UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 42229 / December 14, 1999
ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1212 / December 14, 1999
File No. 3-10117
: ORDER INSTITUTING PUBLIC
In the Matter of : PROCEEDINGS AND OPINION
: AND ORDER PURSUANT TO
JOSE E. RIVERA, CPA, : RULE 102(e) OF THE
: COMMISSION'S RULES OF
Respondent. : PRACTICE
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and they hereby are, instituted against Jose E. Rivera ("Rivera") pursuant to paragraph three (3) of Rule 102(e) of the Commission's Rules of Practice [17 C.F.R. § 201.102(e)(3)] ("Rule 102(e)").1
In anticipation of the institution of these administrative proceedings, Rivera has submitted an offer of settlement ("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 Commission's findings contained herein, except for the jurisdiction of the Commission over him and over the matters set forth in this order and that a Final Judgment of Permanent Injunction and Other Relief ("Final Judgment") has been entered against him as set forth in Paragraph III below, which are admitted, Rivera consents to the entry of this Order Instituting Public Proceedings and Opinion and Order Pursuant to Rule 102(e) ("Order").
On the basis of this Order and the Settlement Offer, the Commission finds that:
A. Rivera, age 44, is a certified public accountant ("CPA") licensed to practice in Florida. Rivera was the Director of Finance in charge of the accounting department of Pepsi-Cola Puerto Rico Bottling Company ("Pepsi P.R.") at all relevant times until his resignation in June 1996.
B. Pepsi P.R., a Delaware corporation, produces, distributes and markets beverages and other soft drink products in Puerto Rico. On September 19, 1995, Pepsi P.R. completed an initial public offering. Pepsi P.R.'s common stock is registered with the Commission pursuant to Section 12(b) of the Securities Exchange Act of 1934 and is listed for trading on the New York Stock Exchange.
C. On September 28, 1999, the Commission filed a complaint against Rivera and two other individuals in SEC v. Jose V. Villares, et al., Civil Action No. 99CV02565 (TPJ) (D.D.C.) ("Complaint"). Rivera consented to the entry of the Final Judgment without admitting or denying the allegations in the Complaint, except subject matter jurisdiction, which Rivera admitted. On November 8, 1999, the United States District Court for the District of Columbia entered the Final Judgment, which permanently enjoins Rivera from violating Sections 10(b) of the Securities Exchange Act or 1934 ("Exchange Act") and Rules 10b-5 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 and 13a-13 thereunder, pursuant to Section 21(d)(1) of the Exchange Act, and orders him to pay a $10,000 civil penalty, pursuant to Section 21(d)(3) of the Exchange Act.
D. The Complaint alleges that Rivera and two other Pepsi P.R. executives engaged in a scheme to fraudulently overstate the company's financial results, which were incorporated into the Forms 10-Q for the first two quarters following Pepsi P.R.'s September 19, 1995 initial public offering, by intentionally understating sales discounts and allowances and operating expenses. The Complaint alleges that this fraudulent conduct enabled Pepsi P.R. to report a $129,000 profit for the first quarter when it actually experienced a $3,206,000 loss, and to report a $702,000 loss for the second quarter when it actually experienced a $6,414,000 loss. The Complaint alleges that, as a result, Pepsi P.R.'s Forms 10-Q filed with the Commission for the first two quarters following the company's initial public offering were materially false and misleading.
ORDER IMPOSING SANCTIONS
Based upon the foregoing, the Commission deems it appropriate and in the public interest to accept the Settlement Offer and accordingly,
IT IS HEREBY ORDERED, effective immediately, that:
A. Rivera is denied the privilege of appearing or practicing before the Commission as an accountant.
B. After five (5) years from the date of this order, Rivera 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 Rivera'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) Rivera, or the firm with which he is associated, is a member of the SEC Practice Section of the American Institute of Certified Public Accountants Division for CPA Firms ("SEC Practice Section"); (b) Rivera, or the firm, has received an unqualified report relating to his, or the firm's, most recent peer review conducted in accordance with the guidelines adopted by the SEC Practice Section; and (c) As long as Rivera appears or practices before the Commission as an independent accountant he will remain either a member of the SEC Practice Section or associated with a member firm of the SEC Practice Section, and will comply with all applicable SEC Practice Section requirements, including all requirements for periodic peer reviews, concurring partner reviews, and continuing professional education.
C. The Commission's review of an application by Rivera to resume appearing or practicing before the Commission may include consideration of, in addition to the matters referenced above, any other matters relating to Rivera's character, integrity, professional conduct, or qualifications to appear or practice before the Commission.
By the Commission.
Jonathan G. Katz
1 Rule 102(e) provides in relevant part:
The Commission, with due regard to the public interest and without preliminary hearing, may, by order, temporarily suspend from appearing or practicing before it any . . . accountant . . . who has been by name . . . [p]ermanently enjoined by any court of competent jurisdiction, by reason of his or her misconduct in an action brought by the Commission, from violating or aiding and abetting the violation of any provision of the Federal securities laws or the rules and regulations thereunder.http://www.sec.gov/litigation/admin/34-42229.htm