FTX’s Accounting Firm Prager Metis to Pay SEC $1.95M to Settle Negligence Allegations
International accounting firm Prager Metis has agreed to pay $745,000 to settle misconduct allegations from the U.S. Securities and Exchange Commission (SEC) tied to its bungled audit of FTX before its collapse in November 2022
The international accounting firm will pay $745,000 to settle the FTX-related allegations alone.
International accounting firm Prager Metis has agreed to pay $745,000 to settle misconduct allegations from the U.S. Securities and Exchange Commission (SEC) tied to its bungled audit of FTX before its collapse in November 2022.
The settlement, announced Tuesday, also included a resolution to a second SEC investigation into Prager Metis, which accused the firm of violating auditor independence rules in the audits of over 200 companies between 2017 and 2020. Prager Metis agreed to pay $1.2 million in civil penalties and pre-judgment interest to settle those charges. The settlement is subject to court approval.
The SEC’s complaint accused the accounting firm of negligence-based fraud. In the two audit reports Prager Metis produced for FTX in 2021 and 2022, the SEC alleges that the firm falsely represented that the audits were compliant with Generally Accepted Auditing Standards (GAAS), when in fact, the firm “fail[ed] to comply with GAAS in multiple aspects of the audit.”
According to the SEC, Prager Metis essentially got in over its head with FTX, “not adequately assessing whether it had the competency and resources to undertake the audit” of the crypto exchange.
