KPMG Must Face the Music, SEC Style
The issue behind this ruling has to do with the circumstances under which KPMG provided services to Porta Systems, a Long Island company with which KPMG had more than an auditor/client relationship. As reported  in January, KPMG was providing administrative services to the company while conducting an audit of the company. In addition, there was a $100,000 loan outstanding from KPMG to the president of Porta Systems.
KPMG contested the SEC's cease and desist order, claiming the SEC disregarded its own standards in applying the order. In addition, KPMG argued that the SEC's conclusion that a likelihood of similar future violations exists was devoid of any evidence or support. The SEC found no merit in KPMG's arguments, and denied KPMG's motion for reconsideration.
You can read the full text  of the SEC's order.