PwC fined £1.4m for JP Morgan breaches
Big Four firm PricewaterhouseCoopers was hit this week with a £1.4m fine and a minimum of £22,051 in costs for disciplinary failings it admitted in its role as auditor for JP Morgan Securities (JPMSL) from 2002-08.
As previously reported, PwC accepted that it had not applied due skill, care and diligence in its work on Financial Services Authority compliance reports and failed to follow the FSA’s Client Asset Rules (CASS).
The misconduct admitted by PwC included:
- Reporting to the FSA that JPMSL had complied with the client asset rules for the financial years from 2002 to 2008 and maintained adequate systems to do so
- Failing to obtain sufficient appropriate evidence on which to base these opinions, particularly the investment bank’s failure to keep client money separate from its own funds at all times. Following the subsidiary’s creation through a merger between Morgan Guaranty Trust Bank and Chase Manhattan in November 2001 money client funds held in the Futures and Options unit’s accounts were “swept” each night by the company’s unified treasury system into an unsegregated account called “Prime Nostro”
An agreed statement of facts on the case is available as a 2.9MB PDF from the AADB website.
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And that is just Uk turnover
Group turnover worldwide is around $26bn so its a drop in the ocean
Proportionality
PWC's t/o for the year to June 2011 was £2,461m.
Whilst £1.4m is a lot of money, it represents just 0.057% of PWC's income.
This is not even a slap on the wrist, its a fly dancing across their ear at three o'clock in the morning following a night on the vino!