SEC prices auditor BF Borgers with fraud

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The auditing agency for Trump Media and the auditor’s proprietor have been charged Friday with “massive fraud” by the Securities and Exchange Commission for accounting work that affected greater than 1,500 SEC filings, the federal regulator introduced.

The auditor, BF Borgers CPA, and its proprietor, Benjamin Borgers, have agreed to be completely suspended from practising as accountants earlier than the SEC, and likewise agreed to pay a mixed $14 million in civil penalties, with out admitting or denying the allegations, the SEC mentioned.

The company, calling BF Borgers a “sham audit mill,” mentioned the corporate and its proprietor “intentionally systematically did not conduct” audits and quarterly opinions integrated in additional than 1,500 SEC filings from January 2021 by June 2023 in accordance with Public Firm Accounting Oversight Board requirements.

The SEC mentioned the Lakewood, Colorado-based auditor lied to shoppers by saying its work complied with PCAOB requirements, fabricated audit paperwork to make it appear that the work did adjust to these requirements, and falsely claims in audit experiences included in additional than 500 public firm SEC filings that the agency’s audits complied with such requirements.

BF Borgers through the interval lined by the SEC criticism acted because the auditor for Trump Media, which was then privately held and transferring towards a deliberate merger with the publicly traded shell firm Digital World Acquisition Corp.

Trump Media and DWAC finalized that merger in late March 2024, resulting in Trump Media changing into publicly traded underneath the DJT ticker.

Three days after the corporate went public, Trump Media’s board accepted maintaining BF Borgers on as the corporate’s auditors for 2024.

BF Borgers Places of work in Lakewood, Colorado.

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“Ben Borgers and his audit agency, BF Borgers, have been answerable for one of many largest wholesale failures by gatekeepers in our monetary markets,” the SEC’s enforcement division director, Gurbir Grewal, mentioned in a press release.

“Because of their fraudulent conduct, they not solely put buyers and markets in danger by inflicting public corporations to include noncompliant audits and opinions into greater than 1,500 filings with the Fee, but in addition undermined belief and confidence in our markets,” Grewal mentioned.

BF Borgers didn’t instantly reply to requests for remark by CNBC.

The bombshell SEC motion raised questions concerning the accuracy of the monetary data in hundreds of experiences that have been issued by the businesses Borgers audited, together with Trump Media, whose majority shareholder is former President Donald Trump.

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These experiences, filed often with the SEC, present important data that buyers and analysts use to judge corporations whose inventory trades on public markets.

The SEC mentioned that experiences filed by corporations that used BF Borgers as its auditors “don’t essentially have to be amended solely due to the Fee’s entry of the Order.”

“Nonetheless, issuers ought to contemplate whether or not their filings might have to be amended to handle any reporting deficiencies arising from the BF Borgers engagement,” the SEC mentioned, whereas additionally noting that corporations that had used Borgers now have to discover a new certified public accountant.

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As of Friday morning, the investor relations web page on Trump Media’s website nonetheless listed BF Borgers because the impartial auditor of the corporate.

However Trump Media spokeswoman Shannon Devine advised CNBC, “Trump Media appears ahead to working with new auditing companions in accordance with at the moment’s SEC order.”

The share worth of Trump Media, which owns the Reality Social app, on Friday was down as a lot as 9% earlier than paring again that loss to a decline of 1.7%.

Further reporting by CNBC’s Brian Schwartz.

Correction: The auditor, BF Borgers CPA, and its proprietor, Benjamin Borgers, agreed to pay a mixed $14 million in civil penalties, with out admitting or denying the allegations, the SEC mentioned. An earlier model misstated the phrases.

That is breaking information. Please test again for updates.

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