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+              U.S. SECURITIES AND EXCHANGE COMMISSION  Litigation Release No. 21361 / January 6, 2010  Accounting and Auditing Enforcement Release No. 3094 / January 6, 2010  Securities and Exchange Commission v. Daniel H. Bayly, et al., Civil Action No. H-03-0946 (S.D. Tex.)  SEC SETTLES WITH FORMER MERRILL LYNCH EXECUTIVE FOR AIDING AND ABETTING ENRON FRAUD  The Securities and Exchange Commission ("Commission") announced today that, on December 31, 2009, the U.S. District Court in Houston entered a final judgment in the Commission's civil action against Daniel H. Bayly ("Bayly"), former global head of investment banking at Merrill Lynch & Co., Inc. ("Merrill Lynch").  On March 17, 2003,  the Commission charged Bayly and three other former executives of Merrill Lynch  with aiding and abetting Enron Corp.'s earnings manipulation. That action remains stayed against Bayly's co-defendants pending resolution of a parallel criminal prosecution. On March 17, 2003,  the Commission also sued and simultaneously settled all of its Enron aiding-and-abetting charges against Merrill Lynch , which was enjoined from violating the federal securities laws and paid $80 million in financial sanctions for distribution to injured investors through the Commission's Enron Fair Fund.  Without admitting or denying the allegations in the Commission's complaint, Bayly has now been permanently enjoined from violating the antifraud provisions, as well as from aiding and abetting violations of the periodic reporting, books-and-records, and internal controls provisions; barred from serving as an officer or director of a public company for five years; and ordered to pay $300,001 in disgorgement and civil money penalties for deposit into the Commission's Enron Fair Fund.  As alleged in the Commission's complaint, Bayly substantially assisted Enron's sham sale of an interest in certain Nigerian barges during late 1999. Although the interest in these barges purportedly passed to a special purpose entity in which Merrill Lynch invested equity capital, Bayly had received an oral commitment from Enron's then-Chief Financial Officer, Andrew Fastow, that Merrill Lynch would be repaid within six months at a specified rate of return. In substance, this side agreement transformed what was supposed to be an equity investment into a bridge loan with a fixed interest rate. The complaint alleged that Bayly helped enable this sham "sale" on Enron's interest in the Nigerian barges so as to maintain favorable relations with Enron. By participating in the arrangement ¢€" which allowed Enron fraudulently to record $28 million in revenue and $12 million in pre-tax income ¢€" Bayly aided and abetted Enron's violations of the federal securities laws.  For more information, see Litigation Release No.  18038  (March 17, 2003). 								
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raw/aaer/2010/AAER-3096.txt

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+ 
+ 
+ UNITED STATES  OF AMERICA 
+ before the 
+ SECURITIES AND EXCHANGE COMMISSION 
+ 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 61301 / January 6, 2010 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 3096 / January 6, 2010 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13737 
+       
+      :  
+ :  
+ :   
+In the Matter of : ORDER INSTITUTING ADMINISTRATIVE 
+      : PROCEEDINGS PURSUANT TO RULE 
+  SCOTT T. VEECH, CPA, : 102(e)  OF THE COMMISSION’S RULES OF 
+      : PRACTICE, MAKING FINDINGS, AND 
+  Respondent.   : IMPO SING REMEDIAL SANCTIONS 
+      :  
+      :  
+____________________________________ :   
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+ 
+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 Scott T. 
+Veech (“Respondent” or “Veech”) 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 . . . 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
+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 paragraph III.B.3. 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 Respon dent’s Offer, the Commission finds that: 
+ 
+ 1. Veech, age 47, has been  a certified public accountant licensed to practice in 
+the State of Pennsylvania.  He served as Chief Financial Officer of Merge Healthcare Inc., f/k/a 
+Merge Technologies, Inc. (“Merge”) from July 2002 until his resignation in July 2006. 
+ 
+ 2. Merge was, at all relevant times, a Wisconsin corporation with its principal 
+place of business in Milwaukee, Wisconsin.  Merge develops medical imaging and information 
+management software and delivers related services.  At all relevant times, Merge’s common stock 
+was registered with the Commission pursuant to Section 12(g) of the Securities Exchange Act of 
+1934 (“Exchange Act”), and traded on the NASDAQ Small Cap or National Market. 
+ 
+ 3. On November 4, 2009, the Commission filed a complaint against Veech in 
+SEC v. Merge Healthcare, et al.
+ (Civil Action No. 2:09-cv-01036).  On November 17, 2009, the 
+court entered an order permanently enjoining Veech, by consent, from future violations of Section 
+17(a) of the Securities Act of 1933 and Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 
+10b-5, 13a-14, 13b2-1 and 13b2-2 thereunder, and aiding and abetting 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 
+thereunder.  Veech was also ordered to pay $180,000 in disgorgement of ill-gotten gains and 
+$50,000 in prejudgment interest; and a $50,000 civil money penalty.  Veech neither admitted nor 
+denied the allegations of the complaint. 
+ 
+   4. The Commission’s complaint alle ged, among other things, that Veech 
+participated in a fraudulent scheme which resulted in Merge filing materially false and misleading 
+financial statements in the company’s annual report on Form 10-K for the fiscal years ended 
+December 31, 2002, December 31, 2003 and December 31, 2004, and in the company’s quarterly 
+reports on Form 10-Q for the first three quarters of fiscal year 2005.  The Complaint alleged that 
+Veech engaged in improper accounting practices that materially increased Merge’s annual and 
+quarterly revenue and net income in a departure from generally accepted accounting principles.  
+These practices included, among other things, causing Merge to recognize revenue improperly on 
+transactions in which Merge promised specified future software enhancements to customers. 
+ 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 Veech’s Offer. 
+ 
+ Accordingly, it is hereby ORDERED, effective immediately, that: 
+ 
+ A. Veech is suspended fr om appearing or practicing before the Commission as an 
+accountant.  
+ 
+ B. After three 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.  Such 
+an application must satisfy the Commission that Respondent’s work in his practice before the 
+Commission 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.    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 di sciplinary 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 
+Respondent 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.   
+      
+ 4
+C. The Commission will consider an application by Respondent to resume 
+appearing or practicing before the Commission 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. 
+ 
+ By the Commission. 
+ 
+ 
+ 
+       E l i z a b e t h  M .  M u r p h y  
+       S e c r e t a r y  

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+ UNITED STATES OF AMERICA 
+ Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 61305 / January 7, 2010 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 3097 / January 7, 2010 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13738 
+In the Matter of 
+ CHARLES A. GRAY, 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 that public 
+administrative proceedings be, and hereby are, instituted against Charles A. Gray, CPA 
+(“Respondent”) pursuant to Section 4C
+1 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 thereunder. 
+2 Rule 102(e)(1)(ii) 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 engaged in unethical or improper professional conduct. 
+ 
+ 
+ 
+ 
+ 
+ 
+   
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
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+ 
+ 
+ 
+ 
+ 
+ 
+ 
+   
+ 
+ 
+ 
+                                                 
+    
+ 
+ 
+   
+ 
+  
+II. 
+In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
+of Settlement (“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, Respondent consents to the entry of this 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 (“Order”), 
+as set forth below. 
+III. 
+On the basis of this Order and Respondent’s Offer, the Commission finds3 that: 
+RESPONDENT 
+Charles A. Gray is a certified public accountant licensed by the state of Oklahoma.  During 
+the period at issue here, he was a partner in Murrell, Hall, McIntosh & Co. PLLP, an accounting 
+firm registered with the Public Company Accounting Oversight Board (the “PCAOB”).4 
+FACTS 
+1. Jerry D. Cash, the former Chief Executive Officer and chairman of Quest Resource 
+Corporation (“Quest Resource”) and the general partner of Quest Energy Partners, L.P. (“Quest 
+Energy” and, together with Quest Resource, “Quest”), with the aid of David E. Grose, Quest’s 
+former Chief Financial Officer, misappropriated millions from Quest through insider loans that 
+were also undisclosed related party transactions.  Between 2005 and August, 2008, Cash 
+embezzled $10 million from Quest by transferring funds between Quest-related entities and 
+companies he owned and controlled.  As a result of Cash’s and Grose’s activities, Quest failed to 
+disclose, or inadequately disclosed, the related party transactions in periodic filings, registration 
+statements, and proxy statements.
+5 
+2. Respondent acted as the engagement partner on Murrell Hall’s (a) audits of Quest 
+Resource’s annual financial statements for years ended December 31, 2005, 2006 and 2007; (b) 
+reviews of Quest Resource’s quarterly financial statements during 2005, 2006, and 2007; (c) audit 
+of Quest Energy’s annual financial statements for the year ended December 31, 2007; and (d) 
+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 Effective August 1, 2008, Eide Bailly LLP, a PCAOB-registered accounting firm, acquired Murrell Hall’s assets. 
+Following the acquisition, Respondent became a partner in Eide Bailly. 
+5 See SEC v. Jerry D. Cash, et al., Lit. Rel. No. 21087 (June 17, 2009) 
+2
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+review of Quest Energy’s quarterly financial statements for the quarter ended September 30, 2007.  
+These financial statements were included in the companies’ Forms 10-K and Forms 10-Q filed 
+with the Commission. 
+3. During Murrell Hall’s audit of Quest Resource’s financial statements for the year 
+ended December 31, 2005, Respondent became aware of transfers totaling $2 million between 
+Quest Resource and Rockport Energy LLC, a company Cash controlled. 
+4. At or near the time of the conclusion of Murrell Hall’s audits of Quest’s financial 
+statements for the year ended December 31, 2007, Respondent learned that Quest had engaged in a 
+circular series of funds transfers to and from Rockport totaling $10 million.  When Respondent 
+learned of these transfers, $10 million was outstanding. 
+5. In the course of providing these professional services, Respondent failed to 
+undertake adequate procedures to determine whether the transfers to Rockport were properly 
+recorded and disclosed in Quest’s annual and quarterly financial statements during 2005, 2006 and 
+2007. Among other things, Respondent failed to undertake adequate procedures to ascertain the 
+terms and other details of the transactions; to determine whether the transactions were authorized 
+by Quest’s board of directors; or whether Quest had properly accounted for the transactions, 
+including whether it had established appropriate reserves against Rockport’s inability to repay the 
+amounts.   
+6. Respondent also failed to adequately consider whether the transfers to Rockport 
+may constitute fraud or an illegal act.  See PCAOB Standards and Related Rules, AU §§ 316 and 
+722.32. Furthermore, Respondent failed to adequately consider whether the transfers to Rockport 
+violated Section 13(k) of the Securities Exchange Act of 1934, which prohibits any issuer to make, 
+directly or indirectly, “personal loans” to any executive officer.   
+Violations 
+Section 4C of the Exchange Act and Rule 102(e)(1)(ii) provide that the Commission may 
+temporarily or permanently deny an accountant the privilege of appearing or practicing before it if 
+it finds, after notice and opportunity for hearing, that the accountant engaged in “improper 
+professional conduct.” In relevant part, Section 4C(b) and Rule 102(e)(1)(iv) define ‘improper 
+professional conduct’ to include either of 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, or a person associated with 
+a registered public accounting firm, 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. 
+3
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+  
+ 
+ 
+ 
+  
+ 
+      
+        
+ 
+      
+  
+      
+           
+ 
+ 
+ 
+ 
+Findings 
+Based on the foregoing, the Commission finds that Respondent engaged in improper 
+professional conduct pursuant to Section 4C 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’s Offer. 
+Accordingly, it is hereby ORDERED, effective immediately, that: 
+A. Respondent is denied the privilege of appearing or practicing before the 
+Commission as an accountant. 
+B. After five 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 a public company’s financial statements that are filed with the Commission.  Such an 
+application must satisfy the Commission that Respondent’s work in his practice before the 
+Commission 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. 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 PCAOB 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 PCAOB and that inspection did not identify any 
+criticisms of or potential defects in Respondent’s or the firm’s quality control system that would 
+indicate that Respondent will not receive appropriate supervision;
+ (c) Respondent 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 
+(d) Respondent acknowledges his responsibility, as long as 
+Respondent 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, 
+4
+ 
+ 
+ 
+  
+ 
+ 
+ 
+ 
+   
+ 
+all requirements relating to registration, inspections, concurring partner reviews and quality 
+control standards. 
+C. The Commission will consider an application by Respondent to resume 
+appearing or practicing before the Commission 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. 
+ By the Commission. 
+       E l i z a b e t h M . M u r p h y
+       S e c r e t a r y 
+5
+ 

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+UNITED STATES OF AMERICA 
+ Before the 
+ SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 61315 / January 7, 2010 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 3100 / January 7, 2010 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13489 
+ 
+ 
+ 
+In the Matter of 
+ 
+POLLARD KELLEY 
+AUDITING SERVICES, 
+INC. and TERANCE 
+KELLEY, CPA,  
+ 
+Respondents. 
+ 
+ 
+ 
+ 
+ 
+ 
+ORDER MAKING FINDINGS AND 
+IMPOSING REMEDIAL SANCTIONS 
+PURSUANT TO RULE 102(e) OF THE 
+COMMISSION’S RULES OF 
+PRACTICE   
+ 
+ 
+ 
+I. 
+ 
+ On May 27, 2009, the Securities and Exchange Commission (“Commission”) 
+instituted public administrative proceedings against Pollard Kelley Auditing Services, Inc. 
+(“Pollard-Kelley”) and Terance Kelley, CPA (“Kelley”) (together, “Respondents”), 
+pursuant to Rule 102(e)(1)(ii) of the Commission’s Rules of Practice. 
+1 
+                                                 
+1  Rule 102(e)(1) provides, in pertinent part:  “The Commission may censure a person or deny, 
+temporarily or permanently, the privilege of appearing or practicing before it . . . to any person who is 
+found . . . (ii) to be lacking in character or integrity or  to have engaged in unethical or improper 
+professional conduct.” 
+ 
+ With respect to persons licensed to practice as accountants, Rule 102(e)(1)(iv) provides that 
+“improper professional conduct” means:   
+ 
+ (A) intentional or knowing conduct, including reckless conduct, that results in a violation 
+of applicable professional standards; or (B) either of 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.  (2) repeated instances of 
+II. 
+ 
+The Respondents have submitted an Offer of Settlement (“Offer”), which the 
+Commission has determined to accept.  Solely for the purpose of these proceedings and any 
+other proceeding 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, Respondents consent to the entry of this Order Making Findings and 
+Imposing Remedial Sanctions Pursuant to Rule 102(e) of the Commission’s Rules of 
+Practice (“Order”), as set forth below. 
+ 
+III. 
+ 
+On the basis of this Order and Respondents’ Offer, the Commission finds that: 
+ 
+Summary 
+ 
+           1. These proceedings arise out of a deficiency in Respondents’ 2006 audit of 
+Pegasus Wireless Corporation’s financial statements.  During the 2006 audit, Respondents 
+violated numerous professional standards by failing to obtain written representations from 
+Pegasus’ management and failing to exercise due care and professional skepticism.  In early 
+2008, nearly one year after completing the audit and after being sued by Pegasus investors 
+for securities fraud, Respondents added additional workpapers to their audit documentation, 
+which masked deficiencies in the audit.  By adding workpapers after the fact and adding 
+them to their audit documentation, without identifying the date they were added or the 
+reason for adding them, Respondents violated Public Company Accounting Oversight 
+Board (“PCAOB”) Auditing Standard No. 3.  Respondents’ conduct, as further described 
+below, constituted improper professional conduct within the meaning of Rule 102(e)(1)(ii) 
+and (iv).  
+ 
+Respondents 
+ 
+ 2. Pollard Kelley Auditing Services, Inc. is a Colorado corporation licensed 
+to do business in Colorado and Ohio.  Pollard-Kelley is a public accounting firm 
+registered with the PCAOB.  According to corporate filings, its principal place of 
+business is Kelley’s Colorado home.  Pollard-Kelley has five employees, including 
+Kelley.  The firm served as Pegasus’ independent auditor from mid-2005 through 
+approximately November 2007.  As auditor, Pollard-Kelley opined that Pegasus’ 2005 
+and 2006 financial statements were prepared in conformity with Generally Accepted 
+Accounting Principles (“GAAP”) and that Pollard-Kelley had conducted audits in 
+accordance with the PCAOB’s standards.  
+ 
+ 3. Terance Kelley, CPA, age 62, resides in Lake City, Colorado.  He formed 
+Pollard-Kelley and is its vice president of audit services.  He performs the vast majority of 
+                                                                                                                                                
+ 
+unreasonable conduct, each resulting in a violation of applicable professional standards, 
+that indicate a lack of competence to practice before the Commission. 
+ 2
+the firm’s audits and performed the audits of Pegasus’ 2005 and 2006 financial statements, 
+as well as quarterly reviews of Pegasus financial statements through approximately 
+November 2007.  He is licensed as a certified public accountant in Ohio.  
+ 
+Related Party 
+ 
+ 4. Pegasus Wireless Corporation is a Nevada corporation formed in 2000.  
+After several failed enterprises, it became a shell company by 2003.  In June 2005, through 
+a series of reverse mergers, it acquired OTC Wireless, Inc., a private company incorporated 
+in California that designs wireless networking devices.  Pegasus had headquarters in 
+Fremont, California, until about January 2007.  It currently maintains a mailbox in Palm 
+Beach, Florida.  During the relevant period, its securities were registered pursuant to 
+Section 12 of the Securities Exchange Act of 1934 (“Exchange Act”).  Its shares most 
+recently traded on the OTC Bulletin Board and briefly traded on NASDAQ in 2006.  
+Pegasus filed for bankruptcy in January 2008. 
+ 
+Respondents’ Improper Professional Conduct
+ 
+ 
+ Pegasus’ Fraud Scheme 
+ 
+ 5. From 2006 through 2008, Pegasus officers defrauded investors by creating 
+backdated promissory notes memorializing a phony debt, which they used to issue 
+unrestricted shares of Pegasus stock to individuals and entities they controlled.  Pegasus 
+issued nearly 480 million shares – 75% of its outstanding shares – based on the fake, 
+backdated promissory notes, resulting in massive dilution of the existing shareholders’ 
+ownership interest.  The individuals and entities who received shares dumped the stock on 
+the open market and funneled many millions in proceeds to Pegasus officers.   
+ 
+6. Pegasus misled investor s about why it issued the shares.  For example, in 
+the financial statements included in its quarterly report on Form 10-QSB for the quarter 
+ended September 30, 2006, Pegasus stated:  “During the third quarter the Company issued 
+5,276,016 shares to satisfy $263,800 debt [sic] owed by the Company from prior to the 
+change in control [in 2005].”  Similarly, in the financial statements in its annual report on 
+Form 10-KSB for the year ended December 31, 2006, Pegasus represented:   
+ 
+During 2006 the Company issued 7,376,016 shares of 
+common stock to satisfy $368,532 debt [sic] owed by the 
+Company from prior to the change in control. . . .  The 
+Company is obligated on notes payable amounting to 
+$145,000 remaining balance which were undisclosed when 
+current management took control of the shell company.  
+These notes were entered into at various times in 2003 and 
+were 2 year notes, all of which have matured.  The notes . . . 
+are convertible into common stock of the parent company at 
+the discretion of the holder.  Management two steps back 
+ 3
+failed to disclose these notes to subsequent management, 
+thus current management was unaware of their existence. 
+ 
+In truth, Pegasus officers in 2006 concocted the debt as a means to enrich themselves. 
+ 
+ Respondents’ Deficient 2006 Audit 
+ 
+7. From mid-2005 through approximately  October 2007, Respondents served 
+as Pegasus’ independent auditor, auditing the company’s 2005 and 2006 financial 
+statements and reviewing its quarterly statements through the second quarter of 2007. 
+ 
+8. In March 2007, during field work fo r the 2006 audit, Respondents noted 
+Pegasus’ disclosures that it had issued stock to pay previously undisclosed debt.  The 
+alleged debt described in the September 30, 2006 10-QSB had grown from $263,800 to 
+$368,532 at year-end, as had the number of shares issued.  (Pegasus had additional debt, 
+which had been previously disclosed, on its balance sheet.)  Moreover, the number of 
+shares issued by year-end based on the alleged debt (7,376,016) equaled more than one 
+third of Pegasus’ then-outstanding shares. 
+ 
+ 9. Respondents advised Pegasus in writi ng that they needed copies of “all 
+agreements in connection with the conversion of $368,532 of debt into common stock.”  
+Pegasus’ CFO agreed to provide the information.  Respondents also sent additional emails 
+seeking this information. 
+ 
+10. Respondents also requested Pegasus to  explain the “basis for the 7,376,016 
+shares of common stock issued to satisfy $368,532 of debt.”  On March 28, 2007, Pegasus’ 
+CFO replied in writing:  “Huh? isn’t that rather obvious.”  Kelley’s contemporaneous notes 
+reflect that he continued to have questions about the item. 
+ 
+11. Pegasus failed to provide the promis ed information or other substantiation 
+or explanation for the alleged debt.  Pegasus also failed to provide additional requested 
+information to Respondents, including detail for prepaid expenses; a cash summary, bank 
+reconciliations, and bank statements; supporting invoices for research and development 
+purchases; a breakdown of the goodwill balance; and a copy of an acquisition agreement.  
+Despite these open items, Respondents rendered an unqualified opinion on Pegasus’ 2006 
+financial statements and affirmed its audit was in accordance with the PCAOB’s standards.  
+Pegasus included the opinion in its 2006 annual report on Form 10-KSB filed April 3, 
+2007.      
+   
+12. Respondents also failed to obtain a signed management representation letter 
+from Pegasus for the 2006 audit. 
+ 
+13. PCAOB auditing standards require auditors to exercise reasonable diligence 
+and due professional care in performing an audit.  “Due professional care requires the 
+auditor to exercise professional skepticism. . . . [i.e.,] an attitude that includes a 
+questioning mind and a critical assessment of audit evidence.”  AICPA Codification of 
+ 4
+Statements on Auditing Standards, “Due Professional Care in the Performance of Work,” 
+AU § 230.07.  “The auditor neither assumes that management is dishonest nor assumes 
+unquestioned honesty.  In exercising professional skepticism, the auditor should not be 
+satisfied with less than persuasive evidence because of a belief that management is 
+honest.”  AU § 230.09.  Moreover, an auditor must obtain “sufficient competent 
+evidential matter” to provide “a reasonable basis for forming an opinion.” AU § 326.22. 
+ 
+14. In addition, PCAOB auditing standard s establish a requirement that the 
+auditor obtain written representations from management as part of an audit.  AU § 333.01.  
+The specific representations an auditor should obtain relate to, among other things, 
+management’s acknowledgement of its responsibility for the financial statements; its belief 
+that the financial statements are fairly presented in conformity with GAAP, and the 
+completeness of information provided.  AU § 333.06.  Management’s refusal to furnish 
+written representations constitutes a limitation on the scope of the audit sufficient to 
+preclude an unqualified opinion and is ordinarily sufficient to cause an auditor to disclaim 
+an opinion or withdraw from the engagement.  AU § 333.13. 
+ 
+15. Respondents departed from the sta ndards described above by failing to 
+obtain competent evidential matter for the alleged debt and other matters and failing to 
+exercise professional skepticism.  
+ 
+16. Respondents further departed from these standards by failing to obtain a 
+written management representation letter from Pegasus for the 2006 audit. 
+ 
+17. During reviews of Pegasus’ quarterly financial statements for the quarters 
+ended March 31, 2007, and June 30, 2007, Respondents continued to request information 
+about the alleged debt and other items, but received nothing regarding the debt or other 
+items. 
+ 
+Respondents Added Documents to Their Audit Work Papers After the Audit 
+ 
+ 18. In late 2007, a Pegasus investor, seeking to represent a class of injured 
+shareholders, sued Pollard-Kelley and others for securities fraud.  Pollard-Kelley was 
+served with the complaint on December 29, 2007. 
+ 
+ 19. On January 1, 2008, Kelley e-mailed the Pegasus CFO and CEO, stating:  
+“We have been named defendants in [a lawsuit] against Pegasus, et al.  Please give me a 
+call and bring me up to date concerning this matter.”  The e-mail further stated:  “ALSO, 
+THIS IS THE TIME TO GET THE FINAL SCHEDULES NEEDED FOR THE 2006 
+AUDIT TO ME!!!!!!”  
+ 
+20. On February 19, 2008,  in connection with its investigation relating to 
+Pegasus, SEC staff requested Pollard-Kelley to produce documents, including documents 
+relating to Pegasus’ disclosures about how and why it issued shares to pay the purported 
+convertible debt. 
+ 
+ 5
+ 21. In early 2008, having received notice of a shareholder suit involving 
+Pegaus, Respondents added an unsigned, written management representation letter to the 
+audit work papers.  The letter purported to reflect the CEO and CFO’s confirmation that the 
+2006 financial statements are fairly presented in conformity with GAAP; that they made 
+available to Pollard-Kelley all financial records and related data; and that they had no 
+knowledge of fraud involving management.  The letter was not signed by Pegasus’ CEO or 
+CFO.  Rather, Kelley made a handwritten note on the last page of the letter:  “Verbally 
+acknowledged & confirmed . . . by [Pegasus’ CFO] over the phone.  Hard copy to follow.”   
+ 
+22. Kelley, however, testified that he added the workpaper to the audit 
+documentation in 2008.   
+23. In addition to adding the written management representation letter to the 
+audit documentation, Respondents added an undated memo to explain why they opined on 
+Pegasus’ 2006 financial statements despite numerous open items.  The memo states:  
+At the time [Pegasus filed its 10-KSB] a request for 
+additional information and support was made to the client . . 
+. . [W]e were told the materials requested would be 
+provided.  The 45 day period of wrapping up audit 
+documentation passed on May 13, 2007 without the receipt 
+of the requested materials. 
+At that time the firm considered what it should do.  
+Provisions of AU 390 were considered.  The firm knew of 
+no reason to suspect the accuracy of the filed financial 
+statements.  [The] CFO is a knowledgeable, competent 
+experiences [sic] accountant, with many years experience.  
+Past audits have shown a consistent accuracy of the 
+Company’s records under [the CFO’s] leadership.  We did 
+not know or have any reason to believe the statements as 
+filed were misleading . . . . 
+We concluded that even with the omitted procedures our 
+audit work papers still supported our opinion.  However, we 
+will continue to try to obtain the information requested the 
+complete the additional audit procedures for the items 
+requested on [the 10-KSB filing date]. 
+24. When Kelley created the document in early 2008 and added it, he was still 
+being told by the CFO of Pegasus that documentation was forthcoming, but he was 
+suspicious whether the CFO would ever provide the requested documents. 
+25. PCAOB Auditing Standard  No. 3 provides that “[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” (i.e., the “date the auditor grants permission to use the 
+auditor’s report in connection with the issuance of the company’s financial statements”).  
+ 6
+¶¶ 14-15.  Although the standard recognizes that “[c]ircumstances may require additions to 
+audit documentation after the report release date,” it states that “[a]ny documentation added 
+must indicate the date information was added, the name of the person who prepared the 
+additional documentation, and the reason for adding it.”  ¶ 16. 
+26. Respondents departed from this sta ndard by adding the written management 
+representation to the audit documentation in early 2008 without indicating when it was 
+added or the reason for adding it. 
+27. Respondents further departed from this standard by adding the undated 
+memo to the audit documentation without indicating when it was added.         
+ 
+Violations 
+ 
+ 28. Rule 102(e)(1) provides, in pertinen t part:  “The Commission may censure a 
+person or deny, temporarily or permanently, the privilege of appearing or practicing before 
+it . . . to any person who is found . . . (ii) to be lacking in character or integrity or  to have 
+engaged in unethical or improper professional conduct.”  With respect to persons licensed 
+to practice as accountants, Rule 102(e)(1)(iv) provides that “improper professional 
+conduct” means:   
+ 
+(A) Intentional or knowing conduct, including reckless conduct, that results 
+in a violation of applicable professional standards; or (B) Either of 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.   
+(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. 
+ 
+Findings
+ 
+ 
+29. Based on the foregoing, the Commission finds that Respondents engaged in 
+improper professional conduct pursuant to 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 Respondents’ Offer. 
+ 
+ 
+ 
+ 7
+ 
+ 
+ Accordingly, it is hereby ORDERED, effective immediately, that : 
+ 
+A.  Respondents are each denied the privilege of appearing or practicing 
+before the Commission as an accountant.  
+ 
+B. After five years from the date of th is order, Respondents may each request 
+that the Commission consider his or its 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.  If submitted by Kelley, such an application must satisfy the Commission 
+that Kelley’s work in his practice before the Commission 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 
+      
+  2.    an independent accountant.  Such an application must satisfy the 
+Commission that: 
+      
+           (a) Respondents, or the public accounting firm with which 
+Kelley is associated, are 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) Respondents, or the regi stered public accounting firm with 
+which Kelley is associated, have been inspected by the Board and that inspection did not 
+identify any criticisms of or potential defects in Kelley’s or the firm’s quality control 
+system that would indicate that Kelley will not receive appropriate supervision; 
+ 
+   (c) Respondents have resolved all disciplinary issues with the 
+Board, and each has complied with all terms and conditions of any sanctions imposed by 
+the Board (other than reinstatement by the Commission); and 
+ 
+   (d) Respondents each acknowledge  his or its responsibility, as 
+long as either Respondent 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.   
+ 
+C. The Commission will consider an a pplication by either Respondent to 
+resume appearing or practicing before the Commission provided that his or its state CPA 
+license is current and he or it has resolved all other disciplinary issues with the applicable 
+state boards of accountancy.  However, if state licensure is dependent on reinstatement by 
+ 8
+ 9
+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 either Respondent’s character, integrity, professional 
+conduct, or qualifications to appear or practice before the Commission. 
+ 
+ 
+ By the Commission. 
+ 
+ 
+ 
+       Elizabeth M. Murphy 
+       S e c r e t a r y  
+ 

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+UNITED STATES OF AMERICA 
+Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 61325 / January 11, 2010 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 3101 / January 11, 2010 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13742 
+: 
+In the Matter of : ORDER INSTITUTING CEASE-AND-DESIST 
+: PROCEEDINGS, MAKING FINDINGS, AND 
+NATCO GROUP INC. : IMPOSING A CEASE-AND-DESIST ORDER 
+: PURSUANT TO SECTION 21C OF THE 
+: SECURITIES EXCHANGE ACT OF 1934 
+Respondent. : 
+: 
+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 NATCO Group Inc. (“Respondent” 
+or “NATCO”). 
+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 Respondent and the subject 
+matter of these proceedings, which are admitted, Respondent consents to the entry of this Order 
+Instituting Cease-and-Desist Proceedings, Making Findings, and Imposing a Cease-and-Desist 
+Order Pursuant to Section 21C of the Securities Exchange Act of 1934 (“Order”), as set forth 
+below. 
+ 
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+                                                 
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+III. 
+On the basis of this Order and Respondent’s Offer, the Commission finds1 that: 
+Summary 
+1. In this Foreign Corrupt Practices Act case, TEST Automation & Controls, Inc. 
+(“TEST”), a wholly owned subsidiary of oil field services provider NATCO Group Inc., created 
+and accepted false documents while paying extorted immigration fines and obtaining 
+immigration visas in the Republic of Kazakhstan.  NATCO’s system of internal accounting 
+controls failed to ensure that TEST recorded the true purpose of the payments, and NATCO’s 
+consolidated books and records did not accurately reflect these payments.   
+Respondent 
+2. NATCO Group Inc., a Delaware corporation with its headquarters in Houston, 
+Texas, designs, manufactures, and markets oil and gas production equipment and systems that 
+are used worldwide. At the time of the events  discussed in this Order, NATCO’s common stock 
+was registered with the Commission pursuant to Section 12(b) of the Exchange Act and was 
+listed on the New York Stock Exchange.
+2 
+Other Relevant Entities 
+3. TEST Automation & Controls, Inc. is a Louisiana corporation and, at all relevant 
+times, was headquartered in Harvey, Louisiana.  TEST is a wholly-owned subsidiary of 
+NATCO.3  TEST fabricates and sells control panels and packaged automation systems, as well as 
+providing field services associated with repair, maintenance, inspection and testing of onshore 
+and offshore control systems.  TEST, at all relevant times, maintained a branch office in 
+Kazakhstan (“TEST Kazakhstan”). 
+Facts 
+A. Background 
+4. In June 2005, TEST Kazakhstan won a contract to provide instrumentation and 
+electrical services in Kazakhstan. To perf orm the services, TEST Kazakhstan hired both 
+expatriates and local Kazakh workers. Kaza khstan law required TEST to obtain immigration 
+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. 
+2 The registration of NATCO’s common stock, and its listing on the NYSE, ended on November 18, 2009, when 
+NATCO became a subsidiary of Cameron International Corporation (“Cameron”), a publicly held reporting 
+corporation listed on the NYSE.  
+3 TEST also became a subsidiary of Cameron, following NATCO’s acquisition by Cameron. 
+ 
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+                                                
+ 
+   
+documentation before an expatriate worker entered the country.  Kazakhstan immigration 
+authorities periodically audited immigration documentation of TEST Kazakhstan and other 
+companies operating in Kazakhstan for compliance with local law. 
+B. Cash Payments to Kazakh Immigration Prosecutor 
+5. In February 2007 and September 2007, Kazakh immigration prosecutors 
+conducted audits and claimed that TEST Kazakhstan’s expatriate workers were working without 
+proper immigration documentation.  The prosecutors threatened to fine, jail or deport the 
+workers if TEST Kazakhstan did not pay cash fines. 
+6. Believing the prosecutor’s threats to be genuine, employees with TEST 
+Kazakhstan sought guidance from TEST’s senior management in Harvey, Louisiana, who 
+authorized making the payments.  TEST Kazakhstan employees used personal funds to pay the 
+prosecutors $25,000 in February and $20,000 in September, and then obtained reimbursement 
+from TEST.     
+7. For the February 2007 payment, TEST made a $25,000 wire transfer to the 
+affected employee. TEST inaccurately described the transfer as “an advance against his [the 
+paying employee's] bonus payable in March.”  Moreover, the email noted the bonus would be 
+“substantial,” to further disguise the true reason for the transfer.  In addition, TEST’s letter to the 
+bank providing the wire instructions inaccurately described the payment as a “Payroll Advance.”  
+After the wire transfer was transmitted, TEST inaccurately recorded the payment in its books and 
+records as a salary advance.   
+8. TEST made a $20,000 wire transfer to reimburse the September 2007 payment.  
+The wire transfer and journal entry in TEST’s books described the purpose of the transfer as 
+“visa fines.” 
+C. Inaccurate Consultant Invoices for Visa Services 
+9. TEST Kazakhstan used consultants to assist it in obtaining immigration 
+documentation for its expatriate employees.  One of these consultants did not have a license to 
+perform visa services, but maintained close ties to an employee working at the Kazakh Ministry 
+of Labor, the entity issuing the visas. On tw o instances, the consultant requested cash from 
+TEST Kazakhstan to help him obtain the visas.  Because Kazakh law requires companies seeking 
+to withdraw cash from commercial bank accounts to submit supporting invoices, the consultant 
+provided TEST Kazakhstan bogus invoices for “cable” from third-party entities he controlled.  
+TEST Kazakhstan knew these invoices were false, but nonetheless presented them to Kazakh 
+banks to withdraw the requested cash.
+4  TEST Kazakhstan later submitted the false invoices – 
+which totaled in excess of $80,000 – to TEST for reimbursement.  TEST reimbursed these 
+requests despite knowing the invoices mischaracterized the true purpose of the services rendered. 
+4 It is not known how the consultant used these funds, or to whom they were paid. 
+ 
+ 
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+       
+                                                 
+ 
+D. Discovery of Payments, Internal Investigation, and Remediation 
+10. During a routine internal audit review in late 2007, NATCO discovered potential 
+issues involving payments at TEST.  NATCO conducted an internal investigation, and 
+voluntarily disclosed the results to Commission staff.  NATCO undertook numerous remedial 
+measures, including employee termination and disciplinary actions.  The company also created a 
+revised form document for agent agreements and established new due diligence procedures 
+regarding the vetting and retention of third-party intermediaries; increased staffing in its global 
+compliance department, including the appointment of a full-time Chief Compliance Officer; 
+joined a non-profit association specializing in anti-bribery due diligence that, among other things, 
+screens potential partners and other third parties that work with multinational corporations; 
+improved its FCPA compliance training worldwide, investing heavily in software to assist in 
+enhancing internal controls and compliance; and restructured its internal audit function and 
+enhanced its monitoring and auditing process for the compliance program. 
+11. In light of the weaknesses uncovered at TEST, the company expanded its 
+investigation to examine TEST’s other worldwide operations, including Nigeria, Angola and 
+China, geographic locations with historic FCPA concerns.  NATCO’s expanded internal 
+investigation of TEST uncovered no wrongdoing. 
+E. Legal Discussion 
+12. The FCPA, enacted in 1977, added Exchange Act Section 13(b)(2)(A) to require 
+public companies 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, and 
+added Exchange Act Section 13(b)(2)(B) to require such companies 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; 
+and (ii) transactions are recorded as necessary to permit preparation of financial statements in 
+conformity with generally accepted accounting principles or any other criteria applicable to such 
+statements, and to maintain accountability for assets. 15 U.S.C. §§ 78m(b)(2)(A) and 
+78m(b)(2)(B). 
+13. As detailed above, NATCO’s books, records, and accounts did not properly 
+reflect TEST’s reimbursement of payments to the Kazakhstan immigration prosecutor or the 
+immigration consultant.  As a result, NATCO violated Exchange Act Section 13(b)(2)(A). 
+14. In addition, NATCO failed to devise or maintain sufficient internal controls to 
+ensure that TEST complied with the books and records provisions of the FCPA and to ensure 
+that the payments TEST made were accurately reflected on its books and records.  As a result, 
+NATCO violated Exchange Act Section 13(b)(2)(B).
+5 
+5 NATCO also has agreed to pay a $65,000 civil monetary penalty. 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+     
+     
+NATCO’s Remedial Efforts 
+In determining to accept the Offer, the Commission considered the remedial efforts 
+undertaken by NATCO and the cooperation afforded the Commission Staff.   
+IV. 
+In view of the foregoing, the Commission deems it appropriate to accept the 
+Respondent’s Offer. 
+Accordingly, pursuant to Section 21C of the Exchange Act, it is hereby ORDERED that 
+NATCO cease and desist from committing or causing any violations and any future violations of 
+Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. 
+By the Commission. 
+Elizabeth M. Murphy 
+Secretary 

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+              U.S. SECURITIES AND EXCHANGE COMMISSION  Litigation Release No. 21374 / January 11, 2010  Accounting and Auditing Enforcement Release No. 3102 / January 11, 2010   Securities and Exchange Commission v. NATCO Group Inc. , Civil Action No. 4:10-CV-98 (S.D. Tex.)  SEC Files Settled Civil Action Charging NATCO Group Inc. with Violations of the Foreign Corrupt Practices Act  On January 11, 2010, the Commission filed a settled civil action in the United States District Court for the Southern District of Texas charging NATCO Group Inc. (NATCO) with violations of the books and records and internal controls provisions of the Foreign Corrupt Practice Act. According to the complaint, TEST Automation & Controls, Inc. (TEST), a wholly owned subsidiary of oil field services provider NATCO Group Inc., created and accepted false documents while paying extorted immigration fines and obtaining immigration visas in the Republic of Kazakhstan. NATCO's system of internal accounting controls failed to ensure that TEST recorded the true purpose of the payments, and NATCO's consolidated books and records did not accurately reflect these payments. Without admitting or denying the allegations in the Commission's complaint, NATCO agreed to pay a $65,000 civil penalty.  In a related administrative proceeding, the Commission today issued a settled cease-and-desist order against NATCO finding that NATCO violated the books and records and internal controls provisions of the Exchange Act in connection with the improper payments made by TEST. Without admitting or denying the Commission's findings, NATCO consented to the issuance of an order that requires NATCO to cease and desist from committing or causing any violations and any future violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. [SEC v. NATCO Group Inc., Civil Action No. 4:10-CV-98(S.D. Tex.)] (LR-21374; AAE Rel. 3102); Administrative Proceeding In the Matter of NATCO Group Inc. ¢€" (Rel. 34-61325; AAE Rel. 3101; File No. 3-13742). 								
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raw/aaer/2010/AAER-3103.txt

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+ 
+___________________________________ 
+ 
+ 
+ 
+  
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+    
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+ 
+                                                 
+ 
+UNITED STATES OF AMERICA 
+Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+Washington, D.C. 20549 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 61344A /January 13, 2010 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 3103A/January 13, 2010 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13707 
+In the Matter of   : 
+APPLIED WELLNESS CORPORATION 
+: 
+: 
+: 
+:
+ : 
+CORRECTED ORDER MAKING 
+FINDINGS AND REVOKING 
+REGISTRATION BY DEFAULT 
+___________________________________ 
+The Securities and Exchange Commission (Commission) initiated this proceeding on 
+December 10, 2009, with an Order Instituting Proceedings (OIP), pursuant to Section 12(j) of the 
+Securities Exchange Act of 1934 (Exchange Act) .  The OIP alleges that Respondent Applied 
+Wellness Corporation (Applied Wellness), is a co rporation with common stock registered with 
+the Commission pursuant to Section 12(g) of the Exchange Act, which has repeatedly failed to 
+file required periodic reports. 
+The Division of Enforcement has provided evidence that Applied Wellness was served 
+with the OIP in a manner that complies with  17 C.F.R. § 141(a)(2)(ii) by December 18, 2009. 
+Applied Wellness’ Answer was due twenty days from the date of service and no Answer has 
+been received. See 17 C.F.R. § 201.220(b); OIP at 2. Applied Wellness was put on notice, by 
+Order dated January 5, 2010, that failure to file an Answer could result in default.  Thus, Applied 
+Wellness has failed to answer or otherwise de fend the proceeding within the meaning of 17 
+C.F.R. § 201.155(a)(2). Accordingly, Applied Wellness is in default, and the following 
+allegations in the OIP are deemed to be true.  See 17 C.F.R. §§ 201.155(a), .220(f); OIP at 2-3. 
+Applied Wellness, CIK No. 0001134011, is a Neva da corporation located in San Diego, 
+California. Pursuant to its  Form 10-KSB filed on April 15, 2008, it purported to distribute 
+“devices for non-invasive therapeutic applications based on the latest adva nces in the field of 
+ionic therapies” through its s ubsidiary, Energy Balance Resources , Inc.  The common stock of 
+Applied Wellness has been regi stered with the Commission unde r Exchange Act Section 12(g) 
+since April 8, 2001. Applied Wellness common stock (symbol AWLL) 1 is quoted on the Pink 
+1 The OIP lists the common stock symbol of Applied Wellness as AAWL.  However, Applied 
+Wellness’ common stock symbol is AWLL.  All ot her references to Applied Wellness set forth 
+ 
+ 
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+                                                                                                                                                            
+ 
+ 
+Sheets, operated by Pink OTC Markets Inc., and is eligible for the “piggyback” exception of 
+Rule 15c2-11 of the Exchange Act. 
+While its common stock was registered with  the Commission, Applied Wellness failed to 
+comply with Exchange Act Section 13(a) and Rule s 13a-1 and 13a-15 thereunder in that it failed 
+to make disclosures in its Form 10-KSB for th e fiscal year ended D ecember 31, 2007, filed with 
+the Commission on April 15, 2008, concerning its inte rnal control over financial reporting and 
+disclosure controls and procedures, as required by Items 307 and 308T of Regulation S-B.   
+While its common stock was registered with  the Commission, Applied Wellness failed to 
+comply with Exchange Act Section 13(a) and Ru les 13a-1 and 13a-13 ther eunder in that it has 
+failed to file periodic or quarterly reports on Fo rm 10-Q since its fiscal quarter ended March 31, 
+2008, and failed to file an annual report on Form 10-K for fiscal year ended December 31, 2008.  
+Exchange Act Section 13(a) and the rules promulgated thereunder require issuers of 
+securities registered pursuant to Exchange Act Section 12 to file with the Commission current 
+and accurate information in periodic reports, even if the registration is voluntary under Section 
+12(g). Specifically, Exchange Act Rule 13a- 1 requires issuers to fi le annual reports and 
+Exchange Act Rule 13a-13 requires issuers to file  quarterly reports.  Exchange Act Rule 13a-15 
+requires issuers, with limited exceptions, to maintain disclosure controls and procedures, and, if 
+such an issuer either had been required to file an annual report pursuant to Section 13(a) or 15(d) 
+of the Exchange Act for the prior fiscal year or  had filed an annual repo rt with the Commission 
+for the prior fiscal year, internal control over financial reporting. 
+As a result of the conduct described above, A pplied Wellness has failed to comply with 
+Section 13(a) of the Exchange Act and Rules 13a-1, 13a-13, and 13a-15 thereunder.  Considering 
+its delinquencies, it is necessary  and appropriate for the protec tion of investors to revoke the 
+registration of each class of registered securities of Applied Wellness. 
+IT IS ORDERED THAT, pursuant to Section 12(j) of the Securities Exchange Act of 
+1934, the registration of each class of registered securities of Applied Wellness Corporation, is 
+revoked. 
+____________________________ 
+       Robert G. Mahony 
+       Administrative Law Judge 
+in the OIP are correct, including its CIK number, 0001134011, which uniquely identifies Applied 
+Wellness within the Commission’s EDGAR database.  
+2 

raw/aaer/2010/AAER-3104.txt

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+ 
+ 
+ 
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+       
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+                                                
+ 
+ 
+ 
+ UNITED STATES OF AMERICA 
+ before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 61375 / January 19, 2010 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 3104 / January 19, 2010 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13751 
+: 
+: 
+: 
+In the Matter of : ORDER INSTITUTING PUBLIC 
+: ADMINISTRATIVE PROCEEDINGS 
+ DIANE BJORKSTROM (CPA), : PURSUANT TO RULE 102(e) OF THE 
+: COMMISSION’S RULES OF PRACTICE, 
+Respondent. : 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 Diane 
+Bjorkstrom (“Respondent” or “Bjorkstrom”) 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 
+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. 
+ 
+ 
+ 
+ 
+ 
+ 
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+ 
+ 
+ 
+ 
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+ 
+ 
+ 
+ 
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+ 
+ 
+  
+ 
+  
+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 her 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 
+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. Bjorkstrom, age 53, is and has been a certified public accountant holding an 
+inactive license to practice in the State of Pennsylvania.  She served as Chief Financial Officer of 
+Tvia, Inc. (“Tvia”) from September 2004 through October 2006. 
+2. Tvia was, at all relevant times, a Delaware corporation with its principal 
+place of business in Santa Clara, California.  Tvia is a fabless semiconductor company which 
+designs and develops digital display processors for use in LCD and other high-definition TVs.  At 
+all relevant times, Tvia’s common stock was registered with the Commission pursuant to Section 
+12(g) of the Securities Exchange Act of 1934 (“Exchange Act”) and traded on the NASDAQ 
+Global Market. 
+3. On November 17, 2009, the Commission filed a complaint against 
+Bjorkstrom in SEC v. Diane Bjorkstrom (Civil Action No. CV-09-5394-JW).  On January 6, 2010, 
+the court entered an order permanently enjoining Bjorkstrom, by consent, from future violations of 
+Sections 17(a)(2) and (3) of the Securities Act of 1933 and Section 13(b)(5) of the Exchange Act 
+and Rules 13a-14 and 13b2-1 thereunder, and aiding and abetting 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 
+thereunder.  Bjorkstrom was also ordered to pay a $20,000 civil money penalty. 
+4. The Commission’s complaint alleged, among other things, that 
+Bjorkstrom agreed to ship product and recognize revenue for a sale that she knew or should have 
+known did not have the paperwork necessary to satisfy Tvia’s revenue recognition policy, resulting 
+in Tvia’s filing of materially false and misleading financial statements in the company’s annual 
+report on Form 10-K for the fiscal year ended March 31, 2006. 
+IV. 
+In view of the foregoing, the Commission deems it appropriate and in the public interest to 
+impose the sanction agreed to in Respondent Bjorkstrom’s Offer. 
+Accordingly, it is hereby ORDERED, effective immediately, that: 
+A. Bjorkstrom is suspended from appearing or practicing before the Commission as an 
+accountant. 
+2
+ 
+ 
+ 
+   
+ 
+      
+        
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+      
+     
+      
+           
+ 
+ 
+ 
+ 
+ 
+      
+   
+ 
+B. After two years from the date of this order, Respondent 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: 
+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.  Such 
+an application must satisfy the Commission that Respondent’s work in her practice before the 
+Commission 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 
+2. an independent accountant. Such an application must satisfy the 
+Commission that: 
+(a) Respondent, or the public accounting firm with which she 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 
+she 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 her responsibility, as long as 
+Respondent 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. 
+C. The Commission will consider an application by Respondent 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 
+3
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+   
+ 
+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. 
+ By the Commission. 
+       E l i z a b e t h M . M u r p h y
+       S e c r e t a r y 
+4
+ 

raw/aaer/2010/AAER-3105.txt

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+ 
+ 
+ 
+ 
+ 
+       
+  
+ 
+       
+     
+      
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+  
+       
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+   
+ 
+ 
+ 
+   
+ 
+                                                 
+ 
+ 
+  
+   
+ 
+    
+    
+ 
+ UNITED STATES OF AMERICA 
+ before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 61383 / January 20, 2010 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 3105 / January 20, 2010 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13754 
+: 
+In the Matter of : ORDER INSTITUTING PUBLIC 
+: ADMINISTRATIVE PROCEEDINGS 
+: PURSUANT TO RULE 102(e) 
+THEODORE P. NONCEK, CPA: OF THE COMMISSION’S RULES 
+: OF PRACTICE, MAKING FINDINGS,  
+: AND IMPOSING REMEDIAL 
+Respondent. : 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 
+Theodore P. Noncek, CPA (“Respondent” or “Noncek”) 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 . . . accountant . . . who has been by name: 
+(A) permanently enjoined by any court of competent jurisdiction, by reason of his or her 
+misconduct in an action brought by the Commission, from violating or aiding and abetting the 
+violation of any provision of the Federal securities laws or of the rules and regulations thereunder. 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+  
+ 
+ 
+  
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+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 
+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. Noncek, age 51, was Vice-President and Controller of Bally Total Fitness 
+Holding Corporation (“Bally”) from 2001 to February 2005, when he was terminated.  Prior to his 
+employment at Bally, Noncek was an auditor with Ernst & Young LLP.  At all relevant times, 
+Noncek was a certified public accountant. 
+2. Bally purported to be the largest, and only nationwide, commercial operator 
+of fitness centers.  At all relevant times, Bally'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”).  The NYSE delisted Bally's common stock on June 8, 
+2007. After filing for reorganization under Chapter 11 of the Bankruptcy Code, on September 17, 
+2007, Bally emerged as a privately held reorganized entity.   
+3. On December 17, 2009, the Commission filed a complaint against Noncek 
+in SEC v. Theodore P. Noncek, 09-CV-2387 (CKK)(D.D.C.).  On December 22, 2009, the court 
+entered an order permanently enjoining Noncek, by consent, from violating Sections 17(a)(2) and 
+(3) of the Securities Act of 1933, and from aiding and abetting 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 
+thereunder. 
+4. The Commission’s complaint alleges, among other things, that during the 
+relevant time period, Noncek violated various provisions of the federal securities laws.  The 
+complaint also alleges that Noncek, with others, was responsible for Bally’s materially false and 
+misleading statements about its financial condition in filings with the Commission and in other 
+public statements. These materially false and misleading statements portrayed Bally's financial 
+condition (its net worth) and its performance (its income) as being materially better than they 
+actually were during the relevant period.  
+2
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+  
+ 
+      
+        
+ 
+      
+  
+      
+           
+ 
+ 
+ 
+ 
+ 
+      
+  
+IV. 
+In view of the foregoing, the Commission deems it appropriate and in the public interest to 
+impose the sanction agreed to in Respondent Noncek’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 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.  Such 
+an application must satisfy the Commission that Respondent’s work in his practice before the 
+Commission 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. 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 
+Respondent 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. 
+C. The Commission will consider an application by Respondent to resume 
+appearing or practicing before the Commission provided that his state CPA license is 
+3
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+   
+ 
+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. 
+ By the Commission. 
+       E l i z a b e t h M . M u r p h y
+       S e c r e t a r y 
+4
+ 

raw/aaer/2010/AAER-3106.txt

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+ 
+ 
+ 
+ 
+ 
+      
+ 
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+   
+       
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+  
+   
+ 
+ 
+ 
+   
+ 
+                                                
+ 
+ 
+ 
+  
+   
+ 
+    
+    
+ 
+ UNITED STATES OF AMERICA 
+ before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 61384 / January 20, 2010 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 3106 / January 20, 2010 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13755 
+: 
+In the Matter of : ORDER INSTITUTING PUBLIC
+ : ADMINISTRATIVE PROCEEDINGS 
+: PURSUANT TO RULE 102(e) 
+JOHN W. DWYER, CPA : OF THE COMMISSION’S RULES 
+: OF PRACTICE, MAKING FINDINGS,  
+: AND IMPOSING REMEDIAL 
+Respondent. : 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 John W. 
+Dwyer, CPA (“Respondent” or “Dwyer”) 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 . . . accountant . . . who has been by name: 
+(A) permanently enjoined by any court of competent jurisdiction, by reason of his or her 
+misconduct in an action brought by the Commission, from violating or aiding and abetting the 
+violation of any provision of the Federal securities laws or of the rules and regulations thereunder. 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+  
+ 
+  
+ 
+ 
+ 
+ 
+ 
+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 
+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. Dwyer, age 57, was Chief Financial Officer (“CFO”) of Bally Total Fitness 
+Holding Corporation (“Bally”) from May 1994 to April 2004, when he was forced to resign.  Prior 
+to his employment at Bally, Dwyer was an audit partner in the Chicago office of Ernst & Young 
+LLP. At all relevant times, Dwyer was a certified public accountant. 
+2. Bally purported to be the largest, and only nationwide, commercial operator 
+of fitness centers.  At all relevant times, Bally'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”).  The NYSE delisted Bally's common stock on June 8, 
+2007. After filing for reorganization under Chapter 11 of the Bankruptcy Code, on September 17, 
+2007, Bally emerged as a privately held reorganized entity.   
+3. On December 17, 2009, the Commission filed a complaint against Dwyer in 
+SEC v. John W. Dwyer, 09-CV-2386 (CKK)(D.D.C.).  On December 22, 2009, the court entered 
+an order permanently enjoining Dwyer, by consent, from violating Section 17(a) of the Securities 
+Act of 1933, and Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5 and 13b2-1 
+thereunder, and from aiding and abetting 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 thereunder. 
+4. The Commission’s complaint alleges, among other things, that during the 
+relevant time period, Dwyer violated the anti-fraud provisions, and aided and abetted Bally’s 
+violations of the reporting, record-keeping, and internal controls provisions, of the Federal 
+securities laws.  The complaint also alleges that Dwyer is responsible for Bally’s materially false 
+and misleading statements about its financial condition in filings with the Commission and in 
+other public statements. These materially false and misleading statements portrayed Bally's 
+financial condition (its net worth) and its performance (its income) as being materially better than 
+they actually were during the relevant period. 
+2
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+   
+ 
+IV. 
+In view of the foregoing, the Commission deems it appropriate and in the public interest to 
+impose the sanction agreed to in Respondent Dwyer’s Offer. 
+Accordingly, it is hereby ORDERED, effective immediately, that: 
+Dwyer is suspended from appearing or practicing before the Commission as an accountant.   
+ By the Commission. 
+       E l i z a b e t h M . M u r p h y
+       S e c r e t a r y 
+3
+ 

raw/aaer/2010/AAER-3107.txt

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+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+         
+  
+ 
+      
+   
+      
+   
+       
+  
+   
+ 
+ 
+ 
+ 
+   
+ 
+ 
+ 
+ 
+                                                 
+ 
+ 
+ UNITED STATES OF AMERICA 
+ before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 61385 / January 20, 2010 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 3107 / January 20, 2010 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13756 
+: 
+In the Matter of : ORDER INSTITUTING ADMINISTRATIVE 
+: PROCEEDINGS PURSUANT TO RULE 
+DEANNA J. SERUGA, CPA : 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 Deanna 
+J. Seruga (“Respondent” or “Seruga”) 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 . . . 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. 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+  
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+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 her 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 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. Seruga, age 33, has been a certified public accountant licensed to practice in 
+the Commonwealth of Pennsylvania. She served as Controller at World Health Alternatives, Inc. 
+(“World Health”) from 2003 until August 2005. 
+2. World Health was, at all relevant times, a Florida corporation with its 
+principal place of business in Pittsburgh, Pennsylvania.  World Health was engaged in the medical 
+staffing business. At all relevant times, World Health common stock was registered with the 
+Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934 (“Exchange Act”), 
+and traded on the Over the Counter Bulletin Board.   
+3. On January 4, 2010, a final judgment was entered by consent against 
+Seruga, permanently enjoining her from future violations of Section 17(a) of the Securities Act of 
+1933, Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13b2-1 and 13b2-2(b) 
+thereunder, and aiding and abetting violations of Section 13(a) of the Exchange Act and Rules 12b-
+20, 13a-1 and 13a-13 thereunder, in the civil action entitled Securities and Exchange Commission 
+v. Richard E. McDonald, et al., Civil Action Number 09-CV-1685, in the United States District 
+Court for the Western District of Pennsylvania.   
+4. The Commission’s complaint alleged, among other things, that Seruga, at the 
+direction of World Health’s former President and Chief Executive Officer and on her own 
+accord, engaged in a fraudulent scheme that resulted in World Health filing materially false and 
+misleading financial statements in the company’s annual and quarterly reports from the first 
+quarter of 2003 through the first quarter of 2005.  The complaint alleged that Seruga falsified 
+World Health’s books and records by, among other things, understating expenses and liabilities 
+through numerous false and improper accounting entries.  In addition, the complaint alleged that 
+Seruga knowingly provided false information to World Health’s auditors.  
+2
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+   
+ 
+IV. 
+In view of the foregoing, the Commission deems it appropriate and in the public interest to 
+impose the sanction agreed to in Respondent Seruga’s Offer. 
+Accordingly, it is hereby ORDERED, effective immediately, that Seruga is suspended from 
+appearing or practicing before the Commission as an accountant. 
+ By the Commission. 
+       E l i z a b e t h M . M u r p h y
+       S e c r e t a r y 
+3
+ 

raw/aaer/2010/AAER-3108.txt

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+
+
+ 
+ 
+   
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+              U.S. SECURITIES AND EXCHANGE COMMISSION  Litigation Release No. 21384 / January 20, 2010  Accounting and Auditing Enforcement Release No. 3108 / January 20, 2010   Securities and Exchange Commission v. General Re Corporation , Civil Action No. 10 Civ 458 (S.D.N.Y.)  SEC Charges General Re Corporation for Role in AIG and Prudential Accounting Frauds  The Securities and Exchange Commission today charged General Re Corporation for its involvement in separate schemes by American International Group and Prudential Financial, Inc. to manipulate and falsify their reported financial results.  The complaint alleges that a foreign subsidiary of Gen Re entered into two sham "reinsurance" transactions with AIG in 2000 to improperly allow AIG to reverse the declining reserve trend and falsely report additions to both loss reserves and premiums written. Senior officials at Gen Re helped AIG structure the two sham transactions. The contracts show reinsurance transactions that appeared to transfer risk to AIG, but the transactions did not transfer risk.  The complaint further alleges that Gen Re separately entered into a series of sham reinsurance contracts with Prudential's property and casualty division from 1997 to 2002. The contracts had no economic substance and purpose other than to allow Prudential to build up and then draw down on an off-balance sheet asset or "finite bank" parked with Gen Re. As a result of the sham transactions, Prudential improperly recognized more than $200 million in revenues in 2000, 2001, and 2002. Gen Re received fees totaling $8.1 million for structuring and executing the scheme with Prudential.  Without admitting or denying the allegations in the complaint, Gen Re has consented to a judgment enjoining it from aiding and abetting violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 and directing it to pay $12.2 million in disgorgement and prejudgment interest. The settlement is subject to court approval.  In determining to accept Gen Re's settlement offer, the SEC took Gen Re's remediation efforts and cooperation into account. Among the efforts SEC considered: Gen Re's comprehensive, independent review of its operations conducted at the outset of the government's investigations the results of which were shared with investigators; Gen Re's substantial assistance in the government's successful civil and criminal actions against individuals involved in the scheme with AIG; and Gen Re's internal corporate reforms designed to strengthen oversight of its operations. Those reforms entail dissolving a subsidiary involved with the AIG transactions, appointing an independent director to its Board of Directors, forming a committee consisting of senior managers to review and approve complex transactions, requiring legal review of proposed finite or loss mitigation contracts, and fortifying its internal audit functions and underwriting rules.  The SEC previously charged AIG with securities fraud and improper accounting, and the company settled the charges by paying more than $800 million among other remedies. The SEC also previously charged AIG former chairman Maurice R. "Hank" Greenberg and former chief financial officer Howard I. Smith, as well as former senior executives of Gen Re for their roles in connection with the scheme with AIG. The Commission separately charged Prudential with securities laws violations in 2008. 								
+								 
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raw/aaer/2010/AAER-3110.txt

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+   
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+                                                 
+    
+ 
+UNITED STATES OF AMERICA  
+Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934  
+Release No. 61432 / January 27, 2010 
+ACCOUNTING AND AUDITING ENFORCEMENT  
+Release No. 3110 / January 27, 2010 
+ADMINISTRATIVE PROCEEDING  
+File No. 3-11911 
+: ORDER GRANTING APPLICATION FOR 
+: REINSTATEMENT TO APPEAR AND PRACTICEIn the Matter of : BEFORE THE COMMISSION AS AN ACCOUNTANT 
+: RESPONSIBLE FOR THE PREPARATION OR Karen T. Baker, CPA : REVIEW OF FINANCIAL STATEMENTS REQUIRED 
+: TO BE FILED WITH THE COMMISSION 
+On April 26, 2005, Karen T. Baker (“Baker”) was denied the privilege of appearing or 
+practicing as an accountant before the Commission as a result of settled public administrative 
+proceedings instituted by the Commission against Baker pursuant to Rule 102(e) of the 
+Commission's Rules of Practice.1  Baker consented to the entry of the April 26, 2005 order 
+without admitting or denying the findings therein.  This order is issued in response to Baker’s 
+application for reinstatement to practice before the Commission as an accountant. 
+Baker served as the audit manager for Deloitte & Touche LLP’s audit of Just for Feet, 
+Inc.’s financial statements for the fiscal year ended January 30, 1999.  The Commission found 
+that Baker reasonably should have known that the financial statements had not been prepared in 
+accordance with GAAP, but nonetheless issued, with others, an unqualified audit report that 
+represented that the financial statements were free from material misstatements and were fairly 
+presented in conformity with GAAP and that the auditors had adhered to GAAS when the audit 
+was performed. Baker did not comply with GAAS in the conduct of the audit and engaged in 
+improper professional conduct within the meaning of Rule 102(e)(1)(ii) of the Commission’s 
+Rules of Practice through repeated instances of unreasonable conduct. 
+In her capacity as a preparer or reviewer, or as a person responsible for the preparation or 
+review, of financial statements of a public company to be filed with the Commission, Baker 
+attests that she will undertake to have her work reviewed by the independent audit committee of 
+1 See Accounting and Auditing Enforcement Release No. 2238 dated April 26, 2005.  Baker was permitted, pursuant 
+to the order, to apply for reinstatement after one year upon making certain showings. 
+   
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+                                                
+ 
+ 
+ 
+ 
+    
+    
+any company for which she works, or in some other manner acceptable to the Commission, 
+while practicing before the Commission in this capacity.  Baker is not, at this time, seeking to 
+appear or practice before the Commission as an independent accountant.  If she should wish to 
+resume appearing and practicing before the Commission as an independent accountant, she will 
+be required to submit an application to the Commission showing that she has complied and will 
+comply with the terms of the original suspension order in this regard.  Therefore, Baker’s 
+suspension from practice before the Commission as an independent accountant continues in 
+effect until the Commission determines that a sufficient showing has been made in this regard in 
+accordance with the terms of the original 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 Baker, it appears that she has complied with the terms of the April 26, 2005 order denying her 
+the privilege of appearing or practicing before the Commission as an accountant, that no 
+information has come to the attention of the Commission relating to her character, integrity, 
+professional conduct or qualifications to practice before the Commission that would be a basis 
+for adverse action against her pursuant to Rule 102(e) of the Commission's Rules of Practice, and 
+that Baker, by undertaking to have her work reviewed by the independent audit committee of any 
+company for which she works, or in some other manner acceptable to the Commission, in her 
+practice before the Commission as a preparer or reviewer of financial statements required to be 
+filed with the Commission, 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 
+Karen T. Baker, 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. 
+Elizabeth M. Murphy 
+Secretary 
+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 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). 

raw/aaer/2010/AAER-3111.txt

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+
+
+ 
+ 
+   
+     
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+ 
+ 
+
+     
+     
+     SEC.gov | Tsukuda-America Inc. et al. 
+     
+     
+     
+     
+     
+     
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+              U.S. SECURITIES AND EXCHANGE COMMISSION  Litigation Release No. 21396A/ January 28, 2010  Accounting and Auditing Enforcement Release No. 3111A / January 28, 2010   Securities and Exchange Commission v. Tsukuda-America Inc. et al. , Case No. 3:10-CV-00136-M (United States District Court for the Northern District of Texas, Dallas Division)  SEC alleges anti-fraud violations by Tsukuda-America and John W. Petros  The Securities and Exchange Commission filed a civil injunctive action on January 26, 2010 against Tsukuda-America Inc., an Indiana corporation, and John W. Petros of Richardson, Texas, alleging fraud in connection with a $600,000 offering of Tsukuda common stock. Petros, the sole officer, director and shareholder of Tsukuda, prepared and submitted Tsukuda's Form S-1 registration statement for the offering, which, according to the complaint, contained false and misleading statements and forged documents.  The Commission's complaint alleges that Tsukuda's registration statement, which was originally filed March 27, 2009, amended on April 10, 2009 and subsequently declared effective: (a) contained a forged audit report and consent; (b) falsely identified a stock transfer agent company as being the transfer agent for Tsukuda; (c) included a bogus legal opinion and geologist's report, and sham consents from an attorney and geologist who do not exist; and (d) contained fictitious financial information. The complaint also alleges that Petros caused four other companies to file registration or offering statements with the Commission that were false, misleading, and contained bogus documents.  The complaint seeks civil money penalties and permanent injunctions against future violations of Section 17(a) of the Securities Act of 1933 by Tsukuda and Petros. The complaint also seeks orders barring Petros from acting as an officer or director of a public company, from participating in an offering of penny stock, and from filing or causing the filing of any registration or offering statements with the Commission.  In a related action, the Commission also instituted administrative proceedings against Tsukuda, seeking to suspend the effectiveness of its registration statement. 								
+								 
+									             See Also:        SEC Complaint;   SEC Rel. No. 33-9102  (January 26, 2010) and the related  Division of Enforcement Statement .                  							  
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raw/aaer/2010/AAER-3112.txt

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+ UNITED STATES OF AMERICA 
+ Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 61445 / January 29, 2010 
+INVESTMENT ADVISERS ACT OF 1940 
+Release No. 2980 / January 29, 2010 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 3112 / January 29, 2010 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13770 
+In the Matter of 
+MARK EVAN BLOOM (CPA), 
+Respondent. 
+ ORDER INSTITUTING 
+ADMINISTRATIVE PROCEEDINGS 
+PURSUANT TO SECTION 203(f) OF THE 
+INVESTMENT ADVISERS ACT OF 1940 
+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 pursuant to 
+Section 203(f) of the Investment Advisers Act of 1940 (“Advisers Act”) and Rule 102(e)(3)(i) of 
+the Commission’s Rules of Practice
+1 against Mark Evan Bloom, CPA (“Respondent” or “Bloom”). 
+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 
+ 
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+                                                                                                                                                             
+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 Sections III.2 and III.4 below, which are admitted, 
+Respondent 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) 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. Bloom, 58 years old, is a resident of New York, New York.  He was the principal 
+and 100% owner of North Hills Management, LLC (“North Hills”), an unregistered investment 
+adviser that served as Manager and General Partner of North Hills, L.P. (the “Fund”).  Bloom is 
+also a certified public accountant and was licensed to practice in the State of New York. 
+2. On February 25, 2009, the Commission filed a complaint against Bloom in SEC v. 
+North Hills Management, LLC, et al., Civil Action No. 1:09-CV-1746 (JGK).  On October 22, 
+2009, the Court entered an order permanently enjoining Bloom, by consent, from future violations 
+of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 
+1934 and Rule 10b-5 thereunder, and Sections 206(1), 206(2) and 206(4) of the Advisers Act and 
+Rule 206-4(8) thereunder.  
+3. The Commission’s complaint alleged that, from on or before July 2001 to February 
+2009, in connection with the offer, sale and purchase of limited partnership interests in the Fund, 
+Bloom misused and misappropriated investor funds, falsely stated to investors that their funds were 
+invested as represented in the offering materials, sent out false account statements indicating that 
+investor funds were fully invested and earning returns, and otherwise engaged in a variety of 
+conduct which operated as a fraud and deceit on investors. 
+4. On July 30, 2009, Bloom pled guilty to one count of securities fraud in violation of 
+Title 15, United States Code, Sections 78j(b) and 78ff, Title 17, Code of Federal Regulations, 
+Section 240.10b5 and Title 18, United States Code, Section 2; one count of mail fraud in violation 
+of Title 18, United States Code, Sections 1341 and 2; one count of wire fraud, Title 18, United 
+States Code, Sections 1343 and 2; one count of money laundering, Title 18, United States Code, 
+the violation of any provision of the Federal securities laws or of the rules and regulations 
+thereunder. 
+2 
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+Sections 1957 and 2; and one count of corruptly endeavoring to obstruct and impede the due 
+administration of the internal revenue laws, Title 26, United States Code, Section 7212(a), before 
+the United States District Court for the Southern District of New York, in United States v. Mark 
+Evan Bloom (Criminal Information No. S1:09-CR-367).   
+5. The counts of the criminal information to which Bloom pled guilty alleged, inter 
+alia, that Bloom defrauded investors and obtained money and property by means of materially false 
+and misleading statements, that he used the United States mails to send false account statements, 
+that he caused commercial interstate carriers to deliver investors’ checks to him via wire, 
+transferred investor funds to unlawfully renovate his home and purchase artwork and jewelry and 
+obstructed the internal revenue laws by, among other things, promoting tax shelters. 
+IV. 
+In view of the foregoing, the Commission deems it appropriate and in the public interest to 
+impose the sanctions agreed to in Respondent’s Offer. 
+Accordingly, it is hereby ORDERED, effective immediately, that: 
+Pursuant to Section 203(f) of the Advisers Act, Respondent Bloom be, and hereby is barred 
+from association with any investment adviser; 
+Pursuant to Rule 102(e)(3)(i) of the Commission’s Rules of Practice, Respondent Bloom is 
+suspended from appearing or practicing before the Commission as an accountant. 
+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, the satisfaction of any or all of the following:  (a) any 
+disgorgement ordered against the Respondent, whether or not the Commission has fully or partially 
+waived payment of such disgorgement; (b) any arbitration award related to the conduct that served 
+as the basis for the Commission order; (c) 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 (d) any restitution order by a self-regulatory organization, whether or not related to the conduct 
+that served as the basis for the Commission order. 
+ By the Commission. 
+       E l i z a b e t h M . M u r p h y
+       S e c r e t a r y 
+3
+ 

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+                                                 
+ 
+ 
+ UNITED STATES OF AMERICA 
+ before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 61516 / February 12, 2010 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 3113 / February 12, 2010 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13781 
+: 
+: 
+: 
+In the Matter of : ORDER INSTITUTING 
+: ADMINISTRATIVE PROCEEDINGS 
+: PURSUANT TO RULE 102(e) OF THE 
+Michael J. Byrd, CPA : COMMISSION’S RULES OF PRACTICE, 
+: MAKING FINDINGS, AND IMPOSING 
+Respondent. : 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 Michael 
+J. Byrd (“Respondent” or “Byrd”) 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 . . . 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. 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+  
+  
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+  
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+ 
+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 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. Byrd, age 49, is and has been a certified public accountant licensed to 
+practice in the State of California, and his license has lapsed.  From approximately May 1999 until 
+May 2001, he served as Chief Financial Officer of Brocade Communications Systems, Inc. 
+(“Brocade”), and then became Brocade’s Chief Operating Officer from May 2001 until January 
+2003. 
+2. Brocade has been, at all relevant times, a Delaware corporation which 
+develops and sells storage networking products, with its principal place of business in San Jose, 
+California.  Since May 1999 when it completed its initial public offering of stock, Brocade had 
+common stock registered with the Commission pursuant to Section 12(g) of the Securities Exchange 
+Act of 1934 (“Exchange Act”) and traded on the NASDAQ National Market. 
+3. On August 17, 2007, the Commission filed a complaint against Byrd in the 
+United States District Court for the Northern District of California.  SEC v. Byrd, No. C-07-4223-
+CRB. On February 3, 2010, the Court entered an order enjoining Byrd, by consent, from future 
+violations of Sections 17(a)(2) and (3) of the Securities Act of 1933 (“Securities Act”), Sections 
+13(b)(5) and 16(a) of the Exchange Act, and Rules 13b2-1, 13b2-2, and 16a-3 thereunder, and 
+from aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the 
+Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder.  Byrd was also ordered to pay 
+disgorgement of $225,000 plus prejudgment interest thereon in the amount of $24,843, for a total 
+amount of $249,843, and a $175,000 civil money penalty. 
+4. The Commission’s complaint alleged, among other things, that Brocade 
+concealed millions of dollars in expenses from investors and overstated its income through a 
+scheme executed by its Chief Executive Officer to backdate employee stock options.  The 
+complaint further alleged that at various times during his tenure at Brocade, Byrd was consulted 
+on options grants, and, as a result, should have fully investigated to determine whether Brocade’s 
+financial statements accurately reflected the necessary compensation expenses, as required under 
+generally accepted accounting principles.   
+2
+ 
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+      
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+      
+           
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+ 
+ 
+ 
+      
+  
+IV. 
+In view of the foregoing, the Commission deems it appropriate and in the public interest to 
+impose the sanction agreed to in Respondent’s Offer. 
+Accordingly, it is hereby ORDERED, effective immediately, that: 
+A. Byrd is suspended from appearing or practicing before the Commission as an 
+accountant. 
+B. After three 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.  Such 
+an application must satisfy the Commission that Respondent’s work in his practice before the 
+Commission 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. 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 
+Respondent 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. 
+C. The Commission will consider an application by Respondent to resume 
+appearing or practicing before the Commission provided that his state CPA license is 
+3
+ 
+ 
+ 
+ 
+ 
+ 
+   
+ 
+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. 
+ By the Commission. 
+       E l i z a b e t h M . M u r p h y
+       S e c r e t a r y 
+4
+ 

raw/aaer/2010/AAER-3114.txt

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+ 
+ 
+ 
+ 
+ 
+ 
+                                                 
+     
+ 
+UNITED STATES OF AMERICA  
+Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934  
+Release No. 61518 / February 16, 2010 
+ACCOUNTING AND AUDITING ENFORCEMENT  
+Release No. 3114 / February 16, 2010 
+ADMINISTRATIVE PROCEEDING  
+File No. 3-12326 
+: ORDER GRANTING APPLICATION FOR 
+: REINSTATEMENT TO APPEAR AND PRACTICEIn the Matter of : BEFORE THE COMMISSION AS AN ACCOUNTANT 
+: RESPONSIBLE FOR THE PREPARATION OR Nevanna Sacks, CPA : REVIEW OF FINANCIAL STATEMENTS REQUIRED 
+: TO BE FILED WITH THE COMMISSION 
+On June 7, 2006, Nevanna Sacks, CPA (“Sacks”) was denied the privilege of appearing 
+or practicing as an accountant before the Commission as a result of settled public administrative 
+proceedings instituted by the Commission against Sacks pursuant to Rule 102(e) of the 
+Commission's Rules of Practice.1  Sacks consented to the entry of the order without admitting or 
+denying the findings therein. This order is issued in response to Sacks’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 alleged that Sacks engaged in improper professional conduct with 
+respect to certain audits and reviews of Peregrine Systems, Inc.’s (“Peregrine”) financial 
+statements by Arthur Andersen LLP (“Andersen”).  Sacks served as audit manager on 
+Andersen’s audit of Peregrine’s fiscal year 2001 financial statements and review of the 
+company’s quarterly financial statements for the third quarter of 2001 and the first, second and 
+third quarters of 2002. Sacks engaged in imprope r professional conduct by repeatedly engaging 
+in unreasonable conduct, resulting in a violation of applicable professional standards that 
+indicated a lack of competence to practice before the Commission.  Sacks (i) failed to adequately 
+audit Peregrine’s accounts receivable; (ii) did not obtain sufficient competent evidential matter to 
+conclude that Peregrine had a history of collecting on certain sales; (iii) failed to make adequate 
+inquiries into Peregrine’s agreements with customers; (iv) failed to obtain sufficient competent 
+evidential matter to afford a reasonable basis for Andersen to issue a report on the financial 
+1 See Accounting and Auditing Enforcement Release No. 2441 dated June 7, 2006.  Sacks was permitted, pursuant 
+to the order, to apply for reinstatement after two years upon making certain showings. 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+                                                
+ 
+ 
+ 
+ 
+    
+    
+ 
+statements of Peregrine, which consolidated the financial statements of Peregrine Germany, a 
+material subsidiary, after Arthur Andersen Germany refused to provide an audit report on the 
+financial statements of Peregrine Germany; (v) failed to exercise due professional care in 
+connection with Peregrine’s false and misleading response to a Commission Comment Letter; 
+and (vi) failed to exercise due professional care in connection with the audit and reviews. 
+In her capacity as a preparer or reviewer, or as a person responsible for the preparation or 
+review, of financial statements of a public company to be filed with the Commission, Sacks 
+attests that she will undertake to have her work reviewed by the independent audit committee of 
+any company for which she works, or in some other manner acceptable to the Commission, 
+while practicing before the Commission in this capacity.  Sacks is not, at this time, seeking to 
+appear or practice before the Commission as an independent accountant.  If she should wish to 
+resume appearing and practicing before the Commission as an independent accountant, she will 
+be required to submit an application to the Commission showing that she has complied and will 
+comply with the terms of the original order, which denied her privilege of appearing and 
+practicing before the Commission as an accountant, in this regard.  Therefore, the denial of 
+Sacks’s privilege of appearing or practicing before the Commission as an independent 
+accountant continues in effect until the Commission determines that a sufficient showing has 
+been made in this regard in accordance with the terms of the original 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 Sacks, it appears that she has complied with the terms of the June 7, 2006 order denying her 
+the privilege of appearing or practicing before the Commission as an accountant, that no 
+information has come to the attention of the Commission relating to her character, integrity, 
+professional conduct or qualifications to practice before the Commission that would be a basis 
+for adverse action against her pursuant to Rule 102(e) of the Commission's Rules of Practice, and 
+that Sacks, by undertaking to have her work reviewed by the independent audit committee of any 
+company for which she works, or in some other manner acceptable to the Commission, in her 
+practice before the Commission as a preparer or reviewer of financial statements required to be 
+filed with the Commission, 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 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). 
+2
+ 
+ 
+ 
+ 
+ 
+ 
+ORDERED pursuant to Rule 102(e)(5)(i) of the Commission's Rules of Practice that 
+Nevanna Sacks, 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. 
+Elizabeth M. Murphy 
+Secretary 
+3
+ 

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+              U.S. SECURITIES AND EXCHANGE COMMISSION  Litigation Release No. 21428 / March 3, 2010  Accounting and Auditing Enforcement Release No. 3117 / March 3, 2010   Securities and Exchange Commission v. Verint Systems Inc. , United States District Court for the Eastern District of New York, Civil Action No. 10-CV-0930-LDW-WDW (E.D.N.Y. March 3, 2010)  In the Matter of Verint Systems Inc.  SEC SUES VERINT FOR IMPROPER ACCOUNTING PRACTICES AND INSTITUTES EXCHANGE ACT SECTION 12(j) ADMINISTRATIVE PROCEEDINGS  The Securities and Exchange Commission today filed a civil action against Verint Systems Inc. ("Verint") alleging a fraudulent scheme involving certain improper accounting practices. The Complaint alleges the misconduct began as early as 1998, when Verint was a wholly-owned subsidiary of Comverse Technology, Inc. ("Comverse"), and continued after Verint became a publicly traded company, while still majority-owned by Comverse, in 2002. In addition, the Commission today instituted administrative proceedings against Verint to determine whether the registration of each class of its securities should be revoked or suspended for a period not exceeding twelve months for its failure to file required periodic reports for over four years.  In its settled Complaint, filed today in the United States District Court for the Eastern District of New York, the Commission alleges:    From 1998 through at least January 2003, Verint improperly established and maintained and/or released reserves as necessary to (i) meet its financial objectives, (ii) build a stockpile of reserves prior to becoming a public company for future earnings management purposes, and (iii) to ensure greater public demand and a better price for its follow-on offering in June 2003. These improper accounting practices did not conform to generally accepted accounting principles ("GAAP").    On May 16, 2002, Verint commenced its initial public offering ("IPO") of 4.5 million shares of common stock at a price of $16 per share. Its balance sheet held approximately $6.5 million excess reserves at the time. Its Form S-1 registration statement reported historical earnings and loss figures that had been materially altered by its historically improper reserve accounting. On June 13, 2003, Verint commenced a follow-on offering for 5 million shares of common stock at a price of $23 per share. Its Form S-3 registration statement reported materially misleading earnings and loss figures, including for the period after the IPO, as a result of its improper accounting for reserves.    In the two years subsequent to its follow-on offering, Verint overstated its pre-tax income and would not have met Wall Street analysts' consensus earnings estimates but for its improper reserve accounting.    The Complaint alleges that as a result of this misconduct, Verint's books and records falsely and inaccurately reflected, among other things, the Company's liabilities, expenses, net income, and general financial condition through at least the fiscal year ended January 31, 2005. The Complaint also alleges that Verint failed to maintain a system of internal accounting controls sufficient to provide assurances that its reserve activity was recorded as necessary to permit the proper preparation of financial statements in conformity with GAAP.  Without admitting or denying the allegations of the Commission's Complaint, Verint has consented to the entry of a final judgment permanently enjoining it from violating the antifraud, reporting, record-keeping, and internal controls provisions of the federal securities laws. Specifically, the proposed final judgment against Verint would permanently enjoin it from violating Section 17(a) of the Securities Act of 1933, Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934 ("Exchange Act"), and Exchange Act Rules 13a-1 and 13a-13. In accepting the settlement offer, the Commission considered, among other things, Verint's remediation and cooperation in the Commission's investigation. The settlement is subject to the approval of the United States District Court for the Eastern District of New York.  Separately, the Commission today issued an Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934 against Verint, to determine whether the registration of each class of its securities should be revoked or suspended for a period not exceeding twelve months based on its failure to file required periodic reports. The Division of Enforcement alleges that Verint has failed to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder by failing to file an annual report on either Form 10-K or Form 10-KSB since April 25, 2005, or quarterly reports on either Form 10-Q or Form 10-QSB since December 12, 2005. A hearing will be scheduled before an Administrative Law Judge to determine whether the allegations of the Division contained in the Order are true, and to provide Verint an opportunity to respond to these allegations.  For further information, see Litigation Release Nos.  19796  (August 9, 2006),  19878  (October 24, 2006),  19964  (January 10, 2007),  21090  (June 18, 2009), and  21091  (June 18, 2009). 								
+								 
+									             See Also:        SEC Complaint against Verint ;  Order Instituting Proceedings                   							  
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+              U.S. SECURITIES AND EXCHANGE COMMISSION  Litigation Release No. 21435 / March 4, 2010  Accounting and Auditing Enforcement Release No. 3118 / March 4, 2010   Securities and Exchange Commission v. Joseph Grendys et al. , Civil Action No. 07-120 (D.D.C.)  SEC ANNOUNCES SETTLEMENT WITH INDIVIDUAL CHARGED WITH AIDING AND ABETTING FINANCIAL FRAUD AT U.S. FOODSERVICE  The Securities and Exchange Commission announced today that the U.S. District Court for the District of Columbia, on March 3, 2010, entered a settled Modified Final Judgment as to defendant Anthony Holohan.  In this previously filed Commission injunctive action against Holohan and three other individuals, the alleged misconduct arose from a financial fraud at U.S. Foodservice, Inc.   Securities and Exchange Commission v. Joseph Grendys et al. , Civil Action No. 07-120 (D.D.C. filed Jan. 18, 2007 ).  Holohan is a former employee of a vendor that supplied U.S. Foodservice.  The Commission's complaint alleges that Holohan aided and abetted the financial fraud by signing and returning materially false audit confirmations.  The Commission's complaint further alleges that U.S. Foodservice personnel contacted Holohan and urged him to sign and return the false confirmation letters to the auditors for U.S. Foodservice.  At the time, U.S. Foodservice was a subsidiary of Royal Ahold (Koninklijke Ahold N.V.).  The letters clearly stated that the confirmations were being used in connection with the annual audit of the financial statements of U.S. Foodservice, and the letters directed Holohan to return them directly to U.S. Foodservice's independent auditors.    Without admitting or denying the allegations in the Commission's complaint, Holohan agreed to settle the action against him by consenting to a Final Judgment permanently enjoining him from aiding and abetting violations of Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5 and 13b2-1 thereunder and imposing a $25,000 civil penalty.  Two other defendants settled previously.    The Commission acknowledges the assistance and cooperation of the Office of the United States Attorney for the Southern District of New York, and the New York Office of the Federal Bureau of Investigation.  For further information,  see  Litigation Release No.  19975  (Jan. 22, 2007). 								
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+              U.S. Securities and Exchange Commission  LITIGATION RELEASE NO. 21444 / March 10, 2010  ACCOUNTING AND AUDITING ENFORCEMENT RELEASE NO. 3119 / March 10, 2010   Securities and Exchange Commission v. Jay Lapine  Case No. C-01-3650 WHA (N.D. Cal.)  SEC Settles Civil Fraud Injunctive Action Against Former McKesson Corporation Attorney  On March 1, 2010, a consent and final judgment against Jay Lapine was entered by the United States District Court for the Northern District of California. Lapine was charged in a previously-filed action with securities fraud in connection with a financial reporting fraud at McKesson HBOC, Inc. (now, McKesson Corporation), a Fortune 100 company headquartered in San Francisco, California. Lapine consented to the entry of judgment without admitting or denying the allegations of the Commission's complaint except as to jurisdiction.  The Commission's Complaint  The Complaint, filed September 27, 2001, alleged that Lapine, together with other senior executives, participated in a long-running fraudulent scheme to inflate the revenue and net income of HBO & Company (HBOC), an Atlanta, Georgia-based vendor of health care technology that merged with McKesson in 1999. As part of this scheme, Lapine, the General Counsel of HBOC and later, of the health care technology unit of McKesson HBOC, took part in negotiating two large backdated transactions with side agreements containing cancellation contingencies that enabled the companies to recognize revenue in earlier reporting periods. Both of these practices failed to comply with Generally Accepted Accounting Principles. The fraud enabled HBOC and McKesson HBOC to report falsely in press releases and in periodic reports HBOC filed with the Commission that the companies were having an unbroken run of financial success and had continually exceeded analysts' expectations. However, when McKesson HBOC announced in April 1999 that the company was conducting an internal investigation into financial reporting irregularities, its shares tumbled from approximately $65 to $34, a drop that slashed its market value by more than $9 billion. The Commission also alleged that Lapine failed in his gatekeeper role during the multi-year long scheme.  The Settlement  The final judgment against Lapine permanently enjoins him from violating Section 17(a) of the Securities Act of 1933 and Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5, 12b-20, 13a-13 and 13b2-1 thereunder. In addition, Lapine was barred him from acting as an officer or director of a public company for a period of five years and was ordered to pay a civil penalty of $60,000. Lapine was acquitted on November 19, 2009 of criminal charges related to the fraud at HBOC and McKesson HBOC. 								
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+UNITED STATES OF AMERICA 
+Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 61688 / March 11, 2010 
+INVESTMENT COMPANY ACT OF 1940 
+Release No. 29173 / March 11, 2010 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 3120 / March 11, 2010 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13543 
+In the Matter of 
+ROBERT JOHN HIPPLE,  
+Respondent. 
+ORDER MAKING FINDINGS AND IMPOSING 
+REMEDIAL SANCTIONS AND A CEASE-AND-
+DESIST ORDER PURSUANT TO SECTION 21C OF 
+THE SECURITIES EXCHANGE ACT OF 1934, 
+SECTIONS 9(b) AND 9(f) OF THE INVESTMENT 
+COMPANY ACT OF 1940, AND RULE 102(e)(1) OF 
+THE COMMISSION’S RULES OF PRACTICE 
+I. 
+On July 9, 2009, the Securities and Exchange Commission (“Commission”) instituted 
+public administrative and cease-and-desist proceedings pursuant to Section 21C of the Securities 
+Exchange Act of 1934 (“Exchange Act”), Sections 9(b) and 9(f) of the Investment Company Act 
+of 1940 (“Investment Company Act”), and Rule 102(e)(1) of the Commission’s Rules of Practice 
+against Robert John Hipple (“Hipple” or “Respondent”). 
+II. 
+In connection with these proceedings, Respondent Hipple 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, Hipple consents to the entry of this Order Making Findings and Imposing Remedial 
+Sanctions and a Cease-and-Desist Order Pursuant to Section 21C of the Securities Exchange Act of 
+1934, Sections 9(b) and 9(f) of the Investment Company Act of 1940, and Rule 102(e)(1) of the 
+Commission’s Rules of practice (“Order”), as set forth below.  
+ 
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+III. 
+On the basis of this Order and Hipple’s Offer, the Commission finds1 that: 
+A. SUMMARY 
+Robert Hipple, a lawyer and the former CEO and CFO of now-defunct business 
+development company (“BDC”)2 iWorld Projects & Systems, Inc. (“iWorld”), overstated the 
+value of iWorld’s primary asset – its investment in several portfolio companies – in three 
+consecutive quarterly filings in 2005.  Hipple, who personally performed iWorld’s accounting 
+and financial reporting functions, also misled iWorld’s auditors into believing that the company 
+had independently evaluated the worth of its portfolio companies.  As a result of his conduct, 
+Hipple i) violated the antifraud provisions of the Exchange Act, filed false Sarbanes-Oxley 
+executive certifications, misled iWorld’s auditors, falsified books and records, and knowingly 
+circumvented internal controls; ii) violated Section 57(a)(1) of the Investment Company Act;  
+and iii) aided and abetted and caused iWorld’s violations of the reporting, books and records, and 
+internal controls provisions of the Exchange Act, and iWorld’s violations of the BDC books and 
+records provision of the Investment Company Act.  
+B. RESPONDENT 
+Robert John Hipple, age 64, resides in Cocoa, Florida.  He is an attorney licensed in 
+Florida and Georgia. Hipple a nd an associate controlled the management and operations of 
+iWorld Projects and Systems, Inc. (“iWorld Florida”), a private Florida company, when it was 
+acquired in early 2005 by iWorld Projects & Systems, Inc. (“iWorld”), a business development 
+company. At the time, Hipple was the CEO of iWorld Florida.  After the acquisition, Hipple 
+formally became iWorld’s CEO and remained in that position until he resigned in March 2006.  
+He also acted as iWorld’s principal financial officer.   
+C. RELEVANT ENTITIES 
+iWorld Projects and Systems, Inc. (“iWorld”) is a BDC that, during all relevant 
+periods, was incorporated in Nevada and headquartered in Addison, Texas.  iWorld has not filed 
+a periodic report with the Commission since it filed its third quarter 2005 Form 10-Q in 
+November 2005.  The Nevada Secretary of State revoked iWorld’s corporate charter on January 
+1, 2006 for failure to pay franchise taxes. iWor ld filed for voluntary Chapter 7 bankruptcy in 
+May 2008. In March 2009, the bankruptcy court cl osed the case because iWorld had no assets. 
+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. 
+2 A BDC is a closed-end investment company authorized by Congress for the purpose of making capital 
+more readily available to certain types of companies.  Under the Investment Company Act, a closed-end company 
+meeting certain eligibility criteria may elect to be regulated as a BDC by filing a notification with the Commission 
+on Form N-54A.  A company filing such a notification is regulated under Sections 55 through 65 of the Investment 
+Company Act.  These sections set forth rules governing the investments BDCs may make, transactions BDCs may 
+enter into, and the governance of BDCs, as well as various other rules governing BDCs. 
+2
+ 
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+ 
+On August 14, 2009, the Commission, pursuant to Section 12(j) of the Exchange Act, revoked 
+the registration of each class of iWorld’s registered securities. 
+iWorld Florida was, prior to its acquisition by iWorld, a privately-held Florida 
+corporation formed by Hipple in May 2004.  iWorld Florida was dissolved on September 15, 
+2006. 
+D. FACTS 
+1. Hipple Postures iWorld Florida for Acquisition by iWorld as BDC 
+a. Shortly after forming iWorld Florida in May 2004, Hipple and others 
+caused it to acquire two small private companies in the project management services industry: 
+Applied Management Concepts, Inc. (“AMC”) and Process Integrity, Inc. (“PII”) (together, “the 
+subsidiaries”). iWorld Florida acquired the subsidiaries for a total of $285,000 in working 
+capital payments, $200,000 in assumed liabilities, and 1.1 million shares of iWorld Florida 
+common stock. This stock was not publicly trad ed and had no readily ascertainable market 
+value. 
+b. When iWorld Florida acquired the subsidiaries, AMC had no operations, 
+while PII had only limited revenues from sales of its only product, a piece of project 
+management software.  Specifically, during the six months before the acquisition, PII had total 
+revenues of $89,000 and was not profitable. Hipple knew these facts at the time.  
+c. Notwithstanding the subsidiaries’ poor performance and negligible 
+operations, Hipple accepted and adopted the financial forecasts presented to him.  According to 
+those forecasts, AMC and PII would generate $2.4 million in revenue in the six-month period 
+after their acquisition by iWorld Florida, and would generate in 2005 a total of $5.5 million in 
+revenue. Hipple had no objective information in  his possession to support these forecasts. 
+d. In December 2004, Hipple initiated and directed a series of transactions to 
+form iWorld.  He first obtained two public, blank-check shell companies, Silesia Enterprises, Inc. 
+(“Silesia”) and Organic Solutions, Inc. (“Organic”).  He then caused Silesia to file a Form N-54 
+election to become a BDC.   
+e. Hipple then directed and caused Silesia’s merger into Organic.  Among 
+other things, Hipple caused Organic to issue convertible preferred shares to four of his designees, 
+including his wife and a college-aged employee of one of his business partners.  Hipple oversaw 
+the conversion of the designee’s preferred shares into common shares – which gave them control 
+over Organic – and the voting of those shares to approve actions related to merging Organic with 
+Silesia, with Organic as the surviving corporation.  At the conclusion of these transactions, 
+Hipple effectively controlled the post-merger company (a BDC), which, as part of the merger, 
+changed its name to iWorld.  Hipple thereafter obtained a new CUSIP number and trading 
+symbol for iWorld’s common shares so they could be publicly traded.  
+3
+ 
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+2.	 Hipple Causes iWorld to Acquire iWorld Florida 
+and Prepares False Filings Overstating iWorld Florida’s Value
+ a. On February 25, 2005, iWorld filed a current report on Form 8-K 
+announcing that it had agreed to acquire iWorld Florida through a merger.  Hipple drafted the 
+filing and caused it to be filed. The Form 8-K stated that the transaction was “valued at $10 
+million, based on the number of shares issued, the market price of the shares, and the assets and 
+businesses acquired.” It then described iWor ld Florida and the subsidiaries’ business, 
+concluding that “combined revenues from [iWorld Florida’s] subsidiaries . . . for 2005 are 
+expected to be in the range of $25 to $30 million, provided sufficient working capital is 
+obtained.” 
+b. The purported $10 million valuation was materially false and misleading. 
+Among other things, the Form 8-K failed to disclose that Hipple controlled both iWorld and 
+iWorld Florida at the time of their merger.  Consequently, and contrary to the Form 8-K’s 
+description of the transaction, the merger did not involve arms-length negotiation and was in fact 
+a related-party transaction.  Furthermore, the Form 8-K failed to disclose that, because Hipple 
+controlled both sides of the transaction, he was able to reverse-engineer the number of shares 
+exchanged between iWorld and iWorld Florida to lend legitimacy to the $10 million figure.  In 
+addition, there was no disclosure that iWorld Florida’s sole asset – its investments in the 
+subsidiaries – had been acquired during the summer of 2004 for only $285,000 cash, $200,000 in 
+assumed liabilities, and 1.1 million shares of iWorld Florida’s non-public stock – consideration 
+that was worth, at best, only a fraction of $10 million.   
+c. The Form 8-K’s representations about the subsidiaries’ prospects were 
+also materially false and misleading, since they were wholly speculative and unsupported.  As 
+noted above, at the time iWorld Florida acquired them in the summer of 2004, PII and AMC had 
+generated meager revenues over the preceding six months.  Their performance after their 
+acquisition by iWorld Florida was no better; indeed, as Hipple knew from internal company 
+reports he received, PII and AMC consistently fell far short of their forecasted performance.  
+Accordingly, Hipple knew or recklessly disregarded that the Form 8-K’s assertions of subsidiary 
+revenues of $25 million to $30 million were baseless. 
+3.	 Hipple Prepares and Certifies iWorld’s False Quarterly Filings 
+a. After iWorld acquired iWorld Florida, Hipple became iWorld’s Chairman, 
+CEO and CFO and performed the company’s accounting and financial reporting functions.  In 
+this capacity, he maintained iWorld’s books and records, was responsible for its system of 
+internal controls, and drafted and filed with the Commission its periodic reports. 
+b. In 2005, iWorld filed three quarterly reports on Forms 10-Q: on May 20, 
+2005, August 12, 2005 and November 15, 2005.  Hipple prepared, signed and certified each of 
+the filings.  
+c. Each of these quarterly reports contained financial statements and other 
+disclosures representing that the subsidiaries (AMC and PII) – including two additional start-up 
+4
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+operating companies iWorld had acquired – were valued at $10 million.  These subsidiaries – 
+which the quarterly reports referred to as “portfolio companies” – comprised, as reported in the 
+quarterly reports, approximately 96% of iWorld’s total assets. 
+d. The reported $10 million valuation was materially false and misleading.  
+As described above, iWorld’s initial valuation of the subsidiaries at $10 million was itself false 
+and misleading since it was not the product of arms-length negotiation, was far in excess of what 
+iWorld Florida had paid to acquire the subsidiaries roughly six months earlier, and was 
+unsupported by the subsidiaries’ poor financial performance.  None of these circumstances had 
+changed by the time Hipple prepared and filed the quarterly reports.  To the contrary, he had 
+continually received information, including reports from the subsidiaries, demonstrating that 
+their performance was deteriorating.  For instance, by the time iWorld filed the first quarter Form 
+10-Q on May 20, 2005, Hipple knew from internal reports that all of the subsidiaries had 
+continued to fall far short of internal projections, with some subsidiaries producing no revenues 
+whatsoever. He also knew that iWorld’s working capital – which was critical to the subsidiaries’ 
+survival – was rapidly diminishing.  From these facts alone (which were not publicly disclosed), 
+Hipple knew or recklessly disregarded that the subsidiaries’ reported valuation was grossly 
+overstated. 
+e. By the time iWorld filed its second quarter Form 10-Q on August 12, 
+2005, Hipple knew from internal reports the additional fact that, not only were the subsidiaries 
+far below their financial projections, they were in fact deeply unprofitable.  Indeed, only PII still 
+had operations by August 2005, due in part to the fact that iWorld had exhausted its working 
+capital, on which the subsidiaries depended.  As iWorld’s CEO and CFO, Hipple knew the 
+subsidiaries were dependent on iWorld for working capital and that, without working capital, the 
+subsidiaries would cease operations. 
+f. By the time iWorld filed its third quarter Form 10-Q on November 15, 
+2005, Hipple knew that meaningful subsidiary operations had ceased and that there was no 
+prospect of iWorld’s reviving them, since iWorld itself had no cash.  Moreover, by December 
+2005, Hipple learned that PII’s president had previously pledged PII’s sole asset – rights to its 
+software product – to a third party as security for a loan to PII to make payroll.  
+g. Hipple never revealed the subsidiaries’ dire circumstances in iWorld’s 
+2005 quarterly filings. To the contrary, each of the filings repeated the $10 million valuation, 
+which the second and third quarter filings amplified by asserting that “the Company’s 
+Investment Committee [has] determine[d] that the portfolio investments should be valued at $10 
+million.” This was false: iWorld’s investment committee never considered the valuation of the 
+subsidiaries.  Moreover, each of the quarterly filings represented that the subsidiaries were 
+projected to earn tens of millions of dollars of revenue through the end of 2006.  In view of the 
+circumstances described above – including the subsidiaries’ continuous unprofitability and the 
+depletion of iWorld’s working capital – these representations were completely unfounded and, 
+consequently, were materially false and misleading. 
+h. Even after learning that PII’s president had pledged PII’s software to 
+secure a loan to PII, Hipple made no effort to amend iWorld’s third quarter Form 10-Q. 
+5
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+4. Hipple Materially Misleads iWorld’s Auditor 
+a. As a BDC, iWorld was required under Section 2(a)(41) of the Investment 
+Company Act (which applies to BDCs pursuant to Section 59 of that Act) to determine in good 
+faith the fair value of the securities of its portfolio companies, since market quotations for those 
+securities were not readily available.  iWorld never made a good faith determination, either when 
+it acquired iWorld Florida and its subsidiaries, or thereafter.  Hipple knew, or was reckless in not 
+knowing, that no such determination had been made. 
+b. Hipple, however, told iWorld’s auditor – in connection with the auditor’s 
+review of iWorld’s first quarter 2005 Form 10-Q – that an “independent investment board” had 
+approved the $10 million valuation.  Hipple knew, or was reckless in not knowing, that this 
+statement was false. 
+5. Civil Penalty 
+Respondent has submitted sworn Statements of Financial Condition, dated October 2, 
+2009 and October 9, 2009, and other evidence, and has asserted his inability to pay a civil 
+penalty. 
+E. VIOLATIONS 
+1. Based on the foregoing, the Commission finds that Respondent Hipple willfully 
+violated: 
+a. Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, which 
+prohibit fraudulent conduct in connection with the purchase or sale of securities; 
+b. Section 34(b) of the Investment Company Act, made applicable to BDCs 
+through Section 59 of the Investment Company Act, which provides, among other things, that in 
+any registration statement, application, report, account, record, or other document filed or 
+transmitted by iWorld pursuant to the Investment Company Act or kept by iWorld pursuant to 
+Section 31(a) of the Investment Company Act, it shall be unlawful for any person so filing, 
+transmitting or keeping any such document to make any untrue statement of material fact or to 
+omit to state therein any fact necessary in order to prevent the statements made therein, in the 
+light of the circumstances under which they were made, from being materially misleading;  
+c. Rule 13a-14 under the Exchange Act, which required Hipple, as iWorld’s 
+principal executive and financial officer, to certify in each quarterly and annual report filed or 
+submitted by iWorld under Section 13(a) of the Exchange Act, that: (1) he had reviewed the 
+report; and (2) based on his knowledge, the report did not contain any untrue statement of 
+material fact, or omit to state a material fact necessary in order to make the statements made, in 
+light of the circumstances under which such statements were made, not misleading with respect 
+to the period covered by the report; 
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+d. Section 13(b)(5) of the Exchange Act, which provides that no person shall 
+knowingly falsify any book, record, or account of an issuer that has a class of securities 
+registered pursuant to Section 12 of the Exchange Act, or is required to file reports pursuant to 
+Section 15(d) of the Exchange Act, or knowingly circumvent the registrant’s system of internal 
+accounting controls; 
+e. Rule 13b2-1 under the Exchange Act, which provides that no person shall, 
+directly or indirectly, falsify or cause to be falsified any book, record, or account subject to 
+Section 13(b)(2)(A) of the Exchange Act; 
+f. Rule 13b2-2(a) under the Exchange Act, which prohibits an officer or 
+director of an issuer from, directly or indirectly: (1) making, or causing to be made, a materially 
+false or misleading statement; or (2) omitting, or causing to be omitted, a statement of a material 
+fact necessary to make the statements made, in light of the circumstances under which they were 
+made, not misleading to an accountant in connection with a required audit, or the preparation or 
+filing of a required document or report;  
+g. Section 57(a)(1) of the Investment Company Act, which prohibits persons 
+“related” to a BDC, as defined in Section 57(b) of the Investment Company Act, from acting as 
+principal knowingly selling to the BDC any securities in another company unless at least one of 
+two conditions applies.  The first condition is that the sale involves solely securities of which the 
+buyer is the issuer. See Section 57(a)(1)(A). The second is  that the sale involves solely 
+securities of which the seller is the issuer and which are part of a general offering to the holders 
+of a class of its securities.   See Section 57(a)(1)(B). Section 57(b)(2) defines a “related person 
+of a BDC,” in pertinent part, as any person directly or indirectly “controlling” a BDC.  Section 
+(2)(a)(9) of the Investment Company Act, in turn, defines “control” as “the power to exercise a 
+controlling influence over the management or policies of a company.”  Hipple controlled iWorld 
+when he sold, as a principal, his iWorld Florida shares to iWorld in iWorld’s acquisition of 
+iWorld Florida.  Hipple’s sale of his shares did not satisfy either of the two conditions set forth in 
+Section 57(a)(1)(A) or (B). Thus, Hipple violated Section 57(a)(1);  
+2. Based on the foregoing, the Commission finds that Respondent Hipple willfully 
+aided and abetted and caused iWorld’s violations of:  
+a. Section 13(a) of the Exchange Act and Rules 13a-11, 13a-13, and 12b-20 
+thereunder, which required iWorld to file information and documents as prescribed by the 
+Commission, including current and quarterly reports, and to include in those reports any material 
+information as may be necessary to make the required statements in those reports not misleading 
+in light of the circumstances under which the statements were made;  
+b. Section 13(b)(2)(A) of the Exchange Act, which required iWorld, as a 
+reporting company, to make and keep books, records, and accounts which, in reasonable detail, 
+accurately and fairly reflected its transactions and dispositions of its assets; 
+c. Section 13(b)(2)(B) of the Exchange Act which required iWorld, as a 
+reporting company, to devise and maintain a system of internal accounting controls sufficient to 
+7
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+provide reasonable assurances that transactions were recorded as necessary to permit preparation 
+of financial statements in conformity with generally accepted accounting principles; and  
+d. Section 31(a) of the Investment Company Act made applicable to BDCs 
+by Section 64 of the Investment Company Act, and Rule 31a-1 thereunder, which required 
+iWorld to make and keep certain books and records, including, among other things, ledgers of all 
+assets, liabilities, reserve capital, income and expense accounts reflecting account balances on 
+each day, and corporate documents such as minutes from shareholder and board meetings. 
+IV. 
+In view of the forgoing, the Commission deems it necessary and appropriate in the public 
+interest to impose the sanctions agreed to in Respondent Hipple’s Offer. 
+Accordingly, it is hereby ORDERED, effective immediately, that: 
+A. Hipple shall cease and desist from committing or causing any violations and any 
+future violations of Secti ons 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13b2-1, 
+13b2-2, and 13a-14 thereunder, and Sections 34(b) and 57(a) of the Investment Company Act, 
+and from causing any violations of 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-11, and 13a-13 thereunder and Section 
+31(a) of the Investment Company Act and Rule 31a-1 thereunder;  
+B. Pursuant to Section 21C(f) of the Exchange Act, Hipple is prohibited, for a period 
+of five years, from acting as an officer or director of any issuer that has a class of securities 
+registered pursuant to Section 12 of the Exchange Act, or that is required to file reports pursuant 
+to Section 15(d) of the Exchange Act;  
+C. Pursuant to Section 9(b) of the Investment Company Act, Respondent Hipple is 
+prohibited from serving or acting as an employee, officer, director, member of an advisory board, 
+investment adviser or depositor of, or principal underwriter for, a registered investment company 
+or affiliated person of such investment adviser, depositor, or principal underwriter, with the right 
+to reapply for association after five (5) years to the appropriate self-regulatory organization, or if 
+there is none, to the Commission;  
+D. Pursuant to Rule 102(e)(1)(iii) of the Commission’s Rules of Practice, Hipple is 
+denied the privilege of appearing or practicing before the Commission as an accountant;  
+E. The Division of Enforcement ("Division") may, at any time following the entry of 
+this Order, petition the Commission to: (1) reopen this matter to consider whether Respondent 
+provided accurate and complete financial information at the time such representations were 
+made; and (2) seek an order directing payment of the maximum civil penalty allowable under the 
+law. No other issue shall be considered in c onnection with this petition other than whether the 
+financial information provided by Respondent was fraudulent, misleading, inaccurate, or 
+incomplete in any material respect.  Respondent may not, by way of defense to any such petition:  
+8
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+(1) contest the findings in this Order; (2) assert that payment of a penalty should not be ordered; 
+(3) contest the imposition of the maximum penalty allowable under the law; or (4) assert any 
+defense to liability or remedy, including, but not limited to, any statute of limitations defense; 
+and 
+F. 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, the satisfaction of any or all of the 
+following: (a) any disgorgement ordered ag ainst the Respondent, whether or not the 
+Commission has fully or partially waived payment of such disgorgement; (b) any arbitration 
+award related to the conduct that served as the basis for the Commission order; (c) 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 (d) any restitution order by a self-
+regulatory organization, whether or not related to the conduct that served as the basis for the 
+Commission order. 
+By the Commission. 
+        Elizabeth M. Murphy 
+        S e c r e t a r y 
+9
+ 

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+              U.S. SECURITIES AND EXCHANGE COMMISSION  Litigation Release No. 21456 / March 19, 2010  Accounting and Auditing Enforcement Release No. 3121 / March 19, 2010   Securities and Exchange Commission v. Exotics.com, Inc , Civil Action No. 2:05-cv-00531-PMP-GWF, United States District Court, District of Nevada  Final Judgments Entered Against Certified Public Accountants Stephen P. Corso and Brian K. Rabinovitz in Market Manipulation and Financial Fraud Case  The Securities and Exchange Commission announced that a federal district court in Nevada has entered final judgments, by consent, against Stephen P. Corso, of Las Vegas, Nevada, and Brian K. Rabinovitz of Oak Park, California, in connection with an enforcement action filed in 2005 concerning a stock manipulation and accounting fraud scheme. The judgment against Corso, entered on March 18, 2010, permanently enjoins him from violating the antifraud and auditor independence provisions of the federal securities laws. The judgment against Rabinovitz, entered on March 15, 2010, permanently enjoins him from violating the auditor independence provisions of the federal securities laws and orders him to pay a civil penalty of $30,000.  The Commission's civil injunctive action was filed on April 25, 2005, against Exotics.com, Inc., a Nevada corporation based in Vancouver, British Columbia, and 12 additional principal defendants and one relief defendant. The Commission's complaint alleged that, between at least 1999 and 2002, Exotics.com, which was then an Over-the-Counter Bulletin Board company in the business of operating adult Web sites, was the subject of a stock manipulation and accounting fraud perpetrated by, among others, its officers, attorneys and outside auditors. The complaint alleged, among other things, that Corso, Rabinovitz, and others engaged in conduct that resulted in Exotics.com filing materially false and misleading financial statements in its Commission filings. The complaint further alleged that audit staff under the supervision of Corso and Rabinovitz committed acts and/or omissions that caused them to become non-independent during audits of Exotics.com and that Corso and Rabinovitz approved the issuance of audit reports that were incorporated in Exotics.com's Commission filings. According to the complaint, the audit reports, among other things, falsely stated that the audits had been conducted by an independent auditor and in accordance with generally accepted auditing standards (GAAS). The Complaint also alleged that Rabinovitz and audit staff under his supervision engaged in a number of improper accounting practices that caused Exotics.com's financial statements to depart from generally accepted accounting principles (GAAP).  Without admitting or denying the allegations in the Commission's complaint, Corso and Rabinovitz consented to the entry of final judgments against them. The final judgment against Corso enjoins him from violating Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder and Rule 2-02 of Regulation S-X. The final judgment against Rabinovitz enjoins him from violating Rule 2-02 of Regulation S-X and orders him to pay a civil penalty of $30,000.  Rabinovitz also consented to the entry of an Administrative Order, pursuant to Rule 102(e) of the Commission's Rules of Practice, suspending him from appearing or practicing before the Commission as an accountant, with a right to apply for reinstatement after three years. Corso was previously forthwith suspended, on April 14, 2009, from appearing or practicing before the Commission as an accountant.  The Commission previously obtained judgments by default against two defendants and judgments by consent against two additional defendants. The action remains pending against the remaining seven defendants and a relief defendant.  For further information, see Litigation Release Nos.  19207  (April 28, 2005) [civil injunctive action filed],  19645  (April 7, 2006) [judgment by default against Exotics.com],  19699  (May 15, 2006) [judgment by consent against Barry Duggan],  19957  (January 4, 2007) [judgment by default against Gary Thomas], and  21028  (May 7, 2009) [judgment by consent against Edward James Wexler], and Exchange Act Release No.  59766  (April 14, 2009) [forthwith suspension of Stephen Corso]. 								
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raw/aaer/2010/AAER-3122.txt

@@ -0,0 +1,208 @@
+ 
+ 
+ 
+ 
+ 
+ 
+  
+ 
+       
+      
+ 
+  
+ 
+      
+   
+      
+    
+       
+       
+  
+   
+ 
+ 
+ 
+ 
+  
+ 
+ 
+                                                
+ 
+ 
+ 
+ UNITED STATES OF AMERICA 
+ before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 61771 / March 24, 2010 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 3122 / March 24, 2010 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13832 
+: 
+: 
+: 
+In the Matter of : ORDER INSTITUTING ADMINISTRATIVE 
+: PROCEEDINGS PURSUANT TO RULE 
+BRIAN K. RABINOVITZ, CPA, : 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 Brian K. 
+Rabinovitz (“Respondent” or “Rabinovitz”) 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 . . . 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. 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+  
+ 
+ 
+ 
+ 
+ 
+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 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. Rabinovitz, age 41, is and has been a certified public accountant licensed to 
+practice in the State of California as of 2007.  He also was or is licensed to practice in the State of 
+New York.  Rabinovitz was employed by Merdinger, Fruchter, Rosen & Corso, P.C. (later 
+Merdinger, Fruchter, Rosen & Company, P.C.)(“MFRC”) as a senior manager and, later, as a non-
+equity partner from 1995 until August 2002.  In the latter capacity, he supervised MFRC’s audit and 
+other engagements concerning Exotics.com, Inc. (“Exotics.com”) in 2001 and 2002. 
+2. Exotics.com was, at all relevant times, a Nevada corporation with its 
+principal place of business in Vancouver, British Columbia, Canada.  Exotics.com was engaged in 
+the business of owning, operating, and licensing adult-oriented websites.  At all relevant times, 
+Exotics.com’s common stock was registered with the Commission pursuant to Section 12(g) of the 
+Securities Exchange Act of 1934, and was approved for quotation on the OTC Bulletin Board. 
+3. On March 15, 2010, a final judgment was entered against Rabinovitz, 
+permanently enjoining him from future violations of Rule 2-02 of Regulation S-X in the civil 
+action entitled Securities and Exchange Commission v. Exotics.com, Inc., et. al, Civil Action 
+Number 2:05-cv-00531-PMP-GWF, in the United States District Court for the District of Nevada.  
+Rabinovitz was also ordered to pay a $30,000 civil money penalty. 
+4. The Commission’s complaint alleged, among other things, that Rabinovitz 
+and others participated in a scheme that resulted in Exotics.com filing materially false and 
+misleading financial statements in its Commission filings, including, among others, an amended 
+current report on Form 8-K filed on September 24, 2001, a quarterly report on Form 10-QSB for 
+the quarter ended September 30, 2001, and an annual report on Form 10-KSB for the fiscal year 
+ended December 31, 2001.  The complaint further alleged that Rabinovitz and audit staff under his 
+supervision committed acts and/or omissions that caused them to become non-independent during 
+audits of Exotics.com and that Rabinovitz approved the issuance by MFRC of audit reports which, 
+among other things, falsely stated that the audits had been conducted by an independent auditor 
+2
+ 
+ 
+ 
+ 
+ 
+ 
+  
+ 
+ 
+ 
+ 
+ 
+      
+        
+ 
+      
+  
+      
+           
+ 
+ 
+ 
+ 
+ 
+and in accordance with generally accepted auditing standards (“GAAS”).  The Complaint also 
+alleged that Rabinovitz and audit staff under his supervision engaged in a number of improper 
+accounting practices that caused Exotics.com’s financial statements to depart from generally 
+accepted accounting principles (“GAAP”). 
+IV. 
+In view of the foregoing, the Commission deems it appropriate and in the public interest to 
+impose the sanction agreed to in Respondent Rabinovitz’s Offer. 
+Accordingly, it is hereby ORDERED, effective immediately, that: 
+A. Rabinovitz is suspended from appearing or practicing before the Commission as an 
+accountant. 
+B. After three 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.  Such 
+an application must satisfy the Commission that Respondent’s work in his practice before the 
+Commission 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. 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 
+Respondent 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 
+3
+ 
+ 
+      
+  
+ 
+ 
+ 
+ 
+   
+ 
+ 
+requirements relating to registration, inspections, concurring partner reviews and quality control 
+standards. 
+C. The Commission will consider an application by Respondent to resume 
+appearing or practicing before the Commission 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. 
+ By the Commission. 
+       E l i z a b e t h M . M u r p h y
+       S e c r e t a r y 
+4
+ 

raw/aaer/2010/AAER-3123.txt

@@ -0,0 +1,145 @@
+     
+ 
+ 
+ 
+ 
+ 
+          
+   
+    
+  
+      
+   
+      
+      
+      
+        
+        
+_______________________________________   
+   
+ 
+ 
+ 
+ 
+   
+ 
+                                                
+ 
+ 
+ 
+ UNITED STATES OF AMERICA 
+ before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 61827 / April 1, 2010 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 3123 / April 1, 2010 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13840 
+      _ _ 
+: 
+:
+ : 
+In the Matter of  : ORDER INSTITUTING ADMINISTRATIVE 
+: PROCEEDINGS PURSUANT TO RULE 
+J. MICHAEL BROULLIRE   : 102(e) OF THE COMMISSION’S RULES OF
+ (CPA),  : PRACTICE, MAKING FINDINGS, AND 
+: IMPOSING REMEDIAL SANCTIONS 
+Respondent. :
+ :
+ : 
+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 J. 
+Michael Broullire (“Respondent” or “Broullire”) 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 . . . 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. 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+   
+ 
+  
+ 
+ 
+ 
+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 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. Broullire, age 56, is and has been a certified public accountant licensed to 
+practice in the State of Maryland.  During the relevant period, 2003-2006, Broullire practiced 
+accounting with a small accounting firm in Maryland and then with his own accounting business. 
+2. TVI Corporation is a Maryland corporation headquartered in Glenn Dale, 
+Maryland. TVI’s business includes selling emergency response equipment to the government and 
+other purchasers.  During the relevant period, TVI’s common stock was registered with the 
+Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934 (“Exchange Act”).  
+After July 2006, TVI’s stock was registered with the Commission pursuant to Section 12(b) and 
+traded on the NASDAQ SmallCap Market under the symbol “TVIN,” and then was registered 
+pursuant to Section 12(g) and quoted on the Pink Sheets under the symbol “TVINQ.PK.”  In 
+September 2009, TVI’s stock registration was revoked. 
+3. On March 25, 2010, the Commission filed a complaint against Broullire in 
+SEC v. Richard V. Priddy, et al. (Civil Action No. 1:10-cv-00739 (BEL)(D. Md.).  On March 26, 
+2010, the court entered an order permanently enjoining Broullire, by consent, from aiding and 
+abetting future violations of Sections 10(b) and 13(a) of the Exchange Act and Rules 10b-5, 12b-
+20, and 13a-1 thereunder. 
+4. The Commission’s complaint alleged, among other things, that Broullire 
+participated in fraudulent schemes with TVI’s former President and CEO and former Executive 
+Vice President by which they created two companies to purchase products and resell them to 
+TVI at approximately a 100% or greater markup.  The Complaint also alleged that TVI paid one 
+of these companies a fictitious finder’s fee in connection with a corporate acquisition.  The 
+Complaint alleged that these fraudulent schemes enriched Broullire and the former TVI 
+executives and materially reduced the net income that TVI reported in its 2004 Form 10-KSB 
+and 2006 Form 10-K.  
+2
+ 
+ 
+ 
+ 
+ 
+ 
+   
+ 
+ 
+ 
+ 
+   
+ 
+IV. 
+In view of the foregoing, the Commission deems it appropriate and in the public interest to 
+impose the sanction agreed to in Respondent Broullire’s Offer. 
+Accordingly, it is hereby ORDERED, effective immediately, that Broullire is suspended 
+from appearing or practicing before the Commission as an accountant.
+ By the Commission. 
+       E l i z a b e t h M . M u r p h y
+       S e c r e t a r y 
+3
+ 

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+ 
+ 
+ 
+ UNITED STATES OF AMERICA 
+ Before the 
+ SECURITIES AND EXCHANGE COMMISSION 
+ 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 61833 / April 2, 2010 
+ 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 3124 / April 2, 2010 
+ 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13843 
+ 
+ 
+In the Matter of 
+ 
+MICHAEL DEGENNARO 
+ 
+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 Michael DeGennaro (“DeGennaro” 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, 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 Res pondent’s Offer, the Commission finds1 that:  
+ 
+1. DeGennaro, age 44, resides in Long Is land, New York.  DeGennaro at all relevant 
+times was Senior Vice President of Finance of Symbol Technologies, Inc. (“Symbol”).   
+ 
+2. Symbol was at all relevant times (a) a Delaware corporation with principal offices 
+in Holtsville, New York; (b) engaged in the design, manufacture, marketing and servicing of 
+mobile information systems using bar code scanners and similar devices; and (c) a public company 
+whose common stock was traded on the New York Stock Exchange and registered with the 
+Commission pursuant to Section 12(b) of the Exchange Act.  On January 9, 2007, Symbol was 
+acquired by Motorola, Inc. 
+ 
+3. As described below, Symbol violated the financial recordkeeping and internal 
+control provisions of Section 13(b)(2) of the Exchange Act due to its failure to maintain the 
+requisite accounting records and implement adequate internal accounting controls.
+2 
+ 
+4. In 2000 and 2001, Symbol created and used certain restructuring charges and 
+related reserves in contravention of GAAP.  As a result, Symbol misstated, inter alia, its operating 
+expenses and net income on its books and records and in its financial statements. 
+ 
+5. During the relevant period, Symbol recorded non-recurring charges in connection 
+with, inter alia, Symbol’s: (i) acquisition of Telxon Corporation, which resulted in a $185.9 
+million restructuring charge recorded in the fourth quarter of 2000; and (ii) Symbol’s relocation of 
+manufacturing operations to new facilities, which resulted in a $59.7 million restructuring charge 
+recorded in the third quarter of 2001 (collectively the “Charges”). The Charges were later reversed, 
+in part, because they did not comply with GAAP.  Symbol also incorrectly used certain reserves 
+created in conjunction with some of the Charges.  The Charges and certain associated reserves 
+were not recorded in accordance with GAAP because, inter alia, they misclassified certain 
+expenses, included amounts unrelated to the purpose of the Charge and, in some cases, were used 
+in later periods for unrelated purposes.   
+ 
+ 
+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.  
+2  Section 13(b)(2)(A) of the Exchange Act requires registrants to make and keep books, 
+records and accounts which, in reasonable detail, accurately and fairly reflect transactions and 
+dispositions of assets.  Section 13(b)(2)(B) requires registrants 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 (“GAAP”) and to maintain accountability for assets.  
+ 
+ 3
+6. As Senior Vice President of Finance at Symbol, DeGennaro was one of the Symbol 
+executives who determined how Symbol accounted for and recorded transactions on its books and 
+records and in its financial statements.  As such, DeGennaro was one of the Symbol executives 
+who had responsibility for implementing internal accounting controls at Symbol, the purpose of 
+which controls was to provide reasonable assurances that relevant transactions were recorded as 
+necessary to permit preparation of financial statements in accordance with GAAP.  DeGennaro, 
+together with others, determined how the Charges were recorded and accounted for on Symbol’s 
+internal books and records and in its financial statements.  DeGennaro failed to take requisite steps 
+to ensure that Symbol’s internal books and records and financial statements accurately reflected 
+each element of the Charges and the uses of associated reserves, and that the Charges and the uses 
+of associated reserves were accounted for in accordance with GAAP. 
+ 
+7. By reason of the foregoi ng, DeGennaro was a cause of Symbol’s violations of 
+Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. 
+ 
+  
+ 
+IV. 
+ 
+ In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
+agreed to in Respondent DeGennaro’s Offer. 
+ 
+ Accordingly, it is hereby ORDERED that pursuant to Section 21C of the Exchange Act, 
+Respondent DeGennaro cease and desist from causing any violations and any future violations of 
+Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. 
+ 
+ By the Commission. 
+ 
+ 
+ 
+       E l i z a b e t h  M .  M u r p h y  
+       S e c r e t a r y  
+ 

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+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+  
+  
+ 
+ 
+ UNITED STATES OF AMERICA 
+ Before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES ACT OF 1933 
+Release No.  9116 / April 7, 2010 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No. 61856 / April 7, 2010 
+INVESTMENT ADVISERS ACT OF 1940 
+Release No. 3009 / April 7, 2010 
+INVESTMENT COMPANY ACT OF 1940 
+Release No. 29203 / April 7, 2010 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No. 3125 / April 7, 2010 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13847 
+In the Matter of 
+MORGAN ASSET MANAGEMENT, INC.; 
+MORGAN KEEGAN & COMPANY, INC.; 
+JAMES C. KELSOE, JR.; and 
+JOSEPH THOMPSON WELLER, CPA, 
+Respondents. 
+ORDER INSTITUTING 
+ADMINISTRATIVE AND CEASE-AND-
+DESIST PROCEEDINGS PURSUANT TO 
+SECTION 8A OF THE SECURITIES ACT 
+OF 1933, SECTIONS 4C, 15(b) AND 21C 
+OF THE SECURITIES EXCHANGE ACT 
+OF 1934, SECTIONS 9(b) AND 9(f) OF 
+THE INVESTMENT COMPANY ACT OF 
+1940, SECTIONS 203(e), 203(f) AND 203(k) 
+OF THE INVESTMENT ADVISERS ACT 
+OF 1940 AND RULE 102(e)(1)(iii) OF THE 
+COMMISSION’S RULES OF PRACTICE 
+I. 
+The Securities and Exchange Commission (“Commission”) deems it appropriate and in 
+the public interest that public administrative and cease-and-desist proceedings be, and hereby 
+are, instituted pursuant to Section 8A of the Securities Act of 1933 (“Securities Act”), Section 
+21C of the Securities Exchange Act of 1934 (“Exchange Act”), and Sections 9(b) and 9(f) of the 
+Investment Company Act of 1940 (“Investment Company Act”) against Morgan Asset 
+Management, Inc. (“Morgan Asset”); Morgan Keegan & Company, Inc. (“Morgan Keegan”); 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+   
+ 
+ 
+ 
+ 
+ 
+ 
+                                                 
+  
+ 
+ 
+ 
+ 
+ 
+James C. Kelsoe, Jr. (“Kelsoe”); and Joseph Thompson Weller, CPA (“Weller”) (collectively 
+“Respondents”); pursuant to Section 15(b)(4) of the Exchange Act against Morgan Keegan; 
+pursuant to Section 15(b)(6) of the Exchange Act against Morgan Asset, Kelsoe and Weller; 
+pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 (“Advisers Act”) 
+against Morgan Asset and Morgan Keegan; pursuant to Sections 203(f) and 203(k) of the Advisers 
+Act against Kelsoe and Weller; and pursuant to Section 4C1 of the Exchange Act and Rule 
+102(e)(1)(iii) of the Commission’s Rules of Practice against Weller.2 
+II. 
+After an investigation, the Division of Enforcement alleges that: 
+A. RESPONDENTS 
+1. Morgan Asset , incorporated in Tennessee on April 10, 1986, has been an 
+investment adviser registered with the Commission at all relevant times.  Morgan Asset’s principal 
+place of business is in Memphis, Tennessee.  Morgan Asset is a wholly-owned subsidiary of MK 
+Holding, Inc., which in turn is a wholly-owned subsidiary of Regions Financial Corporation.   
+2. Morgan Keegan , incorporated in Tennessee on June 27, 1969, has been registered 
+with the Commission as a broker-dealer at all relevant times and as an investment adviser since 
+July 27, 1992. During the relevant time period, Morgan Keegan served as the principal 
+underwriter and sole distributor of shares of the open-end Funds.  Morgan Keegan’s principal place 
+of business is in Memphis, Tennessee.   
+3. Kelsoe , 46 years of age, is a resident of Memphis, Tennessee.  During 2007, Kelsoe 
+was a senior portfolio manager for Morgan Asset. He also was a Managing Director of Morgan 
+Keegan.  Kelsoe is a Chartered Financial Analyst and previously held Series 7 and 65 licenses.  
+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)(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. 
+2
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+Kelsoe was associated with Morgan Keegan at all relevant times, and was a registered 
+representative of the firm from August 1994 through November 2008. 
+4. Weller , 44 years of age, is a resident of Memphis, Tennessee. Weller has been 
+employed by Morgan Keegan since 1992.  During the relevant period, he was Morgan Keegan’s 
+Controller and head of its Fund Accounting Department.  He holds Series 7, 27, and 66 licenses 
+and is a CPA who was previously licensed in the State of Tennessee.  That license is currently 
+lapsed. Since at least January 1, 1993, Weller has been associated with the investment adviser arm 
+of Morgan Keegan.  Additionally, from at least December 1997 through the present, Weller has 
+been a registered representative associated with the broker-dealer arm of Morgan Keegan.   
+B. OTHER RELEVANT ENTITIES 
+5. Helios Select Fund, Inc., formerly known as Morgan Keegan Select Fund, Inc. 
+(“Select Fund”), incorporated in Maryland on October 27, 1998, has been an investment company 
+registered with the Commission since its inception.  In 2007, the Select Fund contained three open-
+end portfolios: the Select High Income portfolio, the Select Intermediate Bond portfolio, and the 
+Select Short Term Bond portfolio.   
+6. Helios High Income Fund, Inc., formerly known as RMK High Income Fund, Inc., 
+a closed-end fund incorporated in Maryland on April 16, 2003, has been an investment company 
+registered with the Commission since its inception. 
+7. Helios Multi-Sector High Income Fund, Inc., formerly known as RMK Multi-
+Sector High Income Fund, Inc., a closed-end fund incorporated in Maryland on November 14, 
+2005 and has been an investment company registered with the Commission since its inception.   
+8. Helios Strategic Income Fund, Inc., formerly known as RMK Strategic Income 
+Fund, Inc., a closed-end fund incorporated in Maryland on January 16, 2004 has been an 
+investment company registered with the Commission since its inception.   
+9. Helios Advantage Income Fund, Inc., formerly known as RMK Advantage Income 
+Fund, Inc., a closed-end fund incorporated September 7, 2004, has been an investment company 
+registered with the Commission since its inception.  
+10. Morgan Asset, through Kelsoe, managed the Helios Select Fund, Inc., the Helios 
+High Income Fund, Inc., the Helios Multi-Sector High Income Fund, Inc., the Helios Strategic 
+Income Fund, Inc., and the Helios Advantage Income Fund, Inc. (collectively, the “Funds”) from 
+at least November 2004 through July 29, 2008.   
+3
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+                                                 
+  
+C. THE FRAUDULENT SCHEME 
+Overview 
+11. During various periods between at least January 2007 and July 2007, the daily net 
+asset value3 (“NAV”) of each of the Funds was materially inflated as a result of the fraudulent 
+conduct of Respondents. Kelsoe, an employee of Morgan Asset and Morgan Keegan, was the 
+portfolio manager for the Funds. Weller was an officer and treasurer of the Funds and signed and 
+certified their periodic reports to the Commission.   
+12. Respondent Morgan Keegan, a registered broker-dealer and registered investment 
+adviser, was the principal underwriter and exclusive distributor of the Funds’ shares. Morgan 
+Keegan was designated in each of the Funds’ prospectuses as authorized to consummate 
+transactions in the securities of the respective Fund.  The Funds’ Boards of Directors were 
+responsible for pricing the Funds’ securities in accordance with the Funds’ valuation policies and 
+procedures. Each Fund’s Board of Directors delegated this pricing responsibility to Morgan 
+Keegan, by contract. Morgan Keegan priced each portfolio’s securities and calculated its daily 
+NAV through its Fund Accounting Department (“Fund Accounting”).  Weller, Morgan Keegan’s 
+Controller and Head of Fund Accounting, along with other Morgan Keegan personnel, staffed a 
+“Valuation Committee” that purportedly oversaw Fund Accounting’s processes and evaluated the 
+prices assigned to securities. Morgan Keegan and Weller failed, despite multiple red flags, to 
+adequately fulfill Morgan Keegan’s responsibilities, as delegated to it by the Funds’ Boards of 
+Directors, to price the Funds’ securities in accordance with their valuation policies and procedures 
+regarding valuation.  For example, Fund Accounting accepted unsubstantiated “price adjustments” 
+submitted by Kelsoe that inaccurately inflated the price of certain securities, contrary to the Funds’ 
+policies and procedures.  Fund Accounting failed to document justifications for such pricing 
+adjustments.   
+13. The Funds’ valuation policies and procedures required that dealer quotes be 
+obtained for certain securities.  Unbeknownst to Fund Accounting and the Funds’ independent 
+auditor (“Independent Auditor”), Kelsoe actively screened and manipulated the dealer quotes that 
+Fund Accounting and the Independent Auditor obtained from at least one broker-dealer.  Kelsoe 
+also failed to advise Fund Accounting or the Funds’ Boards of Directors when he received 
+information indicating that the Funds’ prices for certain securities should be reduced.   
+14. Each Fund held securities backed by subprime mortgages, and the market for such 
+securities deteriorated in the first half of 2007.  Kelsoe’s actions fraudulently forestalled declines in 
+the NAVs of the Funds that would have occurred as a result of the deteriorating market, absent his 
+intervention. Morgan Keegan fraudulently published NAVs for the Funds without following 
+procedures reasonably designed to determine that the NAVs were accurate. 
+The “net asset value” or “NAV” of an investment company is the company’s total assets 
+minus its total liabilities.  An investment company calculates the NAV of a single share (or the 
+“per share NAV”) by dividing its NAV by the number of shares that are outstanding. 
+4
+ 
+3 
+ 
+ 
+ 
+ 
+ 
+    
+ 
+ 
+ 
+ 
+ 
+ 
+                                                
+ 
+Acting Contrary to Disclosures 
+15. Each Fund held, in varying amounts, securities backed by subprime mortgages.  
+Many of these securities lacked readily available market quotations and, as a result, were to be 
+internally priced by the Funds’ Boards of Directors, using “fair value” methods.  Under Section 
+2(a)(41)(B) of the Investment Company Act, the Funds must use market values for portfolio 
+securities with readily available market quotations and determine fair value for all other portfolio 
+assets. The fair value of securities for which market quotations are not readily available is the 
+price the Funds would reasonably expect to receive on a current sale of the security.
+4 
+16. The Funds adopted valuation procedures for pricing the Funds’ portfolio securities 
+and, by contract, assigned the task of following those procedures to Morgan Keegan. The Funds’ 
+valuation procedures for fair-valued securities mandated that such securities should be valued in 
+“good faith” by the Valuation Committee, considering a series of general and specific factors 
+including “fundamental analytical data relating to the investment,” “an evaluation of the forces 
+which influence the market in which the securities are purchased or sold” and “events affecting the 
+security.” The procedures, as set forth in the prospectus, required the Valuation Committee to 
+maintain a written report “documenting the manner in which the fair value of a security was 
+determined and the accuracy of the valuation made based on the next reliable public price 
+quotation for that security.”  The procedures also required that prices assigned to securities be 
+periodically validated through, among other means, broker-dealer quotes.  The procedures 
+specified that prices obtained from a broker-dealer could only be overridden when there was “a 
+reasonable basis to believe that the price provided [did] not accurately reflect the fair value of the 
+portfolio security.”  Whenever a price was overridden, the procedures mandated the basis for 
+overriding the price to be “documented and provided to the Valuation Committee for its review.”   
+17. In filings with the Commission, the Funds stated that the fair value of securities 
+would be determined by Morgan Asset’s Valuation Committee using procedures adopted by the 
+Funds. In fact, the responsibility was delegated to Morgan Keegan, which primarily staffed the 
+Valuation Committee. Morgan Keegan and the Valuation Committee failed to comply with the 
+Funds’ procedures in several ways.  Among other things: (1) the Valuation Committee left pricing 
+decisions to lower level employees in Fund Accounting who did not have the training or 
+qualifications to make fair value pricing determinations; (ii) Fund Accounting personnel relied on 
+Kelsoe’s “price adjustments” to determine the prices assigned to portfolio assets, without obtaining 
+any basis for or documentation supporting the price adjustments or applying the factors set forth in 
+the procedures; (iii) Fund Accounting personnel gave Kelsoe excessive discretion in validating the 
+prices of portfolio securities by allowing him to determine which dealer quotes to use and which to 
+ignore, without obtaining documentation to support his adjustments; and (iv) the Valuation 
+4  See AICPA Audit and Accounting Guide - Investment Companies (Sect. 2.35-2.39), which 
+incorporates Accounting Series Release No. 118 (“ASR 118”). The Commission has provided 
+interpretative guidance related to financial reporting in the Accounting Series Releases, which is 
+included in the Codification of Financial Reporting Policies. Thus, conformity with the ASR 118 
+is required by Commission rules and complies with GAAP. See also Articles 1-01(a) and 6.03 of 
+Regulation S-X. 
+5
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+Committee and Fund Accounting did not ensure that the fair value prices assigned to many of the 
+portfolio securities were periodically re-evaluated, allowing them to be carried at stale values for 
+many months at a time.   
+18. Morgan Asset adopted its own procedures to determine the actual fair value to 
+assign to portfolio securities and to “validate” those values “periodically.”   Among other things, 
+those procedures provided that “[q]uarterly reports listing all securities held by the Funds that 
+were fair valued during the quarter under review, along with explanatory notes for the fair values 
+assigned to the securities, shall be presented to the Board for its review.”   Morgan Asset failed to 
+fully implement this provision of its pricing policy. 
+19. Between at least January 2007 and July 2007, Kelsoe had his assistant send 
+approximately 262 “price adjustments” to Fund Accounting.  These adjustments were contained in 
+approximately 40 emails sent by the assistant to a staff accountant in Fund Accounting who 
+calculated the Funds’ NAVs. The adjustments were communications by Kelsoe to Fund 
+Accounting concerning the price of specific portfolio securities. In many instances, these 
+adjustments were arbitrary and did not reflect fair value.   
+20. Kelsoe’s price adjustments were routinely entered upon receipt by the staff 
+accountant into a spreadsheet used to calculate the NAVs of the Funds.    
+21. Kelsoe knew his prices were being used to compute the Funds’ NAVs.  Among 
+other things, he received bi-weekly reports on the Funds’ holdings and their prices which, by 
+comparison with previous reports, indicated that his price adjustments were being used and were 
+directly affecting the NAVs.   
+22. Fund Accounting did not request, and Kelsoe did not supply, supporting 
+documentation for his price adjustments.  Fund Accounting and the Funds did not record which 
+securities had been assigned prices by Kelsoe. 
+23. As part of the Funds’ valuation procedures, Fund Accounting sometimes requested 
+third party broker-dealer quotes as a means to validate the prices it had assigned to the Funds’ 
+securities. The Funds’ Independent Auditor used similar requests for third party broker-dealer 
+quotes as part of its annual year-end audits of the Funds. Fund Accounting or the Independent 
+Auditor would periodically send such requests to broker-dealers asking them to provide quotations 
+for various portfolio securities.   
+24. When month-end dealer quotes were received by Fund Accounting, an employee of 
+Fund Accounting performed a cursory review to estimate whether they contained any securities 
+prices that varied from current portfolio prices by more than five percent.  If so, then Kelsoe 
+determined whether the current price should be maintained or a new price—which may or may not 
+have been the price given by the broker-dealer—should be assigned to the security.  Thus, Fund 
+Accounting routinely allowed Kelsoe to determine whether dealer quotes were used or ignored.    
+6
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+  
+ 
+ 
+  
+25. Fund Accounting did not record which dealer quotes had been overridden at 
+Kelsoe’s instruction.   
+26. Weller was the head of Fund Accounting and a member of the Valuation 
+Committee. He knew, or was highly reckless in not knowing, of the deficiencies in the 
+implementation of valuation procedures set forth above, and did nothing to remedy them or 
+otherwise to make sure fair-valued securities were accurately priced and the Funds’ NAVs were 
+accurately calculated. Among other things, Weller knew that: (i) the Valuation Committee did not 
+supervise Fund Accounting’s application of the valuation factors; (ii) Kelsoe was supplying fair 
+value price adjustments for specific securities to Fund Accounting; (iii) the members of the 
+Valuation Committee did not know which securities Kelsoe supplied fair values for or what those 
+fair values were, and did not receive supporting documentation for those values; and (iv) the only 
+pricing test regularly applied by the Valuation Committee  was the “look back” test, which 
+compared the sales price of any security sold by a Fund to the valuation of that security used in the 
+NAV calculation for the five business days preceding the sale.  The test only covered securities 
+after they were sold; thus, at any given time, the Valuation Committee never knew how many 
+securities’ prices could ultimately be validated by it.  Weller nevertheless signed the Funds’ 
+annual and semi-annual financial reports on Forms N-CSR, filed with the Commission, including 
+certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002.   
+27. Morgan Keegan, acting through Weller and Fund Accounting, failed to employ 
+reasonable procedures to price the Funds’ portfolio securities and, as a result of that failure, did not 
+calculate accurate NAVs for the Funds.  Despite these failures, Morgan Keegan recklessly 
+published daily NAVs of the Funds which it could not know were accurate and, as distributor of 
+the Funds’ shares, sold shares to investors based on those NAVs.   
+Kelsoe’s Fraudulent Manipulation of the Funds’ Securities Prices 
+28. Between at least January 2007 and July 2007, Kelsoe manipulated the dealer quotes 
+obtained from at least one broker-dealer (“the Submitting Firm”).  At about the time Fund 
+Accounting or the Independent Auditor sent requests for dealer quotes to the Submitting Firm, 
+Kelsoe would confer by e-mail or phone with his contact there (the “Salesman”) regarding the 
+quotes. Among other times, Kelsoe had such conversations concerning the month-end quotes for 
+December 31, 2006, February 28, 2007, and March 31, 2007.   
+29. In some instances, even after causing the Submitting Firm to increase its quotes, 
+Kelsoe subsequently provided price adjustments to Fund Accounting that were higher than even 
+the Submitting Firm’s increased quotes.  These adjustments were not consistent with the Funds’ 
+procedures. Kelsoe and the Salesman also discussed, and the Submitting Firm frequently 
+provided, interim quotes that were lower than the prices at which the Funds were valuing certain 
+bonds, but higher than the initial quotes that the Submitting Firm had intended to provide.  The 
+interim quotes were accommodations to Kelsoe to enable him to avoid marking down the securities 
+to the fair value in one adjustment.  Kelsoe knew that the interim quotes did not reflect fair value, 
+that the Submitting Firm would provide lower quotes in response to future pricing validation 
+requests, and that he would be required to mark down the securities over time, but he did not 
+7
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+  
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+  
+ 
+ 
+disclose that information to Fund Accounting, the Funds’ Boards of Directors or the Independent 
+Auditor.     
+30. For example, on April 25, 2007, the Salesman and Kelsoe spoke by phone about 
+dealer quotes that would be submitted in connection with the March 31, 2007 audit by the 
+Independent Auditor. The Salesman then told Kelsoe that the Submitting Firm’s trading desk had 
+priced down many of the bonds in the Funds.  Kelsoe asked the Salesman not to provide low dealer 
+quotes that reflected actual bid prices.  
+31. As a result of the conversation, on April 30, 2007, the Submitting Firm provided 
+quotes to the Independent Auditor reflecting interim prices for certain bonds, which were higher 
+than the quotes the Submitting Firm originally intended to supply, but lower than the Funds’ then 
+current values. For example, the Submitting Firm priced down one bond (“the Long Beach bond”) 
+from the previous confirmation price of $81 to $65 as an “interim” step.  This interim reduction to 
+$65 was approximately half of the mark-down to $50 that the Submitting Firm’s trading desk 
+initially had told the Salesman to communicate to the Independent Auditor for the Long Beach 
+bond. On April 26, 2007, Kelsoe sent a price adjustment to Fund Accounting marking down the 
+price of the Long Beach bond from $78, the price at which the Funds’ were valuing the bond at 
+that time, to $72.  Fund Accounting promptly entered the $72 price, which was substantially higher 
+than fair value, into the spreadsheet used to calculate the Funds’ NAV. 
+32.   The Submitting Firm also refrained from submitting certain quotes to Fund 
+Accounting, where the quotes would have been lower than the current valuations being used by the 
+Funds, as the result of conversations between Kelsoe and the Salesman.   
+33. Kelsoe did not disclose to Fund Accounting or the Funds’ Boards that he had 
+received quotes from the Submitting Firm which were lower than the current valuations recorded 
+by the Funds, and that the Submitting Firm had refrained from submitting quotes to Fund 
+Accounting or had submitted quotes at higher prices than it had originally planned.  Kelsoe also 
+did not disclose that he caused the Submitting Firm to alter or withhold quotes. 
+The Knollwood Bonds 
+34. In July 2006, Kelsoe purchased from the Submitting Firm, for one or more of the 
+Funds, a Knollwood Collateralized Debt Obligation (“Knollwood bond”), with the guarantee that 
+the Submitting Firm would make a “locked market” and buy it back in six months at the same 
+price, less two coupon payments that the Funds were to receive in the interim.  In January 2007, 
+Kelsoe agreed with the Submitting Firm to continue holding the Knollwood bond. On March 30, 
+2007, the Independent Auditor requested quotes from the Submitting Firm on a number of the 
+Funds’ bonds, including the Knollwood bond, for its year-end audit.  On April 30, 2007, the 
+Submitting Firm returned the requested quotes to both the Independent Auditor and Kelsoe; 
+however, it did not provide a quote for the Knollwood bond.  Consequently, the Knollwood bond 
+continued to be maintained at $92, a price higher than fair value, in the NAV of the relevant Funds.   
+8
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+35. On May 16, 2007, when Morgan Keegan was still valuing the Knollwood bond at 
+$92, Kelsoe and the Salesman discussed the fact that Morgan Keegan would be requesting another 
+quote for it from the Submitting Firm.  Kelsoe told the Salesman not to provide a quote to Morgan 
+Keegan unless it was $87.50 or higher.  On May 18, 2007, the Salesman advised Kelsoe that he 
+had obtained a $65 quote from the Submitting Firm’s trading desk for the Knollwood bond.  On 
+June 5, 2007, Kelsoe communicated his unhappiness about the $65 quote to the Submitting Firm, 
+and threatened to stop doing business with it.  On June 7, Kelsoe provided a price adjustment for 
+the Knollwood bond at $88, which was not consistent with fair value. On June 22, as a result of 
+Kelsoe’s comments, the Submitting firm provided a list of requested quotes to Morgan Keegan, but 
+left the space for the Knollwood quote blank. As a result, the Funds continued to price the 
+Knollwood bond at $88, substantially higher than fair value. Kelsoe did not advise Fund 
+Accounting, the Independent Auditor or the Funds’ Boards of Directors that the Submitting Firm 
+had provided to Kelsoe a quote lower than the price at which the Funds were holding the bonds, or 
+that he had prevailed upon the Submitting Firm not to supply the quotes to Fund Accounting or the 
+Independent Auditor. 
+The Terwin Bonds 
+36. In addition to engaging in affirmative misconduct to inflate the NAVs of the Funds, 
+Kelsoe also failed to inform Fund Accounting in March 2007—in br each of his fiduciary duty as 
+portfolio manager to the Funds—that he had become aware that seven Terwin Mortgage Trust 
+bonds (“Terwin bonds”) held by the Funds had declined substantially in value. 
+37. On or about March 15, 2007, Kelsoe placed a call to a broker-dealer that was the 
+issuer, distributor, and market maker for the Terwin bonds, to discuss a swap transaction.  In 
+discussing the terms of the swap, Kelsoe learned that the values of the Terwin bonds had decreased 
+substantially and that the Submitting Firm would be lowering its dealer quotes in response to a 
+request that would shortly be sent out by Fund Accounting in connection with the Funds’ audit, for 
+prices as of March 31, 2007.   
+38. Despite receiving this news in mid-March 2007, Kelsoe’s first communication with 
+Fund Accounting concerning reducing the price of certain Terwin bonds came in the form of a 
+price adjustment submitted to Fund Accounting by Kelsoe’s assistant via e-mail on Thursday, 
+March 29, 2007. Over the next day and weekend, Kelsoe informed Fund Accounting of the news 
+he had heard two weeks earlier. On April 2, 2007, before the market opened, Fund Accounting 
+lowered the value of all seven of the Terwin bonds effective as of March 31, 2007.   
+39. As the result of Kelsoe’s delay, the bonds were materially overvalued by the Funds 
+during the last two weeks of March 2007. 
+Misrepresentations to Investors and the Funds’ Boards of Directors 
+40. Kelsoe also made fraudulent misrepresentations and omissions of material fact 
+directly to the Funds’ investors concerning the Funds’ performance.  Specifically, in each of the 
+Funds annual and semi-annual reports filed with the Commission on Forms N-CSR during the 
+9
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+relevant period (including, among others, the Annual Report for the Morgan Keegan Select Fund, 
+Inc. for the year-ended June 30, 2007 filed with the Commission on October 4, 2007), Kelsoe 
+included a signed letter to investors reporting on the Funds’ performance “based on net asset 
+value.”  Given his actions to manipulate the Funds’ NAVs, Kelsoe knew the performance he 
+reported was materially misstated.  Kelsoe and, through him, Morgan Asset made untrue 
+statements of material fact concerning the Funds’ performance in the Funds’ annual and semi-
+annual reports filed with the Commission on Forms N-CSR.  Morgan Asset, through Kelsoe, also 
+defrauded the Funds by providing a quarterly valuation packet reflecting inflated prices for certain 
+securities to the Funds’ Boards, failing to disclose to the Funds’ Boards information indicating that 
+the Funds’ NAVs were inflated, and that Kelsoe was actively screening and manipulating  dealer 
+quotes and providing Fund Accounting with unsubstantiated price adjustments.  In addition, the 
+prospectuses described Morgan Asset as responsible for fair valuation of the Funds’ portfolios. 
+D. VIOLATIONS 
+41. As a result of the conduct described above, Respondents Morgan Asset, Kelsoe, 
+Morgan Keegan and Weller willfully violated Section 17(a) of the Securities Act; Section 10(b) of 
+the Exchange Act and Rule 10b-5, thereunder; which prohibit fraudulent conduct in the offer and 
+sale of securities and in connection with the purchase or sale of securities.   
+42. Alternatively, Morgan Asse t and Morgan Keegan willfully violated Section 17(a) 
+of the Securities Act; Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and 
+Respondents Kelsoe and Weller willfully aided and abetted and caused violations of Section 10(b) 
+of the Exchange Act and Rule 10b-5, thereunder. 
+43. As a result of the conduct described above, Respondent Morgan Asset willfully 
+violated, and Respondent Kelsoe willfully aided and abetted and caused violations of, Section 
+206(4) and of the Advisers Act and Rule 206(4)-7 thereunder; which prohibit fraudulent, deceptive 
+or manipulative practices or courses of business by an investment adviser, and requires investment 
+advisers to adopt and implement written policies and procedures reasonably designed to prevent 
+violation of the Advisers Act and the rules thereunder by their supervised persons, respectively. 
+44 As a result of the conduct described above, Respondent Morgan Asset willfully 
+violated, and Respondents Kelsoe and Morgan Keegan willfully aided and abetted and caused 
+violations of, Sections 206(1) and 206(2) of the Advisers Act; which prohibit fraudulent conduct 
+by an investment adviser. 
+45. As a result of the conduct described above, Respondents Morgan Asset, Kelsoe and 
+Weller willfully violated, and Respondent Morgan Keegan willfully aided and abetted and caused 
+violations of, Section 34(b) of the Investment Company Act, which prohibits untrue statements of 
+material fact or omissions to state facts necessary in order to make the statements made, in the light 
+of the circumstances under which they were made, not misleading, in any registration statement, 
+report or other document filed pursuant to the Investment Company Act or the keeping of which is 
+required pursuant to Section 31(a) of the Investment Company Act. 
+10
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+46. As a result of the conduct described above, Respondent Morgan Keegan willfully 
+violated, and Respondents Morgan Asset, Kelsoe and Weller willfully aided and abetted and 
+caused violations of, Rule 22c-1 promulgated under the Investment Company Act, which makes it 
+unlawful for registered investment companies issuing redeemable securities, persons designated in 
+such issuer’s prospectus as authorized to consummate transactions in such securities, and principal 
+underwriters of or dealers in such securities, to sell, redeem, or repurchase such securities except at 
+prices based on their current net asset values. 
+47. As a result of the conduct described above, Respondents Morgan Asset, Morgan 
+Keegan, Kelsoe, and Weller willfully aided and abetted and caused violations of Rule 38a-1 
+promulgated under the Investment Company Act, which requires that a registered investment 
+company adopt and implement written policies and procedures reasonably designed to prevent 
+violation of the federal securities laws, including policies and procedures that provide for oversight 
+of compliance by the investment company’s investment adviser.   
+III. 
+In view of the allegations made by the Division of Enforcement, 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 are true and, in connection therewith, to afford 
+Respondents an opportunity to establish any defenses to such allegations;  
+B. What, if any, remedial action is appropriate in the public interest against Respondent 
+Morgan Keegan pursuant to Section 15(b)(4) of the Exchange Act and against Morgan Asset, 
+Kelsoe and Weller pursuant to Section 15(b)(6) of the Exchange Act, including, but not limited to, 
+disgorgement and civil penalties pursuant to Section 21B of the Exchange Act;  
+C. What, if any, remedial action is appropriate in the public interest against Respondents 
+Morgan Keegan and Morgan Asset pursuant to Section 203(e) of the Advisers Act, and against 
+Respondents Kelsoe and Weller pursuant to Section 203(f) of the Advisers Act, including, but not 
+limited to, civil penalties pursuant to Section 203(i) of the Advisers Act;  
+D. What, if any, remedial action is appropriate in the public interest against Respondents 
+Morgan Keegan, Morgan Asset, Kelsoe and Weller pursuant to Section 9(b) of the Investment 
+Company Act, including, but not limited to, civil penalties pursuant to Section 9(d) of the 
+Investment Company Act;    
+E. Whether, pursuant to Section 8A of the Securities Act, Section 21C of the Exchange Act, 
+Section 203(k) of the Advisers Act, and Section 9(f) of the Investment Company Act, Respondents 
+Morgan Asset, Kelsoe, Morgan Keegan and Weller should be ordered to cease and desist from 
+committing or causing violations of and any future violations of Section 17(a) of the Securities Act, 
+Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; 
+11
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+F. Whether, pursuant to Section 8A of the Securities Act, Section 21C of the Exchange Act, 
+Section 203(k) of the Advisers Act, and Section 9(f) of the Investment Company Act, Respondents 
+Morgan Asset, Morgan Keegan, and Kelsoe should be ordered to cease and desist from committing 
+or causing violations of and any future violations of Sections 206(1), 206(2) and 206(4) of the 
+Advisers Act, Rule 206(4)-7 thereunder, and Section 34(b) of the Investment Company Act; 
+G. Whether, pursuant to Section 8A of the Securities Act, Section 21C of the Exchange Act, 
+Section 203(k) of the Advisers Act, and Section 9(f) of the Investment Company Act, Respondents 
+Morgan Asset and Kelsoe should be ordered to cease and desist from committing or causing 
+violations of and any future violations of Sections 206(4) of the Advisers Act and Rule 206(4)-7 
+thereunder; 
+H. Whether, pursuant to Section 8A of the Securities Act, Section 21C of the Exchange Act, 
+Section 203(k) of the Advisers Act, and Section 9(f) of the Investment Company Act, Respondents 
+Morgan Asset, Morgan Keegan, Kelsoe and Weller should be ordered to cease and desist from 
+committing or causing violations of and any future violations of Rule 22c-1, promulgated under the 
+Investment Company Act; 
+I. Whether, pursuant to Section 8A of the Securities Act, Section 21C of the Exchange Act, 
+Section 203(k) of the Advisers Act, and Section 9(f) of the Investment Company Act, Respondents 
+Morgan Asset, Morgan Keegan, Kelsoe and Weller should be ordered to cease and desist from 
+committing or causing violations of and any future violations of Rule 38a-1, promulgated under the 
+Investment Company Act; 
+J. Whether, pursuant to Section 4C of the Exchange Act and Rule 102(e)(1)(iii) of the 
+Commission’s Rules of Practice, it is appropriate to censure or deny Respondent Weller the 
+privilege of appearing or practicing before the Commission; and 
+K. Whether Respondents should be ordered to pay disgorgement pursuant to Section 8A(e) of 
+the Securities Act, Section 21C(e) of the Exchange Act, Section 203(i) of the Advisers Act and 
+Section 9(e) of the Investment Company Act. 
+IV. 
+IT IS ORDERED that a public hearing for the purpose 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, and before an Administrative Law Judge 
+to be designated by further order as provided by Rule 110 of the Commission's Rules of Practice, 17 
+C.F.R. § 201.110. 
+IT IS FURTHER ORDERED that Respondents 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 
+of the Commission's Rules of Practice, 17 C.F.R. § 201.220.  
+12
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+If Respondent fails to file the directed answer, or fails to appear at a hearing 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 personally or by certified mail. 
+IT IS FURTHER ORDERED that the Administrative Law Judge shall issue an initial 
+decision no later than 300 days from the date of service of this Order, pursuant to Rule 360(a)(2) of 
+the Commission’s Rules of Practice. 
+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. 
+        E l i z a b e t h M . M u r p h y
+        S e c r e t a r y 
+13
+ 

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+              U.S. Securities and Exchange Commission  Litigation Release No. 21480 / April 7, 2010  Accounting and Auditing Enforcement Release No. 3126 / April 7, 2010   SEC v. Symbol Technologies, Inc., et al. , 04 CV 2276 (SJF)(EDNY)  TWO MORE FORMER EXECUTIVES OF SYMBOL TECHNOLOGIES, INC. SETTLE SEC ACTION, CONCLUDING LIABILITY PROCEEDINGS IN THE 12-DEFENDANT ACCOUNTING CASE  The Honorable Sandra J. Feuerstein, United States District Judge for the Eastern District of New York, has entered final consent judgments against Frank Borghese and Michael DeGennaro, the last two defendants in the Commission's enforcement action against Symbol Technologies, Inc. ("Symbol") and its former executives. The Commission's settlement with DeGennaro also included the issuance of an administrative cease-and-desist order. The Commission's federal court complaint, filed on June 3, 2004, alleges that from 1998 until early 2003, Symbol and the eleven individual defendants engaged in fraudulent accounting practices aimed at falsifying Symbol's reported financial results. The judgments and the administrative order imposed the following relief, to which both Borghese and DeGennaro consented without admitting or denying the allegations of the Commission's complaint and, in DeGennaro's case, the findings in the administrative order:  Frank Borghese, formerly Symbol's Senior Vice President of Worldwide Sales and Services, consented to a judgment, entered on February 22, 2010, that requires him to disgorge a total of $450,000 and waives imposition of a civil monetary penalty based on his demonstrated financial inability to pay additional amounts. The consent judgment also prohibits him from acting as an officer or director of a public company and permanently enjoins him from violating the relevant antifraud, corporate reporting, books and records and internal control provisions of the federal securities laws. Specifically, Borghese is permanently enjoined from violating, or aiding and abetting violations of, Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act"), and Exchange Act Rules 10b-5, 12b-20, 13a-1, 13a-13, and 13b2-1. The complaint alleges that, as head of sales, Borghese spearheaded Symbol's various "channel stuffing" and other fraudulent revenue recognition practices.  Michael DeGennaro, formerly Symbol's Senior Vice President of Finance, consented to a final judgment, entered on April 6, 2010, that requires him to pay a civil penalty of $40,000. In addition, on April 2, 2010, the Commission issued an order finding that DeGennaro was a cause of Symbol's violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act -- the corporate books and records and internal control provisions of the Exchange Act -- and directing DeGennaro to cease and desist from causing such violations in the future. The Commission's order finds that: (i) In 2000 and 2001, Symbol created and used certain "restructuring" charges and related reserves in contravention of generally accepted accounting principles ("GAAP"), causing Symbol to misstate its operating expenses and net income on its books and records and in its financial statements; and (ii) DeGennaro was one of the executives who determined how these charges were recorded, and he failed to take the requisite steps to ensure that the charges and the uses of associated reserves were properly recorded and accounted for in accordance with GAAP.  Consent judgments were previously entered against each of the other ten defendants, with the exception of Tomo Razmilovic, Symbol's former Chief Executive Officer. On December 23, 2009, the Court entered a default judgment against Razmilovic as a sanction for his refusal to appear for his court-ordered deposition in the United States. Razmilovic currently resides in Sweden and has been a fugitive from justice since being indicted on parallel criminal charges in the Eastern District of New York. The Court has commenced an evidentiary hearing to determine the relief to be imposed against Razmilovic pursuant to the default judgment. The Commission is seeking permanent injunctive relief, an officer-and-director bar, disgorgement plus prejudgment interest, and civil monetary penalties. The hearing is scheduled to resume on May 10, 2010. The Commission's complaint alleges that Razmilovic orchestrated the fraud at Symbol to create the false appearance that Symbol was achieving the aggressive financial performance targets imposed by Razmilovic.  The Commission acknowledges the assistance and cooperation of the United States Attorney's Office for the Eastern District of New York and the U.S. Postal Inspection Service in this matter. 								
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+              U.S. Securities and Exchange Commission  Litigation Release No. 21491 / April 19, 2010  Accounting and Auditing Enforcement Release No. 3127 / April 19, 2010   SEC v. Collins & Aikman Corporation, et al.  Civil Action No. 07-CV-2419 (S.D.N.Y.) (Judge Shira A. Scheindlin)  SEC SETTLES WITH FIVE DEFENDANTS IN SEC V. COLLINS & AIKMAN; DAVID A. STOCKMAN CONSENTS TO INJUNCTION IN CONNECTION WITH COLLINS AND AIKMAN FRAUD AND AGREES TO PAY $7.2 MILLION IN CIVIL PENALTIES, DISGORGEMENT, AND PREJUDGEMENT INTEREST  The Securities and Exchange Commission today announced that it reached settlements in  SEC v. Collins & Aikman Corp., et al. , No. 07-CV-2419 (SAS) (S.D.N.Y.) with defendants David A. Stockman ("Stockman"), J. Michael Stepp ("Stepp"), Elkin B. McCallum ("McCallum"), David R. Cosgrove ("Cosgrove"), and Paul C. Barnaba ("Barnaba"), all former executives or board members of Collins & Aikman Corporation ("C&A"), an auto parts supplier that went bankrupt in 2005. The proposed settlements are subject to Court approval.  Stockman, C&A's former CEO and Chairman of the Board, Stepp, C&A's former CFO and Vice Chairman of the Board, McCallum, a former C&A Board member, and Cosgrove, C&A's former Corporate Controller, without admitting or denying the Commission's allegations, would each consent to entry of a final judgment permanently enjoining them from violating the antifraud provisions of Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 ("Securities Act") and the reporting, recordkeeping, internal controls, and lying to auditors provisions of the Securities Exchange Act of 1934 ("Exchange Act"). Stockman and Stepp also would be permanently enjoined from violating the Sarbanes-Oxley certification provisions. Barnaba, C&A's former Vice President and Director of Purchasing-Plastic Division, without admitting or denying the Commission's allegations, would consent to entry of a final judgment permanently enjoining him from violation of the reporting, recordkeeping, internal controls, and lying to auditors provisions of the Exchange Act.  Pursuant to the settlement, Stockman has agreed to pay $7.2 million, comprised of $400,000 in civil penalties, disgorgement of $4,424,000, and prejudgment interest of $2,376,000, with the disgorgement and prejudgment interest obligations subject to an offset of up to $4.4 million for payments Stockman makes to settle two securities class action lawsuits against him seeking recovery of the same money as the Commission. Stepp and McCallum have each agreed to pay a civil penalty of $75,000, Cosgrove has agreed to pay a civil penalty of $40,000, and Barnaba has agreed to pay a civil penalty of $20,000. Upon motion to the Court, the civil penalties paid by Stockman may be distributed pursuant to the Fair Funds provisions of Section 308(a) of the Sarbanes-Oxley Act of 2002.  In addition, based upon the anticipated entry of a permanent injunction against him, Cosgrove has offered to consent, without admitting or denying the Commission's findings, to the issuance of an administrative order pursuant to Rule 102(e) of the Commission's Rules of Practice, suspending him from appearing or practicing before the Commission as an accountant with a right to apply for reinstatement after three years.  The SEC's complaint alleges that Stockman participated in fraudulent rebate transactions, joined by Stepp, McCallum, Cosgrove, and Barnaba, to inflate C&A's reported income between 2001 and 2004. The complaint alleges that Stockman and other defendants obtained false documents from suppliers designed to mislead C&A's external auditors. The complaint also alleges that Stockman and other defendants caused C&A to file financial statements with the SEC that materially misrepresented C&A's financial results. According to the complaint, during the time Stockman was engaged in this conduct, he was collecting millions of dollars in management fees C&A paid Stockman's private equity fund, Heartland Industrial Partners.  As part of the settlement, the Commission has submitted proposed stipulated dismissals of its fraud charges under Section 17(a)(1) of the Securities Act and Section 10(b) and Rule 10b-5 under the Exchange Act against Stockman, Stepp, McCallum, Cosgrove, and Barnaba. In addition, the Commission has submitted proposed stipulated dismissals of all claims against defendants John G. Galante, C&A's former Treasurer, Christopher M. Williams, C&A's former Executive Vice President of Business Development, Gerald E. Jones, C&A's former Chief Operating Officer and Executive Vice President of Fabrics, and Thomas V. Gougherty, C&A's former Controller-Plastics Division. C&A, without admitting or denying the Commission's allegations, previously consented to the entry of a final judgment permanently enjoining it from, among other things, violating the antifraud provisions of the federal securities laws, Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5.  The SEC's civil enforcement action will be concluded if the Court approves the proposed settlements and dismissals.  For additional information, see Litigation Release No.  20055  / March 26, 2007. 								
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+              U.S. SECURITIES AND EXCHANGE COMMISSION  Litigation Release No. 21498 / April 22, 2010  Accounting and Auditing Enforcement Release No. 3128 / April 22, 2010   Securities and Exchange Commission v. Exotics.com, Inc., et al.,  Civil Action No. 2:05-cv-00531-PMP-GWF, United States District Court, District of Nevada  CERTIFIED PUBLIC ACCOUNTANT MARLIN R. BRINSKY SETTLES SEC ENFORCEMENT ACTION IN EXOTICS.COM, INC. LITIGATION  The Securities and Exchange Commission announced that a federal district court in Nevada has entered a final judgment, by consent, against Marlin R. Brinsky of Santa Monica, California, in connection with an enforcement action filed in 2005 concerning a penny stock manipulation and accounting fraud. The final judgment against Brinsky, a certified public accountant, was entered on April 21, 2010. It permanently enjoins him from violating provisions of the federal securities laws governing accountant's reports and orders him to pay a $20,000 civil penalty. Separately, Brinsky also consented to an administrative order suspending him from appearing or practicing before the Commission as an accountant, with a right to apply for reinstatement after two years.  The Commission's civil injunctive action was filed on April 25, 2005, against Exotics.com, Inc., a Nevada corporation based in Vancouver, British Columbia, and 12 additional principal defendants and one relief defendant. The Commission's complaint alleged that, between at least 1999 and 2002, Exotics.com, which was then an Over-the-Counter Bulletin Board company in the business of operating adult Web sites, was the subject of a stock manipulation and accounting fraud. The complaint alleged, among other things, that Brinsky and others engaged in conduct that resulted in Exotics.com filing materially false and misleading financial statements in its Commission filings. The complaint further alleged that the staff of Exotics.com's outside auditor, of which Brinsky was a member, committed acts and/or omissions that caused them to become non-independent during audits of Exotics.com and that their firm thereafter issued audit reports falsely representing that the audits had been conducted by an independent accountant. Those audit reports were incorporated in Exotics.com's Commission filings. According to the complaint, the audit reports, among other things, falsely stated that the audits had been conducted by an independent auditor and in accordance with generally accepted auditing standards (GAAS). The complaint also alleged that Brinsky and other members of the audit team engaged in a number of improper accounting practices that caused Exotics.com's financial statements to depart from generally accepted accounting principles (GAAP).  Without admitting or denying the allegations in the Commission's complaint, Brinsky consented to the entry of final judgment against him. The final judgment against Brinsky enjoins him from violating Rule 2-02 of Regulation S-X and orders him to pay a civil penalty of $20,000.  Brinsky also consented to the entry of an Administrative Order, pursuant to Rule 102(e) of the Commission's Rules of Practice, suspending him from appearing or practicing before the Commission as an accountant, with a right to apply for reinstatement after two years.  The Commission previously obtained judgments by default against two defendants and judgments by consent against six additional defendants. The action remains pending against the remaining four defendants and a relief defendant.  For further information, see Litigation Release Nos.  19207  (April 28, 2005) [civil injunctive action filed],  19645  (April 7, 2006) [judgment by default against Exotics.com],  19699  (May 15, 2006) [judgment by consent against Barry F. Duggan],  19957  (January 4, 2007) [judgment by default against Gary Thomas],  21028  (May 7, 2009) [judgment by consent against Edward James Wexler],  21456  (March 19, 2010) [judgments by consent against Stephen P. Corso and Brian K. Rabinovitz],  21490  (April 16, 2010) [judgments by consent against Ingo W. Mueller and Firoz Jinnah] and Exchange Act Release Nos.  59766  (April 14, 2009) [forthwith suspension of Stephen P. Corso, CPA] and  61771  (March 24, 2010) [suspension of Brian K. Rabinovitz, CPA]. 								
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raw/aaer/2010/AAER-3129.txt

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+                                                
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+ 
+ UNITED STATES OF AMERICA 
+ before the 
+SECURITIES AND EXCHANGE COMMISSION 
+SECURITIES EXCHANGE ACT OF 1934 
+Release No.  61976 / April 23, 2010 
+ACCOUNTING AND AUDITING ENFORCEMENT 
+Release No.  3129 / April 23, 2010 
+ADMINISTRATIVE PROCEEDING 
+File No. 3-13870 
+In the Matter of 
+       DAVID R. COSGROVE, CMA 
+Respondent. 
+____________________________________ : 
+: 
+: 
+: 
+: 
+: 
+: 
+ORDER INSTITUTING 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 David 
+R. Cosgrove (“Respondent” or “Cosgrove”) 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 
+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. 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+   
+  
+ 
+ 
+ 
+ 
+ 
+ 
+  
+  
+herein, except as to the Commission’s jurisdiction over him and the subject matter of these 
+proceedings and the findings contained in paragraph 3 of Section III 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. Cosgrove, age 51, is a certified management accountant ("CMA") licensed 
+to practice in Canada. At all times relevant to this matter, he was employed by Collins & Aikman 
+Corporation ("C&A") in Troy, Michigan.  From February 2002 until August 2002, Cosgrove was 
+the Vice President of Finance in the North American Plastics Division.  From August 2002 until 
+October 2004, Cosgrove was the Vice President for Financial Planning and Analysis.  From 
+October 2004 until September 2005, Cosgrove was the Corporate Controller.  
+2. C&A, a Delaware corporation headquartered in Michigan,  manufactured 
+and assembled parts used in automobile production.  Prior to May 2005, C&A's common stock was 
+registered with the Commission pursuant to Section 12(b) of the Securities Exchange Act of 1934 
+("Exchange Act") and was traded on the New York Stock Exchange.  C&A entered bankruptcy in 
+May 2005. On June 29, 2005, the Commission deregistered C&A's common stock and granted a 
+New York Stock Exchange petition to delist C&A.  C&A has subsequently dissolved.     
+3. On March 26, 2007, the Commission filed a complaint against Cosgrove 
+and others in SEC v. Collins & Aikman et al (S.D.N.Y.) Civil Action No. 07-2419.  On April 20, 
+2010, the Court entered an order permanently enjoining Cosgrove, by consent, from future 
+violation of Sections 17(a)(2) and (3) of the Securities Act of 1933, Section 13(b)(5) of the 
+Exchange Act, and Rules 13b2-1 and 13b2-2 under the Exchange Act, and from aiding and 
+abetting 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 under the Exchange Act.  The Court also required Cosgrove to 
+pay a civil penalty of  $40,000. 
+4. The Commission’s complaint alleged, among other things, that from the 
+second quarter of 2002 through the third quarter of 2004 C&A and several of its officers and 
+employees, including Cosgrove, engaged in accounting fraud by improperly accounting for rebates 
+demanded from suppliers in exchange for future business from C&A.  The Commission also 
+alleged that C&A induced suppliers to provide false or misleading documentation regarding the 
+rebates. The Complaint asserts that Cosgrove advised C&A employees on the language to be used 
+in false documents regarding the rebates, knowing that these documents would be used to 
+improperly account for the rebates.   
+2
+ 
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+      
+        
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+ 
+      
+  
+      
+            
+ 
+ 
+ 
+ 
+ 
+ 
+   
+ 
+ 
+IV. 
+In view of the foregoing, the Commission deems it appropriate and in the public interest to 
+impose the sanction agreed to in Respondent’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 three 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.  Such an 
+application must satisfy the Commission that Respondent’s work in his practice before the 
+Commission 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. an independent accountant.  Such an application must satisfy the 
+Commission that: 
+(a) Respondent, or the public accounting firm with which he/she 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/she 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/her responsibility, as long as 
+Respondent 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. 
+C. The Commission will consider an application by Respondent to resume 
+appearing or practicing before the Commission as an accountant provided that he is in 
+possession of an accounting license in good standing and he has resolved any disciplinary 
+3
+ 
+ 
+ 
+ 
+   
+ 
+ 
+ 
+ 
+ 
+issues with any applicable licensing authority.  However, if the resolution of any disciplinary 
+action by a licensing authority 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. 
+ By the Commission. 
+       E l i z a b e t h M . M u r p h y
+       S e c r e t a r y 
+4
+