PwC to pay $335 million over failed audits of Alabama’s Colonial Bank: U.S. regulator

Written by on March 15, 2019

FILE PHOTO: PricewaterhouseCoopers (PWC) is seen in Washington
FILE PHOTO: The exterior of PricewaterhouseCoopers (PWC) is seen in Washington, DC, U.S. December 6, 2017. REUTERS/Mike Stone

March 15, 2019

By Katanga Johnson and Pete Schroeder

WASHINGTON (Reuters) – A top U.S. banking regulator said on Friday that PricewaterhouseCoopers will pay $335 million to settle claims of “professional negligence,” after saying the auditor should have identified problems leading to the 2009 collapse of Alabama-based Colonial Bank.

PwC did not confirm or deny the claims, but agreed to pay the settlement fine, the Federal Deposit Insurance Corporation (FDIC) said in a statement.

The settlement is significantly lower than the $625.3 million a federal judge ordered the firm to pay the regulator in July.

Martin Gruenberg, an FDIC board member and its former chairman, dissented from the settlement because it did not require PwC to admit liability.

The FDIC had sued the company in its role as receiver for Colonial Bank, which once had over $25 billion in assets and 340 branches.

At the time, PwC had argued that the FDIC could recover $306.7 million at most, and that no damages were justified because numerous Colonial employees had interfered with its audits.

U.S. District Judge Barbara Rothstein ruled in July that PwC failed to identify a long-running fraud between the bank and its largest customer, the mortgage lender Taylor, Bean & Whitaker. Both failed in 2009, and the FDIC alleged the bank helped Taylor conceal overdrawn accounts.

“PricewaterhouseCoopers LLP and the Federal Deposit Insurance Corporation as Receiver for Colonial Bank have settled professional negligence claims brought by the FDIC-R against PwC to their mutual satisfaction,” PwC said in a statement.

(Reporting by Katanga Johnson and Pete Schroeder; Editing by Dan Grebler)

Source: OANN

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