The Securities and Exchange Commission on Wednesday charged audit firm Marcum LLP with “systemic quality control failures’ and violations of audit standards in work conducted for hundreds of special purpose acquisition corporations. Marcum has agreed to pay a $10 million fine to settle the charges. Over a three-year period starting in 2020, Marcum more than tripled its public company clients, according to the regulator, the majority of which were SPACs, or blank-check companies, which became popular during the pandemic. SPACs are shell companies that go public and then acquire a business or businesses within a two-year timeframe. If they fail to find a suitable target, they give the money back to the original investors. Marcum’s rapid growth “exposed substantial, widespread, and pre-existing deficiencies in the firm’s underlying quality control policies, procedures, and monitoring. These deficiencies permeated nearly all stages of the audit process and were exacerbated as Marcum took on more SPAC clients,” said the SEC. More than 860 SPACs conducted IPOs between 2020 through 2021, and nearly half were audited by Marcum. “Marcum neglected its essential gatekeeper function in service to its own growth,” said SEC Chair Gary Gensler.
