Frederick W. Kolling III, CPA

Securities Exchange Act of 1934
Release No. 46777 / November 6, 2002

Accounting and Auditing Enforcement
Release No. 1659 / November 6, 2002

Administrative Proceeding
File No. 3-10718

In the Matter of FREDERICK W. KOLLING III, CPA Respondent.

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ORDER PURSUANT TO SECTION 21C AND RULE 102(e) MAKING FINDINGS, IMPOSING REMEDIAL SANCTIONS, AND ISSUING A CEASE-AND-DESIST ORDER

I.

On March 12, 2002, the Securities and Exchange Commission ("Commission") instituted administrative proceedings pursuant to Section 21C of the Securities and Exchange Act of 1934 and Rule 102(e) of the Commission's Rules of Practice¹ against Frederick W. Kolling III, CPA ("Respondent" or "Kolling").

II.

Kolling 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 in which the Commission is a party, and without admitting or denying the findings contained herein, except as to the Commission's jurisdiction over him and over the subject matter of the proceedings, which are admitted, Respondent consents to the entry of the findings, a cease-and-desist order, and the imposition of the remedial sanctions set forth herein.

III.

On the basis of this Order and the Offer submitted by Respondent, the Commission finds that:

A. Summary

1. This proceeding involves violations of the federal securities laws by Kolling arising out of financial fraud at Gunther International, Ltd. ("Gunther"), a Delaware Corporation with its principal executive offices in Norwich, CT. during its fiscal years ended March 31, 1997 and March 31, 1998. On January 14, 1999, Gunther restated the financial statements in its Forms 10-KSB for fiscal years 1997 and 1998 and the financial statements in its Forms 10-QSB for the first three quarters of fiscal year 1998.

2. The fiscal year 1997 financial results, which initially reported $259,000 in net income, were restated to a $1.3 million net loss. The fiscal year 1998 financial results, which initially reported a $2.7 million net loss and $9.3 million of total assets, were restated to a $2.63 million net loss and $8 million of total assets. In the restated quarters of fiscal year 1998, Gunther reported net losses of $897,430, $961,668 and $610,784 in the first, second and third quarters, respectively, after it had previously reported a first quarter net loss of $227,580, second quarter net income of $43,778 and third quarter net income of $125,026.

3. The financial statements in the Form 10-KSB for fiscal year 1997 were restated because (1) revenue was improperly recognized for service contracts that should have been deferred, (2) accounts receivables were improperly included in the company's assets with respect to contracts for the sale of systems that had not been signed by the end of the fiscal year, (3) a significant invoice was not recorded at year end for Gunther's largest vendor and (4) a liability was improperly reversed for an invoice that was allegedly in dispute. The quarterly and annual financial results reported for fiscal 1998 were restated, in part, because (1) expenses were understated when assets were not reduced following the completion of certain machine subassemblies and (2) assets and net income were overstated when machine deposits were improperly recorded.

4. Kolling was Gunther's Chief Financial Officer during the relevant time period. He assisted in the preparation of the financial statements in question and signed them. Kolling knew, or was reckless in not knowing, that Gunther's annual and periodic financial statements were materially false or misleading. Kolling overstated assets and revenues and understated expenses when he made or permitted to be made improper entries into Gunther's accounting system and ignored "red flags" that should have alerted him to material errors in Gunther's financial statements. In addition, Kolling knew, or was reckless in not knowing, that the statements he made in the Management's Discussion and Analysis ("MD&A") section of Gunther's Annual Report on Form 10-KSB for fiscal year 1997 were materially false or misleading. Kolling also made materially false or misleading statements in management representation letters given to Gunther's independent auditors in connection with their audit of Gunther's fiscal year 1997 and 1998 financial statements. Finally, Kolling sold Gunther stock in January 1998 when he knew, or was reckless in not knowing, that Gunther had filed materially false or misleading financial statements with the Commission.

5. Kolling, age 53, was at all relevant times the Vice President, Chief Financial Officer, Treasurer and a director of Gunther and a Certified Public Accountant licensed in the state of Rhode Island. Kolling's job responsibilities included drafting SEC filings, maintaining the percentage of completion schedule for systems revenue recognition, supervising accounts payable, accounts receivable, and human resources. The employees in Gunther's accounting department reported to Kolling during the relevant time period. Kolling also managed Gunther's relationship with the Bank of Boston, the bank that provided Gunther's financing. Kolling resides in East Greenwich, Rhode Island.

6. Gunther manufactures, sells and services complex document finishing systems. Its systems copy, selectively collate, staple or bind documents and insert them into envelopes. Gunther's 1997 fiscal year ran from April 1, 1996 through March 31, 1997, and its 1998 fiscal year ran from April 1, 1997 through March 31, 1998.

7. Gunther's sole source of liquidity during fiscal years 1997 and 1998, other than payments on the systems and service contracts, was a financing agreement with the Bank of Boston. In 1996, Gunther borrowed $1,750,000 in a revolving note that was secured by assets held by Gunther's largest investor at the time. Also in 1996, Gunther entered into a $250,000 revolving note that was secured by all the deposits, credits, collateral and property of the company. In February 1997, Kolling negotiated an increase in Gunther's revolving note to $500,000. In order to secure the increase in Gunther's line of credit, Kolling had to provide the Bank of Boston with profit projections for Gunther's 1997 fiscal year. Kolling also committed to the Bank of Boston that Gunther would meet certain operating profit requirements at the end of fiscal year 1997 and every quarter in fiscal year 1998.

8. The materially false or misleading financial statements that Kolling filed in fiscal year 1997 enabled Gunther to report the profit that Kolling had assured the bank in Kolling's projections and to meet the operating profit requirement in the revolving loan agreement that had recently been increased. Also, the materially false or misleading quarterly financial statements that Kolling filed in fiscal year 1998 enabled Gunther to (1) report improved results as compared to fiscal year 1997, (2) avoid violating the debt covenants in the second and third quarters of fiscal year 1998 and (3) avoid the possibility of the bank liquidating the collateral securing the $1,750,000 and $500,000 notes.

B. Facts

1. Kolling Overstates 1997 Service Revenue by Causing Gunther to Record Revenue for Contracts that Had Not Started

a. Incomplete "trued-up" schedule

9. Customers purchasing Gunther systems typically entered into service contracts with Gunther for service on the systems. The contracts required the customers to pay for the service, in advance, on either a quarterly or annual basis. Gunther, in turn, would bill the customer in advance of actually performing the service. Under Generally Accepted Accounting Principles ("GAAP"), service revenue should be recognized pro rata, over the contractual term of the arrangement or the expected period during which those specified services will be performed. Gunther's practice was to record service billings in a deferred service revenue account until the month in which the services were performed, at which point it would recognize revenue.

10. In fiscal year 1996, and through the second quarter of fiscal year 1997, Gunther used a monthly tracking schedule to determine the appropriate amount of service revenue to record on a monthly basis for each service contract. Gunther would record the amount earned each month on the tracking schedule and, in turn, recognize that amount as revenue.

11. At some point in the third quarter of fiscal year 1997, Gunther discontinued the use of this schedule. Because Gunther had abandoned the monthly tracking schedule, Kolling devised a "trued-up" schedule to determine the appropriate fiscal year-end balance in the deferred service revenue account in the general ledger. This "trued-up" schedule was intended to be a list of all the in-process contracts and the amount of revenue that had not yet been earned for that contract.

12. To determine the year-end revenue number, Kolling, or a member of the accounting department that reported to him, took the total amount of deferred revenue on the "trued-up" schedule, and then subtracted that from the amount of deferred revenue reflected on the general ledger at fiscal year-end. What remained was $952,000, which Kolling, or a member of the accounting department that reported to him, then recorded as revenue. The amount that was recorded as revenue overstated service revenue in fiscal year 1997 by $515,000, due to errors in the "trued-up" schedule.

13. Service revenue was overstated by over $446,000 because the "trued-up" schedule left off a number of contracts. Therefore, when the deferred revenue account balance in the general ledger was reduced by subtracting an understated deferred service revenue total from the "trued-up" schedule, revenue was improperly recognized. This amount had not yet been earned and should have been recognized in fiscal year 1998. In addition, certain invoices recorded in March 1997 (for fiscal year 1997), but relating to services to be performed in fiscal year 1998, were included in the deferred revenue account balance in the general ledger. The deferred revenue account and accounts receivable should have been separately reduced by $68,000 for these invoices but they were not and, consequently, since these items were not on the "trued-up" schedule, service revenues were overstated further.

b. Service Contracts Relating to Fiscal Year 1998 Improperly Recorded Directly into Revenue Account

14. The manner in which Gunther recorded its service invoices abruptly changed during the last three weeks of fiscal year 1997. Beginning with service invoices that were recorded on March 11, 1997, eleven of Gunther's March 1997 service invoices were recorded directly to the service revenue account instead of the deferred service revenue account. These invoices were for services to be performed in fiscal year 1998. Recording these invoices directly into revenue overstated service revenue in fiscal year 1997 by $309,000.

2. Kolling Causes Gunther to Overstate Net Income by Failing to Record a March 1997 Payable

15. In fiscal year 1997, a third party provider, DataCard, performed most of the maintenance service on Gunther's systems. Gunther expected DataCard to bill it in advance for servicing the regular monthly maintenance contracts. The regular maintenance bills from DataCard averaged between $250,000 and $280,000 per month during fiscal year 1997, making them one of Gunther's largest monthly expenses.

16. On March 20, 1997, DataCard generated a $242,000 bill for March 1997 services. Under GAAP, Gunther should have recorded the liability and corresponding expense in fiscal year 1997, because that is the period to which the services related. However, the invoice was entered into the accounting system on April 14, 1997, which was in fiscal year 1998. Because the payable had not been accrued in fiscal year 1997, Gunther understated service cost of sales, which overstated net income in fiscal year 1997, by approximately $242,000.

3. Kolling Causes Gunther to Overstate Net Income in Fiscal Year 1997 by Improperly Reversing an Invoice Owed to DataCard

17. In January 1997, DataCard gave Gunther a $203,000 supplemental invoice. DataCard gave Kolling all the necessary documentation to support the validity of the invoice in January 1997, and the invoice was entered into the accounting system in January 1997. Gunther's accounting manager began to reconcile the invoice in January 1997.

18. The DataCard invoice was improperly reversed in the first quarter of fiscal year 1998. By reversing this valid payable, Gunther understated service cost of sales, which overstated net income in fiscal year 1997 by $203,000.

4. Kolling Causes Gunther to Overstate Fiscal Year 1997 Net Income, Accounts Receivable and Revenue

19. When Gunther sent a contract to a customer to sign, it sent along an invoice for the deposit amount. Generating the deposit invoice created an accounts receivable and increased service revenue. Gunther had to reduce accounts receivable and service revenue at the end of each quarter for invoices for which customers had not signed a contract.

20. Accounts receivable and service revenue were not reduced for two deposit invoices generated in March 1997, for which a contract had not been signed by March 31, 1997. This was contrary to Gunther's percentage of completion revenue recognition policy for systems and contrary to its internal policy of recording accounts receivable upon receipt of a contract. These improperly included deposit invoices caused accounts receivable on the balance sheet to be overstated as of March 31, 1997 by approximately $323,000 and net income in fiscal year 1997 by the same amount.

21. When systems accounts receivable were recorded, Kolling was supposed to add these systems to the percentage of completion schedule at the end of fiscal year 1997 but he did not. If he had, an offsetting entry would have been made and Gunther's income statement would not have been overstated, by approximately $323,000, in fiscal year 1997.

5. Kolling Makes Materially False or Misleading Statements in 1997 to Gunther's Independent Auditors

22. In connection with the fiscal year 1997 audit, Kolling signed a management representation letter to Gunther's independent auditors that was materially false or misleading. Among other things, Kolling represented that Gunther's financial statements were prepared in conformity with GAAP, and that they fairly presented, in all material respects, the financial condition of the company.

23. When he signed the management representation letter, Kolling knew, or was reckless in not knowing, that Gunther's financial statements for fiscal year 1997 were materially false or misleading because service revenues were overstated, service cost of sales was understated and accounts receivable and net income were overstated.

6. Kolling Makes Materially False or Misleading Statements in the MD&A Section of Gunther's Form 10-KSB for Fiscal Year 1997

24. Gunther's Form 10-KSB for fiscal year 1997 was filed with the Commission on June 30, 1997. Kolling drafted the MD&A section of that Form 10-KSB. In connection with preparing the MD&A section, Kolling determined that Gunther had achieved an historically unprecedented 45% gross profit margin for its service business. Gunther had reported a 30% service gross profit margin in fiscal year 1996, and a 21% service gross profit margin in fiscal year 1995. In the MD&A, Kolling attributed the increase in Gunther's gross profit margin to an increase in requests for special services.

25. Kolling also reported, in the 1997 Form 10-KSB, a $1.7 million, or 36%, increase in its fiscal year 1997 service revenues compared to fiscal year 1996. In the MD&A, Kolling attributed the increase to a "larger number of systems in the field and inflationary price increases."

26. Kolling knew, or was reckless in not knowing, that the explanation in the MD&A for the increased gross profit margin and the increased service revenue was materially false or misleading, and that the true reason for the increase, which he did not disclose, was the accounting errors and adjustments that he had made or had failed to correct.

7. Fiscal Year 1998: Kolling Causes Gunther to Overstate Assets and Net Income In Connection with Machine Subassemblies

27. Gunther began to upgrade its accounting software system in October 1996. At the beginning of its fiscal year 1998, which began on April 1, 1997, Gunther installed job cost software in the new accounting system. In addition to other features, the new software allowed Gunther to track job costs for its systems by collecting and summarizing materials, labor, overhead costs and total costs in a separate job cost system. The upgraded accounting system required Gunther to change the process for accounting for the costs incurred to manufacture subassemblies that became a part of Gunther systems.

28. In fiscal year 1998, most Gunther systems were built by making subassemblies, such as folders and inserters, and then adding the subassemblies to the frame of a custom-ordered Gunther system. To manufacture a subassembly, Gunther withdrew parts from inventory and then assembled them into a subassembly. When the subassembly was finished, it was moved from the shop floor into the stock room, thereby increasing inventory and decreasing cost of sales. Because of the idiosyncrasies of Gunther's updated accounting system, moving the completed subassemblies to inventory overstated assets, called "cost in excess of billings," and understated expenses throughout fiscal year 1998.

29. Gunther's accounting system overstated assets and understated expenses in the general ledger when completed subassemblies were moved into inventory. Kolling was told that he needed to adjust the general ledger and he also was given at least one memo setting forth the manual entries he needed to make to the general ledger to eliminate the overstated assets and the understated cost of sales in the general ledger. Kolling, however, failed to make these adjustments.

30. Throughout fiscal year 1998, the general ledger's assets were overstated when compared to the cost in excess of billings on his percentage of completion schedule. The discrepancy grew to $1.15 million by the end of fiscal year 1998.

31. The job costs for Gunther's systems were stated correctly in Gunther's job cost system. However, the job costs Kolling recorded on his percentage of completion schedule, which helped Kolling to determine assets and revenue for Gunther's systems for financial reporting purposes, were misstated.

32. Kolling increased the machine job costs on his percentage of completion schedule until the assets in the account "cost in excess of billings" agreed to the overstated amount in the general ledger. When Kolling increased the job costs, the percentage of completion schedule allowed him to increase revenue and assets, which he did. Kolling then used the overstated figures on his percentage of completion schedule to report false or misleading financial statement results for the first three quarters of fiscal year 1998.

33. As a result of his misconduct relating to the accounting for subassemblies, Gunther overstated net income by approximately $240,000 in the first fiscal quarter, $207,000 in the second fiscal quarter, and $318,000 in the third fiscal quarter of 1998.

8. Kolling Causes Gunther to Overstate Net Income by Failing to Record Deposits

34. In fiscal year 1998, Kolling failed to record properly, on his percentage of completion schedule, the receipt of thirty cash deposits for systems. The total of the deposits was almost $1.4 million. Gunther's accounting process for systems depended on the accuracy and completeness of the percentage of completion schedule Kolling prepared.

35. The dollar value of the deposits Kolling did not record increased over time. The deposits that Kolling left off the percentage of completion schedule enabled him to report improved financial results in the second, third and fourth fiscal quarters (when compared to the prior year) and to meet the debt covenant in the loan agreement with the Bank of Boston in the third and fourth fiscal quarters of fiscal year 1998.

36. Gunther did not meet the operating profit requirement in its revolving loan agreement in the first quarter of fiscal year 1998. Kolling obtained a waiver of default from the bank because he misled the bank into believing that the company was actually profitable, and that the shortfall was due to a backlog in shipping systems that customers had already ordered.

37. Kolling failed to record thirty deposits on the fiscal year 1998 percentage of completion schedule. Kolling's failure to include these deposits on the schedule improperly overstated assets and increased net income by almost $1.4 million.

9. Kolling Makes Materially False or Misleading Statements in 1998 to Gunther's Independent Auditors

38. In connection with the fiscal year 1998 audit, Kolling signed a management representation letter to Gunther's independent auditors that was materially false or misleading. Among other things, Kolling represented that Gunther's financial statements were prepared in conformity with GAAP, and that they fairly presented, in all material respects, the financial condition of the company.

39. When he signed the management representation letter, Kolling knew, or was reckless in not knowing, that Gunther's financial statements for fiscal year 1998 were materially false or misleading because assets were overstated and expenses were understated, due to the subassembly problem and because he had improperly accounted for systems deposits on the percentage of completion schedule.

10. Kolling Sells Shares of Gunther Stock

40. In January 1998, Kolling sold 2,000 shares of Gunther stock. Kolling made a $4,397 profit on the sale of his 2,000 shares.

41. When he sold the stock, Kolling knew, or was reckless in not knowing, that Gunther's financial statements for fiscal year 1997, and those reported in Forms 10-QSB filed for the first and second quarters of fiscal year 1998, were materially false or misleading. As a result, Kolling received ill-gotten gains of $4,397.

C. Kolling's Violations of the Federal Securities Laws

42. During the period from February 1997 through March 1998, Kolling willfully violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder by making materially false or misleading statements in connection with the purchase or sale of Gunther's securities. Specifically, Kolling, as Gunther's Chief Financial Officer, signed and filed Gunther's financial statements on Form 10-KSB in fiscal year 1997, Forms 10-QSB for the first three quarters of fiscal year 1998 and Form 10-KSB for fiscal year 1998 that he knew, or was reckless in not knowing, were materially false or misleading. In addition, in January 1998, Kolling sold 2,000 shares of Gunther stock at a time when he knew, or was reckless in not knowing, that Gunther's financial statements for fiscal year 1997 were materially false or misleading.

43. As set forth above, Kolling, as Gunther's Chief Financial Officer, was responsible for the accuracy of Gunther's books and records. However, among other things, Kolling overstated job costs and failed to record certain deposits on Gunther's percentage of completion schedule and, consequently, Kolling knew, was reckless in not knowing, or should have known that he had overstated assets and net income and had understated expenses. By his conduct while he was Gunther's Chief Financial Officer, Kolling willfully violated Section 13(b)(5) of the Exchange Act and Exchange Act Rule 13b2-1.

44. As set forth above, Kolling made materially false or misleading statements to Gunther's independent auditors during the audits for fiscal years 1997 and 1998. Kolling misrepresented that Gunther's financial statements were prepared in conformity with GAAP, and that they fairly presented, in all material respects, the financial condition of the company. When he signed the management representation letter in 1997, Kolling knew, or was reckless in not knowing, that Gunther's financial statements for fiscal year 1997 were materially false or misleading because service revenues were overstated, service cost of sales was understated and accounts receivable, systems revenue and net income were overstated. When he signed the management representation letter in 1998, Kolling knew, or was reckless in not knowing, that Gunther's financial statements for fiscal year 1998 were materially false or misleading because assets were overstated and expenses were understated, due to the subassembly problem and because he had improperly accounted for systems deposits on the percentage of completion schedule. Accordingly, Kolling willfully violated Exchange Act Rule 13b2-2.

45. As further set forth above, Gunther's books and records did not accurately and fairly reflect the transactions and disposition of its assets and its internal controls had been circumvented. By reason of this and the foregoing, Kolling caused and willfully aided and abetted Gunther's violations of Section 13(b)(2)(A) and (B) of the Exchange Act.

46. As further set forth above, Kolling knew, was reckless in not knowing, or should have known that assets and net income were overstated, and expenses were understated, in certain of Gunther's annual and quarterly reports filed with the Commission in fiscal years 1997 and 1998. By reason of this and the foregoing, Kolling caused Gunther to file materially false or misleading annual and periodic reports during the relevant period of time. As a result, Kolling caused and willfully aided and abetted Gunther's violations of Sections 13(a) of the Exchange Act, and Rules 12b-20, 13a-1 and 13a-13 thereunder.

47. By virtue of his conduct, Kolling willfully violated, and willfully aided and abetted the violation of, provisions of the federal securities laws and rules thereunder within the meaning of Rule 102(e)(1)(iii) of the Commission's Rules of Practice.

D. Disgorgement

48. Kolling has submitted a sworn Statement of Financial Condition dated September 5, 2002 and other evidence and has asserted his inability to pay disgorgement plus prejudgment interest.

IV.

In view of the foregoing, the Commission deems it appropriate to accept the Offer submitted by Kolling and to impose the relief agreed to therein.

ACCORDINGLY, IT IS ORDERED that:

1. Kolling cease and desist from committing or causing any violation and any future violation, of Sections 10(b) and 13(b)(5) of the Exchange Act, and Rules 10b-5, 13b2-1 and 13b2-2 thereunder, and that he cease-and-desist from causing any violation, and any future violation, 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;

2. Kolling shall pay disgorgement in the amount of $4,397, plus prejudgment interest, but that payment of such amount is waived based upon Respondent's sworn representations in his Statement of Financial Condition dated September 5, 2002 and other documents submitted to the Commission;

3. 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 disgorgement and pre-judgment interest. No other issue shall be considered in connection 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: (1) contest the findings in this Order; (2) assert that payment of disgorgement and interest should not be ordered; (3) contest the amount of disgorgement and interest to be ordered; or (4) assert any defense to liability or remedy, including, but not limited to, any statute of limitations defense.

4. Kolling is denied the privilege of appearing or practicing before the Commission as an accountant;

5. After four (4) years from the date of this order, Kolling 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:

a. a preparer or reviewer, or a person responsible for the preparation or review, of any public company's financial statements that are filed with the Commission. Such an application must satisfy the Commission that Kolling'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

b. an independent accountant. Such an application must satisfy the Commission that: (1) Kolling, or any 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") or an organization providing equivalent oversight and quality control functions ("equivalent organization"); (2) Kolling, 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 or equivalent organization; and (3) as long as Kolling appears or practices before the Commission as an independent accountant, he will remain either a member of, or associated with a member firm of, the SEC Practice Section or equivalent organization, and will comply with all applicable SEC Practice Section or equivalent organization requirements, including all requirements for periodic peer reviews, concurring partner reviews, and continuing professional education, and

6. 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 dependant 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 Kolling's character, integrity, professional conduct, or qualifications to appear or practice before the Commission.

By the Commission.

Jonathan G. Katz
Secretary

Endnote

¹ Paragraph 1 of Rule 102(e) of the Commission's Rules of Practice provides, in pertinent part, that: "The Commission may . . . deny, temporarily or permanently, the privilege of appearing or practicing before it in any way to any person who is found by the Commission after notice and opportunity for hearing in the matter . . . (iii) 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."