UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 70074 / July 30, 2013
ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 3473 / July 30, 2013
ADMINISTRATIVE PROCEEDING
File No. 3-15395
:
:
:
In the Matter of : ORDER INSTITUTING ADMINISTRATIVE
: PROCEEDINGS PURSUANT TO RULE
Subramanian Krishnan (CPA), : 102(e) OF THE COMMISSION’S RULES OF
: PRACTICE, MAKING FINDINGS, AND
Respondent. : IMPOSING REMEDIAL SANCTIONS
:
:
____________________________________ :
I.
The Securities and Exchange Commission (“Commission”) deems it appropriate and in the
public interest that public administrative proceedings be, and hereby are, instituted against
Subramanian Krishnan ("Krishnan" or “Respondent”) pursuant to Rule 102(e)(3)(i) of the
Commission’s Rules of Practice.1
II.
In anticipation of the institution of these proceedings, Respondent has submitted an Offer
of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the
1
Rule 102(e)(3)(i) provides, in relevant part, that:
The Commission, with due regard to the public interest and without preliminary hearing,
may, by order, . . . suspend from appearing or practicing before it any . . . accountant . . . who has
been by name . . . permanently enjoined by any court of competent jurisdiction, by reason of his
or her misconduct in an action brought by the Commission, from violating or aiding and abetting
the violation of any provision of the Federal securities laws or of the rules and regulations
thereunder.2
purpose of these proceedings and any other proceedings brought by or on behalf of the
Commission, or to which the Commission is a party, and without admitting or denying the findings
herein, except as to the Commission’s jurisdiction over him and the subject matter of these
proceedings, and the findings contained in Section III.3 below, which are admitted, Respondent
consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Rule 102(e)
of the Commission’s Rules of Practice, Making Findings, and Imposing Remedial Sanctions
(“Order”), as set forth below.
III.
On the basis of this Order and Respondent’s Offer, the Commission finds that:
1. Krishnan, age 58, is and has been a certified public accountant licensed to
practice in the State of Minnesota since 1983. He served as Chief Financial Officer and Senior Vice
President of Digi International, Inc. (“Digi” or the “Company”),from February 1999 until his
resignation in May 2010.
2. Digi was, at all relevant times, a Delaware corporation headquartered in
Minnesota. At all relevant times, Digi manufactured device networking products for businesses. At
all relevant times, Digi’s common stock was registered with theCommission pursuant to Section
12(g) of the Securities Exchange Act of 1934 (“Exchange Act”), and traded on the NASDAQ
Global Select Market.
3. On September 28, 2012, the Commission filed a complaint against Krishnan
in SEC v. Subramanian Krishnan (Civil Action No. 0:12-cv-02495-PAM-JJG) in the United States
District Court for the District of Minnesota. On October 17, 2013, the court entered an order
permanently enjoining Krishnan, by consent, from future violations of Section 17(a) of the
Securities Act of 1933 (“Securities Act”); Sections 10(b) and 13(b)(5) of the Exchange Act and
Rules 10b-5, 13b2-1, 13b2-2, and 13a-14 thereunder, and aiding and abetting violations of Sections
13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13
thereunder; and from acting as an officer or director of a public company for a period of time to be
determined by stipulation or subsequent motion by the Commission. On July 15, 2013, Krishnan
was also ordered to pay a $60,000 civil money penalty and is prohibited from acting as an officer
or director of a public company for a period of five years from the date of the Commission’s
complaint.
4. The Commission’s complaint alleged that Krishnan engaged in a course of
conduct which resulted in Digi filing inaccurate reports and accompanying certifications in
Digi’s annual reports on Form 10-K and Digi’s quarterly reports on Form 10-Q for the period
from March 2005 through May 2010. The complaint also alleged that Krishnan engaged in
certain actions and inactions: a result of which corporate funds were used to pay for
unauthorized expenses. The complaint further alleged that Krishnan aided and abetted Digi’s
violations by making and keeping inaccurate books and records, failing to maintain a system of
adequate internal controls and making inaccurate representations to auditors.3
IV.
In view of the foregoing, the Commission deems it appropriate and in the public interest to
impose the sanction agreed to in Respondent Krishnan’s Offer.
Accordingly, it is hereby ORDERED, effective immediately, that:
A. Krishnan is suspended from appearing or practicing before the Commission as an
accountant.
B. After five years (or 60 months) from the date of this order, Respondent may
request that the Commission consider his reinstatement by submitting an application
(attention: Office of the Chief Accountant) to resume appearing or practicing before the
Commission as:
1. a preparer or reviewer, or a person responsible for the preparation or
review, of any public company’s financial statements that are filed with the Commission. Such
an application must satisfy the Commission that Respondent’s work in his practice before the
Commission will be reviewed either by the independent audit committee of the public company
for which he works or in some other acceptable manner, as long as he practices before the
Commission in this capacity; and/or
2. an independent accountant. Such an application must satisfy the
Commission that:
(a) Respondent, or the public accounting firm with which he is
associated, is registered with the Public Company Accounting Oversight Board (“Board”) in
accordance with the Sarbanes-Oxley Act of 2002, and such registration continues to be effective;
(b) Respondent, or the registered public accounting firm with which he
is associated, has been inspected by the Board and that inspection did not identify any criticisms
of or potential defects in the respondent’s or the firm’s quality control system that would indicate
that the respondent will not receive appropriate supervision;
(c) Respondent has resolved all disciplinary issues with the Board, and
has complied with all terms and conditions of any sanctions imposed by the Board (other than
reinstatement by the Commission); and
(d) Respondent acknowledges hisresponsibility, as long as
Respondent appears or practices before the Commission as an independent accountant, to
comply with all requirements of the Commission and the Board, including, but not limited to, all
requirements relating to registration, inspections, concurring partner reviews and quality control
standards.
C. The Commission will consider an application by Respondent to resume
appearing or practicing before the Commission provided that hisstate CPA license is 4
current and he has resolved all other disciplinary issues with the applicable state boards of
accountancy. However, if state licensure is dependent on reinstatement by the
Commission, the Commission will consider an application on its other merits. The
Commission’s review may include consideration of, in addition to the matters referenced
above, any other matters relating to Respondent’s character, integrity, professional conduct,
or qualifications to appear or practice before the Commission.
By the Commission.
Elizabeth M. Murphy
Secretary
