UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 41424 / May 19, 1999
ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1134 / May 19, 1999
Administrative Proceeding File No. 3-9902
In the Matter of
CHARLES E. FALK, CPA,
Respondent.
ORDER INSTITUTING PROCEEDINGS
PURSUANT TO SECTION 21C OF
THE SECURITIES EXCHANGE ACT OF
1934, AND RULE 102(e) OF THE
COMMISSION'S RULES OF PRACTICE,
MAKING FINDINGS AND IMPOSING
REMEDIAL SANCTIONS
I.
The Securities and Exchange Commission ("Commission") deems it
appropriate and in the public interest that public administrative
proceedings pursuant to Section 21C of the Securities Exchange Act of
1934 ("Exchange Act"), and Rules 102(e)(1)(ii) and (iii) of the
Commission's Rules of Practice, be and hereby are instituted against
Charles E. Falk ("Falk").
II.
In anticipation of the institution of these proceedings, Falk has
submitted an Offer of Settlement ("Offer") to the Commission, 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 the Commission is a party, Falk, without
admitting or denying the facts, findings or conclusions contained
herein, except that he admits to the Commission's jurisdiction over
him and over the subject matter of these proceedings, consents to the
issuance of this Order Instituting Public Proceedings Pursuant to
Section 21C of the Exchange Act, and Rule 102(e) of the Commission's
Rules of Practice, Making Findings and Imposing Remedial Sanctions
("Order").
SNIPPETS:
SECURITIES AND EXCHANGE COMMISSION
CHARLES E. FALK, CPA,
ORDER INSTITUTING PROCEEDINGS PURSUANT TO SECTION 21C OF THE SECURITIES EXCHANGE ACT OF
COMMISSION'S RULES OF PRACTICE, MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS
The Securities and Exchange Commission deems it appropriate and in the public interest that
Solely for the purpose of these proceedings, and any other proceedings brought by or on
ssion's Rules of Practice, Making Findings and Imposing Remedial Sanctions.
Falk has been associated with Moore Stephens since 1983, and has been a principal of that
Falk is also a licensed attorney who, from a separate office in the same building in which
This auditor independence case arises from Falk's activities as a lawyer while he was a Moore
Each year Moore Stephens reported on ITB's financial statements, representing that its audits
Falk's activities as attorney for those clients impaired Moore Stephens' independence with
In the course of his representation of ITB, Falk generated advice memoranda to senior ITB
Also, in response to a subpoena duces tecum issued to him by the staff, Falk declined to
When he was advising ITB as its attorney, Falk knew that ITB was an audit client of Moore
Falk did not participate as engagement partner or concurring partner in any of Moore
In addition to the services Falk rendered directly to ITB, in 1992 Falk provided legal
Rule 2-02 of Regulation S-X, entitled "Accountants' Reports," governs the contents of
Regulation S-X further admonishes that "he Commission will not recognize any certified public
This "public watchdog" function demands that the accountant maintain total independence from
The audit client, ITB, specifically requested that Falk render his services as an attorney,
A single instance of highly unreasonable conduct that results in a violation of applicable
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