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The auditing agency for Trump Media and the auditor’s proprietor have been charged Friday with “huge fraud” by the Securities and Change 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 working towards 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 stated.
The company, calling BF Borgers a “sham audit mill,” stated the corporate and its proprietor “intentionally systematically didn’t conduct” audits and quarterly opinions included in additional than 1,500 SEC filings from January 2021 by means of June 2023 in accordance with Public Firm Accounting Oversight Board requirements.
The SEC stated 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 through the interval lined by the SEC criticism acted because the auditor for Trump Media, which was then privately held and shifting 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 accepted retaining BF Borgers on as the corporate’s auditors for 2024.
BF Borgers Workplaces in Lakewood, Colorado.
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“Ben Borgers and his audit agency, BF Borgers, have been liable for one of many largest wholesale failures by gatekeepers in our monetary markets,” the SEC’s enforcement division director, Gurbir Grewal, stated in an announcement.
“On account of their fraudulent conduct, they not solely put traders and markets in danger by inflicting public corporations 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 stated.
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 1000’s of stories that have been issued by the businesses Borgers audited, together with Trump Media, whose majority shareholder is former President Donald Trump.
These stories, filed repeatedly with the SEC, present important info that traders and analysts use to judge corporations whose inventory trades on public markets.
The SEC stated that stories filed by corporations that used BF Borgers as its auditors “don’t essentially must be amended solely due to the Fee’s entry of the Order.”
“Nonetheless, issuers ought to take into account whether or not their filings could must be amended to deal with any reporting deficiencies arising from the BF Borgers engagement,” the SEC stated, whereas additionally noting that corporations that had used Borgers now have to 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 unbiased auditor of the corporate.
However Trump Media spokeswoman Shannon Devine advised CNBC, “Trump Media appears to be like ahead to working with new auditing companions in accordance with right now’s SEC order.”
The share value 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%.
— 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 stated. An earlier model misstated the phrases.
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