Commentary and editing must never be used to give the audience a materially misleading impression of events or a contribution.

Legal representatives for Pat Riley have called a newspaper report on the Knicks' tampering charge against the Miami Heat "incomplete and materially misleading."

This resulted in the accounts to 31 March 1989, which were given a clean audit report, being materially misleading.

The suit also alleges the company gave the "materially misleading impression" that it could cover its debt obligations without the sale of assets.

"The order alleges that the information given to investors was materially misleading," Paul Maco, director of the municipal securities division at the S.E.C., said.

And the commission threatened to make companies take the embarrassing step of restating published earnings in cases where it deemed their research write-offs to be "materially misleading."

The plaintiffs claimed that research reports recommending the purchase of shares were materially misleading.

These statements were all materially misleading.

(Valukas said Lehman's accounting was "materially misleading," and he accused the firm of "actionable balance sheet manipulation.")

"If there is something out there, which if not corrected would be materially misleading, then the company has a duty to correct it," Mr. Lowenfels said.