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The auditing agency for Trump Media and the auditor’s proprietor had been charged Friday with “large fraud” by the Securities and Alternate Fee 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 in addition 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 didn’t 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 purchasers 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 stories included in additional than 500 public firm SEC filings that the agency’s audits complied with such requirements.
BF Borgers in the course of the interval coated 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 turning into publicly traded underneath the DJT ticker.
Three days after the corporate went public, Trump Media’s board accredited protecting 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, had been accountable for one of many largest wholesale failures by gatekeepers in our monetary markets,” the SEC’s enforcement division director, Gurbir Grewal, mentioned in an announcement.
“Because of their fraudulent conduct, they not solely put buyers and markets in danger by inflicting public firms to include noncompliant audits and opinions into greater than 1,500 filings with the Fee, but additionally 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 in regards to the accuracy of the monetary info in hundreds of stories that had been issued by the businesses Borgers audited, together with Trump Media, whose majority shareholder is former President Donald Trump.
These stories, filed recurrently with the SEC, present important info that buyers and analysts use to guage firms whose inventory trades on public markets.
The SEC mentioned that stories filed by firms that used BF Borgers as its auditors “don’t essentially have to be amended solely due to the Fee’s entry of the Order.”
“Nevertheless, 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 firms that had used Borgers now must discover a new certified public accountant.
As of Friday morning, the investor relations web page on Trump Media’s web site nonetheless listed BF Borgers because the impartial auditor of the corporate.
However Trump Media spokeswoman Shannon Devine informed CNBC, “Trump Media seems ahead to working with new auditing companions in accordance with in the present day’s SEC order.”
The share value of Trump Media, which owns the Fact Social app, on Friday was down as a lot as 9% earlier than paring again that loss to a decline of 1.7%.
— Extra 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.
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