U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25870 / September 29, 2023
Securities and Exchange Commission v. Luther C. Speight, III and Luther Speight & Company, LLC, No. 1:23-cv-4384-AT (N.D. GA. filed Sept. 27, 2023)
SEC Files Settled Fraud Charges Against New Orleans-Based Auditor and Its Principal
The Securities and Exchange Commission announced settled charges against New Orleans-based audit firm Luther Speight & Company, LLC (“LSC”) and its principal Luther C. Speight, III.
According to the SEC’s complaint, filed in the U.S. District Court for the Northern District of Georgia, LSC and Speight were hired in June 2019 by a Louisiana-based school board (“School Board”) to perform an audit of the School Board’s fiscal year 2019 financial statements. The SEC alleged that, on January 2, 2020, LSC, through Speight, issued an auditor’s report stating that it had conducted the audit of the School Board’s fiscal year 2019 financial statements in accordance with Generally Accepted Audit Standards (“GAAS”). According to the SEC’s allegations, this statement was false, as Speight and LSC did not comply with GAAS in many important and material respects, and the School Board’s financial statements also contained various errors that had to be corrected. The SEC alleged that Speight and LSC knew, or should have known, that the School Board would use the auditor’s report to sell bonds to investors. The SEC further alleged that the School Board unknowingly used LSC’s auditor’s report, with the false statement, to sell $120 million of bonds to an investor in March 2020.
Without admitting or denying the allegations, LSC and Speight agreed to be permanently enjoined from future violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933. Speight also agreed to a conduct-based injunction which would prevent him from serving as the engagement manager, engagement partner, or engagement quality reviewer in connection with any audit of financial statements or audit report which Speight should reasonably expect to be submitted to the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access website (“EMMA”), and LSC agreed to a conduct-based injunction which would prevent it from participating in the audit of financial statements which LSC should reasonably expect to be submitted to EMMA. LSC and Speight also agreed to be held jointly and severally liable to pay disgorgement and prejudgment interest totaling of $12,826. LSC and Speight also consented to pay civil penalties of $20,000 and $10,000, respectively. The settlement is subject to court approval.
The SEC’s investigation was conducted by Robbie Mayer and Creighton Papier of the Enforcement Division’s Public Finance Abuse Unit, with assistance from Kristin Murnahan of the SEC’s Atlanta Regional Office and was supervised by Peter J. Diskin, Rebecca Olsen and LeeAnn Gaunt of the Public Finance Abuse Unit.