The Securities and Exchange Commission announced Tuesday that Bernard Madoff's auditors have consented to a partial settlement with the commission.
According to the SEC, David Friehling and Friehling & Horowitz consented to a proposed partial judgment imposing permanent injunctions against them without admitting or denying the allegations against them.
If the partial judgment is entered by the Court, the permanent injunction will restrain Friehling and F&H from violating certain antifraud provisions of the federal securities laws.
The proposed partial judgment would leave the issues of the amount of disgorgement, prejudgment interest and civil penalty to be imposed against Friehling and F&H to be decided at a later time.
The SEC had accused Friehling and F&H of enabling Madoff's Ponzi scheme by falsely stating, in annual audit reports, that F&H audited Bernard L. Madoff Investment Securities' financial statements pursuant to Generally Accepted Auditing Standards (GAAS).
In addition, F&H also made representations that BMIS' financial statements were presented in conformity with Generally Accepted Accounting Principles (GAAP) and that Friehling reviewed internal controls at BMIS.
According to the SEC, all of these statements were materially false because Friehling and F&H did not perform a meaningful audit of BMIS and therefore had no basis to form an opinion about the firm's financial condition or internal controls.
Madoff was arrested when his sons Mark Madoff and Andrew Madoff turned him in December 2008 after Bernie confessed his $65 billion Ponzi scheme to them.
As a result of his Ponzi scheme, Madoff was ultimately sentenced to 150 years in prison on June 29, 2009.
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