ADMINISTRATIVE PROCEEDING
File No. 3-21561

August 15, 2023 - The Securities and Exchange Commission today announced settled charges against Ault Alliance, Inc. (f/k/a BitNile Holdings, Inc., Ault Global Holdings, Inc., DPW Holdings, Inc., and Digital Power Corporation) (“AAI”) and its Executive Chairman and then-Chief Executive Officer, Milton Charles (“Todd”) Ault III, arising out of misleading disclosures and reporting, proxy statement, books and records, and internal controls violations during the period 2016-2021. The Commission also announced settled charges against AAI’s former Chief Financial Officer and current CEO, William Horne, CPA, for his role in the falsification of AAI’s books and records.
  
According to the SEC’s order, in 2018 and 2019, AAI and Ault made materially false and misleading statements and omissions concerning the performance of a) a $50 million purchase order that AAI received from a related party that Ault controlled, Avalanche International, Inc, and b) AAI’s new crypto asset mining business. Separately, in 2019, through Ault and Horne, AAI improperly recorded a $75,000 payment to an individual as being for consulting services when, in fact, the payment was to extinguish a personal debt owed by Ault. In addition, AAI failed to make related-person disclosures in 2016-2021, has had long-running internal control weaknesses beginning in June 2017, and engaged in improper accounting related to its investments in warrants of Avalanche during its fiscal years ended 2018 through 2021.  AAI restated its financial statements to correct for its erroneous warrant accounting in amended filings on April 14, 2023. 

Without admitting or denying the SEC’s findings, AAI, Ault, and Horne consented to an order finding that a) the firm violated Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 (“Securities Act”), and Sections 13(a), 13(b)(2)(A), 13(b)(2)(B) and 14(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and Exchange Act Rules 12b-20, 13a-1, 13a-11, 13a-13, 13a-15(a), 14a-3, and 14a-9; b) Ault violated Exchange Act Rule 13b2-1; violated, and caused violations of, Securities Act Sections 17(a)(2) and 17(a)(3) and 14(a) and Exchange Act Rules 14a-3, and 14a-9; and was a cause of AAI’s violations of Exchange Act Sections 13(a), 13(b)(2)(A), 13(b)(2)(B)  and Rules 12b-20, 13a-1, 13a-11, and 13a-13; and c) Horne violated Exchange Act Rule 13b2-1 and was a cause of AAI’s violations of Exchange Act Sections 13(b)(2)(A) and 13(b)(2)(B). In addition, AAI agreed to pay a $700,000 penalty and to hire an Independent Consultant to review its internal control over financial reporting and disclosure controls and procedures; Ault agreed to pay a $150,000 civil penalty and to pay disgorgement of $75,000 with prejudgment interest of $10,504; and Horne agreed to pay a civil penalty of $20,720. 
 
The SEC’s investigation was conducted by Christina McGill, Elizabeth Marshall Anderson, and Michi Harthcock, with assistance from assistant chief litigation counsel Timothy Halloran. The case was supervised by Tim England and Melissa Hodgman.