The auditing firm for Trump Media and its owner were charged with “massive fraud” by the Securities and Exchange Commission (SEC) for work that impacted over 1,500 SEC filings. The auditor, BF Borgers CPA and owner Benjamin Borgers, agreed to be permanently suspended from practicing as accountants before the SEC and to pay a combined $14 million in civil penalties. The SEC described BF Borgers as a “sham audit mill” and accused them of deliberate and systemic failures to comply with standards set by the Public Company Accounting Oversight Board (PCAOB) in their audits and reviews incorporated in SEC filings between January 2021 and June 2023.
The respondents were also charged with falsely assuring clients that their work would adhere to PCAOB standards, creating fake audit documents to give the impression of compliance, and falsely asserting in audit reports included in over 500 public company SEC filings that the firm’s audits met PCAOB standards. This raises concerns about the accuracy of financial information in thousands of reports issued by companies audited by BF Borgers, including Trump Media, where former President Donald Trump is the majority shareholder. Investors use these reports to evaluate companies whose stock trades on public markets, highlighting the potential impact of the fraudulent activity on market confidence and investor trust.
SEC Enforcement Division Director Gurbir Grewal condemned the fraudulent conduct of Ben Borgers and BF Borgers, labeling it as one of the largest failures by gatekeepers in financial markets. Grewal emphasized that the actions of Borgers not only endangered investors and markets by causing companies to include noncompliant audits in over 1,500 filings with the SEC but also undermined trust and confidence in the markets. Following the SEC’s action, the share price of Trump Media, specifically the Truth Social app, dropped by 9% at the start of trading on Friday. Trump Media will need to find a new auditor due to the SEC’s actions, as BF Borgers has been suspended from practicing before the SEC.
The repercussions of the SEC’s charges against BF Borgers and Benjamin Borgers highlight the significant consequences of fraudulent auditing practices on investor confidence, market integrity, and regulatory oversight. The allegations against BF Borgers and its owner call into question the reliability and accuracy of financial information in thousands of reports filed with the SEC, impacting investors and analysts who rely on this information for decision-making. The case underscored the importance of maintaining transparency, integrity, and compliance with regulatory standards in auditing practices to preserve market trust and investor confidence.
The SEC’s enforcement actions against BF Borgers and its owner serve as a warning to auditing firms and accountants regarding the consequences of fraudulent conduct and noncompliance with regulatory standards. The agency’s determination to hold individuals and firms accountable for violations of PCAOB standards and SEC regulations underscores the importance of upholding ethical and professional standards in financial reporting and auditing practices. The fallout from the SEC’s charges against BF Borgers and Benjamin Borgers will likely have far-reaching implications for Trump Media and other companies audited by BF Borgers, prompting a reassessment of auditing practices and oversight mechanisms to prevent similar instances of misconduct in the future.
