E&Y could face biggest-ever JDS fine
Big Four firm could face biggest-ever JDS fine over its record on auditing Equitable Life
Ernst & Young could receive the biggest fine in the Joint Disciplinary
Scheme’s history as a result of its record on auditing Equitable Life.
Sources familiar with the case said that the allegations were among the most
serious the JDS has brought. The largest fine in the tribunal’s history so far
is Coopers & Lybrand’s, which had to pay £1.2m in fines and more than £2m in
costs for its role in the Maxwell affair.
The case is set to be heard in private next year, with a QC involved in the
Shipman enquiry and the Ladbroke Grove rail disaster due to preside.
Roger Henderson QC is a former chairman of Joint Disciplinary Tribunals. He
presided in the JDS’s Coopers & Lybrand/Maxwell enquiry.
The charges brought against E&Y are much broader than criticisms made by
Equitable itself in its recent negligence action.
The JDS complaints concern 11 different audits from 1990 to 2000 and a
general complaint in relation to a ‘failure to understand [Equitable’s]
business.’
Equitable’s own action concerned audits over the three years 1998, 1999 and
2000, and specific failures to include provisions for guaranteed annuity rates.
The case was settled recently, with the two sides dropping the action and each
side paying their own costs.
Victoria Cochrane, general counsel for E&Y, said: ‘We are surprised by
these comments, given that this is at a very early stage and we haven’t even
seen the evidence on which the complaints are based.’