In late May 2003, SEC staff recommended a six month suspension of new client acquisition for Big Four firm Ernst & Young, in response to alleged independence violations in its relationship with audit client PeopleSoft in the late 1990s.
E&Y has formally responded to the SEC recommendation, calling it an "outrageous" overreaction to claims of independence misconduct.
E&Y attorney Stephen Sacks has filed a court briefing in which he indicates that the SEC's staff recommendation "misleads the public and the marketplace into thinking that there is something wrong with E&Y's independence procedures today." The SEC recommendation was based on alleged independence violations between E&Y and its audit client PeopleSoft, an arrangement that ended over three years ago, according to Ernst & Young.
"The staff's post-trial request for a six-month suspension and appointment of an independent consultant is outrageous," said Sacks.