The SEC alleged that the auditor failed to comply with auditing standards and establish connections between FTX and Alameda Research.
The auditor violated rules while auditing over 200 companies between 2017 and 2020.
Prager Metis, the accounting firm that audited FTX, has agreed to pay $745,000 in civil penalties to settle misconduct allegations brought by the Securities and Exchange Commission (SEC) in connection with its audits of the now-collapsed crypto exchange.
Repeated Violations by the Auditor
The auditor further agreed to pay another $1.2 million for a second regulatory investigation into auditor independence rule violations during the audit of over 200 companies between 2017 and 2020. The amount includes $1 million in civil penalties and $205,000 in recovery and interest.
For its role with FTX, the US regulator highlighted negligence-based fraud in two audit reports for the crypto exchange: one produced in 2021 and the other in 2022. According to the SEC’s complaint, the audit firm falsely reported that the audits were conducted in accordance with Generally Accepted Auditing Standards (GAAS); however, it failed to comply with the framework in multiple aspects of the audit, along with its own policies and procedures.
The regulator additionally highlighted that the auditor failed to establish the connection between FTX and its sister crypto hedge fund, Alameda Research.
“To fulfil their role, auditors must, among other things, be independent, exercise due professional care and scepticism, and comply with all applicable professional standards,” said Gurbir Grewal, Director of the SEC's Division of Enforcement. “As we allege in these enforcement actions, Prager Metis fell short in all of these areas.”
$32B to $0 Overnight
FTX entered bankruptcy in November 2022, when it was valued at $32 billion. The crypto exchange’s collapse resulted from the shady business practices of its founder and former CEO, Sam Bankman-Fried, who did not even separate the funds of the customers and the business.
Bankman-Fried was convicted of seven criminal counts of fraud and conspiracy and was sentenced to 25 years in prison. His legal representatives recently appealed his conviction and sought a new trial.
“Because Prager’s audits of FTX were conducted without due care, FTX investors, for example, lacked crucial protections when making their investment decisions,” Grewal added. “Ultimately, they were defrauded out of billions of dollars by FTX and bore the consequences when FTX collapsed.”
Prager Metis, the accounting firm that audited FTX, has agreed to pay $745,000 in civil penalties to settle misconduct allegations brought by the Securities and Exchange Commission (SEC) in connection with its audits of the now-collapsed crypto exchange.
Repeated Violations by the Auditor
The auditor further agreed to pay another $1.2 million for a second regulatory investigation into auditor independence rule violations during the audit of over 200 companies between 2017 and 2020. The amount includes $1 million in civil penalties and $205,000 in recovery and interest.
For its role with FTX, the US regulator highlighted negligence-based fraud in two audit reports for the crypto exchange: one produced in 2021 and the other in 2022. According to the SEC’s complaint, the audit firm falsely reported that the audits were conducted in accordance with Generally Accepted Auditing Standards (GAAS); however, it failed to comply with the framework in multiple aspects of the audit, along with its own policies and procedures.
The regulator additionally highlighted that the auditor failed to establish the connection between FTX and its sister crypto hedge fund, Alameda Research.
“To fulfil their role, auditors must, among other things, be independent, exercise due professional care and scepticism, and comply with all applicable professional standards,” said Gurbir Grewal, Director of the SEC's Division of Enforcement. “As we allege in these enforcement actions, Prager Metis fell short in all of these areas.”
$32B to $0 Overnight
FTX entered bankruptcy in November 2022, when it was valued at $32 billion. The crypto exchange’s collapse resulted from the shady business practices of its founder and former CEO, Sam Bankman-Fried, who did not even separate the funds of the customers and the business.
Bankman-Fried was convicted of seven criminal counts of fraud and conspiracy and was sentenced to 25 years in prison. His legal representatives recently appealed his conviction and sought a new trial.
“Because Prager’s audits of FTX were conducted without due care, FTX investors, for example, lacked crucial protections when making their investment decisions,” Grewal added. “Ultimately, they were defrauded out of billions of dollars by FTX and bore the consequences when FTX collapsed.”
Arnab is an electronics engineer-turned-financial editor. He entered the industry covering the cryptocurrency market for Finance Magnates and later expanded his reach to forex as well. He is passionate about the changing regulatory landscape on financial markets and keenly follows the disruptions in the industry with new-age technologies.
Revolut Expands Crypto Offerings with Planned Stablecoin Launch
Transformation in the APAC Trading Landscape and Beyond | FMPS:24
Transformation in the APAC Trading Landscape and Beyond | FMPS:24
As the financial services industry experiences rapid and transformative changes, leading fintech experts and policymakers come together to discuss the present and future of retail trading and the evolving regulatory landscape. Join this insightful session for a forward-looking perspective on the trends, innovations, and trader needs that are shaping the future of offerings on a global scale.
Speakers:
Eric Blewitt, CEO, Investment Trends
Rhys Bollen, Senior Executive Leader, Digital Assets, Australian Securities and Investments Commission (ASIC)
Michael Bogoevski, Head of Institutional Sales, CMC Connect
Karin Setchell, General Manager, Product & Investing Solutions, CommSec
#fmps #fmps24 #fmevents #RetailTrading #FintechInnovation #FinancialRegulation #DigitalAssets #GlobalFinance
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As the financial services industry experiences rapid and transformative changes, leading fintech experts and policymakers come together to discuss the present and future of retail trading and the evolving regulatory landscape. Join this insightful session for a forward-looking perspective on the trends, innovations, and trader needs that are shaping the future of offerings on a global scale.
Speakers:
Eric Blewitt, CEO, Investment Trends
Rhys Bollen, Senior Executive Leader, Digital Assets, Australian Securities and Investments Commission (ASIC)
Michael Bogoevski, Head of Institutional Sales, CMC Connect
Karin Setchell, General Manager, Product & Investing Solutions, CommSec
#fmps #fmps24 #fmevents #RetailTrading #FintechInnovation #FinancialRegulation #DigitalAssets #GlobalFinance
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Executive Interviews with Joe Li & Simon Naish | ATFX | FMPS:24
Executive Interviews with Joe Li & Simon Naish | ATFX | FMPS:24
In this Finance Magnates Executive Interview, Joe Li, Chairman at ATFX and Simon Naish, Country Head of Australia at ATFX Connect, discuss ATFX’s strategic growth in the APAC region, particularly focusing on their institutional arm, ATFX Connect. They highlight the importance of Australia as a strategic hub, the challenges of operating in a highly competitive and regulated market, and their plans for regional expansion across APAC. The conversation touches on the integration of advanced technology and multi-asset offerings, the significance of optimal execution tools, and the importance of tailoring solutions to meet the sophisticated demands of institutional clients. They also emphasize their strong regulatory compliance and their commitment to enhancing client experience through innovative tools and infrastructure.
#fmps #fmps24 #fmevents #ATFXConnect #APACFinance #InstitutionalTrading #FinancialTechnology #MarketExpansion
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In this Finance Magnates Executive Interview, Joe Li, Chairman at ATFX and Simon Naish, Country Head of Australia at ATFX Connect, discuss ATFX’s strategic growth in the APAC region, particularly focusing on their institutional arm, ATFX Connect. They highlight the importance of Australia as a strategic hub, the challenges of operating in a highly competitive and regulated market, and their plans for regional expansion across APAC. The conversation touches on the integration of advanced technology and multi-asset offerings, the significance of optimal execution tools, and the importance of tailoring solutions to meet the sophisticated demands of institutional clients. They also emphasize their strong regulatory compliance and their commitment to enhancing client experience through innovative tools and infrastructure.
#fmps #fmps24 #fmevents #ATFXConnect #APACFinance #InstitutionalTrading #FinancialTechnology #MarketExpansion
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Ready to Scale? Regtech in Australia, A Global View | FMPS:24
Ready to Scale? Regtech in Australia, A Global View | FMPS:24
In the effort to elevate Australian fintech on the global stage, RegTech presents a unique and compelling case. Despite the increasing demand for robust compliance solutions, Australia's RegTech sector—ranked third-largest globally—remains underfunded. Join this insightful fireside chat to explore the future of Australia’s RegTech hub and its global potential.
Key discussion points include uncovering the hidden opportunities in RegTech that VCs are overlooking, the necessary steps for increased governmental support, the readiness of the local ecosystem to collaborate across global regulatory regimes, and lessons learned from other leading fintech hubs around the world.
Speakers:
Dickie Currer, National Lead, Tech Australia Advocates
Deborah Young, CEO, The RegTech Association
#fmps #fmps24 #fmevents #RegTech #Fintech #AustralianFintech #GlobalCompliance #TechInnovation
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In the effort to elevate Australian fintech on the global stage, RegTech presents a unique and compelling case. Despite the increasing demand for robust compliance solutions, Australia's RegTech sector—ranked third-largest globally—remains underfunded. Join this insightful fireside chat to explore the future of Australia’s RegTech hub and its global potential.
Key discussion points include uncovering the hidden opportunities in RegTech that VCs are overlooking, the necessary steps for increased governmental support, the readiness of the local ecosystem to collaborate across global regulatory regimes, and lessons learned from other leading fintech hubs around the world.
Speakers:
Dickie Currer, National Lead, Tech Australia Advocates
Deborah Young, CEO, The RegTech Association
#fmps #fmps24 #fmevents #RegTech #Fintech #AustralianFintech #GlobalCompliance #TechInnovation
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Resilience in Trading: From Third Class To World Class | FMPS:24
Resilience in Trading: From Third Class To World Class | FMPS:24
Join Mario Singh, Founder and Chairman of Fullerton Markets, as he shares his life story, highlighting the traits that were required starting without financial knowledge to become a financial and trading expert recognised by world-renowned media like CNBC & Bloomberg.
#fmps #fmps24 #fmevents #trading #onlinetrading #tradingexpert #tradingjourney
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Join Mario Singh, Founder and Chairman of Fullerton Markets, as he shares his life story, highlighting the traits that were required starting without financial knowledge to become a financial and trading expert recognised by world-renowned media like CNBC & Bloomberg.
#fmps #fmps24 #fmevents #trading #onlinetrading #tradingexpert #tradingjourney
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IBs and Brokers: The Good, The Bad, The Ugly | FMPS:24
IBs and Brokers: The Good, The Bad, The Ugly | FMPS:24
For most brokers, IBs and trading educators are invaluable partners, driving highly targeted traffic from key regions. However, without proper management, these relationships can quickly turn sour. In this session, gain an insider’s perspective on the types of licenses IBs need in APAC, the crucial details in IB agreements that both parties must scrutinize, common disputes between IBs and brokers and effective resolutions, and the pros and cons of transitioning from IB to broker.
Speakers:
Melody Gao, Senior Lawyer, Sophie Grace
James Perry-Keene, Head of Strategic Partnerships, Pepperstone
Christopher Balanzategui, CEO, N3tworx
#fmps #fmps24 #fmevents #IBAgreements #BrokerPartnerships #TradingIndustry #APACFinance #FinancialRegulation
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For most brokers, IBs and trading educators are invaluable partners, driving highly targeted traffic from key regions. However, without proper management, these relationships can quickly turn sour. In this session, gain an insider’s perspective on the types of licenses IBs need in APAC, the crucial details in IB agreements that both parties must scrutinize, common disputes between IBs and brokers and effective resolutions, and the pros and cons of transitioning from IB to broker.
Speakers:
Melody Gao, Senior Lawyer, Sophie Grace
James Perry-Keene, Head of Strategic Partnerships, Pepperstone
Christopher Balanzategui, CEO, N3tworx
#fmps #fmps24 #fmevents #IBAgreements #BrokerPartnerships #TradingIndustry #APACFinance #FinancialRegulation
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