SEC and PCAOB Charge Audit Firm Marcum for Systematic Quality Control Failures

SEC Charges Audit Firm Marcum LLP for Widespread Quality Control Deficiencies

The Securities and Exchange Commission today charged audit firm Marcum LLP with systemic quality control failures and violations of audit standards in connection with audit work for hundreds of special purpose acquisition company (SPAC) clients beginning at the latest in 2020. The SEC’s order also found that Marcum’s deficiencies were not limited to SPAC clients, but they reflected systemic quality control failures throughout the firm. Marcum agreed to pay a $10 million penalty to settle the charges.

According to the SEC’s order, over a three-year period, Marcum more than tripled its number of public company clients, the majority of which were SPACs, including auditing more than 400 SPAC initial public offerings in 2020 and 2021. The strain of this growth, however, exposed substantial, widespread, and pre-existing deficiencies in the firm’s underlying quality control policies, procedures, and monitoring. These deficiencies permeated nearly all stages of the audit process and were exacerbated as Marcum took on more SPAC clients. Moreover, in hundreds of SPAC audits, Marcum failed to comply with audit standards related to audit documentation, engagement quality reviews, risk assessments, audit committee communications, engagement partner supervision and review, and due professional care. Depending on the audit standard at issue, violations were found in 25-50 percent of audits reviewed, with even more frequent, nearly wholesale violations found as to certain audit standards across Marcum’s SPAC practice.

Fenwick law firm hires Gibson Dunn to defend work for bankrupt FTX exchange

Law firm Fenwick & West has hired its own outside legal team as it faces scrutiny over its role advising now-bankrupt cryptocurrency exchange FTX, including from the company’s indicted founder Sam Bankman-Fried.

Silicon Valley-founded Fenwick has turned to Gibson, Dunn & Crutcher as its advice becomes a focus of Bankman-Fried’s criminal defense, according to court documents and sources familiar with the situation.

Nancy Hart and Kevin Rosen, leaders in Gibson Dunn’s prominent law firm defense practice, are representing Fenwick on issues related to FTX, including in the Bankman-Fried criminal case and a federal class action lawsuit, sources said.

Ex-Goldman Banker Convicted of Passing Inside Tips to Friend

A former Goldman Sachs Group Inc. banker was found guilty of passing inside information on deals to a once-close friend and squash partner who became the prosecution’s star witness.

Brijesh Goel was convicted Wednesday of tipping off former Barclays Plc trader Akshay Niranjan about deals at Goldman. Niranjan made some $280,000 in illegal profits trading on the information but later flipped on his friend, recording their conversations and cooperating with federal investigators before taking the stand at Goel’s trial in Manhattan federal court.

On Wall Street, Lawyers Make More Than Bankers Now

Equity partners at top law firms, meanwhile, can make around $3 million or more a year—more than triple what they were pulling in two decades ago. An elite group of partners who bring in exceptional amounts of business are earning north of $15 million at a handful of firms including Wachtell, Lipton, Rosen & Katz; Kirkland & Ellis; and Paul, Weiss, Rifkind, Wharton & Garrison.

KPMG’s Big Four Dominance on Bank Audits Shaken by Failures

Big Four accounting firm KPMG has been buffetted by one of the biggest economic stories of the year—and has been pilloried for giving clean audit opinions for three banks that collapsed amid the interest rate crisis that’s threatened the regional banking sector.

The immediate risks to those mid-tier lenders might have subsided, but that doesn’t put KPMG in the clear. The firm faces congressional scrutiny over its relationships with the banks, while shareholders have sued KPMG over its audits of at least one of the banks that collapsed into FDIC receivership.

Crypto shows we shouldn’t venerate ‘innovation’ for its own sake

Why is it, therefore, that we have come to see “innovation” as such an unalloyed good, and why is “stifling” it so unequivocally bad? Surely the objective of the innovation — and the possible repercussions — should matter, too. Innovation might be crucial in making progress in all sorts of areas, such as medicine or science, but we seem to have got to a place where it is the idea itself that we venerate. That is wrong-headed: innovation should not be seen as an end in itself, but as a means of making something better.

Crypto might be novel but that does not make it useful or valuable to society. We cannot go on imagining that all innovation is a force for good. In practice, “innovation” often just means exploiting gaps in existing rules until the regulators catch up — so called “regulatory arbitrage”, a strategy that the crypto industry has very successfully deployed and indeed relied upon. Unfortunately for these ingenious crypto “innovators”, catching up is exactly what regulators are now doing.

Scores of Men Retiring From Boards Open Record Seats to Women

Women hold a third of S&P 500 board seats for the first time ever after scores of men gave up their directorships in May, a long-elusive goal that’s been touted as a baseline for lasting change.

The percentage of female directorships increased to 33.2% from 32.8% in May, according to data compiled by Bloomberg, as 10 companies upped the number of women on their boards. The threshold was passed during the peak season for annual meetings when many directors retire: Men vacated four times as many seats than women, the data show.

ESG Backlash Creates Maze of Challenges for GCs

After spending years helping their companies develop environmental, social and governance programs, general counsel now are having to become quick studies in how to defend against the growing ESG backlash coming from conservative Republicans.

Legal departments at some companies are taking a closer look at socially themed marketing campaigns that risk inflaming today’s culture wars, as one at Target recently did. One company, paint-maker PPG Industries, even has developed an internal scoring system to help determine whether and how to comment on polarizing issues that might outrage customers or employees.