US SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE ACT OF 1934
ACCOUNTING AND AUDITING ENFORCEMENT
COMMISSION INSTITUTES ADMINISTRATIVE PROCEEDING AGAINST CRAIG CONSUMER ELECTRONICS, INC. TO DETERMINE WHETHER TO REVOKE THE REGISTRATION OF ITS COMMON STOCK
The Securities and Exchange Commission ("Commission") announced today the institution of an administrative proceeding against Craig Consumer Electronics, Inc. ("Craig") seeking to revoke registration of Craig's common stock. In the Order Instituting Proceeding, the Division of Enforcement alleges that Craig failed to comply with the federal securities laws by making no periodic filings with the Commission subsequent to its filing of a Form 10-Q for the fiscal quarter ended March 31, 1997. Further, the staff alleges that Craig materially misrepresented its precarious financial position and severe liquidity problems in its second and third quarter 1996 Forms 10-Q, 1996 Form 10-K, and first quarter 1997 Form 10-Q.
Craig Consumer Electronics, Inc., a Delaware corporation, was a marketer of consumer electronics products before it ceased operations. Craig's common stock is registered with the Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934 and is quoted on the OTC Bulletin Board. On August 1, 1997, Craig filed for protection under Chapter 11 of the Bankruptcy Code
A public hearing will be held to determine whether the allegations contained in the Order Instituting Proceeding are true, to offer Craig an opportunity to establish any defenses to the allegations, and to determine whether its registration should be revoked.
In a related but separate enforcement action, on September 27, 2000, the Commission filed a civil complaint against two of the former officers of Craig in federal district court in Los Angeles, California. Simultaneous with the filing of the Commission's complaint, Craig's former CEO, Richard I. Berger consented to the issuance of a permanent injunction, without admitting or denying the allegations contained in the Commission's complaint, agreed to pay a civil penalty of $25,000, and be barred from serving as an officer or director for five years. See Litigation Release No. 16731 (Sept. 27, 2000).
In a related administrative cease-and-desist proceeding, the Commission found that Bonnie K. Metz, the former Vice President/Managing Director for its Hong Kong office, knowingly circumvented Craig's internal controls by falsifying bills of lading. Without admitting or denying the Commissions' findings, Metz agreed to cease-and-desist from knowingly circumventing internal controls and falsifying books and records. See Administrative Proceeding No. 3-10316 (Sept. 27, 2000).