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Non-Tech : The Enron Scandal - Unmoderated -- Ignore unavailable to you. Want to Upgrade?

To: James Calladine who wrote (2671)	5/30/2003 5:16:52 PM
From: Glenn Petersen	Respond to of 3602

In response to the first item on your list: SEC Seeks New-Client Ban at Ernst & Young Fri May 30, 1:30 PM ET Add Politics to My Yahoo! story.news.yahoo.com NEW YORK (Reuters) - U.S. regulators are seeking to ban Ernst & Young from accepting new clients for six months, citing flaws in the accounting firm's system of internal controls and a failure to maintain independence from a client it audited. The Securities and Exchange Commission (news - web sites) pushed for the temporary ban in court papers filed as part of a case in which it accuses Ernst & Young of violating auditor independence rules by working too closely on a computer software project with PeopleSoft Inc., a client whose books it audited. The agency lambasted Ernst's internal controls, arguing that the firm's system lacked accountability, record-keeping and any requirement of pro-active steps to ensure independence. "E&Y's 'independence control system' is unworthy to be so called, and thoroughly undeserving of approval by the Commission," the SEC charged in its brief filed last week. The agency is also seeking disgorgement of Ernst & Young's fees from auditing PeopleSoft from 1994 to 1999, as part of the sanctions. An Ernst & Young spokesman was not immediately available to comment. A spate of accounting scandals in the U.S. has put the spotlight on the issue of auditor independence and raised questions over their impartiality when they vouch for corporate financial statements. The SEC's push for sanctions against Ernst & Young comes as the firm fights battles on legal and other fronts that have put it under the microscope in recent months. The firm is being sued by former clients for more than $1 billion for allegedly advising them to use an illegal tax shelter and later came under attack for tax advice it sold executives at long-distance telephone company Sprint Corp.. More recently, Ernst & Young has been scrutinized for its role as the auditor of HealthSouth Corp., which is accused of inflating earnings by $2.5 billion over several years.

To: James Calladine who wrote (2671)	6/3/2003 9:10:40 AM
From: Glenn Petersen	Read Replies (1) \| Respond to of 3602

Martha Stewart in criminal probe msnbc.com Statement didn’t elaborate on possible charges MSNBC STAFF AND WIRE REPORTS NEW YORK, June 3 — Domestic doyenne Martha Stewart is the target of a federal criminal probe, her company, Martha Stewart Living Omnimedia Inc., said Tuesday. A federal prosecutor intends to ask for a grand jury indictment in the “near future.” STEWART HAS BEEN under investigation on suspicion of insider trading involving shares she sold of biotech company ImClone Systems Inc. in December 2001. The statement from Martha Stewart Living Omnimedia Inc. said Stewart’s attorneys told the company that Stewart is the target of a criminal investigation by the U.S. Attorney’s office for the Southern District of New York and that a civil complaint by the Securities and Exchange Commission also is expected. The statement didn’t elaborate on the possible charges. The company said its board of directors has been planning for a number of possible contingencies, is evaluating the current situation and will take action as appropriate. Federal authorities are investigating Stewart to learn if she sold ImClone shares because she had insider knowledge that the Food and Drug Administration was going to reject the company’s application for its new colon cancer drug. Stewart has denied any wrongdoing in her ImClone sale. A message left with Stewart’s attorney before office hours was not immediately returned. The U.S. attorney’s office had no immediate comment when reached Tuesday morning. The Associated Press and Reuters contributed to this report.