PricewaterhouseCoopers LLP should get a record fine of at least 1.5 million pounds ($2.33 million) for failures concerning reports on client-money accounts at JPMorgan Chase & Co.’s London securities unit, the U.K.’s accounting watchdog told a tribunal today.
The Accountancy & Actuarial Discipline Board is seeking fines that top the 1.2 million-pound sanction against Coopers & Lybrand LLP in 1999. The independent arbitrators in London will make a decision within 15 days.
J.P. Morgan Securities Ltd. was fined a record 33.3 million pounds last year by the Financial Services Authority, Britain’s banking regulator, for not properly separating client money from the firm’s accounts. An average of $8.6 billion wasn’t properly segregated in an error that went undetected by PwC for seven years.
“It didn’t just happen once but it happened for seven consecutive years,” Simon Browne-Wilkinson, a lawyer for the AADB, said. “This is a case of a systemic failure.”
PwC compiled reports for the FSA on the banks’ client-money holdings from 2002 to 2008 and failed to catch JPMorgan’s mistake.
Tim Dutton, a lawyer for PwC, argued the fine should be capped at 1 million pounds because the firm had admitted and apologized for the error, which was a “result of information technology changes made by JPM treasury staff,” and that no clients of the bank had lost money.
“We acknowledge that we did not maintain our usual high standards,” PwC spokesman David Jetuah said in an e-mail. “PwC takes very seriously its reporting requirements to the Financial Services Authority. We hope that the regulatory response will be proportionate to the issue.”