David G. Sherman, John L. Clark, and Sarah E. Hume

Litigation Release No. 17671 / August 9, 2002

Accounting and Auditing Enforcement Release No. 1614

SEC v. Vari-L Company, Inc., David G. Sherman, Jon L. Clark, and Sarah E. Hume, Civ. Action No. 01-MK-1903 (District of Colorado)

The Commission announced today that on August 7, 2002, the Honorable Marcia S. Krieger, United States District Judge, entered a final judgment of permanent injunction against Sarah E. Hume of Aurora, Colorado.

The final judgment enjoins Hume from engaging in transactions, acts, practices and courses of business which constitute or would constitute violations of Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5, 13b2-1, and 13b2-2 , and from aiding and abetting violations of Sections 13(a) and 13(b)(2) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13. The proposed final judgment provides that the Court is not imposing a civil penalty or requiring payment of disgorgement and pre-judgment interest thereon based on defendant's sworn representations in her statement of financial condition. Hume consented to entry of the permanent injunction. Hume has also agreed to be prohibited from acting as an officer or director of a public company.

The Commission's complaint, filed in the U.S. District Court for the District of Colorado on September 27, 2001, alleged that Vari-L Company, Inc and three of its former officers engaged in a massive financial reporting fraud designed to show consistently increasing revenue and earnings, instead of losses, from 1996 through the quarter ended March 31, 2000 by recognizing false revenue, improperly capitalizing and depreciating costs, overstating inventory, and improperly deferring period costs.

The Commission's action against David G. Sherman is continuing.

For more information, see Litigation Release No. 17155 (September 27, 2001).