PwC is settling the lawsuit brought by the bankruptcy trustee of mortgage behemoth Taylor, Bean & Whitaker, putting speculation to rest that a verdict in the $5.5 billion lawsuit for the plaintiff could be the beginning of the end for the firm.
Here are a few details from the WSJ:
Accounting giant PricewaterhouseCoopers LLP has settled a $5.5 billion lawsuit in the middle of a trial over its alleged failure to catch the massive fraud at Taylor Bean & Whitaker Mortgage Corp., according to a lawyer involved in the case.
Steven Thomas, a lawyer for the trust created as part of Taylor Bean & Whitaker Mortgage Corp.’s liquidation plan, announced the settlement at a hearing Friday morning in Miami.
That settlement was reached "to the mutual satisfaction of the parties," which is the precise wording Mr. Thomas used after Deloitte settled their case with him in 2013. Also just like the Deloitte case, we don't know how much PwC settled for, but there's no way Thomas cut them a break at this stage. Our pal (and occasional contributor) Jim Peterson wrote to me in an email:
The up-tick on Thomas's last pre-trial demand, as the price for obliging him to go through a three-week show-and-tell exercise, would be the second most precious number to know -- only after the amount of the settlement itself.
I don't suspect we'll ever learn either number. The confidentiality is Thomas' carrot, giving the PwC a break from the stick of the actual settlement amount.
Despite the confidentiality in this case, Francine McKenna did share this interesting stat on the amount of settlements that is known:
— James Ulvog (@UlvogCPA) August 26, 2016
As for why PwC is settling now, Peterson suspects the firm got spooked after the trial started:
[T]he first weeks of a plaintiff's case are the most discouraging and depressing for a defendant to sit through -- my only take would be that it took this experience to pound a reality check through to PwC's leadership -- that there was unacceptable hazard in riding it all on the lawyers' handicapping of their chances of ultimately prevailing on appeal after a loss.
So PwC lives to fight another day. Up next: the FDIC suit over Colonial Bank's failure.
An email sent to PwC seeking comment was not immediately returned.