The Marriage Is Over: Newly Merged Top 100 Firm(s) Call It Quits

When Walnut, Calif.-based Moore Stephens Wurth Frazer and Torbet joined forces with Little Rock, Ark.-based Frost, PLLC last year, the new Frazer Frost was born and the future of the combined firm looked bright.

Frazer Frost entered the IPA Top 100 in 2010 at No. 59 with combined net revenues of $48.7 million. Now, 11 months post-merger, the firms have called it quits, according to published sources.

Financialinvestigator.com reported in late November that Frost MP Dan Peregrin said in a prepared statement, “The partners of both firms have been friends for years and believed we could best build our business as one firm. Our combination agreement called for a trial period, which began on Jan. 1, 2010, for us to ‘test the waters’ and we have been operating our businesses under the Frazer Frost, LLP name during this time.”

Peregrin told FI.com that a “culture clash” led to the break-up and, “There [are] a lot of [issues] right now in [Chinese reverse mortgage] practice area and we just felt it would be smarter to wish them luck and stick to our practice areas.” Both firms will resume operations under their previous names, according to reports.

The Moore Stephens Wurth Frazer and Torbet side has been “in hot water for a series of audits in its Chinese reverse-merger client base that appear to defy both common sense and financial probability,” according to FI.com.

The Web site GoingConcern.com posted additional information and the following quote from Citron Research, “If you call Frost today in Arkansas, they answer ‘Frost & Co.’ and say they’re no longer associated with Frazer. Citron spoke to Peregrin and twice he told us that the two firms have gone their own way[s] – but if you call Frazer, they answer ‘Frazer Frost’ and in a brief conversation with Susan Woo, the RINO auditor, she told Citron that Frazer Frost is still an operating entity.”

According to published reports, on December, 20, the SEC fined Moore Stephens Wurth Frazer & Torbet LLP and Kerry Dean Yamagata, one of the firm’s partners $129,500 for “improper professional conduct” in connection with a Chinese energy company accused of accounting fraud.

Yamagata, the partner responsible for the audits, was barred from practicing as an independent accountant for at least two years, according to published SEC reports. The SEC ordered the firm to retain an independent consultant for training in fraud detection, auditor independence and other duties related to auditing functions. It ordered the firm not to accept any new issuer audit clients with operations located in China, Hong Kong or Taiwan for an unspecified time period, according to the statement.