The Securities and Exchange Commission today suspended five accountants and two audit firms from practicing or appearing before the SEC after they violated key rules that are designed to preserve the integrity of the financial reporting system.
According to the SEC’s orders instituting settled administrative proceedings, the accountants and firms at various times performed deficient audits of public companies, jeopardized the independence of other audits, and falsified and backdated audit documents among other misconduct.
“Auditors must follow the professional standards and avoid conflicts of interest when they opine on the financial information reported by public companies,” said Paul G. Levenson, Director of the SEC’s Boston Regional Office. “These accountants and their firms showed complete disregard for the basic rules of their profession. As a result, they are now barred from working on any SEC-related matters.”
According to the SEC’s orders finding violations by Peter Messineo and his firm Messineo & Co., Charles Klein and his firm DKM Certified Public Accountants, Robin Bigalke, Joseph Mohr, and Richard Confessore:
- Messineo and his firm, which had more than 70 corporate clients, skipped mandatory quality reviews for their own audits and performed deficient quality reviews for audits by another audit firm.
- To cover up these violations, Bigalke falsified and backdated audit documents in her role as Messineo & Co.’s senior accountant. She also arranged with Mohr, the firm’s quality reviewer, the backdating of quality review documents.
- Mohr falsely identified himself as a certified public accountant during a time when was not licensed as a CPA.
- Messineo served as the CFO of two public companies being audited by Klein and DKM. Messineo falsely certified the companies’ public filings despite knowing that auditor independence rules were being violated as Confessore was improperly serving conflicting roles as a member of the DKM audit team and an employee of Messineo & Co.
- After Messineo resigned from his CFO positions at both public companies, he merged his audit firm into DKM and exacerbated DKM’s independence issues because he retained ownership interests in the two companies while DKM continued to audit them.
The SEC’s orders find that the accountants and firms violated or caused violations of Sections 13(a), 13(d), 15(d), and 16(a) of the Securities Exchange Act of 1934 and Rules 13a-1, 13a-13, 13a-14, 13d-1, 13d-2, 15d-1, and 16a-3 as well as Rule 2-02 of Regulation S-X. The order also finds they engaged in improper professional conduct pursuant to Section 4C(a)(2) of the Exchange Act and Rule 102(e)(1). They consented to the orders without admitting or denying the findings.
Messineo and his firm Messineo & Co. are permanently barred from practicing as accountants on behalf of any publicly traded company or other entity regulated by the SEC. Klein, Confessore, and DKM are suspended from appearing or practicing before the SEC as accountants for at least two years. Mohr is suspended for at least four years and Bigalke is suspended for at least three years. They are collectively paying penalties and disgorgement totaling more than $100,000 to settle the SEC’s charges.
The SEC’s investigation was conducted by Peter Bryan Moores, Patrick Noone, and Marc Jones, and the case was supervised by Kevin Currid. The SEC appreciates the assistance of the Public Company Accounting Oversight Board.