PwC must face $1 billion lawsuit over MF Global advice
A federal judge on Wednesday ordered PricewaterhouseCoopers to face a $1 billion (603 million pounds)lawsuit claiming that its bad accounting advice was a substantial cause of the October 2011 bankruptcy of MF Global Holdings Ltd, a brokerage run by former New Jersey Governor Jon Corzine.
U.S. District Judge Victor Marrero in Manhattan said PwC’s [PWC.UL] advice on “repurchase-to-maturity” transactions through which Corzine bought $6.3 billion of European sovereign debt affected how MF Global implemented its strategy and in turn contributed to its alleged losses.
“This line of causation gives rise to a plausible claim that PwC proximately caused harm to MF Global,” Marrero wrote.
Caroline Nolan, a PwC spokeswoman, said, “We respectfully disagree” with the decision to let the case go forward.
She also said PwC’s audit of MF Global complied with professional standards, and that MF Global’s treatment of the repurchase-to-maturity transactions was consistent with generally accepted accounting principles.
The case is MF Global Holdings Ltd as Plan Administrator v. PricewaterhouseCoopers LLP, U.S. District Court, Southern District of New York, No. 14-02197.
Source: reuters
