William J. McClintock, C.A.
SECURITIES EXCHANGE ACT OF 1934
Release No. 43160 / August 16, 2000
ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1293 / August 16, 2000
ADMINISTRATIVE PROCEEDING
File No. 3-10271
| In the Matter of
WILLIAM J. McCLINTOCK, C.A., Respondent. |
ORDER INSTITUTING PROCEEDINGS
PURSUANT TO RULE 102(e) OF THE COMMISSION'S RULES OF PRACTICE MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS |
I.
The Commission deems it appropriate and in the public interest that public administrative proceedings pursuant to Rule 102(e)(3)1 of the Commission's Rules of Practice be, and hereby are, instituted against William J. McClintock (McClintock).
II.
In anticipation of the institution of this proceeding, McClintock has submitted an Offer of Settlement (Offer) which the Commission has determined to accept. Solely for the purpose of this proceeding and any other proceeding brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the Commission's findings set forth herein, except that he admits the Commission's finding that a Final Judgment of PermanentInjunction and Other Relief has been entered against him as set forth in Paragraph III.C below and admits the Commission's jurisdiction over him and over the subject matter of this proceeding, McClintock consents to the entry of this Order that contains the findings set forth herein and the imposition of the remedial sanctions set forth below.
III.
The Commission finds the following:
A. McClintock, age 48, is a Chartered Accountant (C.A.)2 licensed by the Public Accountants' Council for the Province of Ontario, Canada, in 1980. McClintock was the Chief Financial Officer (CFO) of Alias Research Inc. (Alias), a Toronto, Ontario software company, from August 1988 until December 1991.
B. Alias was, at all relevant times, an Ontario corporation, with its principal place of business in Toronto, which developed and marketed industrial design software. Alias's common stock was registered with the Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934 (Exchange Act) and, at all times relevant to the findings herein, Alias was required to file reports with the Commission pursuant to Section 13(a) of the Exchange Act.
C. On April 16, 1996, the Commission filed a complaint in the United States District Court for the District of Massachusetts against McClintock and others, captioned SEC v. Bingham, et al., No. 96-10793EFH. On March 20, 1997, based upon McClintock's undertaking not to seek reinstatement of his public accountant's license until the professional conduct committee concluded its investigation of him, the Institute of Chartered Accountants of Ontario agreed to postpone its investigation of McClintock pending the outcome of the Commission's proceedings against him. On July 24, 2000, McClintock was permanently enjoined from violating Section 17(a) of the Securities Act of 1933 (Securities Act) and Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13b2-1 and 13b2-2 thereunder, barred for a period of five years from acting as an officer or director of a public company, and ordered to pay disgorgement of $285,825 plus prejudgment interest, but payment of disgorgement was waived and civil penalties were not assessed based upon McClintock's demonstrated lack of financial resources.
D. The Commission's amended complaint alleged, among other things, that: (1) McClintock and others caused Alias's revenues and earnings for the first two quarters of fiscal 1992 to be inflated by recording revenue from four transactions in a manner not in conformity with Generally Accepted Accounting Principles, because collectibility was not reasonably assured; (2) in connection with financial statements included in reports that Alias filed with the Commission for those quarters, McClintock and others misrepresented to accountants that the four transactions were appropriately recognized as revenue; (3) as a result of the conduct ofMcClintock and others, Alias's financial results in Quarterly Reports filed with the Commission for those two quarters and in related press releases were materially misleading; and (4) McClintock sold shares of Alias stock while in possession of material, nonpublic information concerning Alias's true financial condition.
IV.
ORDER IMPOSING SANCTIONS
Based on the foregoing, the Commission deems it appropriate and in the public interest to accept the offer of settlement submitted by McClintock and accordingly,
IT IS HEREBY ORDERED, effective immediately, that:
A. McClintock is denied the privilege of appearing or practicing before the Commission as an accountant.
B. After two years from the date of this Order, McClintock may request that the Commission consider his reinstatement by submitting an application (attention: Office of the Chief Accountant) to resume appearing or practicing before the Commission as:
1. a preparer or reviewer, or a person responsible for the preparation or review, of any public company's financial statements that are filed with the Commission. Such application must satisfy the Commission that McClintock's work in his practice before the Commission will be reviewed either by the independent audit committee of the public company for which he works or in some other acceptable manner, as long as he practices before the Commission in this capacity; and/or
2. an independent accountant. Such application must satisfy the Commission that:
(a) McClintock, or the firm with which he is associated, is a member of the SEC Practice Section of the American Institute of Certified Public Accountants Division for CPA Firms (SEC Practice Section) or an equivalent Canadian organization that includes or is supplemented by peer review, concurring partner review, continuing professional education and other membership requirements that provide appropriate quality controls over an accounting and auditing practice, as long as he practices before the Commission as an independent accountant;
(b) McClintock, 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 or equivalent organization; and
(c) as long as McClintock appears or practices before the Commission as an independent accountant he will remain either a member of or associated with a member firmof the SEC Practice Section or equivalent Canadian organization and will comply with all applicable SEC Practice Section or equivalent Canadian organization requirements, including all requirements for periodic peer reviews, concurring partner reviews, and continuing professional education.
C. The Commission's review of any request or application by McClintock to resume appearing or practicing before the Commission may include consideration of, in addition to the matters referenced above, any other matters relating to McClintock's character, integrity, professional conduct, or qualifications to appear or practice before the Commission.
By the Commission.
Jonathan G. Katz
Secretary
Footnotes
| Rule 102(e)(3), in relevant part, provides that the Commission may suspend from appearing or practicing before it any accountant who by name has been permanently enjoined, by a court of competent jurisdiction in an action brought by the Commission, from violating and provision of the federal securities laws or the rules and regulations thereunder. 17 C.F.R. Section 201.102(e)(3)(i). | |
| In Canada, a C.A. is the professional equivalent of a Certified Public Accountant in the United States. |