KPMG Faces $21 Million Fine for H.I.G. Capital Conflict

KPMG U.K. Ltd. faces a 15 million pound ($21 million) fine after it committed “gross misconduct” over a conflict of interest when it advised bed manufacturer Silentnight and the private equity firm that bought it in 2011.

The U.K.’s audit regulator said the conflict with H.I.G. Capital LLC was “obvious” in documents prepared for a sanctions hearing Monday. The Financial Reporting Council said that KPMG “lost their objectivity and dishonestly advanced, or associated themselves with, misleading statements,” with misrepresentations repeated on eight separate occasions.

The tribunal’s executive counsel also recommended that David Costly-Wood, an ex-KPMG partner who worked on the sale, face a personal fine of at least 500,000 pounds and be stripped of his membership of the Institute of Chartered Accountants in England and Wales for 15 years.

A fine of anything over 15 million pounds would represent a record for the FRC, after it ordered Deloitte LLP to pay that amount for its failures over the audit of Autonomy Corp.

“The tribunal’s draft findings relate to restructuring work performed over a decade ago,” said KPMG U.K. in an emailed statement. “We will consider those findings and our options for a possible appeal at the appropriate time. We disagree with a number of the arguments being advanced by Executive Counsel at the sanctions hearing.”

Costley-Wood didn’t immediately respond to a request for comment sent to his LinkedIn. He has since left KPMG.

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