The U.S. SEC has filed expenses towards international accounting agency Prager Metis CPAs for a mess of alleged auditor independence violations and purportedly contributing to its shoppers’ breaches of federal securities legal guidelines.
Prager Metis served because the auditor for the now-bankrupt cryptocurrency alternate FTX Group 2021, and present FTX CEO John Ray III has beforehand expressed vital apprehensions concerning the validity of data within the audits performed by the agency.
Nevertheless, the violations talked about within the filings reportedly spanned from December 2017 to October 2020, and the SEC has circuitously talked about FTX within the submitting.
Prager Metis informed Reuters in a press release that it intends to “vigorously defend itself in court docket.” The agency added:
“These allegations come up solely from template indemnification language used a number of years in the past that was by no means enforced or sought to be enforced, and the SEC doesn’t allege this language affected the standard of our audits.”
The SEC claims that Prager Metis included indemnification provisions in engagement letters in over 200 audits, opinions, and exams — a apply that reportedly compromises auditor independence in line with federal securities legal guidelines.
The regulator wrote within the submitting:
“As alleged in our grievance, over a interval of almost three years, Prager’s audits, opinions, and exams fell wanting these basic ideas. Our grievance is a crucial reminder that auditor independence is essential to investor safety.”
These provisions had been allegedly continued, regardless of senior companions at Prager Metis being alerted that such inclusion impaired their unbiased standing. Many of those studies had been included in filings with the SEC, and Prager Metis allegedly uncared for to tell its shoppers of the violations.
U.S. Senators Elizabeth Warren and Ron Wyden have additionally aired worries relating to Prager Metis’ objectivity, speculating that the agency acted extra as an advocate for the crypto business moderately than sustaining impartiality.
The SEC’s authorized grievance, lodged within the U.S. District Courtroom for the Southern District of Florida, is looking for a everlasting injunction, disgorgement plus prejudgment curiosity, and a civil financial penalty towards Prager Metis for the alleged violations.
The continued investigation by the SEC underscores the company’s dedication to sustaining the integrity of economic reporting and imposing auditor independence to bolster public belief.
The case is a reminder of the essential function of auditor independence in securing investor safety and sustaining the reliability of economic disclosures, particularly in industries akin to cryptocurrency, that are beneath elevated scrutiny.
The submit SEC information expenses towards former FTX auditor Prager Metis over independence violations appeared first on CryptoSlate.