Price Waterhouse Bangalore and its two erstwhile partners - S Gopalakrishnan and Srinivas Talluri Noticee - have been asked to jointly disgorge the wrongful gains of over Rs 13 crore with interest calculated at the rate of 12% per annum from January 7, 2009, till the date of payment.
In a 108-page statement, SEBI said that the manner in which various entities bearing the PwC name had been registered in India in a "nebulous way", made it hard not to take notice of the "loss of faith of the investors in the brand name".
After the scandal broke, Price Waterhouse moved the Supreme Court to challenge SEBI's jurisdiction and authority in investigating against it; the SC, however, didn't stall investigations.
The affair, however, may make it hard for Price Waterhouse to win new clients because of the damage to its reputation, and the uncertainty that a court proceeding for a stay order would bring. PWC was acting as the auditor of the company between 2000-2008.
PW sources said that since the 2009 Satyam scam, where two partners of the firm were found to be involved in wrongdoing, the global audit and advisory giant has tightened its systems and has undergone several peer reviews.
Price Waterhouse said it would appeal against the Sebi ban, which came nine years after Satyam founder B. Ramalinga Raju confessed to cooking the firm's books in a Rs7,136 crore fraud.
Price Waterhouse, the auditing arm of consultancy firm PwC India, is the auditor for 77 companies listed on National Stock Exchange of India, according to data from Prime Database.
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Although the PwC firms were individual partner firms with separate legal existence, they benefited from the brand name and the resources behind it, and ostensibly held out to the public to be a single consolidated network of firms, SEBI said.
The notification also said it will not impact audits for the financial year 2017-18.
The order was passed under the Prevention of Fraudulent and Unfair Trade Practices (PFUTP) regulations and Section 11 of Sebi Act, which empowers the regulator to pass directions in the interest of investors.
"Companies will be in a sticky position if Price Waterhouse refuses to resign", said Gupta.
The market regulator held in its 180-page order that the firm was complicit with the main perpetrators of the accounting fraud and did not comply with auditing standards. "We believe that the order is also not in line with the directions of the Hon'ble Bombay High Court order of 2010", the accounting firm said in a statement issued as a response to the Sebi order.
The PW statement also said: "We have learnt the lessons of Satyam and invested heavily over the last nine years in building a robust and high quality audit practice, as also confirmed in 2015 by an independent monitor appointed by the US SEC". The Satyam promoters inflated revenue and profits to showcase a healthy picture of the company when PwC was its auditor.
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