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The corporate watchdog has launched a formal investigation into a top-tier consultancy firm following allegations it misused confidential information.

The Australian Securities and Investments Commission told a budget estimates inquiry it had begun the investigation into KPMG, one of the Big Four accounting firms, expanding a preliminary probe.

The firm’s Australian head Andrew Yates resigned in May following the treatment of and the mishandling of allegations by a whistleblower, after an internal investigation into the claims of misconduct was found to have fallen short of the firm’s expectations.

ASIC’s chair Sarah Court said the larger investigation began earlier in June.