The SEC sanctioned and fined the audit engagement partner for an audit firm that provided unqualified audit opinions to a fund that overstated its assets.  The SEC alleges that the audit firm made false statements that the audits were conducted in accordance with GAAS and that the financial statements were presented in accordance with GAAP.  The SEC charges that the audit firm and the engagement partner failed to verify assets with third parties, allowing the firm to vastly overstate assets in account statements and marketing materials.  The SEC alleges that the respondent caused violations of the anti-fraud provisions of the 1934 Act and the Advisors Act.  Neither the adviser nor the fund was registered.

 

OUR TAKE: This case continues the trend of the SEC seeking to hold third party service providers and individuals directly accountable for alleged fraud by their clients.