Magazine article American Banker

OCC Seeks $300K from Auditor

Magazine article American Banker

OCC Seeks $300K from Auditor

Article excerpt

The Office of the Comptroller of the Currency said Monday that it wants Grant Thornton LLP to pay a $300,000 fine and to change some of its business practices because it failed to find the fraud that led to the collapse of First National Bank of Keystone.

The OCC said it would take its case before an administrative law judge on May 4. It will argue that the auditor, which is based in Chicago, should have uncovered the West Virginia bank's schemes before its failure in September 1999. The Federal Deposit Insurance Corp.'s most recent estimate of the cost to the deposit insurance fund was $651 million.

Grant Thornton "knowingly or recklessly participated in unsafe and unsound practices with respect to the bank," the OCC said in its notice of charges. The agency will pursue the fine and an order requiring the auditor "to cease and desist from certain activities." It also intends to order Grant Thornton "to take affirmative corrective action with respect to audits or accounting services it performs for insured depository institutions," the notice said.

Mark Ryan, a lawyer at Mayer, Brown, Rowe & Maw LLP who is representing Grant Thornton, said it would contest the fine and the order on the grounds that Keystone's fraud was sophisticated enough to escape detection from regulators.

"The audit in our work at Keystone was completely consistent with professional standards," Mr. Ryan said. "For the OCC to turn around after it didn't see the fraud for a number of years," having far greater resources than Grant Thornton had, "and to point the finger at us -- we think it is really unfortunate, and it is just not good public policy. …

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