AP Summary

SEC Charges Future Fintech Group Inc. with Accounting Fraud Violations

July 3, 2023

File No. 3-21511

July 3, 2023 - The Securities and Exchange Commission today announced settled charges against Future FinTech Group Inc. ("FTFT"), arising out of the Company's filing of materially inaccurate annual reports and its failure to maintain adequate books and records and internal control over financial reporting.

According to the SEC's order, FTFT took significant impairment losses on its assets from fiscal years 2016 through 2018. However, disclosures in FTFT's own filings reflect triggering events that should have caused the company's assets to have been impaired in larger amounts earlier, rather than the way they were spread out over three years. Because FTFT did not test its assets for recoverability and record impairment losses in accordance with the applicable accounting standard, ASC Topic 360, the financial statements for fiscal years 2016 and 2017 should have included losses that were not taken until later years, and the financial statements for fiscal years 2017 and 2018 included losses that should have been taken in earlier years.

In addition, according to the SEC's order, and as reflected in FTFT's Forms 10-Q and 10-K for fiscal years 2020 to the present, FTFT has continued to have material weaknesses in its internal controls stemming from an inability to retain accounting personnel with sufficient expertise in GAAP and SEC reporting requirements. Furthermore, FTFT's Forms 10-Qs in prior fiscal years reflect multiple quarters in which material weaknesses were present in the company's internal controls.

The order finds that as a result of its conduct, FTFT violated Sections 17(a)(2) and (3) of the Securities Act; Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act; and Rules 12b-20, 13a-1, 13a-13, 13a-15(a) thereunder. Without admitting or denying the findings in the SEC's order, FTFT consented a cease-and-desist order and agreed to pay a $1.65 million civil penalty and to retain an independent compliance consultant to test, assess, and review FTFT's internal accounting controls and internal control over financial reporting.

The investigation was conducted by Howard Kim, Yitzchok Klug, Nandy Celamy, Steven Johnson, Ricky Tong, and Adam Grace, under the supervision of Associate Regional Director Sheldon L. Pollock, of the New York Regional Office.

Last Reviewed or Updated: July 3, 2023