FOR IMMEDIATE RELEASE 99-5 SEC Censures PricewaterhouseCoopers for Violating Auditor Independence Rules and Improper Professional Conduct PwC Agrees to Establish New Procedures and to Create $2.5 Million Auditor Independence Education Fund Washington, D.C., January 14, 1999 -- The Securities and Exchange Commission today brought and settled charges against PricewaterhouseCoopers L.L.P. (PwC) for engaging in improper professional conduct by violating SEC auditor independence rules. In violation of SEC rules and in more than 70 instances, some PwC partners and managers, including its pension fund, purchased securities of PwC audit clients. In settling the charges, PwC agreed to be censured, to establish a $2.5 million auditor independence education fund, to improve its internal procedures for monitoring adherence to auditor independence rules, and to conduct an internal investigation supervised by an outside person named by the SEC, among other things. Richard H. Walker, Director of the SEC's Division of Enforcement said, "The SEC's rules explicitly forbid accountants from owning stock in their audit clients. If auditors are not independent of their clients, in fact or perception, the integrity of the financial reporting system is jeopardized." Chairman Arthur Levitt said, "Without independent auditors to assure the veracity of the numbers, confidence in our markets would be severely undermined. At the simplest level, members of an audit firm cannot invest in their clients." PwC is the entity that resulted from the merger of Coopers & Lybrand L.L.P. (C&L) and Price Waterhouse L.L.P. in July 1998. In its Order, the SEC found that during the period 1996 through 1998, C&L procedures for ensuring its compliance with independence standards with respect to publicly-held audit clients, whose securities were registered with the Commission, failed to detect that: * In four instances, certain professionals owned securities of publicly-held audit clients for which they provided professional services; * In 31 instances, partners or managers owned securities of publicly-held companies for which they provided no professional services but were clients of C&L; and * In 45 instances, C&L's retirement plan owned securities of publicly-held audit clients of C&L and PwC. As part of the order, PwC agreed to: * Be censured; * Pay $2.5 million to establish a fund for programs to further awareness and education throughout the accounting profession relating to the independence requirements of public accounting firms; * Implement various procedures to provide reasonable assurance that it will comply with applicable professional standards requiring that public accounting firms be independent of their audit clients, in fact and in appearance; * Establish a database of its publicly-held audit clients and of the securities transactions of its partners, and to compare each security transaction by a partner with that database and take action if a partner buys the securities of a PwC publicly-held audit client; * Undertake procedures to prevent members and its pension plans from owning securities of PwC's publicly-held audit clients in contravention of SEC regulations and other applicable professional standards concerning auditor independence; and * Conduct an internal investigation supervised by an independent person appointed by the SEC and to report to the SEC any additional instances where a PwC partner or professional staff owned the securities of a PwC audit client in contravention of SEC regulations and other applicable professional standards concerning auditor independence. PwC consented to the entry of the SEC's Order without admitting or denying the facts, findings, or conclusions of the Order. Details of the Commission's action and PwC's undertakings are contained in the Commission's Order, which is available at www.sec.gov. Contact: Randall J. Fons Regional Director, Southeast Regional Office 305-982-6332 # # #