E&Y gears up to fight hedge fund lawsuit

& Young
is facing a lawsuit from a hedge fund, which is claiming huge
damages for negligence and breach of contract.

Ferox Capital Management group has served a writ against its former auditors,
High Court documents show.

The filings show that Ferox are seeking compensation of more than £300,000,
the highest level of damages that can be disclosed in a writ.

Neither side would comment on the particulars of the claim this week, nor
whether it concerned audit or other services. E&Y served as auditors to the
hedge fund, with the company resolving in its most recently filed accounts that
the firm should continue in the role.

A spokesman said the wrangle would be resolved legally and Ferox would be
more forthcoming after a verdict had been passed down, but had no comment at
this juncture. The writ was issued by solicitors Watson Farley and Williams,
acting for Ferox.

Former world fly fishing champion Jeremy Herrmann set up Ferox in 2000, named
after a trout of the same name. He owns 75% of the company, and his fortune is
estimated at £50m.

Four years after forming his company, it made a profit of £264,000 on sales
of £32m. But that was after paying directors a total of £16m. One director,
presumed to be Herrmann, received £11.4m.

E&Y said in a statement: ‘Whilst Ernst & Young acknowledge that we
have received a claim form from Ferox Capital Management we cannot comment on
the particulars of the case. We will however contest the claim vigorously.’

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