MF Global customers sue PricewaterhouseCoopers

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Former customers of MF Global Holdings Ltd's broker-dealer have added accounting firm PricewaterhouseCoopers LLP as a defendant in a lawsuit stemming from the collapse of the brokerage.

In an amended complaint filed in U.S. District Court in Manhattan on Monday, the customers of MF Global Inc accused PwC of failing to adequately audit MF Global's internal controls over customer funds.

The complaint also repeated prior accusations against former officials at MF Global, including former Chief Executive Jon Corzine, who is accused of violating the Commodity Exchange Act, which restricts the use of customer funds.

Caroline Nolan, a spokeswoman for PwC, said it conducted its last audit of MF Global in March 2011 "in accordance with professional standards." The audit at the time confirmed that MF Global had maintained its customer accounts in accordance with federal regulations, she said.

"We will defend this lawsuit vigorously," Nolan said.

The lawsuit also named as a defendant CME Group Inc, the exchange that oversaw MF Global.

Neither a lawyer for Corzine nor spokesperson for CME Group immediately responded to requests for comment on the case.

An estimated $1.6 billion in customer funds went missing following MF Global's collapse. MF Global filed for bankruptcy in October 2011.

Investigations by the U.S. Department of Justice and Commodity Futures Trading Commission are ongoing.

PwC had served as independent auditor of MF Global in 2010 and 2011, according to the complaint.

The lawsuit, which is seeking class action status, contends that PwC failed to examine MF Global's controls over customer funds. This amounted to professional malpractice and a breach of the auditors duties to the company and customers, the lawsuit said.

"If PwC had properly executed its duties and evaluated and reported on (MF Global)'s control problems in March 2011, there would have been ample time for management to institute proper controls over customer funds," the complaint said.

Lawyers for the plaintiffs are cooperating with James Giddens, the trustee for the liquidation of MF Global Inc. Under the deal, the plaintiffs' lawyers say Giddens has assigned to them certain claims against MF Global's directors and officers and PwC.

The case is DeAngelis et al v. Corzine et al, U.S. District Court, Southern District of New York, No. 11-07866.

(Reporting by Nate Raymond in New York; Editing by Dan Grebler)

 



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michael    
kansas  |  November, 07, 2012 at 09:06 AM

Now that the election is over, and Democrats no longer need to bury this story, perhaps we'll see some action. Time to dig deep and push for criminal prosectutions and for some disinfecting light to fall on this deception and fraud. The commodities industry cannot recover its reputation and business until this is completely and honestly resolved.


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