U.S. Securities & Exchange Commission
SEC Seal
Home | Previous Page
U.S. Securities and Exchange Commission

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 48337 / August 14, 2003

ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1842 / August 14, 2003

ADMINISTRATIVE PROCEEDING
File No. 3-11218


In the Matter of

PETER BROMBERG, CPA,

Respondent.


:
:
:
:
:
:
:
ORDER INSTITUTING PUBLIC ADMINISTRATIVE PROCEEDINGS PURSUANT TO RULE 102(e) OF THE COMMISSION'S RULES OF PRACTICE, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS

I.

The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted against Peter Bromberg ("Respondent" or "Bromberg") pursuant to Rule 102(e)(3)(i) of the Commission's Rules of Practice.1

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the "Offer") which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission's jurisdiction over him and the subject matter of these proceedings and the findings contained in Section III.3. below, which are admitted, Respondent consents to the entry of this Order Instituting Public Administrative Proceedings Pursuant to Rule 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. Bromberg was the Chief Financial Officer ("CFO") of Motorcar Parts and Accessories, Inc. ("Motorcar") from 1994 until May 1999. Bromberg, as Motorcar's CFO and chief accounting officer, was responsible for the preparation of accurate financial statements. Bromberg signed Motorcar's 1997 and 1998 Form 10-K annual reports in addition to its 1997 Form S-2 registration statement filed with the Commission. He is a Certified Public Accountant in the State of New York. He is 38 years old and lives in Wellington, Florida.

  2. Motorcar is, and at all relevant times was, a New York corporation with its principal place of business in Torrance, California. Motorcar remanufactures and sells alternators and starters for the automotive aftermarket industry. Motorcar's securities are registered with the Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934 and were traded on the Nasdaq Stock Market until it suspended trading on August 2, 1999. On September 2, 1999, Nasdaq delisted Motorcar's securities and the securities began trading over-the-counter.

  3. On September 18, 2002, the Commission filed a complaint against Bromberg in SEC v. Motorcar Parts and Accessories, Inc. and Peter Bromberg, in the United States District Court for the Central District of California (the "Court") (Civil Action No. SACV 03-485 JVS (SHx)). On August 7, 2003, the Court entered a Final Judgment Of Permanent Injunction And Other Relief Against Defendant Peter Bromberg ("Judgment") which (a) permanently enjoins Bromberg from future violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b), Sections 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, 12b-20, 13a-1, 13b2-1, and 13b2-2 thereunder; and (b) orders payment of $76,275 in disgorgement plus prejudgment interest but waived all but $50,000 of this amount and does not order a civil penalty based on Bromberg's sworn representations in his Statement of Financial Condition and other documents submitted to the Commission. Bromberg consented to the entry of the Judgment without admitting or denying any of the allegations in the complaint.

  4. The Commission alleged that Motorcar and Bromberg fraudulently inflated Motorcar's earnings in 1997 and 1998. Specifically, the complaint alleged that by failing to properly reserve for product returns received but not checked in to Motorcar's inventory accounting system, Motorcar overstated earnings for the fiscal year ended March 31, 1997 by $1,067,000, or 18.8%. Similarly, for the fiscal year ended March 31, 1998, Motorcar overstated earnings by $1,176,000, or 16.3%. In addition, the complaint alleged that Motorcar overstated reported pretax earnings at March 31, 1997 by $2,324,000, or 41%, by recording reserves for unprocessed customer credits of only $500,000 when the actual reserve required was $2,824,000. Similarly, for the fiscal year ended March 31, 1998, Motorcar overstated pretax earnings by $2,401,000, or 33.3%, by recording reserves for unprocessed customer credits of only $300,000 when required reserves were $2,800,000. Motorcar used these false earnings figures in its financial statements included with its 1997 and 1998 Form 10-K annual reports filed with the Commission. It also included the 1997 false earnings figures in a Form S-2 registration statement filed in October 1997 with the Commission. Bromberg signed Motorcar's 1997 and 1998 Form 10-K annual reports as well as the Form S-2 registration statement knowing that Motorcar's earnings were overstated. The complaint also alleged that Bromberg made false representations to Motorcar's auditors in management representation letters. Finally, the complaint alleged that Bromberg improperly reduced Motorcar's accounts payable during fiscal year 1999.

IV.

In view of the foregoing, the Commission deems it appropriate in the public interest to impose the sanction agreed to in Respondent Bromberg's Offer.

Accordingly, IT IS HEREBY ORDERED, effective immediately that:

Bromberg is suspended from appearing or practicing before the Commission as an accountant.

By the Commission.

Jonathan G. Katz
Secretary

 


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.

 

http://www.sec.gov/litigation/admin/34-48337.htm


Modified: 08/14/2003