U.S. Securities & Exchange Commission
SEC Seal
Home | Previous Page
U.S. Securities and Exchange Commission

Before the

Release No. 45586 / March 18, 2002

Release No. 1522 / March 18, 2002

File No. 3-10725

In the Matter of






The Securities and Exchange Commission (the "Commission") deems it appropriate and in the public interest to institute public administrative proceedings against Timothy S. Heyerdahl ("Heyerdahl"), a certified public accountant, pursuant to Rule 102(e)(3) of the Commission's Rules of Practice./ Accordingly, IT IS HEREBY ORDERED that said proceedings be, and hereby are, instituted.


In anticipation of the institution of these proceedings, Heyerdahl has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purposes of these proceedings and any other proceedings brought by or on behalf of the Commission, or in which the Commission is a party, and without admitting or denying the findings contained herein (except that Heyerdahl admits the jurisdiction of the Commission over him and over the subject matter of these proceedings and that a final judgment of permanent injunction has been entered against him) Heyerdahl consents to the entry of this Order Instituting Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings and Imposing Remedial Sanctions ("Order").


On the basis of this Order and Heyerdahl's Offer, the Commission finds that:

A. Heyerdahl, 39, a certified public accountant who is duly licensed by the Texas State Board of Accountancy, is a defendant in Securities and Exchange Commission v. Timothy Heyerdahl, et. al., Civ. No. C-01-3651 MMC, in the United States District Court for the Northern District of California. Heyerdahl, former Senior Vice President, Finance & Treasury of HBO & Co. ("HBOC" or the "Company"), resides in Georgia.

B. On October 2, 2001, in the above-referenced matter, the United States District Court for the Northern District of California: (a) permanently enjoined Heyerdahl from future violations of Section 17(a) of the Securities Act and Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13a-13, 13b2-1, 13b2-2, and 12b-20 thereunder; (b) ordered Heyerdahl to disgorge $454,862.11 in ill-gotten gains from his sales of stock while participating in the fraud, and $66,630.07 in prejudgment interest thereon; and (c) ordered him to pay $100,000 in civil penalties. Heyerdahl consented, without admitting or denying the allegations contained in the Commission's complaint (except as to jurisdiction, which he admitted), to the issuance of the order of permanent injunction and entry of the final judgment thereon.

C. The Commission's complaint alleged that HBOC inflated its revenue and net income in periodic reports filed with the Commission throughout 1998. The complaint further alleged that, contrary to Generally Accepted Accounting Principles, HBOC inflated its revenue and net income by, among other things, improperly recognizing revenue on contingent sales and by decreasing expenses through improper entries in HBOC's general ledger.

D. The complaint further alleged that Heyerdahl knew, or was reckless in not knowing, that HBOC's financial statements for the quarters ended June 30, 1998 and September 30, 1998 were materially false and misleading and that Heyerdahl knowingly provided substantial assistance to HBOC's false and misleading reporting for those quarters. The complaint alleged that during these periods Heyerdahl directed subordinates to improperly: (a) record revenue for contracts which Heyerdahl knew were subject to side letter contingencies; and (b) decrease expenses by making improper entries in HBOC's general ledger. The complaint also alleged that Heyerdahl contributed to the falsification of HBOC's books and records, and circumvented HBOC's internal accounting controls. In addition, the complaint alleged that Heyerdahl failed to disclose information in response to questions by HBOC's independent auditors about certain of the Company's fraudulent revenue recognition practices.


Based on the foregoing, the Commission deems it appropriate and in the public interest to impose the sanction consented to by Heyerdahl in his Offer.

Accordingly, IT IS HEREBY ORDERED that, effective immediately:

  1. Heyerdahl is suspended from the privilege of appearing or practicing before the Commission as an accountant pursuant to SEC Rule of Practice 102(e)(3)(i)(A) [17 C.F.R. Section 201.102(e)].

  2. After five years from the date of this order, Heyerdahl 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 Heyerdahl'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:

      1. Heyerdahl, 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");

      2. Heyerdahl, 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

      3. As long as Heyerdahl 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 Heyerdahl to resume appearing or practicing before the Commission may include consideration of, in addition to the matters referenced above, any other matters relating to Heyerdahl's character, integrity, professional conduct, or qualifications to appear or practice before the Commission.

By the Commission.

Jonathan G. Katz


Modified: 03/19/2002