The big-four audit firm PwC is being sued for $5.5 billion over its failure to detect a fraud that resulted in a bank collapse during the global financial crisis of 2008-2009. This is the biggest lawsuit in PwC history.
The complainant is Taylor, Bean & Whitaker (TBW), which was a top-10 wholesale mortgage lending firm. The trustees of the company are accusing PwC of negligence in their audits of TBW’s lender, Colonial Bank.
In an agreement between the top management of the borrower and the bank, starting from 2002, TBW chairman Lee Farkas sent mortgage data to Colonial Bank for fake loans or those the company had already committed or sold to other investors. By the end of 2007, the scheme had helped the bank accumulate about $1.5 billion in fake or impaired loans.
Colonial collapsed in 2009, becoming the sixth-largest US bank failure in history. Despite this, PwC…
View original post 310 more words