The Securities and Exchange Commission has barred Cynthia Holder from practicing as an accountant before the Commission for her role in the long-running KPMG inspections scandal.
Holder, a former inspections leader at the Public Company Accounting Oversight Board before later joining KPMG, was sentenced to eight months in prison for her actions by the Department of Justice in August. In addition to her term, Holder will serve two years of supervised release.
Holder pleaded guilty in October 2018 to two separate counts of conspiracy to commit fraud. She and five others were accused of executing a plan to get confidential inspection planning information from the PCAOB about which of KPMG’s audits would be inspected, providing an opportunity to double-check work ahead of the inspection.
The scheme related to inspection began in 2015, authorities said, as KPMG struggled to shake off unfavorable results in audit inspections by the PCAOB. The firm was turning out among the worst findings across the largest firms that are inspected annually.
A criminal indictment indicated Brian Sweet, a former PCAOB staffer who left the PCAOB to join KPMG, faced pressure from the beginning of his employment with KPMG to share what he knew about the PCAOB’s plans. Holder was still employed at the PCAOB when Sweet began working at KPMG but became Sweet’s source for newer information as the scheme continued, according to the allegations.
Holder later joined KPMG, and the scheme continued into 2017, with Jeffrey Wada, a former inspections staffer at the PCAOB, becoming the new source for stolen information after he was passed over for a promotion, authorities said.
In announcing its ruling in an administrative proceeding, the SEC contended Holder violated sections EC3 and EC9 of the PCAOB Ethics Codes.
Punishments for the scandal have continued to be handed out by the Department of Justice. In addition to Holder’s prison sentence, David Middendorf, former national managing partner for audit quality and professional practice at KPMG and the individual found to be “at the top of a chain of corruption,” was sentenced to one year and one day in federal prison and three years of supervised release for his role in the scheme.
Most recently, David Britt, the former co-head of the Banking and Capital Markets Group within the audit group of KPMG’s Department of Professional Practice, pleaded guilty to one count of conspiracy to commit wire fraud in October and awaits sentencing.
In June, the SEC settled charges related to the scandal with KPMG for $50 million, in addition to revealing allegations of cheating on internal exams that were also covered in the settlement.
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