SEC, Securities and Exchange Commission, filed a lawsuit against Prager Metis CPAs, a firm that previously offered accounting services to the now-bankrupt FTX bitcoin exchange. The United States SEC charges Prager Metis with auditor independence violations, raising industry concerns.
The SEC stated on 29 September that Prager Metis could not maintain the required independence while performing client audits, including FTX. Legislation governing auditor independence requires a strict division between accounting and audit responsibilities to avoid conflicts of interest.
According to the SEC, from December 2017 to October 2020, Prager Metis incorporated compensation language over 200 contracted letters for audits and other services, which violated auditor independence requirements. Requests for comment have yet to receive a response from the international accounting firm.
The Securities and Exchange Commission’s statement doesn’t mention FTX or other customers. However, it highlights that these alleged violations occurred over three years and reportedly resulted in “hundreds” of violations of auditor independence rules.
SEC Pursues Prager Metis with Fines and Disgorgement
The Security and Exchange Commission has filed a complaint in the Southern District Court of Florida against Prager Metis, alleging violations of the federal securities laws about auditor independence and aiding clients in such violations. The SEC seeks to hold accountable through disgorgement of funds, prejudgment interest, and civil monetary fine.
A dedicated team of SEC investigators, including Drew D. Panahi, Michelle Bosworth, and Carol Der Garry, actively and innovatively pursued this investigation. Their efforts are under the direction of Thierry Olivier Desmet, Glenn S. Gordon, and Fernando Torres, who oversee operations at the Miami Regional Office.
Based at the Miami Regional Office, Christine Nestor is leading the SEC’s legal actions and ensuring their effective execution of all required legal proceedings. Teresa Verges plays a crucial role in supervising these legal actions, and this team is committed to ensuring accountability in this case.
John J. Ray III, the current CEO of FTX, had concerns about the accuracy of the audited financial accounts on January 25 before a bankruptcy court. Senators Elizabeth Warren and Ron Wyden are also concerned about Prager Metis’ integrity, stating that it served as an advocate for the cryptocurrency sector.
Discalimer:
“The author’s views are for reference only and shall not constitute investment advice. Please ensure you fully understand and assess the products and associated risks before purchasing.”
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