McGladrey & Pullen and CPA firm
Altschuler, Melvoin and Glasser have been ordered to pay the
Securities and Exchange Commission (SEC) $1.7m over deficient
audits of the bankrupt fund manager Sentinel Management Group.

The SEC has also censured McGladrey &
Pullen director Victor Johnson II, who worked at Altschuler,
Melvoin and Glasser at the time of the audits. McGladrey &
Pullen acquired Altschuler, Melvoin and Glasser in 2006.

The Commodity Futures Trading Commission
(CFTC), an independent agency that regulates commodity futures and
option markets in the US, investigated the role of the auditor.

The CFTC found the respondents’ audits of
Sentinel deficient in several areas, resulting in a failure to
respond to material misstatements in Sentinel’s financial
statements and material inadequacy in Sentinel’s internal

From 2002 through 2006, Sentinel was required
by the SEC’s custody rule to have an accountant verify all of its
client funds and securities by surprise examination at least once
each calendar year.

Altschuler, Melvoin and Glasser was the
independent public accounting firm that Sentinel retained to
perform its surprise examinations from 2002 through 2006. Johnson
was the engagement partner overseeing the Sentinel surprise
examinations for every year except 2004, but he failed to conduct
the examinations in accordance with the professional standards
applicable to examinations, according to the SEC.

This meant that Sentinel violated the custody
rule and the Advisers Act.

Altschuler, Melvoin and Glasser, and Johnson
also failed to meet the American Institute of Certified Public
Accountants attestation standard, according to the SEC.

Following the CFTC investigation, the SEC
settled with all parties involved. McGladrey & Pullen is to pay
$400,000 in restitution to Sentinel’s customers and $150,000 in
penalties. Altschuler, Melvoin and Glasser will pay $800,000 in
restitution and $350,000 in penalties.

Johnson, 69, was denied the privilege of
appearing or practicing before the SEC as an accountant.