(Crowdfund Insider) - The Securities and Exchange Commission (SEC) has filed an enforcement action against audit firm Marcum LLP regarding its audit work for “hundreds” of SPACs. Marcum has settled the matter without admitting or denying the SEC’s findings, paying a $10 million penalty while agreeing to remedial actions.
Special Purpose Acquisition companies boomed in recent years, but the market cooled following greater regulatory scrutiny. Some industry participants viewed the SPAC market as an alternative path to enable a firm to go public in a more expedient fashion. In recent years, the IPO market has tanked due to the high cost and regulatory requirements to become a public firm.
The SEC claims that Marcum operated with systemic quality control failures and violations of audit standards in connection with audit work for SPAC clients beginning in 2020. The SEC’s order also claims that Marcum’s deficiencies were not limited to SPAC clients.
SEC Chair Gary Gensler commented on the enforcement action saying auditors occupy a position of trust and are critical to protecting investors.
“Marcum neglected its essential gatekeeper function in service to its own growth. Marcum took on more than 600 new SPAC clients for a nearly six-fold increase in just one year, churning out audits at an unsustainable pace causing widespread quality control and audit standard violations that put its clients and the investing public at risk.”
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, noted that from 2020 through 2021, the market saw more than 860 SPACs complete IPOs and Marcum audited nearly half of them.
By JD Alois
