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UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK SECURITIES AND EXCHANGE COMMISSION,
450 Fifth St., N.W.
Washington, D.C. 20549,

Plaintiff,

v.

KPMG LLP, JOSEPH T. BOYLE, MICHAEL A.
CONWAY, ANTHONY P. DOLANSKI, RONALD
A. SAFRAN and THOMAS J. YOHO

Defendant. | )
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Civil Action No.
03 CV 0671 (DLC)

FIRST AMENDED
COMPLAINT
SECURITIES FRAUD

Jury Trial Demanded |
The Securities and Exchange Commission ("the Commission") alleges for its First Amended Complaint as follows:1. Defendants KPMG LLP ("KPMG") and certain KPMG partners permitted Xerox Corporation ("Xerox") to manipulate its accounting practices and fill a $3 billion "gap" between actual operating results and results reported to the investing public from 1997 through 2000. The fraudulent scheme allowed Xerox to claim it met performance expectations of Wall Street analysts, to mislead investors and, consequently, to boost the company's stock price. The KPMG defendants were not the watch dogs on behalf of shareholders and the public that the securities laws and the rules of the auditing profession required them to be. Instead of putting a stop to Xerox's fraudulent conduct, the KPMG defendants themselves engaged in fraud by falsely representing to the public that they had applied professional auditing standards to their review of Xerox's accounting, that Xerox's financial reporting was consistent with Generally Accepted Accounting Principles ("GAAP") and that Xerox's reported results fairly represented the financial condition of the company. There was no watchdog at Xerox. KPMG's bark sounded no warning to investors; its bite was toothless.2. KPMG's foreign affiliates in Europe, Brazil, Canada and Japan, and even KPMG auditors at Xerox's U.S.