The Ernst & Young agreed to pay $ 8.5 million, one of the largest agreements ever made by an audit firm, to stop the charge of having issued audit opinions "false and misleading" about an American company, Bally Total Fitness.
The Securities and Exchange Commission (SEC) sued E & Y, one of the so-called "Big Four" accounting sector, and six of his partners and former partners for their role in the accounting fraud in the Chicago company.
According to the SEC, E & Y "knew or should have known about the accounting and fraudulent information from Bally".
Six current and former members of the audit and consulting firm, including Randy Fletchall, in charge of the firm's national office, were also punished by the SEC in one of the most comprehensive actions against auditors involved in a deficient audit. The E & Y said Fletchall continues as a partner, but would not confirm whether he is still in the same position.
Two people, including Mark Sever, national director of professional methodology, and John Kiss, former partner who worked on the 2001 and 2002 audits, are prohibited from acting as auditors of public companies for three years. Fletchall received a warning from the SEC.
The Ernst & Young and its current and former partners not admitted wrong. "These agreements allow us to leave this matter behind and resolve issues that arose more than five years," says a statement from E & Y.
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Former CEO of Bally John Dwyer and former director of controlling Theodore Noncek were also sued by the SEC, which had previously accused Bally accounting fraud in 2008. Dwyer and Noncek agreed to make a deal with the SEC.
The audit firm is also being sued, along with UBS, the liquidators of a Luxembourg fund that lost almost all of its assets by investing with Bernard Madoff
Liquidators of the fund LuxAlpha Sicav-American Selection, which had $ 1.4 billion of assets one month before the Madoff in prison, filed a lawsuit on Friday in Luxembourg against UBS, the custodian of the fund, and the local firm Ernst & Young, which was the auditor said Alain Rukavina, one of the two liquidators, in a fund's shareholder meeting on Friday.
The fund manager, Access International Advisors, and regulator of the financial market of Luxembourg, are also named in the suit.
UBS was sued by several investors alleging that the bank failed to protect the money invested in LuxAlpha. Patrick Littaye, co-founder of Access International, was convicted of breach of fiduciary duty in November by a French judge investigating the Madoff case.
Tatiana Togni, UBS spokesman told Bloomberg that the bank is studying the case.
Jean Mondloch, a spokesman for Ernst & Young in Luxembourg, could not be reached Friday for comment.
The information is the Economic Value / Rachel Sanderson and Stephanie Bodoni
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