Ernst & Young will have to pay $10.2 million in damages after a Florida jury determined that the firm was negligent in its audits of the now-defunct Sovereign Bank.
However, the jury declined to award the plaintiff, Alan Schein, up to $400 million in damages he claimed for fraud and gross negligence, and did not award him the punitive damages he requested. Schein sued the firm in 2003 after selling his mortgage-marketing company, Results Technologies, to the bank in 1998. He claimed that he had relied on Ernst & Youngs audits of the bank before and after selling his company, until regulators closed down the bank in 2001. He had stayed on with the bank after selling his company and lost his deferred compensation.
Schein claimed that if the firm had acknowledged its errors before he left his job there, his deferred compensation would be intact. The firm later paid $125 million to settle the claims of regulators over the audits, according to Bloomberg News.
Despite the decision, the firm still plans to reduce the judgment. We believe we should have prevailed and will seek appropriate relief from the courts, said Ernst & Young spokesman Charles Perkins.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access