Pricewaterhousecoopers has been slapped with a 1.4 million pound fine for wrongly informing local regulators JPMorgan Securities was keeping client money safe, for seven years. The Accountancy and Actuarial Discipline Board said the top auditor which checks books of almost all blue-chip companies, said it failed to collect "sufficient appropriate evidence" to report JPMorgan Securities.
It said most of the money from futures and options trading was being "swept" daily into interest-bearing, unsegregated accounts overnight at JPMorgan Chase bank. The Financial Services Authority had set a record 33.3 million pound fine on JPMorgan Securities in June 2010 for not keeping client money separate at all times from its own money. The amount of client money ranged from $1.9 to $2.3 billion and were held in unsegregated accounts, at risk of loss if the lender became insolvent.
The AADB said an independent tribunal found PwC's misconduct "very serious" and while it would have issued a fine of 2 million pounds, the penalty was reduced because the auditor cooperated, but was made to pay AADB's expenses. The tribunal even called for further action. "We wish to comment that we have been surprised and concerned that no partner at PwC has been named in relation to this matter or proceeded against by the (AADB's) Executive Counsel."
PwC said it regretted one aspect of its work on the private client money report to the FSA fell below "our usual high standards". It added, "When this issue was identified, and before any complaint had arisen, we took action to ensure that staff received training in the client monies area." The complaint against the company was based on its reports to the FSA for the seven years to December 31, 2008. Tom Martin, AADB executive counsel, said, "It is an appropriate penalty, given the framework the tribunal had to deal with."
