After nearly two years of deliberation, the Securities and Exchange Commission dismissed an administrative proceeding against two former partners of Arthur Andersen & Co. last week.
The 2-2 vote had the effect of upholding a 2001 decision by an SEC administrative law judge, who ruled that SEC enforcement staffers hadn't proved allegations against Jeffrey Steinberg and John Geron, both CPAs. The SEC Enforcement Division argued before the commission in September 2003 that the Andersen auditors helped their client, Spectrum Information Technologies Inc., manipulate its accounting through improper revenue recognition of $10 million in 1993.
The judge had dismissed all charges, finding that the accounting advice to Spectrum was consistent with generally accepted accounting principles and that Spectrum's two quarterly reports under investigation adequately disclosed the licensing transactions that produced the revenue.
The commission was evenly divided, with acting chair Cynthia Glassman and commissioner Paul Atkins -- both Republicans -- voting for dismissal, and Democratic commissioners Harvey Goldschmid and Roel Campos voting against dismissal.
