SEC Charges Audit Firm for Improper Professional Conduct
Feb. 26, 2020
File No. 3-19710
February 26, 2020 - The Securities and Exchange Commission announced today that audit firm RSM US LLP has agreed to settle charges that it engaged in improper professional conduct in its audits of private pooled investment funds managed by SBB Research Group, LLC, an SEC-registered investment adviser.
The SEC's order finds that due to insufficient quality controls, RSM failed to staff the SBB audits with personnel who possessed the necessary competence and capabilities to perform the engagement in accordance with professional standards. The order further finds that, as a result of this failure, RSM's audit team repeatedly violated professional standards by failing to properly assess, test, and document risks of material misstatement associated with SBB's valuation of structured notes held in the private funds it managed.
The order finds that RSM engaged in improper professional conduct in violation of Section 4C of the Securities Exchange Act of 1934 and Rule 102(e)(1)(ii) of the Commission's Rules of Practice. Without admitting or denying the findings, RSM has agreed to be censured and to comply with certain undertakings.
The SEC's investigation was conducted by Kevin Wisniewski and supervised by Jeffrey Shank, both of the Complex Financial Instruments Unit and the Chicago Regional Office, with assistance from Craig McShane and Max Gillman of the Chicago Regional Office and Chiu-Wang Chan of the San Francisco Regional Office. The examination of SBB was conducted by Anthony Santoro, Max Gillman, Chiu-Wang Chan, Erik Lillya, Andrew Schuster, and Maureen Dempsey of the Chicago Regional Office Investment Adviser/Investment Company examination group.