(Bloomberg) MF Global Holdings Ltd., which filed for bankruptcy after a failed $6.3 billion bet on bonds of some of Europe’s most indebted nations, sued PricewaterhouseCoopers LLP for $1 billion, alleging accounting malpractice helped bring down the brokerage company.
PwC, which provided outside auditing and accounting experts, failed to advise the firm to account properly for its European sovereign debt holdings, leading it to over-invest in them, MF Global Holdings said in a complaint filed today in Manhattan federal court.
“But for PwC’s erroneous accounting advice, MF Global Holdings could not have—and would not have—invested heavily in European sovereign debt to generate immediate revenues and would not have suffered the massive damages that befell the company in 2011,” MF Global Holdings said in the complaint.
MF Global filed for bankruptcy on Oct. 31, 2011. Customers have claimed in lawsuits against the firm’s former executives that more than $1.6 billion of their funds that should have been segregated went missing, transferred to other parts of the company during the liquidity crisis.
"During the two and a half years since the collapse of MF Global, the repo-to-maturity accounting that is the subject of today’s complaint has been examined by trustees, regulators and a congressional committee,” PwC said in a statement. “None of them has found that the accounting for those transactions was incorrect. PwC is disappointed that this meritless claim has been brought."
The case is MF Global Holdings Ltd. v. PricewaterhouseCoopers LLP, 14-cv-02197, U.S. District Court, Southern District of New York (Manhattan).