On September 29, 2023, the Securities and Exchange Commission (SEC) announced legal charges against the international accounting firm Prager Metis CPAs, LLC and its Californian counterpart, Prager Metis CPAs LLP (jointly referred to as Prager), for alleged violations of auditor independence rules and for supposedly aiding and abetting their clients in breaching federal securities laws. The complaints pointed to improper conduct over approximately three years, from December 2017 to October 2020, during which Prager was alleged to have included indemnification clauses in engagement letters for more than 200 audit-related assignments, thereby compromising its independence as required by federal securities laws.
Prager’s alleged misconduct involved repeatedly signing engagement letters with indemnification clauses and issuing “accountant’s reports” purporting independence, despite senior partners being notified that such actions…
