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November 28, 2011

UK audit regulator recommends £34m fine for PwC

The UK Accountancy Actuarial Disciplinary Board has recommended  PwC UK be fined up to £34m ($53m) over the JP Morgan securities audit, according to the Financial Times.

At the disciplinary hearing, over PwC’s 2002 to 2008 audits of JP Morgan securities,  AADB prosecutors said the firm’s fine should not be disproportionate to the one received by JP Morgan last year over the same corporate failure.

JP Morgan was fined £33.3m by the Financial Services Authority (FSA) over failing to keep client assets and options businesses in separate accounts.

According to the Financial Times, PwC’s lawyer argued a reasonable fine should be between £500,000 and £1m as the firm made ‘an honest mistake’ and did not benefit from it.

Following the disciplinary hearing this week, an independent tribunal has 15 days to make a final ruling over the disciplinary action handed to PwC.

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 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.

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