PwC’s US arm has gone on trial in New York over claims the firm was allegedly negligent in its accounting advice to derivatives broker MF Global Holdings, which went bankrupt in 2011 after suffering huge financial losses on European government debt
The case, which is expected to last about five weeks, hangs on PwC’s accounting advice relating to the decision by MF Global Holding’s former CEO Jon Corzine to invest $6.3m (£5.17m) in European sovereign debt.
The issue is 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 broker’s administrator is claiming around $2m in damages for alleged negligence.
On the opening day of the trial, a lawyer representing PwC said: ‘MF Global was a sophisticated financial company’ and described Corzine as ‘the mastermind and the driver’ behind the European debt strategy.
The lawyer stated: ‘Pricewaterhouse did not commit malpractice in its audits of MF Global and is not at all to blame, not one bit, for the bankruptcy.’
The current trial is the last major piece of litigation to recover money for MF Global creditors.
In April 2015 PwC reached a separate $65m settlement with MF Global investors, but denied wrongdoing.
Corzine has not been accused of intentional misconduct, but in January reached a $5m civil settlement with the US Commodity Futures Trading Commission.
Neither PwC nor Corzine has issued a statement at this stage.
