The Securities and Exchange Commission (SEC) accused BF Borgers CPA, the former auditor, of engaging in massive fraudulent activities related to over 1,500 regulatory filings for public companies.

In response to the allegations, Truth Social, the owner of Trump Media, swiftly terminated its association with BF Borgers CPA. The SEC stated that the firm had failed to conduct proper audits of its clients before signing off on the regulatory filings, leading to widespread consequences for more than 500 public companies.

Over the weekend, Trump Media engaged the services of Semple, Marchal & Cooper LLP as its new auditor, replacing BF Borgers CPA. As part of the settlement with the SEC, BF Borgers and its owner have agreed to a permanent ban from auditing public companies. This ban necessitated the search for a new auditor not only for Trump Media but also for other public companies that had previously relied on BF Borgers' services.

Trump Media emphasized that the decision to switch accounting firms was made under the recommendation and approval of the company's Audit Committee. It remains to be seen whether Trump Media will request Semple, Marchal & Cooper LLP to review the past work done by BF Borgers in order to ascertain if any auditing industry standards were violated in relation to Trump Media's case.

A spokesperson for Trump Media has not yet responded to requests for comments regarding the company's intentions to review BF Borgers' work or the appointment of Semple, Marchal & Cooper LLP. Similarly, there has been no statement from Semple, Marchal & Cooper LLP regarding the matter.

The SEC's civil regulatory action described BF Borgers as a "sham audit mill," accusing the firm and its owner of deliberately and systematically neglecting their responsibilities in accordance with public accounting firm standards. Consequently, the compliant financial information signed off by BF Borgers was incorporated into more than 1,500 SEC filings spanning from early 2021 through mid-2023.

BF Borgers and its owner agreed to pay a combined penalty of $14 million as part of the settlement. Notably, Trump Media was not a publicly traded company at the time of the alleged conduct, but BF Borgers had been serving as its auditor during that time.

The SEC also clarified that reports filed by companies that used BF Borgers do not necessarily need to be amended solely due to the cease-and-desist order. However, it recommended that issuers consider whether any reporting deficiencies arising from their engagement with BF Borgers may need to be addressed.

In an SEC filing, Trump Media stated that the audit reports on its consolidated financial statements for the fiscal years ended December 31, 2023, and December 31, 2022, did not contain adverse opinions, disclaimers of opinion, or any qualifications or modifications related to audit scope or accounting principles.

Following a merger with Digital World Acquisition Corp., Trump Media's stock became publicly traded on March 26. This recent appointment of a new auditor marks an important step for the company as it aims to ensure transparency and adherence to regulatory standards. Further updates on this developing story will be provided as more information becomes available.