A recent move by the Securities and Exchange Commission to enforce a nearly 10-year-old bar against an accountant is a reminder that companies should pay close attention to whom they hire and what tasks they are assigned.

The SEC filed an action in U.S. District Court in New York to remind Michael Taber that he's still not allowed to prepare financial statements or other filings submitted to the SEC. Taber was CFO at Del Global Technologies Corp. when the SEC came down on the company and a total of five senior officers for an accounting fraud scheme that created an illusion of meeting profitability goals when in fact the company was sustaining losses. In July 2004, the SEC tossed Taber and the others out of capital markets, barring them from serving as directors or officers of public companies or having any other role that would involve preparing or submitting financial statements to the SEC.

It appears, however, that Taber continued working right through the bar, according to the SEC. The SEC filed an action in District Court recently to re-enforce the bar and relieve him of the $584,650 he has earned working in jobs he wasn't allowed to have. The SEC also tacked on interest for a total penalty of $731,500.

At the time of the SEC action, Taber was employed as a controller for registrant Sono-Tek Corp., and he remained in that role in 2005 even after the SEC issued its order, the SEC says. After he left Sono-Tek, Taber took a position with Jefferson Wells, the SEC said, a professional services firm that outsourced specialists to perform accounting and other work until it was acquired and now operates under Experis. From 2005 to 2010, Jefferson Wells assigned Taber to work for a number of SEC issuers, including Paxar, Cendant, Avis Budget, and Liz Claiborne.

According to law firm Venable, the SEC's action to seek court action to enforce an old bar is “rare and aggressive.” The firm says the recent action provides some important reminders to public companies and the accountants they hire. For example, companies should be careful if they employ a barred accountants to assure that they not only stay away from the preparation of SEC filings, but also any data or documentation underlying those filings. Accountants should follow reinstatement procedures if they want to resume work on filings, and apply the same caution to lawyers or others who are barred by the SEC.

Perhaps most fundamentally, companies should be more careful about who they hire, Venable says. “Public companies should conduct appropriate due diligence to determine whether an employee candidate for a financial position is subject to an SEC bar,” the firm wrote in an alert to clients. “Although the public companies charged in the Taber case have not been charged to date, it is not difficult to conceive of a scenario where the SEC seeks to hold such a company liable, particularly given that determining whether a person is subject to an SEC bar merely requires a simple search of the SEC's website.”

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