Business

SEC charges fraud against Trump media auditors

An accounting firm that audits the financial statements of hundreds of publicly traded companies, including former President Donald J. Trump’s social media company, can no longer do so, U.S. securities regulators said Friday.

The Securities and Exchange Commission accused the company of BF Borgers, with fraud, on the grounds that it violated accounting regulations. In settling with the SEC, the company agreed to immediately stop filing audited returns on behalf of its customers.

The regulator blamed BF Borgers and its owner Benjamin F. Borgers for “deliberate and systemic failures” to comply with accounting standards. The accompanying settlement requires both the Company and Mr. Borgers to pay civil penalties totaling $14 million. Many companies that have used BF Borgers now have to find new auditors.

Trump Media & Technology Group, the parent company of the Truth Social platform, has been a customer of BF Borgers since 2022, according to regulatory filings. But for most of that time, Trump Media was a private company.

Trump Media only went public in March after completing its merger with a cash-rich shell company. Although the company is not mentioned in connection with the deal with BF Borgers, shares of Trump Media fell about 7 percent on the news, but ended the day down just 1.5 percent.

Trump Media said in a statement that it “looks forward to working with new audit partners consistent with today’s SEC order.”

In announcing the enforcement action and settlement, the SEC said that Colorado-based BF Borgers had audited hundreds of publicly traded companies. According to regulators, the breaches affected more than 1,500 company registrations.

Gurbir S. Grewal, the SEC’s director of enforcement, called the failures at BF Borgers “one of the biggest gatekeeper failures in our financial markets.”

The SEC said it found that the accounting firm sometimes copied work it had previously done for clients and simply changed the dates of the filings. According to the supervisory authorities, the company “wrongly documented work that had not been carried out”.

Accounting firms play a critical role on Wall Street and are tasked with ensuring that a publicly traded company’s financial reports are accurate and in order. When making investment decisions, investors rely on financial statements that have been audited and certified by accounting firms.

The SEC press release said there was “no known defense attorney” for BF Borgers. In settling with the SEC, the accounting firm and Mr. Borgers neither admitted nor denied the allegations.

The SEC gave listed companies instructions on how to respond to the settlement. In the fileAccording to the regulator, companies must file a regulatory notice when an accounting firm resigns or is fired.

Source link