- Chief Compliance Officer and VP of Legal Affairs, Arrow Electronics
By 
Aaron Nicodemus2024-09-19T15:59:00
Waves of fallout from the collapse of cryptocurrency trading platform FTX continue to ripple, as accounting firm Prager Metis has learned.
The firm agreed to pay nearly $2 million in penalties to settle two enforcement actions by the Securities and Exchange Commission (SEC) related to Prager Metis’ audit work for FTX and other companies. The SEC said the firm committed “negligence-based fraud” by falsely represented that its audits of FTX complied with generally accepted accounting standards (GAAS), and violated its own policies and procedures by not adequately assessing whether it had the competency to audit FTX, the agency announced in a press release Tuesday.
The biggest problem with Prager Metis’ audit of FTX, the SEC said, was that the firm apparently did not fully understand risks posed by the financially intertwined relationship between FTX and Alameda Research, a crypto research fund controlled by FTX founder Sam Bankman-Fried. That connection, and the co-mingling of funds between the two entities, would prove to be FTX’s undoing and were the focus of a $12.7 billion settlement with the Commodity Futures Trading Commission in August.
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FTX Trading and its sister cryptocurrency exchange Alameda Research will pay $12.7 billion to settle charges laid by the Commodity Futures Trading Commission that the two companies violated the Commodity Exchange Act and CFTC regulations.
Why the wild disparity in the sentences of Binance’s Changpeng Zhao and FTX’s Sam Bankman-Fried? Aaron Nicodemus argues the performance of the compliance teams at the two cryptocurrency exchanges was as big a contrast as the penalties earned by their respective founders.
The Federal Reserve Board placed restrictions on Washington-based Farmington State Bank after taking issue with how the liquidating financial institution changed its business plan without seeking proper approvals.
The Public Company Accounting Oversight Board fined five consultancies, including Ernst & Young, as the agency continues its crackdown on firms violating audit committee communications rules and reporting requirements.
Aviation maintenance services provider AAR Corp. disclosed that several former employees may have bribed officials in Nepal and South Africa to win contracts, and chose to self-report violations of the Foreign Corrupt Practices Act to authorities in the U.S. and U.K.
Regulators continue to hammer firms with fines for violating rules regarding the use of unapproved communication methods by employees, issuing $120 million in fines this week. And for the first time, two firms were not fined because they self-reported their violations.
