Key Takeaways:
- Friedman LLP had agreed to settle the charges and will also pay approximately $1.5 million in fines.
- SEC alleges that in Friedman LLP’s audits of the two companies, the auditor was found to have lied about conducting its audits following the standards of the Public Company Accounting Oversight Board.
The U.S. Securities and Exchange Commission(SEC) has fined Tether’s former auditing firm Friedman LLP for “improper professional conduction” and for allegedly violating federal security laws.
SEC alleges that Friedman was engaged in several instances of “improper professional conduct” in its audits of two publicly traded companies, Chinese grocery chain iFresh and another, an unnamed company, from 2017 to 2020.
The regulator notes that in Friedman LLP’s audits of the two companies, the auditor was found to have lied about conducting its audits in accordance with the standards of the Public Company Accounting Oversight Board.
SEC further, in its order, pointed out Friedman’s sloppy accounting practices, including its failure to “respond to fraud risks” and “exercise due professional care and professional skepticism.”
The SEC’s order highlights that the auditing firm did not admit or deny the SEC’s findings, had agreed to settle the charges, and will also pay approximately $1.5 million in fines.
In its settlement agreement with the SEC, the auditing firm has agreed to train its staff in proper auditing procedures and will pay a $1 million civil penalty and $564,138 in disgorgement and prejudgment interest.
While the SEC order doesn’t mention Tether, the stablecoin issuer retained Friedman LLP as auditor from May 2017 to January 2018 before ending the relationship.
As per media reports, Tether fired the accounting firm for not providing an audit quickly enough.
In 2021, Tether and Bitfinex reached an agreement with the New York attorney general’s office to pay an $18.5 million fine to settle a legal dispute covering up the apparent loss of $850 million of commingled client and corporate funds.
Last week, a U.S. judge ordered Tether to produce financial documents to prove the dollar backing of USDT as part of a lawsuit alleging the firm manipulated crypto markets.
As part of the order, Tether was asked to release “balance sheets, income statements, general ledgers, cash-flow statements, and profit and loss statements”.
