The SEC suspended a former KPMG audit partner and a former staffer of the PCAOB after a jury last year found them each guilty of wire fraud charges for interfering with the audit regulator’s oversight, Bloomberg reported.
David Middendorf, the former national MP for audit quality at KPMG, and Jeffrey Wada, who was an inspections leader for the PCAOB, may no longer appear or practice before the SEC, the agency announced.
Middendorf was accused of recruiting PCAOB staffers to provide the firm with information about which audits they would be examining. He was sentenced to a year and a day in prison and three years of supervised release. Manhattan U.S. Attorney Geoffrey Berman, during the sentencing, stated Middendorf was “at the top of a chain of corruption that threatened to corrupt KPMG and the PCAOB’s inspections process,” Compliance Week reported.
Wada was accused of funneling confidential information about the board’s surprise inspections to Cynthia Holder, another PCAOB staffer who had gone to work at KPMG. He was sentenced to nine months in prison.
In a related action, the SEC in November 2019 barred Holder from practicing as an accountant before the SEC. Holder was sentenced to eight months in prison and two years of supervised release for her role in the scandal.
KPMG agreed to pay a $50 million penalty to settle allegations that it altered past audit work after receiving that secret information.