The USA Securities and Exchange Commission (SEC) have charged six public accountants, including three former employees of the Public Company Accounting Oversight Board (PCAOB) and three KPMG USA employees, for leaking confidential inspection information to the network.

The misconduct began in 2015 until February 2017, where former PCAOB supervisor Brian Sweet began working for KPMG but continued accessing materials through PCAOB inspector Cynthia Holder, who also joined KPMG and continued access through PCAOB employee Jeffrey Wada. Wada then leaked PCAOB data at the time he was seeking employment with KPMG, according to the SEC.

Sweet informed supervisors of the confidential materials; KPMG managing partner for audit quality and professional practice David Middendorf, national inspections partner Thomas Whittle, and partner David Britt. All three allegedly encouraged sharing the stolen information so that audit papers of client who would be inspected could be revised to avoid negative findings. Both Middendorf and Whittle allegedly instructed not to disclose that they had confidential PCAOB information.

SEC's Enforcement Division co-director Steven Peikin said they literally stole the exam. “The PCAOB inspections program is meant to assess whether firms are cutting corners, compromising their independence, or otherwise falling short in their responsibilities. The SEC cannot tolerate any scheme to subvert that important process," he said.

PCAOB chairman William Duhnke said that following the discovery last year the Board and staff have reviewed and reinforced safeguards. “The new PCAOB Board will conduct an ongoing review into information technology and security controls, as well as its compliance and ethics protocols, to assess their effectiveness. The misappropriation of confidential PCAOB information or otherwise undermining the integrity of our programs will not be tolerated,” he said.

Sweet has agreed to settle a commission order requiring he cease and desist from violating PCAOB ethics and barring him from appearing or practicing before the SEC as an accountant.

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A KPMG statement said: “When KPMG first discovered the issue in early 2017, we promptly notified the authorities and have been fully cooperating with the Government in its investigation.  KPMG took swift and decisive action, including the engagement of outside legal counsel to conduct a detailed investigation and the separation of involved individuals from the Firm. Since then KPMG has taken remedial actions to assure that such conduct cannot happen again.”

Parallel to the SEC’s charges, the USA Attorney's Office for the Southern District of New York has announced criminal charges against the six accountants. The case will be scheduled for a public hearing.