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U.S. Securities and Exchange Commission

before the

Release No. 44050 / March 8, 2001

Release No. 1374 / March 8, 2001

Admin. Proc. File No. 3-9500

In the Matter of

c/o Michael Carroll, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017



Order Denying Request for Reconsideration

On January 19, 2001, we issued an opinion finding that KPMG Peat Marwick LLP ("Peat Marwick"), an accounting firm that provided auditing services to its clients, 1 was not independent from a Commission registrant when it conducted an audit of the registrant's financial statements and issued an audit report while it had a loan outstanding to an officer of the registrant and while it had the right to receive a fee contingent on the registrant's financial success. We further determined that Peat Marwick acted negligently and that its conduct resulted both in its primary violation of Rule 2-02(b) of Regulation S-X (because its audit report stated, inaccurately, that the audit was made in accordance with Generally Accepted Auditing Standards ("GAAS")) 2 and in its being a "cause" of the registrant's violations of Section 13(a) of the Securities Exchange Act of 1934 and Rule 13a-1 thereunder(because the financial statements included as part of the registrant's annual report, were not, as represented, audited by independent accountants). 3

Based on our findings, we concluded that it was in the public interest to order, under Section 21C of the Exchange Act, 4 that Peat Marwick cease and desist from being a cause of violations of Section 13(a) of the Exchange Act and Rule 13a-1 thereunder, or from committing violations of Rule 2-02(b), by having any transactions, interests, or relationships that would impair its independence under GAAS or under the Commission's independence standards. 5

On January 30, 2001, Peat Marwick submitted a motion seeking reconsideration of our opinion. Peat Marwick bases its motion on two grounds. First, Peat Marwick argues that, in derogation of its due process rights, we have sanctioned it for negligence "based on the record of a hearing held under a scienter standard" in accordance with the "express instruction" of the law judge. Second, Peat Marwick argues that, after adopting a standard for use in determining whether to issue a cease-and-desist order, we disregarded the standard in determining to sanction Peat Marwick.

We consider Peat Marwick's motion under Rule of Practice 470. 6 This rule gives the Commission the opportunity to reconsider its decisions when it deems appropriate. We see no reason to do so here. 7


Peat Marwick claims that it was not put on notice of the culpability standard we applied to certain charges of misconduct in these proceedings. It asserts that the presentation of evidence below was done under the law judge's "express instruction" that the "case" would be tried under a scienter standard, and that, on review, we applied a negligence standard without giving it notice or fair opportunity to address why this standard should not apply. 8 We disagree. Here, the law judge ruledonly that certain charged misconduct, that under Rule 102(e), would be governed by a scienter standard, and the Division made it clear in a timely fashion that it would premise its litigation of other charges, those under Section 21C, on a negligence standard. Accordingly, we conclude that Peat Marwick was given ample notice that both the law judge and we would be considering negligence claims under Section 21C. Indeed, as we discuss below, Peat Marwick acknowledged this during oral argument before us.

As long as a party to an administrative proceeding is reasonably apprised of the issues in controversy and is not misled, notice is sufficient. See, e.g., Long v. Board of Governors of the Federal Reserve System, 117 F.3d 1145, 1158 (10th Cir. 1997); see also Aloha Airlines v. CAB, 598 F.2d 250, 262 (D.C. Cir. 1979) (notice is "sufficient if the respondent `understood the issue' and `was afforded full opportunity' to justify its conduct during the course of the litigation"). From the outset of these proceedings in December 1997, it was clear that more than one violation was charged, more than one remedial ground invoked, and, therefore, that more than one culpability standard might be applied.

The Order Instituting Proceedings ("OIP") charged that by virtue of its alleged conduct Peat Marwick "engaged in improper professional conduct under Rule 102(e), directly violated Rule 2-02 of Regulation S-X, and caused violations of Section 13(a) of the Exchange Act and Rule 13a-1 thereunder." The OIP stated that, in view of these allegations, we deemed it appropriate to institute proceedings under Rule 102(e) and Section 21C of the Exchange Act to determine, among other things, what remedial actions or sanctions, if any, were appropriate under Rule 102(e) and Section 21C. The OIP did not articulate the culpability standards that would apply to the charges. In its answer, Peat Marwick alleged that the OIP provided "no notice . . . as to a requisite element of the charges: the scienter requirement for the alleged violations."

Counsel for the Division of Enforcement and the Office of the Chief Accountant (together the "Division") addressed that concern. During an April 1998 pretrial hearing, the Division's counsel stated that, while there might be an issue as to the culpability standard governing the "half of this case th[at] charges . . . 102E [sic] of the Commission's rules," as to "the other half of the case . . . seek[ing] a cease and desist order under Section 21 [sic] of the Exchange Act . . . I would suggest the standard is clear and that the standard should be negligence . . . . [I]t will be at least that half of the case, which we will premise on a negligence standard so that there should not be any doubt in terms of preparation or getting ready . . . ." Counsel for Peat Marwick did not respond.

Again, in its prehearing memorandum, the Division briefed the culpability standard for the allegations under Exchange Act Section 21C separately from that governing the Rule 102(e) allegations. As to Section 21C, it took the position, citing to authorities concerning "causing" liability under Section21C, that "[i]n determining . . . Peat Marwick's liability under Section 21C, it should be held to a negligence standard." The Division took the position that the Rule 102(e) allegations also should be governed by a negligence standard.

By contrast, in its pretrial submission, Peat Marwick expressly limited its briefing on culpability to the question of what "standard of culpability . . . applies to enforcement actions under Rule [10]2(e)." After citing a number of authorities concerning the culpability standard governing Rule 102(e) charges, Peat Marwick concluded, under a heading entitled "Scienter is the Only Legal Standard Under which this Case Can Proceed to Trial," that "the proper standard to apply to alleged violations of Rule [10]2(e)" was scienter. Under a separate heading, Peat Marwick noted that "[t]he Commission is also bringing a charge pursuant to Section 13(a) of the Exchange Act in which it is seeking a cease and desist order under Section 21C of the Exchange Act against Peat Marwick." Peat Marwick did not brief the question of what culpability standard would apply to that charge.

With this submission, Peat Marwick filed its "Motion to Try This Case Under a Scienter Standard or, in the Alternative, to Postpone Trial Until After the Commission Decides on Some Other Legal Standard." Peat Marwick relies heavily on this motion and the law judge's ruling on it in arguing that the hearing was "held under a scienter standard."

Peat Marwick filed its motion against a backdrop of some uncertainty as to the scope of Rule 102(e). In March 1998, the United States Court of Appeals for the District of Columbia Circuit decided, in Checkosky v. SEC, 139 F.3d 221 (D.C. Cir. 1998), that the Commission had failed in that case to articulate clearly the mental state it had applied to find "improper professional conduct" under Rule 102(e) and, in particular, the court faulted the Commission for not articulating with some degree of specificity when negligent conduct by an accountant constitutes "improper professional conduct." Based on its reading of Checkosky, Peat Marwick asserted that the Commission had failed to adopt a "clear and coherent Rule 102(e) [culpability] standard." Accordingly, Peat Marwick requested that, until the Commission issued such a standard, the hearing be postponed, unless the Division agreed to try the "case" under a scienter standard.

Even though Peat Marwick's answer raised an issue about "the scienter requirement for the alleged violations" and its pretrial submission and its motion addressed the culpability standard for Rule 102(e) charges, its motion did not address the culpability standards for charges sought to be remedied under Section 21C of the Exchange Act. It argued only that, if the law judge decided "to postpone trial of the Rule [10]2(e) claim, then trial on the Section 21A [sic] claim should be postponed concurrently." Significantly, Peat Marwick did not argue that scienter was required for a cease-and-desist order to issue under Section 21C. Instead, it argued that "[p]rosecuting this case in piecemeal fashion" would be "burdensome" and "wasteful." The Division's response to the motion focused only on the culpability standard for the Rule 102(e) charge (again arguing that it should be tried under a negligence standard),and expressly noted that the 21C part of proceedings would focus on whether Peat Marwick was negligent. 9

On May 21, 1998, the law judge ruled on Peat Marwick's motion. He denied a stay and held that "scienter is the correct standard in this case, and that is the one I will apply." He did not, as Peat Marwick contends, issue an "express instruction" that the "case" -- embracing each and every charge -- would be tried under a scienter standard. His ruling, which nowhere addressed the Section 21C charges, concerned only the Rule 102(e) allegations:

This area of law is somewhat in flux maybe, in light of Checkosky and maybe a few other things. I've thought about this, and my view is on this . . . . Well, I do agree that in a [10]2E [sic] case, negligence could very well be the standard . . . . [B]ut here w[h]ere you're talking about corporate relationships, intertwined with negotiations with the SEC, I'm going to apply a scienter standard . . . .

Under the circumstances, we conclude that it would have been apparent to a reasonable person that the law judge's ruling pertained only to the Rule 102(e) charge. 10

Peat Marwick directs us to nothing in the transcript of the hearing that is inconsistent with this determination, and we find much that is consistent. Thus, on June 15, 1998, after opening the trial and stating that the proceedings were taking place pursuant to Rule 102(e) and Exchange Act Section 21C, the law judge addressed a motion by the Division to conform the "trial standard" of the "Rule 102(e) portion of the case" to a negligence standard. He stated: "With respect to the 102(e) standard issue, we visited this about two weeks ago . . . . I'll just carry the motion. I'm not going to back off what I said before." In our view, this statement again put Peat Marwick on notice that the law judge's May 21 ruling concerned the trial of only the Rule 102(e) allegations. A number of statements by counsel for the Division in his opening argument further apprised Peat Marwick that the Division interpreted the law judge's May 21 order to pertain to the trial of only the Rule 102(e) allegations. For example, at the close of his opening argument, the Division's counsel stated that "regardless of what standard . . .[might] apply on the 102(e) half of this case, . . . the cease and desist portion . . . is tried under a negligence standard."

Later argument was consistent. For example, when, at the close of the Division's case, Peat Marwick's counsel moved for summary disposition, claiming, among other things, that "insufficient evidence . . . has been offered that would allow for a finding of any scienter violation," the Division's counsel responded that the Division was "confident" that it had "carried [its] burden in this case whether it's the negligence standard of proof applicable to the cease [and] desist order part of the case or on the Rule 102(e) part of the case whether it's ultimately a scienter standard, recklessness or whether it's ultimately some form of negligence, whichever the Court determines upon consideration of the parties' briefs."

After the Division asserted, in closing argument, that it had carried its burden under the negligence standard applicable to the charges brought under Section 21C, Peat Marwick for the first time clearly stated that, in its view, all charges, regardless of the remedy invoked, should be subject to the same culpability standard, because they all stemmed from the same conduct. 11 Then, in its post-hearing submissions, Peat Marwick asserted for the first time that it had "prepared and conducted its defense to the Division's Section 21C claim in reliance on the Court's [May 21] ruling that scienter was the appropriate standard for this case" and that "to subject Peat Marwick to a lower standard now would violate Peat Marwick's due process rights" (emphasis in original). 12

In his initial decision, the law judge rejected this view of his May 21 ruling. First, he noted, under a heading entitled "The Applicable Standard Under Rule 102(e)(1)(ii)," that he had ruled on May 21 that he would "apply a scienter standard because of the Checkosky holding and the circumstances that brought about this proceeding." Then, after holding that the scienter standard would embrace recklessness, he concluded that Peat Marwick did not recklessly engage in improper professional conduct within the meaning of Rule 102(e). Despite his conclusion that Peat Marwick did not act with scienter, the law judge proceeded (a) to conclude that Peat Marwick violated Rule 2-02 and caused violations of Section 13(a) of the Exchange Act and Rule 13a-1 thereunder, and (b) to consider whether a cease-and-desist order should be imposed. Given his finding that Peat Marwick did not act with scienter, the law judge could not have reached these conclusions without also concluding that something less than scienter was a sufficient basis to find these violations. 13 Thus, the law judge necessarily, if implicitly, rejected Peat Marwick's argument that, by virtue of the May 21 ruling or due process, a scienter standard applied to all charges regardless of their nature and the remedy invoked. 14

On its appeal to us of the law judge's decision, the Division, while conceding that the law judge had stated that the culpability standard for the Rule 102(e) allegations was recklessness, also argued that the culpability standard for "causing cases" under Section 21C was negligence and that the standard for the Rule 2-02 primary violation sought to be remedied under Section 21C was strict liability. 15 In response, Peat Marwick did not brief the question of the culpability standards for charges under Section 21C but simply alluded to the Division's "new [strict liability] approach" to theRule 2-02 primary violation, stating that it presented "a striking contrast to [the Division's] pre-trial assertions that a negligence standard applies to the request for cease and desist relief - which the Division/OCA concedes in its brief." 16

On appeal, Peat Marwick did not assert that the entire "case" had been tried on a scienter standard or that it would be a due process violation to apply a negligence standard to any of the charges involved in these proceedings. 17 In fact, much of Peat Marwick's briefing was framed in negligence terms: e.g., that the law judge had "affirm[ed] the reasonableness of Peat Marwick's conduct," that testimony presented at the hearing "demonstrated how Peat Marwick had acted reasonably in its discussions" with our staff, and that it was "entirely reasonable to think that . . . the . . . [subject] audit engagement[] . . . could proceed."

This briefing alone would be enough to lead us to conclude that Peat Marwick was not denied due process by our consideration of whether its conduct was negligent. But, in addition, Peat Marwick conceded in oral argument before us that these proceedings were not necessarily governed by a single culpability standard and that the "reasonableness" of its conduct (as evinced by what it described as the "reasonableness findings" of the law judge) should affect our determination under Section 21C. In "touch[ing] . . . on the legal framework" involved in these proceedings, Peat Marwick's counsel stated:

We were tried under 102(e) which required scienter as it was applied in this case. And it was a finding that there was no scienter. On the C&D side, 21(c) [sic] in this case . . . requires a finding that we knew or should have known. I think, based up to now, the Commission has not finally settled the issue of what legal standard that requires. But it certainly requires some. The staff submits, in their papers, it requires at least negligence. And I would submit to you that when you look through the binder of the findings I've tendered, taken out of [the law judge's] opinion, and you see all the reasonableness findings that are inthere based on his weighing of the evidence, there is no basis for reversing it.

Under the circumstances, we conclude that Peat Marwick was reasonably apprised of the issues as to culpability in controversy in these proceedings and had a full and fair opportunity to litigate them.


Peat Marwick also urges us to reconsider our imposition of a cease-and-desist order. Peat Marwick contends that, although we determined "correctly" that there must be some likelihood of future violations whenever we issue a cease-and-desist order, we "nullified this standard by finding that there is a presumption of future likelihood whenever a past violation is shown" since the "question of whether or not to issue a cease-and-desist order only arises after there has been a finding of a past violation, and issuance of a cease-and-desist order would become automatic if nothing more were required to show future likelihood." Peat Marwick asserts that in these proceedings our "finding" of "a likelihood of future harm" was based on a record (concerning a "single past violation") devoid of any evidence to support that "finding" and, therefore, our imposition of the cease-and-desist order was arbitrary and capricious. Peat Marwick's arguments, which, in large measure, merely reiterate arguments we have already considered, are without merit.

Peat Marwick's arguments misapprehend our decision. It is clear that the requirement that we adopted was not the "likelihood of future violation" requirement that governs the issuance of injunctions in court proceedings and that serves as the focus of Peat Marwick's motion. Thus, the precedents Peat Marwick relies on, to the effect that a single past violation is insufficient to demonstrate the likelihood of future violations, are inapplicable.

Instead, after recounting the history leading up to the enactment of our cease-and-desist authority, we concluded that, although Congress intended that cease-and-desist orders be forward-looking like injunctions, it intended that the showing of risk of future violations be significantly less than that required for an injunction. Therefore, we concluded that, although "`some' risk" of future violation is necessary, it need not be very great to warrant issuing a cease-and-desist order and that in the ordinary case and absent evidence to the contrary, a finding of past violation raises a sufficient risk of future violation.

This does not mean, however, that even in the ordinary case issuance of a cease-and-desist order is "automatic" on a finding of past violation. Instead, as we made clear in our opinion, "[a]long with the risk of future violations, we will continue to consider our traditional factors in determining whether a cease-and-desist order is an appropriate sanction based on the entire record." In this case, only after considering those factors, including the seriousness of the violations, Peat Marwick's failure to appreciate that seriousness, and the remedial function to be served by the cease-and-desist order,together with the question of the level of risk of future violations, did we conclude that cease-and-desist relief was "fully warranted."

In applying the "some risk" requirement to these proceedings, we concluded that there was a "serious" risk of future violation. Although Peat Marwick contends, as it has before, that its violative conduct was isolated, inadvertent, and unconnected to any ongoing conduct or engagement, we considered these contentions in our opinion. We observed that the isolated nature of the violations tended to counsel against relief. But we did not, and do not, consider the lack of care at senior levels that attended the independence determinations in this case to have been merely inadvertent or to be "unconnected" to any ongoing conduct or engagement. As we stated in our opinion based on a lengthy exposition of the facts, particularly facts bearing on the negligence of the head of Peat Marwick's Department of Professional Practice ("DPP"), the risk of future violation here arises from the manifestly inadequate level of scrutiny given to independence issues and Peat Marwick's consistent failure to recognize the seriousness of this misconduct.

As we stated in our opinion, independence is the keystone of our disclosure system. We found that one of the independence impairing circumstances in these proceedings - the loan to an officer of a registrant -- was correctly characterized by one witness as "an absolute blatant out-and-out violation" of GAAS. We found that this impairment, as well as the impairment flowing from Peat Marwick's right to receive a fee contingent on the registrant's success, resulted in serious violations and that Peat Marwick failed to appreciate that seriousness. We also determined that the violations flowed from the negligent failures of the head of Peat Marwick's DPP and the audit partner to inform themselves about facts material to specific issues about independence attending Peat Marwick's audit engagement -when both had questions or concerns about the propriety of the audit and had ready access to relevant information.

These findings, as well as others detailed in our opinion, are based on the record as a whole and are more than adequate to support our conclusion that there was not just "some" risk but a "serious" risk of future violation, which, together with the traditional sanctioning factors we considered, fully warranted the cease-and-desist relief we issued. 18

Accordingly, IT IS ORDERED that the motion for reconsideration filed by Peat Marwick be, and it hereby is, denied.

By the Commission (Acting Chairman UNGER and Commissioner HUNT); Commissioner CAREY not participating.

Jonathan G. Katz

1 Peat Marwick has changed its name to KPMG LLP. For purposes of this order, however, the firm will be referred to as Peat Marwick.
2 17 C.F.R. § 210.2-02(b).
3 15 U.S.C. § 78m(a) and 17 C.F.R. § 240.13a-1.
4 15 U.S.C. § 78u-3.
5 Because the law judge had determined that a scienter standard would apply to these proceedings insofar as they were based on allegations that Peat Marwick engaged in improper professional conduct under Rule 102(e) of the Commission's Rules of Practice (17 C.F.R. § 201.102(e)), however, we declined to sustain those allegations.
6 17 C.F.R. § 201.470.
7 Preliminarily, we note that settled principles of federal court practice establish that a party may not seek rehearing of an appellate decision in order to advance an argument that it could have made previously but elected not to (see, e.g., Anderson v. Beatrice Foods Co., 900 F.2d 388, 397 (1st Cir. 1990)) or to "shift position and present an issue which was previously conceded." United States v. Smith, 781 F.2d 184, 185 (10th Cir. 1986). In considering motions for reconsideration of federal district court rulings, courts have likewise cautioned that "`[t]he purpose of a motion for reconsideration is to correct manifest errors of law or fact or to present newly discovered evidence'" and that a "motion for reconsideration should not be used as a vehicle to present authorities available at the time of the first decision or to reiterate argumentspreviously made . . . ." Z.K. Marine, Inc. v. M/V Archigetis, 808 F. Supp. 1561, 1563 (S.D. Fla. 1992) (quoting Harsco Corp. v. Zlotnicki, 779 F.2d 906, 909 (3d Cir. 1985)). The efficiency and fairness concerns that underlie these settled principles of federal court practice likewise inform our review of motions for reconsideration under Rule 470. Cf. Summitt Investigative Service, Inc. v. Herman, 34 F. Supp.2d 16, 27 (D.D.C. 1998) ("The Court can divine no reasonable basis for concluding that, although a federal appellate court will refuse to review matters raised for the first time in a motion to reconsider, an agency's appellate board must nonetheless `enable a party to complete presenting his case after the court has ruled against him.'") (quoting Frietsch v. Refco, Inc., 56 F.3d 825, 828 (7th Cir. 1995)). As will become clear below, Peat Marwick's motion runs afoul of these principles. Its first ground of error rests on an argument Peat Marwick made and lost below and then abandoned on review. We deny the motion for reconsideration on this ground both because it lacks merit for the reasons discussed in text and, independently, because Peat Marwick is foreclosed from resurrecting this argument as part of a motion for reconsideration. As to its second ground of error, Peat Marwick repeats in large part arguments previously made and considered.
8 Accordingly, Peat Marwick argues that due process requires, at a minimum, that these proceedings be remanded to the law judge "for the taking of additional evidence under a negligence standard." Peat Marwick does not identify what such evidence would be or how it would differ from what has already been presented. Indeed, despite its apparent protestations to the contrary, Peat Marwick did present evidence pertaining to whether its conduct was negligent. For example, it elicited testimony about its course of dealings with our staff, which, together with other evidence, led the law judge to conclude that Peat Marwick had acted "reasonably" in certain respects. As stated below, Peat Marwick relied on these "reasonableness" findings on appeal before us.

We note that Peat Marwick is not arguing that it did not have notice that Section 21C "causing" liability could extend to negligent conduct. Our decision in these proceedings marks the first time we stated on review of contested adjudicative proceedings that negligence is sufficient to give rise to causing liability. As we explained in our opinion, however, our holding was consistent with prior Commission pronouncements, congressional testimony, statements in anumber of consent orders, and numerous decisions by law judges.

9 In its response to the motion, the Division argued, in part, that Peat Marwick would "not be disadvantaged by a hearing in which it has to meet the . . . claim that the evidence should be tested under a negligence standard . . . [since it] will have to deal with the negligence standard in the other portion of this case that is founded on Section 21C . . . ."
10 The Division's request that Peat Marwick waive any argument that the case would have to be retried in the event that the Commission determined that the standard should be less than scienter does not undermine this understanding because, given the context of the request, it is clear that it related to the trial of the Rule 102(e) allegations.
11 Counsel stated:
[The Division] made reference to the fact that maybe under the C&D part of [its] case [it] should somehow get a negligence standard. Your Honor, we'll brief this again. It is not correct, for starters, that every time there has been a C&D type proceeding there has been agreement it's negligence. Previously, [the Division] has acknowledged there has been some division of authority on that. But more to the point, in this proceeding where it's the same conduct that's being alleged to have been wrong under any theory that you're talking about, it makes no sense to now, after the case has been presented, split and have a different standard that would somehow be applicable. And it especially makes no sense, Your Honor, because the primary violation, if you will, the securities violation being charged in this case, is causing someone else to violate [the] securities laws.
12 Peat Marwick submitted a proposed conclusion of law that "any retroactive application to the evidence presented at the Hearing in this matter of any standard other than scienter" was prohibited and that "[b]ecause Peat Marwick relied on the Court's [May 21] ruling in conducting its entire defense, it would be unfairly prejudiced by the application of any standardother than a scienter standard to the entire proceeding."
13 Thus, when Peat Marwick asserts, in its motion, that the law judge "held to his original statements and proceeded to apply a scienter (including recklessness) standard," it fails to point out that the law judge did so only with respect to the Rule 102(e) allegations. When Peat Marwick asserts that "[n]owhere in his opinion" did the law judge "purport to apply any standard other than scienter," Peat Marwick fails to acknowledge the obvious import of the law judge's findings of a primary violation of Rule 2-02 and a "causing" violation of Section 13(a) under a culpability standard necessarily less than scienter.
14 Peat Marwick did not petition for our review of any aspect of the law judge's ruling, including this one.
15 We recognize that the Division first made the strict liability argument in its post-hearing submission to the law judge. Although this might raise a concern about a shifting theory of liability as to the Rule 2-02 primary violation (not addressed in Peat Marwick's motion for reconsideration and only alluded to in its brief on review), our decision that Peat Marwick violated Rule 2-02 was based on conduct we determined was negligent.
16 Peat Marwick then cited to that portion of the Division's brief that argued that the culpability standard for "causing cases" under Section 21C was negligence. Peat Marwick also argued at length that the strict liability approach to the Rule 2-02 primary violation, without the requirement of a finding of likelihood of future violation, would amount, inappropriately, to "an automatic cease and desist for every independence violation."
17 Indeed, it discussed the May 21 ruling under a heading entitled "The Law Judge Correctly Concluded That BayMark [sic] Was Not Reckless and, Therefore, Did Not Violate Rule 102(e)." It stated: "In response to Peat Marwick's pre-trial motion requesting clarification of the applicable standard after Checkosky, [the law judge] ruled that a scienter standard should apply, given the nature of this case."
18 On February 27, 2001, the American Institute of Certified Public Accountants ("AICPA") submitted a motion to participate in these proceedings as amicus, together with a statement of its position supporting Peat Marwick. The AICPA's request, submitted nearly one month after Peat Marwick filed its motion for reconsideration of our January 19 decision, is untimely and inappropriate. As Rule of Practice 201.210(d)(2) provides: "[e]xcept as all parties otherwise consent, any amicus curiae shall file its brief within the time allowed the party whose position the amicus will support, unless the Commission . . . for cause shown, grants leave for a later filing." 17 C.F.R. 201.210(d)(2). The AICPA has not attempted to show cause for its late filing. Such a filing is particularly problematic given that our rule concerning motions for reconsideration prohibits responses to such motions absent our request (17 C.F.R. 201.470),and we have not requested a response in this case. We would accept amicus filings on reconsideration only under extraordinary circumstances leading us to conclude that it was necessary or appropriate to do so in the public interest. See 17 C.F.R. 201.210(f). This is not such a circumstance. The AICPA tenders argument, which, for the most part, merely reiterates that of Peat Marwick and does not call on the expertise of the AICPA. Its argument therefore does not assist our deliberations. The AICPA's motion to file an amicus submission is denied. For the same reasons, we deny the AICPA's alternative request to state its views pursuant to Rule 201.210(e). 17 C.F.R. 201.210(e).


Modified: 03/08/2001