TrumpMediaAuditor Charged with Fraud, Suspended by SEC

The SEC charged BF Borgers CPA, Trump Media's auditor, with "massive fraud" for falsifying audit documents and violating PCAOB standards in over 1,500 filings. The firm and its owner agreed to a permanent suspension and $14 million in penalties.

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TrumpMediaAuditor Charged with Fraud, Suspended by SEC

TrumpMediaAuditor Charged with Fraud, Suspended by SEC

The Securities and Exchange Commission (SEC) has charged BF Borgers CPA, the auditing firm for Trump Media & Technology Group, and its owner Benjamin Borgers with "massive fraud" for their work on over 1,500 SEC filings from January 2021 to June 2023. The firm and its owner have agreed to be permanently suspended from practicing as accountants before the SEC and will pay a combined $14 million in civil penalties.

Why this matters: This massive fraud scandal has far-reaching implications for the integrity of financial reporting and auditing practices in the US, potentially affecting thousands of companies and investors. It also raises concerns about the oversight and regulation of accounting firms, highlighting the need for stricter enforcement and accountability.

The SEC alleges that BF Borgers engaged in "deliberate and systemic failures" to comply with Public Company Accounting Oversight Board (PCAOB) standards in its audits and reviews, and falsely told clients that their work would comply with these standards. The firm also fabricated audit documents and falsely stated in audit reports that their work complied with PCAOB standards.

SEC Enforcement Division Director Gurbir Grewal described the allegations as a "massive fraud" that put investors and markets at risk. "Ben Borgers and his audit firm, BF Borgers, were responsible for one of the largest wholesale failures by gatekeepers in our financial markets," Grewal said. "As a result of their fraudulent conduct, they not only put investors and markets at risk by causing public companies to incorporate noncompliant audits and reviews into more than 1,500 filings with the Commission, but also undermined trust and confidence in our markets."

The SEC's action raises questions about the accuracy of financial information in thousands of reports issued by companies audited by BF Borgers, including Trump Media, whose majority shareholder is former President Donald Trump. Trump Media's investor relations page still listed BF Borgers as the independentauditorof the company as of Friday morning.

Trump Media & Technology Group, the parent company behind the Truth Social platform, went public in March 2023 through a merger with Digital World Acquisition Corp. The company has faced concerns about its accounting practices in the past, including an accounting error that made its financial statements unreliable and a near-delisting from NASDAQ.

In response to the SEC's action, Trump Media stated that it "looks forward to working with new auditing partners in accordance with today's SEC order." The company's share price fell around 9% shortly after trading began on Friday following the announcement. Trump Media and other companies that used BF Borgers as their auditors will now need to find new qualified public accountants to review their financial statements and filings.

Key Takeaways

  • SEC charges BF Borgers CPA with "massive fraud" for work on 1,500+ filings.
  • Firm and owner agree to permanent suspension and $14 million in penalties.
  • Allegations include deliberate failures to comply with PCAOB standards.
  • Fraudulent conduct puts investors and markets at risk, undermines trust.
  • Trump Media and other affected companies must find new auditors.