SEC seeks E&Y client ban
US regulators are seeking to bar Big Four firm E&Y from taking new public-company clients for six months for alleged violation of auditor independence rules.
The Securities and Exchange Commission has argued to an administration judge that E&Y maintained an improper business relationship with PeopleSoft while performing the audit for the accountancy software company.
E&Y’s non-audit fees included $452m (£273m) from 1995 to 1999 for installing PeopleSoft software with other companies. the SEC claimed.
The SEC staff further asked the judge to order E&Y to return the $1.7m in audit fees and interest. It also proposed to extent the ban on new clients beyond six months if E&Y fails to prove that its procedures are adequate.
E&Y lawyers have commented that there has been ‘no violation’ of independence rules and ‘no basis for the imposition of any sort of sanction’. Once the administration court reaches a decision, either side can appeal to the five SEC commissioners.