Deloitte & Touche LLP will probably settle with the Securities and Exchange Commission today, paying a $50 million fine on civil charges connected to the auditor’s failure to prevent massive fraud at Adelphia Communications Corp.
The past few weeks saw a spate of settlements by major auditing firms that paid over $186 million in fines connected to the cases of fraud in 1990s - 2000s. These efforts by the SEC are directed at strengthening the first line of defence against accounting fraud, including lawyers and auditors.
Arthur Andersen LLP that was formerly a member of the Big Five (now effectively Big Four due to Andersen’s demise) settled the charges in Worldcom suit for $65 million.The settlement was facilitated by Andersen’s showing its deteriorated financial position to the plaintiff, says a knowledgeable person.
In Columbia, S.C., PricewaterhouseCoopers settled for $48 million the lawsuit in federal court brought by Safety-Kleen’s investors. The company that issued junk bonds restated its 1997, 1998 and 1999 financials, lowering income by $500 million. PricewaterhouseCoopers signed off on these fraudulent statements.
Ernst & Young LLP is at this point exempt from fines these days, although in January the firm paid $84 million in settlement in Federal District Court in Boston for the work for the Bank of New England Corp.