FOR IMMEDIATE RELEASE                                    2000-4
                                
             Independent Consultant Finds Widespread
        Independence Violations at PricewaterhouseCoopers

     Washington, DC, January 6, 2000 -- The staff of the
Securities and Exchange Commission today made public the report
by independent consultant Jess Fardella, who was appointed by the
Commission in March 1999 to conduct a review of possible
independence rule violations by the public accounting firm
PricewaterhouseCoopers (PwC) arising from ownership of client-
issued securities.  The report finds significant violations of
the firm's, the profession's, and the SEC's auditor independence
rules.

     On January 14, 1999, the Securities and Exchange Commission,
in an investigation that remains ongoing, issued an Opinion and
Order Pursuant to Rule 102(e) of the Commission's Rules of
Practice In the Matter of PricewaterhouseCoopers LLP (Securities
Exchange Act of 1934 Release No. 40945) ("Order"), which censured
PwC for violating auditor independence rules and improper
professional conduct.  Pursuant to the settlement reached with
the Commission, PwC agreed to, among other things, complete an
internal review supervised by an independent person or firm
appointed by the Commission and to report to the Commission staff
any additional instances in which PwC partners or professionals
owned securities of public audit clients of PwC in contravention
of applicable rules and regulations concerning independence.  Mr.
Jess Fardella of Lankler Siffert & Wohl LLP was appointed by the
SEC to supervise PwC's internal review.

     The independent consultant's report discloses that a
substantial number of PwC professionals, particularly partners,
had violations of the independence rules, and that many had
multiple violations.  The review found excusable mistakes, but
also attributed the violations to laxity and insensitivity to the
importance of independence compliance.  According to the
independent consultant's report, PwC acknowledges that the review
disclosed widespread independence non-compliance that reflected
serious structural and cultural problems in the firm.

     The independent consultant's report summarizes results of
the internal review at PwC, which included two key parts:  PwC
professionals were requested in March 1999 to self-report
independence violations; and the independent consultant randomly
tested a sample of the responses for completeness and accuracy.

     Almost half of the PwC partners -- 1,301 out of a total of
2,698 -- self-reported at least one independence violation.  The
1,301 partners who reported a violation reported an average of
five violations; 153 partners had more than ten violations each.
Of 8,064 reported violations, 81.3% were reported by partners and
17.4% by managers; 45.2% of the violations were reported by
partners who perform services related to audits of financial
statements.  Almost half of the reported violations involved
direct investments by the PwC professional in securities, mutual
funds, bank accounts, or insurance products associated with a
client.  Almost 32% of reported violations, or 2,565 instances,
involved holdings of a client's stock or stock options.

     Six out of eleven partners at the senior management level
who oversee PwC's independence program self-reported violations.
Each of the 12 regional partners who help administer PwC's
independence program reported at least one violation; one
reported 38 violations and another reported 34 violations.
Thirty-one of the 43 partners who comprise PwC's Board of
Partners and its U.S. Leadership Committee self-reported at least
one violation.  Four of these had more than 20 violations; one of
these partners had 41 violations and another had 40 violations.

     The random tests of the self-reporting process summarized
above indicated that a far greater percentage of individuals had
independence violations than were reported.  Despite clear
warnings that the SEC was overseeing the self-reporting process,
the random tests of those reports indicated that 77.5% of PwC
partners failed to self-report at least one independence
violation.  The combined results of the self-reporting and random
tests of those reports indicated that approximately 86.5% of PwC
partners and 10.5% of all other PwC professionals had
independence violations.

     The independent consultant's report identifies key
weaknesses in the systems PwC had used to prevent or detect
independence violations:

  *  reporting systems relied on the individuals themselves to
     sort through their own investments and interests for violations;
  *  efforts to educate professionals about the independence
     rules and their responsibilities to the client to comply with the
     rules were insufficient;
  *  resolution of reported violations were not adequately
     documented; and
  *  reporting systems did not focus on the reporting of
     violations that were deemed to be resolved before annual
     confirmations were submitted.

     PwC is implementing a new system that requires all partners
and managers to report all investments and that regularly
subjects the self-reporting to audit.

     The independent consultant's report concludes:

       .  .  .  the numbers of violations alone,  as  PwC
       acknowledges,   reflect  serious  structural   and
       cultural  problems that were rooted  in  both  its
       legacy  firms  [Price  Waterhouse  and  Coopers  &
       Lybrand].   Although  a large  percentage  of  the
       reported and unreported violations is attributable
       solely  to  the Merger, an even larger portion  is
       not;  thus, the situation revealed by the internal
       investigation   is   not  a   one-time   breakdown
       explained  solely  by  the Merger.   Nor  can  the
       magnitude   of   the   reported   and   unreported
       violations  be attributed simply to less  familiar
       Independence  Rules  such as those  pertaining  to
       brokerage, bank and sweep accounts.  At least half
       of   the   reported   and  unreported   violations
       consisted  of  interests held by a  reporting  PwC
       professional himself or herself, and most  of  the
       violations arose from either mutual fund or  stock
       holdings . . . .

       .  .  .  Independence compliance at  PwC  and  its
       legacy  firms was dependent largely on  individual
       initiative.   This  system  failed,  as  PwC   has
       acknowledged . . . .

       Particularly  as  accounting  firms   have   grown
       larger,  acquired more clients and  provided  more
       services,  and  as  investment  opportunities  and
       financial  arrangements have increased  in  number
       and   complexity,  well-designed   and   extensive
       controls  --  as reflected in the SEC's  order  in
       this  matter  --  are  needed both  to  facilitate
       Independence  compliance  and  to  discourage  and
       detect non-compliance.

     Securities and Exchange Commission Chief Accountant Lynn E.
Turner said, "This report is a sobering reminder that accounting
professionals need to renew their commitment to the fundamental
principle of auditor independence."

     The violations discussed in the independent consultant's
report came to light as a result of a Commission-ordered review,
after professional self-regulatory procedures failed to detect
such violations.  As a result, at the SEC's request, the Public
Oversight Board will sponsor similar independent reviews at other
firms and will oversee development of enhancements to quality
control and other professional standards.
                                
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