Balance Suit Vs PwC to Move Forward
A judge of the U.S. District Court in New York has denied a motion filed by PricewaterhouseCoopers’ seeking to dismiss a ruling in a lawsuit filed by former employees of the accounting firm.
Judge George Daniels upheld an earlier decision by Judge Michael Mukasey who had ruled in September 2006 that PwC must conduct a “whipsaw calculation.”
Daniels denied PwC‘s August 15 motion to dismiss that ruling. The decision was released amid PwC’s imminent case with the Accountancy and Actuarial Discipline Board, which is expected to hear a formal complaint by FRC’s (Financial Reporting Council) executive counsel regarding the conduct of PwC as auditor to JP Morgan Securities Ltd.
At issue was the allegation by former employees of PwC, claiming that the firm miscalculated their accrued benefits upon withdrawing from the firm’s cash balance plan before age 65 under the Employee Retirement Income Security Act.
The plaintiffs added that PwC owed them larger payments. They said under ERISA, the firm should have used a “whipsaw calculation” of between 9 percent and 10% percent to project their benefits to age 65 and not the 30-year Treasury rate that PwC used.
“Although the court was unwilling to rule for PwC as a matter of law at this time, we continue to believe PwC appropriately computed amounts owed to participants who took lump-sum distributions from its cash balance plan,” said Robert Kopecky of Kirkland and Ellis, counsel for PwC.
The case was Laurent vs. PricewaterhouseCoopers LLP.
Initially, it was filed in the U.S. District Court in East St. Louis, Ill., in November 2004 by Timothy Laurent, a former employee who alleged that PwC violated ERISA law in the design of the cash balance plan.
The case was refiled in the U.S. District Court in New York in March 2006, adding two former PwC employees to the list of plaintiffs.