UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 42909 / June 8, 2000
ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1270 / June 8, 2000
ADMINISTRATIVE PROCEEDING
File No. 3-10219
_________________________________________________________________
In the Matter of
Firstmark Corp.
Respondent.
_________________________________________________________________
ORDER INSTITUTING PROCEEDINGS
PURSUANT TO SECTION 21C OF THE
SECURITIES EXCHANGE ACT OF 1934,
MAKING FINDINGS AND ISSUING
CEASE-AND-DESIST ORDER
I.
The Securities and Exchange Commission ("Commission") deems it
appropriate that cease-and-desist proceedings be, and hereby are,
instituted pursuant to Section 21C of the Securities Exchange Act of
1934 ("Exchange Act") against Firstmark Corp. ("Firstmark").
II.
In anticipation of the institution of these proceedings, Firstmark 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 to
which Commission is a party, and without admitting or denying any of
the findings contained herein, except those findings pertaining to the
jurisdiction of the Commission over it and over the subject matter of
these proceedings, which it admits, Firstmark consents to the entry of
this Order instituting proceedings, making findings and issuing a
cease-and-desist order ("Order").
SNIPPETS:
SECURITIES AND EXCHANGE COMMISSION
ORDER INSTITUTING PROCEEDINGS PURSUANT TO SECTION 21C OF THE SECURITIES EXCHANGE ACT OF 1934,
The Securities and Exchange Commission deems it appropriate that cease-and-desist proceedings
In anticipation of the institution of these proceedings, Firstmark has submitted an Offer of
Respondent
Firstmark is a Maine corporation which, at all relevant times, owned a registered
From December 1992 through April 1999, Firstmark's common stock was listed on the NASDAQ
Firstmark's former chief financial officer ("the former CFO") held that position, as well as
At all relevant times, the former CFO was responsible for maintaining Firstmark's books and
For the periods ended September 30, 1994 through March 31, 1996, Firstmark filed materially
For its fiscal year ended June 30, 1995 and the quarters ended December 31, 1994 through
Under generally accepted accounting principles, Firstmark's recognition of income from its
For the quarter ended December 31, 1994, instead of net income before taxes of $144,471,
In July 1994, the former CEO increased the amount of Firstmark's investment in the resale
In order to limit Firstmark's exposure from the investment, however, the former CEO planned
Instead, they included the payment within the line item called "prepaid expenses and other
According to GAAP, to recognize revenue, there must be a completed exchange of goods or
The overstatement occurred because Firstmark failed to write off the worthless resale company
Under FAS 115, which Firstmark implemented in fiscal 1995, securities must be classified in
Section 17of the Securities Act and Section 10of the Exchange Act and Rule 10b-5 thereunder
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