• Big 4

    PwC Has Had Enough Courtroom Fun

    By | August 26, 2016

    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:

    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.

    [WSJ]

    • sunnycoast

      Can we get a list of all outstanding cases against PwC? Let’s play a guessing game of how much the firm will settle for each one.

      • sunnycoast

        It was way more than that.

        • sunnycoast

          Way more. Either you’re lying or trolling.

          • sunnycoast

            Boring. I’ve seen all of the inner workings of PwC.

            It is basically a fraternity. Your post is for newbies.

            • sunnycoast

              Ok, so you work for what…..PwC marketing? HR?

              PwC is for white men and pretty women (of all races).

              Everybody else is out after 2-3 years (if that) unless you are the token.

              This is common knowledge and expressed pretty clearly once you join the firm.

            • Jake

              We found the PwC washout!

            • sunnycoast

              I suppose while PwC’s new head had a “frank conversation about race”, they didn’t bother to mention they changed the annual review system in recent years to reduce the amount of words used. (i.e. less legal liability by the federal government)

              You also have to sign a waiver to sue the company? PwC is getting scaaarrred.

            • sunnycoast

              Black lives matter movement against PwC. This is looong overdue.

            • Another exKPMGer

              Dude. You’re a dick, seriously. And you clearly don’t understand anything about these suits, how they work, how the settlements work, etc. Delete your account.

            • Mose Schrute

              The man is a major Richard/Penis

            • AaronBalake

              I can’t believe I just up voted one of your posts.

            • Mose Schrute

              First time for everything my man!

            • sunnycoast

              Also, stop upvoting yourself.

            • sunnycoast

              Completely irrelevant.

              We need a black lives matter – like movement against PwC. There are SO many minorities who can relate. It’s only a matter of time. Keep discriminating PwC.

            • IndenturedServant

              dude what?

              I mean it sucks being a minority at a big4 (i know) but to equate that with getting shot by the police is not going to win you many friends.

            • sunnycoast

              PwC hasn’t changed in 50 years. Only an extreme push will work. Who said I was trying to make friends?

            • IndenturedServant

              you’re gonna need support for a populist movement.

              lol

            • sunnycoast

              Dumping work papers that show how fraudulent pwc is, this won’t be too hard to achieve. It’s a mafia.

            • James B

              Forget PwC.

            • Adam Hill

              She is either dating or full blown married to said white man over there. Most likely not the latter of your same sentence though…………

            • Mose Schrute

              AaronBalake?

            • AaronBalake

              Here. You forgot to tag.

        • AaronBalake

          Hello PwC employee, lay off the Koolaid

          • AaronBalake

            Exactly what a PwC employee would say.

            • AaronBalake

              Ex employee*

            • AaronBalake

              …Is it not the auditors job to find the errors or glaring fraud for that matter? Or is my understanding of the audit industry completely wrong? This is how people get away fraud – because people like you are the ones auditing them.

            • Steve Dave

              This comment is spot on – Too many clueless auditors with their heads up their asses!!! BTW – @AaronBalake rocks!!!!

    • dumpus

      Thomas didn’t get close to what he asked for. If he did, he’d be parading that number around. He’s got no reason to chip PwC off anything in the form of confidentiality if he felt he was in a strong position; if PwC balked, Thomas would just carry forward and take more money on the judgment. My perspective is that Thomas wasn’t feeling as good during the trial as he was before the trial, and that PwC threw a number out there and he took it under confidentiality so both parties can save face. But then again, I don’t know shit. Happy hour yet?

      • sunnycoast

        No, it is time for all lawyers to do a run on PwC for money. They are weakening. Bring down the evil empire.

        • cpanum31

          If they sensed blood, and from the lawyers I’ve met over the years, I am pretty sure they have, then they are already digging up the garden looking for possible causes for action.

          It is now called legitimate prospecting for business.

          • sunnycoast

            Open season on PwC!

        • sunnycoast

          First you type accusing me of an intern then you change to your sympathetic statement? Enjoy being a PwC spokes person.

          PwC partners deserve eating bullets for what they commit year after year.

          Edit: Now you change your statement for the third time with “The lawsuit was a failure…” Who are you?

          • sunnycoast

            STFU

          • Adam Hill

            I’m thinking you are not a guy, and that you coupled the accounting degree with a law degree. You are probably sitting on five years of experience in a large city office, while your dad works in another office in another large city.

            It’s almost like you have cut and pasted your responses.

            Only someone with confidence issues need to be so defiant in their responses.

            • Adam Hill

              Not relevant? Your background in general or to this issue?

        • cpanum31

          No, it is something other than Conspiracy Theory.
          It is a behavioral thing.
          The Wiki lists 14 interesting occurrences since the merger. Things like that attract the attention of lawyers as it, to them, indicates a potential pattern that created as yet unfound opportunities to profit from suing them.

          What we are referring to as the BLOOD IS ON THE WATER.

          • cpanum31

            Well, you do have to do a little research on their pre merge situations.

            I imagine someone wrote a book on the “whatever” of the big firms.

          • Skadden88

            This lawsuit is not a failure, from a litigator’s point of view. Additionally the central theme of the argument is completely logical, PwC clearly did not perform it’s job up to standards. I understand you are an accountant with zero legal experience (my assertion is based off your previous commentary) and hold tremendous bias toward PwC. You also seem slightly misinformed when referencing “Fannie Mae” when indeed Freddie Mac was the Plaintiff on D&T’s lawsuit (Yes, they are different). PwC was brought to trial for negligence/malfeasance on a failed mortgage lender it didn’t even audit based on clean financial statements it issued. I honestly don’t think you understand the gravity of the situation. Also referencing certain audit regulations/practices is just noise to a hollow argument.

            These lawsuits bring down accounting firms (e.g. ArthurAndersen from Enron). These lawsuits also change industry practices (e.g. Sarbanes-Oxley) and insurance does not cover such circumstances in any capacity. In all likelihood, PwC initiated the settlement. Also a mid-trial settlement (not a week as you indicated) typically reflects negatively upon the defendant. I do not believe the defense provided an adequate explanation to convince a jury (obviously this is speculation). I highly doubt this settlement was for less than $200mm and it’s a certainty Thomas is bound by a NDA.

            You fail to realize that this creates further skepticism in Big4 practices and the dubious nature in which they perform work (even when they aren’t the firm signing financial statements). That being said Big4 is an oligopoly, providing public corporations four “independent” choices when attesting their financial statements. There will be little change in professional practices unless the industry decides it’s necessary or a legal action forces to do so. This lawsuit will serve as precedence for cases moving forward. Not to mention PwC, still has to deal with FDIC lawsuit and a few other cases.

      • cpanum31

        I am pretty sure there is one of those nasty silence or else clauses in the settlement. They are usually written so neither of the parties is going to ever leak the settlement amount.

        I think PwC has two more actions against it with significant potential liability.

        It will be interesting to see if they settle or carry it into court.

        • Mose Schrute

          Hey, baby, wake up from your asleep
          We have arrived onto the future
          And the whole world is become

          Elektronik supersonik
          Supersonik elektronik

          • Tad Taxation

            All these firms should wake the F Up and listen to @cpanum31

    • keepin_it_real

      Most likely the final amount was significantly under $100M.

      • How do you know this?

    • N.E.R.D.

      @People_With_Charles:disqus is what I imagine happens when you drink too much kool-aid. His identity is entirely merged with PWC, complete with snobbishness I’ve only encountered with B4 employees.

      “As a final note – as a third generation CPA with numerous family members – working high up in the big 4, 6, 8, etc. with numberous high level communication sources at all big 4 firms…”

      You claim nepotism like it’s a good thing? LOL! What a fool. Born @ 3rd base but thoroughly convinced you hit a triple. Glad you outed yourself. It’ll be easier to understand your kool-aid POV.

      “Leaving big 4 (or public accounting) is a tremendously short sighted career mistake – only jusified if one wants to completely switch industries.”

      LOL! The only accounting career worth having is B4 or public? Give me a break.

      • Another exKPMGer

        You should try and dislodge that silver spoon from your throat before you go into anaphylaxis. Wait, nevermind, one of your highly compensated elders can afford the $608 price tag for an EpiPen, what am I thinking, you’ll be just fine.

        Remember that you’re basing your assumption on leaving public accounting based off of the experiences of people who haven’t left public accounting. Your opinion is going to be naturally biased in that direction. Just like I’m sure you don’t like brown people, but won’t admit as much because you’ve convinced yourself that you could never be predisposed one direction or another.

        I can only imagine the distaste your fellow coworkers have for you. I’m sure it’s only outweighed by your own disdain for them.

      • N.E.R.D.

        I’m very glad we’ll never work together. I avoid and turn down B4 offers (including PWC! Gasp!) to avoid people like you.

        Your unnecessary adjectives don’t lend credence to your post(s). It makes you look like you don’t know what you’re talking about so you’re attempting to bolster your position with words.

      • KM

        “Nepotism doesn’t exist in public accounting or the big four.”

        Hahaha haha ha…oh wait, is he serious?

    • James B

      So if you’re a minority, don’t go to PwC?

    • McValue Meal Audit

      Damn, what did i miss?

      • Mose Schrute

        The triumphant return of AaronBalake to the comment section!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!