The SEC today announced settled charges against African Gold Acquisition for internal controls, reporting, and recordkeeping violations. These failures enabled African Gold’s former CFO to misappropriate approximately $1.2 million from the company’s operating bank account. As a result, African Gold made materially false filings with the commission and maintained inaccurate books and records, the SEC said.
The SEC’s order finds that African Gold violated Exchange Act provisions relating to internal controls, reporting, and recordkeeping. Without admitting or denying the SEC’s findings, African Gold agreed to a cease-and-desist order and to pay a $103,591 civil monetary penalty. The SEC lasty month charged African Gold’s former CFO, Cooper J. Morgenthau, with violating several provisions of the federal securities laws related to misappropriating money from African Gold’s operating bank account and for lying to African Gold’s accountants and auditor, circumventing and/or knowingly failing to implement internal accounting controls, falsifying African Gold’s books and records, and filing false certifications with the Commission. Morgenthau pleaded guilty.
The irregularities did not extend to the SPAC’s trust account, which holds about $415.5 million.
According to the SEC’s order, African Gold’s only liquid asset was the money held in its operating bank account, and thus potential fraud by management posed one of the company’s most significant risks of material misstatement in its financial statements. The SEC’s order alleges that, despite this risk, African Gold gave its former CFO control over nearly all aspects of its operating bank account and financial reporting process with little to no oversight. According to the order, this enabled the CFO to make unauthorized withdrawals from African Gold’s operating bank account to himself without detection for more than one year and to alter the company’s bank account statements to conceal his fraud. Read more.
