PwC’s US firm has come to a settlement with former audit client MF Global Holdings, ending a high profile trial in New York over claims the firm was allegedly negligent in its accounting advice to the derivatives broker, which went bankrupt in 2011 after suffering huge financial losses on European government debt
The size of the settlement was undisclosed. MF Global was believed to have been seeking up to $2bn (£1.6bn) in damages for alleged accounting malpractice.
The issue in dispute was believed to relate to whether the purchase of the European bonds should have been treated as a sale and, as such not moved off MF Global’s balance sheet, which is the approach PwC took.
The case was brought by the administrator for MF Global, which claimed that when the full scale of the bond-buying was discovered a crisis of confidence led to customers and counterparties abandoning the brokerage and tipping it into bankruptcy.
In opening arguments heard at the trial, PwC described Jon Corzine, MF Global chairman and chief executive from March 2010 until the end, as ‘the mastermind and the driver’ behind the European debt strategy. Its legal team suggested Corzine was responsible for an alleged culture of risky bets on EU debt in a bid to boost profits.
PwC’s lawyer stated at the time: ‘Pricewaterhouse did not commit malpractice in its audits of MF Global and is not at all to blame, not one bit, for the bankruptcy.’
Regarding the latest development, a PwC spokesperson said: ‘The case was settled to the mutual satisfaction of the parties.’
The trial, in the US district court of the southern district of New York, was expected to last five weeks. The settlement came before PwC's lawyers had begun to call witnesses to its defence.
