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PwC to face investigation over JPMorgan audit, newspaper report claims

PricewaterhouseCoopers (PwC) may face an inquiry into its auditing of JPMorgan Securities after the institution received a fine of £33 million from the Financial Services Authority (FSA).

The case may be referred to the the Institute of Chartered Accountants in England and Wales and the Financial Reporting Council after an estimated £16 billion worth of client money was misplaced by the bank, the Daily Telegraph reported.

According to the FSA, the £33.32 million fine is the largest it has ever handed out and an indication of the gravity with which it is viewing the breach.

PwC is thought to have signed off a report on the segregation of client assets, even though the institution failed to meet industry standards.

Sally Dewar, FSA managing director of risk, said at the time the fine was imposed: "It is crucial that firms are compliant with the FSA’s client money and assets rules. Adhering to these rules not only ensures greater protection of clients but of financial stability as a whole.”

The FSA’s investigation found that the balance of client funds held by JPMorgan Chase Bank’s future and options unit varied between $1.9 billion and $23 billion between 2002 and 2008.

JPMorgan’s work with the FSA on the matter ensured that the bank received a 30 per cent discount on the fine.

By Jim Ottewill