SEC Files Settled Fraud Charges Against New Orleans-Based Auditor and Its Principal

The Securities and Exchange Commission (SEC) has announced the resolution of charges against Luther Speight & Company, LLC (LSC), an audit firm based in New Orleans, and its principal, Luther C. Speight, III.

The SEC’s complaint, which was filed in the U.S. District Court for the Northern District of Georgia, revolves around LSC’s engagement by a Louisiana-based school board in June 2019 to conduct an audit of the school board’s fiscal year 2019 financial statements. The SEC alleges that on January 2, 2020, LSC, through Luther Speight, issued an auditor’s report asserting that it had conducted the audit of the school board’s financial statements for the fiscal year 2019 in compliance with Generally Accepted Audit Standards (GAAS). However, the SEC contends that this statement was inaccurate, as Luther Speight and LSC failed to adhere to GAAS in numerous significant and material respects. Furthermore, the financial statements of the school board contained various errors that required correction. Crucially, the SEC asserts that Speight and LSC knew or should have known that the school board would use the auditor’s report to sell bonds to investors. In a subsequent transaction in March 2020, the school board unknowingly employed LSC’s auditor’s report, which contained the false statement, to sell $120 million in bonds to an investor.

In the settlement reached, neither LSC nor Speight admit or deny the allegations made by the SEC. However, they have agreed to a permanent injunction that bars them from future violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933. Additionally, Speight has accepted a conduct-based injunction preventing him from serving as the engagement manager, engagement partner, or engagement quality reviewer concerning any audit of financial statements or audit report that he should reasonably expect to be submitted to the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access website (EMMA). Similarly, LSC has agreed to a conduct-based injunction that precludes the firm from participating in the audit of financial statements that it should reasonably expect to be submitted to EMMA.

As part of the settlement, LSC and Speight will be jointly and severally liable for disgorgement and prejudgment interest totaling $12,826. Furthermore, they will pay civil penalties, with LSC paying $20,000 and Speight paying $10,000. The approval of this settlement is pending court approval.

If you suspect your advisor mismanaged your money or committed negligence or fraud, call Sonn Law Group for a free consultation at 833-912-3000 today.