FORMER MF GLOBAL customers have filed a lawsuit against the investment bank’s former auditors, PwC.
In an amended complaint filed in the US District Court in Manhattan, MF Global Inc customers accused PwC of failing to adequately audit internal controls over customers funds at the bank.
The lawsuit argues that PwC failed to examine MF Global’s control over customer funds. This amounted to professional malpractice and a breach of auditor duties.
“If PwC had properly executed its duties and evaluated and reported on [MF Global]’s control problems in March 2011, there would have been ample time for management to institute proper controls over customer funds,” the complaint said.
When MF Global UK collapsed in November last year, it was the world’s first Special Administration Regime. This type of administration was created for collapsed financial institutions to ensure a faster return of customer funds.
Richard Fleming, Richard Heis and Mike Pink, partners at KPMG, were appointed joint administrators to the collapsed investment bank.
The administrators are set to take the US arm to court over a $700m claim which they dispute is owed to the American group.
A statement from PwC US said: “PwC audited the financial statements of MF Global Inc. and reviewed its control activities for safeguarding customer assets as of March 31, 2011 in accordance with professional standards.
“The audit evidence confirmed that MF Global Inc. maintained customer assets in accordance with the applicable SEC and CFTC requirements as of March 31, 2011, and both congressional testimony and the SIPC Trustee’s June 2012 report support this conclusion. We will defend this lawsuit vigorously.”
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The fast-track move is a bold departure from the norm, as a probe would normally only begin several months after administrators had finished their own enquiries
EY has been BG auditor since 2013, while it was recently appointed Royal Dutch Shell auditor