Failed brokerage MF Global Holdings Ltd. and accounting firm PricewaterhouseCoopers LLP said yesterday that they have settled their high-profile accounting-malpractice lawsuit in which the brokerage contended bad advice from PwC contributed to its 2011 collapse, the Wall Street Journal reported today. Terms of the settlement weren’t disclosed. Both sides said the case has been settled to “the mutual satisfaction of the parties” and declined to discuss the agreement further. The settlement came during the third week of an expected five-week trial in federal court in New York, in which MF Global’s bankruptcy administrator had sought $3 billion in damages and interest from PwC. MF Global contended that PwC had advised it to treat its “repo-to-maturity” trades involving European sovereign debt as sales rather than borrowings. This move enabled MF Global to record $100 million in immediate profit and take $6.3 billion in securities off its balance sheet, reducing its leverage and making the firm look less risky. PwC insisted it had given MF Global the correct accounting advice, and that MF Global collapsed because of its own faulty strategy and bad decision to bet on the risky European debt.
