Bank Overseer PwC Faces Penalty and Sidelining of Regulatory Consulting Unit
The giant consulting firm PricewaterhouseCoopers occupies a position of trust on Wall Street, acting as a shadow regulator of sorts that promises the government an impartial look inside the world’s biggest banks.
But the firm – hired and paid by the banks it examines – has now landed in the regulatory spotlight for obscuring some of the same misconduct it was supposed to unearth.
New York State’s financial regulator is poised to announce a settlement with PricewaterhouseCoopers, taking aim at the consulting firm for watering down a report about one of the world’s biggest banks, Bank of Tokyo-Mitsubishi UFJ.
The firm, which is accused of lacking the objectivity and integrity expected of consultants but not actually breaking the law, agreed to pay the fine and accept the two-year sidelining of its regulatory consulting unit.
The settlement involves the firm’s work for the Japanese banking giant, which regulators long suspected of routing money through its New York branches on behalf of nations blacklisted by the United States. The bank voluntarily hired PricewaterhouseCoopers in 2007 to quantify its improper transactions with Iran and other sanctioned countries.
The industry, which includes PricewaterhouseCoopers and another giant accounting firm, Deloitte, as well as Washington power brokers like Promontory Financial Group, has long defended the quality and independence of its work.
For years, regulators largely overlooked the consulting industry’s potential conflicts, often leaning on the firms to conduct large-scale examinations. But recently, the authorities have begun to reconsider that reliance, following consulting missteps like a botched review of Wall Street’s practices in foreclosures.
Source: NYT
