PNC Agrees to Federal Scrutiny of Accounts
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PNC Financial Services Group Inc. avoided monetary penalties, but will face stricter federal scrutiny after regulators questioned its accounting and record-keeping practices.
The Securities and Exchange Commission said the bank tried to conceal $762 million in potential liabilities last year by transferring them to three subsidiaries created for that purpose.
The Pittsburgh-based bank and federal regulators announced that PNC would give the SEC and the Federal Reserve Bank of Cleveland greater access to company records and tighter control of mergers or acquisitions.
Federal regulators said PNC wanted to keep various capital investments and “volatile, troubled or under-performing loans” from affecting its bottom line in the second, third and fourth quarters by transferring them to three subsidiaries created with insurance giant American International Group Inc.
The bank did not admit any wrongdoing, but reduced its 2001 profit by $155 million to $412 million in January after federal regulators questioned the accounting.
AIG has said it didn’t take part in the transactions and didn’t revise its earnings.
PNC’s stock tumbled $6.91, or 14.8%, to $39.69 on the NYSE.
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