A liquidating trust formed by New Century Financial Corp. debtors filed a billion-dollar lawsuit today against KPMG International and its U.S. arm, KPMG LLP. The lawsuit alleges that KPMG performed “grossly negligent audits” that helped trigger the collapse of New Century by covering up “catastrophic” accounting and other problems at New Century, Reuters reports. “As New Century’s auditor, KPMG failed its public watchdog duty,” the complaint alleges.
The complaint also alleges that KPMG “did the unthinkable for a public auditor,” issuing an audit report on New Century’s 2005 financial results before its audit was complete. This “falsely enabled” New Century to file its annual report with the SEC, the complaint alleges.
A spokesperson for KPMG told Reuters that he had not seen the suit and had no immediate comment.