricing in later quarters within the same year.  In connection with this deal, the 
+Procurement Executive was aware  that his team was contemplating sugar pricing strategies to 
+address pressures from Pelleissone to narrow the gap between forecasted and actual expenses to 
+date, and approved the transaction. The Procurement Executive and Pelleissone reviewed 
+presentations highlighting that the $600,000 in positive impact to KHC’s P&L was tied to “sugar 
+price phasing.”  Similarly a draft presentation that the Procurement Executive reviewed in 
+advance of a trip he and Pelleissone took to visit the supplier highlighted that the deal would 
+“[m]ove some negative impact from Q1 CY17 through price phasing.”  
+ 
+KHC’s Internal Controls Deficiencies 
+ 
+34. Throughout the Relevant Period, the company did not design or maintain effective 
+controls for the procurement division, including those implemented by the finance and controller 
+groups, in connection with the accounting for supplier contracts and related arrangements.  The 
+company reported this material weakness in its annual report on Form 10-K filed on June 7, 2019.  
+For example, on the Friday after the close of the August 2017 books, the controller group allowed 
+KHC  to recognize fully in 2017 a rebate that it had previously determined correctly to spread over 
+a future-year period.  The changed decision by that Monday to allow immediate recognition was 
+not adequately documented nor explained to internal stakeholders, and it was made after 
+procurement employees were instructed by a superior in operations to “find a way . . . to get 
+back” the payments into the August books. 
+ 
+35. During the Relevant Period, finance personnel in gatekeeping roles also 
+overlooked indications  that some expenses were potentially being improperly managed and 
+accounted for in the procurement division.  In one internal communication, for example, a 
+member of KHC’s controller group acknowledged a procurement buyer’s effort to “jam [a] 
+rebate in to help [KHC’s] results in 2017.”  That member of the controller group took no steps to 
+report this conduct to legal or compliance, nor to determine whether it was part of a larger 
+practice within procurement. 
+ 
+36. During the Relevant Period, KHC also tied internal performance metrics and 
+compensation of the procurement legal group staff to assisting the procurement division’s efforts 
+to reduce costs.   Additionally, prior to 2018, KHC failed to provide the legal group with adequate 
+staffing and resources for reviewing numerous global supply contracts, many of which were 
+under negotiation at the same time.  Under these conditions, the part of the legal group in charge 
+of reviewing procurement contracts overlooked facts indicating that contract documentation was 
+inconsistent with the underlying negotiated transaction, and the group failed to have reasonably 
+ 
+10 
+ 
+sufficient controls over the procurement contracting process. 
+ 
+37. Pelleissone should have known that, in not properly addressing several indicia that 
+supplier contracts were being used to manage expenses, he caused KHC’s internal accounting 
+controls failures, including those relating to: (i) its accounting-related policies and procedures, (ii) 
+the preparation and signing of contract approval forms which were to communicate the key 
+commercial terms of procurement transactions to the controllers, (iii) the review of contract 
+documentation and contract approval forms by KHC’s controllers, (iv) the completion and 
+approval of management representation letters affirming the accuracy and completeness of the 
+financial records of KHC’s Zones, business units, and procurement division, and (v) a disclosure  
+committee whose function was to review and confirm the accuracy and completeness of KHC’s 
+draft periodic filings.   
+ 
+* * * * * * 
+ 
+38. KHC issued debt in securities offerings during the relevant period, the offerings for 
+which incorporated by reference the inaccurate financial reports that were later restated, and 
+offered the Procurement Executive and Pelleissone, among other employees, stock options and 
+other stock-based compensation during the Relevant Period, and bonus compensation that was 
+tied to their success at generating supply chain and operational cost savings.  Specifically, the 
+bonus criteria given the largest weight for the Procurement Executive was reaching a metric 
+referred to as a purchase price variance target that was based on the amount of year-over-year 
+savings the procurement division obtained from its supplier contracts.  Similarly, Pelleissone  was 
+assigned responsibility for operational costs, which not only were a key factor in determining the 
+company’s annual budget, but were also directly impacted by the year-over-year savings achieved 
+by the procurement division. 
+ 
+39. Additionally, during the period of the misconduct, Pelleissone exercised options in 
+August 2018 on 35,000 shares of KHC common stock and then sold the shares at a profit. 
+ 
+VIOLATIONS 
+ 
+40. Section 17(a)(2) of the Securities Act proscribes the receipt of “money or property 
+by means of any untrue statement of a material fact or any omission to state a material fact 
+necessary in order to make the statements made, in light of the circumstances under which they 
+were made, not misleading.” Section 17(a)(3) of the Securities Act proscribes engaging “in any 
+transaction, practice, or course of business which operates or would operate as a fraud or deceit 
+upon the purchaser.”  A violation of these provisions does not require scienter and may rest on a 
+finding of negligence.  See Aaron v. SEC, 446 U.S. 680, 685, 701-02 (1980). 
+ 
+41. Section 13(a) of the Exchange Act requires issuers to file such periodic and other 
+reports as the Commission may prescribe and in conformity with such rules as the Commission 
+may promulgate.  Exchange Act Rules 13a-1, 13a-11, and 13a-13 require the filing of annual, 
+current, and quarterly reports, respectively.  The obligation to file such reports embodies the 
+requirement that they be true and correct.  See, e.g., SEC v. Savoy Indus., Inc., 587 F.2d 1149, 
+ 
+11 
+ 
+1165 (D.C. Cir. 1978), cert. denied, 440 U.S. 913 (1979).  In addition to the information 
+expressly required to be included in such reports, Rule 12b-20 of the Exchange Act requires 
+issuers to add such further material information, if any, as may be necessary to make the required 
+statements, in the light of the circumstances under which they are made not misleading.  A 
+violation of these reporting provisions does not require scienter and may rest on a finding of 
+negligence.  See SEC v. Wills, 472 F. Supp. 1250, 1268 (D.D.C. 1978). 
+ 
+42. Section 13(b)(2)(A) of the Exchange Act requires Section 12 registrants to make 
+and keep books, records, and accounts that accurately and fairly reflect the transactions and 
+dispositions of their assets.  Section 13(b)(2)(B) of the Exchange Act requires all reporting 
+companies to devise and maintain a system of internal accounting controls sufficient to provide 
+reasonable assurances that transactions are recorded as necessary to permit preparation of 
+financial statements in accordance with generally accepted accounting principles.  Scienter is not 
+an element of the books and records and internal control provisions.  See Ponce v. SEC, 345 F.3d 
+722, 737 n.10 (9th Cir. 2003) (noting that a “plain reading of Section 13(b) reveals that it also 
+does not impose a scienter requirement”). 
+ 
+43. Section 13(b)(5) of the Exchange Act provides: “No person shall knowingly 
+circumvent or knowingly fail to implement a system of internal accounting controls or knowingly 
+falsify any book, record, or account described in paragraph (2) [of the statute].”   
+ 
+44. Rule 13b2-1 also prohibits any person from directly or indirectly, falsifying or 
+causing to be falsified, any book, record, or account subject to Section 13(b)(2)(A).  Rule 13b2-
+2(a) prohibits an officer or director of an issuer from, among other things, making or causing to 
+be made a materially false or misleading statement to an accountant in connection with any 
+required audit of the issuer’s financial statements or the preparation of a report required to be 
+filed with the Commission.  Scienter is not required to establish a violation of either of these 
+rules.  See World-Wide Coin Investments, 567 F. Supp. 724, 749 (N.D. Ga. 1983) (addressing 
+Rule 13b2-1); SEC v. McNulty, 137 F.3d 732, 740-41 (2d. Cir. 1997) (addressing Rule 13b2-2).  
+ 
+FINDINGS 
+ 
+45. Based on the foregoing, the Commission finds that Respondent KHC violated 
+Securities Act Sections 17(a)(2) and 17(a)(3), Exchange Act Sections 13(a), 13(b)(2)(A), and 
+13(b)(2)(B), and Exchange Act Rules 12b-20, 13a-1, 13a-11, and 13a-13 promulgated 
+thereunder. 
+ 
+46. Based on the foregoing, the Commission finds that Respondent Pelleissone (a) 
+violated Securities Act Sections 17(a)(2) and 17(a)(3), Exchange Act Section 13b-5, and 
+Exchange Act Rules 13b2-1 and 13b2-2(a); and (b) caused KHC’s violations of Sections 13(a), 
+13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act, and Rules 12b-20, 13a-1, 13a-11, and 13a-13 
+promulgated thereunder. 
+ 
+DISGORGEMENT AND CIVIL PENALTIES 
+ 
+47. The disgorgement and prejudgment interest ordered in Section IV, paragraph D 
+ 
+12 
+ 
+below is consistent with equitable principles and does not exceed Respondent’s net profits from 
+his violations, and will be distributed to harmed investors to the extent feasible.  The 
+Commission will hold funds paid pursuant to paragraph D in an account at the United States 
+Treasury pending distribution. Upon approval of the distribution final accounting by the 
+Commission, any amounts remaining that are infeasible to return to investors, and any amounts 
+returned to the Commission in the future that are infeasible to return to investors, may be 
+transferred to the general fund of the U.S. Treasury, subject to Section 21F(g)(3) of the 
+Exchange Act. 
+ 
+KHC’S COOPERATION AND REMEDIAL EFFORTS 
+ 
+48. In determining to accept Respondent KHC’s Offer, the Commission considered 
+the cooperation and remedial acts promptly undertaken by KHC.  Among other efforts, KHC 
+proactively expanded the scope of its internal investigation, provided timely updates to the 
+Commission staff regarding KHC’s investigation findings, and provided courtesy translations of 
+foreign language documents.  KHC has taken disciplinary action, enhanced review of its finance, 
+controllership, and legal functions, and instituted enhanced training, policies and procedures to 
+prevent and detect future misconduct of the type described in the Order. 
+ 
+IV. 
+ 
+In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
+agreed to in Respondents’ Offers. 
+ 
+Accordingly, it is hereby ORDERED, effective immediately, that: 
+ 
+A. KHC shall cease and desist from committing or causing any violations and any 
+future violations of Securities Act Sections 17(a)(2) and 17(a)(3) and Exchange Act Sections 13(a), 
+13(b)(2)(A), and 13(b)(2)(B), and Exchange Act Rules 12b-20, 13a-1, 13a-11, and 13a-13 
+promulgated thereunder. 
+ 
+B. KHC shall, within ten (10) days of the entry of this Order, pay a civil money 
+penalty in the amount of $62,000,000 to the Securities and Exchange Commission.  If timely 
+payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717. 
+ 
+C. Pelleissone shall cease and desist from committing or causing any violations and any 
+future violations of Securities Act Sections 17(a)(2) and 17(a)(3), Exchange Act Sections 13b-5, 
+13(a), 13(b)(2)(A), and 13(b)(2)(B), and Exchange Act Rules 13b2-1, 13b2-2(a), 12b-20, 13a-1, 
+13a-11, and 13a-13 promulgated thereunder. 
+ 
+D. Pelleissone shall, within ten (10) days of the entry of this Order, pay a civil money 
+penalty in the amount of $300,000, disgorgement of $12,500, and prejudgment interest of 
+$1,711.31 to the Securities and Exchange Commission.  If timely payment of the civil money 
+penalty is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717, and if timely 
+payment of disgorgement and prejudgment interest is not made, additional interest shall accrue 
+ 
+13 
+ 
+pursuant to SEC Rule of Practice 600.     
+ 
+Payment must be made in one of the following ways: 
+ 
+(1) Respondents may transmit payment electronically to the Commission, which will 
+provide detailed ACH transfer/Fedwire instructions upon request; 
+ 
+(2) Respondents may make direct payment from a bank account via Pay.gov through 
+the  SEC website at http://www.sec.gov/about/offices/ofm.htm; or 
+ 
+(3) Respondents may pay by certified check, bank cashier’s check, or United States 
+postal money order, made payable to the Securities and Exchange Commission 
+and hand-delivered or mailed to: 
+ 
+Enterprise Services Center Accounts Receivable Branch HQ Bldg., Room 181, AMZ-341 
+6500 South MacArthur Boulevard Oklahoma City, OK 73169 
+ 
+Payments by check or money order must be accompanied by a cover letter identifying the 
+Respondents in these proceedings, and the file number of these proceedings; a copy of the cover 
+letter and check or money order must be sent to Anita B. Bandy, Associate Director, Division of 
+Enforcement, Securities and Exchange Commission, 100 F St., NE, Washington, DC 20549.  
+ 
+E. Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, a Fair Fund is created 
+for disgorgement, prejudgment interest and penalties referenced in paragraphs B and D 
+above.  Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
+treated as penalties paid to the government for all purposes, including all tax purposes.  To 
+preserve the deterrent effect of the civil penalties, Respondents agree that in any Related Investor 
+Action, Respondents shall not argue that Respondents are entitled to, nor shall Respondents 
+benefit by, offset or reduction of any award of compensatory damages by the amount of any part 
+of Respondents’ payment of a civil penalty in this action ("Penalty Offset").  If the court in any 
+Related Investor Action grants such a Penalty Offset, Respondents agree that Respondents shall, 
+within 30 days after entry of a final order granting the Penalty Offset, notify the Commission's 
+counsel in this action and pay the amount of the Penalty Offset to the Securities and Exchange 
+Commission.  Such a payment shall not be deemed an additional civil penalty and shall not be 
+deemed to change the amount of the civil penalties imposed in this proceeding.  For purposes of 
+this paragraph, a "Related Investor Action" means a private damages action brought against 
+Respondents by or on behalf of one or more investors based on substantially the same facts as 
+alleged in the Order instituted by the Commission in this proceeding. 
+ 
+F. Respondent KHC acknowledges that the Commission is not imposing a civil 
+penalty in excess of $62,000,000 based upon its cooperation in a Commission investigation and 
+related enforcement action.  If at any time following the entry of the Order, the Division of 
+Enforcement (“Division”) obtains information indicating that KHC knowingly provided 
+materially false or misleading information or materials to the Commission, or in a related 
+proceeding, the Division may, at its sole discretion and with prior notice to KHC, petition the 
+Commission to reopen this matter and seek an order directing that KHC pay an additional civil 
+ 
+14 
+ 
+penalty.  KHC may contest by way of defense in any resulting administrative proceeding whether 
+it knowingly provided materially false or misleading information, but may not: (1) contest the 
+findings in the Order; or (2) assert any defense to liability or remedy, including, but not limited 
+to, any statute of limitations defense. 
+ 
+V. 
+ 
+It is further Ordered that, solely for purposes of exceptions to discharge set forth in 
+Section 523 of the Bankruptcy Code, 11 U.S.C. §523, the findings in this Order are true and 
+admitted by Respondent Pelleissone, and further, any debt for disgorgement, prejudgment 
+interest, civil penalty or other amounts due by Pelleissone under this Order or any other 
+judgment, order, consent order, decree or settlement agreement entered in connection with this 
+proceeding, is a debt for the violation by Pelleissone of the federal securities laws or any 
+regulation or order issued under such laws, as set forth in Section 523(a)(19) of the Bankruptcy 
+Code, 11 U.S.C. §523(a)(19). 
+ 
+ 
+By the Commission. 
+ 
+ 
+Vanessa A. Countryman 
+Secretary 

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+UNITED STATES OF AMERICA 
+before the 
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 92939 / September 10, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4249 / September 10, 2021 
+ 
+Admin. Proc. File No. 3-20394 
+ 
+In the Matter of 
+ 
+PAUL L. CHANCEY, JR., CPA  
+ 
+ 
+POSTPONEMENT ORDER 
+On July 13, 2021, the Securities and Exchange Commission issued an order instituting an 
+administrative proceeding (“OIP”) against Paul L. Chancey, Jr., CPA (“Respondent”), pursuant 
+to Sections 4C and 21C of the Securities Exchange Act of 1934 and Rule 102(e)(1)(ii) of the 
+Commission’s Rules of Practice. 1  On August 31, 2021, Respondent filed an unopposed motion 
+to postpone the proceeding pending the lifting of a stay entered in a related civil proceeding, SEC 
+v. MiMedx Grp., Inc. , No. 1:19-cv-10927 (S.D.N.Y.)  (the “Related Civil Proceeding”). 
+Rule of Practice 161(b) provides that the Commission may “postpone” a proceeding on a 
+party’s motion “in circumstances where the requesting party makes a strong showing that the 
+denial of the . . . motion would substantially prejudice their case. ”2   In assessing such a motion, 
+the Commission must “consider, in addition to any other relevant factors: (i) The length of the 
+proceeding to date; (ii) The number of postponements, adjournments or extensions already 
+granted; (iii) The stage of the proceedings at the time of the request; (iv) The impact of the 
+request on the hearing officer’s ability to complete the proceeding in the time specified by the 
+Commission; and (v) Any other such matters as justice may require.”3   
+Respondent represents that the stay in the Related Civil Proceeding prevents him from 
+obtaining discovery in this proceeding relevant to his defense of the proceeding.  The Division of 
+Enforcement does not oppose Respondent’s request to postpone this proceeding.  For those 
+                                              
+1  Paul L. Chancey, Jr., CPA , Exchange Act Release No. 92378, 2021 WL 2953721 (July 13, 
+2021). 
+2  17 C.F.R. § 201.161(b). 
+3  Id. 
+2 
+ 
+ 
+ 
+reasons, and in consideration of the Rule 161(b) factors outlined above, we conclude that a 
+postponement of this proceeding is warranted.   
+Accordingly, it is ORDERED that the motion is GRANTED and that this proceeding and 
+any previously prescribed deadlines are postponed indefinitely.  The postponement is contingent 
+on the stay of the Related Civil Proceeding.  Within seven days of the lifting of the stay in the 
+Related Civil Proceeding, the parties shall file a notice informing the Commission of such event.   
+For the Commission, by the Office of the General Counsel, pursuant to delegated 
+authority.  
+ 
+ 
+     Vanessa A. Countryman 
+   Secretary 

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+ 
+ 
+ 
+UNITED STATES OF AMERICA 
+Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 92944 / September 13, 2021 
+ 
+ACOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4250 / September 13, 2021 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-20538 
+ 
+ 
+ 
+In the Matter of 
+ 
+Leonard R. Barr,   
+ 
+Respondent. 
+ 
+ 
+ 
+ORDER INSTITUTING  
+ADMINISTRATIVE PROCEEDINGS 
+PURSUANT TO SECTION 102(e) OF THE 
+COMMISSION’S RULES OF PRACTICE, 
+MAKING FINDINGS, AND IMPOSING 
+REMEDIAL SANCTIONS 
+ 
+ 
+ 
+ 
+I. 
+ 
+ The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
+public interest that public administrative proceedings be, and hereby are, instituted pursuant to 
+102(e)(3)(i) the Commission’s Rules of Practice against Leonard R. Barr (“Respondent” or 
+“Barr”).1   
+                                                
+1 Rule 102(e)(3)(i) provides, in relevant part that: 
+ The Commission, with due regard to the public interest and without preliminary hearing, may, by order, . . , 
+suspend from appearing or practicing before it any . . . accountant . . . who has been by name . . . permanently enjoined 
+by any court of competent jurisdiction, by reason of his or her misconduct in an action brought by the Commission, 
+from violation or aiding and abetting the violation of any provision of the Federal securities laws or of the rules and 
+regulations thereunder. 
+ 2 
+II. 
+ 
+ In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
+of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
+purpose of these proceedings and any other proceedings brough t by or on behalf of the 
+Commission, or to which the Commission is a party, and without admitting or denying the findings 
+herein, except as to the Commission’s jurisdiction over him and the subject matter of these 
+proceedings and the findings contained in Section III.3 below, which are admitted, Respondent 
+consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Section 
+102(e) of the Commission’s Rules of Practice, Making Findings, and Imposing Remedial 
+Sanctions (“Order”), as set forth below.   
+III. 
+ 
+ On the basis of this Order and Respondent’s Offer, the Commission finds that: 
+  
+1. Leonard R. Barr, age 51, resides in Dexter, Michigan.  Barr worked as an 
+accountant at Domino’s Pizza, Inc. (“Domino’s”) from 1996 to 2020 and held the position of Unit 
+Controller from at least 2016 to 2020.  Barr does not hold a CPA license. 
+ 
+2. Domino’s was, at all relevant times, a publicly-traded company incorporated in 
+Delaware and headquartered in Ann Arbor, Michigan.  At all relevant times, Domino’s common 
+stock was registered with the Commission pursuant to Section 12(b) of the Securities Exchange 
+Act of 1934 and was quoted on the New York Stock Exchange under the ticker symbol “DPZ.” 
+   
+3. On September 3, 2021, a final judgment was entered by consent against Barr, 
+permanently enjoining him from future violations of Section 10(b) of the Securities Exchange Act 
+of 1934 (“Exchange Act”) and Rule 10b-5 thereunder in the civil action entitled Securities and 
+Exchange Commission v. Leonard R. Barr, Civil Action Number 2:21-cv-11831-LJM-APP, in the 
+United States District Court for the Eastern District of Michigan, Southern Division.  
+ 
+4. The Commission’s complaint alleged, among other things, that in advance of two of 
+Domino’s earnings announcements in 2016 and 2020, Barr traded Domino’s stock and options on 
+the basis of material non-public information with which he was entrusted.  The complaint 
+specifically alleged that Barr traded shortly after reviewing Domino’s draft Forms 10-Q and 10-K, 
+which contained confidential financial data that had not yet been released to the public in 
+Domino’s periodic filings with the Commission and regularly held earnings announcements.  In 
+addition, the complaint alleged that Barr’s illegal trades resulted in profits of $34,180.00. 
+ 
+ 
+ 3 
+IV. 
+ 
+ In view of the foregoing, the Commission deems it appropriate and in the public interest to 
+impose the sanctions agreed to in Respondent Barr’s Offer. 
+ 
+Accordingly, it is hereby ORDERED, effective immediately, that: 
+ 
+A. Barr is suspended from appearing or practicing before the Commission as an 
+accountant. 
+ 
+B. After five (5) years from the date of this order, Barr may request that the 
+Commission consider his reinstatement by submitting an application (attention: Office of the 
+Chief Accountant) to resume appearing or practicing before the Commission.  
+ 
+ 
+ 
+ By the Commission. 
+ 
+  
+ 
+Vanessa A. Countryman 
+Secretary 
+ 
+ 

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+UNITED STATES OF AMERICA 
+before the 
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 93005 / September 15, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4251 / September 15, 2021 
+ 
+Admin. Proc. File No. 3-18347 
+ 
+ 
+IN THE MATTER OF  
+ 
+BRIAN SWEET, CPA 
+ 
+ 
+NOTICE THAT INITIAL DECISION HAS BECOME FINAL 
+ 
+ The time for filing a petition for review of the initial decision in this proceeding has 
+expired.  No such petition has been filed by Brian Sweet, CPA, or the Division of Enforcement, 
+and the Commission has not chosen to review the decision on its own initiative. 
+ 
+ Accordingly, notice is hereby given, pursuant to Rule 360(d) of the Commission's Rules 
+of Practice,1 that the initial decision of the administrative law judge has become the final 
+decision of the Commission with respect to Brian Sweet, CPA.2  The order contained in that 
+decision is hereby declared effective.  The initial decision ordered that the additional proceedings 
+ordered by the order instituting proceedings in this proceeding be dismissed. 
+ 
+ For the Commission, by the Office of the General Counsel, pursuant to delegated 
+authority. 
+ 
+ 
+ 
+  
+        Vanessa A. Countryman 
+                               Secretary 
+                                                             
+1      17 C.F.R. § 201.360(d). 
+2      Brian Sweet, CPA, Initial Decision Release No. 1409, 2021 WL 3501213 (Aug. 2, 2021).   

raw/aaer/2021/AAER-4255.txt

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+UNITED STATES OF AMERICA 
+before the  
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 93092 / September 21, 2021 
+ 
+INVESTMENT ADVISERS ACT OF 1940 
+Release No. 5870 / September 21, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4255 / September 21, 2021 
+ 
+Admin. Proc. File No. 3-20395 
+ 
+ 
+In the Matter of 
+ 
+STOCKMAN KAST RYAN & CO. LLP; 
+ELLEN S. FISHER, CPA; AND 
+DAVID H. KAST, CPA 
+ 
+ 
+ORDER  
+ 
+On July 13, 2021, t he Securities and Exchange Commission issued an order instituting an 
+administrative proceeding (“OIP”) against Stockman Kast Ryan & Co. LLP, Ellen S. Fisher, 
+CPA, and David H. Kast, CPA (collectively, “Respondents”), pursuant to Section 4C of the 
+Securities Exchange Act of 1934, Section 203(k) of the Investment Advisers Act of 1940, and 
+Rule 102(e)(1)(ii) of the Commission’s Rules of Practice. 1  Respondents filed an answer to the 
+allegations contained in the OIP on August 6, 2021.  On September 2, 2021, the parties were 
+directed to conduct a prehearing conference and to file a joint prehearing conference statement 
+addressing a proposed prehearing schedule.2 
+The parties filed a joint statement on September 15, 2021.  They stated that, after a 
+prehearing conference, they had reached agreement on a proposed schedule with an 
+approximately five-day hearing to commence on April 25, 2022.  Accordingly, it is ORDERED, 
+based on the parties’ representations, that the parties adhere to the following schedule: 
+                                              
+1  Stockman Kast Ryan & Co. , Exchange Act Release No. 92382, 2021 WL 2953521 (July 
+13, 2021). 
+2  Stockman Kast Ryan & Co. , Exchange Act Release No. 92859, 2021 WL 4031162 (Sept. 
+2, 2021). 
+2 
+ 
+September 17, 2021  Parties exchange initial witness lists. 
+December 23, 2021  Close of fact discovery. 
+January 14, 2022   Last date to serve expert reports. 
+February 4, 2022   Last date to serve rebuttal expert reports. 
+February 28, 2022   Close of expert discovery. 
+March 7, 2022 Last date to file any motions for summary disposition, if 
+leave for any such motions is granted. 
+March 7, 20223  Parties exchange revised witness lists and initial exhibit 
+lists. 
+March 21, 2022   Parties to file objections to proposed witnesses and   
+     exhibits. 
+ Parties to file any motions in limine or other pre-hearing  
+  motions. 
+ Parties to file prehearing briefs. 
+April 4, 2022  Deadline to request subpoenas for witnesses to appear at 
+ the hearing. 
+ Parties to file any oppositions to motions in limine or other 
+ pre-hearing motions. 
+April 8, 2022  Last date to file oppositions to any motions for summary 
+ disposition. 
+April 15, 2022  Last date to file replies to any motions for summary 
+ disposition.    
+                                              
+3  This deadline is either March 7, 2022 or 49 days before the hearing commences.  For this 
+event, as well as for some subsequent events, the parties agreed that the event should occur at a 
+certain amount of time before the hearing commences.  Thus, if the hearing date should be 
+moved by subsequent order, then the due date for the event will also shift. 
+3 
+ 
+April 18, 2022  Final prehearing conference including ruling on any 
+ motions in limine or other pre-hearing motions. 
+April 20, 2022   Parties exchange final witness lists and final exhibit lists. 
+ Parties exchange pre-marked exhibits. 
+April 25, 2022  Hearing commences. 
+It is further ORDERED that the parties shall seek leave to file any motions for summary 
+disposition pursuant to Rule of Practice 250(c) by January 7, 2022, by filing a concise statement, 
+which also addresses whether the parties consent to any modifications of the prehearing schedule 
+as a result of such motion for summary disposition.4  
+ 
+For the Commission, by the Office of the General Counsel, pursuant to delegated 
+authority. 
+ 
+ 
+        Vanessa A. Countryman 
+              Secretary 
+                                              
+4  See 17 C.F.R. § 201.250(c) (requiring leave to be sought to file motions for summary 
+disposition in 120-day proceedings and articulating that summary disposition may be granted as 
+to a claim or defense when there is “no genuine issue with regard to any material fact” and “the 
+movant is entitled to summary disposition as a matter of law”); see also Stockman Kast Ryan & 
+Co., 2021 WL 2953521, at * 37 (designating this proceeding one under the “120-day 
+timeframe”). 

raw/aaer/2021/AAER-4256.txt

@@ -0,0 +1,239 @@
+ 
+ 
+ UNITED STATES OF AMERICA 
+ Before the 
+ SECURITIES AND EXCHANGE COMMISSION 
+ 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 93101 / September 21, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4256 / September 21, 2021 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-20591
+       
+      :  
+ :  
+ :   
+In the Matter of : ORDER INSTITUTING ADMINISTRATIVE 
+      : PROCEEDINGS PURSUANT TO RULE 
+  PETER DICHIARA,   : 102(e) OF THE COMMISSION’S RULES OF 
+      : PRACTICE, MAKING FINDINGS, AND 
+  Respondent.   : IMPOSING REMEDIAL SANCTIONS  
+      :  
+      :  
+____________________________________ :   
+   
+ 
+I. 
+ 
+ The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
+public interest that public administrative proceedings be, and hereby are, instituted against Peter 
+DiChiara (“Respondent” or “DiChiara”) pursuant to Rule 102(e)(3)(i) of the Commission’s Rules 
+of Practice.1   
+ 
+ 
+                                                 
+1 Rule 102(e)(3)(i) provides, in relevant part, that: 
+ 
+ The Commission, with due regard to the public interest and without preliminary hearing, may, by order, . . . 
+suspend from appearing or practicing before it any attorney, accountant, engineer, or other professional or expert 
+who has been by name (A) [p]ermanently 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) [f]ound by any court of 
+competent jurisdiction in an action brought by the Commission 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 
+II. 
+ 
+ In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
+of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
+purpose of these proceedings and any other proceedings brought by or on behalf of the 
+Commission, or to which the Commission is a party, and without admitting or denying the findings 
+herein, except as to the Commission’s jurisdiction over him and the subject matter of these 
+proceedings, and the findings contained in Section III.2. below, which are admitted, Respondent 
+consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Rule 102(e) 
+of the Commission’s Rules of Practice, Making Findings, and Imposing Remedial Sanctions 
+(“Order”), as set forth below.   
+ 
+III. 
+ 
+ On the basis of this Order and Respondent’s Offer, the Commission finds that: 
+ 
+ 1.  DiChiara, age 57, resides in Mount Kisco, New York. DiChiara is a member of the 
+New York State Bar. DiChiara provided advice to individuals and entities regarding compliance 
+with the federal securities laws.  DiChiara is also licensed as a certified public accountant (“CPA”) 
+in New York. His certified public accounting license is Not Registered as of July 31, 2018.  
+DiChiara has never held any securities licenses and is not registered with the Commission in any 
+capacity. 
+ 
+ 2. On September 3, 2020, the Commission filed a complaint against DiChiara in SEC 
+v. DiChiara (Civil Action No. 20-CV-11645-DPW), in the United States District Court for the 
+District of Massachusetts. The complaint alleged that DiChiara violated Sections 5(a), 5(c), 
+17(a)(2), and 17(a)(3) of the Securities Act of 1933 (“Securities Act”) and aided and abetted 
+violations of Section 17(a)(1) and the Securities Act and Section 10(b) of the Securities Exchange 
+Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder.  On September 2, 2021, the court entered 
+an order permanently enjoining DiChiara by consent, from future violations of Sections 5(a), 5(c), 
+and 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.  
+ 
+ 3.  The Commission’s complaint alleged, among other things, that DiChiara assisted a 
+group of individuals engaged in a scheme to defraud investors by concealing their ownership and 
+control of substantially all of the purportedly unrestricted shares in Environmental Packaging 
+Technologies Holdings, Inc. (“Environmental Packaging”), in order to sell those shares in bulk in 
+violation of restrictions on stock sales by affiliates. The complaint also alleged that DiChiara 
+assisted Environmental Packaging in making misstatements in certain Forms 8-Ks filed with the 
+Commission, and that DiChiara authored attorney opinion letters to Environmental Packaging’s 
+transfer agent and to the Depository Trust Company which falsely stated that certain individuals 
+and entities were not affiliates of Environmental Packaging. 
+ 
+ 
+ 3 
+ 
+IV. 
+ 
+ In view of the foregoing, the Commission deems it appropriate and in the public interest to 
+impose the sanction agreed to in Respondent DiChiara’s Offer. 
+ 
+ Accordingly, it is hereby ORDERED pursuant to Rule 102(e)(3)(i) of the Commission’s 
+Rules of Practice, effective immediately, that: 
+ 
+ A. Respondent is suspended from appearing or practicing before the Commission as 
+an attorney for 3 years from the date of the Order.  
+  
+ B. After 3 years from the date of the Order, Respondent may request that the 
+Commission consider his application to resume appearing and practicing before the Commission 
+as an attorney.  The application should be sent to the attention of the Office of the General 
+Counsel. 
+ 
+C. In support of such an application, Respondent must provide a certificate of good 
+standing from each state bar where Respondent is a member.  
+ 
+D. In support of such an application, Respondent must also submit an affidavit 
+truthfully stating, under penalty of perjury:  
+ 
+1. that Respondent has complied with the Order, and with any orders in SEC 
+v DiChiara, including any orders requiring payment of disgorgement or 
+penalties; 
+ 
+2. that Respondent:  
+ 
+a. is not currently suspended or disbarred as an attorney by a court of 
+the United States (or any agency of the United States) or the bar or 
+court of any state, territory, district, commonwealth, or possession; 
+and  
+ 
+b. since the entry of the Order, has not been suspended as an attorney 
+for an offense involving moral turpitude by a court of the United 
+States (or any agency of the United States) or the bar or court of 
+any state, territory, district, commonwealth, or possession, except 
+for any suspension concerning the conduct that was the basis for 
+the Order; 
+ 
+3. that Respondent, since the entry of the Order, has not been convicted of a 
+felony or misdemeanor involving moral turpitude as set forth in Rule 
+102(e)(2) of the Commission’s Rules of Practice; and  
+ 
+ 4 
+4. that Respondent, since the entry of the Order: 
+ 
+a. has not been found by the Commission or a court of the United 
+States to have committed a violation of the federal securities laws, 
+except for any finding concerning the conduct that was the basis 
+for the Order; 
+   
+b. has not been charged by the Commission or the United States with 
+a violation of the federal securities laws, except for any charge 
+concerning the conduct that was the basis for the Order;   
+ 
+c. has not been found by a court of the United States (or any agency 
+of the United States) or any state, territory, district, 
+commonwealth, or possession, or any bar thereof, to have  
+committed an offense involving moral turpitude, except for any 
+finding concerning the conduct that was the basis for the Order; 
+and 
+ 
+d. has not been charged by the United States (or any agency of the 
+United States) or any state, territory, district, commonwealth, or 
+possession, or any bar thereof, with having committed an offense 
+involving moral turpitude, except for any charge concerning the 
+conduct that was the basis for the Order. 
+ 
+E.  If Respondent provides the documentation required in Paragraphs C and D, and 
+the Commission determines that he truthfully attested to each of the items required in his 
+affidavit, he shall by Commission order be permitted to resume appearing and practicing before 
+the Commission as an attorney.   
+ 
+F. If Respondent is not able to truthfully attest to the statements required in 
+Subparagraphs D(2)(b) or D(4), Respondent shall provide an explanation as to the facts and 
+circumstances pertaining to the matter and the Commission may hold a hearing to determine 
+whether there is good cause to permit him to resume appearing and practicing before the 
+Commission as an attorney. 
+ 
+G. Respondent is suspended from appearing or practicing before the Commission 
+as an accountant. 
+ 
+H. After 3 years from the date of this order, Respondent may request that the 
+Commission consider his reinstatement by submitting an application (attention: Office of the 
+Chief Accountant) to resume appearing or practicing before the Commission as: 
+      
+       1. a preparer or reviewer, or a person responsible for the preparation or 
+review, of any public company’s financial statements that are filed with the Commission (other 
+than as a member of an audit committee, as that term is defined in Section 3(a)(58) of the 
+ 5 
+Securities Exchange Act of 1934).  Such an application must satisfy the Commission that 
+Respondent’s work in his practice before the Commission as an accountant will be reviewed 
+either by the independent audit committee of the public company for which he works or in some 
+other acceptable manner, as long as he practices before the Commission in this capacity; and/or 
+      
+  2.    a preparer or reviewer, or a person responsible for the preparation or 
+review, of any public company’s financial statements that are filed with the Commission as a 
+member of an audit committee, as that term is defined in Section 3(a)(58) of the Securities Act 
+of 1934.  Such an application will be considered on a facts and circumstances basis with 
+respect to such membership, and the applicant’s burden of demonstrating good cause for 
+reinstatement will be particularly high given the role of the audit committee in financial and 
+accounting matters; and/or  
+ 
+3. an independent accountant.   
+ 
+Such an application must satisfy the Commission that: 
+      
+           (a) Respondent, or the public accounting firm with which he is 
+associated, is registered with the Public Company Accounting Oversight Board (“Board”) in 
+accordance with the Sarbanes-Oxley Act of 2002, and such registration continues to be effective; 
+ 
+   (b) Respondent, or the registered public accounting firm with which he  
+is associated, has been inspected by the Board and that inspection did not identify any criticisms 
+of or potential defects in the Respondent’s or the firm’s quality control system that would 
+indicate that the respondent will not receive appropriate supervision; 
+   (c) Respondent has resolved all disciplinary issues with the Board, and 
+has complied with all terms and conditions of any sanctions imposed by the Board (other than 
+reinstatement by the Commission); and 
+ 
+   (d) Respondent acknowledges his responsibility, as long as he appears 
+or practices before the Commission as an independent accountant, to comply with all 
+requirements of the Commission and the Board, including, but not limited to, all requirements 
+relating to registration, inspections, concurring partner reviews and quality control standards.   
+ 
+I. The Commission will consider an application by Respondent to resume appearing 
+or practicing before the Commission as an accountant provided that his state CPA license is 
+current and he has resolved all other disciplinary issues with the applicable state boards of 
+accountancy. However, if state licensure is dependent on reinstatement by the Commission, the 
+Commission will consider an application on its other merits. The Commission’s review may 
+include consideration of, in addition to the matters referenced above, any other matters relating 
+to Respondent’s character, integrity professional conduct, or qualifications to appear or practice 
+before the Commission as an accountant. Whether an application demonstrates good cause will 
+be considered on a facts and circumstances basis with due regard for protecting the integrity of 
+the Commission’s processes. 
+ 
+ 6 
+ 
+ By the Commission. 
+ 
+ 
+ 
+Vanessa A. Countryman 
+Secretary 
+ 

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+ 
+ 
+UNITED STATES OF AMERICA 
+Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 93117 / September 24, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4257 / September 24, 2021 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-20595 
+ORDER INSTITUTING CEASE-AND- 
+DESIST PROCEEDINGS PURSUANT TO 
+SECTION 21C OF THE SECURITIES 
+EXCHANGE ACT OF 1934, MAKING 
+FINDINGS, AND IMPOSING A CEASE-
+AND-DESIST ORDER 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+I. 
+The Securities and Exchange Commission (“Commission”) deems it appropriate that 
+cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the 
+Securities Exchange Act of 1934 (“Exchange Act”), against WPP plc (“WPP” or 
+“Respondent”). 
+II. 
+In anticipation of the institution of these proceedings, WPP has submitted an Offer of 
+Settlement (the “Offer”) which the Commission has determined to accept. Solely for the 
+purpose of these proceedings and any other proceedings brought by or on behalf of the 
+Commission, or to which the Commission is a party, and without admitting or denying the 
+findings herein (except as to the Commission’s jurisdiction over it and the subject matter of 
+these proceedings), which are admitted, WPP consents to the entry of this Order Instituting 
+Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, 
+Making Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.
+ 
+In the Matter of 
+ 
+WPP PLC 
+ 
+Respondent. 
+ 
+ 
+III. 
+On the basis of this Order and WPP’s Offer, the Commission finds1 that: 
+SUMMARY 
+1. This matter concerns violations of the anti-bribery, books and records, and 
+internal accounting controls provisions of the Foreign Corrupt Practices Act (“FCPA”) by 
+WPP, the world’s largest advertising group.  The bribery scheme took place at a WPP 
+majority-owned subsidiary in India, which, through intermediaries, paid as much as a 
+million dollars in bribes to Indian officials to obtain and retain government business, 
+resulting in over $5 million in net profit from 2015 – 2017.  Additionally, WPP benefited 
+from other illicit schemes at its subsidiaries such as: (1) a subsidiary in China making 
+unjustified payments to a vendor in connection with a Chinese tax audit, resulting in 
+significant tax savings to WPP’s subsidiary; (2) a subsidiary in Brazil making improper 
+payments to purported vendors in connection with government contracts in 2016-2018; and 
+(3) in 2013, a Peruvian subsidiary funneling funds through other WPP entities to disguise 
+the source of funding for a political campaign in Peru .   
+2. WPP failed to devise and maintain a sufficient system of internal accounting 
+controls necessary to detect and prevent the bribe payments at this Indian subsidiary or 
+properly account for the true nature of payments and income at all four subsidiaries.  
+Specifically, WPP failed to implement and maintain sufficient internal accounting controls 
+over vendor management, and accounts payable at these subsidiaries, failed to provide 
+reasonable assurances that these subsidiaries were adhering to WPP’s anti-corruption 
+policy, and lacked sufficient entity level controls over these subsidiaries.  As a result, it also 
+failed to make and keep accurate books and records.  Finally, despite WPP’s size and 
+geographical reach, it failed to timely and properly manage the company’s response to red 
+flags indicating corruption risks or remediate identified control deficiencies. 
+RESPONDENT  
+3. WPP plc is a Jersey multinational marketing communications group with dual-
+headquarters in London and New York City.  WPP’s American depositary shares are registered 
+with the Commission pursuant to Section 12(b) of the Exchange Act and trade on the New York 
+Stock Exchange under the Ticker “WPP.”  WPP operates through agencies operating in various 
+international locations, referred to as “Networks.”   
+FACTS 
+Background 
+4. Until 2018, WPP implemented an aggressive acquisition strategy in order to grow 
+its business.  As part of its acquisition strategy, WPP acquired a controlling interest in small, 
+                                                             
+1 Pursuant to Respondent’s Offer of Settlement, the SEC makes these findings in this proceeding.  The findings are not 
+binding on any other person or entity or in any other proceeding. 
+ 
+ 
+localized agencies in high-risk markets, such as India, China, and South America that were 
+previously majority-owned by the local agency’s founder.  WPP often structured these 
+acquisitions to include an earn-out provision.  Under these earn-out provisions, the parties 
+agreed to defer a portion of the purchasing price until the agency’s founder met future financial 
+goals.  In some cases, WPP agreed that the agency’s founder would continue as the Chief 
+Executive Officer of the WPP controlled entity (hereinafter Founder-in-Control or “FIC” 
+entities).  WPP placed the FIC entities within a WPP Network and consolidated the FIC 
+entities’ financial statements into WPP’s financial statements. 
+5. WPP centrally coordinated the group’s financial matters, reporting, control, 
+treasury, tax, mergers, acquisitions, investor relations, legal affairs and internal audit from its 
+headquarters.  In larger markets, such as India and China, WPP appointed a regional Financial 
+Director to work more closely with the Networks, which were primarily responsible for 
+servicing WPP’s clients and overseeing the FIC entities.  While WPP mandated that all 
+companies follow WPP global policies and internal accounting control requirements, in reality, 
+the founders and/or CEOs of the FIC entities exercised wide autonomy and outsized influence.   
+6. Following this growth strategy, WPP operated in 112 countries and employed 
+approximately 100,000 people over 3,000 locations during the relevant period.  WPP sourced 
+86% of its revenue from 10 companies and 88% of its revenue was from operations in 20 
+countries.   
+7. Despite the known corruption and fraud risks inherent in WPP’s FIC 
+acquisitions, WPP lacked sufficient internal accounting controls with respect to its expansive 
+international network.  Additionally, WPP had no compliance department during the relevant 
+period, and it lacked meaningful coordination between its legal and internal audit departments 
+and Network management.  While WPP charged Network management with remediating 
+deficiencies identified by WPP’s legal and internal audit departments, in practice, neither WPP 
+nor the Networks provided adequate oversight of the FIC entities to ensure that the FIC entities 
+implemented WPP’s internal accounting controls and compliance policies.  As a result of these 
+structural deficiencies, WPP failed to promptly or adequately respond to repeated warning signs 
+of corruption or identified control failures at certain FIC entities.  Described below are 
+examples of the schemes and circumvention of WPP’s internal accounting controls and 
+compliance policies that occurred at FIC entities. 
+Indian Subsidiary 
+8. In July 2011, WPP obtained a majority interest in an agency located in 
+Hyderabad, India, which became a FIC entity within a WPP Network (“India Subsidiary”).  
+WPP’s acquisition agreement contained an earn-out provision, and WPP appointed 
+Subsidiary’s co-founder as the CEO of India Subsidiary (“CEO A”).  From 2015 – 2017, 
+approximately half of India Subsidiary’s revenue was attributable to the Indian States of 
+Telangana and Andhra Pradesh’s Departments of Information and Public Relations (“DIPR”), 
+which were responsible for retaining media agencies to conduct advertising and public relations 
+campaigns for their respective state governments. 
+9. From July 7, 2015 through September 2, 2017, WPP received seven anonymous 
+ 
+ 
+complaints alleging – with increasing specificity – two bribery schemes related to India 
+Subsidiary’s work for DIPR.  The first scheme involved the use of a third-party agency 
+(“Vendor A”) that India Subsidiary used to purchase media for DIPR to create an off-the-books 
+fund.  The second scheme involved India Subsidiary fabricating an entire advertising campaign 
+in order to create an off-the-books fund at a third-party agency (“Vendor B”) that was used to 
+compensate DIPR officials for awarding campaigns to India Subsidiary and for the personal 
+benefit of CEO A. 
+ The Vendor A Bribery Scheme 
+10. With the relevant Network’s knowledge, India Subsidiary and Vendor A entered 
+an agreement under which Vendor A would pay for media purchases when due and India 
+Subsidiary would pay Vendor A upon receipt of payment from the government client.  Pursuant 
+to the contract, Vendor A kept the profits from the media purchases (minus a 10% fee 
+remaining with India Subsidiary).  India Subsidiary reserved audit rights in the agreement and 
+required Vendor A to submit its media invoices prior to receiving payment.  In practice though, 
+India Subsidiary paid Vendor A without ever receiving the media invoices to justify the 
+payments. 
+11. The Vendor A bribery scheme worked as follows: (1) DIPR awarded India 
+Subsidiary a contract under which India Subsidiary created an advertisement and then 
+purchased space in newspapers to display the advertisement; (2) DIPR paid a set publicly-
+available fee to media agencies for purchasing advertisement space (the “card rate”); (3) CEO 
+A was able to negotiate rates with the newspapers that were significantly less than DIPR’s card 
+rate; (4) to utilize the delta between DIPR’s card rate and the actual price paid to the 
+newspapers for bribes to DIPR officials, India Subsidiary entered into the agreement with 
+Vendor A to purchase the advertising space on DIPR’s behalf; and (5) after paying the 
+newspapers and taking its cut of the scheme, Vendor A facilitated payments to DIPR officials.  
+This same mechanism was used to make payments to CEO A. 
+12. Following the receipt of the original complaint in July 2015, which identified 
+CEO A by name as the architect of the scheme, WPP tasked its Financial Director for the India 
+region (“WPP India FD”) to oversee a review of the allegations.  The WPP India FD retained 
+an Indian partner firm of an international accounting firm (“Accounting Firm”) ostensibly to 
+investigate the allegations and review India Subsidiary’s processes regarding government 
+contracts and transactions involving government clients.  However, the Accounting Firm relied 
+on information provided by CEO A and India Subsidiary CFO (“CFO A”), did not contact third 
+parties, and ultimately provided a report to WPP, which contained no conclusions related to the 
+bribery allegations.  Instead, the Accounting Firm noted several red flags regarding Vendor A, 
+such as the India Subsidiary failing to obtain comparative quotes from other vendors or 
+properly vetting Vendor A.  After receipt of the Accounting Firm’s report, WPP allowed India 
+Subsidiary to continue routing DIPR’s media purchases through Vendor A.  
+13. In the spring of 2016, WPP received three additional anonymous complaints 
+related to the Vendor A bribery scheme.  These complaints again specifically identified CEO A 
+as the architect of the scheme and described documents CFO A falsified to facilitate the 
+scheme.  In response, WPP forwarded some of the complaints to the Accounting Firm and 
+ 
+ 
+requested that the Accounting Firm conduct a transactional review of India Subsidiary’s 
+business with Vendor A as part of a compliance review.   
+14. As part of its review, the Accounting Firm asked Vendor A to produce the 
+relevant media invoices.  Despite being contractually obligated to provide supporting 
+documentation, Vendor A refused.  As a result, the Network India CFO terminated the 
+relationship, while still authorizing India Subsidiary to pay Vendor A for past media purchases.  
+WPP did nothing further with respect to the multiple allegations that CEO A was engaged in a 
+bribe scheme with the FIC entity’s significant client. 
+ Indian Subsidiary’s Bribery Scheme involving Vendor B 
+15. The second bribery scheme involved Indian Subsidiary paying DIPR officials 
+through an intermediary.  In this scheme, DIPR paid India Subsidiary $1,588,480 to supposedly 
+execute a campaign related to the celebration of the anniversary of the formation of the Indian 
+state of Telangana in June 2015.  In reality, no such campaign occurred.  Instead, CFO A 
+requested that Vendor B falsify documents indicating that Vendor B provided services for the 
+supposed campaign as justification for India Subsidiary paying the bulk of the money it 
+received from DIPR to Vendor B.   
+16. As reflected in spreadsheets maintained by CFO A, Vendor B then paid over 
+$1,000,000 to a third-party intermediary responsible for making payments to DIPR officials.  
+With the remaining funds, Vendor B made cash payments to CEO A and routed money back to 
+India Subsidiary.  India Subsidiary used the money it received back from Vendor B to pay 
+overdue account receivables from clients unrelated to DIPR.  Therefore, the entire purpose of 
+the fake campaign was to enrich DIPR officials, CEO A, and benefit India Subsidiary by 
+cancelling out old receivable balances. 
+17. Despite having notice of these potential problems with Vendor B in early 2016 
+through the same anonymous complaints described above, WPP failed to uncover that the 
+supposed June 2015 DIPR campaign was, in actuality, a mechanism for bribery. 
+ WPP ultimately acts on the bribery allegations at Indian Subsidiary 
+18.  In 2017, WPP continued to receive warning signs about India Subsidiary in the 
+form of anonymous complaints citing CEO A, Vendor A, and Vendor B.  One of these 
+complaints named the specific DIPR official (“DIPR Official”) that allegedly received bribes in 
+return for awarding India Subsidiary contracts. 
+19. In August 2017, WPP directed a member of its legal team to conduct an 
+investigation.  Unlike the earlier reviews in response to the various allegations of bribery, WPP 
+conducted third-party due diligence of CEO A, DIPR Official, and Vendor A and a review of 
+CEO A’s and CFO A’s email accounts, which were stored on servers in the United States.  The 
+third-party due-diligence report revealed that CEO A and DIPR Official had a close 
+relationship and DIPR Official had a reputation for demanding kickbacks for contracts awarded 
+under his supervision.  Additionally, WPP identified email communication dating back to 2015, 
+in which CEO A and CFO A tracked the off-the-books funds India Subsidiary maintained at 
+ 
+ 
+Vendors A and B that were used for bribe payments.  Ultimately, CEO A admitted that he was 
+aware that third parties made payments to government officials on behalf of India Subsidiary, 
+and WPP terminated both CEO A and CFO A. 
+20. As a result of the bribery schemes at India subsidiary, WPP was unjustly 
+enriched by $5,669,596. 
+Chinese Subsidiary 
+21. In 2014, WPP obtained a majority interest in an agency headquartered in 
+Shanghai, China, which focused on celebrity branding and endorsement.  China Subsidiary was 
+a FIC entity because WPP’s acquisition agreement contained an earn-out provision and WPP 
+agreed that the China Subsidiary’s co-founder would serve as the CEO of China Subsidiary 
+(“CEO B”).  WPP placed it within a WPP Network (“China Subsidiary”), and China 
+Subsidiary’s annual revenues during the years 2017 and 2018 were $9.4 million and $7.6 
+million, respectively. 
+22. In November 2018, China Subsidiary was able to avoid paying $3,261,437 in 
+taxes to a Chinese tax authority by making payments to a vendor identified by tax officials and 
+providing $2,000 worth of gifts and entertainment to tax officials during the same time period.  
+Specifically, China Subsidiary paid approximately $107,000 to the tax official’s chosen vendor 
+in the two months before a tax audit finalized.  The vendor kept a small percentage of the 
+money and transmitted the rest to an unknown recipient.  Although China Subsidiary’s books 
+and records reflected that the vendor performed services for a client, a China Subsidiary 
+employee falsified documentation to justify the transaction.  Despite the presence of red flags 
+that, if properly investigated, could have led to the prevention or detection of China 
+Subsidiary’s improper payments, WPP did not uncover the scheme until early 2019 while 
+conducting an unrelated review. 
+23. In 2017 and 2018, WPP was aware of significant red flags related to China 
+Subsidiary and CEO B.  First, an internal audit in 2017 determined that China Subsidiary was 
+employing tax avoidance schemes and other significant violations of WPP’s internal accounting 
+controls resulting from CEO B’s actions.  Second, in May 2018, a China Subsidiary employee 
+informed the Network CFO in charge of APAC (“Network APAC CFO”) and WPP’s regional 
+tax director in China (“WPP China Tax Director”) that China Subsidiary was in the midst of a 
+tax audit and China Subsidiary management could face criminal charges for its tax avoidance 
+schemes.  In the same communication, the China Subsidiary employee informed –without 
+additional context – that the tax officials recommended that China Subsidiary engage a third-
+party vendor.  After receiving the email, neither WPP nor the Network attempted to determine 
+why the tax officials recommended that the China Subsidiary retain a specific vendor or to 
+otherwise follow-up on the information. 
+24. In June 2018, WPP and the Network overlooked another warning sign, when, , 
+CEO B told WPP China Tax Director and Network APAC CFO that he was “comb[ing] 
+through a lot of [his] personal social connections,” in an attempt to control the direction of the 
+tax audit.  Again, neither WPP nor the Network inquired further to clarify CEO B’s statement.  
+During a mid-2018 phone call, CEO B reported to Network APAC CFO that he had resolved 
+ 
+ 
+Network Subsidiary’s tax exposure for $43,000 in back-owed stamp duty taxes and the tax 
+bureau was unwilling to provide any documentation explaining its determination.  WPP China 
+Tax Director met with the tax official in charge of the audit who verbally confirmed that the 
+investigation was concluded with no major issues.  Despite the fact that the information CEO B 
+and the tax official provided was inconsistent with the tax liabilities WPP’s internal audit had 
+uncovered and the presence of other red flags, WPP did not investigate the issue further. 
+25. While responding to allegations unrelated to the tax issue, WPP uncovered an 
+off-the-books account maintained by China Subsidiary reflecting the payments to the vendor 
+recommended by the tax officials.  As a result, CEO B finally resigned in April 2019 – a year 
+and a half after WPP and the Network first became aware of the significant issues at China 
+Subsidiary. 
+Brazilian Subsidiary 
+26. In 2016, WPP obtained a majority interest in a public relations agency 
+headquartered in São Paulo, Brazil that WPP placed within a WPP Network (“Brazil 
+Subsidiary”).  Brazil Subsidiary was a FIC entity because WPP’s acquisition agreement 
+contained an earn-out provision and WPP agreed that Brazil Subsidiary’s minority owner 
+would serve as the CEO of Brazil Subsidiary (“CEO C”).  Brazil Subsidiary’s annual revenue 
+in 2017 was approximately 26 million dollars. 
+27. WPP had an adviser payment policy that prohibited its companies from paying 
+third parties to assist in obtaining or retaining government contracts without WPP’s approval.  
+Despite the policy, Brazil Subsidiary made improper payments to vendors in connection with 
+securing government contracts at CEO C’s direction.  These payments directly violated WPP’s 
+adviser payment policies and were made in circumstances in which there was a high probability 
+that a portion of the payments may have been passed to the government officials with the 
+authority to award the contracts.  To disguise the fact that Brazil Subsidiary’s payments to the 
+vendors related to obtaining or retaining government contracts, Brazil Subsidiary falsified its 
+books and records to reflect that the vendors performed bonafide services, such as marketing or 
+IT related services.  As a result of this misconduct, WPP was unjustly enriched by $891,457. 
+Peruvian Subsidiary 
+28. In 1996, WPP obtained a majority interest in a creative services agency 
+headquartered in Lima, Peru that WPP placed within a Network (“Peru Subsidiary”).  Peru 
+Subsidiary was a FIC entity because WPP agreed that Peru Subsidiary’s founder and CEO 
+would remain as CEO of the company post-acquisition (“CEO D”) and retain a 30% stake in 
+the company.  Peru Subsidiary’s total revenue during the years 2013 and 2014 was 
+approximately $5.6 million.  CEO D continued to manage Peru Subsidiary until WPP 
+terminated him in 2018 for participating in a scheme to manipulate Peru Subsidiary’s earnings. 
+29. In 2013, WPP was unjustly enriched by $291,935 as a result of Peru Subsidiary 
+acting as a conduit for a bribery scheme.  The bribery scheme involved a construction company 
+funding the mayor of Lima’s political campaigns in exchange for contract awards.  At CEO D’s 
+direction, Peru Subsidiary agreed to be a conduit for the construction company’s bribe to the 
+ 
+ 
+mayor of Lima.  Also, CEO D disguised the corrupt source of the funds used for the mayor of 
+Lima’s political campaign by funneling the construction company’s payments to Peru 
+Subsidiary through WPP subsidiaries in Colombia and Chile.  Consequently, the WPP 
+subsidiaries in Colombia and Chile falsely recorded that they received money in return for 
+services performed for the construction company, and Peru Subsidiary maintained no records 
+indicating that the construction company paid for a portion of the mayor of Lima’s political 
+campaigns. 
+30. WPP did not uncover Peru Subsidiary’s role in the bribery scheme until a 
+Peruvian criminal proceeding highlighted the conduct in 2019. 
+LEGAL STANDARDS AND FCPA VIOLATIONS 
+31. Under Section 21C(a) of the Exchange Act, the Commission may impose a 
+cease-and-desist order upon any person who is violating, has violated, or is about to violate any 
+provision of the Exchange Act or any rule or regulation thereunder, and upon any other person 
+that is, was, or would be a cause of the violation, due to an act or omission the person knew or 
+should have known would contribute to such violation. 
+WPP Violated Exchange Act Section 30A 
+32. The anti-bribery provisions of the FCPA, Section 30A of the Exchange Act, 
+make it unlawful for any issuer with a class of securities registered pursuant to Section 12 of 
+the Exchange Act, or any employee or agent of such issuer, to make use of the mails or any 
+means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, 
+promise to pay, or authorization of the payment of any money, or offer, gift or promise to give 
+anything of value to any foreign official for purposes of influencing any act or decision of such 
+foreign official in his official capacity in order to assist such issuer in obtaining or retaining 
+business for or with any person. 15 U.S.C. § 78dd-1. As a result of the conduct described above 
+regarding India Subsidiary’s payments to government officials, WPP violated Exchange Act 
+Section 30A. 
+WPP Violated Exchange Act Section 13(b)(2)(A) 
+33. The books and records provision of the FCPA, Section 13(b)(2)(A) of the 
+Exchange Act, requires every issuer with a class of securities registered pursuant to Section 12 
+of the Exchange Act to make and keep books, records, and accounts, which, in reasonable 
+detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer. 
+15 U.S.C. § 78m(b)(2)(A).  As described above, WPP’s books and records did not accurately 
+reflect the true purpose of outgoing and incoming transactions.  Therefore, WPP violated 
+Exchange Act Section 13(b)(2)(A).  
+WPP Violated Exchange Act Section 13(b)(2)(B) 
+34. Section 13(b)(2)(B) of the Exchange Act requires companies with a class of 
+securities registered under Section 12 of the Exchange Act to devise and maintain a system of 
+internal accounting controls sufficient to provide reasonable assurances that (i) transactions are 
+ 
+ 
+executed in accordance with management’s general or specific authorization; (ii) transactions 
+are recorded as necessary (I) to permit preparation of financial statements in conformity with 
+generally accepted accounting principles or any other criteria applicable to such statements, and 
+(II) to maintain accountability for assets; (iii) access to assets is permitted only in accordance 
+with management’s general or specific authorization; and (iv) the recorded accountability for 
+assets is compared with the existing assets at reasonable intervals and appropriate action is 
+taken with respect to any differences. 15 U.S.C. § 78m(b)(2)(B).  As described above, WPP 
+failed to implement a system of internal accounting controls sufficient to provide reasonable 
+assurances that transactions were executed in accordance with management’s general or 
+specific authorization and that access to assets was permitted only in accordance with 
+management’s general or specific authorization.  By this conduct, WPP violated Exchange Act 
+Section 13(b)(2)(B). 
+WPP’s Remedial Actions and Cooperation  
+35. In determining to accept the Offer, the Commission considered remedial acts 
+undertaken by WPP and cooperation afforded the Commission Staff. 
+36. WPP’s cooperation included sharing facts developed in the course of its own 
+internal investigations and forensic accounting reviews, translating key documents, and making 
+current and former employees located abroad available for interviews at the Commission’s 
+Regional Office in Fort Worth.   
+37. WPP’s remediation includes (i) terminating senior executives and other 
+employees involved in the misconduct and separating from employees with supervisory 
+responsibilities over the misconduct; (ii) strengthening and expanding its global compliance, 
+internal investigations, risk and controls functions, including the creation of 36 new positions 
+globally; (iii) enhancing its internal audit function; (iv) creating Network risk committees to 
+prevent, detect, and remediate corruption risk, among other risks; (v) conducting global, annual 
+compliance risk assessments; (vi) conducting proactive reviews of remaining FIC entities in 
+Brazil, China, and India; (vii) streamlining businesses and back-office functions, including that 
+three of the Networks in which the subsidiaries in this Order were incorporated have since been 
+merged with other networks; (viii) enhancing the procedures for engagement of third parties; 
+and (ix) enhancing training provided to employees regarding anti-corruption, controls, and 
+other compliance issues. 
+DISGORGEMENT AND CIVIL PENALTIES 
+38. The disgorgement and prejudgment interest ordered in section IV. is consistent 
+with equitable principles, does not exceed Respondent’s net profits from its violations, and 
+allowing Respondent to retain such funds would be inconsistent with equitable principles.  
+Therefore, in these circumstances, distributing disgorged funds to the U.S. Treasury is the most 
+equitable alternative.  The disgorgement and prejudgment interest ordered in section IV. shall 
+be transferred to the general fund of the U.S. Treasury, subject to Section 21F(g)(3) of the 
+Exchange Act.  
+ 
+ 
+IV. 
+In view of the foregoing, the Commission deems it appropriate to impose the 
+sanctions agreed to in Respondent’s Offer. 
+Accordingly, pursuant to Section 21C of the Exchange Act it is hereby ORDERED that: 
+A. Respondent shall cease and desist from committing or causing any 
+violations and any future violations of Sections 30A, 13(b)(2)(A) and 
+13(b)(2)(B) of the Exchange Act [15 U.S.C. §§ 78m(b)(2)(A), 
+78m(b)(2)(B), and 78dd-1]. 
+B. Respondent shall, within 14 days of entry of this Order, pay disgorgement 
+of $10,114,424.86 and prejudgment interest of $1,110,234.68 for a total of 
+$11,224,659.54 and a civil money penalty in the amount of $8,000,000 to 
+the Securities and Exchange Commission for transfer to the general fund of 
+the United States Treasury, subject to Exchange Act Section 21F(g)(3).  If 
+timely payment is not made, additional interest shall accrue pursuant to 
+SEC Rule of Practice 600 and 31 U.S.C 3717. 
+C. Payment must be made in one of the following ways: 
+(1) Respondent may transmit payment electronically to the 
+Commission, which will provide detailed ACH 
+transfer/Fedwire instructions upon request; 
+(2) Respondent may make direct payment from a bank account 
+via Pay.gov through the SEC Web site at 
+http://www.sec.gov/about/offices/ofm.htm; or 
+(3) Respondent may pay by certified check, bank cashier’s check, 
+or United States postal money order, made payable to the 
+Securities and Exchange Commission and hand-delivered or 
+mailed to: 
+   Enterprise Services Center   
+   Accounts Receivable Branch   
+   HQ Bldg., Room 181, AMZ- 341 
+   6500 South MacArthur Boulevard Oklahoma City, OK 73169 
+ Payments by check or money order must be accompanied by a cover letter 
+identifying W P P  as the Respondent in these proceedings, and the file number of 
+these proceedings; a copy of the cover letter and check or money order must be sent to 
+Charles Cain, Unit Chief, FCPA Unit, Division of Enforcement, Securities and 
+Exchange Commission, 100 F St., NE, Washington, DC 20549. 
+  
+ 
+ 
+D. Amounts ordered to be paid as civil money penalties pursuant to this 
+Order shall be treated as penalties paid to the government for all purposes, 
+including all tax purposes. To preserve the deterrent effect of the civil 
+penalty, Respondent agrees that in any Related Investor Action, it shall not 
+argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
+award of compensatory damages by the amount of any part of 
+Respondent’s payment of a civil penalty in this action (“Penalty Offset”). 
+If the court in any Related Investor Action grants such a Penalty Offset, 
+Respondent agrees that it shall, within 30 days after entry of a final order 
+granting the Penalty Offset, notify the Commission’s counsel in this action 
+and pay the amount of the Penalty Offset to the Securities and Exchange 
+Commission. Such a payment shall not be deemed an additional civil 
+penalty and shall not be deemed to change the amount of the civil penalty 
+imposed in this proceeding. For purposes of this paragraph, a “Related 
+Investor Action” means a private damages action brought against 
+Respondent by or on behalf of one or more investors based on 
+substantially the same facts as alleged in the Order instituted by the 
+Commission in this proceeding. 
+By the Commission. 
+ 
+ 
+Vanessa A. Countryman 
+Secretary 

raw/aaer/2021/AAER-4258.txt

@@ -0,0 +1,928 @@
+ 
+UNITED STATES OF AMERICA 
+Before the  
+SECURITIES AND EXCHANGE COMMISSION  
+ 
+SECURITIES EXCHANGE ACT OF 1934  
+Release  No. 93133 / September 27, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release  No. 4258 / September 27, 2021 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-20600  
+ 
+ORDER INSTITUTING PUBLIC  
+ADMINISTRATIVE AND CEASE-AND- 
+DESIST PROCEEDINGS PURSUANT TO 
+SECTIONS 4C AND SECTION 21C OF 
+THE SECURITIES EXCHANGE ACT OF 
+1934 AND RULE 102(e) OF THE  
+COMMISSION’S RULES OF PRACTICE, 
+MAKING FINDINGS, AND IMPOSING 
+REMEDIAL SANCTIONS AND A 
+CEASE-AND-DESIST ORDER 
+ 
+ 
+I. 
+ 
+The Securities and Exchange Commission (“Commission”) deems it appropriate that 
+public administrative and cease-and-desist proceedings be, and hereby are, instituted pursuant to 
+Sections 4C1 and 21C of the Securities Exchange Act of 1934 (“Exchange Act”), and Rule 
+102(e)(1)(ii) of the Commission’s Rules of Practice 2 against Respondents, Ravindranathan 
+Raghunathan, CPA (“Raghunathan”) and Craig A. Golding, CPA (“Golding”), (collectively, 
+“Respondents”). 
+ 
+ 
+ 
+1 Section 4C provides, in relevant part, that: 
+The Commission may censure any person, or deny, temporarily or permanently, to any person the 
+privilege of appearing or practicing before the Commission in any way, if that person is found . . .(1) not 
+to possess the requisite qualifications to represent others; (2) to be lacking in character or integrity, or to 
+have engaged in unethical or improper professional conduct; or (3) to have willfully violated, or willfully 
+aided and abetted the violation of, any provision of the securities laws or the rules and regulations 
+thereunder. 
+ 
+2 Rule 102(e)(1)(ii) provides, in pertinent part, that: 
+The Commission may . . . deny, temporarily or permanently, the privilege of appearing or practici ng 
+before it . . . to any person who is found . . . to have engaged in unethical or improper professional 
+conduct.  
+ 
+In the Matter of 
+ 
+Ravindranathan Raghunathan, 
+CPA 
+and 
+Craig A. Golding, CPA, 
+Respondents.  
+2  
+ 
+II. 
+ 
+In anticipation of the institution of these proceedings, Respondents have submitted Offers 
+of Settlement (“Offers”) which the Commission has determined to accept. Solely for the purpose 
+of these proceedings and any other proceedings brought by or on behalf of the Commission, or to 
+which the Commission is a party, and without admitting or denying the findings herein, except as 
+to the Commission’s jurisdiction over them and the subject matter of these proceedings, which 
+are admitted, and except as provided herein in Section V, Respondents consent to the entry of 
+this Order Instituting Public Administrative and Cease-and-Desist Proceedings Pursuant to 
+Sections 4C and 21C of the Securities Exchange Act of 1934 and Rule 102(e) of the 
+Commission’s Rules of Practice, Making Findings, and Imposing Remedial Sanctions and a  
+Cease-and-Desist Order (“Order”), as set forth below. 
+ 
+III. 
+ 
+On the basis of this Order and Respondents’ Offers, the Commission finds3 that: 
+ 
+SUMMARY 
+ 
+1. These proceedings involve improper professional conduct regarding the 2017 audit 
+of Longfin Corp. (“Longfin”) by Ravindranathan Raghunathan and Craig A. Golding, both 
+partners in a Public Company Accounting Oversight Board (“PCAOB”) registered audit firm 
+(“audit firm”). Over the course of the audit, Raghunathan, who served as the engagement 
+partner, did not adhere to numerous PCAOB standards, resulting in audit failures in three critical 
+areas, including recognition of revenue and related party transactions. Golding served as the 
+engagement quality review (“EQR”) partner and did not adequately conduct his review of two of 
+these areas in accordance with the applicable PCAOB standard. 
+ 
+2. The audit deficiencies included, among other things, the failure to: (i) properly plan 
+the audit and assess and respond to the risks of material misstatements in Longfin’s financial 
+statements; (ii) conduct appropriate procedures to obtain reasonable assurance that Longfin’s 
+financial statements were free of material misstatements caused by fraud; (iii) obtain sufficient 
+appropriate audit evidence; (iv) identify and properly audit related party transactions; and (v) 
+exercise due professional care and skepticism, in connection with related-party transactions, 
+revenue recognition, and the valuation of intangible assets. Notwithstanding these deficiencies 
+in these three areas, Raghunathan approved the issuance of the audit report, which was 
+inaccurate because it stated that the firm’s audit was conducted in accordance with PCAOB 
+standards. 
+ 
+RESPONDENTS AND RELEVANT ENTITIES 
+ 
+Respondents  
+ 
+ 
+3 The findings herein are made pursuant to Respondents’ Offers of Settlement and are not binding on any other 
+person or entity in this or any other proceeding. 
+3  
+3. Ravindranathan Raghunathan, age 49, who resides in Edison, New Jersey, is a 
+licensed certified public accountant (“CPA”) in New Jersey since 2004. Raghunathan is a 
+partner of a PCAOB registered audit firm. Raghunathan served as the audit partner for the audit 
+of Longfin’s 2017 financial statements. 
+ 
+4. Craig A. Golding, age 50, who resides in San Diego, California, is a licensed CPA 
+in California since 1999. Golding is a partner of a PCAOB registered audit firm. Golding 
+served as the EQR partner for the audit of Longfin’s 2017 financial statements. 
+ 
+Relevant Entities  
+ 
+5. Longfin was a Delaware corporation formed in February 2017 and headquartered in 
+New York, New York. Longfin’s Class A common stock was previously registered with the 
+Commission pursuant to Section 12(b) of Exchange Act. Between December 13, 2017 and its 
+voluntary delisting from Nasdaq in May 2018, Longfin’s Class A common stock traded on the 
+Nasdaq Capital Market under the symbol “LFIN.” On May 24, 2018, Longfin’s Class A 
+common stock began trading over the counter. On November 21 and November 27, 2018, 
+Longfin filed Forms 8-K announcing that the company had entered into an Assignment for the 
+Benefit of Creditors on November 14, 2018 in New Jersey state court and, as a result, had 
+terminated all of its employees and disbanded its Board of Directors. 
+ 
+FACTS 
+ 
+Longfin Background 
+ 
+6. Longfin was formed in February 2017 as a purported finance and technology 
+company specializing in structured trade finance solutions and physical commodities solutions. 
+From its formation and throughout the relevant period, Venkata Meenavalli, an Indian citizen 
+who owned a majority of shares of Longfin’s common stock, served as Longfin’s Chairman and 
+Chief Executive Officer. For the one-month fiscal period from February 1, 2017 ending 
+February 28, 2017, Longfin reported total assets of approximately $300,000 and net income of 
+approximately $5,000. 
+ 
+7. In a June 2017 share exchange, Longfin acquired Stampede Tradex (“Stampede”), a 
+purported global trade finance solutions provider in which Meenavalli held a 45% interest, 
+ascribing a fair value of the consideration transferred of $134.4 million. At or around the same 
+time, Longfin began selling shares pursuant to Regulation A+ of the Securities Act of 1933 
+(“Securities Act”), and in December 2017, Longfin’s shares began trading on the Nasdaq Capital 
+Market. 
+ 
+8. Longfin reportedly had a total of 18 employees, and conducted almost all of its 
+operations from India and Singapore. Other than a dedicated office space in a shared workspace 
+facility and two corporate bank accounts, Longfin had no presence in the United States. 
+Longfin’s purported business model involved purchasing physical commodities in-transit aboard 
+ships at sea and then immediately reselling the commodities for a small profit. Because these 
+transactions occurred in-transit at sea, the nature of the commodity purchases and sales was such 
+4  
+that they could not be physically verified. Longfin exchanged commodities with certain entities 
+owned or controlled by Meenavalli. Longfin reported $75 million of revenue in 2017, 
+purportedly derived principally from “structured trade finance, principally the sale of physical 
+commodities,” including $66.6 million “related to the sale of physical commodities.” Longfin 
+reported a net loss of $26 million in 2017. The documents Longfin maintained to record 
+commodities sales transactions often lacked information substantiating critical information to 
+support the validity of the transactions, such as the passage of title and transfer of the risk of loss. 
+ 
+9. On February 7, 2018, Longfin engaged an audit firm as its independent auditor. 
+ 
+10. On March 29, 2018, the audit firm learned that Longfin had received a voluntary 
+document request from the Commission’s Division of Enforcement a few weeks earlier. 
+ 
+11. On April 2, 2018, the audit firm issued an audit report containing an unqualified 
+opinion on Longfin’s 2017 financial statements with an explanatory paragraph regarding 
+substantial doubt about the ability of the Company to continue as a going concern. 
+ 
+12. The audit firm resigned from the Longfin engagement on April 5, 2018. 
+ 
+13. On April 6, 2018, an emergency action filed under seal two days earlier by the 
+Commission against Longfin and four Longfin-affiliated individuals, including Meenavalli, was 
+made public. The Commission alleged that Longfin and Meenavalli participated in unregistered 
+offerings in violation of Section 5 of the Securities Act. 
+ 
+14. On April 6, 2018, Nasdaq suspended trading of Longfin’s shares. 
+ 
+15. More than a year later, on June 5, 2019, the Commission filed another complaint 
+against Longfin and Meenavalli, alleging that Longfin and Meenavalli engaged in a scheme to 
+obtain a Nasdaq listing through a fraudulent public offering under Regulation A+. The 
+Commission further alleged that, in 2017 and 2018, Meenavalli perpetrated an accounting fraud 
+by publicly reporting fictitious revenue from commodity transactions in its 2017 annual report 
+and a quarterly report for the first quarter of 2018. Longfin’s scheme allegedly involved 
+numerous round-trip transactions between Longfin and Meenavalli-controlled entities. Longfin 
+also allegedly used several deceptive means to make transactions appear legitimate by including 
+in its books and records forged contracts and phony bills of lading for purported physical 
+commodities. According to the Commission’s complaint, Longfin fraudulently reported over 
+$66 million of fictitious revenue, constituting over 89% of Longfin’s total revenue in 2017. 
+Meenavalli is further alleged to have concealed the revenue recognition scheme by making false 
+and misleading misrepresentations to the audit firm. In January 2020, Meenavalli agreed to 
+resolve the Commission's fraud action against him. 
+ 
+Failure to Properly Plan the Audit and Assess and Respond to Risks o f Material 
+Misstatement  
+ 
+16. In late December 2017, audit firm personnel had an initial meeting with Meenavalli 
+to discuss the audit firm’s potential engagement as Longfin’s independent auditor. After 
+5  
+performing its client acceptance procedures, the audit firm was formally engaged by Longfin as 
+its independent auditor on February 7, 2018. 
+ 
+17. During the client acceptance process, Raghunathan learned that Longfin did not have 
+effective Internal Control over Financial Reporting (“ICFR”) and that it had several material 
+weaknesses in its ICFR that impacted multiple aspects of its financial statement accounts. The 
+audit firm ultimately issued a material weakness letter to Longfin identifying seven internal 
+control deficiencies that were determined to be material weaknesses.  These material weaknesses 
+were also disclosed in the Form 10-K. 
+ 
+18. Raghunathan also learned that Longfin’s former CFO and COO had resigned just 
+prior to Longfin’s IPO, giving rise to another potential audit risk factor. Apart from making 
+inquiries of Meenavalli, Raghunathan took no additional steps to obtain an understanding of the 
+circumstances of the resignations. In addition, Raghunathan learned that Longfin’s financial 
+statements for the one-month period, beginning February 1, 2017 and ending February 28, 2017, 
+were audited by another accounting firm. Raghunathan did not communicate with or make 
+inquiries of the predecessor auditor as required by PCAOB Audit Standard (“AS”) 2101 ¶18 and 
+AS 2610 ¶07. 
+ 
+19. During the planning phase of the audit, Raghunathan learned that Longfin had a 
+limited operating history, low cash balances and operating losses, and that Longfin’s ability to 
+continue as a going concern was dependent on obtaining additional financing and generating 
+profits. 
+ 
+20. Raghunathan did not adequately identify or consider the overall fraud risks to the 
+2017 Longfin audit and, in doing so, did not appropriately address and respond to the risk of 
+material misstatement to the financial statements. Longfin’s ineffective ICFR, combined with its 
+precarious financial position, created pressure and opportunity for the company to manipulate its 
+financial statements. 
+ 
+21. In addition to the overall fraud risks, Raghunathan should have given greater 
+consideration to a number of other facts that should have raised red flags concerning the risk of  
+material misstatement to Longfin’s recorded revenue, including: (i) the nature of Longfin’s 
+commodity sales was such that they could not be physically verified, (ii) Longfin was unable to 
+provide reliable documentation memorializing key aspects of its commodities sales, and (iii) 
+Longfin entered into transactions where related parties were involved in both sides of the 
+purchase and sale of commodities. 
+ 
+22. Despite these red flags, in planning the audit Raghunathan did not adequately design 
+the audit in a manner that appropriately addressed and responded to the risk of material 
+misstatement to the financial statements and did not adequately consider the opportunity and 
+pressures to commit fraud (AS 2301 ¶07-09). Raghunathan did not obtain reasonable assurance 
+about whether Longfin’s financial statements were free of material misstatement, whether caused 
+by error or fraud (AS 1101 ¶03), identify and appropriately assess the risks of material 
+misstatement (AS 2110 ¶03), and design and implement audit responses that addressed the risks 
+of material misstatement (AS 2301 ¶03). 
+6  
+ 
+Failure to Identify Undisclosed  Related Parties 
+ 
+23. Raghunathan identified related party transactions as both a significant and fraud risk 
+due in part to the volume of related party transactions and the large number of Longfin affiliated 
+companies.4 Related party transactions were also described in the work papers as a “significant 
+high-risk area,” a “complex or troublesome engagement ar ea,” and an “overall risk” to the audit. 
+The audit firm’s material weakness letter to Longfin also included a finding that Longfin lacked 
+formal or documented accounting policies and procedures with respect to monitoring related 
+parties. 
+ 
+24. Despite the identified risks, Raghunathan did not exercise appropriate due 
+professional care and skepticism (AS 1015) and implement appropriate audit responses to those 
+risks associated with related party transactions (AS 2410). He also did not adequately perform 
+procedures necessary to determine whether previously undisclosed relationships or transactions 
+with related parties, in fact, existed (AS 2410 ¶15) and to design and perform appropriate audit 
+procedures in a manner that addressed the risks of material misstatement associated with related 
+parties and relationships and transactions with related parties (AS 2410 ¶11). 
+ 
+Failure to Audit Disclosed  Related Party Transactions 
+ 
+25. Longfin engaged in transactions in which it purchased a commodity from a related 
+party and then sold that same commodity to a different related party on the same day. Longfin’s 
+related party purchases and sales were a significant risk, and were therefore subject to the audit 
+procedures articulated in AS 2410 ¶12, which require the auditor to (i) read the underlying 
+documentation and evaluate whether the terms and other information about the transaction were 
+consistent with explanations from inquiries and other audit evidence about the business purpose 
+(or the lack thereof) of the transaction, and (ii) determine whether the transaction were 
+authorized and approved in accordance with the company's established policies and procedures 
+regarding the authorization and approval of transactions with related parties. Despite the 
+increased risks associated with these transactions, Raghunathan did not ensure that adequate 
+procedures were performed with respect to the sale or purchase of commodities with disclosed 
+related parties. 
+ 
+26. In addition to not ensuring that adequate procedures were performed, Raghunathan 
+also did not adequately follow up on red flags concerning the commodities transactions with 
+related parties. After learning that the Commission’s Division of Enforcement had issued an 
+investigative request to Longfin, senior management at the audit firm directed a Director in the 
+firm’s National Office to review the Longfin audit work papers. During her review, the Director 
+flagged a June 9, 2017 commodity purchase by Longfin from a related party and the subsequent 
+sale of that same commodity by Longfin to a different related party on the same day (the “June 9 
+transaction”). Longfin had engaged in numerous similar transactions, and the Director asked 
+Raghunathan whether the audit team understood their substance to ensure that they were valid 
+transactions. 
+ 
+4 AS 2401, Appendix 2 states that opportunities to engage in fraudulent financial reporting can arise from significant 
+transactions with related parties whose financial statements are not audited or are audited by another firm. 
+7  
+ 
+27. In response to the Director’s question, Raghunathan obtained invoices and contracts 
+for the June 9 transaction and a written explanation for the transaction from a Longfin employee. 
+Raghunathan neither challenged nor questioned the explanation he received and did not direct or 
+perform any further audit procedures with respect to these types of transactions. 
+ 
+28. The June 9 transaction identified by the Director was in fact a sham. Raghunathan 
+obtained supporting documents for the June 9 transaction but did not adequately review them. 
+Raghunathan also did not obtain a sufficient understanding or appropriately evaluate the business 
+purpose (or lack thereof) of any of the other related party transactions in which both the buyer 
+and seller were related parties. 
+ 
+29. In addition to not exercising appropriate due professional care and heightened 
+professional skepticism for the related-party transactions (AS 1015), Raghunathan did not 
+perform adequate procedures to obtain an understanding of the company’s relationships and 
+transactions with its related parties that might reasonably be expected to affect the risks of 
+material misstatement of the financial statements (AS 2410 ¶03), perform audit procedures in a 
+manner that addresses the risks of material misstatement associated with related parties and 
+relationships and transactions with related parties (AS 2410 ¶11), read underlying documentation 
+and evaluating whether information about the related party transactions are consistent with audit 
+evidence about the business purpose (or the lack thereof) of the transactions (AS 2410 ¶12), and 
+obtain sufficient appropriate audit evidence for the related-party transactions (AS 1105 ¶4). 
+ 
+Failure to Appropriately Audit Revenues  and Accounts  Receivables 
+30. Raghunathan primarily relied on third party confirmation of revenues and related 
+receivables as audit evidence. Many of the confirmations were not relevant, reliable audit 
+evidence because their source was unknown and unverified. Other substantive procedures 
+performed – such as cash receipt testing and vouching of transactions to invoices and contracts – 
+also did not provide sufficient reliable audit evidence to support the auditors’ conclusions that 
+revenue and related accounts receivable were not materially misstated. 
+ 
+31. The audit procedures with respect to the confirmation process were inadequate 
+despite the existence of red flags. Longfin supplied the audit staff with: (i) the same contact 
+person for three different entities; (ii) an address in the same office building for different entities; 
+(iii) the same email address provided for two different customers or suppliers; and (iv) non- 
+company network domain email accounts (e.g., @gmail.com domains) as the contact for four 
+customers. 
+ 
+32. The audit staff sent and received confirmations to and from several of the non- 
+company network domain email accounts. Raghunathan did not implement adequate procedures 
+to understand what persons and/or entities were associated with these non-company network 
+domain email addresses, and thus could not reasonably expect that the results from the 
+confirmation responses would not be biased because of interception and alteration of the 
+confirmation requests or responses (AS 2310 ¶28). Because Raghunathan did not know the 
+recipients of the confirmations, he could not direct the confirmation request to a third party who 
+he believed to be knowledgeable about the information to be confirmed (AS 2310 ¶26), and he 
+8  
+lacked a sufficient basis for concluding that the confirmation requests were sent to a respondent 
+from whom he could expect the response to provide meaningful and appropriate evidence (AS 
+2310 ¶27). 
+ 
+33. These matters undermined the audit of Longfin’s revenues. In addition to having 
+reviewed a selection of underlying transaction documentation, the audit staff and Raghunathan 
+relied on confirmations from non-company network domain email accounts as audit evidence to 
+support $22.6 million in revenue – approximately one-third of Longfin’s total commodity 
+revenue – without otherwise obtaining other sufficient appropriate evidence to substantiate that  
+revenue. Raghunathan’s reliance on these confirmations was inconsistent with the guidance 
+published by the PCAOB in “Staff Audit Practice Alert No. 8” which states that “the auditor 
+might determine that confirmation responses cannot be relied upon if it appears that management 
+interfered with the process because responses to confirmation requests were received from a 
+personal e-mail account rather than a company network domain ….” 
+ 
+34. The audit staff did not adequately document that it performed certain procedures 
+contained in the accounts receivable audit program related to the confirmation process. The 
+audit program called for the auditors to “verify the source and content of the replies by 
+telephoning the respondent and requesting that the respondent mail the original confirmation 
+directly to the auditor” for those replies that were received by email. The audit staff received 
+confirmation responses via email but in contravention of their own audit program and audit 
+standards (AS 2310 ¶29) either did not adequately document or did not obtain additional 
+evidence to support their validity, such as telephoning the respondents or requesting that original 
+confirmations be mailed to the audit firm. 
+ 
+35. The other substantive audit procedures performed with respect to commodity 
+revenues – cash receipt testing and vouching to invoices and contracts – also did not provide 
+sufficient audit evidence to conclude that commodity revenue was not materially misstated. 
+Cash receipts accounted for approximately $8 million of the $52 million in revenues that Longfin 
+recorded for commodity sales to unrelated third parties. The audit staff randomly selected eight 
+transactions representing 27% of the unrelated third party commodity revenue that were  vouched 
+to source documents. But the source documents provided insufficient reliability because they 
+were not obtained from an independent source, the internal controls related to the creation and 
+recording of those documents were non-existent, the accuracy and completeness of the source 
+documents was not subject to testing, and only copies and/or digitized documents were available 
+for the auditor’s examination (AS 1105 ¶8). 
+ 
+36. Raghunathan did not appropriately evaluate whether the objectives of the procedures 
+were achieved and the results of the work adequately supported the conclusions reached 
+concerning revenues and accounts receivables (AS 1201 ¶5) or to ensure that audit procedures 
+were planned and performed to obtain sufficient appropriate audit evidence concerning revenues 
+and accounts receivables (AS 1105 ¶4). Raghunathan also did not appropriately ensure that the 
+audit team was complying with PCAOB standards with respect to the confirmation process and 
+did not adequately assess whether the confirmations and other evidence to substantiate revenues 
+were sufficient reliable audit evidence. Additionally, Raghunathan did not design and implement 
+audit responses that adequately address the risks of material misstatement of revenues or 
+9  
+accounts receivables (AS 2301 ¶03). 
+ 
+Failure to Appropriately Audit Longfin’s Technology  Assets 
+37. Longfin’s 2017 balance sheet reported a $32 million developed technology asset,5 
+which it acquired through Longfin’s acquisition of Stampede in June 2017. The audit work 
+papers characterized the Stampede acquisition as a “significant risk” and “material event,” and 
+identified acquisition accounting as a “complex or troublesome engagement area.” Valuations 
+related to acquisition were also identified as a “significant estimate.” Further, several relevant 
+material weaknesses were identified as impacting the recording of transactions such as the 
+developed technology asset. 
+ 
+38. Raghunathan knew of the material weaknesses and identified the valuation as a 
+significant estimate and, therefore, should have been highly skeptical of management’s  
+projections, which were incorporated into a valuation of the developed technology asset prepared 
+by Longfin’s outside third party valuation specialist and reviewed by the audit firm’s valuation 
+advisory services group. Although the financial projections were subject to testing by the audit 
+team, the testing performed did not provide sufficient appropriate evidence to conclude that those 
+projections were reasonable (AS 2502 ¶11-13 and ¶31-32). 
+ 
+39. In connection with the audit of intangible assets, Raghunathan did not adequately 
+evaluate the reasonableness of accounting estimates made by management for the intangible 
+asset (AS 2501 ¶04), obtain sufficient appropriate evidential matter to provide reasonable 
+assurance that all accounting estimates that could be material to the financial statements have 
+been developed and those accounting estimates are reasonable in the circumstances concerning 
+the intangible asset (AS 2501 ¶07), and adequately evaluate the sufficiency and competence of 
+the audit evidence obtained from auditing fair value measurements and disclosures as well as the 
+consistency of that evidence with other audit evidence obtained and evaluated during the audit of 
+the intangible asset (AS 2502 ¶47). 
+ 
+Failure to Conduct a Proper Engagement  Quality Review  
+ 
+40. Golding did not perform an adequate EQR in connection with the 2017 audit of 
+Longfin’s related party transactions and intangible assets.  Golding knew that significant and 
+fraud risks were identified in the areas of related party transactions and intangible assets. 
+Golding did not appropriately evaluate whether the documentation reviewed for those audit areas 
+indicated that the engagement team responded appropriately to the identified risks and supported 
+the conclusions reached by the engagement team (AS 1220 ¶11). The work papers reviewed by 
+Golding did not provide sufficient information to enable him to evaluate whether the engagement 
+team’s audit testing had appropriately responded to the identified risks in these areas (AS 1220 
+¶10). 
+ 
+41. Golding reviewed all relevant audit planning work papers that identified related party 
+transactions and intangible assets as either a significant or fraud risk. Golding also reviewed the 
+ 
+5 This was Longfin’s third largest asset behind $90 million in goodwill and $36.8 million of accounts receivable. 
+10  
+relevant audit testing work papers related to these two areas.  Golding did not sufficiently 
+recognize that related party audit procedures performed did not sufficiently address the identified 
+risk of fraud or that significant and unusual related party transactions were not agreed to 
+supporting documents. 
+ 
+42. Golding also did not sufficiently evaluate whether the engagement team responded 
+appropriately to the significant risk associated with Longfin’s intangible asset. Golding did not 
+appropriately identify that the engagement team did not obtain sufficient appropriate audit 
+evidence to conclude that the projections used in the valuation of the intangible asset were 
+reasonable. 
+ 
+43. As a result of the foregoing, Golding did not sufficiently fulfill his responsibilities as 
+EQR under AS 1220, Engagement Quality Review. 
+ 
+Failure to Issue  Accurate Audit Reports  
+ 
+44. AS 3101, Report on Audited Financial Statements, requires that the auditor’s report 
+contain an opinion on the financial statements taken as a whole and contain a clear indication of 
+the character of the auditor’s work. The auditor is in a position to express an unqualified opinion 
+on the financial statements when the auditor conducted an audit in accordance with the standards 
+of the PCAOB and concludes that the financial statements, taken as a whole, are presented fairly, 
+in all material respects, in conformity with the applicable financial reporting framework. 
+Additionally, Regulation S-X, 17 CFR § 210 et seq., prescribes the qualifications of accountants 
+and the contents of the accountants’ reports that must be submitted with corporate financial 
+statements. 
+ 
+45. The sum total of Raghunathan’s audit deficiencies rendered any representations that 
+the audits were conducted in accordance with PCAOB standards materially false and misleading 
+because the audits were out of compliance. Raghunathan made such representations in the audit 
+report for Longfin, inaccurately certifying that the audit of Longfin’s financial statements was 
+conducted in accordance with the standards of the PCAOB. 
+ 
+VIOLATIONS 
+ 
+46. During the time period at issue herein, Rule 2-02(b)(1) of Regulation S-X required 
+an accountant’s report to state “whether the audit was made in accordance with generally 
+accepted auditing standards” (“GAAS”). “[R]eferences in Commission rules and staff guidance 
+and in the federal securities laws to GAAS or to specific standards under GAAS, as they relate to 
+issuers, should be understood to mean the standards of the PCAOB plus any applicable rules of 
+the Commission.” See SEC Release No. 34-49708 (May 14, 2004). Through the conduct 
+described above, Raghunathan and Golding caused the audit firm to violate Regulation S -X Rule 
+2-02(b)(1) when the audit firm issued the Longfin audit report stating that it had conducted the 
+audit in accordance with PCAOB standards when, in fact, it had not. 
+ 
+47. Section 4C of the Exchange Act and Rule 102(e)(1)(ii) of the Commission’s Rules of 
+Practice provide, in part, that the Commission may censure or deny, temporarily or permanently, 
+11  
+the privilege of appearing or practicing before the Commission to any person who is found by 
+the Commission to have engaged in improper professional conduct. Exchange Act Section 4C(b) 
+and Rule 102(e)(1)(iv) of the Commission’s Rules of Practice define improper professional 
+conduct with respect to persons associated with public accounting firms and persons licensed to 
+practice as accountants, respectively, as (1) a single instance of highly unreasonable conduct in 
+circumstances for which heightened scrutiny is warranted; or (2) repeated instances of 
+unreasonable conduct that indicate a lack of competence. 
+ 
+48. An issuer violates Section 13(a) of the Exchange Act and Rule 13a-1 thereunder 
+when such issuer files with the Commission annual reports that contain materially false or 
+misleading information. Scienter is not required for a violation of Section 13(a). In 
+administrative proceedings, the Commission may impose sanctions upon any person that is, was, 
+or would be a cause of a violation, due to an act or omission the person knew or should have 
+known would contribute to such violation. In order to establish that a person caused a non- 
+scienter based violation, a showing of negligence will suffice. By not conducting the audits of 
+Longfin’s financial statements in accordance with PCAOB standards, yet allowing the audit firm 
+to issue an audit report falsely stating that it had conducted the audit in accordance with PCAOB 
+standards, Raghunathan and Golding were a cause of Longfin’s violations of Section 13(a) and 
+Rule 13a-1. 
+ 
+FINDINGS 
+ 
+49. Based on the foregoing, the Commission finds that Raghunathan and Golding caused 
+the audit firm’s violations of  Regulation S-X Rule 2-02(b)(1). 
+ 
+50. Based on the foregoing, the Commission finds that Respondents engaged in 
+improper professional conduct pursuant to Section 4C(a)(2) of the Exchange Act and Rule 
+102(e)(1)(ii) of the Commission’s Rules of Practice. 
+ 
+51. Based on the foregoing, the Commission finds that Respondents were a cause of 
+Longfin’s violations of Section 13(a) of the Exchange Act and Rule 13a-1 thereunder. 
+ 
+IV. 
+ 
+In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
+agreed to in the Respondents’ Offers. 
+ 
+Accordingly, it is hereby ORDERED, effective immediately, that: 
+ 
+A. Respondents, Raghunathan and Golding, shall cease and desist from committing 
+or causing any violations and any future violations of Regulation S-X Rule 2-02(b)(1) and 
+Section 13(a) of the Exchange Act and Rule 13a-1 promulgated thereunder. 
+ 
+B. Respondent Raghunathan is denied the privilege of appearing or practicing before 
+the Commission as an accountant. 
+12  
+C. After three years from the date of the Order, Raghunathan may request that the 
+Commission consider Raghunathan’s reinstatement by submitting an application to the attention 
+of the Office of the Chief Accountant. 
+ 
+D. In support of any application for reinstatement to appear and practice before the 
+Commission as a preparer or reviewer, or a person responsible for the preparation or review, of 
+financial statements of a public company to be filed with the Commission, other than as a 
+member of an audit committee, as that term is defined in Section 3(a)(58) of the Exchange Act, 
+Raghunathan shall submit a written statement attesting to an undertaking to have Raghunathan’s 
+work reviewed by the independent audit committee of any public company for which 
+Raghunathan works or in some other manner acceptable to the Commission, as long as 
+Raghunathan practices before the Commission in this capacity and will comply with any 
+Commission or other requirements related to the appearance and practice before the Commission 
+as an accountant. 
+ 
+E. In support of any application for reinstatement to appear and practice before the  
+Commission as a member of an audit committee, as that term is defined in Section 3(a)(58) of 
+the Exchange Act, as a preparer or reviewer, or as a person responsible for the preparation or 
+review, of any public company’s financial statements that are filed with the Commission, 
+Raghunathan shall submit a statement prepared by the audit committee(s) with which 
+Raghunathan will be associated, including the following information: 
+ 
+1. A summary of the responsibilities and duties of the specific audit committee(s) 
+with which Raghunathan will be associated; 
+ 
+2. A description of Raghunathan’s role on the specific audit committee(s) with 
+which Raghunathan will be associated; 
+ 
+3. A description of any policies, procedures, or controls designed to mitigate any 
+potential risk to the Commission by such service; 
+ 
+4. A description relating to the necessity of Raghunathan’s service on the specific 
+audit committee; and 
+ 
+5. A statement noting whether Raghunathan will be able to act unilaterally on 
+behalf of the Audit Committee as a whole. 
+ 
+F. In support of any application for reinstatement to appear and practice before the 
+Commission as an independent accountant (auditor) before the Commission, Raghunathan must 
+be associated with a public accounting firm registered with PCAOB and Raghunathan shall 
+submit the following additional information: 
+ 
+1. A statement from the public accounting firm (the “Firm”) with which 
+Raghunathan is associated, stating that the firm is registered with the PCAOB in 
+accordance with the Sarbanes-Oxley Act of 2002; 
+13  
+2. A statement from the Firm with which Raghunathan is associated that the Firm 
+has been inspected by the PCAOB and that the PCAOB did not identify any 
+criticisms of or potential defects in the Firm’s quality control system that would 
+indicate that Raghunathan will not receive appropriate supervision; and 
+ 
+3. A statement from Raghunathan indicating that the PCAOB has taken no 
+disciplinary actions against Raghunathan since seven (7) years prior to the date 
+of the Order other than for the conduct that was the basis for the Order. 
+ 
+G. In support of any application for reinstatement, Raghunathan shall provide 
+documentation showing that Raghunathan is currently licensed as a CPA and that Raghunathan 
+has resolved all other disciplinary issues with any applicable state boards of accountancy. If 
+Raghunathan is not currently licensed as a CPA, Raghunathan shall provide documentation 
+showing that Raghunathan’s licensure is dependent upon reinstatement by the Commission. 
+ 
+H. In support of any application for reinstatement, Raghunathan shall also submit a 
+signed affidavit truthfully stating, under penalty of perjury: 
+ 
+1. That Raghunathan has complied with the Commission suspension Order, 
+and with any related orders and undertakings, including any orders in SEC 
+v. Longfin Corp., et al. , Case No. 19-cv-5296-DLC (S.D.N.Y.), or any  
+related Commission proceedings, including any orders requiring payment of 
+disgorgement or penalties; 
+ 
+2. That Raghunathan undertakes to notify the Commission immediately in 
+writing if any information submitted in support of the application for 
+reinstatement becomes materially false or misleading or otherwise changes 
+in any material way while the application is pending; 
+ 
+3. That Raghunathan, since the entry of the Order, has not been convicted of a 
+felony or a misdemeanor involving moral turpitude that would constitute a 
+basis for a forthwith suspension from appearing or practicing before the 
+Commission pursuant to Rule 102(e)(2); 
+ 
+4. That Raghunathan, since the entry of the Order: 
+ 
+a. has not been charged with a felony or a misdemeanor involving moral 
+turpitude as set forth in Rule 102(e)(2) of the Commission’s Rules of 
+Practice, except for any charge concerning the conduct that was the 
+basis for the Order; 
+ 
+b. has not been found by the Commission or a court of the United States to 
+have committed a violation of the federal securities laws, and has not 
+been enjoined from violating the federal securities laws, except for any 
+finding or injunction concerning the conduct that was the basis for the 
+Order; 
+14  
+ 
+c. has not been charged by the Commission or the United States with a 
+violation of the federal securities laws, except for any charge concerning 
+the conduct that was the basis for the Order; 
+ 
+d. has not been found by a court of the United States (or any agency of the 
+United States) or any state, territory, district, commonwealth, or 
+possession, or any bar thereof to have committed an offense (civil or 
+criminal) involving moral turpitude, except for any finding concerning 
+the conduct that was the basis for the Order; and 
+ 
+e. has not been charged by the United States (or any agency of the United 
+States) or any state, territory, district, commonwealth, or possession, 
+civilly or criminally, with having committed an act of moral turpitude, 
+except for any charge concerning the conduct that was the basis for the 
+Order. 
+ 
+5. That Raghunathan’s conduct is not at issue in any pending investigation of 
+the Commission’s Division of Enforcement, the PCAOB’s Division of 
+Enforcement and Investigations, any criminal law enforcement 
+investigation, or any pending proceeding of a State Board of Accountancy, 
+except to the extent that such conduct concerns that which was the basis 
+for the Order. 
+ 
+6. That Raghunathan has complied with any and all orders, undertakings, or 
+other remedial, disciplinary, or punitive sanctions resulting from any action 
+taken by any State Board of Accountancy, or other regulatory body. 
+ 
+I. Raghunathan shall also provide a detailed description of: 
+ 
+1. Raghunathan’s professional history since the imposition of the Order, 
+including 
+ 
+a. all job titles, responsibilities and role at any employer; 
+ 
+b. the identification and description of any work performed for entities 
+regulated by the Commission, and the persons to whom Raghunathan 
+reported for such work; and 
+ 
+2. Raghunathan’s plans for any future appearance or practice before the 
+Commission. 
+J. The Commission may conduct its own investigation to determine if the foregoing 
+attestations are accurate. 
+ 
+K. If Raghunathan provides the documentation and attestations required in this Order 
+and the Commission (1) discovers no contrary information therein, and (2) determines that 
+15  
+Raghunathan truthfully and accurately attested to each of the items required in Raghunathan’s 
+affidavit, and the Commission discovers no information, including under Paragraph J, indicating 
+that Raghunathan has violated a federal securities law, rule or regulation or rule of professional 
+conduct applicable to Raghunathan since entry of the Order (other than by conduct underlying 
+Raghunathan’s original Rule 102(e) suspension), then, unless the Commission determines that 
+reinstatement would not be in the public interest, the Commission shall reinstate Raghunathan 
+for cause shown. 
+ 
+L. If Raghunathan is not able to provide the documentation and truthful and accurate 
+attestations required in this Order or if the Commission has discovered contrary information, 
+including under Paragraph J, the burden shall be on Raghunathan to provide an explanation as to 
+the facts and circumstances pertaining to the matter setting forth why Raghunathan believes 
+cause for reinstatement nonetheless exists and reinstatement would not be contrary to the public 
+interest. The Commission may then, in its discretion, reinstate Raghunathan for cause shown. 
+ 
+M. If the Commission declines to reinstate Raghunathan pursuant to Paragraphs K 
+and L, it may, at Raghunathan’s request, hold a hearing to determine whether cause has been 
+shown to permit Raghunathan to resume appearing and practicing before the Commission as an 
+accountant. 
+ 
+N. Respondent Golding is denied the privilege of appearing or practicing before the 
+Commission as an accountant. 
+ 
+O. After one year from the date of the Order, Golding may request that the 
+Commission consider Golding’s reinstatement by submitting an application to the attention of the 
+Office of the Chief Accountant. 
+ 
+P. In support of any application for reinstatement to appear and practice before the 
+Commission as a preparer or reviewer, or a person responsible for the preparation or review, of 
+financial statements of a public company to be filed with the Commission, other than as a member 
+of an audit committee, as that term is defined in Section 3(a)(58) of the Exchange Act, Golding 
+shall submit a written statement attesting to an undertaking to have Golding’s work reviewed by 
+the independent audit committee of any public company for which Golding works or in some other 
+manner acceptable to the Commission, as long as Golding practices before the Commission in this 
+capacity and will comply with any Commission or other requirements related to the appearance 
+and practice before the Commission as an accountant. 
+ 
+Q. In support of any application for reinstatement to appear and practice before the 
+Commission as a member of an audit committee, as that term is defined in Section 3(a)(58) of the 
+Exchange Act, as a preparer or reviewer, or as a person responsible for the preparation or review, 
+of any public company’s financial statements that are filed with the Commission, Golding shall 
+submit a statement prepared by the audit committee(s) with which Golding will be associated, 
+including the following information: 
+ 
+1. A summary of the responsibilities and duties of the specific audit 
+committee(s) with which Golding will be associated; 
+16  
+ 
+2. A description of Golding’s role on the specific audit committee(s) with 
+which Golding will be associated; 
+ 
+3. A description of any policies, procedures, or controls designed to mitigate 
+any potential risk to the Commission by such service; 
+ 
+4. A description relating to the necessity of Golding’s service on the specific 
+audit committee; and 
+ 
+5. A statement noting whether Golding will be able to act unilaterally on 
+behalf of the Audit Committee as a whole. 
+R. In support of any application for reinstatement to appear and practice before the 
+Commission as an independent accountant (auditor) before the Commission, Golding must be 
+associated with a public accounting firm registered with the PCAOB and Golding shall submit the 
+following additional information: 
+ 
+1. A statement from the public accounting firm (the “Firm”) with which 
+Golding is associated, stating that the firm is registered with the PCAOB in 
+accordance with the Sarbanes-Oxley Act of 2002; 
+ 
+2. A statement from the Firm with which Golding is associated that the Firm 
+has been inspected by the PCAOB and that the PCAOB did not identify any 
+criticisms of or potential defects in the Firm’s quality control system that 
+would indicate that Golding will not receive appropriate supervision; and 
+ 
+3. A statement from Golding indicating that the PCAOB has taken no 
+disciplinary actions against Golding since seven (7) years prior to the date 
+of the Order other than for the conduct that was the basis for the Order. 
+ 
+S. In support of any application for reinstatement, Golding shall provide 
+documentation showing that Golding is currently licensed as a CPA and that Golding has resolved 
+all other disciplinary issues with any applicable state boards of accountancy. If Golding is not 
+currently licensed as a CPA, Golding shall provide documentation showing that Golding’s 
+licensure is dependent upon reinstatement by the Commission. 
+ 
+T. In support of any application for reinstatement, Golding shall also submit a signed 
+affidavit truthfully stating, under penalty of perjury: 
+ 
+1. That Golding has complied with the Commission suspension Order, and 
+with any related orders and undertakings, including any orders in SEC v. 
+Longfin  Corp., et al., Case No. 19-cv-5296-DLC (S.D.N.Y.), or any related 
+Commission proceedings, including any orders requiring payment of 
+disgorgement or penalties; 
+17  
+2. That Golding undertakes to notify the Commission immediately in writing 
+if any information submitted in support of the application for reinstatement 
+becomes materially false or misleading or otherwise changes in any material 
+way while the application is pending; 
+ 
+3. That Golding, since the entry of the Order, has not been convicted of a 
+felony or a misdemeanor involving moral turpitude that would constitute a 
+basis for a forthwith suspension from appearing or practicing before the 
+Commission pursuant to Rule 102(e)(2); 
+ 
+4. That Golding, since the entry of the Order: 
+ 
+a. has not been charged with a felony or a misdemeanor involving moral 
+turpitude as set forth in Rule 102(e)(2) of the Commission’s Rules of 
+Practice, except for any charge concerning the conduct that was the 
+basis for the Order; 
+ 
+b. has not been found by the Commission or a court of the United States to 
+have committed a violation of the federal securities laws, and has not 
+been enjoined from violating the federal securities laws, except for any 
+finding or injunction concerning the conduct that was the basis for the 
+Order; 
+ 
+c. has not been charged by the Commission or the United States with a 
+violation of the federal securities laws, except for any charge concerning 
+the conduct that was the basis for the Order; 
+ 
+d. has not been found by a court of the United States (or any agency of the 
+United States) or any state, territory, district, commonwealth, or 
+possession, or any bar thereof to have committed an offense (civil or 
+criminal) involving moral turpitude, except for any finding concerning 
+the conduct that was the basis for the Order; and 
+ 
+e. has not been charged by the United States (or any agency of the United 
+States) or any state, territory, district, commonwealth, or possession, 
+civilly or criminally, with having committed an act of moral turpitude, 
+except for any charge concerning the conduct that was the basis for the 
+Order. 
+ 
+5. That Golding’s conduct is not at issue in any pending investigation of the 
+Commission’s Division of Enforcement, the PCAOB’s Division of 
+Enforcement and Investigations, any criminal law enforcement 
+investigation, or any pending proceeding of a State Board of Accountancy, 
+except to the extent that such conduct concerns that which was the basis 
+for the Order. 
+18  
+6. That Golding has complied with any and all orders, undertakings, or other 
+remedial, disciplinary, or punitive sanctions resulting from any action taken 
+by any State Board of Accountancy, or other regulatory body. 
+U. Golding shall also provide a detailed description of: 
+ 
+1. Golding’s professional history since the imposition of the Order, including 
+ 
+a. all job titles, responsibilities and role at any employer; 
+ 
+b. the identification and description of any work performed for entities 
+regulated by the Commission, and the persons to whom Golding 
+reported for such work; and 
+ 
+2. Golding’s plans for any future appearance or practice before the 
+Commission. 
+V. The Commission may conduct its own investigation to determine if the foregoing 
+attestations are accurate. 
+ 
+W. If Golding provides the documentation and attestations required in this Order and 
+the Commission (1) discovers no contrary information therein, and (2) determines that Golding 
+truthfully and accurately attested to each of the items required in Golding’s affidavit, and the 
+Commission discovers no information, including under Paragraph V, indicating that Golding has 
+violated a federal securities law, rule or regulation or rule of professional conduct applicable to 
+Golding since entry of the Order (other than by conduct underlying Golding’s original Rule 102(e) 
+suspension), then, unless the Commission determines that reinstatement would not be in the public 
+interest, the Commission shall reinstate Golding for cause shown. 
+ 
+X. If Golding is not able to provide the documentation and truthful and accurate  
+attestations required in this Order or if the Commission has discovered contrary information, 
+including under Paragraph V, the burden shall be on Golding to provide an explanation as to the 
+facts and circumstances pertaining to the matter setting forth why Golding believes cause for 
+reinstatement nonetheless exists and reinstatement would not be contrary to the public interest. 
+The Commission may then, in its discretion, reinstate Golding for cause shown. 
+ 
+Y. If the Commission declines to reinstate Golding pursuant to Paragraphs W and X, it 
+may, at Golding’s request, hold a hearing to determine whether cause has been shown to permit 
+Golding to resume appearing and practicing before the Commission as an accountant. 
+ 
+Z. Respondent Raghunathan shall, within 21 days of the entry of this Order, pay a 
+civil money penalty in the amount of $25,000 to the Securities and Exchange Commission. The 
+Commission may distribute civil money penalties collected in this proceeding if, in its discretion, 
+the Commission orders the establishment of a Fair Fund pursuant to 15 U.S.C. § 7246, Section 
+308(a) of the Sarbanes-Oxley Act of 2002. The Commission will hold funds paid pursuant to 
+this paragraph in an account at the United States Treasury pending a decision whether the 
+Commission, in its discretion, will seek to distribute funds or transfer them to the general fund of 
+19  
+the United States Treasury, subject to Exchange Act Section 21F(g)(3). If timely payment is not 
+made, additional interest shall accrue pursuant to 31 U.S.C. § 3717. 
+ 
+AA. Respondent Golding shall, within 21 days of the entry of this Order, pay a civil 
+money penalty in the amount of $10,000 to the Securities and Exchange Commission. The 
+Commission may distribute civil money penalties collected in this proceeding if, in its discretion, 
+the Commission orders the establishment of a Fair Fund pursuant to 15 U.S.C. § 7246, Section 
+308(a) of the Sarbanes-Oxley Act of 2002. The Commission will hold funds paid pursuant to 
+this paragraph in an account at the United States Treasury pending a decision whether the 
+Commission, in its discretion, will seek to distribute funds or transfer them to the general fund of 
+the United States Treasury, subject to Exchange Act Section 21F(g)(3). If timely payment is not 
+made, additional interest shall accrue pursuant to 31 U.S.C. § 3717. 
+ 
+BB. Payment must be made in one of the following ways: 
+ 
+(1) Respondents may transmit payment electronically to the Commission, 
+which will provide detailed ACH transfer/Fedwire instructions upon 
+request; 
+ 
+(2) Respondents may make direct payment from a bank account via 
+Pay.gov through the SEC website at 
+http://www.sec.gov/about/offices/ofm.htm; or 
+ 
+(3) Respondents may pay by certified check, bank cashier’s check, or  
+United States postal money order, made payable to the Securities and 
+Exchange Commission and hand-delivered or mailed to: 
+ 
+Enterprise Services Center 
+Accounts Receivable Branch 
+HQ Bldg., Room 181, AMZ-341 
+6500 South MacArthur Boulevard 
+Oklahoma City, OK 73169 
+ 
+CC. Payments by check or money order must be accompanied by a cover letter 
+identifying each Respondent in these proceedings, and the file number of these proceedings. A 
+copy of the cover letter and check or money order must be simultaneously sent to Anita Bandy, 
+Associate Director, Division of Enforcement, Securities and Exchange Commission, 100 F St., 
+N.E., Washington, DC 20549. 
+ 
+DD. Regardless of whether the Commission in its discretion orders the creation of a 
+Fair Fund for the penalties ordered in this proceeding, amounts ordered to be paid as civil money 
+penalties pursuant to this Order shall be treated as penalties paid to the government for all 
+purposes, including all tax purposes. To preserve the deterrent effect of the civil penalty, 
+Respondents agree that in any Related Investor Action, they shall not argue that they are entitled 
+to, nor shall they benefit by, offset or reduction of any award of compensatory damages by the 
+amount of any part of Respondents’ payment of a civil penalty in this action (“Penalty Offset”). 
+20 
+ 
+If the court in any Related Investor Action grants such a Penalty Offset, Respondents 
+agree that they shall, within 30 days after entry of a final order granting the Penalty 
+Offset, notify the Commission’s counsel in this action and pay the amount of the Penalty 
+Offset to the Securities and Exchange Commission. Such a payment shall not be deemed 
+an additional civil penalty and shall not be deemed to change the amount of the civil 
+penalty imposed in this proceeding. For purposes of this paragraph, a “Related Investor 
+Action” means a private damages action brought against Respondents by or on behalf of 
+one or more investors based on substantially the same facts as alleged in the Order 
+instituted by the Commission in this proceeding. 
+ 
+V. 
+It is further Ordered that, solely for purposes of exceptions to discharge set 
+forth in Section 523 of the Bankruptcy Code, 11 U.S.C. §523, the findings in this 
+Order are true and admitted by Respondents Raghunathan and Golding, and further, 
+any debt for disgorgement, prejudgment interest, civil penalty or other amounts due by 
+Respondents under this Order or any other judgment, order, consent order, decree or 
+settlement agreement entered in connection with this proceeding, is a debt for the 
+violation by Respondents of the federal securities laws or any regulation or order 
+issued under such laws, as set forth in Section 523(a)(19) of the Bankruptcy Code, 11 
+U.S.C. §523(a)(19). 
+ 
+ 
+By the Commission. 
+ 
+ 
+Vanessa A. Countryman 
+Secretary 
+ 

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+   
+UNITED STATES OF AMERICA  
+Before the  
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934  
+Release No. 93544 / November 9, 2021 
+ACCOUNTING AND AUDITING ENFORCEMENT  
+Release No. 4265 / November 9, 2021 
+ADMINISTRATIVE PROCEEDING  
+File No. 3-18292 
+ 
+In the Matter of  
+Tommy Shek, CPA  
+ 
+: 
+: 
+: 
+: 
+: 
+: 
+ORDER GRANTING APPLICATION FOR 
+REINSTATEMENT TO APPEAR AND PRACTICE 
+BEFORE THE COMMISSION AS AN 
+INDEPENDENT ACCOUNTANT  
+On July 12, 2018, the Commission issued an Order Making Findings and Imposing 
+Remedial Sanctions Pursuant to Section 4C of the Securities Exchange Act of 1934 (“Exchange 
+Act”) and Rule 102(e) of the Commission’s Rules of Practice (the “Suspension Order”) as to 
+Respondent Tommy Shek, CPA (“Shek”).1  The Suspension Order denied Shek the privilege of 
+appearing or practicing before the Commission as an accountant but permitted Shek, after one 
+year from the date of the Suspension Order and if certain conditions were met, to request that the 
+Commission consider his reinstatement to resume appearing or practicing before the 
+Commission as: (1) a preparer or reviewer, or a person responsible for the preparation or review, 
+of any public company’s financial statements that are filed with the Commission, other than as a 
+member of an audit committee, as that term is defined in Section 3(a)(58) of the Exchange Act; 
+(2) a preparer or reviewer, or a person responsible for the preparation or review, of any public 
+company’s financial statements that are filed with the Commission as a member of an audit 
+committee, as that term is defined in Section 3(a)(58) of the Exchange Act; or (3) an independent 
+accountant. 
+On August 4, 2020, Shek was reinstated to appear and practice before the Commission as 
+a preparer or reviewer, or a person responsible for the preparation or review, of any public 
+company’s financial statements that are filed with the Commission, other than as a member of an 
+audit committee as that term is defined in Section 3(a)(58) of the Exchange Act.2   
+                                                 
+1 See Accounting and Auditing Enforcement Release No. 3951 dated July 12, 2018.   
+ 
+2 See Accounting and Auditing Enforcement Release No. 4156 dated August 4, 2020. 
+ 2 
+This order is issued in response to Shek’s application for reinstatement to appear and 
+practice before the Commission as an independent accountant. 
+ The Commission previously found that Shek, an audit manager at Anton & Chia LLP, 
+engaged in improper professional conduct with respect to his work on the interim reviews of the 
+financial statements of CannaVEST Corp. (“CannaVEST”) for the first through third quarters of 
+2013.  In performing the interim reviews of CannaVEST’s financial statements, Shek engaged in 
+improper professional conduct by failing to adhere to standards of the Public Company 
+Accounting Oversight Board and ignoring a number of red flags that indicated that 
+CannaVEST’s financial information contained material misstatements. 
+ 
+Shek has met all of the conditions set forth in the Suspension Order to be reinstated to 
+appear and practice before the Commission as an independent accountant and, in his capacity as 
+an independent accountant, has stated that he will comply with all requirements of the 
+Commission and the Public Company Accounting Oversight Board, including, but not limited to, 
+all requirements relating to registration, inspections, concurring partner reviews, and quality 
+control standards.  Shek is not, at this time, seeking to appear or practice before the Commission 
+as a preparer or reviewer, or a person responsible for the preparation or review, of any public 
+company’s financial statements that are filed with the Commission as a member of an audit 
+committee.  If, in the future, he should wish to resume appearing and practicing before the 
+Commission in such capacity he will be required to submit an application to the Commission 
+showing, among other things, that he has complied and will comply with the terms of the 
+Suspension Order.   
+ 
+Rule 102(e)(5) of the Commission’s Rules of Practice governs applications for 
+reinstatement, and provides that the Commission may reinstate the privilege to appear and 
+practice before the Commission “for good cause shown.”3  This “good cause” determination is 
+necessarily highly fact specific. 
+ 
+Shek is currently subject to probation under the California State Board of Accountancy.  
+Failure to abide by the terms of his probation could result in the suspension of Shek’s CPA 
+license.  Shek has attested that he will notify the Commission if he is found to have violated the 
+terms of the probation. He also has attested that he understands that the suspension of his CPA 
+license could result in the revocation of the reinstatement of his privilege to appear or practice 
+before the Commission as an accountant. 
+ 
+On the basis of information supplied, representations made, and undertakings agreed to 
+by Shek, it appears that he has complied with the terms of Suspension Order denying him the 
+privilege of appearing or practicing before the Commission as an accountant.  No information 
+                                                                                                                                                             
+ 
+3 Rule 102(e)(5)(i) provides: 
+ 
+“An application for reinstatement of a person permanently suspended or disqualified under paragraph (e)(1) or (e)( 3) 
+of this section may be made at any time, and the applicant may, in the Commission’s discretion, be afforded a 
+hearing; however, the suspension or disqualification shall continue unless and until the applicant has been reinstated 
+by the Commission for good cause shown.”  17 C.F.R. § 201.102(e)(5)(i). 
+ 
+ 3 
+has come to the attention of the Commission relating to his character, integrity, professional 
+conduct or qualifications to practice before the Commission that would be a basis for adverse 
+action against him pursuant to Rule 102(e) of the Commission's Rules of Practice.  In addition, 
+Shek has undertaken to comply with all requirements of the Commission and the Public 
+Company Accounting Oversight Board, including, but not limited to, all requirements relating to 
+registration, inspections, concurring partner reviews, and quality control standards in his practice 
+before the Commission as an independent accountant.  As a result, Shek has shown good cause 
+for reinstatement.  Therefore, it is accordingly, 
+ 
+ORDERED pursuant to Rule 102(e)(5)(i) of the Commission's Rules of Practice that 
+Tommy Shek, CPA is hereby reinstated to appear and practice before the Commission as an 
+independent accountant. 
+ 
+By the Commission. 
+ 
+ 
+Vanessa A. Countryman 
+Secretary  

raw/aaer/2021/AAER-4267.txt

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+ UNITED STATES OF AMERICA 
+ Before the 
+ SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 93568 / November 12, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4267 / November 12, 2021 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-20652 
+ 
+In the Matter of 
+William Wright, CPA 
+Respondent. 
+ 
+ORDER INSTITUTING PUBLIC 
+ADMINISTRATIVE PROCEEDINGS 
+ PURSUANT TO RULE 102(e) OF THE 
+COMMISSION’S RULES OF PRACTICE, 
+MAKING FINDINGS, AND IMPOSING 
+REMEDIAL SANCTIONS 
+ 
+   
+I. 
+ 
+ The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
+public interest that public administrative proceedings be, and hereby are, instituted against William 
+Wright (“Respondent” or “Wright”) pursuant to Rule 102(e)(3)(i) of the Commission’s Rules of 
+Practice.1   
+II. 
+ 
+ In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
+of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
+purpose of these proceedings and any other proceedings brought by or on behalf of the 
+Commission, or to which the Commission is a party, and without admitting or denying the findings 
+herein, except as to the Commission’s jurisdiction over him and the subject matter of these 
+proceedings, and the findings contained in Section III.3. below, which are admitted, Respondent 
+consents to the entry of this Order Instituting Public Administrative Proceedings Pursuant to Rule 
+                                                 
+1 Rule 102(e)(3)(i) provides, in relevant part, that: 
+ 
+ The Commission, with due regard to the public interest and without preliminary hearing, 
+may, by order, . . . suspend from appearing or practicing before it any . . . accountant . . . who has 
+been by name . . . 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. 
+ 2 
+102(e) of the Commission’s Rules of Practice, Making Findings, and Imposing Remedial 
+Sanctions (“Order”), as set forth below.   
+ 
+III. 
+ 
+ On the basis of this Order and Respondent’s Offer, the Commission finds that:  
+ 
+1. Wright, age 47, is a resident of Arlington, VA.  Wright was the Corporate 
+Controller at CEB Inc. from July 2015 through August 2017, and prior to that served as CEB’s 
+Managing Director in Accounting and Reporting from 2004 to June 2015.  Wright was a licensed 
+Certified Public Accountant in Virginia from 2003 until 2015 when his license expired. 
+ 
+2. CEB Inc. (“CEB”) was a Delaware corporation headquartered in Arlington, VA that 
+provided best practice and talent management products and services. CEB’s common stock was 
+registered with the Commission pursuant to Section 12(b) of the Securities Exchange Act of 1934 
+(“Exchange Act”) and traded on the New York Stock Exchange (“NYSE”) under ticker symbol 
+CEB.  CEB filed periodic reports, including Forms 10-K and 10-Q, with the Commission pursuant 
+to Section 13(a) of the Exchange Act and related rules thereunder until April 2017, when it 
+voluntarily delisted from NYSE and terminated its reporting obligations with the Commission in 
+connection with its acquisition by another company. 
+ 
+3. On December 11, 2020, the Commission filed a complaint against Wright in SEC v. 
+Clark, et al., No. 1:20-cv-01529 (E.D. Va.).  On October 18, 2021, the court entered an order 
+permanently enjoining Wright, by consent, from future violations of Section 10(b) of the Exchange 
+Act and Rule 10b-5 thereunder; Wright was also ordered to pay a civil penalty of $240,934. 
+ 
+4. The Commission’s complaint alleged, among other things, that Wright tipped his 
+brother-in-law, Defendant Christopher Clark, material non-public information concerning the 
+impending acquisition of Wright’s employer, CEB, by another company.  Based on the 
+information, as further alleged in the complaint, Wright’s brother-in-law traded in CEB securities 
+in advance of the merger announcement generating profits of $240,934. 
+ 
+IV. 
+ 
+ In view of the foregoing, the Commission deems it appropriate and in the public interest to 
+impose the sanction agreed to in Respondent Wright’s Offer. 
+ 
+ Accordingly, it is hereby ORDERED, effective immediately, that: 
+ 
+ A. Respondent is suspended from appearing or practicing before the Commission as an 
+accountant.  
+ 
+B. After two years from the date of the Order, Respondent may request that the 
+Commission consider Respondent’s reinstatement by submitting an application to the attention of 
+the Office of the Chief Accountant. 
+ 3 
+ 
+C. In support of any application for reinstatement to appear and practice before the 
+Commission as a preparer or reviewer, or a person responsible for the preparation or review, of 
+financial statements of a public company to be filed with the Commission, other than as a member 
+of an audit committee, as that term is defined in Section 3(a)(58) of the Exchange Act, Respondent 
+shall submit a written statement attesting to an undertaking to have Respondent’s work reviewed 
+by the independent audit committee of any public company for which Respondent works or in 
+some other manner acceptable to the Commission, as long as Respondent practices before the 
+Commission in this capacity and will comply with any Commission or other requirements related 
+to the appearance and practice before the Commission as an accountant. 
+ 
+D. In support of any application for reinstatement to appear and practice before the 
+Commission as a member of an audit committee, as that term is defined in Section 3(a)(58) of the 
+Exchange Act, as a preparer or reviewer, or as a person responsible for the preparation or review, 
+of any public company’s financial statements that are filed with the Commission, Respondent shall 
+submit a statement prepared by the audit committee(s) with which Respondent will be associated, 
+including the following information: 
+ 
+1. A summary of the responsibilities and duties of the specific audit committee(s) 
+with which Respondent will be associated; 
+ 
+2. A description of Respondent’s role on the specific audit committee(s) with 
+which Respondent will be associated; 
+ 
+3. A description of any policies, procedures, or controls designed to mitigate any 
+potential risk to the Commission by such service;   
+ 
+4. A description relating to the necessity of Respondent’s service on the specific 
+audit committee; and 
+ 
+5. A statement noting whether Respondent will be able to act unilaterally on behalf 
+of the Audit Committee as a whole.  
+ 
+E. In support of any application for reinstatement to appear and practice before the 
+Commission as an independent accountant (auditor) before the Commission, Respondent must be 
+associated with a public accounting firm registered with the Public Company Accounting 
+Oversight Board (the “PCAOB”) and Respondent shall submit the following additional 
+information: 
+ 
+1. A statement from the public accounting firm (the “Firm”) with which 
+Respondent is associated, stating that the firm is registered with the PCAOB in 
+accordance with the Sarbanes-Oxley Act of 2002; 
+ 
+2. A statement from the Firm with which the Respondent is associated that the 
+Firm has been inspected by the PCAOB and that the PCAOB did not identify 
+ 4 
+any criticisms of or potential defects in the Firm’s quality control system that 
+would indicate that Respondent will not receive appropriate supervision; and 
+ 
+3. A statement from Respondent indicating that the PCAOB has taken no 
+disciplinary actions against Respondent since seven (7) years prior to the date of 
+the Order other than for the conduct that was the basis for the Order. 
+ 
+F. In support of any application for reinstatement, Respondent shall provide 
+documentation showing that Respondent is currently licensed as a certified public accountant 
+(“CPA”) and that Respondent has resolved all other disciplinary issues with any applicable state 
+boards of accountancy.  If Respondent is not currently licensed as a CPA, Respondent shall provide 
+documentation showing that Respondent’s licensure is dependent upon reinstatement by the 
+Commission.   
+ 
+G.  In support of any application for reinstatement, Respondent shall also submit a 
+signed affidavit truthfully stating, under penalty of perjury:  
+ 
+1. That Respondent has complied with the Commission suspension Order, and 
+with any related orders and undertakings, including any orders in SEC v. 
+Clark, et al., No. 1:20-cv-01529 (E.D. Va.), or any related Commission 
+proceedings, including any orders requiring payment of disgorgement or 
+penalties; 
+ 
+2. That Respondent undertakes to notify the Commission immediately in 
+writing if any information submitted in support of the application for 
+reinstatement becomes materially false or misleading or otherwise changes 
+in any material way while the application is pending; 
+ 
+3. That Respondent, since the entry of the Order, has not been convicted of a 
+felony or a misdemeanor involving moral turpitude that would constitute a 
+basis for a forthwith suspension from appearing or practicing before the 
+Commission pursuant to Rule 102(e)(2);   
+ 
+4. That Respondent, since the entry of the Order: 
+ 
+a. has not been charged with a felony or a misdemeanor involving moral 
+turpitude as set forth in Rule 102(e)(2) of the Commission’s Rules of 
+Practice, except for any charge concerning the conduct that was the 
+basis for the Order; 
+ 
+b. has not been found by the Commission or a court of the United States to 
+have committed a violation of the federal securities laws, and has not 
+been enjoined from violating the federal securities laws, except for any 
+finding or injunction concerning the conduct that was the basis for the 
+Order;   
+ 5 
+ 
+c. has not been charged by the Commission or the United States with a 
+violation of the federal securities laws, except for any charge concerning 
+the conduct that was the basis for the Order; 
+ 
+d. has not been found by a court of the United States (or any agency of the 
+United States) or any state, territory, district, commonwealth, or 
+possession, or any bar thereof to have committed an offense (civil or 
+criminal) involving moral turpitude, except for any finding concerning 
+the conduct that was the basis for the Order; and 
+ 
+e. has not been charged by the United States (or any agency of the United 
+States) or any state, territory, district, commonwealth, or possession, 
+civilly or criminally, with having committed an act of moral turpitude, 
+except for any charge concerning the conduct that was the basis for the 
+Order. 
+ 
+5. That Respondent’s conduct is not at issue in any pending investigation of 
+the Commission’s Division of Enforcement, the PCAOB’s Division of 
+Enforcement and Investigations, any criminal law enforcement 
+investigation, or any pending proceeding of a State Board of Accountancy, 
+except to the extent that such conduct concerns that which was the basis for 
+the Order. 
+ 
+6. That Respondent has complied with any and all orders, undertakings, or 
+other remedial, disciplinary, or punitive sanctions resulting from any action 
+taken by any State Board of Accountancy, or other regulatory body. 
+ 
+H. Respondent shall also provide a detailed description of: 
+ 
+1. Respondent’s professional history since the imposition of the Order, including  
+ 
+(a) all job titles, responsibilities and role at any employer; 
+ 
+(b) the identification and description of any work performed for entities 
+regulated by the Commission, and the persons to whom Respondent reported for 
+such work; and  
+ 
+2. Respondent’s plans for any future appearance or practice before the 
+Commission. 
+ 
+ I. The Commission may conduct its own investigation to determine if the foregoing 
+attestations are accurate. 
+ 
+ 6 
+J.    If Respondent provides the documentation and attestations required in this Order 
+and the Commission (1) discovers no contrary information therein, and (2) determines that 
+Respondent truthfully and accurately attested to each of the items required in Respondent’s 
+affidavit, and the Commission discovers no information, including under paragraph I, indicating 
+that Respondent has violated a federal securities law, rule or regulation or rule of professional 
+conduct applicable to Respondent since entry of the Order (other than by conduct underlying 
+Respondent’s original Rule 102(e) suspension), then, unless the Commission determines that 
+reinstatement would not be in the public interest, the Commission shall reinstate the respondent for 
+cause shown. 
+ 
+K. If Respondent is not able to provide the documentation and truthful and accurate 
+attestations required in this Order or if the Commission has discovered contrary information, 
+including under Paragraph I, the burden shall be on the Respondent to provide an explanation as to 
+the facts and circumstances pertaining to the matter setting forth why Respondent believes cause 
+for reinstatement nonetheless exists and reinstatement would not be contrary to the public interest.  
+The Commission may then, in its discretion, reinstate the Respondent for cause shown.   
+ 
+L.  If the Commission declines to reinstate Respondent pursuant to Paragraphs J and K, 
+it may, at Respondent’s request, hold a hearing to determine whether cause has been shown to 
+permit Respondent to resume appearing and practicing before the Commission as an accountant. 
+ 
+ By the Commission. 
+ 
+ 
+ 
+Vanessa A. Countryman 
+       Secretary 

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+ 
+ UNITED STATES OF AMERICA 
+ Before the 
+ SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES ACT OF 1933 
+Release No. 11008 / November 22, 2021 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 93645 / November 22, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT  
+Release No. 4268 / November 22, 2021 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-20661 
+ 
+ 
+In the Matter of 
+ 
+ProPetro Holding Corp. 
+            and Dale Redman, 
+ 
+Respondents. 
+ 
+ 
+ 
+ORDER INSTITUTING CEASE-AND-
+DESIST PROCEEDINGS PURSUANT TO 
+SECTION 8A OF THE SECURITIES ACT 
+OF 1933 AND SECTION 21C OF THE 
+SECURITIES EXCHANGE ACT OF 1934, 
+MAKING FINDINGS AND IMPOSING A 
+CEASE-AND-DESIST ORDER  
+   
+I. 
+ 
+ The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
+public interest that public cease-and-desist proceedings be, and hereby are, instituted pursuant to 
+Section 8A of the Securities Act of 1933 (“Securities Act”)  and Section 21C of the Securities 
+Exchange Act of 1934 (“Exchange Act”) against ProPetro Holding Corp. (“ProPetro”) and Dale 
+Redman (“Redman”) (collectively, “Respondents”).   
+ 
+II. 
+ 
+ In anticipation of the institution of these proceedings, Respondents have submitted Offers of 
+Settlement (the “Offers”) which the Commission has determined to accept.  Solely for the purpose 
+of these proceedings and any other proceedings brought by or on behalf of the Commission, or to 
+which the Commission is a party, and without admitting or denying the findings herein, except as to 
+the Commission’s jurisdiction over them and the subject matter of these proceedings, which are 
+admitted, and except as provided herein in Section V, Respondents consent to the entry of this Order 
+Instituting Cease-and-Desist Proceedings pursuant to Section 8A of the Securities Act of 1933 and 
+Section 21C of the Securities Exchange Act of 1934, Making Findings and Imposing a Cease-and-
+Desist Order (“Order”), as set forth below.   
+ 2 
+III. 
+ 
+ On the basis of this Order and Respondents’ Offers, the Commission finds1 that 
+ 
+Summary 
+ 
+1. These proceedings arise from: (a) ProPetro’s failure to disclose certain perquisites and 
+stock pledges concerning its co -founder and former CEO Dale Redman  in its definitive proxy 
+statements and annual reports for the fiscal years end ed December 31, 2017 and 2018 ; and (b) 
+Redman’s role in ProPetro’s failure to disclose the perquisites paid to him and his pledges of ProPetro 
+stock while he was CEO and a member of ProPetro’s Board of Directors.  
+2. From January 2017 to December 2018 , Redman: (a ) caused ProPetro to incur 
+approximately $252,896 in charges relating to travel on his personal aircraft for trips that were not 
+directly related to the performance of his duties as CEO ; (b) used ProPetro credit cards to charge  
+$127,698 of personal expenses; and (c) pledged all of his personal stock in ProPetro in two real estate 
+transactions in violation of the company’s shareholder agreement and insider trading policy.  During 
+the same period, ProPetro failed to properly disclose $47,591 in additional perquisites for Redman 
+that were authorized and paid for directly by the company.  
+3. From January 2017 to January 2019, Redman failed to provide information required 
+by ProPetro policies to enable ProPetro to adequately disclose these perquisites and stock pledges. As 
+a result, ProPetro made material misstatements regarding executive perquisites and stock ownership 
+in its annual reports, definitive proxy statements , and a registration statement .  Additionally, 
+ProPetro’s deficient internal accounting controls resulted in the company’s failure to accurately 
+record Redman’s perquisites in its books and records. 
+4. As a result of the conduct described herein, ProPetro violated Sections 13(a), 
+13(b)(2)(A), 13(b)(2)(B), and 14(a) of the Exchange Act and Rules 12b-20, 13a-1, 14a-3, and 14a-9 
+thereunder. Redman violated Section 17(a)(3) of the Securities Act and Section 14(a) of the 
+Exchange Act and Rules 13b2-1, 14a-3, and 14a-9 thereunder and caused ProPetro’s violations of  
+Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchan ge Act and Rules 12b -20 and 13a -1 
+thereunder. 
+Respondents 
+5. ProPetro Holding Corp., a Delaware corporation headquartered in Midland, Texas, is 
+an oilfield services company.  ProPetro was founded as a private entity in September 2005 by former 
+CEO Redman and another individual.  Beginning in March 2017, ProPetro’s common stock became 
+registered with the Commission pursuant to Section 12(b) of the Exchange Act and began trading 
+on the New York Stock Exchange under the ticker PUMP.     
+6. Dale Redman, age 60, is a resident of Midland, Texas.  Redman co-founded ProPetro 
+in September 2005 and became CEO in August 2006, a position he held until he resigned on March 
+                                                 
+1  The findings herein are made pursuant to Respondents’ Offers of Settlement and are not binding on any other 
+person or entity in this or any other proceeding.  
+ 3 
+13, 2020.  Redman was a member of ProPetro’s Board of Directors from September 2005 until his 
+resignation in March 2020.  
+ 
+Background on Perquisite Disclosures 
+ 
+7. Section 14(a) of the Exchange Act makes it unlawful to solicit any proxy in respect of 
+any security (other than an exempted security) registered pursuant to Section 12 of the Exchange Act 
+in contravention of such rules and regulations as the Commission may prescribe.  Rule 14a-3 prohibits 
+the solicitation of a proxy without furnishing information specified by Schedule 14A, including 
+executive compensation pursuant to Item 402 of Regulation S-K.  Rule 14a-9 prohibits the use of 
+proxy statements containing any statement that is false or misleading with respect to any material fact, 
+or omitting to state any material fact necessary in order to make the statements therein not false or 
+misleading. Misstatements and omissions are material under Rule 14a-9 if they would alter the “total 
+mix of information” considered by a shareholder in making a voting decision.  TSC Indus., Inc. v. 
+Northway, Inc., 426 U.S. 438, 449 (1976). 
+ 
+8. Item 402 of Regulation S-K requires disclosure of the total value of all perquisites and 
+other personal benefits provided to named executive officers who receive at least $10,000 worth of 
+such items in a given year. Item 402 of Regulation S-K also requires identification of all perquisites 
+and personal benefits by type, and quantification of any perquisite or personal benefit that exceeds 
+the greater of $25,000 or 10% of total perquisites. 
+ 
+9. Item 403 of Regulation S-K requires disclosure of the security ownership of certain 
+beneficial owners and management.  Item 403(b) details the categories of information required for 
+each class of equities offered by the registrant that must be furnished in substantially tabular form to 
+reflect the equity ownership of all directors and nominees and each named executive officer.  Item 
+403(b) directs issuers to disclose, by footnote or otherwise, the number of shares beneficially owned 
+that are pledged as security.  A negative pledge is subject to this disclosure. 
+ 
+ProPetro’s Undisclosed Perquisites Related to  
+Redman’s Use of Private Aircraft 
+ 
+10.  From at least 2014 through 2019, Redman owned a 50% interest in a private aviation 
+company (“Aviation Co.”), which owned a 2008 Learjet 45XR.  Redman principally used the Learjet 
+for business-related travel, and Aviation Co. invoiced ProPetro for its expenses associated with 
+Redman’s use of the aircraft.  Additionally, because Redman frequently used his personal plane for 
+business travel, ProPetro employed two pilots to fly the Learjet in 2017 and 2018. 
+ 
+11. ProPetro did not have a formal policy regarding approval and use of non-
+commercial aircraft or a process for reimbursement of private aviation expenses.  Even without a 
+formal policy or process, Aviation Co. had a practice of sending monthly invoices to ProPetro for 
+Redman’s flights.  Redman initialed the invoices to signify his approval and then passed them on 
+to the accounts payable supervisor who processed them in the same manner as all other vendor 
+invoices.     
+ 
+ 4 
+12. From January 2 017 through December 2018, approximately 10% of Redman’s 
+Aviation Co.-invoiced travel was for personal trips  ($42,519 in 2017 and $117,279 in 2018 ).  
+Additionally, the pilots on ProPetro’s payroll flew Aviation Co.’s plane for both Redman’s personal 
+and business flights.  Redman’s personal trips cost the company $52,665 in 2017 and $40,433 in 
+2018 for pilot -related expenses.  In total, ProPetro paid approximately $252,896 in Aviation Co. 
+invoices and pilot flight time for Redman’s travel that was not integrally and directly related to the 
+performance of his duties as CEO. 
+ 
+ProPetro’s Undisclosed Perquisites Related to  
+Redman’s Use of the Corporate Credit Card 
+ 
+13. ProPetro authorized Redman to use company credit cards for work-related expenses.  
+From January 2017 to December 2018, ProPetro’s Employee Handbook included written policies 
+regarding the use of company credit cards.  According to ProPetro’s Employee Handbook Policy 
+No. 518, “Credit Card Policy,” credit card holders were “required to turn in a Credit Card Expense 
+Form” and “detailed receipts.”  The policy included a list of examples of authorized and unauthorized 
+purchases, and added that “the card is not to be used for any product, service or with any merchant 
+considered to be inappropriate for company funds.”   
+ 
+14. Despite this policy, Redman and his family members used his company credit cards 
+for personal purchases that were not integrally and directly related to the performance of his duties 
+as CEO of ProPetro. 
+ 
+15. In total, from January 2017 through December 2018 , Redman and his family 
+members used his ProPetro corporate cards for approximately $ 127,698 in undocumented and/or 
+personal expenses ($27,247 in 2017 and $100,451 in 2018).  The company paid for all these charges 
+by paying the bills for Redman’s corporate cards.  ProPetro failed to timely disclose the 2017 and 
+2018 charges as additional executive compensation in the form of perquisites.   
+ 
+ProPetro’s Additional Undisclosed Perquisites Related to Redman 
+ 
+16. Between January 2017 and December 2018, ProPetro spent $47,591 on additional 
+perquisites for Redman, which the company failed to disclose as additional executive compensation.  
+These expenses were appropriately incurred as perquisites and were paid for directly by the 
+company.  However, failures in the company’s internal accounting controls caused them to not be 
+recorded and disclosed properly. 
+ 
+17. These expenses consisted of charitable donations and event tickets ($20,139 in 2017 
+and $27,452 in 2018). 
+ 
+ 
+ 
+ 
+ 
+ 
+ 5 
+18. In total, ProPetro failed to disclose the following perquisites for Redman: 
+ 
+ 2017 2018 
+Aviation Expenses $95,184 
+ 
+$157,712 
+Personal Credit Card 
+Charges 
+$27,247 $100,451 
+Authorized, Undisclosed 
+Perquisites 
+$20,139 $27,452 
+Total $142,570 
+ 
+$285,615 
+ 
+Redman’s Undisclosed Stock Pledges 
+ 
+19. In January 2017, Redman borrowed money from a bank to purchase real estate.  As 
+a condition of the loan, Redman pledged all of his ProPetro stock as collateral to secure the debt.  
+However, the Shareholders Agreement in place at the time, which Redman signed, stated that 
+stockholders may not “pledge or otherwise dispo se of or encumber [their shares] without prior 
+written consent of the Company.”  Redman did not obtain prior written consent or inform company 
+counsel or the Board of Directors.  The company never disclosed the pledge to investors as required 
+by Item 403(b) of Regulation S-K under the Exchange Act.     
+ 
+20. In March 2017, in preparation to go public, ProPetro adopted an Insider Trading 
+Compliance Policy, which provided in relevant part that “[p]ledging the Company’s securities as 
+collateral to secure loans is also prohibited.” 
+ 
+21. In January 2018, Redman purchased additional real estate, borrowing funds from a 
+second bank.  Redman again agreed to pledge his ProPetro shares as collateral.  The second bank 
+took steps to perfect its security interest and reached out to ProPetro’s General Counsel, who 
+informed the Board about the pledge.  While the Board considered its options to deal with the pledge, 
+Redman and the second bank agreed to execute a “negative pledge” whereby Redman agreed not to 
+sell his shares in ProPetro for as long as he owes the bank for the loan.  The Board agreed to allow 
+the negative pledge, and Redman executed his Amended Loan Agreements and a Negative Pledge 
+Agreement on September 14, 2018.  During this time, Redman did not inform the Board of th e 
+original stock pledge in place with the first bank and the company did not disclose either the 2017 
+pledge or the 2018 negative pledge in its SEC filings until 2020. 
+D&O Questionnaires 
+22. ProPetro did not have a formal written policy for the completion of its annual 
+Directors & Officers Questionnaire (“D&O Questionnaire”).  Rather, the company’s General 
+Counsel was responsible for ensuring that directors and officers completed their annual D&O 
+Questionnaire and then used the information provided to complete the company’s disclosures on, 
+among other things, perquisites and beneficial ownership disclosures. 
+ 6 
+23. Redman was responsible for completing three D&O Questionnaires in connection 
+with the company’s preparation of the following SEC filings, all of which conta ined material 
+misstatements or omissions: 
+Filing Date SEC Filing 
+Feb. 8, 2017 Form S-1 
+Mar. 27, 2018 Form 10-K 
+Apr. 26, 2018 Definitive Proxy Statement 
+Mar. 1, 2019 Form 10-K 
+Apr. 23, 2019 Definitive Proxy Statement 
+ 
+24. On January 27, 2017, approximately one week after the close on the loan for his first 
+ranch with its associated stock pledge, Redman completed his “D&O Questionnaire” for the 
+disclosures in the company’s Form S-1 Registration Statement.  Redman completed and signed the 
+2017 D&O Questionnaire, but left the line item for pledged shares blank.  In 2018, Redman did not 
+complete a D&O Questionnaire at all.  On January 21,  2019, Redman completed the D&O 
+Questionnaire but did not submit Schedule B, “Security Owners hip and Recent Transactions in 
+Company Securities,” which should have described his ProPetro equity ownership  including his 
+stock pledges.   
+25. Redman also did not identify in his D&O Questionnaires any of his personal trips on 
+the Aviation Co. Learjet, the personal charges he made on the corporate credit card, or the additional 
+perquisites authorized by the company.  In his 2017 D&O Questionnaire, Redman included some 
+perquisites for his company car, but failed to include any of the additional perquisites de tailed 
+above.  In 2018, Redman failed to complete a D&O Questionnaire.  On January 21, 2019, although 
+Redman included some perquisites in his D&O Questionnaire, he did not disclose the personal air 
+travel, any of the personal credit card charges reimbursed by the company that year or the various 
+previously authorized perquisites detailed above.   
+ProPetro’s Proxy Statements Contained Material Misstatements  
+Regarding Redman’s Perquisites and Stock Ownership 
+26. ProPetro did not properly disclose perquisites related to Redman’s use of his private 
+aircraft, company credit cards and other previously authorized benefits in the Summary 
+Compensation Table of its  Definitive Proxy Statements filed in 2018 and 2019 (the “Proxy 
+Statements”).  As a  result, Redman’s perquisites were understated in the Proxy Statements by 
+$142,570 (identifying $10,800 instead of  $153,370) for the 2017 fiscal year and $285,615  
+(identifying $19,248 instead of $304,863) for the 2018 fiscal year.2  In the same filings, ProPetro 
+also did not accurately disclose Redman’s stock ownership in its Principal Stockholders table in its 
+Form S-1 filed on February 8, 2017 or the Proxy Statements due to the undisclosed stock pledges.  
+                                                 
+2 Redman repaid the 2019 expenses during the year he incurred them.  As such, the company properly did not 
+disclose these charges as perquisites in the Summary Compensation Table. 
+ 7 
+27. ProPetro and Redman used the Proxy Statements to solicit annual shareholder votes 
+to elect directors, including Redman.  The 2019 Proxy Statement also solicited non-binding advisory 
+votes from shareholders on executive compensation, including Redman’s compensation.   
+28. ProPetro’s Annual Reports filed on Form 10-K incorporated the Proxy Statements 
+by reference , which included  executive compensation and management’s stock ownership.  
+Consequently, those annual reports also materially understated Redman’s compensation and 
+perquisites, and failed to accurately disclose his ownership of ProPetro stock. 
+29. Between February 2017 and August 2019, ProPetro offered and sold securities, 
+including in March 2017 as part of its initial public offering, and through grants of restricted stock 
+units and exercises by employees of stock options. 
+ProPetro’s Internal Investigation, Self Reporting and Remediation 
+30. In May 2019,  the Audit Committee of the Board of Directors hired independent 
+outside counsel and accounting advisors to conduct an internal investigation focused on a different 
+matter than the issues detailed above.  Although the review did not reveal anything of substance with 
+respect to that matter , counsel uncovered other issues, including the improper e xpense 
+reimbursements and undisclosed stock pledges for Redman described herein 
+31. On August 8, 2019, ProPetro filed a Form 8 -K announcing certain preliminary 
+findings of the investigation.  The company disclosed that due to inadequate documentation 
+associated with the company’s expense reimbursement practices, approximately $370,000 of 
+expenses had been incorrectly reimbursed to members of senior management for non -business 
+purchases, including approximately $345,636 to Redman.  Redman reimbursed the company for the 
+$345,636 preliminary total in August 2019.   
+32. Around this same time, the company filed multiple Form s 8-K announcing the 
+resignation of several senior executives and Board members and the appointment of a new Executive 
+Chairman and principal executive officer, interim CFO, General Counsel, Chief Accounting Officer, 
+and new Board members.  Finally, on March 13, 2020, the company self-reported its discovery that 
+Redman had entered into the two stock pledge agreements described above.  The same Form 8-K 
+announced Redman’s resignation as CEO and a member of the Board. 
+33. On June 22, 2020, ProPetro filed its Form 10-K for the fiscal year ended December 
+31, 2019 with an introductory note summarizing all the findings of the expanded Audit Committee 
+Internal Review, including details on the improper expense reimbursements to Redman and 
+Redman’s undisclosed stock pledges.  The company updated the compensation , disclosed as  
+provided to Redman for the fiscal years ended December 31, 2019, 2018, and 2017 in its 2019 Form 
+10-K, with an explanatory footnote to describe the increases in each category. 
+Violations 
+34. Section 17(a)(3) of the Securities Act makes it unlawful, in the offer or sale of 
+securities, to engage in any transaction, practice, or course of business which operates or would 
+operate as a fraud or deceit upon the purchaser.  Negligence is sufficient to establish violations of 
+ 8 
+Section 17(a)(3); no finding of scienter is required.  Aaron v. SEC, 446 U.S. 680, 696-97 (1980).  As 
+a result of the conduct described above, Redman violated Section 17(a)(3) of the Securities Act.  
+35. In addition, as a result of the conduct described above, including the solicitations for 
+Redman’s election as a director and advisory approval of his compensation by means of proxy 
+statements that materially misrepresented and misstated his compensation by failing to report certain 
+perquisites, ProPetro and Redman violated Section 14(a) of the Exchange Act and Rules 14a-3 and 
+14a-9 thereunder.  No showing of scienter is required to establish a violation of Section 14(a) of the 
+Exchange Act and Rules 14a-3 and 14a-9 thereunder.  See, e.g., Gerstle v. Gamble-Skogmo, Inc., 478 
+F.2d 1281, 1299-1300 (2d Cir. 1973).  A showing of negligence is sufficient.  See Dekalb County 
+Pension Fund v. Transocean Ltd, 817 F.3d 393, 408 (2d Cir. 2016). 
+36. In addition, as a result of the conduct described above, ProPetro violated, and Redman 
+caused ProPetro’s violations of, Section 13(a) of the Exchange Act and Rule 13a-1 thereunder, which 
+require reporting companies to file with the Commission complete and accurate annual reports.  
+ProPetro also violated, and Redman caused ProPetro’s violations of, Exchange Act Rule 12b -20, 
+which requires an issuer to include in a statement or report filed with the Commission any information 
+necessary to make the required statements in the filing not materially misleading. 
+37. In a ddition, as a result of the conduct described above, ProPetro violated, and 
+Redman caused ProPetro’s violations of, Section 13(b)(2)(A) of the Exchange Act, which requires 
+issuers such as ProPetro to make and keep books, records, and accounts which, in reasonable detail, 
+accurately and fairly reflect their transactions and dispositions of their assets, including perquisites 
+and executive compensation.   
+38. In addition, as a result of the conduct described above, ProPetro violated, and Redman 
+caused ProPetro’s violations of, Section 13(b)(2)(B) of the Exchange Act which requires reporting 
+companies to devise and maintain a system of internal accounting controls sufficient to, among other 
+things, provide reasonable assurances that transactions are executed in acc ordance with 
+management’s general or specific authorization and are recorded as necessary to maintain 
+accountability for assets, and that access to assets is permitted only in accordance with management’s 
+general or specific authorization.   
+39. In addition, as a result of the conduct described above, Redman violated Exchange 
+Act Rule 13b2-1 which prohibits any person from, directly or indirectly, falsifying or causing to be 
+falsified, any book, record, or account subject to Section 13(b)(2)(A) of the Exchange Act. 
+ 
+ProPetro’s Remedial Efforts 
+ 
+In determining to accept ProPetro’s  Offer, the Commission considered  the remedial acts 
+promptly undertaken by ProPetro and cooperation afforded the Commission staff.   Specifically, 
+ProPetro (i) hired a new management team and additional finance department personnel, all with 
+significant public company experience; (ii) installed several new directors, including new Audit 
+Committee members, and created a new Disclosure Committee with its own disclosure cou nsel; 
+(iii) developed several new internal controls regarding internal auditing matters, credit card and 
+ 9 
+expense reimbursement, and travel ; (iv) created and implemented new training requirements for 
+employees; (v) enhanced the D&O Questionnaire process; an d (vi) retained an investigative firm 
+to do background checks on all senior executives and executive disclosures. 
+IV. 
+ In view of the foregoing, the C ommission deems it appropriate to impose the sanctions 
+agreed to in Respondents’ Offers. 
+ Accordingly, pursuant to Section 8A of the Securities Act and Section 21C of the Exchange 
+Act, it is hereby ORDERED that: 
+ 
+ A. Respondent ProPetro cease and desist from committing or causing any violations and 
+any future violations of Sections 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) of the Exchange Act and 
+Rules 12b-20, 13a-1, 14a-3, and 14a-9 thereunder. 
+ 
+ B. Respondent Redman cease and desist from committing or causing any violations and 
+any future violations of Section 17(a)(3) of the Securities Act and Sect ions 13(a), 13(b)(2)(A), 
+13(b)(2)(B), and 14(a) of the Exchange Act and Rules 12b-20, 13a-1, 13b2-1, 14a-3, and 14a-9 
+thereunder. 
+ 
+C. Respondent Redman shall, within 30 days of the entry of this Order, pay a civil 
+money penalty in the amount of $195,046 to the Securities and Exchange Commission for transfer 
+to the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3).  If 
+timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717.   
+ 
+Payment must be made in one of the following ways:   
+ 
+(1) Respondents may transmit payment electronically to the Commission, which 
+will provide detailed ACH transfer/Fedwire instructions upon request;  
+ 
+(2) Respondents may make direct payment from a bank account via Pay.gov 
+through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
+ 
+(3) Respondents may pay by certified check, bank cashier’s check, or United 
+States postal money order, made payable to the Se curities and Exchange 
+Commission and hand-delivered or mailed to:  
+ 
+Enterprise Services Center 
+Accounts Receivable Branch 
+HQ Bldg., Room 181, AMZ-341 
+6500 South MacArthur Boulevard 
+Oklahoma City, OK 73169 
+ 
+Payments by check or money order must be accompanied by a cover letter identifying Dale 
+Redman as a Respondent in these proceedings, and the file number of these proceedings; a copy of 
+ 10 
+the cover letter and check or money order must be sent to Eric Werner, Division of Enforcement, 
+Securities and Exchange Commission, 801 Cherry Street, Suite 1900, Fort Worth, Texas 76102.   
+ 
+ D. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
+treated as penalties paid to the government for all purposes, including all tax purposes.  To 
+preserve the deterrent effect of the civil penalty, Respondent Redman agrees that in any Related 
+Investor Action, he shall not argue that he is entitled to, nor shall he benefit by, offset or reduction 
+of any award of compensatory damages by the amount of any part of his payment of a civil penalty 
+in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a Penalty 
+Offset, Respondent Redman agrees that he shall, within 30 days after entry of a final order granting 
+the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the 
+Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 
+an additional civil penalty and shall not be deemed to change the amount of the civil penalty 
+imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 
+private damages action brought against Respondent Redman by or on behalf of one or more 
+investors based on substantially the same facts as alleged in the Order instituted by the 
+Commission in this proceeding  
+ 
+ E. Respondent ProPetro acknowledges that the Commission is not imposing a civil 
+penalty based upon its cooperation in a Commission investigation.  If at any time following the entry 
+of the Order, the Division of Enforcement (“Division”) obtains information indicating that 
+Respondent ProPetro knowingly provided materially false or misleading information or materials to 
+the Commission, or in a related proceeding, the Division may, at its sole discretion and with prior 
+notice to Respondent ProPetro, petition the Commission to reopen this matter and seek an order 
+directing that Respondent ProPetro pay a civil money penalty.  Respondent ProPetro may contest by 
+way of defense in any resulting administrative proceeding whether it knowingly provided materially 
+false or misleading information, but may not:  (1) contest the findings in the Order; or (2) assert any 
+defense to liability or remedy, including, but not limited to, any statute of limitations defense. 
+V. 
+It is further Ordered that, solely for purposes of exceptions to discharge set forth in Section 
+523 of the Bankruptcy Code, 11 U.S.C. §523, the findings in this Order are true and admitted by 
+Respondent Redman, and further, any debt for disgorgement, prejudgment interest, civil penalty or 
+other amounts due by Respondent Redman under this Order or any other judgment, order, consent 
+order, decree or settlement agreement entered in connection with this proceeding, is a debt for the 
+violation by Respondent Redman of the federal securities laws or any regulation or order issued 
+under such laws, as set forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. §523(a)(19). 
+ By the Commission. 
+ 
+ 
+ 
+ 
+Vanessa A. Countryman 
+        Secretary 

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+UNITED STATES OF AMERICA 
+Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 93647 / November 22, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4269 / November 22, 2021 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-20658 
+ 
+: 
+In the Matter of : 
+: ORDER OF SUSPENSION PURSUANT 
+SHANNON D. DOYLE, CPA : TO RULE 102(e)(2) OF THE 
+: COMMISSION’S RULES OF PRACTICE 
+Respondent. : 
+: 
+ 
+ 
+ 
+I. 
+ 
+The Securities and Exchange Commission deems it appropriate to issue an order of 
+forthwith suspension of Shannon D. Doyle pursuant to Rule 102(e)(2) of the Commission’s 
+Rules of Practice [17 C.F.R. 201.102(e)(2)].1 
+ 
+II. 
+ 
+The Commission finds that: 
+ 
+1. Doyle, age 53, was a certified public accountant (“CPA”) licensed in the states of 
+Washington and Maryland. His license in Washington lapsed in 2013 and his license in 
+Maryland lapsed in 2019. From 2013 until he resigned in December 2017, Doyle was the Chief 
+Financial Officer of Digi Outdoor Media, Inc. (“Digi”), a Nevada corporation headquartered in 
+Snoqualmie, Washington with its principal place of business in Washington, D.C. 
+ 
+2. On November 13, 2018, Doyle pleaded guilty to one count of conspiracy to 
+commit wire fraud in violation of 18 U.S.C. §1349 in connection with his work for Digi in the 
+United States District Court for the Northern District of California. United States v. Shannon 
+ 
+1 Rule 102(e)(2) provides in pertinent part: “Any ... person who has been convicted of a felony or a 
+misdemeanor involving moral turpitude shall be forthwith suspended from appearing or practicing before the  
+Commission.” 
+Doyle, No. CR-17-00592-002-WHA (N.D. Cal.). 
+ 
+3. As a result of his guilty plea, a judgment of conviction was entered against Doyle 
+on May 18, 2021 and Doyle was sentenced to 8 months imprisonment in a federal penitentiary 
+and ordered to pay a criminal fine in the amount of $15,000. 
+ 
+III. 
+ 
+In view of the foregoing, the Commission finds that Doyle has been convicted of a felony 
+within the meaning of Rule 102(e)(2) of the Commission’s Rules of Practice. 
+ 
+Accordingly, it is ORDERED, that Shannon D. Doyle is forthwith suspended from 
+appearing or practicing before the Commission pursuant to Rule 102(e)(2) of the Commission’s 
+Rules of Practice. 
+ 
+ 
+By the Commission. 
+ 
+ 
+Vanessa A. Countryman 
+Secretary 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+2 

raw/aaer/2021/AAER-4270.txt

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+   
+UNITED STATES OF AMERICA  
+Before the  
+SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934  
+Release No. 93682 / November 30, 2021 
+ACCOUNTING AND AUDITING ENFORCEMENT  
+Release No. 4270 / November 30, 2021 
+ADMINISTRATIVE PROCEEDING  
+File No. 3-17107 
+ 
+In the Matter of  
+ANTHONY P. 
+HARTKE, CPA  
+ 
+: 
+: 
+: 
+: 
+: 
+: 
+ORDER GRANTING APPLICATION FOR 
+REINSTATEMENT TO APPEAR AND PRACTICE 
+BEFORE THE COMMISSION AS AN 
+ACCOUNTANT RESPONSIBLE FOR THE 
+PREPARATION OR REVIEW OF FINANCIAL 
+STATEMENTS REQUIRED TO BE FILED WITH 
+THE COMMISSION 
+ 
+On February 9, 2016, the Commission issued an Order Instituting Administrative and 
+Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 (“Securities 
+Act”), Sections 4C and 21C of the Securities Exchange Act of 1934 (“Exchange Act”), and Rule 
+102(e) of the Commission’s Rules of Practice, Making Findings and Imposing Remedial 
+Sanctions and a Cease-and-Desist Order (the “Suspension Order”) against Respondent Anthony 
+P. Hartke (“Hartke”) and others.1 The Suspension Order suspended Hartke from appearing or 
+practicing before the Commission as an accountant but permitted Hartke, after one year from the 
+date of the Suspension Order and if certain conditions were met, to request that the Commission 
+consider his reinstatement to resume appearing or practicing before the Commission as (1) a 
+preparer or reviewer, or a person responsible for the preparation or review, of financial 
+statements that are required to be filed with the Commission; or (2) an independent accountant. 
+This order is issued in response to Hartke’s application for reinstatement to appear and 
+practice before the Commission as an accountant responsible for the preparation or review of 
+financial statements required to be filed with the Commission. 
+The Commission found that Hartke willfully violated the federal securities laws with 
+respect to his conduct as a U.S. Business Analyst at Monsanto Company (“Monsanto”) during 
+fiscal years 2009 and 2010. During the relevant period, Hartke knew or should have known that 
+Monsanto was accounting for costs related to certain rebate programs in the incorrect period. As 
+                                                
+1 See Accounting and Auditing Enforcement Release No. 3741, dated February 9, 2016. 
+ 
+ 2 
+a result of this conduct, the Commission found that Hartke caused Monsanto to violate Sections 
+17(a)(2) and (3) of the Securities Act, Sections 13(a) and 13(b)(2)(A) of the Exchange Act, and 
+Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder.  In addition, the Commission found that 
+Hartke willfully violated Rule 13b2-1 under the Exchange Act. 
+ 
+Hartke has met all of the conditions set forth in the Suspension Order to be reinstated to 
+appear and practice before the Commission as a person responsible for the preparation or review 
+of financial statements of a public company required to be filed with the Commission and in this 
+capacity has attested that he will undertake to have his work reviewed by the independent audit 
+committee of any company for which he works, or in some other manner acceptable to the 
+Commission, while practicing before the Commission in this capacity. Hartke is not, at this time, 
+seeking to appear or practice before the Commission as an independent accountant. If, in the 
+future, Hartke should wish to resume appearing and practicing as an independent accountant, he 
+will be required to submit an application to the Commission showing, among other things, that 
+he has complied and will comply with the terms of the Suspension Order.  
+ 
+Rule 102(e)(5) of the Commission’s Rules of Practice governs applications for 
+reinstatement, and provides that the Commission may reinstate the privilege to appear and 
+practice before the Commission “for good cause shown.”2 This “good cause” determination is 
+necessarily highly fact specific. 
+ 
+On the basis of information supplied, representations made, and undertakings agreed to 
+by Hartke, it appears that he has complied with the terms of the Suspension Order. No 
+information has come to the attention of the Commission relating to his character, integrity, 
+professional conduct or qualifications to practice before the Commission that would be a basis 
+for adverse action against him pursuant to Rule 102(e) of the Commission's Rules of Practice. In 
+addition, Hartke has undertaken to have his work reviewed by the independent audit committee 
+of any company for which he works, or in some other manner acceptable to the Commission. As 
+a result, Hartke has shown good cause for reinstatement. Therefore, it is accordingly, 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+                                                
+2 Rule 102(e)(5)(i) provides: 
+ 
+“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, and the applicant may, in the Commission’s discretion, be afforded a hearing; 
+however, the suspension or disqualification shall continue unless and until the applicant has been reinstated by the 
+Commission for good cause shown.”  17 C.F.R. § 201.102(e)(5)(i). 
+ 
+ 
+ 3 
+ORDERED pursuant to Rule 102(e)(5)(i) of the Commission’s Rules of Practice that 
+Anthony P. Hartke, CPA is hereby reinstated to appear and practice before the Commission as an 
+accountant responsible for the preparation or review of financial statements required to be filed 
+with the Commission. 
+ 
+By the Commission. 
+ 
+ 
+Vanessa A. Countryman  
+Secretary  

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+ 
+ UNITED STATES OF AMERICA 
+ Before the 
+ SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 93751 / December 10, 2021 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 4273 / December 10, 2021  
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3 - 20673 
+ 
+ 
+ 
+In the Matter of 
+ 
+PHILIP S. HURAK, ESQ., 
+ 
+Respondent. 
+ 
+ 
+ 
+ 
+ORDER INSTITUTING PUBLIC 
+ADMINISTRATIVE AND CEASE- 
+ AND-DESIST PROCEEDINGS PURSUANT TO 
+SECTIONS 4C AND 21C OF THE SECURITIES 
+EXCHANGE ACT OF 1934 AND RULE 102(e) 
+OF THE COMMISSION’S RULES OF 
+PRACTICE, MAKING FINDINGS, AND 
+IMPOSING REMEDIAL SANCTIONS AND A 
+CEASE-AND-DESIST ORDER 
+   
+ 
+I. 
+ 
+ The Securities and Exchange Commission (“Commission”) deems it appropriate that public 
+administrative and cease-and-desist proceedings be, and hereby are, instituted against Philip S. 
+Hurak (“Respondent”) pursuant to Sections 4C1 and 21C of the Securities Exchange Act of 1934 
+(“Exchange Act”) and Rule 102(e)(1)(iii) of the Commission’s Rules of Practice.2 
+                                                 
+1  Section 4C provides, in relevant part, that:  
+ 
+ The Commission may censure any person, or deny, temporarily or permanently, 
+to any person the privilege of appearing or practicing before the Commission in 
+any way, if that person is found . . . (1) not to possess the requisite qualifications 
+to represent others; (2) to be lacking in character or integrity, or to have engaged 
+in unethical or improper professional conduct; or (3) to have willfully violated, or 
+willfully aided and abetted the violation of, any provision of the securities laws or 
+the rules and regulations issued thereunder. 
+ 
+2  Rule 102(e)(1)(iii) provides, in pertinent part, that: 
+ 
+ 
+2 
+ 
+II. 
+ 
+ In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
+of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
+purpose of these proceedings and any other proceedings brought by or on behalf of the 
+Commission, or to which the Commission is a party, and without admitting or denying the findings 
+herein, except as to the Commission’s jurisdiction over him and the subject matter of these 
+proceedings, which are admitted, and except as provided herein in Section V, Respondent consents 
+to the entry of this Order Instituting Public Administrative and Cease-and-Desist Proceedings 
+Pursuant to Sections 4C and 21C of the Securities Exchange Act of 1934 and Rule 102(e) of the 
+Commission’s Rules of Practice, Making Findings, and Imposing Remedial Sanctions and a Cease-
+and-Desist Order (“Order”), as set forth below.   
+ 
+III. 
+ 
+ On the basis of this Order and Respondent’s Offer, the Commission finds3 that:  
+ 
+SUMMARY 
+ 
+1. This matter involves aiding and abetting and causing violations of the auditor 
+independence rules arising from Ernst & Young LLP (“EY”), a public accounting firm, performing 
+non-audit services for its audit client Cintas Corporation (“Cintas”) on a contingent fee basis.4  EY 
+billed and received payment from Cintas on invoices calculated on a contingent fee basis for tax 
+credit and incentive services (“C&I services”) performed between July 2009 and August 2018.  An 
+audit firm is not independent of its audit client if it provides any non-audit services to the audit 
+client for a contingent fee.  As a result, EY was not independent of Cintas during that time period, 
+and Cintas filed annual and quarterly reports with the Commission that were not audited or 
+reviewed by an independent public accountant, as required by Section 13(a) of the Exchange Act 
+                                                 
+ 
+ The Commission may . . . deny, temporarily or permanently, the privilege of 
+appearing or practicing before it . . . to any person who is found…to have 
+willfully violated, or willfully aided and abetted the violation of any provision of 
+the Federal securities laws or the rules and regulations thereunder. 
+ 
+3   The findings herein are made pursuant to Respondent's Offer of Settlement and are not 
+binding on any other person or entity in this or any other proceeding.  
+  
+4  Contingent fee means … any fee established for the sale of a product or the performance of 
+any service pursuant to an arrangement in which no fee will be charged unless a specified 
+finding or result is attained, or in which the amount of the fee is otherwise dependent upon 
+the finding or result of such product or service.  See 17 CFR § 210.2-01(f)(10). 
+ 
+ 
+3 
+and Rules 13a-1 and 13a-13 thereunder.   
+2. Respondent, an attorney, was a senior manager and later a principal with EY.  
+Respondent served as an engagement manager for C&I services that EY provided to Cintas from 
+2013 through 2018.  During that time, Respondent reviewed and approved EY’s bills sent to Cintas 
+containing fees calculated on a contingent fee basis, which Cintas paid.  As a result of his conduct, 
+Respondent willfully aided and abetted and caused EY’s violation of Rule 2-02(b)(1) of Regulation 
+S-X, which, during the relevant period, required an auditor to state whether the audit was made in 
+accordance with generally accepted auditing standards (“GAAS”).  Respondent also willfully aided 
+and abetted and caused Cintas to violate Exchange Act Section 13(a) and Rules 13a-1 and 13a-13, 
+which require the company to file annual and quarterly reports audited and reviewed by an 
+independent public accountant. 
+RESPONDENT 
+ 
+3. Philip S. Hurak, age 41, was a senior manager and, beginning July 1, 2018, a 
+principal of EY before resigning from the firm in February 2019.  He is an attorney licensed in the 
+state of Ohio.  Respondent was an engagement manager for certain C&I services that EY provided 
+to Cintas from April 2013 to August 2018. 
+OTHER RELEVANT ENTITIES 
+4. Cintas Corporation is a Washington corporation headquartered in Cincinnati, Ohio.  
+Its common stock is registered with the Commission pursuant to Section 12(b) of the Exchange 
+Act and is traded on the Nasdaq Global Select Market.  Cintas’s fiscal year end is the last day in 
+May.  At the time of the conduct described herein, Cintas had reporting obligations under Section 
+13(a) of the Exchange Act. 
+5. Ernst & Young LLP, a partnership organized under the laws of Delaware, is a 
+public accounting firm with principal offices in New York, New York.  EY has been registered 
+with the Public Company Accounting Oversight Board (“PCAOB”) since 2003.  EY has served as 
+the auditor for Cintas since 1968. 
+FACTS 
+ 
+6. Under the Commission’s auditor independence rules, external accountants are 
+required to be independent—in fact and in appearance—of their audit clients.  The Commission’s 
+auditor independence rules set forth a general standard of independence in Rule 2-01(b) of 
+Regulation S-X which, among other things, states that, in determining whether an accountant is 
+independent, the Commission will consider “all relevant circumstances, including all relationships 
+between the accountant and the audit client . . .”  Rule 2-01(c)(5) of Regulation S-X provides that 
+“[a]n accountant is not independent if, at any point during the audit and professional engagement 
+period, the accountant provides any service or product to an audit client for a contingent fee … or 
+receives a contingent fee … from an audit client.”  EY’s policies and procedures also prohibited 
+ 
+ 
+4 
+billing audit clients on a contingent fee basis. 
+7. Between July 2009 and August 2018, EY audited Cintas’s annual financial 
+statements that the issuer included in filings made with the Commission on Forms 10-K.  EY 
+issued an audit report for Cintas’s annual financial statements (included in Forms 10-K), stating 
+that it had conducted its audit of Cintas in accordance with the standards of the PCAOB, which 
+include the requirement that auditors be independent of their audit clients.  During this period, EY 
+also reviewed Cintas’s quarterly financial statements that the issuer included in Commission filings 
+on Forms 10-Q. 
+8. As Cintas’s auditor, EY had to obtain pre-approval from Cintas’s audit committee 
+under Section 10A(h) of the Exchange Act in order to provide non-audit tax services to Cintas.  
+EY’s policies and procedures required that requests for pre-approval of non-audit services to the 
+audit committee comply with PCAOB Rule 3524, which requires written disclosure of a fee 
+structure that complies with the auditor independence rules. 
+9. EY provided C&I services to Cintas between July 2009 and August 2018.  In 
+obtaining pre-approval from the audit committee to provide those services, EY represented that it 
+would bill for C&I services on a time and materials basis.  EY’s engagement letters with Cintas 
+similarly represented that EY would bill for C&I services on a time and materials basis.  From 
+April 2013 through August 2018, Respondent was an engagement manager for certain C&I 
+services that EY provided to Cintas.  Respondent knew that EY was supposed to bill Cintas on a 
+time and materials basis.   
+10. As an engagement manager, Respondent reviewed and approved certain EY 
+invoices sent to Cintas for C&I services.  Respondent knew that the auditor independence rules and 
+EY’s policies and procedures prohibited EY from providing audit and review services while also 
+providing any services to Cintas on a contingent fee basis. 
+11. Respondent nevertheless approved EY’s invoices sent to Cintas that charged fees of 
+approximately—sometimes exactly—10% of the benefit Cintas received for federal tax credits and 
+15% of the benefit Cintas received for state and local tax credits resulting from EY’s C&I 
+engagements.   
+12. For example, in November 2016, Respondent approved billing Cintas for obtaining 
+a large federal hiring-related tax credit.  The invoice listed both the amount of the credit and the 
+amount of the fee.  The amount of the bill was almost exactly 10% of the credit amount that Cintas 
+received.  Cintas paid the invoice in January 2017. 
+13. Similarly, in September 2017, Respondent emailed Cintas an invoice for C&I 
+services relating to three federal tax credits.  The email also summarized the amount of each 
+federal credit and the charges for each credit.  Those charges were approximately 10% of the tax 
+benefit Cintas received for each credit.  Cintas paid the invoice in October 2017. 
+14. As a result of the contingent fees, EY was not independent of Cintas between July 
+ 
+ 
+5 
+2009 and August 2018.  Consequently, the Forms 10-K and 10-Q that Cintas filed with the 
+Commission during this period contained financial statements that were not audited or reviewed by 
+an independent public accountant.   
+VIOLATIONS 
+15. During the relevant period, Rule 2-02(b)(1) of Regulation S-X required each 
+auditor’s report on a public issuer’s financial statements to state “whether the audit was made in 
+accordance with generally accepted auditing standards.”  GAAS includes the auditing standards set 
+forth in PCAOB standards and applicable Commission rules, both of which require an auditor to be 
+independent of its client.5  Circumstances in which an auditor will—and will not—be deemed 
+independent are set forth in Rule 2-01 of Regulation S-X.  Rule 2-01(c)(5) of Regulation S-X 
+provides that “[a]n accountant is not independent if, at any point during the audit and professional 
+engagement period, the accountant provides any service or product to an audit client for a 
+contingent fee … or receives a contingent fee … from an audit client.”  EY stated in its audit report 
+attached to Cintas’s Forms 10-K during the relevant period that EY conducted its audit of Cintas in 
+accordance with the standards of the PCAOB, when it had not. 
+16. By his conduct described above, Respondent willfully6 aided and abetted and 
+caused EY to violate Rule 2-02(b)(1) of Regulation S-X.    
+17. Section 13(a) of the Exchange Act and Exchange Act Rule 13a-1 require issuers 
+with equity securities registered under Section 12 to file annual reports with the Commission that 
+include financial statements audited by an independent public accountant.  Exchange Act Rule 
+13a-13 requires issuers with securities to file with the Commission quarterly reports on Form 10- 
+Q.  Rule 10-01(d) of Regulation S-X requires the interim financial statements included in a Form 
+                                                 
+5  The Commission has stated that for audit reports issued on or after May 24, 2004, the 
+reference in Rule 2-02(b)(1) to GAAS means the standards of the PCAOB and applicable 
+Commission rules, both of which require an auditor to be independent of its client.  See 
+Commission Guidance Regarding the Public Company Accounting Oversight Board’s 
+Auditing and Related Professional Practice Standard No. 1, Exchange Act Rel. No. 
+49708, 2004 WL 1439831, at *2 (May 14, 2004); see also PCAOB AS 3101 (superseding 
+PCAOB Auditing Standard No. 1 for audits of fiscal years ending on or after December 15, 
+2017); PCAOB Rule 3520 (“A registered public accounting firm and its associated 
+persons must be independent of the firm’s audit client throughout the audit and 
+professional engagement period.”); PCAOB Auditing Standards, Independence, AU § 
+220.03 (PCAOB auditor independence standards effective prior to December 31, 2016); 
+PCAOB AS 1005.03 (PCAOB auditor independence standards effective on or after 
+December 31, 2016). 
+6  “Willfully” for purposes of imposing relief under Section 102(e) “means no more than 
+the person charged with the duty knows what he is doing.”  Wonsover v. SEC, 205 F.3d 
+408, 414 (D.C. Cir. 2000). 
+ 
+ 
+6 
+10-Q to be reviewed by an independent public accountant.  
+18. By his conduct described above, Respondent willfully aided and abetted and caused 
+Cintas to violate Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 promulgated 
+thereunder. 
+19. Section 4C of the Exchange Act and Rule 102(e)(1)(iii) of the Commission’s Rules 
+of Practice, permit the Commission to censure a person or deny a person the privilege of appearing 
+or practicing before it after finding that a person willfully violated or willfully aided and abetted 
+the violation of any provisions of the federal securities laws or the rules and regulations thereunder.  
+By his conduct described above, Respondent willfully aided and abetted EY’s and Cintas’s 
+violations of the federal securities laws within the meaning of Exchange Act Section 4C(a)(3) and 
+Rule 102(e)(1)(iii) of the Commission’s Rules of Practice. 
+FINDINGS 
+ 
+20. Based on the foregoing, the Commission finds that Respondent willfully aided and 
+abetted and caused EY’s violations of Rule 2-02(b)(1) of Regulation S-X. 
+21. Based on the foregoing, the Commission finds that Respondent willfully aided and 
+abetted and caused Cintas’s violations of Section 13(a) of the Exchange Act and Rules 13a-1 and 
+13a-13 promulgated thereunder.   
+22. Based on the foregoing, the Commission finds that Respondent willfully aided and 
+abetted Cintas’s violations of the federal securities laws within the meaning of Section 4C(a)(3) of 
+the Exchange Act and Rule 102(e)(1)(iii) of the Commission’s Rules of Practice. 
+IV. 
+ 
+ In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
+agreed to in Respondent’s Offer. 
+ 
+ Accordingly, it is hereby ORDERED, effective immediately, that: 
+ 
+ A. Respondent shall cease and desist from committing or causing any violations and 
+any future violations of Rule 2-02(b)(1) of Regulation S-X, Section 13(a) of the Exchange Act and 
+Rules 13a-1 and 13a-13 promulgated thereunder.   
+ 
+ B. Respondent is denied the privilege of appearing or practicing before the 
+Commission as an attorney.  
+ 
+ C. After two years from the date of this Order, Respondent may request that the 
+Commission consider Respondent’s reinstatement by submitting an application to the 
+attention of the Office of the General Counsel. 
+ 
+ 
+7 
+ 
+D. In support of any application for reinstatement to appear and practice before the 
+Commission as an attorney, Respondent shall provide a certificate of good standing from each state 
+bar where Respondent is a member.   
+  
+E.  In support of any application for reinstatement, Respondent shall also submit a 
+signed affidavit truthfully stating, under penalty of perjury:  
+ 
+1. That Respondent has complied with the Commission suspension Order, and 
+with any related orders and undertakings, including any orders in these 
+proceedings or any related Commission proceedings, including any orders 
+requiring payment of disgorgement or penalties; 
+ 
+2. That Respondent is not currently suspended or disbarred as an attorney by a 
+court of the United States (or any agency of the United States) or the bar or 
+court of any state, territory, district, commonwealth, or possession;  
+ 
+3. That Respondent, since the entry of the Order, has not been convicted of a 
+felony or a misdemeanor involving moral turpitude that would constitute a 
+basis for a forthwith suspension from appearing or practicing before the 
+Commission pursuant to Rule 102(e)(2); 
+ 
+4. That Respondent, since the entry of the Order: 
+ 
+a. has not been charged with a felony or a misdemeanor involving 
+moral turpitude as set forth in Rule 102(e)(2) of the Commission’s 
+Rules of Practice, except for any charge concerning the conduct that 
+was the basis for the Order; 
+ 
+b. has not been found by the Commission or a court of the United 
+States to have committed a violation of the federal securities laws, 
+and has not been enjoined from violating the federal securities laws, 
+except for any finding or injunction concerning the conduct that was 
+the basis for the Order;   
+ 
+c. has not been charged by the Commission or the United States with a 
+violation of the federal securities laws, except for any charge 
+concerning the conduct that was the basis for the Order;   
+ 
+d. has not been found by a court of the United States (or any agency of 
+the United States) or any state, territory, district, commonwealth, or 
+possession, or any bar thereof to have committed an offense (civil or 
+ 
+ 
+8 
+criminal) involving moral turpitude, except for any finding 
+concerning the conduct that was the basis for the Order;  
+ 
+e. has not been charged by the United States (or any agency of the 
+United States) or any state, territory, district, commonwealth, or 
+possession, civilly or criminally, with having committed an act of 
+moral turpitude, except for any charge concerning the conduct that 
+was the basis for the Order; and  
+ 
+f. has not been subject to disciplinary action by a bar, court or agency 
+of any state for violations of applicable rules of professional 
+conduct, except for any charge concerning the conduct that was the 
+basis for the Order; 
+ 
+5. That Respondent’s conduct is not at issue in any pending investigation of 
+the Commission’s Division of Enforcement or any criminal law 
+enforcement investigation. 
+  
+6. That Respondent is not the subject of any complaints to, or investigations 
+by, the bar or court of any state, territory, district, commonwealth, or 
+possession, except to the extent that such complaints concern the conduct 
+that was the basis for the Order;  
+ 
+7. That Respondent has complied with any and all orders, undertakings, or 
+other remedial, disciplinary, or punitive sanctions resulting from any action 
+taken by the bar or court of any state, territory, district, commonwealth, or 
+possession, or other regulatory body; and 
+  
+8. That Respondent undertakes to notify the Office of General Counsel 
+immediately in writing if any information submitted in support of the 
+application for reinstatement becomes materially false or misleading or 
+otherwise changes in any material way while the application is pending. 
+ 
+F. Respondent shall also provide a detailed description of: 
+ 
+1. Respondent’s professional history since the imposition of the Order, including  
+ 
+(a) all job titles, responsibilities and role at any employer; 
+ 
+(b) the identification and description of any work performed for entities 
+regulated by the Commission, and the persons to whom Respondent reported for 
+such work;  
+ 
+ 
+ 
+9 
+2. The circumstances under which Respondent’s membership in a state bar or any 
+court for which Respondent was a member has lapsed or otherwise is no longer 
+active and an explanation of why for each; and 
+ 
+3. Respondent’s plans for any future appearance or practice before the 
+Commission. 
+ 
+G. The Commission may conduct its own investigation to determine if the foregoing 
+attestations are accurate. 
+ 
+H. If Respondent provides the documentation and attestations required in this Order 
+and the Commission (1) discovers no contrary information therein, and (2) determines that 
+Respondent truthfully and accurately attested to each of the items required in Respondent’s 
+affidavit, and the Commission discovers no information, including under Paragraph G, indicating 
+that Respondent has violated a federal securities law, rule or regulation or rule of professional 
+conduct applicable to Respondent since entry of the Order (other than by conduct underlying 
+Respondent’s original Rule 102(e) suspension), then, unless the Commission determines that 
+reinstatement would not be in the public interest, the Commission shall reinstate the respondent for 
+cause shown. 
+.   
+  
+I.   If Respondent is not able to provide the documentation and truthful and accurate 
+attestations required in this Order or if the Commission has discovered contrary information, 
+including under Paragraph G, the burden shall be on the Respondent to provide an explanation as 
+to the facts and circumstances pertaining to the matter setting forth why Respondent believes cause 
+for reinstatement nonetheless exists and reinstatement would not be contrary to the public interest.  
+The Commission may then, in its discretion, reinstate the Respondent for cause shown.   
+ 
+J. If the Commission declines to reinstate Respondent pursuant to Paragraphs H and I, 
+it may, at Respondent’s request, hold a hearing to determine whether cause has been shown to 
+permit Respondent to resume appearing and practicing before the Commission as an attorney.  
+ 
+ 
+  
+ 
+K. Respondent Hurak shall, within 14 days of the entry of this Order, pay a civil 
+money penalty in the amount of $20,000.00 to the Securities and Exchange Commission for 
+transfer to the general fund of the United States Treasury, subject to Exchange Act Section 
+21F(g)(3).  If timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. 
+§3717.   
+ 
+Payment must be made in one of the following ways:   
+ 
+ 
+ 
+10 
+(1) Respondent may transmit payment electronically to the Commission, which 
+will provide detailed ACH transfer/Fedwire instructions upon request;  
+ 
+(2) Respondent may make direct payment from a bank account via Pay.gov 
+through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
+ 
+(3) Respondent may pay by certified check, bank cashier’s check, or United 
+States postal money order, made payable to the Securities and Exchange 
+Commission and hand-delivered or mailed to:  
+ 
+Enterprise Services Center 
+Accounts Receivable Branch 
+HQ Bldg., Room 181, AMZ-341 
+6500 South MacArthur Boulevard 
+Oklahoma City, OK 73169 
+ 
+Payments by check or money order must be accompanied by a cover letter identifying Philip S. 
+Hurak as a Respondent in these proceedings, and the file number of these proceedings; a copy of 
+the cover letter and check or money order must be sent to Carolyn Welshhans, Division of 
+Enforcement, Securities and Exchange Commission, 100 F St. NE, Washington, DC 20549.   
+ 
+ L. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
+treated as penalties paid to the government for all purposes, including all tax purposes.  To 
+preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
+Action, he shall not argue that he is entitled to, nor shall he benefit by, offset or reduction of any 
+award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
+penalty in this action ("Penalty Offset").  If the court in any Related Investor Action grants such a 
+Penalty Offset, Respondent agrees that he shall, within 30 days after entry of a final order granting 
+the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the 
+Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 
+an additional civil penalty and shall not be deemed to change the amount of the civil penalty 
+imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 
+private damages action brought against Respondent by or on behalf of one or more investors based 
+on substantially the same facts as alleged in the Order instituted by the Commission in this 
+proceeding. 
+ 
+V. 
+It is further Ordered that, solely for purposes of exceptions to discharge set forth in Section 
+523 of the Bankruptcy Code, 11 U.S.C. § 523, the findings in this Order are true and admitted by 
+Respondent, and further, any debt for disgorgement, prejudgment interest, civil penalty or other 
+amounts due by Respondent under this Order or any other judgment, order, consent order, decree 
+or settlement agreement entered in connection with this proceeding, is a debt for the violation by 
+Respondent of the federal securities laws or any regulation or order issued under such laws, as set 
+ 
+ 
+11 
+forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. § 523(a)(19). 
+ 
+ 
+ By the Commission. 
+ 
+ 
+ 
+Vanessa A. Countryman 
+Secretary 
+ 
+ 
+ 

raw/filings/0000320187/2014/0000320187-15-000113/filing_metadata.csv

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+cik,ticker,company_name,form,filing_date,report_date,acceptance_datetime,accession_number,primary_document,primary_doc_description,size,is_xbrl,is_inline_xbrl,document_url,filing_index_url,year,fiscal_year,is_primary_filing
+0000320187,NKE,"NIKE, Inc.",10-K,2015-07-23,2015-05-31,2015-07-24T01:26:50.000Z,0000320187-15-000113,nke-5312015x10k.htm,10-K,16905418,1,0,https://www.sec.gov/Archives/edgar/data/320187/000032018715000113/nke-5312015x10k.htm,https://www.sec.gov/Archives/edgar/data/320187/000032018715000113/,2014,2014,1

raw/filings/0000320187/2014/0000320187-15-000113/item1.txt

@@ -0,0 +1,108 @@
+ITEM 1. Business 
+General 
+NIKE, Inc. was incorporated in 1967 under the laws of the State of Oregon. As used in this report, the terms “we,” “us,” “NIKE,” and the “Company” refer to NIKE, Inc. and its predecessors, subsidiaries and affiliates, collectively, unless the context indicates otherwise. Our NIKE e-commerce website is located at www.nike.com. On our NIKE corporate website, located at news.nike.com, we post the following filings as soon as reasonably practicable after they are electronically filed with or furnished to the United States Securities and Exchange Commission (the “SEC”): our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended. Our definitive Proxy Statements are also posted on our corporate website. All such filings on our corporate website are available free of charge. Copies of these filings may also be obtained by visiting the Public Reference Room of the SEC at 100 F Street, NE, Washington, D.C. 20549, or by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a website ( www.sec.gov ) that contains current, quarterly and annual reports, proxy and information statements and other information regarding issuers that file electronically. Also available on our corporate website are the charters of the committees of our Board of Directors, as well as our corporate governance guidelines and code of ethics; copies of any of these documents will be provided in print to any shareholder who submits a request in writing to NIKE Investor Relations, One Bowerman Drive, Beaverton, Oregon 97005-6453. 
+Our principal business activity is the design, development and worldwide marketing and selling of athletic footwear, apparel, equipment, accessories and services. NIKE is the largest seller of athletic footwear and apparel in the world. We sell our products to retail accounts, through NIKE-owned retail stores and internet websites (which we refer to as our “Direct to Consumer” or "DTC" operations), and through a mix of independent distributors and licensees throughout the world. Virtually all of our products are manufactured by independent contractors. Practically all footwear and apparel products are produced outside the United States, while equipment products are produced both in the United States and abroad. 
+Products 
+We focus our NIKE Brand product offerings in eight key categories: Running, Basketball, Football (Soccer), Men’s Training, Women’s Training, Action Sports, Sportswear (our sports-inspired lifestyle products) and Golf. Basketball includes our Jordan Brand product offerings and Men's Training includes our baseball and American football product offerings. We also market products designed for kids, as well as for other athletic and recreational uses such as cricket, lacrosse, tennis, volleyball, wrestling, walking and outdoor activities. 
+NIKE’s athletic footwear products are designed primarily for specific athletic use, although a large percentage of the products are worn for casual or leisure purposes. We place considerable emphasis on high-quality construction and innovation in our products. Sportswear, Running, Basketball and Football (Soccer) are currently our top-selling footwear categories and we expect them to continue to lead in footwear sales. 
+We sell sports apparel covering most of the above-mentioned categories, which feature the same trademarks and are sold predominantly through the same marketing and distribution channels as athletic footwear. Our sports apparel, similar to our athletic footwear products, is designed primarily for athletic use and exemplifies our commitment to innovation and high-quality construction. Sportswear, Men's Training, Running and Football (Soccer) are currently our top-selling apparel categories and we expect them to continue to lead in apparel sales. We often market footwear, apparel and accessories in “collections” of similar use or by category. We also market apparel with licensed college and professional team and league logos. 
+We sell a line of performance equipment and accessories under the NIKE Brand name, including bags, socks, sport balls, eyewear, timepieces, digital devices, bats, gloves, protective equipment, golf clubs and other equipment designed for sports activities. We also sell small amounts of various plastic products to other manufacturers through our wholly owned subsidiary, NIKE IHM, Inc. 
+Our Jordan Brand designs, distributes and licenses athletic and casual footwear, apparel and accessories predominantly focused on Basketball using the Jumpman trademark. Sales and operating results for the Jordan Brand are included within the NIKE Brand Basketball category and within the respective NIKE Brand geographic operating segments. 
+One of our wholly owned subsidiary brands, Hurley, headquartered in Costa Mesa, California (“Hurley”), designs and distributes a line of action sports and youth lifestyle apparel and accessories under the Hurley trademark. Sales and operating results for Hurley are included within the NIKE Brand Action Sports category and within the NIKE Brand's North America geographic operating segment, respectively. 
+Another of our wholly owned subsidiary brands, Converse, headquartered in Boston, Massachusetts (“Converse”), designs, distributes and licenses casual sneakers, apparel and accessories under the Converse, Chuck Taylor, All Star, One Star, Star Chevron and Jack Purcell trademarks. Operating results of the Converse brand are reported on a stand-alone basis. 
+In addition to the products we sell to our wholesale customers and directly to consumers through our DTC operations, we have also entered into license agreements that permit unaffiliated parties to manufacture and sell, using NIKE-owned trademarks, certain apparel, digital devices and applications and other equipment designed for sports activities. 
+On February 1, 2013, and November 30, 2012, we completed the divestitures of the Cole Haan and Umbro businesses, respectively, allowing us to better focus our resources on driving growth in the NIKE, Jordan, Hurley and Converse brands. 
+1 
+Table of Contents 
+Sales and Marketing 
+Financial information about geographic and segment operations appears in Note 18 — Operating Segments and Related Information of the accompanying Notes to the Consolidated Financial Statements. 
+We experience moderate fluctuations in aggregate sales volume during the year. Historically, revenues in the first and fourth fiscal quarters have slightly exceeded those in the second and third quarters. However, the mix of product sales may vary considerably as a result of changes in seasonal and geographic demand for particular types of footwear, apparel and equipment, as well as other macroeconomic, operating and logistics-related factors. 
+Because NIKE is a consumer products company, the relative popularity of various sports and fitness activities and changing design trends affect the demand for our products. We must, therefore, respond to trends and shifts in consumer preferences by adjusting the mix of existing product offerings, developing new products, styles and categories and influencing sports and fitness preferences through extensive marketing. Failure to respond in a timely and adequate manner could have a material adverse effect on our sales and profitability. This is a continuing risk. We report our NIKE Brand operations based on our internal geographic organization. Each NIKE Brand geography operates predominantly in one industry: the design, development, marketing and selling of athletic footwear, apparel, equipment, accessories and services. Our reportable operating segments for the NIKE Brand are: North America, Western Europe, Central & Eastern Europe, Greater China, Japan and Emerging Markets. Our NIKE Brand Direct to Consumer operations are managed within each geographic operating segment. 
+Converse is also a reportable segment, and operates in one industry: the design, marketing, licensing and selling of casual sneakers, apparel and accessories. 
+United States Market 
+For both fiscal 2015 and fiscal 2014 , NIKE Brand and Converse sales in the United States accounted for approximately 46% of total revenues, compared to 45% for fiscal 2013 . We sell our NIKE Brand, Jordan Brand, Hurley and Converse products to thousands of retail accounts in the United States, including a mix of footwear stores, sporting goods stores, athletic specialty stores, department stores, skate, tennis and golf shops and other retail accounts. In the United States, we utilize NIKE sales offices to solicit sales as well as independent sales representatives to sell specialty products for golf and skateboarding. During fiscal 2015 , our three largest customers accounted for approximately 26% of sales in the United States. 
+We make substantial use of our futures ordering program, which allows retailers to order five to six months in advance of delivery with the commitment that their orders will be delivered within a set time period at a fixed price. In fiscal 2015 , 87% of our U.S. wholesale footwear shipments (excluding NIKE Golf, Hurley and Converse) were made under the futures program, compared to 86% in fiscal 2014 and 87% in fiscal 2013 . In fiscal 2015 , 67% of our U.S. wholesale apparel shipments (excluding NIKE Golf, Hurley and Converse) were made under the futures program, compared to 71% in fiscal 2014 and 67% in fiscal 2013 . 
+Our Direct to Consumer operations sell NIKE Brand products, including Jordan Brand and Hurley, to consumers through our e-commerce website, www.nike.com . We also sell Converse products to consumers through a Converse owned e-commerce website, www.converse.com . In addition, our Direct to Consumer operations sell through the following number of retail stores in the United States: 
+U.S. Retail Stores 
+Number 
+NIKE Brand factory stores 
+185 
+NIKE Brand in-line stores, including employee-only stores 
+33 
+Converse stores (including factory stores) 
+92 
+Hurley stores (including factory and employee stores) 
+29 
+TOTAL 
+339 
+NIKE owns a full product line distribution center located in Memphis, Tennessee. In addition, NIKE has four other distribution centers, three of which are leased, also located in Memphis. NIKE Brand apparel and equipment products are also shipped from our leased Foothill Ranch, California distribution center. Converse and Hurley products are shipped primarily from leased facilities in Ontario, California. 
+International Markets 
+For both fiscal 2015 and fiscal 2014 , non-U.S. NIKE Brand and Converse sales accounted for 54% of total revenues, compared with 55% for fiscal 2013 . We sell our products to retail accounts, through our own Direct to Consumer operations and through a mix of independent distributors, licensees and sales representatives around the world. We sell to thousands of retail accounts and ship products from 45 distribution centers outside of the United States. In many countries and regions, including Canada, Asia, some Latin American countries and Europe, we have a futures ordering program for retailers similar to the United States futures ordering program described above. During fiscal 2015 , NIKE’s three largest customers outside of the United States accounted for approximately 12% of total non-U.S. sales. 
+Our Direct to Consumer business operates the following number of retail stores outside the United States, in addition to NIKE and Converse owned e-commerce websites in over 25 countries: 
+Non-U.S. Retail Stores 
+Number 
+NIKE Brand factory stores 
+512 
+NIKE Brand in-line stores, including employee-only stores 
+73 
+Converse stores (including factory stores) 
+7 
+TOTAL 
+592 
+2 
+Table of Contents 
+International branch offices and subsidiaries of NIKE are located in Argentina, Australia, Austria, Belgium, Bermuda, Brazil, Canada, Chile, China, Croatia, Cyprus, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Malaysia, Mexico, New Zealand, the Netherlands, Norway, Panama, the Philippines, Poland, Portugal, Russia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Taiwan, Thailand, Turkey, the United Arab Emirates, the United Kingdom, Uruguay and Vietnam. 
+Significant Customer 
+No customer accounted for 10% or more of our worldwide net sales during fiscal 2015 . 
+Orders 
+Worldwide futures orders for NIKE Brand athletic footwear and apparel, scheduled for delivery from June through November 2015, were $13.5 billion compared with $13.3 billion for the same period last year. This futures orders amount is calculated based upon our forecast of the actual currency exchange rates under which our revenues will be translated during this period. Reported futures orders are not necessarily indicative of our expectation of revenues for this period. This is because the mix of orders can shift between futures and at-once orders and the fulfillment of certain of these futures orders may fall outside of the scheduled time period noted above. In addition, foreign currency exchange rate fluctuations as well as differing levels of discounts, order cancellations and returns can cause differences in the comparisons between futures orders and actual revenues. Moreover, a portion of our revenue is not derived from futures orders, including at-once and closeout sales of NIKE Brand footwear and apparel, sales of NIKE Brand equipment, sales from our Direct to Consumer operations and sales from our Converse, Hurley and NIKE Golf businesses. 
+Product Research, Design and Development 
+We believe our research, design and development efforts are key factors in our success. Technical innovation in the design and manufacturing process of footwear, apparel and athletic equipment receive continued emphasis as NIKE strives to produce products that help to enhance athletic performance, reduce injury and maximize comfort while reducing waste. 
+In addition to NIKE’s own staff of specialists in the areas of biomechanics, chemistry, exercise physiology, engineering, industrial design, sustainability and related fields, we also utilize research committees and advisory boards made up of athletes, coaches, trainers, equipment managers, orthopedists, podiatrists and other experts who consult with us and review designs, materials, concepts for product and manufacturing process improvements and compliance with product safety regulations around the world. Employee athletes, athletes engaged under sports marketing contracts and other athletes wear-test and evaluate products during the design and development process. 
+As we continue to develop new technologies, NIKE is simultaneously focused on the design of innovative products incorporating such technologies throughout our product categories. Using market intelligence and research, the various NIKE design teams identify opportunities to leverage new technologies in existing categories responding to consumer preferences. The proliferation of NIKE Air, Lunar, Zoom, Free, Flywire, Dri-Fit, Flyknit, Flyweave and NIKE+ technologies through Running, Basketball, Men's Training, Women's Training and Sportswear, among others, typifies our dedication to designing innovative products. 
+Manufacturing 
+We are supplied by approximately 146 footwear factories located in 14 countries. The largest single footwear factory accounted for approximately 7% of total fiscal 2015 NIKE Brand footwear production. Virtually all of our footwear is manufactured outside of the United States by independent contract manufacturers who often operate multiple factories. In fiscal 2015 , contract factories in Vietnam, China and Indonesia manufactured approximately 43%, 32% and 20% of total NIKE Brand footwear, respectively. We also have manufacturing agreements with independent factories in Argentina, Brazil, India and Mexico to manufacture footwear for sale primarily within those countries. In fiscal 2015 , five footwear contract manufacturers each accounted for greater than 10% of footwear production, and in aggregate accounted for approximately 69% of NIKE Brand footwear production. 
+We are supplied by approximately 408 apparel factories located in 39 countries. The largest single apparel factory accounted for approximately 11% of total fiscal 2015 NIKE Brand apparel production. Virtually all of our apparel is manufactured outside of the United States by independent contract manufacturers which often operate multiple factories. In fiscal 2015 , most of this apparel production occurred in China, Vietnam, Sri Lanka, Thailand, Indonesia, Malaysia and Cambodia. In fiscal 2015 , one apparel contract manufacturer accounted for more than 10% of apparel production, and the top five contract manufacturers in aggregate accounted for approximately 36% of NIKE Brand apparel production. 
+The principal materials used in our footwear products are natural and synthetic rubber, plastic compounds, foam cushioning materials, natural and synthetic leather, nylon, polyester and canvas, as well as polyurethane films used to make NIKE Air-Sole cushioning components. During fiscal 2015 , NIKE IHM, Inc., a wholly-owned subsidiary of NIKE, Inc., with facilities near Beaverton, Oregon and in St. Louis, Missouri, and independent contractors in China and Vietnam, were our largest suppliers of the Air-Sole cushioning components used in footwear. The principal materials used in our apparel products are natural and synthetic fabrics and threads (both virgin and recycled); specialized performance fabrics designed to efficiently wick moisture away from the body, retain heat and repel rain and/or snow; and plastic and metal hardware. NIKE’s independent contractors and suppliers buy raw materials for the manufacturing of our footwear, apparel and equipment products. Most raw materials are available and purchased by those independent contractors and suppliers in the countries where manufacturing takes place. NIKE's independent contract manufacturers and suppliers have thus far experienced little difficulty in satisfying raw material requirements for the production of our products. 
+3 
+Table of Contents 
+Since 1972, Sojitz Corporation of America (“Sojitz America”), a large Japanese trading company and the sole owner of our redeemable preferred stock, has performed significant import-export financing services for us. During fiscal 2015 , Sojitz America provided financing and purchasing services for NIKE Brand products sold in certain NIKE markets including Argentina, Uruguay, Canada, Brazil, India, Indonesia, the Philippines, South Africa and Thailand, excluding products produced and sold in the same country. Approximately 8% of NIKE Brand sales occurred in those countries. Any failure of Sojitz America to provide these services or any failure of Sojitz America’s banks could disrupt our ability to acquire products from our suppliers and to deliver products to our customers in those markets. Such a disruption could result in canceled orders that would adversely affect sales and profitability. However, we believe that any such disruption would be short-term in duration due to the ready availability of alternative sources of financing at competitive rates. Our current agreements with Sojitz America expire on May 31, 2018, and contain a provision allowing us to extend the agreements to May 31, 2019. 
+International Operations and Trade 
+Our international operations and sources of supply are subject to the usual risks of doing business abroad, such as possible increases in import duties, anti-dumping measures, quotas, safeguard measures, trade restrictions, restrictions on the transfer of funds and, in certain parts of the world, political instability and terrorism. We have not, to date, been materially affected by any such risk, but cannot predict the likelihood of such material effects occurring in the future. 
+In recent years, uncertain global and regional economic conditions have affected international trade and caused a rise in protectionist actions around the world. These trends are affecting many global manufacturing and service sectors, and the footwear and apparel industries, as a whole, are not immune. Companies in our industry are facing trade protectionism in many different regions, and in nearly all cases we are working together with industry groups to address trade issues and reduce the impact to the industry, while observing applicable competition laws. Notwithstanding our efforts, protectionist measures have resulted in increases in the cost of our products, and additional measures, if implemented, could adversely affect sales and/or profitability for NIKE as well as the imported footwear and apparel industry as a whole. 
+We monitor protectionist trends and developments throughout the world that may materially impact our industry, and we engage in administrative and judicial processes to mitigate trade restrictions. In Brazil and Argentina, we are actively participating in dumping investigations against footwear from China and actively monitoring actions in other countries that may result in additional anti-dumping measures and could affect our industry. We are also monitoring for and advocating against other impediments that may limit or delay customs clearance for imports of footwear, apparel and equipment. Moreover, with respect to trade restrictions targeting China, which represents an important sourcing country and consumer market for us, we are working with a broad coalition of global businesses and trade associations representing a wide variety of sectors to help ensure that any legislation enacted and implemented (i) addresses legitimate and core concerns, (ii) is consistent with international trade rules, and (iii) reflects and considers China's domestic economy and the important role it has in the global economic community. 
+Where trade protection measures are implemented, we believe that we have the ability to develop, over a period of time, adequate alternative sources of supply for the products obtained from our present suppliers. If events prevented us from acquiring products from our suppliers in a particular country, our operations could be temporarily disrupted and we could experience an adverse financial impact. However, we believe we could abate any such disruption, and that much of the adverse impact on supply would, therefore, be of a short-term nature, although alternate sources of supply might not be as cost-effective and could have an ongoing adverse impact on profitability. 
+NIKE advocates for trade liberalization for footwear and apparel in a number of regional and bilateral free trade agreements. The passage of Trade Promotion Authority in the United States will enable the conclusion of the Trans-Pacific Partnership (TPP). If ultimately passed, the TPP has the potential to reduce or eliminate high rates of customs duties for imports into the United States of NIKE products sourced from TPP countries (primarily footwear and apparel from Vietnam and apparel from Malaysia). Similarly, the European Union is close to concluding a free trade agreement with Vietnam that could lead to duty reduction or elimination for footwear and apparel. 
+Competition 
+The athletic footwear, apparel and equipment industry is highly competitive on a worldwide basis. We compete internationally with a significant number of athletic and leisure footwear companies, athletic and leisure apparel companies, sports equipment companies and large companies having diversified lines of athletic and leisure footwear, apparel and equipment, including adidas, Li Ning, lululemon athletica, Puma, V.F. Corp., Under Armour and UNIQLO, among others. The intense competition and the rapid changes in technology and consumer preferences in the markets for athletic and leisure footwear and apparel, and athletic equipment, constitute significant risk factors in our operations. 
+NIKE is the largest seller of athletic footwear, apparel and equipment in the world. Important aspects of competition in this industry are: 
+• 
+Product attributes such as quality; performance and reliability; new product innovation and development and consumer price/value. 
+• 
+Consumer connection and affinity for brands and products, developed through marketing and promotion; social media interaction; customer support and service; identification with prominent and influential athletes, coaches, teams, colleges and sports leagues who endorse our brands and use our products and active engagement through sponsored sporting events and clinics. 
+• 
+Effective sourcing and distribution of products, with attractive merchandising and presentation at retail, both in-store and online. 
+We believe that we are competitive in all of these areas. 
+Trademarks and Patents 
+We utilize trademarks on nearly all of our products and believe having distinctive marks that are readily identifiable is an important factor in creating a market for our goods, in identifying our brands and the Company and in distinguishing our goods from the goods of others. We consider our NIKE and Swoosh Design trademarks to be among our most valuable assets and we have registered these trademarks in almost 170 jurisdictions worldwide. In addition, we own many other trademarks that we utilize in marketing our products. We own common law rights in the trade dress of several significant shoe designs and elements. For certain trade dress, we have sought and obtained trademark registrations. 
+NIKE has copyright protection in its design, graphics and other original works. When appropriate, we have sought registrations for this content. 
+4 
+Table of Contents 
+NIKE owns patents, and has a patent license, facilitating its use of “Air” technologies. The "Air" process utilizes pressurized gas encapsulated in polyurethane. Some of the early patents directed to the “Air” technologies have expired, which may enable competitors to use certain types of similar technology. Subsequent NIKE patents directed to the “Air” technologies will not expire for several years. 
+We also file and maintain many U.S. and foreign utility patents, as well as many U.S. and foreign design patents protecting components, manufacturing techniques, features and industrial design used in various athletic and leisure footwear, apparel, athletic equipment, digital devices and golf products. These patents expire at various times; and patents issued for original applications filed this calendar year in the United States may last until 2030 for design patents and until 2035 for utility patents. 
+We believe our success depends primarily upon our capabilities in areas such as design, research and development, production and marketing rather than exclusively upon our patent and trade secret positions. However, we have followed a policy of filing patent applications for the United States and select foreign countries on inventions, designs and improvements that we deem valuable. We also continue to vigorously protect our trademarks and patents against third-party infringement. 
+Employees 
+As of May 31, 2015 , we had approximately 62,600 employees worldwide, including retail and part-time employees. Management considers its relationship with employees to be excellent. None of our employees are represented by a union, except for certain employees in the Emerging Markets geography, where local law requires those employees to be represented by a trade union. Also, in some countries outside of the United States, local laws require employee representation by works councils (which may be entitled to information and consultation on certain Company decisions) or by organizations similar to a union. In certain European countries, we are required by local law to enter into and/or comply with industry-wide or national collective bargaining agreements. NIKE has never experienced a material interruption of operations due to labor disagreements. 
+Executive Officers of the Registrant 
+The executive officers of NIKE, Inc. as of July 17, 2015 are as follows: 
+Philip H. Knight, Chairman of the Board of Directors — Mr. Knight, 77, a director since 1968, is a co-founder of NIKE and, except for the period from June 1983 through September 1984, served as its President from 1968 to 1990 and from June 2000 to December 2004. Prior to 1968, Mr. Knight was a certified public accountant with Price Waterhouse and Coopers & Lybrand and was an Assistant Professor of Business Administration at Portland State University. 
+Mark G. Parker, President and Chief Executive Officer — Mr. Parker, 59, was appointed President and Chief Executive Officer in January 2006. He has been employed by NIKE since 1979 with primary responsibilities in product research, design and development, marketing and brand management. Mr. Parker was appointed divisional Vice President in charge of product development in 1987, corporate Vice President in 1989, General Manager in 1993, Vice President of Global Footwear in 1998 and President of the NIKE Brand in 2001. 
+David J. Ayre, Executive Vice President, Global Human Resources — Mr. Ayre, 55, joined NIKE as Vice President, Global Human Resources in 2007. Prior to joining NIKE, he held a number of senior human resource positions with PepsiCo, Inc. since 1990, most recently as head of Talent and Performance Rewards. 
+Donald W. Blair, Executive Vice President and Chief Financial Officer — Mr. Blair, 57, joined NIKE in November 1999. Prior to joining NIKE, he held a number of financial management positions with PepsiCo, Inc., including Vice President, Finance of Pepsi-Cola Asia, Vice President, Planning of PepsiCo’s Pizza Hut Division and Senior Vice President, Finance of The Pepsi Bottling Group, Inc. Prior to joining PepsiCo, Mr. Blair was a certified public accountant with Deloitte, Haskins & Sells. 
+Trevor A. Edwards, President, NIKE Brand — Mr. Edwards, 52, joined NIKE in 1992. He was appointed Marketing Manager, Strategic Accounts for Foot Locker in 1993, Director of Marketing for the Americas in 1995, Director of Marketing for Europe in 1997, Vice President, Marketing for Europe, Middle East and Africa in 1999 and Vice President, U.S. Brand Marketing in 2000. Mr. Edwards was appointed corporate Vice President, Global Brand Management in 2002, Vice President, Global Brand and Category Management in 2006 and President, NIKE Brand in 2013. Prior to NIKE, Mr. Edwards was with the Colgate-Palmolive Company. 
+Jeanne P. Jackson, President, Product and Merchandising — Ms. Jackson, 63, joined NIKE in 2009. She was appointed President, Direct to Consumer in 2009 and President, Product and Merchandising in 2013. Ms. Jackson also served as a member of the NIKE, Inc. Board of Directors from 2001 through 2009. She founded and served as Chief Executive Officer of MSP Capital, a private investment company, from 2002 to 2009. Ms. Jackson was Chief Executive Officer of Walmart.com from March 2000 to January 2002. She was with Gap, Inc., as President and Chief Executive Officer of Banana Republic from 1995 to 2000, also serving as Chief Executive Officer of Gap, Inc. Direct from 1998 to 2000. Since 1978, she has held various retail management positions with Victoria’s Secret, The Walt Disney Company, Saks Fifth Avenue and Federated Department Stores. 
+Hilary K. Krane, Executive Vice President, Chief Administrative Officer and General Counsel — Ms. Krane, 51, joined NIKE as Vice President and General Counsel in April 2010. In 2011, her responsibilities expanded and she became Vice President, General Counsel and Corporate Affairs. Ms. Krane was appointed to Executive Vice President, Chief Administrative Officer and General Counsel in 2013. Prior to joining NIKE, Ms. Krane was General Counsel and Senior Vice President for Corporate Affairs at Levi Strauss & Co. from 2006 to 2010. From 1996 to 2006, she was a partner and assistant general counsel at PricewaterhouseCoopers LLP. 
+John F. Slusher, Executive Vice President, Global Sports Marketing — Mr. Slusher, 46, has been employed by NIKE since 1998 with primary responsibilities in global sports marketing. Mr. Slusher was appointed Director of Sports Marketing for the Asia Pacific and Americas in 2006, divisional Vice President of Asia Pacific & Americas Sports Marketing in September 2007 and Vice President, Global Sports Marketing in November 2007. Prior to joining NIKE, Mr. Slusher was an attorney at the law firm of O’Melveny & Myers from 1995 to 1998. 
+Eric D. Sprunk, Chief Operating Officer — Mr. Sprunk, 51, joined NIKE in 1993. He was appointed Finance Director and General Manager of the Americas in 1994, Finance Director for NIKE Europe in 1995, Regional General Manager of NIKE Europe Footwear in 1998 and Vice President & General Manager of the Americas in 2000. Mr. Sprunk was appointed Vice President of Global Footwear in 2001, Vice President of Merchandising and Product in 2009 and Chief Operating Officer in 2013. Prior to joining NIKE, Mr. Sprunk was a certified public accountant with Price Waterhouse from 1987 to 1993. 
+5 
+Table of Contents

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+ITEM 13. Certain Relationships and Related Transactions and Director Independence 
+The information required by Items 404 and 407(a) of Regulation S-K is included under “Election of Directors — Transactions with Related Persons” and “Corporate Governance — Director Independence” in the definitive Proxy Statement for our 2015 Annual Meeting of Shareholders and is incorporated herein by reference.

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+ITEM 9A. Controls and Procedures 
+We maintain disclosure controls and procedures that are designed to ensure information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. 
+We carry out a variety of ongoing procedures, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, to evaluate the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of May 31, 2015 . 
+“Management’s Annual Report on Internal Control Over Financial Reporting” is included in Item 8 of this Report. 
+We have commenced several transformation initiatives to centralize and simplify our business processes and systems. These are long-term initiatives, which we believe will enhance our internal control over financial reporting due to increased automation and further integration of related processes. We will continue to monitor our internal control over financial reporting for effectiveness throughout the transformation. 
+There have not been any other changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

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+Transactions with Related Persons 
+Mr. Howard S. Slusher, the father of John Slusher, Executive Vice President of Sports Marketing, and the Company are parties to a Consulting Agreement pursuant to which Howard Slusher manages the planning, design, and construction of new buildings at, and improvements to, NIKE’s World Headquarters. Howard Slusher was selected due to his deep history and experience with the Company, as he has managed several significant construction projects for the Company, including the original World Headquarters construction and later expansions. In addition, Howard Slusher’s previous engagement with the Company garnered the trust of management and makes him uniquely qualified to oversee the project. During fiscal 2016, the Company paid Howard Slusher $3,408,837 for these services. 
+Pursuant to the terms of a past consulting agreement with the Company, the Company agreed to pay for health and life insurance policies for Howard Slusher following expiration of the agreement. During fiscal 2016, the Company paid $123,574 for life insurance premiums. 
+Three of Mr. Parker’s siblings, each with over 25 years of service to the Company, were employed by the Company in non-executive roles in fiscal 2016. Ann Parker was an Executive Talent Scout, Bob Parker was a Marketplace Director, and Stephen Parker held a Vice President role with Converse. During fiscal 2016, the Company paid aggregate compensation to each of Ann Parker and Stephen Parker in the amounts of $317,642 and $525,491, respectively, comprising of salary, bonuses, the grant date fair value of stock options granted during the fiscal year estimated using the Black-Scholes pricing model, profit sharing and matching contributions to Company-sponsored retirement plans. Additionally, the Company paid aggregate compensation to Bob Parker in the amount of approximately $506,948, comprising of approximately $504,144 paid in connection with his termination of services as well as the compensation components listed above. The compensation and benefits received by each of Mr. Parker’s siblings, including the separation benefits received by Bob Parker, were consistent with compensation paid to other employees holding similar positions. 
+Mr. Thompson’s son, John Thompson III, head basketball coach at Georgetown University, and the Company are parties to a contract pursuant to which Mr. Thompson III provides certain endorsement and consulting services to the Company. The terms of this agreement, effective August 2014 through August 2019, provide for annual base compensation of $200,000, and up to $112,500 per year of product and merchandise, for use by him, the basketball staff and team. In addition, there are annual incentive payments based upon his team’s performance of up to $100,000. 
+Ms. Lindsay A. Jackson, the daughter of Jeanne Jackson, President of Product and Merchandising during fiscal 2016, was employed by the Company in a non-executive role in fiscal 2016 as a Brand Director. During fiscal 2016, the Company paid aggregate compensation to Ms. Lindsay Jackson of $152,861, comprising salary, bonuses, the grant date fair value of stock options granted during the fiscal year estimated using the Black-Scholes pricing model, profit sharing and matching contributions to Company-sponsored retirement plans. The compensation and benefits received by Ms. Lindsay Jackson was consistent with compensation paid to other employees holding similar positions. 
+On June 30, 2016 Mr. Philip Knight, the father of NIKE director Travis Knight, retired from the Board of Directors. Effective immediately upon his retirement, the Board has appointed Mr. Philip Knight to the position of Chairman Emeritus, which provides a standing invitation for Mr. Philip Knight to attend meetings of the Board and its committees as a non-voting observer. Pursuant to serving as the Chairman Emeritus, Mr. Knight will receive medical and dental insurance coverage available to employees and will receive an annual salary of $500,000. 
+The Company’s written policy requires the Nominating and Corporate Governance Committee to review any transaction or proposed transaction with a related person that would be required to be reported under Item 404(a) of Regulation S-K, and to determine whether to ratify or approve the transaction, with ratification or approval to occur only if the Committee determines that the transaction is fair to the Company or that approval or ratification of the transaction is in the interest of the Company. 
+NIKE, INC. Ÿ 2016 Notice of Annual Meeting 14

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+ITEM 1. Business 
+General 
+NIKE, Inc. was incorporated in 1967 under the laws of the State of Oregon. As used in this report, the terms “we,” “us,” “NIKE,” and the “Company” refer to NIKE, Inc. and its predecessors, subsidiaries and affiliates, collectively, unless the context indicates otherwise. Our NIKE e-commerce website is located at www.nike.com. On our NIKE corporate website, located at news.nike.com, we post the following filings as soon as reasonably practicable after they are electronically filed with or furnished to the United States Securities and Exchange Commission (the “SEC”): our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended. Our definitive Proxy Statements are also posted on our corporate website. All such filings on our corporate website are available free of charge. Copies of these filings may also be obtained by visiting the Public Reference Room of the SEC at 100 F Street, NE, Washington, D.C. 20549, or by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a website ( www.sec.gov ) that contains current, quarterly and annual reports, proxy and information statements and other information regarding issuers that file electronically. Also available on our corporate website are the charters of the committees of our Board of Directors, as well as our corporate governance guidelines and code of ethics; copies of any of these documents will be provided in print to any shareholder who submits a request in writing to NIKE Investor Relations, One Bowerman Drive, Beaverton, Oregon 97005-6453. 
+Our principal business activity is the design, development and worldwide marketing and selling of athletic footwear, apparel, equipment, accessories and services. NIKE is the largest seller of athletic footwear and apparel in the world. We sell our products to retail accounts, through NIKE-owned retail stores and internet websites (which we refer to collectively as our “Direct to Consumer” or “DTC” operations), and through a mix of independent distributors and licensees throughout the world. Virtually all of our products are manufactured by independent contractors. Nearly all footwear and apparel products are produced outside the United States, while equipment products are produced both in the United States and abroad. 
+Products 
+We focus our NIKE Brand product offerings in nine key categories: Running, NIKE Basketball, the Jordan Brand, Football (Soccer), Men’s Training, Women’s Training, Action Sports, Sportswear (our sports-inspired lifestyle products) and Golf. Men's Training includes our baseball and American football product offerings. We also market products designed for kids, as well as for other athletic and recreational uses such as cricket, lacrosse, tennis, volleyball, wrestling, walking and outdoor activities. 
+NIKE’s athletic footwear products are designed primarily for specific athletic use, although a large percentage of the products are worn for casual or leisure purposes. We place considerable emphasis on innovation and high-quality construction in our products. Sportswear, Running, the Jordan Brand and Football (Soccer) are currently our top-selling footwear categories and we expect them to continue to lead in footwear sales. 
+We also sell sports apparel covering the above-mentioned categories, which feature the same trademarks and are sold predominantly through the same marketing and distribution channels as athletic footwear. Our sports apparel, similar to our athletic footwear products, is designed primarily for athletic use and exemplifies our commitment to innovation and high-quality construction. Sportswear, Men's Training, Running, Football (Soccer) and Women's Training are currently our top-selling apparel categories, and we expect them to continue to lead in apparel sales. We often market footwear, apparel and accessories in “collections” of similar use or by category. We also market apparel with licensed college and professional team and league logos. 
+We sell a line of performance equipment and accessories under the NIKE Brand name, including bags, socks, sport balls, eyewear, timepieces, digital devices, bats, gloves, protective equipment, golf clubs and other equipment designed for sports activities. We also sell small amounts of various plastic products to other manufacturers through our wholly-owned subsidiary, NIKE IHM, Inc. 
+Our Jordan Brand designs, distributes and licenses athletic and casual footwear, apparel and accessories predominantly focused on basketball using the Jumpman trademark. Sales and operating results for the Jordan Brand are reported as a separate category and within the NIKE Brand geographic operating segments, respectively. 
+One of our wholly-owned subsidiary brands, Hurley, headquartered in Costa Mesa, California, designs and distributes a line of action sports and youth lifestyle apparel and accessories under the Hurley trademark. Sales and operating results for Hurley are included within the NIKE Brand Action Sports category and within the NIKE Brand's North America geographic operating segment, respectively. 
+Another of our wholly-owned subsidiary brands, Converse, headquartered in Boston, Massachusetts, designs, distributes and licenses casual sneakers, apparel and accessories under the Converse, Chuck Taylor, All Star, One Star, Star Chevron and Jack Purcell trademarks. Operating results of the Converse brand are reported on a stand-alone basis. 
+In addition to the products we sell to our wholesale customers and directly to consumers through our DTC operations, we have also entered into license agreements that permit unaffiliated parties to manufacture and sell, using NIKE-owned trademarks, certain apparel, digital devices and applications and other equipment designed for sports activities. 
+1 
+Table of Contents 
+Sales and Marketing 
+Financial information about geographic and segment operations appears in Note 17 — Operating Segments and Related Information of the accompanying Notes to the Consolidated Financial Statements. 
+We experience moderate fluctuations in aggregate sales volume during the year. Historically, revenues in the first and fourth fiscal quarters have slightly exceeded those in the second and third quarters. However, the mix of product sales may vary considerably as a result of changes in seasonal and geographic demand for particular types of footwear, apparel and equipment, as well as other macroeconomic, operating and logistics-related factors. 
+Because NIKE is a consumer products company, the relative popularity of various sports and fitness activities and changing design trends affect the demand for our products. We must, therefore, respond to trends and shifts in consumer preferences by adjusting the mix of existing product offerings, developing new products, styles and categories and influencing sports and fitness preferences through extensive marketing. Failure to respond in a timely and adequate manner could have a material adverse effect on our sales and profitability. This is a continuing risk. Refer to Item 1A. Risk Factors. 
+We report our NIKE Brand operations based on our internal geographic organization. Each NIKE Brand geography operates predominantly in one industry: the design, development, marketing and selling of athletic footwear, apparel, equipment, accessories and services. Our reportable operating segments for the NIKE Brand are: North America, Western Europe, Central & Eastern Europe, Greater China, Japan and Emerging Markets. Our NIKE Brand Direct to Consumer operations are managed within each geographic operating segment. 
+Converse is also a reportable segment and operates in one industry: the design, marketing, licensing and selling of casual sneakers, apparel and accessories. Converse Direct to Consumer operations, including e-commerce, are reported within the Converse operating segment results. 
+United States Market 
+For fiscal 2016 , NIKE Brand and Converse sales in the United States accounted for approximately 47% of total revenues, compared to 46% for both fiscal 2015 and fiscal 2014 . We sell our NIKE Brand, Jordan Brand, Hurley and Converse products to thousands of retail accounts in the United States, including a mix of footwear stores, sporting goods stores, athletic specialty stores, department stores, skate, tennis and golf shops and other retail accounts. In the United States, we utilize NIKE sales offices to solicit sales as well as independent sales representatives to sell specialty products for golf and skateboarding. During fiscal 2016 , our three largest customers accounted for approximately 25% of sales in the United States. 
+We make substantial use of our futures ordering program, which allows retailers to order five to six months in advance of delivery with the commitment that their orders will be delivered within a set time period at a fixed price. In fiscal 2016 , 84% of our U.S. wholesale footwear shipments were made under the futures program, compared to 87% in fiscal 2015 and 86% in fiscal 2014 . In fiscal 2016 , 66% of our U.S. wholesale apparel shipments were made under the futures program, compared to 67% in fiscal 2015 and 71% in fiscal 2014 . 
+Our Direct to Consumer operations sell NIKE Brand, Jordan Brand, Hurley and Converse products to consumers through our e-commerce website, www.nike.com . In addition, our Direct to Consumer operations sell through the following number of retail stores in the United States: 
+U.S. Retail Stores 
+Number 
+NIKE Brand factory stores 
+196 
+NIKE Brand in-line stores, including employee-only stores 
+34 
+Converse stores (including factory stores) 
+103 
+Hurley stores (including factory and employee stores) 
+29 
+TOTAL 
+362 
+In the United States, NIKE has five significant distribution centers located in Memphis, Tennessee, two of which are owned and three are leased. NIKE Brand apparel and equipment products are also shipped from our leased Foothill Ranch, California distribution center. Converse and Hurley products are shipped primarily from leased facilities in Ontario, California. Smaller leased distribution facilities are located in various parts of the United States. 
+International Markets 
+For fiscal 2016 , non-U.S. NIKE Brand and Converse sales accounted for 53% of total revenues, compared to 54% for both fiscal 2015 and fiscal 2014 . We sell our products to retail accounts, through our own Direct to Consumer operations and through a mix of independent distributors, licensees and sales representatives around the world. We sell to thousands of retail accounts and ship products from 42 distribution centers outside of the United States. In many countries and regions, including Canada, Asia, some Latin American countries and Europe, we have a futures ordering program for retailers similar to the United States futures ordering program described above. During fiscal 2016 , NIKE’s three largest customers outside of the United States accounted for approximately 13% of total non-U.S. sales. 
+In addition to NIKE and Converse owned e-commerce websites in over 40 countries, our Direct to Consumer business operates the following number of retail stores outside the United States: 
+Non-U.S. Retail Stores 
+Number 
+NIKE Brand factory stores 
+588 
+NIKE Brand in-line stores, including employee-only stores 
+72 
+Converse stores (including factory stores) 
+23 
+TOTAL 
+683 
+2 
+Table of Contents 
+International branch offices and subsidiaries of NIKE are located in Argentina, Australia, Austria, Belgium, Bermuda, Brazil, Canada, Chile, China, Croatia, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary, India, Indonesia, Ireland, Israel, Italy, Japan, Jordan, Korea, Malaysia, Mexico, New Zealand, the Netherlands, Norway, Panama, the Philippines, Poland, Portugal, Russia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Taiwan, Thailand, Turkey, the United Arab Emirates, the United Kingdom, Uruguay and Vietnam. 
+Significant Customer 
+No customer accounted for 10% or more of our worldwide net revenues during fiscal 2016 . 
+Orders 
+Worldwide futures orders for NIKE Brand athletic footwear and apparel, scheduled for delivery from June through November 2016, were $14.9 billion compared with $13.8 billion for the same period last year. NIKE Brand reported futures include (1) orders from external wholesale customers and (2) internal orders from our DTC in-line stores and e-commerce operations which are reflected at prices that are comparable to prices charged to external wholesale customers. The U.S. Dollar futures orders amount is calculated based upon our internal forecast of the actual currency exchange rates under which our revenues will be translated during this period. Reported futures orders are not necessarily indicative of our expectation of revenues for this period. This is because the mix of orders can shift between futures and at-once orders and the fulfillment of certain of these futures orders may fall outside of the scheduled time period noted above. In addition, foreign currency exchange rate fluctuations as well as differing levels of order cancellations, discounts and returns can cause differences in the comparisons between futures orders and actual revenues. Moreover, a portion of our revenue is not derived from futures orders, including sales of at-once and closeout NIKE Brand footwear and apparel, all sales of NIKE Brand equipment, the difference between retail sales and internal orders from our Direct to Consumer in-line stores and e-commerce operations, and sales from our Converse, Hurley and NIKE Golf businesses. 
+Product Research, Design and Development 
+We believe our research, design and development efforts are key factors in our success. Technical innovation in the design and manufacturing process of footwear, apparel and athletic equipment receive continued emphasis as we strive to produce products that help to enhance athletic performance, reduce injury and maximize comfort while reducing waste. 
+In addition to our own staff of specialists in the areas of biomechanics, chemistry, exercise physiology, engineering, industrial design, sustainability and related fields, we also utilize research committees and advisory boards made up of athletes, coaches, trainers, equipment managers, orthopedists, podiatrists and other experts who consult with us and review designs, materials, concepts for product and manufacturing process improvements and compliance with product safety regulations around the world. Employee athletes, athletes engaged under sports marketing contracts and other athletes wear-test and evaluate products during the design and development process. 
+As we continue to develop new technologies, we are simultaneously focused on the design of innovative products incorporating such technologies throughout our product categories. Using market intelligence and research, our various design teams identify opportunities to leverage new technologies in existing categories responding to consumer preferences. The proliferation of NIKE Air, Lunar, Zoom, Free, Flywire, Dri-Fit, Flyknit, Flyweave and NIKE+ technologies through Running, NIKE Basketball, the Jordan Brand, Football (Soccer), Men's Training, Women's Training and Sportswear, among others, typifies our dedication to designing innovative products. 
+Manufacturing 
+We are supplied by approximately 142 footwear factories located in 15 countries. The largest single footwear factory accounted for approximately 7% of total fiscal 2016 NIKE Brand footwear production. Virtually all of our footwear is manufactured outside of the United States by independent contract manufacturers who often operate multiple factories. In fiscal 2016 , contract factories in Vietnam, China and Indonesia manufactured approximately 44%, 29% and 21% of total NIKE Brand footwear, respectively. We also have manufacturing agreements with independent factories in Argentina, India, Brazil and Mexico to manufacture footwear for sale primarily within those countries. In fiscal 2016 , five footwear contract manufacturers each accounted for greater than 10% of footwear production and in aggregate accounted for approximately 69% of NIKE Brand footwear production. 
+We are supplied by approximately 394 apparel factories located in 39 countries. The largest single apparel factory accounted for approximately 12% of total fiscal 2016 NIKE Brand apparel production. Virtually all of our apparel is manufactured outside of the United States by independent contract manufacturers which often operate multiple factories. In fiscal 2016 , contract factories in China, Vietnam and Indonesia produced approximately 26%, 23% and 9% of total NIKE Brand apparel, respectively. In fiscal 2016 , one apparel contract manufacturer accounted for more than 10% of apparel production, and the top five contract manufacturers in aggregate accounted for approximately 39% of NIKE Brand apparel production. 
+The principal materials used in our footwear products are natural and synthetic rubber, plastic compounds, foam cushioning materials, natural and synthetic leather, nylon, polyester and canvas, as well as polyurethane films used to make NIKE Air-Sole cushioning components. During fiscal 2016 , NIKE IHM, Inc., a wholly-owned subsidiary of NIKE, Inc., with facilities near Beaverton, Oregon and in St. Charles, Missouri, as well as independent contractors in China and Vietnam, were our largest suppliers of the Air-Sole cushioning components used in footwear. The principal materials used in our apparel products are natural and synthetic fabrics and threads (both virgin and recycled); specialized performance fabrics designed to efficiently wick moisture away from the body, retain heat and repel rain and/or snow; and plastic and metal hardware. NIKE’s independent contractors and suppliers buy raw materials for the manufacturing of our footwear, apparel and equipment products. Most raw materials are available and purchased by those independent contractors and suppliers in the countries where manufacturing takes place. NIKE's independent contract manufacturers and suppliers have thus far experienced little difficulty in satisfying raw material requirements for the production of our products. 
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+Since 1972, Sojitz Corporation of America (“Sojitz America”), a large Japanese trading company and the sole owner of our redeemable preferred stock, has performed significant import-export financing services for us. During fiscal 2016 , Sojitz America provided financing and purchasing services for NIKE Brand products sold in certain NIKE markets including Argentina, Uruguay, Brazil, Canada, India, South Africa and Thailand, excluding products produced and sold in the same country. Approximately 6% of NIKE Brand sales occurred in those countries. Any failure of Sojitz America to provide these services or any failure of Sojitz America’s banks could disrupt our ability to acquire products from our suppliers and to deliver products to our customers in those markets. Such a disruption could result in canceled orders that would adversely affect sales and profitability. However, we believe that any such disruption would be short-term in duration due to the ready availability of alternative sources of financing at competitive rates. Our current agreements with Sojitz America expire on May 31, 2018 and contain a provision allowing us to extend the agreements to May 31, 2019. 
+International Operations and Trade 
+Our international operations and sources of supply are subject to the usual risks of doing business abroad, such as possible increases in import duties, anti-dumping measures, quotas, safeguard measures, trade restrictions, restrictions on the transfer of funds and, in certain parts of the world, political instability and terrorism. We have not, to date, been materially affected by any such risk, but cannot predict the likelihood of such material effects occurring in the future. 
+In recent years, uncertain global and regional economic conditions have affected international trade and caused a rise in protectionist actions around the world. These trends are affecting many global manufacturing and service sectors, and the footwear and apparel industries, as a whole, are not immune. Companies in our industry are facing trade protectionism in many different regions, and in nearly all cases we are working together with industry groups to address trade issues and reduce the impact to the industry, while observing applicable competition laws. Notwithstanding our efforts, protectionist measures have resulted in increases in the cost of our products, and additional measures, if implemented, could adversely affect sales and/or profitability for NIKE as well as the imported footwear and apparel industry as a whole. 
+We monitor protectionist trends and developments throughout the world that may materially impact our industry, and we engage in administrative and judicial processes to mitigate trade restrictions. We are actively monitoring actions that may result in additional anti-dumping measures and could affect our industry. We are also monitoring for and advocating against other impediments that may limit or delay customs clearance for imports of footwear, apparel and equipment. Moreover, with respect to trade restrictions targeting China, which represents an important sourcing country and consumer market for us, we are working with a broad coalition of global businesses and trade associations representing a wide variety of sectors to help ensure that any legislation enacted and implemented (i) addresses legitimate and core concerns, (ii) is consistent with international trade rules, and (iii) reflects and considers China's domestic economy and the important role it has in the global economic community. 
+Where trade protection measures are implemented, we believe that we have the ability to develop, over a period of time, adequate alternative sources of supply for the products obtained from our present suppliers. If events prevented us from acquiring products from our suppliers in a particular country, our operations could be temporarily disrupted and we could experience an adverse financial impact. However, we believe we could abate any such disruption, and that much of the adverse impact on supply would, therefore, be of a short-term nature, although alternate sources of supply might not be as cost-effective and could have an ongoing adverse impact on profitability. 
+NIKE advocates for trade liberalization for footwear and apparel in a number of regional and bilateral free trade agreements. The Trans-Pacific Partnership (TPP), if ultimately ratified, has the potential to reduce or eliminate high rates of customs duties for imports into the United States of NIKE products sourced from TPP countries (primarily footwear and apparel from Vietnam and apparel from Malaysia). Similarly, the European Union has concluded a free trade agreement with Vietnam that, if approved, could lead to duty reduction or elimination for footwear and apparel. 
+Competition 
+The athletic footwear, apparel and equipment industry is highly competitive on a worldwide basis. We compete internationally with a significant number of athletic and leisure footwear companies, athletic and leisure apparel companies, sports equipment companies and large companies having diversified lines of athletic and leisure footwear, apparel and equipment, including adidas, ASICS, Li Ning, lululemon athletica, Puma, V.F. Corporation and Under Armour, among others. The intense competition and the rapid changes in technology and consumer preferences in the markets for athletic and leisure footwear and apparel and athletic equipment, constitute significant risk factors in our operations. 
+NIKE is the largest seller of athletic footwear, apparel and equipment in the world. Important aspects of competition in this industry are: 
+• 
+Product attributes such as quality; performance and reliability; new product innovation and development and consumer price/value. 
+• 
+Consumer connection and affinity for brands and products, developed through marketing and promotion; social media interaction; customer support and service; identification with prominent and influential athletes, coaches, teams, colleges and sports leagues who endorse our brands and use our products and active engagement through sponsored sporting events and clinics. 
+• 
+Effective sourcing and distribution of products, with attractive merchandising and presentation at retail, both in-store and online. 
+We believe that we are competitive in all of these areas. 
+Trademarks and Patents 
+We utilize trademarks on nearly all of our products and believe having distinctive marks that are readily identifiable is an important factor in creating a market for our goods, in identifying our brands and the Company and in distinguishing our goods from the goods of others. We consider our NIKE and Swoosh Design trademarks to be among our most valuable assets and we have registered these trademarks in almost 170 jurisdictions worldwide. In addition, we own many other trademarks that we utilize in marketing our products. We own common law rights in the trade dress of several significant shoe designs and elements. For certain trade dress, we have sought and obtained trademark registrations. 
+We have copyright protection in our design, graphics and other original works. When appropriate, we have sought registrations for this content. 
+We own patents and have a patent license, facilitating our use of “Air” technologies. 
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+We also file and maintain many U.S. and foreign utility patents, as well as many U.S. and foreign design patents protecting components, manufacturing techniques, features and industrial design used in various athletic and leisure footwear and apparel, athletic equipment, digital devices and golf products. These patents expire at various times; patents issued for original applications filed this calendar year in the United States may last until 2031 for design patents and until 2036 for utility patents. 
+We believe our success depends upon our capabilities in areas such as design, research and development, production and marketing rather than exclusively upon our patent and trade secret positions. However, we have followed a policy of filing patent applications for the United States and select foreign countries on inventions, designs and improvements that we deem valuable. We also continue to vigorously protect our trademarks and patents against third-party infringement. 
+Employees 
+As of May 31, 2016 , we had approximately 70,700 employees worldwide, including retail and part-time employees. Management considers its relationship with employees to be excellent. None of our employees are represented by a union, except for certain employees in the Emerging Markets geography, where local law requires those employees to be represented by a trade union. Also, in some countries outside of the United States, local laws require employee representation by works councils (which may be entitled to information and consultation on certain Company decisions) or by organizations similar to a union. In certain European countries, we are required by local law to enter into and/or comply with industry-wide or national collective bargaining agreements. NIKE has never experienced a material interruption of operations due to labor disagreements. 
+Executive Officers of the Registrant 
+The executive officers of NIKE, Inc. as of July 15, 2016 are as follows: 
+Mark G. Parker, Chairman, President and Chief Executive Officer — Mr. Parker, 60, was appointed President and Chief Executive Officer in January 2006 and named Chairman of the Board in June 2016. He has been employed by NIKE since 1979 with primary responsibilities in product research, design and development, marketing and brand management. Mr. Parker was appointed divisional Vice President in charge of product development in 1987, corporate Vice President in 1989, General Manager in 1993, Vice President of Global Footwear in 1998 and President of the NIKE Brand in 2001. 
+Chris L. Abston, Vice President and Corporate Controller — Mr. Abston, 53, joined NIKE in 2015 from Wal-Mart Stores, Inc., where he served as Vice President, Global Controls and Governance since February 2015. Prior to that he was Vice President and Controller of Walmart International from February 2013 to January 2015, responsible for the oversight of international accounting and reporting, and Vice President and Assistant Controller of Wal-Mart Stores, Inc. from May 2011 to January 2013. Before joining Wal-Mart, Mr. Abston spent 25 years in public accounting with Ernst & Young LLP, most recently leading its Strategic Growth Markets practice as a Partner in the Dallas office. 
+David J. Ayre, Executive Vice President, Global Human Resources — Mr. Ayre, 56, joined NIKE as Vice President, Global Human Resources in 2007. Prior to joining NIKE, he held a number of senior human resource positions with PepsiCo, Inc. since 1990, most recently as head of Talent and Performance Rewards. 
+Andrew Campion, Executive Vice President and Chief Financial Officer — Mr. Campion, 44, joined NIKE in 2007 as Vice President of Global Planning and Development, leading strategic and financial planning. He was appointed Chief Financial Officer of the NIKE Brand in 2010, responsible for leading all aspects of financial management for the Company's flagship brand. In 2014, he was appointed Senior Vice President, Strategy, Finance and Investor Relations in addition to his role as Chief Financial Officer of NIKE Brand. Mr. Campion assumed the role of Executive Vice President and Chief Financial Officer in August 2015. Prior to joining NIKE, he held leadership roles in strategic planning, mergers and acquisitions, financial planning and analysis, operations and planning, investor relations and tax at The Walt Disney Company from 1996 to 2007. 
+Trevor A. Edwards, President, NIKE Brand — Mr. Edwards, 53, joined NIKE in 1992. He was appointed Marketing Manager, Strategic Accounts for Foot Locker in 1993, Director of Marketing for the Americas in 1995, Director of Marketing for Europe in 1997, Vice President, Marketing for Europe, Middle East and Africa in 1999 and Vice President, U.S. Brand Marketing in 2000. Mr. Edwards was appointed corporate Vice President, Global Brand Management in 2002, Vice President, Global Brand and Category Management in 2006 and President, NIKE Brand in 2013. Prior to NIKE, Mr. Edwards was with the Colgate-Palmolive Company. 
+Jeanne P. Jackson, President & Strategic Advisor — Ms. Jackson, 64, joined NIKE in 2009. She was appointed President & Strategic Advisor in June 2016. She was appointed President, Product and Merchandising in 2013 and President, Direct to Consumer in 2009. Ms. Jackson also served as a member of the NIKE, Inc. Board of Directors from 2001 through 2009. She founded and served as Chief Executive Officer of MSP Capital, a private investment company, from 2002 to 2009. Ms. Jackson was Chief Executive Officer of Walmart.com from March 2000 to January 2002. She was with Gap, Inc., as President and Chief Executive Officer of Banana Republic from 1995 to 2000, also serving as Chief Executive Officer of Gap, Inc. Direct from 1998 to 2000. Since 1978, she has held various retail management positions with Victoria’s Secret, The Walt Disney Company, Saks Fifth Avenue and Federated Department Stores. 
+Hilary K. Krane, Executive Vice President, Chief Administrative Officer and General Counsel — Ms. Krane, 52, joined NIKE as Vice President and General Counsel in April 2010. In 2011, her responsibilities expanded and she became Vice President, General Counsel and Corporate Affairs. Ms. Krane was appointed Executive Vice President, Chief Administrative Officer and General Counsel in 2013. Prior to joining NIKE, Ms. Krane was General Counsel and Senior Vice President for Corporate Affairs at Levi Strauss & Co. from 2006 to 2010. From 1996 to 2006, she was a partner and assistant general counsel at PricewaterhouseCoopers LLP. 
+John F. Slusher, Executive Vice President, Global Sports Marketing — Mr. Slusher, 47, has been employed by NIKE since 1998 with primary responsibilities in global sports marketing. Mr. Slusher was appointed Director of Sports Marketing for the Asia Pacific and Americas in 2006, divisional Vice President of Asia Pacific & Americas Sports Marketing in September 2007 and Vice President, Global Sports Marketing in November 2007. Prior to joining NIKE, Mr. Slusher was an attorney at the law firm of O’Melveny & Myers from 1995 to 1998. 
+Michael Spillane, President, Product and Merchandising — Mr. Spillane, 56, joined NIKE in 2007. He was appointed President, Product and Merchandising in 2016. He has served the Company in various roles including Vice President and General Manager of Greater China, Chief Executive Officer of Umbro and Converse and most recently as Vice President and General Manager of Footwear. Prior to joining NIKE, Mr. Spillane held leadership roles at Polartec, Maiden Mills Industries, Inc. and Tommy Hilfiger Licensing, LLC. 
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+Eric D. Sprunk, Chief Operating Officer — Mr. Sprunk, 52, joined NIKE in 1993. He was appointed Finance Director and General Manager of the Americas in 1994, Finance Director for NIKE Europe in 1995, Regional General Manager of NIKE Europe Footwear in 1998 and Vice President & General Manager of the Americas in 2000. Mr. Sprunk was appointed Vice President of Global Footwear in 2001, Vice President of Merchandising and Product in 2009 and Chief Operating Officer in 2013. Prior to joining NIKE, Mr. Sprunk was a certified public accountant with Price Waterhouse from 1987 to 1993. 
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+ITEM 13. Certain Relationships and Related Transactions and Director Independence 
+The information required by Items 404 and 407(a) of Regulation S-K is included under “Election of Directors — Transactions with Related Persons” and “Corporate Governance — Director Independence” in the definitive Proxy Statement for our 2016 Annual Meeting of Shareholders and is incorporated herein by reference.

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+ITEM 9A. Controls and Procedures 
+We maintain disclosure controls and procedures that are designed to ensure information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. 
+We carry out a variety of ongoing procedures, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, to evaluate the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of May 31, 2016 . 
+“Management’s Annual Report on Internal Control Over Financial Reporting” is included in Item 8 of this Report. 
+We have commenced several transformation initiatives to centralize and simplify our business processes and systems. These are long-term initiatives, which we believe will enhance our internal control over financial reporting due to increased automation and further integration of related processes. We will continue to monitor our internal control over financial reporting for effectiveness throughout the transformation. 
+There have not been any other changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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+Transactions with Related Persons 
+Mr. Howard S. Slusher, the father of John Slusher, Executive Vice President of Sports Marketing, and the Company are parties to a Consulting Agreement pursuant to which Howard Slusher manages the planning, design, and construction of new buildings at, and improvements to, NIKE’s World Headquarters. Howard Slusher was selected due to his deep history and experience with the Company, as he has managed several significant construction projects for the Company, including the original World Headquarters construction and later expansions. In addition, Howard Slusher’s previous engagement with the Company garnered the trust of management and makes him uniquely qualified to oversee the project. During fiscal 2016, the Company paid Howard Slusher $3,408,837 for these services. 
+Pursuant to the terms of a past consulting agreement with the Company, the Company agreed to pay for health and life insurance policies for Howard Slusher following expiration of the agreement. During fiscal 2016, the Company paid $123,574 for life insurance premiums. 
+Three of Mr. Parker’s siblings, each with over 25 years of service to the Company, were employed by the Company in non-executive roles in fiscal 2016. Ann Parker was an Executive Talent Scout, Bob Parker was a Marketplace Director, and Stephen Parker held a Vice President role with Converse. During fiscal 2016, the Company paid aggregate compensation to each of Ann Parker and Stephen Parker in the amounts of $317,642 and $525,491, respectively, comprising of salary, bonuses, the grant date fair value of stock options granted during the fiscal year estimated using the Black-Scholes pricing model, profit sharing and matching contributions to Company-sponsored retirement plans. Additionally, the Company paid aggregate compensation to Bob Parker in the amount of approximately $506,948, comprising of approximately $504,144 paid in connection with his termination of services as well as the compensation components listed above. The compensation and benefits received by each of Mr. Parker’s siblings, including the separation benefits received by Bob Parker, were consistent with compensation paid to other employees holding similar positions. 
+Mr. Thompson’s son, John Thompson III, head basketball coach at Georgetown University, and the Company are parties to a contract pursuant to which Mr. Thompson III provides certain endorsement and consulting services to the Company. The terms of this agreement, effective August 2014 through August 2019, provide for annual base compensation of $200,000, and up to $112,500 per year of product and merchandise, for use by him, the basketball staff and team. In addition, there are annual incentive payments based upon his team’s performance of up to $100,000. 
+Ms. Lindsay A. Jackson, the daughter of Jeanne Jackson, President of Product and Merchandising during fiscal 2016, was employed by the Company in a non-executive role in fiscal 2016 as a Brand Director. During fiscal 2016, the Company paid aggregate compensation to Ms. Lindsay Jackson of $152,861, comprising salary, bonuses, the grant date fair value of stock options granted during the fiscal year estimated using the Black-Scholes pricing model, profit sharing and matching contributions to Company-sponsored retirement plans. The compensation and benefits received by Ms. Lindsay Jackson was consistent with compensation paid to other employees holding similar positions. 
+On June 30, 2016 Mr. Philip Knight, the father of NIKE director Travis Knight, retired from the Board of Directors. Effective immediately upon his retirement, the Board has appointed Mr. Philip Knight to the position of Chairman Emeritus, which provides a standing invitation for Mr. Philip Knight to attend meetings of the Board and its committees as a non-voting observer. Pursuant to serving as the Chairman Emeritus, Mr. Knight will receive medical and dental insurance coverage available to employees and will receive an annual salary of $500,000. 
+The Company’s written policy requires the Nominating and Corporate Governance Committee to review any transaction or proposed transaction with a related person that would be required to be reported under Item 404(a) of Regulation S-K, and to determine whether to ratify or approve the transaction, with ratification or approval to occur only if the Committee determines that the transaction is fair to the Company or that approval or ratification of the transaction is in the interest of the Company. 
+NIKE, INC. Ÿ 2016 Notice of Annual Meeting 14