Prager Metis CPAs has agreed to pay $1.95 million to settle two U.S. Securities and Change Fee (SEC) actions alleging misconduct in its audits of FTX and violations of auditor independence guidelines, based on a Sept. 17 assertion.
The settlement addresses negligence-based fraud prices associated to FTX audits and separate prices for violating auditor independence guidelines.
Jorge G. Tenreiro, Performing Chief of the SEC’s Crypto Property and Cyber Unit, emphasised:
“As soon as extra we see an entity, lured by the siren music of the crypto asset markets, reducing corners on its obligations to adjust to the regulation.”
The SEC claims Prager misrepresented compliance with Typically Accepted Auditing Requirements (GAAS) in two FTX audit studies from February 2021 to April 2022.
Moreover, the agency allegedly didn’t assess its competency for the FTX audit and didn’t perceive the dangers related to the trade’s relationship with Alameda Analysis.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, added that Prager’s audits had been carried out with out due care, leading to FTX buyers missing essential protections when making their funding choices.
With out admitting or denying the findings, Prager agreed to everlasting injunctions, a $745,000 civil penalty for the FTX-related prices, and remedial actions, together with an impartial guide overview of its audit procedures.
In a separate settlement, the Prager Entities agreed to resolve earlier prices of violating auditor independence guidelines, paying $1 million in civil penalties and $205,000 in disgorgement with prejudgment curiosity.
The settlements are topic to court docket approval, and the SEC’s investigation into Prager’s FTX audits is ongoing.