Shareholders of the Waltham, Massachusetts-based defense contractor alleged PricewaterhouseCoopers issued clean audit opinions of Raytheon’s finances, despite numerous red flags that indicated accounting problems in 1998. The suit, filed by New York State Comptroller Alan Hevesi, sole Trustee of the New York State Common Retirement Fund, said the auditing firm stood to gain more than $70 million worth of fees for non-audit services, according to a news release issued by Hevesi’s office.
In admitting no wrongdoing in the case, PricewaterhouseCoopers agreed to pay $50 million to settle the action.
“This settlement sends a strong message to auditors and other gatekeepers that they will be held to a high level of accountability and integrity in matters that impact the investing public,” Hevesi said. “Investors depend on these third parties to guard them from corporate corruption and fraud. Auditors must be independent and diligent in overseeing public companies in order to protect shareholders whose savings and retirements are vulnerable to corporate wrongdoing.”
Earlier this month, Raytheonagreed to pay a total of $410 million in cash and warrants to settle all claims against it and its former top executives in the same action. Hevesi said if the settlements, which are both currently pending before the U.S. District Court for the District of Massachusetts, are approved; the $460 million settlementwould be the 6th largest settlement in securities class action history.