PwC Gets Sued for $1B over MF Global Collapse
The administrator of MF Global Holdings Ltd's bankruptcy plan on Friday sued PricewaterhouseCoopers for at least $1 billion, accusing the auditor of professional malpractice in connection with the brokerage's investment in European sovereign debt.
According to a complaint filed in the U.S. District Court in Manhattan, PwC provided "flatly erroneous accounting advice" to MF Global and its then-chief executive Jon Corrine by recommending the use of off-balance sheet structures for the brokerage's $6.3 billion bet on the debt.
Market worries about that exposure was among the factors that led to MF Global's quick collapse and October 31, 2011, bankruptcy.
The lawsuit said it is the first case seeking to hold PwC liable for malpractice over its advice concerning, and approval of, the accounting treatment for the debt. Creditors would share in any recoveries if the lawsuit were to be successful.
A PwC spokeswoman declined to comment.
(Reporting by Jonathan Stempel and Nate Raymond in New York; Editing by Ken Wills)