The U.S. Public Company Accounting Oversight Board (PCAOB) has censured and imposed a US$1-million civil penalty on PricewaterhouseCoopers LLP (PwC) for violations of the audit rules in connection with its examination and audit of Merrill Lynch, Pierce, Fenner & Smith, Inc.

Specifically, PwC auditing Merrill Lynch’s compliance with the U.S. Securities and Exchange Commission’s (SEC) customer protection rules, which require brokers to hold certain customer securities in segregated accounts to protect them from creditors in case the broker’s business fails.

In June 2016, the SEC found that Merrill Lynch violated those rules. Now, the PCAOB has found that PwC violated audit standards by not adequately investigating Merrill Lynch’s compliance with those rules. PwC consented to the PCAOB’s order without admitting or denying the findings in the order.

“An auditor’s attention to a broker’s compliance with the SEC’s customer protection rule provides critical assurance that the business is protecting customer securities from liens by creditors of the broker,” says James Doty, chairman of the PCAOB, in a statement. “PwC failed to fulfill its obligations during a period when Merrill Lynch exposed billions of dollars of customer assets to claims of its creditors.”

“Investors should not have to worry that their brokers’ auditors are failing to perform appropriate work in examining the safeguards around their funds,” adds Claudius Modesti, director of PCAOB enforcement and investigations, in a statement.