Ernst & Young sued for Â£1.3bn over bank failure
Saturday 02 November 2002
The US accounting industry was in the dock again last night as the federal government filed a $2bn (£1.3bn) lawsuit against Ernst & Young for alleged fraud, negligence and professional misconduct in its auditing of a Chicago savings bank that failed in July 2001.
The suit has been brought by the Federal Deposit Insurance Corporation (FDIC), which insures customer deposits. On top of $548m (£350m) of compensation for the amount the FDIC will payout to depositors who lost their money in the collapse of Superior Bank, it is also demanding $1.6bn in punitive damages, plus interest and costs for each of three charges.
E&Y is accused of mis-stating the assets of Superior Bank and deliberately delaying its report of the error, so as not to interfere with the $11bn sale of its consulting division. Last night E&Y denied the charges, saying Superior's failure "was not caused by any action of ours". E&Y said it would "vigorously" defend itself in any court case.
Regulators seized the bank in July 2001 after what was then the largest failure of an insured US financial institution in almost a decade, brought about by excessive mortgage lending to high-risk customers. The lawsuit said the total cost to the FDIC was $750m.
The suit states E&Yadmitted in January 2001 after lengthy denials that Superior's assets were overvalued by $270m. Subsequently, they had to be cut by an additional $150m.
- 1 Michelle Obama highlights harsh restrictions faced by Saudi women after meeting King Salman without wearing a headscarf
- 2 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 3 Kim Kardashian on Bruce Jenner's 'story': 'We support him no matter what, and I think when the time is right, he'll talk'
- 4 Amal Clooney gives excellent response to fashion question at European Court of Human Rights
- 5 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Michelle Obama highlights harsh restrictions faced by Saudi women after meeting King Salman without wearing a headscarf
Amal Clooney gives excellent response to fashion question at European Court of Human Rights
Isis publicly behead man in Syrian town square for 'insulting Allah' as he screams for help
One spelling error costs Companies House up to £9 million after being sued for ruining business
9 reasons Greece's experiment with the radical left is doomed to failure
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
Greece elections: Syriza and EU on collision course after election win for left-wing party
British Muslim school children suffering a backlash of abuse following Paris attacks
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Liberal Democrat minister defends comments suggesting immigration causes pub closures
iJobs Money & Business
£13000 per annum: Recruitment Genius: This Pension Specialist was established ...
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...
£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...
Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...