PricewaterhouseCoopers LLP agreed to pay $21.5 million to resolve lawsuits by Anicom Inc. shareholders and creditors, who accused the accounting firm of acting recklessly by certifying the company's financial statements during the years leading up to its January 2001 bankruptcy-court filing.
The payment is among the larger settlements to date over an alleged audit failure by PricewaterhouseCoopers, which currently is under regulatory scrutiny related to its prior audits for Tyco International Ltd. In May 2001, the firm agreed to pay about $51 million to settle a class-action shareholder lawsuit that accused it of botching some previous audits of MicroStrategy Inc.'s financial statements. As in the MicroStrategy case, PricewaterhouseCoopers settled the Anicom litigation without admitting wrongdoing.
"We believe the work we performed for Anicom complied fully with applicable auditing standards and federal securities laws," PricewaterhouseCoopers spokesman Steven Silber said. "We decided to settle the lawsuit to avoid the costs and uncertainties associated with protracted litigation."
The $21.5 million payment will be divided among Anicom's bankruptcy estate and its secured lenders and shareholders, including the State of Wisconsin Investment Board, which held Anicom shares and is lead plaintiff in the securities litigation over Anicom's collapse in a federal district court in Chicago. The plaintiffs' claims against several former executives remain pending. An attorney for the Wisconsin board, Ken McNeil of the Houston law firm Susman Godfrey LLP, said Monday's settlement "will now let us focus trial preparation on the primary target -- the officer and director defendants who typically have primary responsibility for misstated financial statements."
The settlement comes about five months after the Securities and Exchange Commission sued six former Anicom executives in Chicago, accusing them of accounting fraud. The SEC's complaint alleges that they inflated the company's revenue by more than $38 million from January 1998 through March 2000. The executives have denied wrongdoing.
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