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U.S. Securities and Exchange Commission


Litigation Release No. 18695 / May 5, 2004

Accounting and Auditing Enforcement
Release No. 2002 / May 5, 2004

Moore Stephens Chartered Accountants (United Kingdom) and Peter D. Stewart, A Partner, Sanctioned by Institute of Chartered Accountants in England and Wales for Failures in Connection with Audits of Financial Statements Filed with the SEC

On May 5, 2004, the Investigation Committee of the Institute of Chartered Accountants in England and Wales ("Institute") announced that Consent Orders had been issued against the firm of Moore Stephens Chartered Accountants (United Kingdom), and a partner at the firm, Peter D. Stewart, FCA, for misconduct in connection with audits of the financial statements of the Cronos Group that were filed with the Securities and Exchange Commission. This is the first known disciplinary action brought by the Institute based on a complaint by the Commission and is the result of cross-border cooperation between the Commission and the Institute on this auditor oversight matter. Moore Stephens consented to an order of a severe reprimand, a fine of 35,750 ($67,450) and the payment of costs of 5,330 ($10,056). Stewart consented to an order that includes a reprimand, a fine of 3,000 ($5,660) and the payment of costs of 600 ($1,132). The disciplinary actions resulted from Stewart's and the firm's conduct with respect to the issuance of an unqualified audit report, dated July 28, 1997, on the consolidated financial statements of the Cronos Group for the year ended December 31, 1996, to the effect that the firm had conducted its audit in accordance with generally accepted auditing standards ("GAAS") in the United States, when this was not the case.

On July 2, 2002, based on the conduct described above and other conduct, the Commission in an administrative proceeding found that Stewart and two other auditors at the firm of Moore Stephens engaged in improper professional conduct within the meaning of Rule 102(e)(1)(ii) of the Commission's Rules of Practice and denied Stewart the privilege of practicing before the Commission as an accountant, but provided that he may request that the Commission consider his reinstatement after one year, and censured the two other auditors. The three consented to the Commission's Order without admitting or denying the allegations. In the Matter of Peter D. Stewart, FCA, John L. Harbor, FCA, and David Chopping, ACA, Admin. Proc. File No. 3-10820; SEA Rel. No. 34-46157; AAE Rel. No. 1587 (July 2, 2002).

Previously, the Commission instituted administrative proceedings against Cronos, Axel E. Friedberg and Rudolf J. Weissenberger. In the Matter of the Cronos Group, Admin. Proc. No. 3-10096; SA Rel. No 33-7771; SEA Rel. No. 34-42139; AAE Rel. No. 1208 (November 15, 1999); In the Matter of Axel E. Friedberg and Rudolf J. Weissenberger, Admin. Proc. File No. 3-10263; Rel. 34-43129; AAE Rel. No. 1291 (August 8, 2000). A civil action against the former CEO of the Cronos Group, Stefan M. Palatin, resulted in a final judgment of a permanent injunction against him for violations of the federal securities laws and a permanent bar against him acting as an officer and director of a public company. SEC v. Stefan M. Palatin, Civil Action No. 1:00CV01909 (USDC DC); LR-18284; AAE Rel. No. 1841 (August 13, 2003); see also LR-16645; AAE Rel. No. 1292 (August 8, 2000). All of these releases are available at the Commission's website at http://www.sec.gov. The Commission acknowledges the assistance provided in these matters by the governmental authorities of Austria, Switzerland and the United Kingdom.


Modified: 05/05/2004