Discard PricewaterhouseCoopers: BofA Investors Urged

Lucas Gilmore, “Big 4″ observer
April 30, 2011 /

The annual meeting at the Bank of America has rather produced unpalatable recommendations from a San Francisco-based proxy adviser against PricewaterhouseCoopers auditors, and the board of directors.

Glass Lewis & Co. has urged BofA investors to trash the ratification of PricewaterhouseCoopers auditors and to tell BofA to look for another accounting firm instead. The proxy adviser went on to recommend the approval of proposals by the bank’s shareholders, which are against the will of the board.

PricewaterhouseCoopers, whose Indian units were recently fined a total of $7.5 million in a settlement with the US Securities and Exchange Commission and the Public Company Accounting Oversight Board over charges of violating audit standards with regards to a scandal that hit Satyam Computer Services, is facing questions over the quality of its services to Bank of America.

During the bank’s annual meeting, Glass Lewis presented an array of shortcomings in Bank of America’s internal audit and controls, policies, procedures, compliance and risk management programs, discovered by the Office of the Comptroller of the Currency (OCC).

The proxy adviser raised questions over the value of services that PricewaterhouseCoopers had rendered for Bank of America in light of the findings of the OCC. Glass Lewis especially mentioned the urgency for the shareholders to look into the matter in question.

Glass Lewis said the appointment of new auditor would better serve the bank in bringing new “perspective to evaluating the company’s controls and audit procedures.”

In 2010, Bank of America made payments amounting to $123 million for PricewaterhouseCoopers services which include compliance and risk management that cost $11.6 million.

Meanwhile, Glass Lewis told BofA investors to cast their support for the proposals of shareholdes to independently review the bank’s mortgage operations, look into the lobbying expenses of the bank, and revamp its voting process for directors to allow for an independent stand of at least one of them.

The call was likewise raised by the ISS Proxy Advisory Services, Glass Lewis’s rival.

However, the ISS Proxy Advisory voted against the shareholder proposal of giving all the shareholders an access into the list of Bank of America’s top executives who had experiences in the last five years holding a government post.

ISS views the proposal as giving benefits to BofA from the executives’ “knowledge and expertise” from working for the government.

BofA investors were further told they should dump the appointment of Virgis Colbert and Charles Rossotti as directors.

Colbert and Rossotti were previously directors at Merrill Lynch & Co., which was acquired by Bank of America in 2008 in the height of the global financial crisis.

However, ISS stood to oppose voting against Rossetti, in contrast to its previous position prior to this year’s annual meeting.

ISS has changed its views on the director after a review disclosed that payments made to a law firm connected to one of his family members took place prior to his appointment to Bank of America’ board.

 

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