PwC was recently dealt a blow when U.S. District Judge Victor Marrero stated: “[u]nder PwC’s reasoning, the in pari delicto doctrine would insulate an auditor from liability whenever a company pursues a failed investment strategy after receiving wrongful advice from an accountant. Such a broad reading of the doctrine would effectively put an end to all professional malpractice actions against accountants – – an outcome not in line with [New York law].” As Francine McKenna has called it, the in pari delicto doctrine is like "like a pair of needle nosed pliers by audit firm defense lawyers to diffuse a bomb."
Never a firm to be deterred by a legal speed bump, PwC isn't all that worried about this latest development in MF Global's $1 billion lawsuit against them. The basis of the MF Global claim is that they received "flatly erroneous" advice from PwC. PwC, however, maintains that it didn't tell MF Global to enter into crappy transactions that ended up sinking the company. It didn't tell them to commingle money they didn't have the right to mingle. All it did was issue audit opinions up until MF Global's bankruptcy. No biggie, that.
Just in case MF Global didn't the message that it's their own fault they were so bad at managing risk, PwC reiterates in economia:
A PwC spokesperson said, “The lawsuit is baseless, and PwC expects ultimately to prevail.
“PwC acted as MF Global’s auditor. It never gave MF Global business advice on transactions into which it should enter, and no published report by a government agency or bankruptcy trustee has ever criticized the accounting treatment for the RTM transactions.
“Finally, the record is clear that MF Global’s collapse was caused by its own business decisions and actions, not by accounting advice.”
Last year, DealBook wrote that MF Global failed due to "myriad" reasons, not least of which "a risky bet on European sovereign debt" and "a one-time charge that depressed its earnings and years of quarterly losses." But, you note PwC's careful wording here: the media can foam at the mouth over this case all they want but as far as the law is concerned, it's not their bad.
It's a lot of hair-splitting here, obviously, but that's what lawyers are for.
