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July 3, 2018

US court orders PwC to pay $625m for negligence in banking audit

A US court has ordered PricewaterhouseCoopers (PwC) to pay $625.3m as damages for negligence in auditing work of Colonial BancGroup, an Alabama-based bank which failed in 2009.

In the judgement, US District Judge Barbara Rothstein said that PwC failed to identify a multi-year fraud between Colonial and its client Taylor, Bean & Whitaker. The client Taylor, Bean & Whitaker also failed in August 2009.

The damages will be paid to the Federal Deposit Insurance (FDIC).

Before it failed, Colonial Bank had around 340 branches with assets of more than $35bn.

Judge Rothstein found PwC guilty of negligence in December following a non-jury trial. Subsequently, the company was tried for damages issue in March.

During the trials, PwC claimed that multiple Colonial employees interfered with the auditing.

The damages to be paid by the company encompass PwC’s audits of Colonial between 2003 and 2005 as well as in 2008.

After the ruling, PwC lawyer Phil Beck was quoted by Reuters as saying: “We intend to pursue an appeal of this matter at the earliest opportunity.”

FDIC claimed that the fraud started in 2002 when Taylor, Bean & Whitaker began overdrawing its accounts.

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