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October 31, 2011

PwC faces tribunal for JP Morgan audits

PwC UK will face a disciplinary hearing over its 2002 to 2008 audits of JP Morgan, following an Accountancy and Actuarial Discipline Board (AADB) investigation.

The hearing, which will be held on 28 November 2011, will take place due to AABD allegations that PwC’s audits of the investment bank ‘lacked due skill, care and diligence’.

The AABD began its investigation in September 2010 and found PwC did not report that client money held by JP Morgan’s futures and options business was not segregated at all times in line with the FSA’s Client Asset rules in force at that time.

PwC was JP Morgan’s main auditor and responsible for producing the bank’s client asset returns report as required by the FSA to ensure customer fund protection.

PwC allegedly failed to notice JP Morgan had placed as much as £16bn ($26bn) of client funds into incorrect bank accounts over a seven-year period between 2002 and 2009. In 2010, the FSA fined the investment bank £33.3m for breaching rules governing segregation of client money.

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