In a highly publicized case with significant ramifications for accounting firms that seek to provide more than just auditing services to their clients, a Securities and Exchange Commission administrative law judge found Jan. 21 that KMPG Peat Marwick LLP did not engage in “improper professional conduct” by auditing a company that was a management client of an affiliate (In re KPMG Peat Marwick, SEC, Admin. Proc. File No. 3-9500, 1/21/00.)

Specifically, the ALJ said KPMG did not violate Rule 102(e) of SEC Regulation S-X when it performed an audit for Porta Systems Corp., a company that was also receiving management services from a KPMG affiliate, KPMG BayMark LLC.