UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 37716 / September 24, 1996 ACCOUNTING AND AUDITING ENFORCEMENT Release No. 820 / September 24, 1996 ADMINISTRATIVE PROCEEDING File No. 3-9094 ------------------------------ : In the Matter of : ORDER INSTITUTING PROCEEDINGS : AND OPINION AND ORDER PURSUANT ROBERT McCLERNON, C.P.A. : TO RULE 102(e) OF THE : COMMISSION'S RULES OF PRACTICE : ------------------------------ I. The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and they hereby are, instituted pursuant to Rule 102(e)(3)(i)(a) of the Commission's Rules of Practice, 17 C.F.R.  102(e)(3)(i)(a), -[1]- against Robert McClernon ("McClernon"). II. ---------FOOTNOTES---------- -[1]- Rule 102(e)(3) of the Commission's Rules of Practice, 17 C.F.R.  201.102(e)(3), provides, in pertinent part: The Commission, with due regard to the public interest ... may ... suspend from appearing or practicing before it any, accountant ... who ... has been by name ... [p]ermanently 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 ... 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 (e)(3) to have been enjoined by reason of the misconduct alleged in the complaint. ==========================================START OF PAGE 2====== In anticipation of the institution of this administrative proceeding, McClernon has submitted an Offer of Settlement 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 in which the Commission is a party, and prior to a hearing pursuant to the Commission's Rules of Practice, 17 C.F.R.  201.100 et seq., and without admitting or denying any findings set forth herein, except as to jurisdiction, and facts set forth in paragraphs III. A. and C. below, which he admits, McClernon consents to the issuance of this Order Instituting Proceedings And Opinion And Order Pursuant To Rule 102(e) Of The Commission's Rule Of Practice ("Order") and to the entry of findings and imposition of the remedial sanctions as set forth below. III. On the basis of this Order and McClernon's Offer, the Commission finds that: -[2]- A. McClernon, 34, is a certified public accountant ("CPA") who has been licensed by the State of Florida Board of Accountancy since February 1988. He has practiced before the Commission within the meaning of Rule 102(f) of the Commission's Rules of Practice in that as controller from August 1989 to July 1992 for the Keith Group of Companies, Inc. ("Keith Group"), he prepared financial statements that were contained in Forms 10-Q and 10-K filed by Keith Group with the Commission. B. Keith Group, a Delaware corporation located in Hallandale, Florida, was engaged in the business of acquiring, developing and operating manufactured housing communities and other properties located in Florida. Keith Group's common stock is registered pursuant to Section 12(g) of the Securities Exchange Act of 1934 ("Exchange Act") and Keith Group has filed periodic and annual reports with the Commission since 1987. C. On August 29, 1996, a final judgment of permanent injunction and other relief was entered, by consent, against McClernon, permanently enjoining him from violations of Sections 10(b) and 13(b)(5) of the Exchange Act, and Rules 10b-5 and 13b2- 1, thereunder. SEC v. Keith Group of Companies, Inc. et al. Civil Action No. 95-6702-CIV-GONZALEZ (S.D. Fla. 1995). D. The Commission's complaint alleged that between February 1991 through May 1992, McClernon, in connection with the ---------FOOTNOTES---------- -[2]- The findings herein are made pursuant to Respondent McClernon's Offer of Settlement and are not binding on any other person or entity named as a respondent in this or any other proceeding. ==========================================START OF PAGE 3====== offer, purchase and sale of securities, violated the antifraud and books and records provisions of the federal securities laws. In particular, the complaint alleged that McClernon recorded fictitious gains from fraudulent real estate sales and fraudulent management fee income in Keith Group's books and records and that he knew or was reckless in not knowing that the real estate sales were not recorded in conformity with generally accepted accounting principles. IV. Based on the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer of Settlement submitted by McClernon, and accordingly, IT IS HEREBY ORDERED, effective immediately, that: A. McClernon is denied the privilege of appearing or practicing before the Commission as an accountant; B. Five years from the date of the Order, McClernon may apply to the Commission by submitting an application to the Office of the Chief Accountant which requests that he be permitted to resume appearing or practicing before the Commission as: 1. a preparer or reviewer, or a person responsible for the preparation or review, of financial statements of a public company to be filed with the Commission upon submission of an application satisfactory to the Commission in which McClernon undertakes that, in his practice before the Commission, his work will be reviewed by the independent audit committee of the company for which he works or in some other manner acceptable to the Commission; 2. an independent accountant upon submission of an application containing a showing satisfactory to the Commission that: a) McClernon, or any firm with which he is or becomes associated in any capacity, is and will remain a member of the SEC Practice Section of the American Institute of Certified Public Accountants Division for CPA Firms ("SEC Practice Section") as long as he practices before the Commission as an independent accountant; b) McClernon 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; c) McClernon will comply with all applicable SEC ==========================================START OF PAGE 4====== Practice Section requirements, including all requirements for periodic peer reviews, concurring partner reviews, and continuing professional education, as long as he appears or practices before the Commission as an independent accountant; and C. The Commission's review of any request or application by McClernon to resume appearing or practicing before the Commission may include consideration of, in addition to the matters referenced above, any other matter relating to McClernon's character, integrity, professional conduct or qualifications to appear or practice before the Commission. By the Commission. Jonathan G. Katz Secretary