Compliance

Marcum’s compliance leader charged with improper professional conduct

“Improper professional conduct” leads to three-year ban and $75k fine.
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In a move that suggests the Securities and Exchange Commission will punish audit firms’ executives if they fail to fix problems, the SEC on Tuesday charged Greg Giugliano, the top compliance professional at Marcum LLP, with engaging in “unethical or improper professional conduct.”

Marcum itself was charged in June with “systemic quality control failures and violations of audit standards,” and paid a $10 million penalty, without admitting wrongdoing. The charge against Giugliano, who was the national assurance services leader at Marcum for more than 20 years, stems from what the SEC claims is a failure to “sufficiently address and timely remediate numerous deficiencies” within Marcum’s practice.

Marcum’s communications director did not respond to CFO Brew’s request for comment by publication.

As part of a deal with the SEC that included no admission of wrongdoing, Giugliano agreed to pay a fine of $75,000, and to take a three-year break from management responsibilities at any registered public accounting firm.

“This action highlights that those with responsibilities for audit firms’ quality control systems, including national partners, must fulfill these critical obligations” of imposing quality control standards, Carolyn Welshhans, associate director of the division of enforcement at the SEC, said in a statement.

The SEC emphasized Giugliano’s alleged lack of response to “an increasing number of deficiencies” the PCAOB identified in its annual inspections of Marcum.

Marcum generated more than $1.2 billion in revenue last year, more than double what the firm made in 2019, according to Accounting Today. The firm’s rapid growth, according to the SEC, “exposed substantial, widespread, and pre-existing deficiencies in the firm’s underlying quality control policies, procedures, and monitoring that Giugliano oversaw.”

The SEC found particular fault with the firm’s work related to SPACs. Marcum was a large player in the SPAC boom of 2020 and 2021, as the auditor of nearly half the SPAC IPOs of that period, the SEC claims. That boom contributed to Marcum’s growth: It audited 185 public company issuers in 2019, but by 2022, had 575 such clients, “the majority of which were SPACs,” per the SEC.

News built for finance pros

CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.