The U.S. regulator overseeing auditors was rocked by criminalcharges as federal prosecutors accused three former employees ofleaking inside information to KPMG so it could improve its auditresults.

The allegations are a major embarrassment for the Public CompanyAccounting Oversight Board, a regulator that was meant to restorepublic confidence in the audit industry after accounting scandalsat Enron and WorldCom cost investors billions of dollars. Claimsthat employees shared confidential information with a top auditfirm raise doubt about whether the PCAOB is up to the job.

They're also another black eye for KPMG, one of the Big Fouraccounting firms. The company paid $456 million in 2006 to avoidcriminal charges that it helped wealthy clients dodge $2.5 billionin taxes. The firm is accused of poaching PCAOB officials and usingtheir contacts to get warnings about pending inspections.

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