PracticeAuditFBI is reviewing troubled banks for accounting issues

FBI is reviewing troubled banks for accounting issues

Federal Bureau of Investigation under pressure to hold companies accountable for their actions in the wake of the loan crises

Lehman Brothers, Fannie Mae, Freddie Mac and giant insurer American
International Group are among 26 companies under review by the US Federal Bureau
of Investigation for possible accounting misstatements.

The FBI has come under pressure to hold companies accountable for their
actions in the wake of the loan crises which began last year and continues to
destabilise the capital markets.

Robert Mueller, an FBI director, pledged to ‘pursue these cases as far up the
corporate chain as necessary to ensure those responsible receive the justice
they deserve’, Bloomberg reported.

Mortgage giants Freddie Mac and Fannie Mae were taken over by the US
government and together with AIG restated their books correcting billions of
dollars in accounting errors, while Lehman filed for bankruptcy. The regulators
leading the $700bn (£376bn) rescue plan also asked Congress to approve the use
of tax-payers funds.

Fannie Mae has also paid a record $400m to the SEC in 2006 to settle charges
that senior executives fraudulently used ‘cookie jar’ reserves and other
accounting gimmicks to hide $10.3bn in losses from 2002 to 2004, so as to
maximise bonuses.

Freddie Mac paid $125m in fines in 2003, while earnings between 2000 and 2002
were restated after it discovered derivative-related errors after replacing its
former auditors Arthur Andersen. At the time regulators charged that the company
manipulated its accounting to push about $5bn in earnings to future quarters.

Further reading:

Mac Mae be the biggest bailout

FBI
Probing Fannie, Freddie, AIG, Lehman in Subprime Collapse

Related Articles

KPMG South Africa to review past audit work amid fresh scandal

Audit KPMG South Africa to review past audit work amid fresh scandal

7d Alia Shoaib, Reporter
FRC introduces £10m sanctions for Big Four firms

Audit FRC introduces £10m sanctions for Big Four firms

2w Alia Shoaib, Reporter
Ukraine’s PrivatBank files $3bn claim against PwC

Audit Ukraine’s PrivatBank files $3bn claim against PwC

3w Alia Shoaib, Reporter
Grant Thornton to exit FTSE 350 audit market, citing Big Four dominance

Audit Grant Thornton to exit FTSE 350 audit market, citing Big Four dominance

3w Alia Shoaib, Reporter
Big Four dominate FTSE 250 audit market in Q1 rankings

Audit Big Four dominate FTSE 250 audit market in Q1 rankings

2m Alia Shoaib, Reporter
Deloitte to pay $149.5m over Taylor, Bean & Whitaker audit failure

Audit Deloitte to pay $149.5m over Taylor, Bean & Whitaker audit failure

2m Alia Shoaib, Reporter
Carillion inquiry: missed red flags, aggressive accounting and the pension deficit

Audit Carillion inquiry: missed red flags, aggressive accounting and the pension deficit

2m Alia Shoaib, Reporter
Deloitte’s audits of Hezbollah-linked bank to be examined by Dubai court

Audit Deloitte’s audits of Hezbollah-linked bank to be examined by Dubai court

2m Alia Shoaib, Reporter