Global: U.S. securities regulator (SEC) hits top SPAC auditor with $10 million fine

The U.S. Securities and Exchange Commission (SEC) on Wednesday (June 21, 2023) slapped Marcum LLP with a $10 million penalty for standards violations and systemic quality control failures in its audit work for hundreds of special purpose acquisition companies, or SPACs.

Marcum, one of the leading auditors of SPACs, had substantial and widespread deficiencies in its quality control policies and procedures when the firm saw a nearly six-fold increase in clients, the SEC said in a statement. Violations were found in 25-50% of audits reviewed, depending on the audit standard at issue, the SEC said.

A spokesperson for Marcum, which did not admit or deny the SEC’s allegations, said in a statement: “We remain committed to maintaining the full confidence of our clients, regulators, and investors.”

The SPAC boom of 2020 and 2021 brought the likes of DraftKings Inc and electric truck maker Nikola public but drew scrutiny from watchdogs and the regulator for concerns over what some saw as less stringent due diligence practices.

“Marcum neglected its essential gatekeeper function in service to its own growth,” said SEC Chair Gary Gensler in a statement.

The SEC found the deficiencies were not limited to Marcum’s SPAC clients.

In addition to the civil penalty, settlement requires Marcum undertake remedial actions including hiring an independent consultant to review its policies procedures and to abide by certain restrictions when taking on new clients.