WASHINGTON (Reuters) - The U.S. government on Monday announced criminal and civil charges against three former staffers of an audit watchdog, accusing them of providing confidential information to help accounting firm KPMG pass regulatory inspections.
Three ex-KPMG executives also were charged with encouraging disclosure of the data on Public Company Accounting Oversight Board (PCAOB) audit inspections, the U.S. Securities and Exchange Commission and Justice Department said in separate filings.
The incidents occurred between 2015 and 2017, the government said.
Two of the former PCAOB staffers charged, Cynthia Holder and Brian Sweet, left the watchdog to work for KPMG during that period, authorities said, taking confidential information with them. The third, Jeffrey Wada, also tried to move to KPMG, they said.
Holder’s lawyer could not immediately be reached. A lawyer for Wada could not immediately be identified, and calls to phone numbers linked to his name were not immediately returned.
Sweet has already pleaded guilty to criminal conspiracy charges, according to a spokesman for the prosecutors. He has also reached a settlement with the SEC, the agency said. Sweet’s lawyer, Richard Morvillo, declined to comment.
The ex-KPMG executives charged were David Middendorf, David Britt and Thomas Whittle. Gregory Bruch, Middendorf’s lawyer, said his client was a “very well regarded accounting professional” who “intends to defend himself.”
Melinda Haag, Britt’s lawyer, said her client was innocent, and that the conduct he was accused of was not criminal.
A lawyer for Whittle could not immediately be reached.
The government charged that the PCAOB and KPMG employees conspired to share information about which audits the watchdog would be reviewing, giving KPMG an opportunity to shore up those before facing scrutiny.
The PCAOB is a private non-profit corporation that monitors the audits of public companies.
In a statement on Monday, SEC Chairman Jay Clayton said he did not believe the improper actions compromised the integrity of the KPMG audits embroiled in the scandal.
Last year, KPMG said it had fired six people over the PCAOB leaks, which the company had identified and brought to the government’s attention. The company hired outside legal counsel to investigate the matter and took “remedial actions” to prevent a recurrence, KPMG spokesman Manuel Goncalves said on Monday in an email.
Steven Peikin, co-director of the SEC’s enforcement division, said the enforcement action was unrelated to a December shake-up of the PCAOB in which the SEC named a new head for the watchdog and four new board members.
Reporting by Pete Schroeder; Additional reporting by Brendan Pierson; Editing by Paul Simao and Cynthia Osterman