According to the SEC order, since the closing of its initial public offering (IPO) of securities in March 2021 until late 2022, “African Gold failed properly to devise and maintain a sufficient system of internal accounting controls and also failed to maintain internal control over financial reporting (ICFR) and disclosure controls and procedures (DCP) as required.”
African Gold’s failure to implement sufficient internal controls enabled Cooper Morgenthau, African Gold’s former chief financial officer, to misappropriate nearly all the funds in the company’s operating bank account—approximately $1.2 million—and to otherwise use the bank account as his own personal account for over a year, according to the SEC order.
“For example, African Gold failed to implement basic segregation of duties or monitoring controls with respect to its operating bank account, cash disbursements and financial reporting more generally,” the SEC order stated.
“This settled order with African Gold demonstrates that SPACs must comply with basic Exchange Act requirements, just like any other publicly traded company,” said John Dugan, Associate Director for Enforcement in the SEC’s Boston Regional Office. “The fact that African Gold did not discover the misappropriation of its funds for more than a year, when certain vendors refused to provide further services due to unpaid invoices, clearly indicates that the company neglected to comply with basic internal control requirements.”
Consequently, African Gold filed material misstatements in its Form 10-K filed with the SEC for the fiscal year ended Dec. 31, 2021, and in quarterly reports for the periods ended June 30, 2021, Sept. 30, 2021, and March 31, 2022.
On Feb. 13, African Gold filed a preliminary proxy statement seeking shareholder approval to extend its liquidation date from March 2 to June 2 and to allow African Gold, without another shareholder vote, to further extend the liquidation date until March 2, 2024, among other proposals.
The SEC’s settled charges against African Gold follow charges brought against Morgenthau on Jan. 3. 
Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.