The latest compliance issues in wealth management across North America.

PwC
Accountancy and professional services giant PricewaterhouseCoopers has been ordered by a federal court to pay $625 million in damages for not catching a fraud scheme that helped cause a major bank failure. 

The judgement against PwC centers on the failure in 2009 of Alabama’s Colonial Bank. The Wall Street Journal report on the case called it one of the largest judgements or settlements for malpractices by an accounting firm.

The WSJ said the decision followed a December ruling in which US District Judge Barbara Jacobs Rothstein found PwC, the outside auditor for Colonial’s bank-holding company, negligent in not detecting a massive fraud at a major customer of the firm. That scheme helped trigger the bank’s collapse, the report said. 

Judge Rothstein agreed with the Federal Deposit Insurance Corp, the organization that had sued PwC as the receiver for the failed bank, that $625.3 million was the proper level of damages to assess against PwC. 

“For the foregoing reasons, this court concludes that the FDIC has established by a preponderance of the evidence that PWC’s negligence proximately caused the FDIC’s asserted damages and further concludes that the FDIC has quantified its damages to a reasonable certainty,” the judge said in her statement on the case. 

The WSJ reported that Philip Beck, a lawyer for PwC, said the firm was “disappointed” in the ruling and plans “to pursue an appeal of this matter at the earliest opportunity.”

Colonial was one of the 25 largest banks in the US with more than $26 billion in assets and more than 340 branches throughout Alabama, Georgia, Florida, Nevada, and Texas in 2008.