E&Y 'Vindicated' in $4.5 Billion Law Suit

Ernst & Young breathed a sigh of relief this week as a judge threw out two out of three of the claims made against it in a negligence case brought against the Big Four firm by Equitable Life. If successful, the suit could have cost the accounting firm $4.5 billion in damages.

Last month, AccountingWEB reported that British-based Equitable Life had brought a lawsuit against E&Y claiming that negligence on the part of the auditors led to the near collapse of the 240-year old insurer. The suit alleged that E&Y failed to alert Equitable to the catastrophic liabilities associated with annuity policies it sold in the 1970s and 1980s.

The law suit was thrown out of an English court today on the grounds that there was insufficient evidence that any negligence on the part of the auditor was related to the size of the loss that was claimed by Equitable.

"We are delighted with this success," says E&Y’s UK chairman Nick Land. “The judgment vindicates our belief that this claim was ill-conceived and bound to fail from the outset.”

The final count, relating to a bonus declaration claim, will be resubmitted by Equitable Life in an attempt to recover hundreds of millions of dollars from Ernst & Young. "It is very hard to see how Equitable can resurrect what remains of the claim. We are absolutely confident of defeating any restated claim that might emerge," said E&Y’s Chairman Land.

You may like these other stories...

Here's a CPA who truly walks the walk. On March 15, Frank Ryan, CPA, departed San Diego, California, with plans to be in Ocean City, Maryland, by July 2 to teach a course at the Maryland Association of CPAs’ (MACPA...
When Theodore J. Flynn first joined the Massachusetts Society of CPAs (MSCPA) in 1970, it was a different world and a different profession.  The "Big Eight" were still headquartered in Boston. Vietnam War...
Accountant Rickey Charles Goodrich had it a little too good. Many bean counters would kill to serve as financial guru to the likes of Pearl Jam. Goodrich was hired in 2005, and the following year, he became the CFO of Curtis...

Already a member? log in here.

Upcoming CPE Webinars

Oct 30Many Excel users have a love-hate relationship with workbook links.
Nov 5Join CPA thought leader and peer reviewer Rob Cameron and learn ways to improve the outcome of your peer reviews while maximizing the value of your engagement workflow.
Nov 12This webcast presents basic principles of revenue recognition, including new ASU 2014-09 for the contract method. Also, CPAs in industries who want a refresher on revenue accounting standards will benefit.
Nov 18In this session Excel expert David Ringstrom, CPA tackles what to do when bad things happen to good spreadsheets.