SEC Charges Madoff Auditors

The SEC charged the auditors of Bernard Madoff’s broker-dealer firm with committing securities fraud by representing that they had conducted legitimate audits, when in fact they had not. In its complaint filed in federal court in New York, the SEC alleged that from 1991 through 2008, certified public accountat David G. Friehling and his firm, Friehling & Horowit, CA’s, P.C., purported to audit financial statements and disclosures of Bernard L. Madoff Investment Securities LLC. The SEC’s complaint alleged that Mr. Friehling enabled the Madoff Ponzi scheme by falsely stating, in annual audit reports, that F&H audited the Madoff firm’s when they had not. F&H also allegedly made representations that the Madoff firm’s financial statements were presented in conformity with Generally Accepted Accounting Principles and that Mr. Friehling reviewed internal controls at the investment firm, including controls over the custody of assets, and found no material inadequacies.