PwC Canada has been named in seven separate lawsuits claiming up to $2 billion in damages by investors victimized in the Bernard Madoff Ponzi scheme. The Telegraph reports that PwC Canada was auditor to Fairfield Sentry, the feeder fund that placed $7.2 billion of investors’ money with Madoff.
PwC is reportedly facing two class action lawsuits, two claims from individual investors and three derivative actions launched by investors on behalf of Fairfield Sentry. PwC Canada allegedly signed off on accounts in 2007 stated that 97.3% of Fairfield Sentry’s assets were held in short-term US treasury bills. The Telegraph notes that:
As auditors, PwC would have been required to check that the treasury notes existed. However, Madoff was able to conceal any shortfall because he was not just the “execution agent” for Fairfield Sentry’s investment strategy but also the custodian of the money. As such, PwC would have received assurances from Madoff that the treasury notes existed.
Investors argue that his dual role should have been a “red flag” that raised suspicions and persuaded the auditors to verify the claim with the US Treasury.