The firm has also been ordered to pay over £2.75m towards executive counsel costs of the investigation together with the costs of the tribunal.
David Costley-Wood,the former partner and head of KPMG Manchester restructuring, who was also caught up in the scandal, was fined £500,000 and “severely reprimanded”.
As part of his sanctions, he will be excluded from membership of the ICAEW for 13 years and be precluded from holding an insolvency licence for the same period.
The tribunal found that the firm and Costley-Wood failed “to act solely in its client’s interests” and comply with the fundamental principles of “objectivity and integrity” when they advised on the sale of Silentnight to HIG Capital in 2011.
The tribunal also stated that Costley-Wood acted “dishonestly” and therefore he and KPMG acted with a “lack of integrity”.
This included their dealings with the Pension Protection Fund (PPF) and the Pensions Regulator despite Costley-Wood “acknowledging” that there was an obligation to act “transparently” in relation to a regulator.
A spokesperson for KPMG said: “We acknowledge the tribunal’s findings and regret that the professional standards we expect of our partners and colleagues were not met in this case.
“Mr David Costley-Wood has retired from the firm and whilst we no longer provide insolvency services, our broader controls and processes have evolved significantly since this work was performed over a decade ago.”
They added: “As a firm, we are committed to the highest standards and continually invest in our people and procedures to ensure potential conflicts of interest are identified and managed effectively. We welcome the additional review process outlined by the FRC and remain focused on building trust and delivering work of the highest quality.”