Audit Firm Prager Metis Settles SEC Charges for Negligence in FTX Audits and for Violating Auditor Independence Requirements

The Securities and Exchange Commission announced that Prager Metis CPAs, LLC (Prager) and its California professional services firm, Prager Metis CPAs LLP, agreed to pay $1.95 million to resolve two actions alleging misconduct in their audits of the now-defunct crypto asset trading platform, FTX, and auditor independence violations. The SEC alleges that Prager misrepresented its compliance with auditing standards regarding FTX and failed to follow Generally Accepted Auditing Standards (GAAS) due to a quality control failure. Without admitting or denying the findings, Prager agreed to permanent injunctions, a $745,000 civil penalty, and remedial actions, including retaining an independent consultant. The SEC's enforcement actions emphasize the importance of auditor independence, due professional care, and compliance with all applicable professional standards. The settlements are subject to court approval.