The accounting firm that audits the financial statements of hundreds of publicly traded companies, including former President Donald J. Trump's social media company, can no longer perform the audits, U.S. securities regulators announced Friday. .
The Securities and Exchange Commission charged BF Borgers with fraud for failing to comply with accounting rules. In its settlement with the SEC, the company agreed to immediately stop filing audited statements on behalf of its customers.
Regulators held BF Borger's and its owner, Benjamin F. Borger, responsible for a “deliberate and systematic failure” to comply with accounting rules. The resulting settlement requires both the company and Mr. Borgers to pay civil penalties totaling $14 million. Many companies that used BF Borgers now have to find new auditors.
Trump Media & Technology Group, the parent company of the Truth Social platform, has been a customer of BF Borgers since 2022, according to regulatory filings. But for most of that time, Trump Media was a private company.
Trump Media had just gone public in March after completing a merger with a well-funded shell company. Although the company was not mentioned in connection with the B.F. Borgers settlement, Trump Media's stock price fell about 4% in early trading on the news.
“We look forward to working with our new audit partners pursuant to today's SEC order,” Trump Media said in a statement.
In announcing the enforcement action and settlement, the SEC said Colorado-based BF Borgers audited hundreds of publicly traded companies. The regulator said the breach affected the filings of more than 1,500 companies.
Gurbir S. Grewal, SEC Director of Enforcement, called the failure in BF Borgers “one of the great failures by gatekeepers in our nation's financial markets.”
The SEC said it found that the audit firm had copied work it had previously done for clients and simply changed the dates on the filings. In the process, the company “falsely documented work that was not performed,” the regulator said.
Audit firms play an important role on Wall Street and are responsible for ensuring that the financial statements of publicly traded companies are accurate and orderly. Investors rely on financial statements that have been reviewed and certified by auditing firms when making investment decisions.
In an SEC release, BF Borgers' attorney said he was “unknown.” In their settlement with the SEC, the audit firm and Mr. Borgers neither admitted nor denied the charges.
The SEC has issued instructions to public companies on how to respond to the settlement. The regulator said in a filing that companies will be required to file a regulatory notice if an audit firm resigns or is fired.
