UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Securities Exchange Act of 1934
Release No. 42910 / June 8, 21000

Accounting and Auditing Enforcement
Release No. 1271 / June 8, 2000

Administrative Proceeding File No. 3-10220

PROCEEDINGS INSTITUTED AGAINST CERTIFIED PUBLIC ACCOUNTANT SCOTT E. EDWARDS ALLEGING IMPROPER PROFESSIONAL CONDUCT

The Commission announced today the entry of an order instituting proceedings against certified public accountant Scott E. Edwards ("Edwards"), alleging that Edwards engaged in improper professional conduct with respect to his audit of the financial statements of Firstmark Corp. ("Firstmark") for the fiscal year ended June 30, 1995. Edwards resides in Bangor, Maine.

In the Order, the Division of Enforcement ("Division") alleges that, in its Form 10-KSB for that period, Firstmark inflated and improperly accounted for the value of its investments in two start-up companies. As a result, Firstmark reported pre-tax income of $771,895 when it should have reported a loss of $54,886. The Division alleges that, during the audit, Edwards learned that: (1) Firstmark's investment in one of the companies had become worthless and should have been written off and (2) Firstmark had improperly recognized income on the appreciation in the value of its investment in the second company by reclassifying the restricted stock it owned in that company as a trading security. The Division further alleges that Edwards knew that Firstmark's management hoped to apply for listing on the NASDAQ National Market or the American Stock Exchange, which required at least $750,000 in pre-tax income for eligibility, and thus had a motive to inflate earnings. The Division alleges that, despite the knowledge he possessed concerning the matters set forth above, Edwards issued an audit report containing an unqualified opinion. The Order alleges that, by these activities, Edwards engaged in improper professional conduct under Rule 102(e) of the Commission's Rules of Practice.

A public hearing will be scheduled to determine whether the allegations against Edwards are true and, if so, whether any remedial sanctions should be issued pursuant to Rule 102(e) of the Commission's Rules of Practice.

http://www.sec.gov/litigation/admin/34-42910.htm