SEC files lawsuit against FTX's Prager Metis auditor

SEC files lawsuit against FTX's Prager Metis auditor

FTX's former auditing firm Prager Metis has been accused of violating U.S. auditor independence rules by the SEC, a court filing shows.

The SEC alleges that the firm helped its clients - including 62 individuals registered with the agency - to break federal securities laws. The group argues for an injunction against the auditor, aiming to force it to pay fines and give up any profits made from illegal activities.

Prager Metis audited FTX's international arm and reported $1 billion in revenue in 2021, coindesk reported in November, on the same day FTX filed for bankruptcy in the U.S. with a $7 billion shortfall in its balance sheet. The company also planned to open a branch in the Metaverse. The SEC's complaint, however, isn't centered on the auditor's ties to FTX but on agreements the firm made with its numerous clients.

The agency alleged that the auditor had been notified of these violations since at least January 2019.

Despite these fundamental principles, audits, reviews, and exams fell short of these fundamental principles. Our complaint is an important reminder that auditor independence is crucial to investor protection, according to Eric I. Bustillo, director of the SEC's Miami regional office.