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PwC fined £1.4m for failing to notice JPM breaches

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.”



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There are 4 comments at the moment, we would love to hear your opinion too.

  1. FSA fining PwC for ‘failing to notice…..’??
    Keydata, kettles and pots come to mind!

  2. So Transact got fined £3 miillion for their breach…..

    …Seems PwC has got away with it on the cheap!!!!!

  3. This does make me laugh!

    PwC fail to notice breaches ……… so the FSA really do enforce “Do as I say not as I do”!!

    I wonder how much the FSA should be fined for not spotting the breaches it hasnt spotted???

    Should we start with all the major bank breaches? where the FSA admit that they had spent to much time and resource on things such as TCF and RDR rather than regulating the banks?
    or should we start with Keydata? where the FSA were in at Keydata for two years before they actually went pop!!

    Anyway, I am sure that we IFAs can do absolutely nothing as we have no real voice. We are just the easy targets for the FSA. I am sure that the FSA will eventually get their way and ban all IFAs, just leaving the banks and probably a few National Institutions….. much easier for them to regulate!

  4. The fine was not imposed by the FSA it was imposed by Accountancy & Actuarial Discipline Board which is an independent regulator for chartered accountants.

    It’s worth noting that the FSA took no action whatsoever and maybe that’s the real problem here that the auditing of big banks and indeed large financial houses has become so slack. There have been so many mergers in the accountancy world, that we now only have four major firms that are large enough and have enough expertise to auditing a large Bank or corporation. This is a real problem and gets to the heart of the problem of corporate governance. I would go as far to say that the big accountancy firms should be split up and there should be a toughening up of the non-executive role for checking accountant audits.

    You only have to look at what can go wrong when the accountants have two cosier relationships with boards of large firms when you look at the RBS situation. Where were the RBS auditors when Fred Goodwin announced his rights issue just before the bank had to go for government money and why were they not held responsible for the lack of auditing of the ABN deal?

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