PracticeConsultingCourt battle in the pipeline for Ernst & Young over gas company rogue trader

Court battle in the pipeline for Ernst & Young over gas company rogue trader

Ernst & Young is facing a new US$49m lawsuit from TransCanada Pipelines which alleges the firm failed to spot rogue trading by a senior employee at a subsidiary company, according to reports.

The subsidiary, Pan-Alberta, which sold natural gas into the US, had a limited hedging programme to protect itself from currency fluctuations.

But, the Financial Times reports, the lawsuit alleges that in late 1996 and 1997 the rogue trader embarked upon a reckless and speculative foreign exchange trading spree, incurring losses of US$49m.

The trader was suspended in 1998 after the company discovered the losses.

TransCanada said it would have been able to limit the losses had E&Y alerted it to the heightened foreign exchange activity.

The accountancy firm said it would defend itself rigourously and that the work was carried out in accordance with professional standards.

E&Y agrees massive payout to settle Cendant audit dispute

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