Prager Metis Settles With SEC for $1.95 Million

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• Prager Metis and its California affiliate like agreed to pay $1.95 million to solve SEC allegations associated to their audits of FTX and auditor independence violations
• The SEC claims Prager issued deceptive audit experiences for FTX and no longer effectively-known needed dangers associated to the crypto platform
• The settlement entails penalties, everlasting injunctions, and a requirement for Prager to sustain an self reliant book to evaluation its audit practices

Prager Metis CPAs, LLC and its California counterpart like agreed to pay $1.95 million to determine two SEC enforcement actions. The allegations comprise misrepresenting their audits of the now-defunct FTX crypto shopping and selling platform and violating auditor independence solutions. The SEC claims that Prager’s audits of FTX were conducted with out ample care, leaving merchants at threat of fraud. Apart from to financial penalties, Prager should enforce remedial actions equivalent to maintaining an self reliant book.

Business SEC Accuses Prager of Negligence

The SEC’s complaints heart on Prager’s audits of FTX between February 2021 and April 2022. Basically based fully on the SEC, Prager falsely claimed compliance with Most continuously Authorized Auditing Standards (GAAS) in its experiences, despite vital screw ups in its processes.

“Prager failed to assess whether it had the competency and sources to audit FTX,” the SEC’s tale talked about. This negligence prolonged to Prager’s incapacity to acknowledge the dangers posed by FTX’s ties to Alameda Analysis, a hedge fund managed by FTX’s CEO, additional jeopardizing merchants.

Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, emphasized the broader consequences of Prager’s screw ups, announcing, “FTX merchants lacked needed protections…they were defrauded out of billions of dollars when FTX collapsed.” Grewal also highlighted the settlement’s significance in reinforcing auditor accountability, announcing it serves as a “warning to audit experts no longer precisely assembly their gatekeeping responsibilities.”

Business Prager Doesn’t Admit to Faults

Prager has no longer admitted or denied the SEC’s findings however has agreed to a assortment of penalties and preventive measures, in conjunction with a $745,000 civil penalty and a requirement to hire an self reliant book to evaluation and change its audit insurance policies. Additionally, the company will face restrictions on accepting new audit purchasers, subject to court approval.

The SEC also announced that Prager had settled earlier costs for violating auditor independence solutions: between 2017 and 2020, Prager allegedly included unsightly indemnification provisions in over 200 audits, undermining its required independence from purchasers. For these violations, Prager has agreed to pay an additional $1 million in combined penalties and disgorgement, alongside additional compliance measures.