US SEC fines UK firm Crowe over audit of music streaming business

(Reuters) – The British audit firm Crowe UK, an executive and top auditor have agreed to pay nearly $800,000 to settle charges they falsely claimed to have properly audited a business that went public despite having little to no revenue, Wall Street’s top regulator announced on Monday.

The settled charges against the London-based audit firm, Crowe CEO Nigel Bostock, and senior auditor Matthew Stallabrass were announced nearly two years after the Securities and Exchange Commission reached a $38.8 million settlement with the purported music streaming business Akazoo, which allegedly defrauded investors out of tens of millions of dollars.

Following the audit, Akazoo went public through a merger with a special purpose acquisition company (SPAC) in 2019, with financial statements falsely claiming $120 million in revenue for the prior year.

Crowe, Bostock and Stallabrass neither admitted nor denied the charges, according to the SEC. A lawyer representing the three referred queries to the company, which said it was pleased to have resolved the matter.

“Audit quality and its continuous improvement remain a key priority for the firm,” the company said in a statement.

According to the SEC, Crowe falsely claimed its staff were qualified to conduct an audit according to standards set by the U.S. Public Company Accounting Oversight Board and failed to exercise appropriate skepticism when presented with fabricated documents, among other failings.

Crowe has agreed to withdraw its PCAOB registration while Bostock and Stallabrass have agreed to be suspended from appearing before the SEC as accountants for minimum periods of five and two years, respectively, the SEC said.

(Reporting by Douglas Gillison; Editing by Paul Simao)