Disciplinary Action Slams PwC Over JP Morgan Audits

UK’s independent, investigative and disciplinary body for accountants and actuaries will finally hear a formal complaint by FRC’s (Financial Reporting Council) executive counsel regarding the conduct of PricewaterhouseCoopers LLP (PwC) as auditor to JP Morgan Securities Ltd.

On September 2010 the Accountancy and Actuarial Discipline Board (AADB) set out an investigation into the conduct of PwC in relation to the reports it submitted to the Financial Services Authority about JP Morgan‘s compliance with the FSA’s Client Asset Rules for the periods ended December 31, 2001 to December 31, 2008.

Last month, the Securities and Exchange Commission charged JP Morgan Securities LLC with fraudulent bidding practices that involved investment of at least 93 municipal bond reinvestment transactions in 31 states, generating millions of dollars in ill-gotten gains.

PwC conceded to the results of the investigation, to which it has fully co-operated.Now, Executive Counsel Cameron Scott has filed a disciplinary Formal Complaint with the AADB.

In particular, the Formal Complaint claimed: “PwC did not carry out its professional work in relation to these reports with due skill, care and diligence and with proper regard for the applicable technical and professional standards expected of it and consequently did not report that client money held by JPMSL’s Futures and Options business was not segregated at all times in accordance with the CASS Rules in force at that time.”

An independent Disciplinary Tribunal will be appointed to consider the Formal Complaint and to decide upon any sanctions to be imposed.