UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION
Securities Act of 1933
Release No. 7859 / May 25, 2000
Securities Exchange Act of 1934
Release No. 42827 / May 25, 2000
Accounting and Auditing Enforcement
Release No. 1260 / May 25, 2000
Administrative Proceeding
File No. 3-9345
In the Matter of
PAUL Y. OKUDA,
STEPHEN A. THORPE, and
DAVID J. CHESTER,
Respondents.
ORDER MAKING
FINDINGS, IMPOSING
REMEDIAL SANCTIONS
AND CEASE-AND-DESIST
ORDER AS TO STEPHEN A.
THORPE
I.
Stephen A. Thorpe has submitted an offer of settlement ("Offer") for
the purpose of disposing of the issues raised by this proceeding.
Solely for the purposes of these proceedings and any other proceedings
brought by or on behalf of the Commission or to which the Commission
is a party, and prior to hearing and without admitting or denying the
findings set forth herein, except as to the Commission's finding of
jurisdiction over him and the subject matter of this proceeding,
Thorpe consents to the entry of this Order Making Findings, Imposing
Remedial Sanctions and Cease-and-Desist Order as to Stephen A. Thorpe
("Order"). The Commission has determined that it is appropriate and in
the public interest to accept the Offer, and accordingly is issuing
this Order.
II.
Based on the foregoing, the Commission finds that
A. Respondent
SNIPPETS:
SECURITIES AND EXCHANGE COMMISSION
Securities Exchange Act of 1934
IMPOSING REMEDIAL SANCTIONS AND CEASE-AND-DESIST ORDER AS TO STEPHEN A. THORPE
Stephen A. Thorpe has submitted an offer of settlement for the purpose of disposing of the
Solely for the purposes of these proceedings and any other proceedings brought by or on
Thorpe conducted certain transactions relating to a private placement of shares of
In early 1992, Ronald Moskowitz, Ferrofluidics' former Chief Executive Officer and Chairman
Instead, Moskowitz and Jan R. Kirk, Ferrofluidics' former Chief Financial Officer, parked
Kirk told Thorpe, in substance, that there was no risk of loss because the shares would be
The Purchasers, including Thorpe, each signed a subscription agreement, a promissory note,
However, none of the Purchasers, including Thorpe, paid for the subscribed Ferrofluidics
In fact, the transaction added only $1.6 million in equity, from a single legitimate
During the fiscal years ended June 30, 1991 and 1992, Ferrofluidics recorded $735,000 of
As a result of this improper accounting treatment, Ferrofluidics' net income was materially
Antifraud Violations -- Section 17of the Securities Act and Section 10of the Exchange Act and
Section 17of the Securities Act, Section 10 of the Exchange Act, and Rule 10b-5 thereunder
Through the scheme described above, the false and misleading press releases relating to it,
Thorpe caused Ferrofluidics' violations.
Payment is to be made by U.S. Postal money order, certified check, bank cashier's check, or
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