SEC Charges FTX Auditor for Helping Clients Violate Securities Laws
The
U.S. Securities and Exchange Commission (SEC) announced charges against an accounting firm that worked for
failed cryptocurrency exchange FTX. The company,
Prager Metis, has been accused of facilitating clients in breaking federal securities laws and also
auditor independence violations.
In its complaint, filed in the U.S.
District Court for the Southern District of Florida, the SEC claims that between
December 2017 and October 2020 Prager included indemnification
provisions in engagement letters for more than
200 audits, reviews, and exams.
According to the Commission,
Prager Metis continued to sign engagement letters with indemnification provisions and issued
“accountant’s reports” in which it purported to be
independent, despite regulators repeatedly notifying its senior partners that this practice rendered the firm not independent.
According to a press release published Friday, the
complaint seeks a permanent injunction, disgorgement plus prejudgment interest, and a civil monetary penalty against
Prager.
While the announcement does not mention FTX or other customers of the accounting firm,
the bankrupt crypto exchange claimed before its November 2022 collapse that its 2021 financial results had been audited by Prager Metis and another company claiming crypto expertise, Armanino.
