September 25, 2021

PwC Faces Damages That Range From ‘Bad’ to ‘Worse’ But Probably Far Short of ‘Catastrophic’ for Colonial Bank Failure

pwc colonial award

Francine McKenna reports on MarketWatch that the Federal Deposit Insurance Corp. stands to collect a pret-tay pret-tay pret-tay big chunk of change from PwC for the losses from the bankruptcy of Colonial Bank.

The FDIC, acting as receiver for the failed Colonial Bank Group that collapsed in 2009, has asked Judge Barbara Rothstein to award it $625 million in compensation for the net losses it sustained in paying depositors and other creditors of the bank from the federal deposit insurance fund.

Even PwC’s offer of $306 million would result in the largest-ever final judgment or jury verdict for accounting malpractice, and the fifth-largest accounting malpractice award ever, according to data compiled by research firm Audit Analytics.

Rothstein is not required to accept either version of the damage estimates.

Jim Peterson pegged the tipping point for a Big 4 failure last year at somewhere between $4 billion and $6 billion, so PwC will be fine. However, because all the other recent settlements PwC has reached have been confidential, we have no way of knowing what the firm has agreed to pay out in the last 12-18 months. It’s unlikely that the total sum has reached Peterson’s danger zone, but it’s not impossible that the firm has shelled out the equivalent of a so-so year at Grant Thornton.

[MW]

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