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Benjamin Lawsky Isn't Through With Bank Consultants Just Yet

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That $10 million fine he slapped on Deloitte for doing shoddy work may be only the beginning, of both a crackdown on consultants and, even more likely, a run for state comptroller/attorney general/governor/president/city comptroller (the latter if there should be a hiccup in the former path).

New York State has subpoenaed two consulting firms as part of a broader investigation into the industry’s perceived coziness with Wall Street, according to people briefed on the inquiry. The two firms that received the subpoenas in recent months — Promontory Financial Group and PricewaterhouseCoopers — are among the industry’s biggest names….

New York’s financial regulator, Benjamin M. Lawsky, fined Deloitte $10 million in June and banned it from advising banks in New York for one year after accusing the firm of watering down a report about money-laundering controls at the British bank Standard Chartered.

At Standard Chartered’s request, Deloitte removed a recommendation from the report that was “aimed at rooting out money laundering,” Mr. Lawsky, New York’s superintendent of financial services, said when announcing the Deloitte action. Deloitte was not accused of intentionally aiding or abetting Standard Chartered. At the time, Deloitte said it “has an important responsibility to continually elevate the standards that govern our work and that of our profession.”

Mr. Lawsky is scrutinizing some of the same issues in his investigation of Promontory and PricewaterhouseCoopers, according to the people briefed on the matter.

The subpoena of Promontory seeks e-mails and other documents generated during the firm’s work for Standard Chartered, which settled with New York and federal regulators over claims that it had illegally transferred money for Iran….

In Mr. Lawsky’s examination of PricewaterhouseCoopers, he is focused on the consultant’s work for the Bank of Tokyo-Mitsubishi UFJ, which faced investigations over foreign money transfers, according to people briefed on the matter. In June, Mr. Lawsky accused the bank of processing 28,000 payments worth about $100 billion on behalf of countries that were facing sanctions by the United States. PricewaterhouseCoopers was tasked with assessing the volume of transfers.

2 Consultants to Banking Industry Come Under Scrutiny [DealBook]


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