David Middendorf’s trial buddy, Jeffrey Wada, the now-former PCAOB inspections leader who fed confidential information about upcoming audit inspections to some folks at KPMG, including Middendorf, in the hopes of landing a job at the Big 4 firm, is now prohibited from appearing or practicing before the Securities and Exchange Commission as an accountant.
Wada’s punishment was handed down on Jan. 15, shortly after the SEC suspended Middendorf’s right to appear or practice before the SEC. The suspensions given to Wada and Middendorf, former national managing partner for audit quality and professional practice at KPMG, are due to them being convicted felons.
Rule 102(e)(2) of the SEC’s Rules of Practice states:
(2) Certain Professionals and Convicted Persons. Any attorney who has been suspended or disbarred by a court of the United States or of any State; or any person whose license to practice as an accountant, engineer, or other professional or expert has been revoked or suspended in any State; or any person who has been convicted of a felony or a misdemeanor involving moral turpitude shall be forthwith suspended from appearing or practicing before the Commission. A disbarment, suspension, revocation or conviction within the meaning of this rule shall be deemed to have occurred when the disbarring, suspending, revoking or convicting agency or tribunal enters its judgment or order, including a judgment or order on aplea of nolo contendere, regardless of whether an appeal of such judgment or order is pending or could be taken.
At the end of a month-long trial in Manhattan federal court last year, a jury on March 11 found Wada guilty of one count of conspiracy to commit wire fraud and two counts of wire fraud. That same jury convicted Middendorf of one count of conspiracy to commit wire fraud and three counts of wire fraud.
Wada was sentenced last October to nine months in federal prison. Middendorf got a sentence of one year and one day in federal prison last September. He is appealing his conviction.
Ex-KPMG executive director Cynthia Holder, who was sentenced to eight months in federal prison in August, was banned from appearing or practicing before the SEC as an accountant last November.
Holder, a former PCAOB inspections leader, is serving time at a minimum security federal prison camp for women in Bryan, TX. Her current release date is June 13, 2020.