KPMG offices.

KPMG LLC has reached a settlement with a former managing director who claimed he was fired last year in retaliation for raising concerns that the firm was understaffing audits of public companies, just months after the U.S. Securities and Exchange Commission faulted it for failing to properly vet the financial statements of an oil and gas company.

Gregory Andrew, who worked at KPMG for nearly two decades before his January 2018 firing, had argued in proceedings before the U.S. Labor Department that he was terminated in violation of a federal whistleblower protection law. He alleged that in the months leading up to his firing he'd complained about deficiencies in the number and qualifications of KPMG employees assigned to the firm's audit of Citibank.

New filings in the case, which is pending before a Labor Department administrative law judge, indicate KPMG's lawyers at Sidley Austin and attorneys for Andrew have reached a settlement. Andrew is represented by a team from Outten & Golden, the civil rights and employment law firm.

Neither side returned calls and emails seeking comment about the case, and a KPMG representative was not immediately reached for comment. The company has denied Andrew's retaliation claims.

Andrew said his concerns came in the immediate aftermath of KPMG agreeing to pay $6.2 million to resolve allegations that it failed to properly audit Miller Energy Resources Inc. As part of that settlement, KPMG was required to assign sufficiently qualified employees to future audits of public companies, Andrew's lawyers at Outten & Golden said in their complaint at the Labor Department, where administrative law judges preside over federal whistleblower-retaliation claims.

Andrew, who was based in New York, noted that the firm decided to fire him on the same day the U.S. Justice Department charged five former KPMG partners with improperly obtaining the confidential list of audits that a federal audit regulator—the Public Company Accounting Oversight Board—would select for its annual inspection of the company's work. The actual firing, according to Labor Department records, came several days after the DOJ's charges.

In June, KPMG agreed to pay a $50 million fine to resolve claims that it altered past audit work after receiving stolen information about the board's planned inspections of the firm. KPMG also agreed to hire an outside monitor to review the firm's ethics and integrity controls.

KPMG, represented by Sidley Austin at the Labor Department, has denied the company retaliated against Andrew, according to filings in the case.

The accounting firm pointed to past episodes of alleged misconduct that involved—as Andrew's complaint described them—attending a "bachelorette party at a strip club with team members in 2016″ and "a night of drinking with his clients and colleagues in December 2017″ that allegedly ended with him stealing a hubcap from a car.

In May 2019, the Labor Department's Occupational Safety and Health Administration dismissed Andrew's complaint and concluded the evidence supported KPMG's defense. Andrew's lawyers took the case to an administrative law judge in June.

Andrew's lawyers contend KPMG's stated reasons for firing him are "clearly pretextual."

"The bachelorette party occurred in 2016. His direct supervisor was aware of the outing at the time, and was also aware of it when KPMG promoted Mr. Andrew to managing director. Mr. Andrew did not steal a hubcap from a car," Andrew's lawyers, including Tammy Marzigliano and Amy Biegelsen, said in a June filing. "Furthermore, Mr. Andrew was not the only KPMG employee—or even the most senior KPMG employee—at either event."

In the same filing, Andrew's lawyers disputed the accusation that he stole a hubcap. "The incident involved two cars of the same make and model," the lawyers wrote. "When Mr. Andrew spoke with an HR investigator [at KPMG], he did not believe that she understood that the hubcap was replaced on the car that it was originally removed from."

KPMG, his lawyers added, has not disciplined, "much less terminated," any other employees for their involvement in the 2016 bachelorette party or the night of drinking in 2017.

In August, a Labor Department judge ordered KPMG and Andrew to meet for mediation by no later than Oct. 31. The notice of a settlement was filed earlier this month, and the attorneys are required soon to send a copy of the settlement agreement to the presiding Labor Department judge.

Read more:

Ex-Morgan Stanley Lawyer Alleges Retaliation After Raising Corruption Concerns

Baker & Hostetler Lures Another Big Four Alum for International Tax Team

Inside Wells Fargo's Quest Against a Whistleblower Awarded $577K