Accounting firm PricewaterhouseCoopers LLP agreed Wednesday to pay $1 million to settle a regulator's allegations that its audit of Bank of America Corp.'s Merrill Lynch brokerage had been inadequate.
PwC's 2014 audit of Merrill had failed to find that the brokerage improperly left billions of dollars in customer assets exposed to creditors' claims, said the Public Company Accounting Oversight Board, which regulates the auditing industry.
Broker-dealers are required to hold certain customer securities in separate, safeguarded accounts to protect them from the claims of creditors if the brokerage failed. But Merrill failed to do so for several years, putting customer assets at risk and violating customer-protection rules, the Securities and Exchange Commission said when it settled with BofA over the matter last year.
PwC reported that Merrill had complied with the rules but didn't obtain sufficient evidence to support that contention, the PCAOB said.
"Investors should not have to worry that their brokers' auditors are failing to perform appropriate work in examining the safeguards around their funds," said Claudius Modesti, the PCAOB's director of enforcement and investigations, in a statement.
No Merrill customers actually suffered any losses.
In a statement, PwC said it was "pleased to have resolved the matter." The firm didn't admit or deny wrongdoing in agreeing to the settlement.
BofA paid a $415 million settlement to the SEC over the customer-protection issues in June 2016. A spokesman for the bank declined to comment on the PwC settlement.
Write to Michael Rapoport at Michael.Rapoport@wsj.com
(END) Dow Jones Newswires
August 02, 2017 15:26 ET (19:26 GMT)