An accounting firm that previously worked with former President Donald Trump’s social media company, Trump Media, has been accused of “massive fraud” by the U.S. Securities and Exchange Commission (SEC). The firm, BF Borgers, was described as a “sham audit mill” by the SEC’s enforcement division director, Gurbir Grewal. BF Borgers is accused of engaging in deliberate and systemic failures in independent audits and reviews included in over 1,500 SEC filings for public companies between January 2021 and June 2023. Trump Media used BF Borgers as its accounting firm before going public in March, but the firm is not accused of committing fraud in relation to Trump Media.
Following the SEC investigation, BF Borgers and its owner, Benjamin Borgers, were ordered to cease practicing as accountants before the commission and to pay a combined civil fine of $14 million. Companies that used BF Borgers for SEC filings were also instructed to find a different qualified accountant. A spokesperson for Trump Media stated that the company is looking forward to working with new auditing partners in compliance with the SEC’s order. The investigation found that at least 75 percent of filings involving BF Borgers’ audits did not meet federal standards and that the firm fabricated audit documentation to appear compliant. Grewal criticized Borgers and his firm for their failure as gatekeepers in the financial markets, putting investors and markets at risk while undermining trust and confidence.
Despite Trump being a prominent user of Truth Social, Trump Media stock shares experienced high demand earlier in the year after going public. The stock value surged but then sharply declined, leading to scrutiny over the company’s valuation. Some have compared Trump Media stock to meme stocks that artificially increase in value due to online activity, suggesting that enthusiastic Trump supporters might have impacted the stock price. A SEC filing in April revealed that Trump Media made over $4.1 million in revenue but incurred losses of almost $58.2 million. However, the company’s valuation on the stock market exceeded $6 billion. Daily active users of Truth Social declined to around 113,000 as of April, representing a drop of nearly 20 percent from the previous year.
Trump Media’s Truth Social platform saw a decline in the number of active daily users in recent months, with the company facing scrutiny over its valuation and financial performance. The SEC’s order to shut down BF Borgers and its owner for alleged fraud in independent audits and reviews has raised concerns about the credibility and integrity of financial reporting in the market. Trump Media’s stock price volatility and comparison to meme stocks suggest potential speculation and influence by supporters of former President Trump. Moving forward, Trump Media will need to work with new auditing partners to ensure compliance with SEC standards and regain the trust of investors and the market.
