Ernst & Young has reportedly confirmed that the Securities and Exchange Commission is investigating the firm over its role in designing and auditing financing vehicles allegedly used by PNC Financial Services Group to inflate profits.
A spokesperson for the Big Four firm told Bloomberg News that an investigation is underway into a financial product that E&Y was hired by insurer American International Group Inc. to help create for PNC that has since led to multimillion-dollar settlements being paid out by the latter two firms.
Regulators said that the product in question allowed PNC to move $762 million in bad loans and investments off its balance sheet in 2001.
Last month, AIG agreed to pay $46.3 million to settle SEC charges related to the arrangement and $80 million to settle a criminal complaint by the Justice Department related to its PNC work and other matters. PNC agreed last year to pay $115 million to settle similar allegations made by the Justice Department.
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