PwC fined £15M by FCA for not reporting LCF fraud.

TLDR:

Key points:

• FCA fines PwC £15M for failing to report suspected fraudulent activity at LCF to the regulator
• PwC encountered issues during their audit of LCF, leading to suspicions of fraud

The UK Financial Conduct Authority (FCA) has fined PricewaterhouseCoopers LLP (PwC) £15 million for failing to report their suspicions that London Capital & Finance plc (LCF) might be involved in fraudulent activity. This is the first time the FCA has fined an audit firm. PwC encountered significant issues during their 2016 audit of LCF, including aggressive behavior from a senior individual at LCF and providing PwC with inaccurate information. These issues led PwC to suspect fraud at LCF, but they failed to report it to the FCA as required.

PwC eventually concluded that LCF’s 2016 accounts were accurate, but they still had a duty to report their suspicions to the FCA. LCF went into administration in January 2019 after the FCA ordered them to withdraw misleading promotional material for mini-bonds. The Serious Fraud Office is conducting a criminal investigation into the failure of LCF.

Maria Nikolova, who has been covering the Forex industry for over 17 years, provided this news report. She has a Philosophy degree and specializes in Cognitive Science.