SEC Closes 'Prolific' Auditor BF Borgers for 'Massive Fraud'

BF Borgers Shutdown by SEC

The US Securities and Exchange Commission (SEC) has put a halt to the operations of auditor BF Borgers. The Financial Times has described the company as "one of the most prolific auditors of US public companies." The SEC's action comes in response to allegations of "massive fraud" that has reportedly impacted over 1,500 SEC filings. The announcement was made by the agency on Friday.

Penalties and Suspensions

The company has agreed to pay a civil penalty of $12 million, while its owner, Benjamin Borgers, has consented to pay $2 million to settle the charges brought by the SEC. Additionally, the company has accepted permanent suspensions from practicing as accountants on SEC filings, effective immediately.

Implications for Listed Companies

The SEC has indicated that a "significant" number of listed companies will need to find new accountants in the coming days due to this enforcement action.

Trump Media Among Clients

Among the clients of BF Borgers is Trump Media. A spokesperson for Trump's media company has stated in an email to Reuters that "Trump Media looks forward to working with new auditing partners in accordance with today's SEC order."

Other Clients and Allegations

BF Borgers has also worked for fintech and crypto companies, as well as many other small issuers, according to SEC filings. The SEC has accused the company of not properly preparing and maintaining audit documentation, fabricating audit planning meetings, and in some cases, simply reusing previous audits for the current audit period.

Non-Compliance with SEC Rules

Of the 369 BF Borgers clients whose filings from January 2021 through June 2023 incorporated BF Borgers's audits and reviews, at least 75% incorporated audits that did not comply with the SEC's rules.

Comments from SEC Enforcement Division Director

Gurbir Grewal, the Director of the SEC Enforcement Division, has stated that "Ben Borgers and his audit firm, BF Borgers, were responsible for one of the largest wholesale failures by gatekeepers in our financial markets."

Final Thoughts

As we reflect on this significant development in the auditing industry, it's important to consider the implications for both the companies involved and the wider financial market. What are your thoughts on this matter? Do you think this will lead to more stringent regulations for auditors? Share this article with your friends and engage in the conversation. Don't forget to sign up for the Daily Briefing at 6pm every day to stay informed on this and other important topics.