UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 39376 / December 1, 1997 ACCOUNTING AND AUDITING ENFORCEMENT Release No. 991 / December 1, 1997 ADMINISTRATIVE PROCEEDING File No. 3-9492 ______________________________ : In the Matter of : ORDER INSTITUTING PUBLIC : PROCEEDINGS AND OPINION AND STEPHEN P.MORIN, CPA, : ORDER PURSUANT TO RULE 102(e) : OF THE COMMISSION'S RULES OF Respondent. : PRACTICE ______________________________: I. 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 Stephen P. Morin ("Morin") pursuant to paragraph (3) of Rule 102(e) of the Commission's Rules of Practice.<(1)> II. In anticipation of the institution of these proceedings, Morin has submitted an Offer of Settlement, 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 the Commission's finding that a Final Judgment of Permanent Injunction and Other Relief as to Stephen P. Morin has been entered against him as set forth in Paragraph III, which is admitted, Morin consents to the entry of this Order Instituting Public <(1)> Paragraph (3) of Rule 102(e) provides, in pertinent part: The Commission, with due regard to the public interest . . . may . . . 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 . . . any provision of the Federal securities laws or the rules and regulations thereunder. Proceedings and Opinion and Order Pursuant to Rule 102(e) of the Commission's Rules of Practice ("Order"). III. FINDINGS On the basis of this Order and the Offer of Settlement submitted by Morin, the Commission finds<(2)> that: A. Morin, age 35, is, and has been since about 1989, a certified public accountant. He has been the controller for Ferrofluidics Corporation ("Ferrofluidics") from July 1989 until the present, and he worked at Coopers & Lybrand as an auditor from January 1985 through November 1988. B. Ferrofluidics is a Massachusetts corporation with its principal place of business in Nashua, New Hampshire. It manufactures and sells ferrofluids, as well as products that incorporate ferrofluids, including environmental seals, speaker components, and crystal growing systems. Ferrofluidics' stock is registered with the Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934 ("Exchange Act"). During the time relevant to the allegations herein, Ferrofluidics was required to file reports with the Commission pursuant to Section 13(a) of the Exchange Act. C. On September 25, 1997, the Commission filed a complaint against Morin in SEC v. Ferrofluidics Corporation, et al., 97 Civ. 7174 (S.D.N.Y.). On June 17, 1997, Morin consented to the entry of a Final Judgment of Permanent Injunction and Other Relief as to Stephen P. Morin ("Final Judgment"), without admitting or denying the allegations in the complaint, except as to subject matter jurisdiction, which he admitted. On November 10, 1997, the United States District Court for the Southern District of New York entered the Final Judgment, which (i) permanently enjoins Morin from violating Section 17(a) of the Securities Act of 1933 ("Securities Act"), Sections 10(b), 13(b)(5) and 13(d) of the Exchange Act, and Rules 10b-5, 13b2-1, 13b2-2 and 13d-1 thereunder, (ii) orders him to pay a $25,000 civil penalty pursuant to Section 20(d) of the Securities Act and Section 21(d)(3)(A) of the Exchange Act, and (iii) prohibits Morin for a period of five years from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act or that is required to file reports pursuant to Section 15(d) of the Exchange Act. <(2)> The findings herein are made pursuant to Morin's Offer of Settlement and are not binding on any other person or entity in this or any other proceeding. ======END OF PAGE 2====== D. The Commission's complaint filed in SEC v. Ferrofluidics Corporation, et al. alleges, among other things, that from early 1991 through June 1993, Ronald Moskowitz, the former Chairman and CEO of Ferrofluidics, devised, and with the assistance of members of the company's senior management, including Morin, implemented a broad-ranging scheme to defraud the investing public by materially overstating the company's revenues and earnings and by making numerous other materially false and misleading disclosures about the company's business. In particular, in furtherance of the scheme, Morin (i) made or caused to be made certain false accounting entries to Ferrofluidics' books and records and (ii) provided false information to the company's outside auditors. As a result, Ferrofluidics reported materially inflated revenue and net income and other materially false and misleading information on its financial statements included in its Quarterly Reports on Form 10-Q for the first, second and third quarters of fiscal 1992, its Annual Report on Form 10-K for the year ended June 30, 1992, and its Quarterly Reports on Form 10-Q for the first, second and third quarters of fiscal 1993. Morin participated in the preparation of each of these filings. IV. ORDER IMPOSING SANCTIONS Based on the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer of Settlement submitted by Morin and accordingly, IT IS HEREBY ORDERED, effective immediately, that: A. Morin is denied the privilege of appearing or practicing before the Commission as an accountant. B. Five years from the date of this Order, Morin may apply to the Commission by submitting an application to the Office of the Chief Accountant which requests that he be permitted to resume appearing or practicing before the Commission as: 1. a preparer or reviewer, or a person responsible for the preparation or review, of financial statements of a public company to be filed with the Commission upon submission of an application satisfactory to the Commission in which Morin undertakes that, in his practice before the Commission, his work will be reviewed by the independent audit committee of the company for which he works or in some other manner acceptable to the Commission; ======END OF PAGE 3====== 2. an independent accountant upon submission of an application containing a showing satisfactory to the Commission that: (a) Morin, or any firm with which he is or becomes associated in any capacity, is and will remain a member of the SEC Practice Section of the American Institute of Certified Public Accountants Division for CPA Firms ("SEC Practice Section") as long as he appears or practices before the Commission as an independent accountant; (b) Morin 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) Morin will comply with all applicable SEC Practice Section requirements, including all requirements for periodic peer reviews, concurring partner reviews, and continuing professional education, as long as he appears or practices before the Commission as an independent accountant; and C. The Commission's review of any request or application by Morin to resume appearing or practicing before the Commission may include consideration of, in addition to the matters referenced above, any other matters relating to Morin's character, integrity, professional conduct, or qualifications to appear or practice before the Commission. By the Commission. _______________________ Jonathan G. Katz Secretary ======END OF PAGE 4======