Spongetech Delivery Systems, Inc. (fka SPNGQ)

[loanranger]

"I'm willing to bet Franky resigned months ago."

I won't take that bet, but humor me. From the board, from the committee chair or from the committee? Anyplace else that question would be ridiculous, but please answer it anyway.

You've relieved R&H of any responsibility to report to the powers that be, in all its forms. It's my understanding that, had they reported let's call it "illegal acts" (don't make me look it up) to the audit committee and, in the absence of correction, and a non-productive report to the full board, that there would've been an obligation to resign and/or report to the Commission(see below). Given that you believe that Pizza Frank has already resigned from something without a filing, would you be as willing to accept that R&H may have done the same?

http://www.allbusiness.com/legal/legal-services-litigation/12368941-1.html
Whistleblowing Under the Securities Laws

In 1995, as a part of the Private Securities Reform Act, the Securities Exchange Act of 1934 was amended to add a whistleblowing provision (section 10A). The amended statute takes a step-by-step approach to the problem.

When a CPA notes that a client may have participated in an illegal acL the CPA is obligated to determine whether it has occurred. The CPA must then consider the effects on the financial statements (including contingent monetary effects, such as fines, penalties, and damages), and so notify management and the board of directors (or audit committee of the board) unless the act is "clearly inconsequential." The CPA should then consider whether the illegal act has a material effect on the financial statements of the public company, and whether senior management and the board of directors have not taken "timely and appropriate remedial actions." If such failure is expected to warrant departure from a standard auditor's report or cause the auditor to resign, then the CPA is to inform the board of directors about the matter. If the board does not notify the SEC within one business day and furnish the CPA with a copy of its notification, then the CPA has two choices: resign or notify the SEC.

CPAs are specifically protected from being sued as a result of whistleblowing under section 10A. As noted above, whistleblowing under section 10A should qualify as exempt from Rule 301 of the AICPA Code of Professional Conduct (Confidentiality).