SEC – You Want Sanctions? We Got Sanctions

Slowly but surely, years after the companies fail, the SEC is finally getting around to sanctioning the audit partners involved in the audits of the failed companies.
This new one, for Adelphia’s audit, comes long after Deloitte settled and payed big money to make their case go away and shortly after the Enron guys from Arthur Andersen were slapped on the wrist.
As Richard Murphy says, “If you don’t get in trouble for Enron (and Adelphia), what do you get in trouble for?
While Dearlove was waiting for this final verdict from the SEC, he was an officer of a NASDAQ traded company, signing SEC disclosures! Sometime in 2006, before their annual report was filed, he quietly and wisely stepped down, although he was still cashing stock options.
The Commission found that Gregory M. Dearlove, a certified public accountant and former partner at Deloitte & Touche, LLP, engaged in improper professional conduct within the meaning of Rule of Practice 102(e) during the audit of the financial statements of Adelphia Communications Corporation for the fiscal year ended Dec. 31, 2000. The Commission found that Adelphia’s financial statements did not comply with generally accepted accounting principles in several respects and that Dearlove, who served as the engagement partner on the audit, failed to conduct an adequate audit of four major accounts despite circumstances requiring heightened care and scrutiny. The Commission concluded that Dearlove engaged in repeated instances of at least unreasonable conduct, each resulting in a violation of applicable standards, that indicate a lack of competence to practice before the Commission.
Dearlove was denied the privilege of appearing or practicing before the Commission with a right to apply for reinstatement after four years.
The Commission also found that Dearlove, who signed Deloitte’s unqualified audit opinion filed with Adelphia’s 2000 financial statements, was a cause of Adelphia’s violations of the reporting provisions of the Exchange Act and related rules. Dearlove was ordered to cease and desist from causing further violations of those provisions. (Rel. 34-57244; AAE Rel. 2779; File No. 3-12064)
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