September 1999

SEC Forces Sale of McGladrey & Pullen's Mutual Fund Practice

By Danielle D'Angelo

As result of H&R Block's acquisition of McGladrey & Pullen LLP (See the July issue of The Trusted Professional.), the Securities and Exchange Commission required McGladrey & Pullen to sell its mutual fund practice.

Since H&R Block, a publicly-traded company subject to SEC regulations, owned stock in some of the funds that McGladrey & Pullen audited, the Commission expressed independence concerns.

"The SEC didn't think we ought to be auditing the auditors," said Mark Scally, chief executive officer of RSM McGladrey, the new company that includes the nonattest assets of McGladrey & Pullen and the previously acquired accounting firms within H&R Block's HRB Business Services division.

PricewaterhouseCoopers LLP purchased the mutual fund practice for an undisclosed sum. According to PricewaterhouseCoopers, McGladrey & Pullen serviced approximately 230 mutual funds totaling more than $100 billion in assets, which now adds to PricewaterhouseCoopers' practice of about 3,100 mutual funds with combined assets of more than $2.8 trillion. As a result of the acquisition, 25 professionals from McGladrey & Pullen's New York City office recently joined PricewaterhouseCoopers.