Arden Franklin, CPA

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 44229 / April 27, 2001

ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1386 / April 27, 2001

ADMINISTRATIVE PROCEEDING
File No. 3-8667

On April 12, 1995, Arden Franklin, CPA ("Franklin") was denied the privilege of appearing or practicing before the Commission as an accountant as a result of settled public administrative proceedings instituted by the Commission against Franklin pursuant to Rule 2(e) of the Commission's Rules of Practice.¹ This order is issued in response to his application for reinstatement to appear and practice before the Commission as an accountant responsible for the preparation or review of financial statements required to be filed with the Commission.

Franklin, a certified public accountant in the state of California, was the controller of L.A. Gear from October 1986 to July 1990, and a vice president from July 1990 to April 1992. The original order alleged that Franklin falsified and caused others to falsify L.A. Gear's books and records to report a higher gross profit margin in the company's Form 10-Q for the quarter ended February 28, 1990. To cover the fraud and deceive L.A. Gear's independent auditors, Franklin directed the accounting staff to alter an inventory report to substantiate the journal entry concerning ending inventory. After publication of L.A. Gear's overstated earnings, Franklin sold L.A. Gear stock at artificially inflated prices.

In his capacity as an accountant responsible for the preparation or review of financial statements of a public company to be filed with the Commission, Franklin has undertaken to have his work reviewed by the independent audit committee of any future employer, or in some other manner acceptable to the Commission, while practicing before the Commission in this manner. Franklin is not, at this time, seeking to practice before the Commission as an independent accountant and has represented to the Commission staff that if he should wish to resume practicing before the Commission as an independent accountant, he will submit an application to the Commission showing that he has complied and will comply with the terms of the original suspension order in this regard. Therefore, Franklin's suspension from practice before the Commission as an independent accountant continues in effect until the Commission determines that a sufficient showing has been made in this regard in accordance with the terms of the original suspension order.

On the basis of information supplied, representations made, and undertakings agreed to by Franklin, it appears that Franklin has complied with the terms of the April 12, 1995 order suspending him from practice before the Commission as an accountant responsible for the preparation or review of financial statements of a public company to be filed with the Commission, that no information has come to the attention of the Commission relating to his character, integrity, professional conduct or qualifications to practice before the Commission that would be a basis for adverse action against Franklin pursuant to Rule 102(e) of the Commission's Rules of Practice, and that Franklin's undertaking to have his work reviewed by the independent audit committee of any future employer, or in some other manner acceptable to the Commission, in his practice before the Commission as a preparer or reviewer of financial statements required to be filed with the Commission is in the public interest. Therefore, it is accordingly,

ORDERED pursuant to Rule 102(e)(5)(i) of the Commission's Rules of Practice that Arden Franklin, CPA is hereby reinstated to appear and practice before the Commission as an accountant responsible for the preparation or review of financial statements required to be filed with the Commission.

By the Commission.

Jonathan G. Katz
Secretary

Footnotes

¹ See Accounting and Auditing Enforcement Release No. 662, dated April 12, 1995. Franklin was permitted, pursuant to the order, to apply for reinstatement after three years upon making certain showings. Rule 2(e) has been recodified in its entirety as Rule 102(e). Rule 102(e)(5)(i) provides:

"An application for reinstatement of a person permanently suspended or disqualified under paragraph (e)(1) or (e)(3) of this section may be made at any time, and the applicant may, in the Commission's discretion, be afforded a hearing; however, the suspension or disqualification shall continue unless and until the applicant has been reinstated by the Commission for good cause shown." 17 C.F.R. § 201.102(e)(5)(i).