PwC faces disciplinary action from UK regulator over JP Morgan work
UK - PwC is facing disciplinary action from the UK's Financial Reporting Council (FRC) over accusations that work the consultancy conducted for JP Morgan Securities lacked "skill, care and diligence".
The threat of disciplinary action follows an investigation, launched in September last year, to look into the preparation of reports for the Financial Services Authority (FSA) and JP Morgan's compliance with the FSA's client asset rules, which govern aspects of third-party assets and money.
The investigation by the FRC's Accountancy & Actuarial Discipline Board (AADB) examined a six-year period between the end of 2002 and the end of 2008, when the consultancy allegedly failed to carry out its work professionally.
The board noted PwC's full cooperation and said the consultancy admitted to the formal complaint, which could lead to disciplinary action.
The AADB said: "The formal complaint alleges that PwC did not carry out its professional work in relation to these reports with due skill, care and diligence and with proper regard for the applicable technical and professional standards expected of it.
"Consequently, [PwC] did not report that client money held by JPMorgan Securities' Futures and Options business was not segregated at all times in accordance with the CASS Rules in force at that time."
Last year, the FSA fined JP Morgan £33m (€40m) for failing to segregate the accounts after the bank reported its error, ruling that the mistake occurred following the merger of JP Morgan and Chase Manhattan Bank in 2000 but did not result in the loss of any client money.
A spokesman at PwC stressed that the company had cooperated fully with the AADB and that it was "naturally" a matter of regret that, in this instance, its high standards were not upheld.
"However," he added, "as the Tribunal will be considering this matter in due course, it would not be appropriate for us to comment further at this stage."