1 year ago
The U.S. SEC has filed charges against planetary accounting steadfast Prager Metis CPAs for a multitude of alleged auditor independency violations and purportedly contributing to its clients’ breaches of national securities laws.
Prager Metis served arsenic the auditor for the now-bankrupt cryptocurrency speech FTX Group 2021, and existent FTX CEO John Ray III has antecedently expressed important apprehensions astir the validity of accusation successful the audits conducted by the firm.
However, the violations mentioned successful the filings reportedly spanned from December 2017 to October 2020, and the SEC has not straight mentioned FTX successful the filing.
Prager Metis told Reuters successful a connection that it intends to “vigorously support itself successful court.” The steadfast added:
“These allegations originate solely from template indemnification connection utilized respective years agone that was ne'er enforced oregon sought to beryllium enforced, and the SEC does not allege this connection affected the prime of our audits.”
Alleged Violations
The SEC claims that Prager Metis incorporated indemnification provisions successful engagement letters successful implicit 200 audits, reviews, and exams — a signifier that reportedly compromises auditor independency according to national securities laws.
The regulator wrote successful the filing:
“As alleged successful our complaint, implicit a play of astir 3 years, Prager’s audits, reviews, and exams fell abbreviated of these cardinal principles. Our ailment is an important reminder that auditor independency is important to capitalist protection.”
These provisions were allegedly continued, contempt elder partners astatine Prager Metis being alerted that specified inclusion impaired their autarkic status. Many of these reports were included successful filings with the SEC, and Prager Metis allegedly neglected to pass its clients of the violations.
U.S. Senators Elizabeth Warren and Ron Wyden person besides aired worries regarding Prager Metis’ objectivity, speculating that the steadfast acted much arsenic an advocator for the crypto manufacture alternatively than maintaining impartiality.
Legal Implications
The SEC’s ineligible complaint, lodged successful the U.S. District Court for the Southern District of Florida, is seeking a imperishable injunction, disgorgement positive prejudgment interest, and a civilian monetary punishment against Prager Metis for the alleged violations.
The ongoing probe by the SEC underscores the agency’s committedness to maintaining the integrity of fiscal reporting and enforcing auditor independency to bolster nationalist trust.
The lawsuit is simply a reminder of the important relation of auditor independency successful securing capitalist extortion and maintaining the reliability of fiscal disclosures, particularly successful industries specified arsenic cryptocurrency, which are nether accrued scrutiny.
The station SEC files charges against erstwhile FTX auditor Prager Metis implicit independency violations appeared archetypal connected CryptoSlate.
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