UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 41181 / March 18, 1999 ACCOUNTING AND AUDITING ENFORCEMENT Release No. 1118 / March 18, 1999 ADMINISTRATIVE PROCEEDING File No. 3-9851 : In the Matter of : ORDER INSTITUTING PUBLIC : PROCEEDING PURSUANT : TO RULE 102(e) OF THE ROBERT S. BARTON, CPA : COMMISSION’S RULES OF : PRACTICE, MAKING FINDINGS : AND IMPOSING REMEDIAL : SANCTION Respondent. : __________________________________________: I. The Securities and Exchange Commission ("Commission") deems it appropriate that a public administrative proceeding pursuant to Rule 102(e) of the Commission’s Rules of Practice be, and hereby is, instituted against Robert S. Barton ("Barton").[1] **FOOTNOTES** [1]: Rule 102(e)(3)(i), 17 C.F.R. § 201.102(e)(3)(i), provides in pertinent part that the Commission may suspend from appearing or practicing before it any person who by name has been permanently enjoined by a court of competent jurisdiction in an action brought by the Commission from violating or aiding and abetting the violation of any provision of the Federal securities laws or the rules and regulations thereunder. II. In anticipation of the institution of this administrative proceeding, Barton has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of this proceeding 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 findings contained herein, except that he admits the jurisdiction of the Commission over him and over the subject matter of this proceeding and that a Judgment of Permanent Injunction and Other Relief has been entered against him, Barton, by his Offer, consents to the issuance of this Order Instituting Public Proceeding Pursuant to Rule 102(e) of the Commission’s Rules of Practice, Making Findings and Imposing Remedial Sanction ("Order"). III. The Commission makes the following findings:[2] A. Sunrise Medical Inc. ("Sunrise Medical") is a Delaware corporation with its principal executive offices in Carlsbad, California. Through its various operating divisions, Sunrise Medical designs, manufactures, and markets medical devices for institutional and retail customers. Its net sales, as restated, for the fiscal year ended June 30, 1995, were $602 million. Its common stock is registered with the Commission under Section 12(b) of the Securities Exchange Act of 1934 ("Exchange Act") and listed on the New York Stock Exchange. During all relevant times, Sunrise Medical was required to file reports with the Commission pursuant to Section 13(a) of the Exchange Act. B. Barton, 42, is a Certified Public Accountant licensed in the State of Texas. Barton was the vice-president of finance of Bio Clinic Corporation ("Bio Clinic"), then a wholly-owned subsidiary of Sunrise Medical, from September 1989 to December 1995, and the vice-president of operations of Comfort Clinic (during all relevant times, a division of Bio Clinic) from March 1995 to December 1995. C. During 1994 and 1995, Barton practiced before the Commission within the meaning of Rule 102(e) of the Commission’s Rules of Practice in connection with the preparation of Sunrise Medical’s financial statements and other documents. D. On February 23,1999, the Commission filed a federal civil injunctive action against Barton [SEC v. Robert S. Barton, Civil Action No. 99-01881 AHM (Rcx), C.D.Calif.] alleging that Barton violated Section 17(a) of the Securities Act of 1933 ("Securities Act") and Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5 and 13b2-1 thereunder. E. The Commission’s complaint alleged that, among other things, Barton orchestrated a scheme to understate Bio Clinic's expenses as reported to Sunrise Medical by recording fictitious assets and improperly decreasing liabilities. Barton perpetrated this fraud to ensure that Bio Clinic met the earnings targets previously agreed upon between Bio Clinic's management team and Sunrise Medical's corporate management team. To avoid detection by Sunrise Medical's auditors, Barton, and others acting at his direction, falsified accounting records that were then given to the auditors. Barton lied to an internal auditor who had discovered a discrepancy in one such accounting record. Barton then, with the help of others, further falsified the accounting record to conceal the discrepancy before having it returned to the auditor. The Commission also alleged that Barton sold Sunrise Medical stock (through exercising his employee stock options) while in possession of the nonpublic information that Sunrise Medical's earnings were materially overstated, thereby avoiding the losses that he would have incurred if he had disclosed this information before his trading. F. On March 1, 1999, without admitting or denying the allegations in the Commission’s complaint (except he admitted the Court’s jurisdiction over him and the subject matter of the action), Barton consented to the entry of an order of permanent injunction enjoining him from violations of Section 17(a) of the Securities Act and Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5 and 13b2-1 thereunder. IV. Based on the foregoing, the Commission deems it appropriate to accept the Offer submitted by Barton, and accordingly, IT IS HEREBY ORDERED, effective immediately, that Robert S. Barton is denied the privilege of appearing or practicing before the Commission as an accountant. By the Commission. Jonathan G. Katz Secretary **FOOTNOTES** [2]: The findings herein are made pursuant to Barton’s Offer of Settlement and are not binding on any other person or entity in this or any other proceeding.