Comparator Says Auditor Has Resigned
Comparator Systems Corp. said its longtime auditor has resigned and withdrawn its endorsement of the scandal-ridden company’s 1995 financial statement.
In a document filed with the Securities and Exchange Commission on Friday, the Newport Beach-based company said it has hired the accounting firm of Farber & Hass as its new auditor, replacing the Eli Buchalter Accountancy Corp.
Buchalter has withdrawn its opinion of the company’s June 30, 1995, financial statements, according to the SEC filing, and “has requested that the company notify holders of [those] statements to return them . . . and to not place any further reliance on those statements.”
Neither Buchalter nor officials at Comparator could be reached for comment.
Comparator and three of the company’s executives, including chief executive Robert Reed Rogers, were accused of lying about the company’s finances and cheating investors in a sweeping lawsuit filed against the company in May by the SEC. The case is expected to be settled soon.
Comparator, which describes itself as a maker of high-tech fingerprint scanning devices, caught the attention of regulators and the national media when its stock set three trading records on the Nasdaq stock market in early May.
The company’s stock was delisted from Nasdaq in June amid suspicions that it was being manipulated and SEC charges that the value of the company’s patents and other assets were vastly overstated. Company officials have denied wrongdoing.
In a letter accompanying the company’s annual report nearly a year ago, Buchalter said that Comparator’s financial statements “present fairly in all material respects the financial position of Comparator Systems Corp.”
Buchalter did, however, raise some questions about the company’s “significant operating losses” and “recorded asset amounts.”
Witnesses have told the SEC that Buchalter was misled by Comparator executives, but publicly the Los Angeles-based accountant continued to stand by his rendered opinion until Friday.
Regulators were not available for comment on the impact Buchalter’s withdrawal may have on the SEC suit.
Investigators have said Comparator’s surprising stock run-up appeared to be fueled by hundreds of postings about the company on Internet news groups and bulletin boards. On Thursday, the National Assn. of Securities Dealers, which regulates the Nasdaq market, urged investors to treat Internet stock postings with skepticism.
