Last week, the UK Financial Conduct Authority (FCA) fined PwC £15 million — the regulator's first penalty targeting an auditor. PwC was accused of failing to report concerns about potential fraudulent activity at its audit client, London Capital & Finance (LCF).
LCF collapsed in 2019 after being ordered to withdraw misleading promotional material for its mini-bonds, leading nearly 12,000 investors to lose a total of £237 million. The fine against PwC stemmed from the firm's 2016 audit of LCF. In the course of that audit, PwC encountered significant issues, including facing aggressive behavior from LCF's management and receiving misleading information. However, despite having suspicions of fraud, PwC signed off on LCF's financials. This violated its legal responsibility to report suspected fraud, the FCA argued.
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