PwC liable for Taylor Bean fraud
A federal court recently issued a rare finding of liability against a Big Four auditor for professional malpractice. In a December 28, 2017 ruling, a federal district court judge found PwC was liable to the FDIC for professional negligence in the liability phase of the litigation. The case relates to the Taylor Bean fraud perpetrated on Colonial Bank resulting in billions of losses and the failure of the bank. Interestingly, the court also found that PwC had breached professional duties owed to the bank, but the bank’s claims were barred due to the imputed fraudulent conduct of a bank officer and analyst as well as the employees’ interference with the conduct of the audit. The damages phase of the trial and a separate trial against Crowe Horwath, who served as the internal auditor for the bank, are the next phases. PwC stated that it plans to appeal the liability ruling. Below is a January 2, 2017 article in Forbes summarizing the ruling. Another article on the ruling is also in the January 2 edition of The Wall Street Journal.
