The UK arm of PricewaterhouseCoopers has been fined a record £1.4m and severely reprimanded by the Accountancy & Actuarial Discipline Board for failing to notice billions of dollars in client moneys had not been properly ringfenced by US bank JP Morgan Chase.
PwC was auditor for JP Morgan Securities Limited between 2002 and 2008 but failed to notice during that period that JPMSL had mixed up £23bn of client money with its own cash.
As a result, PwC mistakenly reported to the FSA that JPMSL had maintained systems to comply with client money rules. In 2010, JPMSL was fined a record £33m by the FSA for the breaches.
The PwC fine is the largest yet for a UK accountancy firm but falls some way short of the potential penalties put forward by regulators who said the fine could have been larger.
A statement from the AADB says: “The tribunal found the misconduct in this case to be ‘very serious’ and therefore imposed a severe reprimand on PwC. It further ordered that PwC should pay a record fine of £1.4m, reduced from £2m for cooperation and other mitigation, and the AADB’s costs in investigating and prosecuting the case.”