PwC, MF Global Bankruptcy Admins Point Fingers At Each Other in Firm's Collapse

By:
Chris Gaetano
Published Date:
Mar 9, 2017
PWC

Administrators overseeing the bankruptcy proceedings of failed investment firm MF Global are squaring off in court against Big Four firm PwC in a $3 billion trial over who was to blame for the spectacular collapse of the investment firm, which had been led by former NJ Governor Jon Corzine, according to Bloomberg. The administrators said that PwC was ultimately responsible for the company's fall, claiming that the accounting firm had given then-CEO Corzine bad accounting advice, which led to the meltdown.

During the start of a trial that is expected to last for weeks, the administrators accused the accounting firm of failing to properly account for the "repurchase-to-maturity" transactions undergirding MF Global's investments into European sovereign debt. The administrators said that PwC committed professional malpractice through saying these transactions were to be counted as sales, rather than secured borrowings. It also accused the firm of wrongly assessing the company's ability to protect income from future taxes, which caused MF Global to write down more than $100 million in the firm's final weeks. PwC fired back, saying that the company's failures are its own, and that what doomed MF Global wasn't its accounting advice but, rather, Corzine's risky gamble on European sovereign debt, which wound up being extremely ill-advised. 

The case is MF Global Holdings Ltd. v. PricewaterhouseCoopers LLP, 14-cv-02197, U.S. District Court, Southern District of New York (Manhattan).


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