Prager Metis settles with the SEC for $2m over misconduct in FTX audits

Accounting and consulting company Prager Metis CPAs and its California-based affiliate are now $1.95 million lighter. The SEC nailed them for two counts of misconduct during their audits of FTX. 

The once-prominent crypto trading platform crashed and burned, leaving billions of dollars in losses and a trail of lawsuits.

The SEC accuses Prager of falsely representing that its audits of FTX between February 2021 and April 2022 followed Generally Accepted Auditing Standards (GAAS).

The firm failed to assess whether it had the skills and manpower to handle such a high-stakes audit. 

It also missed a huge red flag—the risky relationship between FTX and Alameda Research, the crypto hedge fund Samuel Bankman-Fried controlled.

Prager has agreed to pay a $745,000 civil penalty, face permanent injunctions, and implement some big changes.

But they neither admitted nor denied the SEC’s findings, which is pretty typical in these cases.

They must now hire an independent consultant to dig into their audit processes and quality control measures. In short, they’ll need to fix what they broke.