Watchdog investigates PwC over JPMorgan

In a statement, the Accountancy and Actuarial Discipline Board (AADB) said it was investigating PwC’s role in JPMorgan’s compliance with client asset rules set by the Financial Services Authority (FSA).

The board said it was investigating: “The conduct of PricewaterhouseCoopers LLP in relation to the preparation of reports to the FSA in respect of JP Morgan Securities Limited’s compliance with the FSA’s Client Asset Rules for the periods ended 31st December 2001 to 31st December 2008.”

A PwC spokeswoman said: “We are fully cooperating with the AADB investigation and have no further comment to make at this stage”.

The announcement comes a week after the FSA found “material failings and weaknesses” in a number of audits, focusing on segregation of client money and assets within financial services firms.

The AADB simultaneously announced it was investigating Ernst & Young (E&Y) over similar issues in its audit work at Lehman Brothers’ European arm. This is the second AADB investigation in connection with Lehman Brothers. The watchdog is also looking at the treatment of so called Repo 105, or repurchase transactions within the bank.

An E&Y spokeswoman said it was one of a number of auditors that had been referred to the AADB by the FSA “in relation to reporting on client assets”.

“Ernst & Young can confirm that it has been approached by the AADB in relation to this matter. We will cooperate fully with the investigation.”

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