PwC pays $335m over Colonial Bank audit failures

PwC has paid $335m (£253m) to settle claims brought by the Federal Deposit Insurance Corporation (FDIC) relating to professional negligence in the US firm’s auditing of the Colonial Bank, which collapsed in 2009 with an estimated $3bn loss to the deposit insurance fund

At the time of its collapse, Colonial Bank was the 25th largest in the US, with around $26bn in assets and 340 branches. Its failure followed the discovery of a complex multi-billion fraud relating to non-existent mortgages and involving one of its biggest clients, broker Taylor, Bean & Whitaker (TBW).

Several senior executives at the mortgage company and bank were found guilty over the fraud, which was carried out between 2002 and 2009, and were given jail sentences.

The FDIC’s case alleged PwC was professionally negligent, as the firm should have tracked the fraudulent movements sooner, and a court in Alabama upheld its case in December 2017, with a second court awarding the agency damages in July 2018.

Previously, the FDIC settled professional negligence claims against Crowe Horwath for $60m arising out of its internal audits of Colonial Bank.

Report by Pat Sweet

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