Former FTX Accountant Prager Metis Sued By SEC

Former FTX accountant Prager Metis was sued by the US Securities and Trade Fee (SEC) for violating auditor independence guidelines and aiding and abetting its purchasers’ violations of federal securities legal guidelines.

Prager Metis improperly included indemnification provisions in engagement letters for greater than 200 audits, critiques, and exams between roughly December 2017 and October 2020, the SEC stated. Prager thus failed to keep up its independence from its purchasers as required underneath federal securities legal guidelines, it added

“Over a interval of almost three years, Prager’s audits, critiques, and exams fell wanting these basic ideas,” it stated. “Auditor independence is essential to investor safety.”

At the moment we introduced costs towards worldwide accounting agency Prager Metis for committing a whole lot of auditor independence violations. https://t.co/P7mBzw96x6

— U.S. Securities and Trade Fee (@SECGov) September 29, 2023

The SEC additional alleged that Prager Metis continued to signal engagement letters containing indemnification provisions and in addition issued “accountant’s studies” through which it presupposed to be impartial in reference to its audits and exams, even after Prager’s senior companions repeatedly have been notified that inclusion of indemnification provisions in engagement letters rendered Prager not impartial.

Lots of Prager Metis’s purchasers included these “accountant’s studies” of their filings with the SEC, it stated. Prager allegedly additionally didn’t advise its purchasers of its violations, even after the Public Firm Accounting Oversight Board knowledgeable Prager Metis that the indemnification provisions violated the independence necessities of the federal securities legal guidelines, it added.

Prager Metis Ties to FTX

Whereas the present allegations and lawsuit don’t point out the agency’s reference to FTX, a earlier court docket submitting stated that Prager Metis “facilitated the FTX Group enterprise by giving Bankman-Fried’s entities clear payments of well being, which Bankman-Fried used to persuade prospects and traders to belief him with their cash.”

Remember, Prager Metis is the agency that signed audit opinions for FTX buying and selling in Bahamas for 2020 and 2021. A now-deleted put up on the corporate’s web site, revealed in June 2022 stated Prager Metis was “proud to assist FTX US.” https://t.co/QALoR0IOVf

— Francine McKenna (@retheauditors) September 29, 2023

The grievance added that Prager Metis ought to have recognized that FTX would use its work to extend public belief since former FTX CEO Sam Bankman-Fried had publicly disclosed earlier FTX audit outcomes.

Whereas FTX filed for chapter in america with a $7 billion deficiency on its steadiness sheet in November, Prager Metis reported $1 billion in revenues for the 12 months 2021.

SEC Seeks Fantastic and Disgorgement

The SEC is looking for a everlasting injunction towards Prager Metis, a effective, and the forfeiture of earnings earned by from the enterprise.

In response, Prager Metis acknowledged that the corporate disagrees with the SEC’s claims and that they “solely arose from template indemnification language used a number of years in the past that was by no means enforced or sought to be enforced,” based on an electronic mail to the Wall Road Journal.

The accounting firm added that it’s going to defend itself in court docket.

Associated Articles

New Crypto Mining Platform – Bitcoin Minetrix

Audited By Coinsult
Decentralized, Safe Cloud Mining
Earn Free Bitcoin Each day
Native Token On Presale Now – BTCMTX
Staking Rewards – Over 10,000% APY