UNITED STATES OF AMERICA
In the Matter of
WALTER CERCAVSCHI, CPA,
|ORDER INSTITUTING PUBLIC |
ADMINISTRATIVE PROCEEDINGS, MAKING
FINDINGS AND IMPOSING REMEDIAL
SANCTIONS PURSUANT TO RULE 102(e) OF
THE COMMISSION'S RULES OF PRACTICE
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest to institute public administrative proceedings against Respondent Walter Cercavschi ("Cercavschi" or "Respondent") pursuant to paragraph (3) of Rule 102(e) of the Commission's Rules of Practice [17 C.F.R.§ 201.102(e)].1
In anticipation of the institution of these proceedings, Cercavschi has submitted an Offer of Settlement ("Offer"), 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 findings, except as to the Commission's jurisdiction over the subject matter of these proceedings and as to the entry of the injunction set forth in Section III, which are admitted, Cercavschi consents to the entry of this the Order Instituting Public Proceedings, Making Findings and Imposing Remedial Sanctions Pursuant to Rule 102(e) of the Commission's Rules of Practice ("Order").2
The Commission finds the following3:
A. Cercavschi, age 45, is a certified public accountant licensed in Illinois and was, during the relevant period covered by this Order, a partner at Arthur Andersen LLP. Cercavschi was a member of the engagement team for the audits of the financial statements of Waste Management, Inc. for the years 1994 through 1996.
B. Arthur Andersen LLP is a national public accounting firm and, during the relevant period covered by this Order, served as the independent public accountant for Waste Management, Inc.
C. Waste Management, Inc. was, during the relevant period covered by this Order, a Delaware corporation with its principal place of business in Oak Brook, Illinois. At all times pertinent to the period covered by this Order, the common stock of Waste Management was registered with the Commission pursuant to Section 12(b) of the Securities Exchange Act of 1934 ("Exchange Act") and traded on the New York Stock Exchange.
D. On June 19, 2001, the Commission filed a complaint against Cercavschi and others in the United States District Court for the District of Columbia. SEC v. Arthur Andersen LLP, et al., No. 1:01CV01348 (JR) (D.D.C.). The Commission's complaint alleged, among other things, that (1) Cercavschi, as a partner and member of the engagement team, knowingly or recklessly caused the issuance of materially false and misleading audit reports on Waste Management's financial statements for the period 1994 through 1996, (2) those false and misleading audit reports were incorporated into registration statements Waste Management filed with the Commission pursuant to the Securities Act of 1933 ("Securities Act"), and (3) as a result of his conduct, Cercavschi violated Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Exchange Act Rule 10b-5.
E. On June 19, 2001 the United States District Court for the District of Columbia entered a final judgment permanently enjoining Cercavschi from violating Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Exchange Act Rule 10b-5. Cercavschi consented to the entry of the final judgment without admitting or denying the allegations of the Commission's complaint.
Based on the foregoing, the Commission deems it appropriate and in the public interest to accept Cercavschi's Offer of Settlement and accordingly,
IT IS HEREBY ORDERED, effective immediately, that Cercavschi is denied the privilege of appearing or practicing before the Commission as an accountant, and
IT IS FURTHER ORDERED that, after three (3) years from the date of this Order, Cercavschi 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:
IT IS FURTHER ORDERED, that the Commission's review of an application by Cercavschi to resume appearing or practicing before the Commission may include consideration of, in addition to the matters referenced above, any other matters relating to Cercavschi's character, integrity, professional conduct, or qualifications to appear or practice before the Commission.
By the Commission.
Jonathan G. Katz
|1|| Rule 102(e) provides, in pertinent part:
(3)(i) 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:(A) 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 (15 U.S.C. §§ 77a-80b-20) or of the rules and regulations thereunder . . .
|2||This matter is related to SEC v. Arthur Andersen LLP, et al., No. 1:01CV01348 (JR) (D.D.C.) [Release No. LR-17039] (June 19, 2001), In the Matter of Arthur Andersen LLP [Release No.34-44444] (June 19, 2001), and In the Matter of Robert G. Kutsenda, CPA, [Release No.34-44448] (June 19, 2001).|
|3||The findings herein are made pursuant to the Respondent's Offer and are not binding on any other person or entity in this or any other proceeding.|
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