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Regulator: PwC Reviewed Peregrine’s Books During Fraud Period
July 29, 2012
By Michael Foster, Big4.com Blogger
A regulator told legislators that PwC may have known of fraud at Peregrine Financial Group on Wednesday.
Commodity Futures Trading Commission Chairman Gary Gensler said that PwC was retained as the failed futures firm’s accountant in 2000 when the firm was penalized by the CFTC for violating net capital rules. Those rules required that the firm hire an independent accountant to check the firm’s financial accounts, but lawmakers were told that PwC did not report any instances of fraud.
PwC spokeswoman Caroline Nolan said that “PwC has never been Peregrine’s auditor” and that the firm was “retained to do limited, agreed-upon procedures” that were stipulated in the CFTC order.
According to the CFTC order, PwC was hired to review accounts payable and accounts receivable as well as check customer segregation reports, confirm net capital computations, and confirm wire transfers and deposits were executed to and from the correct accounts.
Fraud at Peregrine became the focus for regulator after former CEO Russell Wasendorf attempted suicide and left a note in which he confessed to talking $100 million in customer funds over two decades.
The news comes shortly after PwC faced unwelcome scrutiny for its role as auditor for MF Global, which went into bankruptcy protection last October after losing $1.6 billion in customer funds.