Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread -- Ignore unavailable to you. Want to Upgrade?

To: Boca_PETE who wrote (2139)	11/1/2002 8:44:46 PM
From: Investor2	Read Replies (1) \| Respond to of 10065

Hi Pete. Did you see that another accounting firm is being deemed responsible? "Reuters FDIC Sues Ernst & Young over Bank Failure Friday November 1, 4:28 pm ET WASHINGTON (Reuters) - Bank regulators sued accountants Ernst & Young on Friday for alleged fraud, negligence and professional misconduct relating to audits of failed Chicago savings institution Superior Bank. The Federal Deposit Insurance Corp., in a lawsuit filed in the U.S. District Court for the Northern District of Illinois, sought $548 million in compensatory damages, plus punitive damages three times the amount of compensatory damages plus interest and costs for each of three charges. The owners of Superior paid a $460 million settlement to the FDIC in December to resolve claims from the bank's costly and controversial collapse in July 2001. "As a direct result of E&Y's gross misstatement of Superior's assets, the bank became insolvent, which ultimately required the FDIC to pay out in excess of $750 million from the Federal Deposit Insurance Fund," the FDIC said. Ernst & Young disputed the charges. FDIC officials have blamed Superior's board of directors for the bank's failure in congressional testimony, the accounting firm said in a statement. Ernst & Young also cite in their defense government criticism of federal regulators for not identifying problems at the bank early enough. "Superior's failure was caused by the unfortunate and unpredictable confluence of three factors: a substantial high-risk subprime loan portfolio, multiple and rapid declines in interest rates beginning early last year, and a deteriorating economy that had a disproportionate impact on subprime borrowers," the accounting firm said in a statement. But the FDIC said E&Y delayed disclosure of Superior's true financial condition, and knew its treatment of Superior's assets was improper and grossly misleading. Also, the auditor knew that making public auditing problems at Superior would have jeopardized the $11 billion sale of the accounting firm's consulting practice to a French firm, Gemini Cap, the regulator charged. Ernst & Young delayed disclosure of its improper treatment of Superior's assets until after the deal was finalized, the FDIC alleged. Senior Ernst & Young officials were aware of the improper accounting treatment the accounting firm's Chicago office was providing for Superior, the FDIC charged." Best wishes, I2