Daily Dicta: When You Cheat on an Ethics Test, You Know You've Got Problems, KPMG Edition
“This cheating was extensive,” said SEC Enforcement Division Co-Director Steven Peikin. “Given the nature and severity of the conduct, we thought that seeking an admission of wrongdoing was appropriate.”
June 18, 2019 at 02:37 PM
3 minute read
If it wasn't so pathetic, it would almost be funny: KPMG audit professionals were busted by the U.S. Securities and Exchange Commission for widespread cheating on continuing education exams that focused on topics including (wait for it…) ethics and integrity.
We're talking behavior that would get you expelled from high school or college in a heartbeat—taking photos of exam answers and emailing them to colleagues, printing out answers and passing them around, hitting up subordinates for help cheating, even manipulating an internal server hosting the exams to lower the score required for passing to less than 25 percent, according to the SEC.
Really KPMG? That's your curve? (Also, did your mommies and daddies pay people to take your SATs?)
Notice I didn't say “allegedly” cheated. The accounting giant admitted wrongdoing in a settlement with the SEC on Monday. The firm agreed to pay a $50 million penalty and to hire an independent consultant to review and assess its ethics and integrity controls. (Hint: They're lacking.)
KPMG also admitted that from 2015 to 2017, now-former senior members of its audit quality and professional practice group “improperly obtained and used confidential information belonging to the Public Company Accounting Oversight Board in an effort to improve the results of the PCAOB's annual inspections of KPMG audits.”
Kudos to the SEC for refusing to let KPMG, which was represented by Sidley Austin's Kevin Burke, squirm off the hook with a no admit/no deny settlement.
“This cheating was extensive,” said SEC Enforcement Division Co-Director Steven Peikin in a conference call with reporters. “Given the nature and severity of the conduct, we thought that seeking an admission of wrongdoing was appropriate.”
The $50 million fine is one of the largest that the SEC has ever imposed on an auditor, according to the Wall Street Journal.
But considering KPMG's FY 2018 revenue was $29 billion, it's still a bit of a slap on the wrist.
The cheating revelations come as KPMG moves to expand its global legal services arm to more than 3,000 lawyers in the next few years. The firm already has more than 1,800 lawyers across offices in 75 countries.
In an emailed statement, a KPMG spokesman said, “Integrity and quality remain our focus, as always. The foundation of our role as auditors and advisors is trust. We have learned important lessons through this experience and we are a stronger firm as a result of the actions we are taking to strengthen our culture, our governance and our compliance program. As we move forward, we are committed to delivering the highest quality and fulfilling our important role in the capital markets.”
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllDaily Dicta: Under-the-Radar Fight Over Jones Day Memos Could Sharply Undercut Attorney-Client Privilege
DC Circuit's Rao, Millett and Tatel Will Hear Trump Subpoena Case July 12
Trending Stories
- 1Regulatory Upheaval Is Coming. How Businesses Prepare and Respond Will Separate Winners and Losers
- 2Cravath Elevates 7 to Partnership, Up From Last Year
- 3Kline & Specter Hit With Lawsuit From Another Former Associate
- 4USPTO Director Kathi Vidal Announces Resignation Ahead of Administration Change
- 5As Gen AI Acceptance Grows, Lawyers Race to Mitigate Risks
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250