Photo Credit: Sarah Elizabeth
Prager Metis is set to pay $1.2 million to settle the auditor-independence lawsuit filed against it by the Securities and Exchange Commission (SEC).
That seeming end to the legal battle between the SEC and the prominent industry accounting firm came to light in the former’s newly submitted (and unopposed) motion for final judgement entry.
Last time we checked in on the matter, the presiding judge in March rejected Prager Metis’ discovery stay motion, before tossing a dismissal motion in late May. And as we described, the case, which kicked off about one year back, centers on multiple alleged “auditor independence rule” violations between late 2017 and October of 2020.
In the interest of brevity here, that refers specifically to the alleged inclusion of indemnification provisions in 87 client engagement letters. Also as of March, the case was tentatively expected to head to trial towards the top of 2025.
But settlement discussions have evidently proven fruitful during the past six months; per the mentioned motion, Prager Metis has “consented to the entry of the proposed” judgement.
On the “monetary remedies” side, said judgement includes a total of $1,205,000 in payments to be made by Prager Metis.
Prager Metis LLC will put up the lion’s share of the sum, $980,000, as “a civil penalty,” with $172,728.19 attributable to disgorgement and another $27,486.64 to interest on the latter, according to the document. Rounding out the $1.21 million, the closely associated Prager Metis LLP is poised to pay $3,868.90 in disgorgement, $916.27 in interest thereon, and a $20,000 civil penalty.
Perhaps more important than the relatively modest financial penalties is a collection of settlement clauses permanently restraining and enjoining Prager Metis from violating the relevant securities laws moving forward.
As to where things go from here, the settlement doesn’t appear to be quite “official official.” At the time of this writing, the court didn’t look to have granted the sought judgement, which, the document reiterates for good measure at its end, “will fully resolve this pending matter.”
But the available evidence strongly suggests that formal approval will arrive sooner rather than later for the government agency and Prager Metis, which over the summer added Jared Mahar to its tax department.
