PwC to pay $1 million to settle Merrill Lynch audit complaint

The logo of accounting firm PwC is seen on a board at the SPIEF 2017 in St. Petersburg
The logo of accounting firm PricewaterhouseCoopers (PwC) is seen on a board at the St. Petersburg International Economic Forum 2017 (SPIEF 2017) in St. Petersburg, Russia, June 1, 2017. REUTERS/Sergei Karpukhin

August 2, 2017

By Sarah N. Lynch

WASHINGTON (Reuters) – Accounting company PricewaterhouseCoopers LLP will pay $1 million to settle a civil complaint alleging it conducted a flawed audit into Merrill Lynch’s compliance with federal brokerage customer protection rules, U.S. audit watchdogs said on Wednesday.

The Public Company Accounting Oversight Board (PCAOB) said PwC was settling Wednesday’s case without admitting or denying the allegations.

“We are pleased to have resolved the matter,” PwC said in a statement.

The PCAOB’s penalty against PwC comes a little over a year after the Securities and Exchange Commission ordered Bank of America’s Merrill Lynch <BAC.N> to pay $415 million to settle charges it had put its brokerage clients’ cash at risk in violation of customer protection rules.

SEC rules require brokerages to hold customer money in segregated accounts that are shielded from creditor claims against the bank. The rule also requires brokerages to hire outside accountants, such as PwC, to conduct routine audits to ensure compliance with the rules.

(Reporting by Sarah N. Lynch; Editing by Bernard Orr and Tom Brown)