PwC has ordered nearly 300 of its US partners to cut ties with a tiny brokerage firm offering speculative small-cap investments after an internal investigation into the relationships.
The ruling has caused consternation at the highest levels of the Big Four accounting firm, where senior executives have for years offered an introduction to the brokerage Black River Management to colleagues and junior partners rising up the ranks, telling them it provides access to lucrative and hard-to-find investments.
Clients have included a number of past and present PwC executives, including current US senior partner Paul Griggs, and the ruling has led to them rushing to transfer what in some cases are illiquid investments, according to people familiar with the situation.
PwC conducted an investigation into partners’ ties with Black River earlier this year, covering matters including whether independence rules could have been broken, the people said. Details of the investigation and its conclusions were not widely circulated, and it is not known what it found, but the result has been that PwC has withdrawn permission for partners to use Black River, they said. PwC declined to discuss the investigation or its conclusions.
The internal investigation came after a period when US regulators stepped up scrutiny of the private investments of accounting firm staff, which are subject to strict independence rules designed to protect the integrity of a firm’s audit work. Partners and staff are typically banned from having financial ties to any company whose financial accounts might be audited by the firm.
The Public Company Accounting Oversight Board now publishes data on independence violations in their annual inspection reports on the Big Four, and has levied large fines on significant offenders.
“Regulators have been trying to come down hard on independence violations because there have been a lot over the past five or 10 years,” said Steven Mintz, professor emeritus of accounting at California Polytechnic State University, San Luis Obispo. “Firms need to err on the side of caution.”
In a statement, Black River said that it was “proud of its 25-year relationship with PwC. It was never informed of, or aware of, any independence violations for the entirety of the relationship”.
That relationship was strong enough that Black River was linked in to PwC’s compliance system, Checkpoint, the tool that partners and their financial advisers use to see whether an investment is off-limits under independence rules.
Based in the affluent New Jersey suburb of Morristown, about an hour outside New York, Black River gained a reputation in the upper echelons of PwC for suggesting potentially high-return investments in early-stage companies such as biotechs and venture capital funds, according to clients.
The company’s website shows it offers investments in stocks and options and wealth management advice to individuals, while its affiliate Newbridge Securities offers capital raising services to small companies that can generate investment opportunities for Black River clients.
One former partner who used Black River said it was seen as a way to access speculative investments. “This is not Vanguard,” the person said. “This is for the money that you can afford to lose, like going to Las Vegas and betting on red or black.”
PwC has close to 4,000 partners in the US, and 50,000 employees. Partners, employees, third-party contractors and their immediate family must not hold investments in, or have other financial relationships with, PwC audit clients. They also sign up to an ethics code that demands integrity and professional behaviour. – Copyright The Financial Times Limited 2025
