McGladrey & Pullen has been sued by the bankruptcy trustee for Sentinel Management Group, Frederick Grede, for $550 million, according to the Wall Street Journal. Gede accuses McGladrey of “certifying false financial statements and creating some of the accounting entries that led to Sentinel’s financial misstatements.”
Mr. Grede, whom the court appointed last year to oversee Sentinel’s bankruptcy, said the firm’s “failure to properly fulfill its responsibilities” let Sentinel executives run the company for their own benefit.”"M&P’s failure to either ensure that Sentinel’s financial statements accurately reflected the facts or refuse to certify materially misstated financial statements, as well as its failure to report these violations in its audit report and to authorities, reflects a deliberate disregard of M&P’s obligations as an auditor,” he said.
Grede has also sued three former Sentinel executives and the Bank of New York.Thus far, McGladrey has not made comment on the suit. Considering what BDO has faced in the ES Bankest case after deciding to go to trial, one wonders whether McGladrey will seek a settlement.