Release: 4203-98 (CFTC Docket 98-11)
For Release: November 2, 1998
CFTC ISSUES ORDER FINDING HENRY & HORNE, PLC, AN ACCOUNTING FIRM, ENGAGED IN IMPROPER UNPROFESSIONAL CONDUCT
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today that it issued an order accepting an offer of settlement from Henry & Horne, PLC, a public accounting firm, in Tempe, Arizona, in connection with a complaint filed by the CFTC on April 8, 1998 (see CFTC News Release #4132-98, April 8, 1998).
The CFTC's order finds that Henry & Horne engaged in "improper unprofessional conduct" and permanently denies the firm the privilege of appearing or practicing before the CFTC, with a right to apply for reinstatement in five years. Henry & Horne agreed to the order without admitting or denying the findings therein.
The CFTC order, filed on October 21, 1998, finds that between March 1992 and September 1995, Henry & Horne engaged in improper unprofessional conduct in performing four separate annual audits of O'Connell & Associates (OCA), a Vermont limited partnership, operated by Thomas O'Connell as a commodity pool. (O'Connell, in an injunctive action filed by the CFTC in the United States District Court for the District of Vermont, was alleged to have operated OCA as a Ponzi scheme and defrauded investors of more than $14 million before he was arrested by law enforcement authorities. In that action, O'Connell consented to the entry of a permanent injunction and other relief.)
Specifically, the CFTC order finds that Henry & Horne auditors failed to plan properly the 1991, 1992, 1993 and 1994 audits; failed to obtain sufficient competent evidential matter, particularly involving the existence of certain trading account balances; failed to employ adequate analytical procedures considering OCA's consistently profitable trading performance; failed to maintain an attitude of professional skepticism regarding OCA's trading performance, balance discrepancies and other matters; and failed to detect errors and irregularities, including O'Connell's fraud. As a result of these failures to adhere to the requirements of Generally Accepted Auditing Standards (GAAS), Henry & Horne engaged in "improper unprofessional conduct" within the meaning of Section 14.8(c) of the CFTC's regulations.
Under the terms of the settlement with Henry & Horne, the firm is permanently denied the privilege of appearing or practicing before the CFTC and agrees not to apply to the CFTC for reinstatement for five years from the date of the order. If Henry & Horne applies to the Commission for reinstatement after that date, the Commission will grant such application if it finds, upon consideration of Henry & Horne's professional performance and disciplinary record and any other relevant information, no grounds to warrant denying it the privilege of appearing or practicing before it.
Previously, in a related matter, the Commission entered an order, pursuant to an offer of settlement, as to Sherald Griffin and Donna Laubscher, accountants with Henry & Horne, finding that they had engaged in improper unprofessional conduct based on the audits that are the subject of the Henry & Horne order.