PwC settles lawsuit over MF Global audits

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PricewaterhouseCoopers has settled a lawsuit with MF Global’s bankruptcy administrator for an undisclosed sum.

PwC was sued by an administrator for the defunct investment firm claiming PwC gave MF Global faulty advice about the proper accounting treatment for a kind of bond-repurchase agreement that led to the firm’s demise in 2011. MF Global recorded the transactions as sales, instead of secured debt, and used off-balance sheet accounting. MF Global also accused PwC of providing the wrong advice on a tax matter, leading to a write-off of over $100 million shortly before the firm’s demise. MF Global’s bankruptcy administrator was seeking $3 billion in damages.

MF Global’s former CEO, Jon Corzine, a former New Jersey governor and U.S. senator, took the witness stand in the case earlier this month (see Corzine blames ‘loss of confidence’ for MF Global crash). Corzine had bet heavily on investments in the sovereign debt of several European countries, using “repurchase-to-maturity,” or RTM, transactions to finance the purchases. For a time, the firm also borrowed $1.6 billion from customer accounts that was supposed to be protected in an effort to cover up a shortfall, although the funds were later reimbursed.

PwC contended that it gave MF Global the right accounting advice and that Corzine’s decisions led to MF Global’s demise. PwC settled with MF Global’s investors in 2015 for $65 million (see PwC settles MF Global lawsuit for $65 million). The trial was winding down and the terms of the settlement were not disclosed.

“The terms are not being disclosed,” said PwC spokesperson Caroline Nolan in an email to Accounting Today. “Only statement is that the case was settled to the mutual satisfaction of the parties.”

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