BF Borgers, the accounting firm for Trump Media & Technology Group, is facing allegations of massive fraud from the Securities and Exchange Commission (SEC). The SEC claimed that the auditor ran a “sham audit mill” putting investors at risk, leading to the company’s shutdown. The suspension from practicing before the agency and a $12 million civil penalty were part of the settlement reached, with owner Benjamin Borgers also agreeing to pay a $2 million civil penalty. Trump Media & Technology Group did not immediately respond to the allegations.
The SEC charged Borgers with deliberate and systemic failures in complying with accounting standards in 1,500 SEC filings from January 2021 through June 2023. Despite having around 350 clients during this period, Trump Media’s debut as a public company occurred after this time frame. However, the company revealed in its 2023 annual report that it had worked with Borgers before going public on the Nasdaq stock exchange. The audit committee approved Borgers to audit the company’s 2023 and 2022 financial statements in March.
One of the key issues cited by the SEC was Borgers’ failure to comply with Public Company Accounting Oversight Board (PCAOB) standards in its audits, despite being required for public companies’ financial statements. The agency also alleged that Borgers falsely told clients that its work complied with these standards. The SEC claimed that at least 75% of the filings incorporating Borgers’ audits and reviews failed to meet PCAOB standards. Gurbir S. Grewal, director of the SEC’s Division of Enforcement, stated that Borgers’ actions put investors and markets at risk, affecting more than 1,500 filings and undermining trust in the financial markets.
Aimee Picchi, the associate managing editor for CBS MoneyWatch, covers business and personal finance. She noted that Borgers’ suspension and penalties reflected a significant regulatory action against an accounting firm. The SEC’s charges against Borgers and the subsequent penalties underscored the importance of adherence to accounting standards to protect investors and maintain market integrity. The fallout from the allegations and suspension of Borgers could have broader implications for the accounting industry and regulatory oversight moving forward, highlighting the need for accountability and transparency in financial reporting practices.
The allegations against BF Borgers and the subsequent actions taken by the SEC shed light on the critical role of auditors and the consequences of failing to uphold accounting standards. The case also underscores the potential risks that can arise when auditors engage in fraudulent conduct, affecting public companies, investors, and market integrity. The suspension of BF Borgers and the associated penalties serve as a warning to other accounting firms about the importance of compliance and ethical practices in their audits. The ultimate impact of this case on Trump Media & Technology Group and the wider business community remains to be seen as further details emerge and investigations continue.
