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Pwc Facing £840M Legal Action From Sub-Prime Lender Cattles

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The action comes only days after the accountant said it regretted it hadn't met "normal high standards" in its audit of investment bank JP Morgan's securities division.

Cattles, which saw its shares suspended in 2009, claims PwC is responsible for years of gross accounting misstatements. The company alleges that between 2005 to 2007 PwC was to blame for "a gross misstatement at the heart of the accounts" that ultimately led to numerous profit warnings and left the company close to insolvency.

According to court documents, Cattles claims the action against PwC could result in "substantial damages". In a preliminary legal hearing at the High Courts of Justice in October, Judge Henry Bernard Eder awarded Cattles the right to demand PwC produce secret documents relating to past audits of the company. The pre-disclosure hearing, which cost more than £250,000 in fees for barely a four-hour hearing, also gave PwC the right to gain access to the case material currently being assembled by Cattles and its lawyers, Ashurst.

It is thought Cattles will file for a formal hearing in 2012. According to an outline of the case by Judge Henry Bernard Eder, Cattles alleges PwC incorrectly classified loans that were in long-term arrears "which should have been treated as impaired". When the problem was discovered, Cattles said it was forced to report a loss in 2008 of £745m. It also restated earnings from the previous year to a loss of £98.5m, from a profit of £165.3m.

Nice looks like the lawyers will do well out of this!

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  • 276 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
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