PwC dragged into Refco controversy - Big Four firm's US arm advised futures brokerage on financial reporting ahead of collapse

Nicholas Neveling
Accountancy Age
Nov 7, 2005

PwC's US arm has been dragged into the controversy surrounding collapsed futures brokerage Refco after it emerged that the Big Four firm advised it about financial reporting when it changed from a private to public company.

According to the Financial Times PwC advised Refco on accounting issues and preparing more detailed financial statements. Prosecutors and regulators have not spoken to PwC, but Refco's other advisers, including auditors Grant Thornton, are facing shareholder lawsuits.

The FT reports that PwC was appointed in April last year to advise Refco on $600m (£343.2m) debt offering as part of a deal that saw private equity group Thomas H Lee pay $450m for a majority stake in Refco.

PwC is believed to have had one partner and three staff working for Refco. They advised the group on financial reporting and SEC filing requirements for public companies. Refco collapsed last month when CEO Phillip Bennett allegedly used a hedge fund to conceal a $430m debt from investors.

Labels: Grant Thornton, Phillip Bennett, Refco