Prager Metis Settles With SEC for $1.95 Million

By Mark Hunter

5 days agoWed Sep 18 2024 07:34:43

Checking out Time: 2 minutes

• Prager Metis and its California affiliate have actually consented to pay $1.95 million to deal with SEC accusations associated to their audits of FTX and auditor self-reliance infractions
• The SEC declares Prager released deceptive audit reports for FTX and overlooked important threats connected with the crypto platform
• The settlement consists of charges, long-term injunctions, and a requirement for Prager to maintain an independent expert to examine its audit practices

Prager Metis CPAs, LLC and its California equivalent have actually consented to pay $1.95 million to settle 2 SEC enforcement actions. The accusations consist of misrepresenting their audits of the now-defunct FTX crypto trading platform and breaking auditor self-reliance guidelines. The SEC declares that Prager’s audits of FTX were carried out without adequate care, leaving financiers susceptible to scams. In addition to punitive damages, Prager should execute therapeutic actions such as maintaining an independent expert.

SEC Accuses Prager of Negligence

The SEC’s grievances center on Prager’s audits of FTX in between February 2021 and April 2022. According to the SEC, Prager incorrectly declared compliance with Generally Accepted Auditing Standards (GAAS) in its reports, regardless of considerable failures in its procedures.

“Prager stopped working to examine whether it had the proficiency and resources to examine FTX,” the SEC’s report specified. This carelessness reached Prager’s failure to acknowledge the threats presented by FTX’s ties to Alameda Research, a hedge fund managed by FTX’s CEO, additional threatening financiers.

Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, highlighted the more comprehensive repercussions of Prager’s failures, stating, “FTX financiers did not have vital securities … they were defrauded out of billions of dollars when FTX collapsed.” Grewal likewise highlighted the settlement’s significance in enhancing auditor responsibility, stating it functions as a “alerting to investigate experts not properly fulfilling their gatekeeping commitments.”

Prager Doesn’t Admit to Faults

Prager has actually not confessed or rejected the SEC’s findings however has actually consented to a series of charges and preventive steps, consisting of a $745,000 civil charge and a requirement to work with an independent specialist to evaluate and upgrade its audit policies. In addition, the company will deal with constraints on accepting brand-new audit customers, based on court approval.

The SEC likewise revealed that Prager had actually settled previous charges for breaching auditor self-reliance guidelines: in between 2017 and 2020, Prager supposedly consisted of inappropriate indemnification arrangements in over 200 audits, weakening its needed self-reliance from customers. For these offenses, Prager has actually consented to pay an extra $1 million in integrated charges and disgorgement, along with additional compliance steps.

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