PwC Liable For Startup's Misleading Audits, Investors Say

Law360 (July 27, 2020, 8:01 PM EDT) -- A Chinese unit of PwC deliberately ignored "red flags" that a Chinese startup understated its tax expenses and should be liable for its fraud, investors told a federal court in asking to keep the accounting firm in a stock-drop lawsuit.

The unit, PricewaterhouseCoopers Zhong Tian LLP, created audit reports on the startup, Gridsum Holding Inc., that were "materially false and misleading" to the point that the firm is culpable, the investors said Friday in a memo opposing PwC's June motion to be dismissed from the case.

The investors' 2018 suit alleges that Gridsum misled investors before its 2016 initial public offering,...

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