SEC Accuses Trump Media’s Auditing Firm of Massive Fraud (2)

The <-bsp-bb-link state="{"bbHref":"bbg://securities/13165Z%20US%20Equity","_id":"0000018f-3fbd-d4b6-a98f-ffbdfe170000","_type":"0000016b-944a-dc2b-ab6b-d57ba1cc0000"}">Securities and Exchange Commission accused the auditor of Donald Trump’s social-media company of massive fraud affecting hundreds of companies and more than 1,500 regulatory filings.

BF Borgers CPA PC and its founder, Benjamin Borgers, will be permanently suspended from practicing and appearing as accountants before the SEC, and will pay a total of $14 million in fines to settle the probe, the SEC said in a Friday release.

“Ben Borgers and his audit firm, BF Borgers, were responsible for one of the largest wholesale failures by gatekeepers in our financial markets,” <-bsp-person state="{"_id":"0000018f-3fbd-d4b6-a98f-ffbdfe180000","_type":"00000160-6f41-dae1-adf0-6ff519590003"}">Gurbir Grewal, the SEC’s enforcement chief, said in a statement. “Borgers and his firm completely abandoned that role, but thanks to the painstaking work of the SEC staff, Borgers and his sham audit mill have been permanently shut down.”

Gurbir Grewal, director of enforcement for US Securities and Exchange Commission

Photographer: Jeenah Moon/Bloomberg

BF Borgers didn’t immediately respond to a request for comment Friday morning. The firm has been one of the most prolific auditors in the US. The most recent review of its audits by US regulators found a 100% deficiency rate. In its order, the SEC described false audit work papers, “nonexistent work” and fabricated meetings.

“This is so bad that this guy is not going to be able to do anything of importance to a public company,” said Doug Carmichael, former chief auditor of the Public Company Accounting Oversight Board.

<-rte-company state="{"_id":"0000018f-3fbd-d4b6-a98f-ffbdfe4e0000","_type":"00000160-4b23-d8bd-adfd-4b3348fd0000"}">Trump Media & Technology Group Corp. became a public company in March. Trump Media “looks forward to working with new auditing partners in accordance with today’s SEC order,” a representative for the company said.

Read More: <-bsp-bb-link state="{"bbDocId":"SBMVB1T1UM0W","_id":"0000018f-3fbd-d4b6-a98f-ffbdfe4e0001","_type":"0000016b-944a-dc2b-ab6b-d57ba1cc0000"}">Trump Media’s Accounting Firm Has Audit Deficiency History

Trump Media has used the Colorado-based accounting firm since 2022, and retained its services after it went public by merging with Digital World Acquisition Corp., a special purpose acquisition company. The PCAOB’s inspections haven’t yet covered BF Borgers’ audits of Trump Media, and the conduct covered by the SEC’s order were for BF Borgers’ work for public companies from January 2021 through June 2023.

The former president’s social-media company was the biggest client by market capitalization on BF Borgers’ client roster. Although the firm is one of the busiest in the US, more than 80% of its clients trade over the counter, meaning they are too small to meet the listing requirements of large exchanges, according to research firm Ideagen Audit Analytics.

BF Borgers was among the top 10 auditing firms with the most publicly traded clients in 2023, according to the firm.

The auditor has faced regulatory scrutiny in both Canada and the US. It scored poor marks on the last two annual inspections from the US audit regulator, with the PCAOB citing a 100% deficiency rate in the sample of audits it inspected for 2021 and 2022.

The audit watchdog said BF Borgers, which has hundreds of clients, more than doubled its clients between 2019 and 2021 but didn’t add more staff to handle the additional workload. Just one person was responsible for 147 audits, the regulator said in an expanded inspection reports.

Most of BF Borgers’ clients, such as Lingerie Fighting Championships Inc., a mixed martial arts league, are significantly smaller than Trump’s media business.

(Updates with quote and details on conduct starting in fifth paragraph.)

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