Orbis, KPMG’s trust and company administration service, was sold to Dresdner Bank for an undisclosed amount reflecting the impact the Securities & Exchange Commission’s onslaught on auditor independence is having on the range of services the Big Five firms are able to offer.
KPMG decided to sell Orbis because tighter US rules would prove an unacceptable hindrance, the Financial Times reported today.
The SEC recently conducted a series of public consultations into its proposals to force accountancy firms to reduce the scope of services offered in order to avoid potential conflicts of interest.
The FT reported that KPMG faced problems with SEC rules because trust law dictates that the trustee was the legal owner of the assets under administration. Orbis clients holding equity portfolios that included shares in KPMG audit clients could create independence issues.
KPMG together with Deloitte & Touche has been the most vocal of the Big Five firms in its opposition to the SEC proposals. But the Orbis sale indicates a reluctant resignation of the Big Five to the power-wielding SEC.
‘Even the current rules were quite restrictive on what we could do,’ senior partner for KPMG in the Channel Islands Charles Clarke told the FT.
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