Chicago (July 16, 2004) -- A three-judge panel here ruled that a federal lawsuit against Ernst & Young over its role in the failure of a bank it audited is without merit.

The Federal Deposit Insurance Corp. sued the Big Four firm in 2002 over the July 2001 failure of Chicago savings and loan Superior Bank, alleging fraud, gross negligence and accounting malpractice. The FDIC claimed that E&Y deliberately suppressed its improper accounting of Superior to protect the financial position of the firm and its partners, and alleged that E&Y’s conduct caused large losses to the Savings Association Insurance Fund arising from Superior's failure.

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