New York state’s financial regulator has expanded its investigation of conflicts of interest among bank consulting firms by subpoenaing two more of the advisers, a person familiar with the matter said.
Promontory Financial Group LLC and PricewaterhouseCoopers LLP, which advise clients on how to satisfy regulatory requirements, were sent subpoenas by the Department of Financial Services during the past several months, said the person, who asked not to be identified because the matter is confidential.
Benjamin Lawsky, superintendent of the department, began investigating consulting firms last year after determining that financial adviser Deloitte LLP had not demonstrated sufficient independence in advising Standard Chartered Bank in 2004 in response to a regulatory warning that the bank needed to tighten its money-laundering controls.
Lawsky reached an agreement with Deloitte in June, in which the firm, accused of watering down a money-laundering report to Standard Chartered, paid $10 million to the state and agreed to a one-year suspension of its work for banks supervised by DFS.
“At times, the consulting industry has been infected by an ’I’ll scratch your back if you scratch mine’ culture and a stunning lack of independence,” Lawsky said at the time of the Deloitte settlement.
The latest round of subpoenas includes a request for Washington, D.C.-based Promontory to provide information related to its own work with Standard Chartered Plc. That bank agreed to pay $667 million last year to Lawsky’s department and other regulators to settle charges of violating U.S. laws concerning money transfers to Iran.
Lawsky’s office sent a second subpoena to Promontory that asked for information about its work with another, unidentified bank suspected of transferring dollars to Iran, the person said.
The PricewaterhouseCoopers subpoena is related to that consulting firm’s work with Mitsubishi UFJ-Bank of Tokyo, the person said. In June, the Tokyo bank agreed to pay $250 million to Lawsky’s department to settle claims that it had engaged in improper dollar transfers to Iran, Sudan and Myanmar.
Bank of Tokyo-Mitsubishi UFJ Ltd., the main lending unit of Japan’s biggest bank by market value, moved an estimated $100 billion through New York for government and privately owned entities on the Specially Designated Nationals list issued by the U.S. Treasury Department’s Office of Foreign Assets Control from 2002 to 2007, the financial services department and New York Governor Andrew Cuomo said in a statement in June.
The transfers involved about 28,000 clearing transactions and the bank routinely stripped information from wire transfer messages that could identify countries and people subject to international sanctions, the department said.
In a statement, Promontory spokeswoman Debra Cope said: “Promontory from time to time receives document requests in the form of subpoenas relating to client activities. Promontory does not disclose the nature of individual requests or scope of the inquiry.”
Christopher Atkins, a spokesman for New York-based PWC, did not respond to a request for comment.
The subpoenas were reported earlier by Time magazine and the New York Times.
Promontory has done work this year for Bloomberg LP, parent of Bloomberg News.