Prager Metis CPAs has settled with the SEC for $1.95 million over allegations of audit negligence and violations of auditor independence rules in its audits of crypto exchange FTX.
Settlement Details and Background
FTX’s auditor, Prager Metis CPAs, has agreed to a $1.95 million settlement with the U.S. Securities and Exchange Commission (SEC). This settlement comes after allegations of misconduct during the former’s audits of the crypto exchange FTX from February 2021 to April 2022. The SEC’s investigation found evidence of negligence and violations of auditor independence rules in these audits.
Charges and Misconduct
The SEC’s investigation revealed that Prager Metis misrepresented its adherence to Generally Accepted Auditing Standards (GAAS) in the audit reports for FTX. Additionally, the firm failed to report significant risks associated with FTX’s ties to Alameda Research. This lack of due diligence in the auditing process led to negligence-based fraud charges.
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