FOR IMMEDIATE RELEASE                               2002-4

                    SEC CENSURES KPMG FOR
               AUDITOR INDEPENDENCE VIOLATION


     Washington, D.C., January 14, 2002 – The Securities and
Exchange Commission today censured KPMG LLP, a big-five
accounting firm based in New York City, for engaging in
improper professional conduct because it purported to serve
as an independent accounting firm for an audit client at the
same time that it had made substantial financial investments
in the client.  The SEC found that KPMG violated the auditor
independence rules by engaging in such conduct.  KPMG
consented to the SEC’s order without admitting or denying
the SEC’s findings.
     
     “The SEC’s decision to censure KPMG reflects the
seriousness with which the SEC treats violations of the
auditor independence rules, even in the absence of
demonstrated investor harm or deliberate misconduct,” said
Stephen M. Cutler, the SEC’s Director of Enforcement
     
     In addition to censuring the firm, the SEC ordered KPMG
to undertake certain remedies designed to prevent and detect
future independence violations caused by financial
relationships with, and investments in, the firm’s audit
clients.
     
      “This case illustrates the dangers that flow from a
failure to implement adequate policies and procedures
designed to detect and prevent auditor independence
violations,” said Paul R. Berger, Associate Director of
Enforcement.
     
     The SEC found that, from May through December 2000,
KPMG held a substantial investment in the Short-Term
Investments Trust (“STIT”), a money market fund within the
AIM family of funds.  According to the SEC’s order, KPMG
opened the money market account with an initial deposit of
$25 million on May 5, 2000, and at one point the account
balance constituted approximately 15% of the fund’s net
assets.  In the order, the SEC found that KPMG audited the
financial statements of STIT at a time when the firm’s
independence was impaired, and that STIT included KPMG’s
audit report in 16 separate filings it made with the SEC on
November 9, 2000.  The SEC further found that KPMG
repeatedly confirmed its putative independence from the AIM
funds it audited, including STIT, during the period in which
KPMG was invested in STIT.
     
     Rule 102(e) of the SEC’s Rules of Practice provided the
basis for the SEC’s finding in its administrative order that
KPMG engaged in improper professional practice.  According
to the SEC, KPMG’s independence violation occurred primarily
because the firm lacked adequate policies or procedures to
prevent or detect such violations, and because the steps
which KPMG personnel usually took before initiating
investments of the firm’s surplus cash were not taken in
this instance.
     
     The SEC also found that KPMG:
     
     ·    had no procedures directing its treasury department
       personnel to check the firm’s “restricted entity list” to
       confirm that a proposed investment was not restricted;
             
     ·    had no specific policies or procedures requiring any
       participation by a KPMG partner in the investigation and
       selection of money market investments; and

     ·    had no policies or procedures designed to put KPMG
       audit professionals on notice of where the firm’s cash 
       was invested, or requiring them to check a listing of 
       the firm’s investments, prior to accepting new audit 
       engagements or confirming the firm’s independence from 
       audit clients.
          
     As a result, the SEC found that there was no system
KPMG audit engagement partners could have used to confirm
the firm’s independence from its audit clients.
          
     The SEC concluded that KPMG’s lack of adequate policies
and procedures constituted an extreme departure from the
standards of ordinary care, and resulted in violation of the
auditor independence requirements imposed by the SEC’s rules
and by Generally Accepted Auditing Standards.
     
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For further information, contact:
     Paul R. Berger     (202) 942-4560
     Russell G. Ryan   (202) 942-4660