Accounting
Trump pick for SEC chair faces conflict-of-interest scrutiny
Paul Atkins, President Donald Trump’s pick to lead the Securities and Exchange Commission, faced an early political test over his strong ties to Wall Street and digital-asset firms.
At his nomination hearing Thursday, the former Republican SEC commissioner and founder of consulting firm Patomak Global Partners met with stiff opposition from Democratic lawmakers over his potential conflicts of interest and support of deregulation.
Senator Elizabeth Warren, speaking just before his Banking Committee hearing, said she’s concerned that Atkins is “thinking about his past and future clients” rather than American families. That criticism is unlikely to get in the way of his approval by the GOP-controlled Senate.
Supporters of Atkins see him as an ideal choice to roll back Biden-era policies, bolster capital formation and provide clarity to the crypto industry.
In a letter sent Thursday to Warren, Atkins said he had “met or exceeded” the same ethics standard applied to prior SEC nominees, and was divesting from more than 150 financial holdings.
Priorities reset
Atkins told lawmakers he plans to work on “clear rules of the road” for Wall Street and digital-asset firms.
“Unclear, overly politicized, complicated and burdensome regulations are stifling capital formation, while American investors are flooded with disclosures that do the opposite of helping them understand the true risks of an investment,” Atkins said. “It is time to reset priorities and return common sense to the SEC.”
Atkins, 66, would be the wealthiest SEC chair in recent decades. He and his wife, Sarah, an heir to a roofing-products firm, have a net worth of at least $327 million, according to Office of Government Ethics filings.
His stake in Patomak is worth at least $25 million, based on documents made public on Tuesday. Atkins said he will resign as chief executive and divest from the firm and other holdings within 90 days of confirmation.
Client list
The firm’s long list of clients has raised questions about Atkins’s ability to navigate any conflicts of interest. His filings show compensation from Bank of America Corp., Barclays Plc, Exxon Mobil Corp., global investment firm Temasek Holdings Pte. and trading firm Virtu Financial Inc., among others.
Warren, the top Democrat on the Banking Committee, has pressed him for details on who will purchase his stake in his firm. Divestitures aren’t enough “unless he agrees to disclose to Congress who the buyer will be and whether they are paying for access to the SEC chair,” Warren said in an emailed statement before the hearing.
Warren also has
Scaling back
Atkins is expected to scale back regulation and enforcement, a path the SEC is already taking under the Trump administration.
Last month, the SEC asked a federal court to delay arguments in its legal defense of climate disclosure rules. And on Monday, the agency’s acting enforcement director said penalties will generally
Atkins is listed as a contributor to the Heritage Foundation’s Project 2025, which calls for a rollback of SEC regulations and eliminating the Public Company Accounting Oversight Board, the audit regulator established after the Enron accounting scandal. Atkins deflected questions on whether the board should be scrapped, saying it was up to Congress.
Senator Angela Alsobrooks, a Maryland Democrat, pushed Atkins to pledge that he won’t allow politics to interfere with the SEC’s work. She referenced reports about SEC Commissioner
Atkins told the panel he didn’t anticipate there would be any attempts to politically influence the agency while he is chairman.
Crypto prospects
For the crypto community, Atkins’s nomination is viewed as critical for the development of a light-touch framework that sharply contrasts with former SEC Chair Gary Gensler’s aggressive approach. Gensler pursued firms for failure to register as exchanges and disclose information about their tokens.
Wall Street firms often criticized Gensler’s fast-paced rulemaking agenda and tight timelines — sometimes as few as 30 days — to respond to agency proposals. They also complained about the time and money spent complying with regulations, including new disclosures in their corporate financial statements.
“It’ll be more of an emphasis on capital formation and investment choice as opposed to more of an emphasis on investor prohibition or greater regulatory obligations,” said Nick Morgan, president of the Investors Choice Advocates Network and former SEC attorney. “That’s a very good thing.”
Luke Pettit, the Trump pick to serve as assistant secretary of the Treasury, as well as Jonathan Gould, the nominee to lead the Treasury’s Office of the Comptroller of the Currency, also testified before the panel.
Prague & Co. was founded in 1988 and has a team of 15 professionals. Its services include accounting, tax and fund administration services to individuals, partnerships and corporations worldwide.
The firm focuses on high-net-worth individuals and alternative investment vehicles engaged in the real estate, timber, private equity and venture capital sectors. (The law firm of Prague & Peters PLLC is not part of the combination and will remain an independent law firm.)
“With 37 years of dedicated service to our clients, I’m proud of how our tax and accounting practice has grown while still adhering to the highest levels of quality and personal attentiveness. In evaluating the next steps and how to offer even more, combining with EisnerAmper provides the perfect solution. We’re excited about what this means for our clients and our team,” said founder Andrew Prague in a statement Tuesday.
Financial terms of the deal were not disclosed. EisnerAmper’s Eisner Advisory Group ranked No. 15 on Accounting Today‘s list of the
“With each client, Prague & Company works to understand the intricacies and nuances of each situation and then provides tailored guidance,” said Jay Weinstein, EisnerAmper’s vice chair of industries and markets, in a statement. “As we look to the future, the team at Prague & Company will enhance our Boston presence while deepening our expertise in trusts, estates, foundations, nonprofit organizations, and closely held businesses. We warmly welcome them to the EisnerAmper family.”
EisnerAmper has been busy on the M&A front since it
Builder.ai lowered the sales figures it provided to investors and hired auditors to examine its last two years of accounts, a major setback for the artificial intelligence startup backed by Microsoft Corp. and the Qatar Investment Authority.
The London-based company, which has raised more than $450 million, dropped its revenue estimates for the second half of 2024 by about 25% after some sales channels “did not come through,” according to Manpreet Ratia, the recently appointed chief executive.
Builder.ai confirmed the adjustment, which it began making last summer but hasn’t previously been reported, in response to questions from Bloomberg News about the sales correction and concerns from former employees that the company inflated sales figures.
“It’s probably time to sit back and take pause,” Ratia said in his first interview as CEO of the nine-year-old company, which helps businesses create customized apps with little to no coding. “We need to do a little bit of work making sure we get our house in order.”
The company’s missteps show the risks inherent in the rush to back promising AI startups, as investors seek to replicate the success of companies like OpenAI or Anthropic. After the debut of ChatGPT, the company rode investor enthusiasm for AI startups, raising from backers including Microsoft and the Qatar Investment Authority, which
Multiple former employees alleged that Builder.ai had inflated sales figures on several occasions by more than 20% than actual bookings. These former employees asked not to be identified discussing private information.
Ratia said that discounts Builder.ai provides to customers may account for discrepancies in its sales reporting. “For me to come out and say, ‘This is inaccurate’ — I don’t think I’m at the stage to do that,” he said. “When the audit report comes out, it will tell me everything.” The full audit is expected by this summer, he said.
When asked whether the company was treating the discrepancies as a potential fraud, a spokesperson said Builder.ai has “strengthened our internal policies and governance processes to ensure transparency and best practices at every level of the business.”
“While challenges can arise in any company, what matters most is how they are addressed,” the company said.
A representative from Microsoft didn’t respond to a request for comment. A spokesperson for QIA did not respond outside of regular business hours.
On Feb. 27, Builder.ai announced that its founder, Sachin Dev Duggal, was stepping down as CEO and being replaced by Ratia. The company also cut its board to five seats from nine, and asked Duggal to relinquish four of the five seats he had controlled. A company spokesperson said the recent revenue adjustments were “unrelated” to Duggal’s departure. Duggal, who has retained his title of “Chief Wizard,” did not respond to a request for comment.
Duggal left the same month as the company’s chief revenue officer, Varghese Cherian, who had spent more than nine years at the company. Cherian declined to comment.
At least five other senior employees including a sales director, a senior engineer and three vice presidents who oversaw revenue, human resources and its European operation, have left since October, according to their LinkedIn profiles. Builder.ai is still searching for a new chief financial officer, a post that’s been vacant since 2023.
Ratia declined to comment on Cherian and Duggal specifically and described the other departures as “part of a normal evolution of the business.” But the recent exits leave a gap in the company’s management as it’s racing to win customers in the competitive market for AI tools.
Ratia, who joined from Jungle Ventures, a Builder.ai investor based in Singapore, previously worked as a director for Citigroup Inc. and Amazon.com Inc. He said that Builder.ai has recruited several seasoned leaders over the last nine months, including Vahé Torossian, a former Microsoft executive hired as chief partner officer. Torossian is now taking on the chief revenue officer responsibilities as well, according to Ratia.
Ratia said he is searching for a CFO who has taken a startup public before.
An incoming financial chief will have to deal with any accounting issues the company uncovers. Ratia said the sales guidance adjustment came after expansion in Australia and Southeast Asia failed to meet expectations. The company moved from reporting finances to investors annually to monthly, in part because the sales had grown more “complicated,” Ratia said.
Builder.ai has recently hired two auditing firms to comb through its finances from 2023 and 2024. Ratia declined to name the auditors but said they were part of the “Big Four.” The company’s 2024 revenue is likely to come in at $170 million, up from $140 million in 2023, the company said.
The company relied on an auditor with close ties to Duggal for its U.K. accounts, the Financial Times had reported, citing a review of filings. The startup told the newspaper that its selection of auditors has evolved along with the company’s operational scale and local regulations.
“Are there things that could probably have been done better? Absolutely, I don’t deny that,” Ratia said.
Retail entrepreneur Christine Hunsicker has resigned from her position as chief executive officer of CaaStle after the fashion-technology startup’s board of directors alleged she misrepresented the company’s performance to investors, according to a March 29 letter to shareholders seen by Bloomberg News.
CaaStle faces “a severe and immediate liquidity problem,” and the board is considering options including a possible wind down, liquidation or strategic transaction, according to the letter. The company is planning a two-week-long furlough for its employees. Law enforcement authorities are also investigating the matter and the company is cooperating, the letter said.
Hunsicker didn’t respond to calls and emails seeking comment.
“The performance to date has not matched what Christine claimed — we have learned that Christine provided certain investors with misstated financial statements and falsified audit opinions, as well as capitalization information that understated the number of company shares outstanding,” the letter said.
“The board is deeply disappointed by the conduct that has led to this moment,” a representative for CaaStle said in a separate statement to Bloomberg. “Our immediate focus is on addressing the company’s challenges, supporting our employees, and preserving the value of our technology and business operations.”
The board has appointed George Goldenberg, the firm’s chief operating officer and board member as interim CEO, according to the letter, details of which were first reported by Axios.
Rental services
CaaStle, based in New York, began as Gwynnie Bee Inc. in 2011 and changed its legal name in 2018, according to an auditor’s report attached to the letter. It provides rental subscription services for owned and third-party retailers. The company has retained ICR for restructuring and strategic communications advice, according to a person familiar with the matter, who asked not to be named discussing confidential information.
Hunsicker also co-founded P180 with Brendan Hoffman, which aims to invest in or acquire brands and retailers to use CaaStle technology, according to a 2024 press release. In January, P180 announced that it had
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