Skip to main content

Accountants are privy to all kinds of material non-public information, and sometimes they do things with it that they shouldn’t. Usually, however, this happens after they win the client, but not always, particularly if they’re the (allegedly) overly friendly folks at Ernst & Young.

Ernst & Young LLP will pay $10 million to settle a regulatory investigation into allegations that it improperly obtained confidential information in pursuit of a contract to audit a public company’s books…. The SEC’s investigation described frequent contacts between [Sealed Air Corp. chief accounting officer William] Stiehl and the audit partners. Late in the bidding process, when Ernst & Young was a finalist for the work along with another accounting firm, Mr. Stiehl attended an NFL game in Ernst & Young’s suite in Charlotte, N.C., according to the SEC….

When Mr. Stiehl joined Sealed Air in 2013, he began providing [EY partner James] Herring with confidential information about Sealed Air’s efforts to engage a new audit firm, the SEC’s order said. Mr. Stiehl allowed Ernst & Young to help draft portions of his company’s request for proposal before it was released, according to the SEC.

He also gave Ernst & Young the proposals of other accounting firms competing for the work, as well as internal documents prepared for Sealed Air’s audit committee, often before the committee members received them, the SEC said.

In late 2014, after Sealed Air selected Ernst & Young for the work, Mr. Stiehl sent an email to another Ernst & Young partner—a former college roommate—that read: “Back in the family!!!”

All of that being said, the second finalist for the contract was apparently KPMG, so maybe Stiehl helped Sealed Air dodge a bullet there. On the other hand, maybe not.

Ernst & Young to Pay $10 Million to Settle SEC Probe of Bid Violations [WSJ]
SEC Charges Ernst & Young, Three Audit Partners, and Former Public Company CAO with Audit Independence Misconduct [press release]

For more of the latest in litigation, regulation, deals and financial services trends, sign up for Finance Docket, a partnership between Breaking Media publications Above the Law and Dealbreaker.

Related

ey

SEC Making Some Seriously Ominous Noises About Auditor Independence

If the Big Four didn’t like giving up their Russian affiliates, imagine how they’ll feel about having to give up the consulting businesses.

GE penny

GE Would Probably Have Been Better Off Doing No Accounting At All

Assuming you can call whatever it is they did accounting, anyway.

GE penny

GE’s Feel-Good Accounting, Which Invented 6.2 Billion Fake Dollars, Costs Company 200 Million Real Ones

And it goes without saying that $200 million is hard to come by at the General these days.

merrick garland

Merrick Garland Is Looking To Nail Some Corporate A**es To The Wall

The Justice Department is going holistic on wrongdoers.