UNITED STATES OF AMERICA
In the Matter of
| ORDER INSTITUTING ADMINISTRATIVE|
PROCEEDINGS PURSUANT TO RULE
102(e) OF THE COMMISSION'S RULES OF
PRACTICE, MAKING FINDINGS, AND
IMPOSING REMEDIAL SANCTIONS
The Securities and Exchange Commission ("Commission") deems it in the public interest that public administrative proceedings be, and hereby are, instituted against Stephen R. Becker ("Becker") pursuant to Rule 102(e)(3) of the Commission's Rules of Practice.1
In anticipation of the institution of these proceedings, Becker has submitted an Offer of Settlement (the "Offer") which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission's jurisdiction over him and the subject matter of these proceedings, and the findings contained in Section III.3. below, which are admitted, Becker consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings, and Imposing Remedial Sanctions ("Order"), as set forth below.
On the basis of this Order and Becker's Offer, the Commission finds that:
The Commission's complaint, filed on October 30, 2002, alleged, among other things, the following:
During EA Engineering's fiscal year ended August 31, 1999, in order to conceal project contract losses from EA Engineering managers who had emphasized the importance of the company making its projected earnings, the defendant Stephen R. Becker committed fraudulent acts by, among other things, intentionally recording fictitious revenue on the books of the company in the form of false unbilled receivables. Becker assigned the fictitious revenue to various projects, most of which were inactive. Becker moved the fictitious revenue among projects to keep the projects' unbilled receivables from aging and over-rode the company's contract accounting system so that the inactive project accounts would not be billed. As a direct result of Becker's actions, EA Engineering's financial statements included in its quarterly report on Form 10-Q for its quarter ended May 31, 1999, and its annual report on Form 10-K for its fiscal year ended August 31, 1999, were materially misstated. The financial statements for the quarter ended May 31, 1999, materially misstated and misrepresented the company's unbilled accounts receivable and the financial statements for the fiscal year ended August 31, 1999, materially misstated and misrepresented the company's unbilled accounts receivable and its loss before income taxes. By engaging in this conduct, Becker violated the antifraud and recordkeeping provisions of the federal securities laws. He also aided and abetted EA Engineering's violations of the periodic reporting and recordkeeping provisions of the federal securities laws.
In view of the foregoing, the Commission deems it in the public interest to impose the sanction agreed to in Respondent Becker's Offer.
Accordingly, IT IS HEREBY ORDERED that:
|(a)||Becker, 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") or an organization providing equivalent oversight and quality control functions ("equivalent organization");|
|(b)||Becker, 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 or equivalent organization; and |
|(c)|| As long as Becker appears or practices before the Commission as an independent accountant he will remain either a member of, or associated with a member firm of, the SEC Practice Section or equivalent organization, and will comply with all applicable SEC Practice Section or equivalent organization requirements, including all requirements for periodic peer reviews, concurring partner reviews, and continuing professional education.|
By the Commission.
Jonathan G. Katz
|1||Rule 102(e)(3) provides, in relevant part, that:
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 . . . 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 or of the rules and regulations thereunder.
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