UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES ACT OF 1933
Release No. 7627 / January 13, 1999
SECURITIES EXCHANGE ACT OF 1934
Release No. 40937 / January 13, 1999
ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1095 / January 13, 1999
ADMINISTRATIVE PROCEEDING
File No. 3-9806
In the Matter of
LIVENT INC.,
Respondent.
ORDER INSTITUTING PUBLIC
PROCEEDINGS PURSUANT TO
SECTION 8A OF THE SECURITIES
ACT OF 1933 AND SECTION 21C OF THE
SECURITIES EXCHANGE ACT OF 1934,
MAKING FINDINGS AND IMPOSING A
CEASE-AND-DESIST ORDER
I.
The Securities and Exchange Commission ("Commission") deems it
appropriate and in the public interest that public administrative
proceedings be, and hereby are, instituted pursuant to Section 8A of
the Securities Act of 1933 ("Securities Act") and Section 21C of the
Securities Exchange Act of 1934 ("Exchange Act") against Livent Inc.
("Livent" or the "respondent").
II.
In anticipation of the institution of these proceedings, Livent has
submitted an Offer of Settlement ("Offer") which the Commission has
determined to accept. Solely for the purpose of these proceedings, and
any other proceedings brought by or on behalf of the Commission, or in
which the Commission is a party, without admitting or denying the
SNIPPETS:
ORDER INSTITUTING PUBLIC PROCEEDINGS PURSUANT TO SECTION 8A OF THE SECURITIES ACT OF 1933 AND
The Securities and Exchange Commission deems it appropriate and in the public interest that
On November 18 and 19, 1998, respectively, Livent declared bankruptcy in the United States
The former senior management of Livent engaged in a multi-faceted and pervasive accounting
Drabinsky and Gottlieb manipulated income and operating cash flows throughout the relevant
While in possession of material nonpublic information concerning the fraudulent conduct at
In November 1998, following the independent investigationconducted by KPMG Peat Marwick,
Former senior management's manipulation of income for eight years caused Livent to file with
Livent reported pre-tax earnings of $2.9 million.
As a further result of the scheme, Livent reported fixed assets that were fraudulently
As a further result of the scheme, Livent reported preproduction costs or fixed assets that
Through these manipulations, Drabinsky and Gottlieb together with other Livent officers and
According to Livent's accounting policy, as contained in its financial statements,
In 1997, for example, Livent transferred preproduction costs, and certain show operating
During these meetings, the group discussed the manipulations, and agreed on the approximate
After a final review by senior management, these bogus numbers were presented to Livent's
Consequently, starting in at least 1994, Eckstein had Malcolm enlist the assistance of the
Gottlieb signed a management representation letter dated February 24, 1997, in connection
The agreement made the fee nonrefundable, regardless of whether Livent made available to
At the time, Gottlieb served as a director of Dundee's parent, Dundee Bancorp Inc.; however,
The registration statement, and the amendments, contained disclosures and financial
IT IS FURTHER ORDERED that Livent comply with its undertaking to upon reasonable request by
tive proceeding arising as a result of the Commission's investigation entitled In the Matter of
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