Thursday, April 02, 2009

Subprime Suit Accuses KPMG of Negligence - Accounting -

Well we all knew that lawsuits would begin soon. Here we go:

Subprime Suit Accuses KPMG of Negligence - Accounting -
"Two complaints filed in federal courts yesterday claim that KPMG auditors were complicit in allowing 'aggressive accounting' to occur under their watch at New Century Financial, the mortgage lender that collapsed two years ago at the beginning of the subprime-mortgage mess.

The plaintiff, a New Century trustee, alleges that misstated financial reports were filed with the audit firm's rubber stamp because of its partners' fears of losing the lender's business. 'KPMG acted as a cheerleader for management, not the public interest,' one of the complaints says. The trustee further accuses the firm of 'reckless and grossly negligent audits.'


"In the new lawsuit, KPMG LLP is accused of not giving credence to lower-level employees' concerns about their client's accounting flaws. In 2005, for instance, a partner was said to have "silenced" one of the firm's specialists who had questioned New Century's "incorrect accounting practice." The partner allegedly said, "I am very disappointed we are still discussing this.... The client thinks we are done. All we are going to do is piss everybody off." Dan Ginsburg, KPMG LLP spokesman, says any claims that the firm gave in to its client's demands "is unsupportable."

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