UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release No. 99638 / February 29, 2024

ACCOUNTING AND AUDITING ENFORCEMENT

Release No. 4491 / February 29, 2024

ADMINISTRATIVE PROCEEDING

File No. 3-21876

In the Matter of

Clark Schaefer Hackett & Co.,

Respondent.

ORDER INSTITUTING PUBLIC 

ADMINISTRATIVE AND CEASE-ANDDESIST PROCEEDINGS PURSUANT TO 

SECTIONS 4C AND 21C OF THE 

SECURITIES EXCHANGE ACT OF 1934, 

AND RULE 102(e) OF THE 

COMMISSION’S RULES OF PRACTICE, 

MAKING FINDINGS, AND IMPOSING 

REMEDIAL SANCTIONS AND A CEASEAND-DESIST ORDER

I.

The Securities and Exchange Commission (“Commission”) deems it appropriate that 

public administrative and cease-and-desist proceedings be, and hereby are, instituted against 

Clark Schaefer Hackett & Co., (“Respondent” or “CSH”) pursuant to Sections 4C1 and 21C of 

the Securities Exchange Act of 1934 (“Exchange Act”), and Rule 102(e)(1)(ii) of the 

1 Section 4C provides, in relevant part, that:

The Commission may censure any person, or deny, temporarily or permanently, to any 

person the privilege of appearing or practicing before the Commission in any way, if that 

person is found . . . (1) not to possess the requisite qualifications to represent others; (2) 

to be lacking in character or integrity, or to have engaged in unethical or improper 

professional conduct; or (3) to have willfully violated, or willfully aided and abetted the 

violation of, any provision of the securities laws or the rules and regulations issued 

thereunder.
2

Commission’s Rules of Practice.2

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 

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 it and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting 

Public Administrative And Cease-and-Desist Proceedings Pursuant To Sections 4C And 21C of 

the Securities Exchange Act Of 1934 and Rule 102(e) of the Commission’s Rules Of Practice, 

Making Findings, and Imposing Remedial Sanctions and a Cease-And-Desist Order (“Order”), 

as set forth below.

III.

On the basis of this Order and Respondent’s Offer, the Commission finds3 that:

A. SUMMARY

These proceedings arise from violations of the Commission’s auditor independence rules 

by CSH, a public accounting firm. In early 2020, when Lordstown Motors Corp. (“Lordstown”) 

was a private company, CSH audited Lordstown’s 2019 financial statements under Generally 

Accepted Audit Standards (“GAAS”), and during the same engagement, provided the company 

with non-audit services by assisting management in preparing the financial statements and 

performing bookkeeping services. Later in 2020, in connection with Lordstown’s anticipated 

merger with DiamondPeak Holdings Corp. (“DiamondPeak”), CSH conducted an audit of the 

same 2019 financial statements under PCAOB standards. CSH represented that it was 

“independent” in the auditor’s report it issued to Lordstown under PCAOB standards, and the 

report was included in public filings with the Commission by DiamondPeak, and later, 

Lordstown.

Rule 2-01 of Regulation S-X requires that auditors be independent of their audit clients 

both in fact and appearance. Rule 2-01(c) of Regulation S-X provides that an auditor is not 

independent if, at any point during the audit and professional engagement period, the audit firm 

provides certain non-audit services to the client. CSH however, violated those independence 

2 Rule 102(e)(1)(ii) provides, in pertinent part, that:

The Commission may . . . deny, temporarily or permanently, the privilege of appearing or 

practicing before it . . . to any person who is found . . . to have engaged in unethical or 

improper professional conduct.

3 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 

binding on any other person or entity in this or any other proceeding.
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standards because it audited and prepared the financial statements and provided bookkeeping 

services to Lordstown during the audit and professional engagement period. By doing so, CSH 

violated Rule 2-02(b) of Regulation S-X and caused Lordstown’s violations of Sections 13(a) 

and 14(a) of the Exchange Act, and Rules 13a-1 and 14a-3 thereunder. CSH’s conduct also 

constituted improper professional conduct pursuant to Section 4C of the Exchange Act and Rule 

102(e)(1)(ii) of the Commission’s Rules of Practice.

B. RESPONDENT

CSH, headquartered in Cincinnati, Ohio, is an accounting and advisory firm. CSH is 

registered with the Public Company Accounting Oversight Board (“PCAOB”).

C. RELEVANT ENTITY

Lordstown Motors Corp. is a Delaware corporation with its principal place of business in 

Lordstown, Ohio. Lordstown’s common stock was registered with the Commission under 

Exchange Act Section 12(b), and at all relevant times it was required to file periodic reports with 

the Commission pursuant to Section 13(a).

D. FACTS

1. On January 17, 2020, Lordstown, then a private company, engaged CSH to audit 

Lordstown’s 2019 financial statements under GAAS and to provide financial statement 

preparation services. During the course of the work that took place from January 17 to May 14, 

2020, CSH also calculated Lordstown’s stock compensation expense and prepared notes to the 

financial statements.

2. At the conclusion of the audit, on May 14, 2020, CSH issued an audit report 

containing an opinion under GAAS for Lordstown’s 2019 financial statements.

3. On July 1, 2020, in connection with Lordstown’s anticipated merger transaction 

with DiamondPeak, CSH and Lordstown entered into a new engagement letter to audit 

Lordstown’s 2019 financial statements under PCAOB standards. During the course of the 

PCAOB audit, Lordstown identified and corrected errors in the financial statements, including a

$271,103 understatement of stock compensation expense that was previously both prepared and 

audited by CSH during the GAAS audit.

4. On August 24, 2020, CSH issued an audit report containing an opinion on the 

revised 2019 financial statements under PCAOB standards. DiamondPeak’s August 24, 2020 

proxy statement included CSH’s August 24, 2020 audit opinion.

5. From 2020 through 2023, CSH consented for its August 24, 2020 audit opinion of 

Lordstown’s 2019 financial statements to be used in connection with Lordstown’s registration 

statements and periodic reports filed with the Commission.

6. The facts and circumstances in which an auditor will—and will not—be deemed 

independent are set forth in Rule 2-01 of Regulation S-X. Rule 2-01(c) provides a non-exclusive 
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list of specific relationships that render an accountant not independent. Rule 2-01(c)(4) states 

that an auditor will not be considered independent if it provides certain bookkeeping services for 

its audit client or if it prepares financial statements “that are filed with the Commission or that 

form the basis of financial statements filed with the Commission.” Further, PCAOB Rule 3520, 

Auditor Independence, requires an auditor to be independent of its client throughout the audit 

and professional engagement period and to comply with independence criteria established by the 

rules and regulations of the Commission. When CSH performed the audit of Lordstown’s 2019 

financial statements under PCAOB standards, CSH audited its own work and consequently 

lacked independence.

7. CSH’s audit report contained an unqualified opinion in which it represented that it 

had conducted an audit in accordance with PCAOB standards. By violating PCAOB 

independence standards, that representation was inaccurate. 

Violations 

8. Rule 2-02(b) of Regulation S-X prohibits auditors from falsely certifying that an 

audit report was conducted in accordance with PCAOB standards. PCAOB Rule 3520 requires 

that an auditor be independent of its client throughout the audit and professional engagement 

period and that an auditor comply with independence criteria established by the rules and 

regulations of the Commission. 

9. Section 13(a) of the Exchange Act and Rule 13a-1 thereunder require issuers with 

securities registered under Section 12 of the Exchange Act to file annual reports with the 

Commission. Annual Reports on Form 10-K must include financial statements meeting the 

requirements of Regulation S-X, which require an audit of the financial statements by an 

independent accountant in accordance with PCAOB standards. See Rule 1-02(d) of Regulation 

S-X. The obligation to file such reports embodies the requirement that they be true and 

complete. See, e.g., SEC v. Savoy Indus., Inc., 587 F.2d 1149, 1165 (D.C. Cir. 1978), cert. 

denied, 440 U.S. 913 (1979). 

10. Section 14(a) of the Exchange Act and Rule 14a-3 set forth the information to be 

provided by issuers of securities registered pursuant to Section 12 of the Exchange Act in proxy 

solicitations. Item 13 of Exchange Act Rule 14a-101 requires that financial statements meeting 

the requirements of Regulation S-X be furnished with Schedule 14. Proxy material disclosure is 

required to be accurate and complete. Lichtenberg v. Besicorp, 43 F. Supp. 2d 376, 393 

(S.D.N.Y. 1999). 

Findings

11. Based on the foregoing, the Commission finds that CSH engaged in improper 

professional conduct pursuant to Section 4C(a)(2) of the Exchange Act and Rule 102(e)(1)(ii) of 

the Commission’s Rules of Practice.

12. Based on the foregoing, the Commission finds that CSH committed violations of 

Rule 2-02(b) of Regulation S-X.
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13. Based on the foregoing, the Commission finds that CSH caused Lordstown’s 

violations of Section 13(a) of the Exchange Act and Rule 13a-1 thereunder, and Section 14(a) of 

the Exchange Act and Rule 14a-3 thereunder. 

Disgorgement

The disgorgement and prejudgment interest ordered in paragraph IV.D. are consistent 

with equitable principles, do not exceed CSH’s net profits from its violations, and returning the 

money to Respondent would be inconsistent with equitable principles. Therefore, in these 

circumstances, distributing disgorged funds to the United States Treasury is the most equitable 

alternative. The disgorgement and prejudgment interest ordered in paragraph IV.D shall be 

transferred to the general fund of the United States Treasury, subject to Section 21F(g)(3) of the 

Exchange Act.

Undertakings

CSH has undertaken to: 

14. Retain, at its own expense, an independent consultant (the “Independent 

Consultant”), not unacceptable to the staff of the Commission, within 120 days after the entry of 

this Order. Within the time periods specified below, the Independent Consultant will review and 

evaluate (the “Review”) CSH’s audit, review, and quality control policies and procedures as to, 

among other aspects, their sufficiency, adequacy, design, implementation, and effectiveness 

applicable to the subjects set forth below. The Independent Consultant’s purpose for this Review 

will be to make recommendations for improvements to policies and procedures relating to the 

sufficiency, adequacy, design, implementation, and effectiveness of CSH’s current quality 

controls (“CSH’s Policies”) relating to educating and monitoring for compliance by its personnel 

with the independence requirements under PCAOB standards and Commission rules that prohibit 

the performance of certain non-audit services by CSH or its associated entities to CSH audit 

clients or their affiliates.

15. The Review shall be completed within 120 days of the retention of the 

Independent Consultant, and shall assess the following areas to determine whether the 

sufficiency, adequacy, design, implementation, and effectiveness of CSH’s Policies provide 

reasonable assurance of compliance with PCAOB and SEC independence rules concerning the 

provision of prohibited non-audit services by CSH or its associated entities to CSH audit clients 

or their affiliates:

(a) personnel and expertise within CSH, including with respect to 

independence issues; 

(b) CSH’s independence quality controls to prevent and detect prohibited nonaudit services, including monitoring systems designed to check conflicts and preventively 

consider independence issues across all CSH engagements;
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(c) CSH’s independence guidance and training of personnel, including 

education regarding independence issues related all CSH clients; and

(d) CSH’s policies, procedures, and controls regarding the issuance of consent 

letters to registrants for use of CSH’s audit opinions in SEC filings.

16. Require the Independent Consultant to make recommendations for any necessary 

changes or improvements to CSH’s Policies.

17. Provide a copy of the engagement letter within 14 days of the date of retention of 

the Independent Consultant detailing the Independent Consultant’s responsibilities to the 

Commission staff.

18. Cooperate fully with the Independent Consultant and provide the Independent 

Consultant with access to its own files, books, records, and personnel as reasonably requested for 

the Review. CSH shall require the Independent Consultant to report to the Commission staff on 

their activities as the staff may request.

19. Require that the Independent Consultant issue a report (the “Report”), within 60 

days of completing the Review, summarizing the Review and reporting on the findings and any 

recommendations regarding CSH’s Policies. Simultaneously with providing the Report to CSH, 

the Independent Consultant shall transmit a copy to Jeff Leasure, Assistant Director, Division of 

Enforcement, Securities and Exchange Commission, 100 F Street N.E., Washington, DC 20549.

20. CSH will adopt all recommendations in the Report within 120 days from the date 

the Report is issued; however, within 30 days after the Independent Consultant serves the Report, 

CSH shall advise the Independent Consultant and the Commission, in writing of any 

recommendations that it considers unnecessary, unduly burdensome, impractical, or unjustifiably 

costly. With respect to any recommendation that CSH considers unnecessary, unduly 

burdensome, impractical, or unjustifiably costly, CSH need not adopt that recommendation at 

that time but shall propose in writing an alternative policy, procedure, or system designed to 

achieve the same objective or purpose. As to any recommendation on which CSH and the 

Independent Consultant do not agree, such parties shall attempt in good faith to reach an 

agreement within 30 days after CSH serves the written advice. In the event that CSH and the 

Independent Consultant are unable to agree on an alternative proposal, CSH will either abide by 

the determinations of the Independent Consultant or seek approval from the Commission staff 

pursuant to paragraph 24 below to engage, at CSH’s expense, a qualified third party acceptable 

to the Commission staff to promptly resolve the issue(s).

21. For the period of engagement and for a period of two years from completion of 

the engagement, CSH shall not (i) retain the Independent Consultant for any other professional 

services outside of the services described in this Order; (ii) enter into any other professional

relationship with the Independent Consultant, including any employment, consultant, attorneyclient, auditing, or other professional relationship; or (iii) enter, without prior written consent of 

the Commission staff, into any such professional relationship with any of the Independent 

Consultant’s present or former affiliates, employers, directors, officers, employees, or agents 
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acting in their capacity as such.

22. To ensure the independence of the Independent Consultant, CSH: (1) shall not 

have the authority to terminate the Independent Consultant or substitute another independent 

consultant for the initial Independent Consultant without the prior written approval of the 

Commission staff; and (2) shall compensate the Independent Consultant and persons engaged to 

assist the Independent Consultant for services rendered pursuant to this Order at their reasonable 

and customary rates.

23. CSH shall certify, in writing, compliance with the undertaking(s) set forth above. 

The certification shall identify the undertaking(s), provide written evidence of compliance in the 

form of a narrative, and be supported by exhibits sufficient to demonstrate compliance. The 

Commission staff may make reasonable requests for further evidence of compliance, and CSH 

agrees to provide such evidence. The certification and supporting material shall be submitted to 

Jeff Leasure, Assistant Director, Division of Enforcement at the address provided above, with a 

copy to the Office of Chief Counsel of the Division of Enforcement, no later than sixty (60) days 

from the date of the completion of the undertakings.

24. The reports by the Independent Consultant will likely include confidential 

financial, proprietary, competitive business or commercial information. Public disclosure of the 

reports could discourage cooperation, impede pending or potential government investigations, or 

undermine the objectives of the reporting requirement. For these reasons, among others, the 

reports and the contents thereof are intended to remain and shall remain non-public, except (1) 

pursuant to court order, (2) as agreed to by the parties in writing, (3) to the extent that the 

Commission determines in its sole discretion that disclosure would be in furtherance of the 

Commission’s discharge of its duties and responsibilities, or (4) as otherwise required by law.

25. For good cause shown, the Commission staff may extend any of the dates set 

forth above. Deadlines for dates shall be counted in calendar days, except if the last day falls on 

a weekend or federal holiday, the next business day shall be considered the last day.

26. CSH agrees that if the Division of Enforcement believes that CSH has not 

satisfied these undertakings, it may petition the Commission to reopen the matter to determine 

whether additional sanctions are appropriate.

IV.

In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent CSH’s Offer.

Accordingly, it is hereby ORDERED that:

A. CSH is censured.

B. CSH shall cease and desist from committing or causing any violations and any 

future violations of Rule 2-02(b) of Regulation S-X, Section 13(a) of the Exchange Act and Rule 

13a-1 thereunder; and Section 14(a) of the Exchange Act and Rule 14a-3 thereunder.
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C. CSH shall comply with the undertakings enumerated in paragraphs 14-26 above. 

D. CSH shall, within ten (10) days of the entry of this Order, pay disgorgement of 

$27,822 and prejudgment interest of $3,059 to the Securities and Exchange Commission for 

transfer to the general fund of the United States Treasury, subject to Exchange Act Section 

21F(g)(3). If timely payment is not made, additional interest shall accrue pursuant to SEC Rule 

of Practice 600.

E. CSH shall, within ten (10) days of the entry of this Order, pay a civil money 

penalty, in the amount of $50,000.00, to the Securities and Exchange Commission for transfer to 

the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If 

timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717. 

Payment must be made in one of the following ways: 

(1) Respondent may transmit payment electronically to the Commission, which will 

provide detailed ACH transfer/Fedwire instructions upon request; 

(2) Respondent may make direct payment from a bank account via Pay.gov through 

the SEC website at http://www.sec.gov/about/offices/ofm.htm; or 

(3) Respondent may pay by certified check, bank cashier’s check, or United States 

postal money order, made payable to the Securities and Exchange Commission and 

hand-delivered or mailed to:

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

Payments by check or money order must be accompanied by a cover letter identifying 

CSH as a Respondent in these proceedings, and the file number of these proceedings; a copy of 

the cover letter and check or money order must be sent to D. Mark Cave, Associate Director, 

Division of Enforcement, Securities and Exchange Commission, 100 F St., N.E., Washington, 

DC 20549-6011. 

F. Amounts ordered to be paid as civil money penalties pursuant to this Order shall 

be treated as penalties paid to the government for all purposes, including all tax purposes. To 

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 

Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

penalty in this action (“Penalty Offset”). If the court in any Related Investor Action grants such 

a Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order 

granting the Penalty Offset, notify the Commission’s counsel in this action and pay the amount 

of the Penalty Offset to the Securities and Exchange Commission. Such a payment shall not be 

deemed an additional civil penalty and shall not be deemed to change the amount of the civil 
9

penalty imposed in this proceeding. For purposes of this paragraph, a “Related Investor Action”

means a private damages action brought against Respondent by or on behalf of one or more 

investors based on substantially the same facts as alleged in the Order instituted by the 

Commission in this proceeding.

By the Commission.

Vanessa A. Countryman 

Secretary