Ernst & Young has settled charges with the Securities and Exchange Commission for $2.9 million alleging a conflict of interest in its audits of three companies.
The case involved a series of interviews that Ernst & Young distributed on audio CDs with the CEOs of various companies. The interviews, known as the Ernst & Young Thought Leaders Series, were conducted by executive coach Mark C. Thompson, who was also a board member of three companies audited by the firm, including Best Buy.
E&Y COO John Ferraro, who at the time was vice chair of markets at the firm, met with Thompson in October 2002 to plan the series. He agreed to cease and desist from future violations. E&Y audit partner Michael Lutze was denied the privilege of appearing before the SEC as an accountant, but may reapply in a year's time. Thompson will forfeit $123,900 he earned from his relationship with E&Y.
E&Y also agreed to improve its independence policies and procedures. The firm has established a new business relationship evaluation process. E&Y did not respond to a request for comment.
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