RSM US LLP (“RSM”) recently paid a $3.75 million penalty to the SEC for failing to properly audit the financial statements of Revolution Lighting Technologies, Inc. (“Revolution”), while Revolution was artificially inflating revenues over a four-year period. According to the SEC’s order, RSM failed to comply with the Public Company Accounting Oversight Board’s auditing and quality control standards, in finding that Revolution’s inflated revenues were immaterial to investors.
Gurbir Grewal, the SEC’s Director of the Division of Enforcement, stated, "Auditors are important checks against fraud, and they should be scrutinizing arrangements like bill and hold sales. RSM failed to do this at all levels, from the engagement team up through the firm’s national office. And by giving Revolution a pass, investors learned only too late that Revolution was committing a multi-year fraud."
In addition to paying the monetary penalty, RSM has agreed to be censured and to retain an independent consultant to evaluate its policies and procedures.
Auditors who fail to conduct proper audits may be liable for investors’ resulting losses. If you were impacted by RSM’s inflation fraud, the securities attorneys at Morgan & Morgan’s Business Trial Group are here to help. Please contact us at (888) 744-0142 or visit us online for a free case evaluation.
The Business Trial Group at Morgan & Morgan is part of the largest contingency law firm in the nation, with over 800 lawyers and 50 offices. We help investors recover their losses on a contingency basis—that means we are only paid if we successfully recover money for you. We have helped numerous investors recover tens of millions of dollars of investment losses, and we’re ready to fight for you.
Don’t wait—reach out today.