PNC Settlement May Be Near | AccountingWEB

PNC Settlement May Be Near

Some 73,000 PNC Financial Services Group shareholders may soon share in the settlement of their class-action lawsuit against the bank. The shareholder restitution fund already amounts to $156.4 million. The acting trustee of the fund, Louis Fryman, said the fund will not be distributed until and unless U.S. District Judge David S. Cercone approves a not-yet-approved additional $36.6 million bringing the fund total to $193 million.


Click Here
Cougar Mountain has all the features of the high-end accounting products at an affordable price. Fully integrated modules including our award-winning Point of Sale product mean you only enter data once - saving time and ensuring accuracy. Cougar Mountain is the answer for small to mid-sized businesses that have outgrown their initial accounting package.
Learn more!

Cougar Mountain Home Cougar Mountain Accounting
Sign up for a Web Demo Cougar Mountain Point of Sale
Request a Call Cougar Mountain FUND

PNC inflated its 2001 earnings by transferring some $762 million in bad corporate loans to three partnerships that it created with the insurance company AIG. In removing these loans from their balance sheet, the bank did not need to book the depreciation on these loans for the second, third, and fourth quarters of 2001 allowing the bank to misrepresent its results.

Shareholder overvalue was realized when the Federal Reserve forced the bank to restate its 2001 annual results to the tune of $155 million under the initial numbers. Shareholders who bought stock between July 19, 2001 and July 18, 2002 are members of the class for which the class-action suit was by Pittsburgh attorney Alfred Yates Jr. in July 2002. The suit contends the bank misrepresented itself to investors.

PNC paid $25 million to the U.S. Department of Justice to settle conspiracy to commit securities fraud charges in June 2003. They also required PNC to set up the $90 million restitution fund as a term of its criminal settlement of the charges. $27 million of that amount was covered by insurance. Earnings will not be affected by the payment.

There is a shareholder suit pending for Ernst & Young, PNC’s former auditing firm according to court filings. The Big Four accounting firm reviewed the 2001 loan transactions and did not put up any red flags.

Buchanan Ingersoll, a Pittsburgh law firm advised PNC on the 2001 loan transactions. Shareholders are planning to sue the company. The restitution fund will receive $1.9 million from the firm.

AIG will pay $4 million into the restitution fund. AIG will also pay over $40 million into the fund. AIG earned these fees in the 2001 loan transactions from PNC.

Wait, there's more!
There's always more at AccountingWEB. We're an active community of financial professionals and journalists who strive to bring you valuable content every day. If you'd like, let us know your interests and we'll send you a few articles every week either in taxation, practice excellence, or just our most popular stories from that week. It's free to sign up and to be a part of our community.
Premium content is currently locked

Editor's Choice

As part of our continued effort to provide valuable resources and insight to our subscribers, we're conducting this brief survey to learn more about your personal experiences in the accounting profession. We will be giving away five $50 Amazon gift cards, and a $250 Amazon gift card to one lucky participant.
This is strictly for internal use and data will not be sold
or shared with any third parties.