Audit Firm Will Pay Over $4 Million for Lobbying Activities that Violated Independence Rules
A large audit firm agreed to pay over $4 Million in fines, disgorgement, and interest for engaging in lobbying activities that the SEC charges violated the auditor independence rules. According to the SEC, the respondent’s lobbying affiliate worked directly on behalf of clients to influence legislation by interacting with Congressional staffers, marking up bills, and sending letters and emails. The SEC asserts that advocacy on behalf of clients precludes auditor independence.
OUR TAKE: The SEC has emphasized its interest in regulating industry service providers as the gatekeepers to the markets. We expect that this trend will ultimately expand to fund administrators, custodians, lawyers, and compliance firms.