UNITED STATES OF AMERICA
|In the Matter of
DONALD C. YOUNT, CPA,
|ORDER INSTITUTING PUBLIC PROCEEDINGS, MAKING FINDINGS AND ORDER PURSUANT TO RULE 102(e) OF THE COMMISSION's RULES OF PRACTICE|
The Securities and Exchange Commission ("Commission") deems it appropriate to institute a public administrative proceeding against Respondent Donald C. Yount pursuant to Rule 102(e) of the Commission's Rules of Practice [17 C.F.R.§ 201.102(e)].1
In anticipation of the institution of this proceeding, Yount 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 for the purpose of this proceeding and over the matters set forth in this Order and admits the Commission's finding that a Final Judgment of Permanent Injunction has been entered against him as set forth in Section II., Yount consents to the entry of findings and the imposition of the remedial sanctions set forth below.
The Commission finds the following:
A. Yount, age 39, was at all relevant times Senior Vice President and Chief Financial Officer of Versatility, Inc. ("Versatility") and is a certified public accountant, registered in the state of North Carolina;
B. Versatility is a Delaware corporation with its principal place of business in Fairfax, VA. Versatility's common stock was at all relevant times registered with the Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934 ("Exchange Act") and listed on NASDAQ.
C. On September 19, 2000, the Commission filed a complaint against Yount and others in the United States District Court for the District of Columbia. SEC v. Charnock, et al., Civil Action No. 00 2239. The Commission's complaint alleged, among other things, that (1) from at least May 1996 through December 1997, Yount, as Senior Vice President and Chief Financial Officer of Versatility, knowingly or recklessly participated in the material overstatement of Versatility's assets, revenues and earnings in its financial statements included in periodic reports and registration statements filed with the Commission; (2) Yount aided and abetted Versatility's failure to devise and maintain a system of internal accounting controls; and (3) Yount provided false or misleading management representation letters to Versatility's auditors in connection with Versatility's audit for fiscal year 1997 and in connection with registration statements Versatility filed in December 1996 and March 1997.
D. On September 27, 2000, a final judgment was entered by the United States District Court for the District of Columbia permanently enjoining Yount from violating Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Exchange Act and Rules 10b-5, 13b2-1 and 13b2-2 thereunder and aiding and abetting violations of Section 13(b)(2)(B) of the Exchange Act. Yount 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 to accept Yount's Offer of Settlement and accordingly,
IT IS HEREBY ORDERED, effective immediately, that Yount is suspended from the privilege of appearing or practicing before the Commission as an accountant.
After three (3) years from the date of this order, Yount 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:
1. a preparer or reviewer, or a person responsible for the preparation or review, of any public company's financial statements that are filed with the Commission. Such an application must satisfy the Commission that Respondent's work in his practice before the Commission will be reviewed either by the independent audit committee of the public company for which he works or in some other acceptable manner, as long as he practices before the Commission in this capacity; and/or
2. an independent accountant. Such an application must satisfy the Commission that: (a) Yount, or the firm with which he is associated, is a member of the SEC Practice Section of the American Institute of Certified Public Accountants Division for CPA Firms ("SEC Practice Section"),
(b) Yount, or the firm, has received an unqualified report relating to his firm's most recent peer review conducted in accordance with the guidelines adopted by the SEC Practice Section, and (c) as long as Yount appears or practices before the Commission as an independent accountant he will remain either a member of the SEC Practice Section or associated with a member firm of the SEC Practice Section, and will comply with all applicable SEC Practice Section requirements, including all requirements for periodic peer reviews, concurring partner reviews, and continuing professional education.
3. The Commission's review of an application by Yount to resume appearing or practicing before the Commission may include consideration of, in addition to the matters referenced above, any other matters relating to Yount'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 misconduct in an action brought by the Commission, from violation 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 . . .
(iv) . . . A person who has consented to the entry of a permanent injunction. . . without admitting the facts set forth in the complaint shall be presumed for all purposes under this paragraph (3) to have been enjoined by reason of the misconduct alleged in the complaint.
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