Archive for the ‘The Case Against The Auditors’ Category

Deloitte’s Troubles Bubble To Surface

By Francine • Jan 31st, 2011

Mainstream media, and the Financial Crisis Inquiry Commission, are focused mainly on Ernst & Young as the auditor whipping boy of the financial crisis. That’s really by default not by design and is thinly justified. No one has given fly-over journalists anything on a silver platter that would draw in the rest. Give me a few minutes and I can make a case for PricewaterhouseCoopers as the one teetering on the edge of the abyss. Or KPMG. But today, let’s talk about Deloitte.

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PwC Prevails In Decision On AIG “In Pari Delicto” Case

By Francine • Jan 6th, 2011

The Supreme Court of the State of Delaware issued an opinion on January 3rd, 2011 affirming the dismissal of claims against PricewaterhouseCoopers (PwC) in the Teachers Retirement System of Louisiana derivative suit. PwC prevailed because the Delaware Supreme Court had little choice but to follow New York’s direction regarding in pari delicto, barring a strong argument otherwise from the plaintiffs.

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The Case Against Ernst & Young: NY AG Cuomo Sues Over Lehman

By Francine • Dec 22nd, 2010

New York Attorney General Andrew Cuomo sued Ernst & Young over their involvement in the Lehman failure. EY was Lehman’s long time auditors and the firm is accused of “permitting Lehman to engage in an accounting fraud.” Hold on tight. It’s going to be a bumpy ride.

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Modesti, PCAOB Director of Enforcement and Investigations, Calls For More Transparency

By Francine • Dec 8th, 2010

This is a text of the speech today by Claudius Modesti, PCAOB Director of Enforcement and Investigations, for the AICPA’s Conference on SEC and PCAOB Developments.
I’ve written about the PCAOB’s request to have the Sarbanes-Oxley law changed to allow transparency in disciplinary proceedings. I’ve also written about the SEC’s recent action that effectively squelches timely disclosure [...]

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Deloitte, Delphi, and GM: Duped or Duplicitous?

By Francine • Nov 21st, 2010

It’s as wicked as it seems…
What the SEC is doing at Delphi is quite expedient. When the SEC wants to bring civil charges for fraud against Delphi executives, the story is that the auditor was duped. And they got the auditor who was sanctioned for not performing the audit with due professional care to testify to that.

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Repurchase Risk (Put-Back) Getting Full Court Press At CNBC

By Francine • Nov 10th, 2010

John Carney at CNBC NetNet is talking a lot about repurchase risk. He’s tied it all together in a bow for us, mentions Citigroup and Bank of America, and has given me credit for having been on KPMG’s case for a while.

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Put Your Money Where Your Money Is: The Auditors and the US Midterm Elections

By Francine • Nov 8th, 2010

The Big 4 audit firms prefer to contribute to candidates who are in powerful positions rather than focus on their party politics. It’s purely opportunistic largesse. They typically donate heavily to those in legislative leadership positions and to those in the position to take over leadership roles.

To use a hockey metaphor: The audit firms put their money more often where the puck is rather than where it’s going and hardly ever chase the puck for strictly ideological reasons.

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Will Ernst & Young Ever Be Held Accountable for the Lehman Failure?

By Francine • Oct 31st, 2010

I’d be exaggerating if I told you the Lehman bankruptcy examiner’s report, and its scathing indictment of Ernst & Young’s role in the biggest failure on Wall Street, answered my prayers. On the contrary. The more successful a fraud case is against Lehman’s executives, the less likely EY or any of its partners will suffer any consequences for their role in the Lehman fraud.

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New York Court of Appeals Stands By Corporate Man: In Pari Delicto Prevails

By Francine • Oct 22nd, 2010

The New York Court of Appeals decided on October 21, 2010, by a vote of 4-3, to “decline to alter our precedent relating to in pari delicto, and imputation and the adverse interest exception, as we would have to do to bring about the expansion of third-party liability sought by plaintiffs here.”

The decision is flawed, misguided and strongly biased towards corporate interests rather than shareholder and investor interests.

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Auditor Litigation: How To Track It

By Francine • Oct 18th, 2010

Keeping track of litigation against the audit firms is probably one of the most difficult and most time consuming aspects of what I do.  But it has definitely been one of the most intellectually satisfying activities.  I never anticipated this when I started this site.
In addition to the information reproduced below, I have recently found [...]

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