Grant Thornton Ireland will pay $19m to settle US audit claims cases

Grant Thornton Ireland had been accused of taking part in a cover-up by colluding during audits to help a US investment advisory firm persist with fraudulent activity that resulted in a $400m (€373m) black hole in the Florida firm’s balance sheet.

In a statement, Grant Thornton Ireland said it will contribute $19.25m towards the total settlement to close out the cases and any threatened claims in full. It is making the payment without admission of liability or wrongdoing by Grant Thornton, the accountancy firm said.

"This decision was taken in order to avoid prohibitive legal defence costs in the USA and Cayman Islands, and was done without admission of liability or wrongdoing by Grant Thornton. Having issued qualified audit opinions for both years, Grant Thornton maintains its position that its work on the audits complied with applicable professional standards. As part of the resolution, Grant Thornton has agreed not to pursue its demand for arbitration in the Cayman Islands,” the firm said.

The agreement was reached through mediation in Florida, resolving all claims arising from the 2017 and 2018 audit engagements with TCA.

The overall agreement is subject to the execution of a written agreement, and approval by the courts presiding over the relevant lawsuits.

In 2020, a case had been launched in Miami by investors in entities connected to Florida-based investment firm TCA Fund Management against TCA and its former executives.

Grant Thornton Ireland and Grant Thornton Cayman Islands were also defendants in that case.

Jonathan Perlman, the receiver of TCA Fund Management Group and related entities, also sued Grant Thornton Ireland and Grant Thornton Cayman Islands in January, claiming that the firms took part in a cover-up by colluding during audits to help the investment firm engage in fraudulent activity.

That fraudulent activity, it had been alleged, resulted in a $400m (€373m) black hole in the TCA’s balance sheet.

Grant Thornton Ireland rejected the allegations in January when the lawsuit was launched.

Last month, Mr Perlman asked a Florida court to merge the action he filed this year against Grant Thornton Ireland and the accountancy firm’s office in the Cayman Islands into the 2020 action that was initiated by TCA investors. The settlement agreed with Grant Thornton Ireland will bring both actions to a close.

Grant Thornton’s office in the Cayman Islands recently agreed to a settlement in principle in the related 2020 legal action, but that was contingent on Grant Thornton Ireland also reaching a deal.

The mediator in the 2020 action has previously told the court that Grant Thornton Ireland had four layers of insurance, each syndicated with various carriers.