Ernst & Young To Pay $100 Million Penalty To Settle Cheating Scandal Charges—The Largest Ever Imposed By The SEC Against An Audit Firm
Ernst & Young To Pay $100 Million Penalty To Settle Cheating Scandal Charges—The Largest Ever Imposed By The SEC Against An Audit Firm
The U.S. Securities and Exchange Commission (“SEC”) announced on June 28, 2022 that it charged accounting firm Ernst & Young LLP (“E&Y”) for cheating on ethics tests and withholding evidence from the SEC’s Enforcement Division.
According to the SEC, E&Y admitted that a significant number of its auditors cheated on the ethics components of exams and other continuing education courses required to maintain Certified Public Accountant (“CPA”) licenses. E&Y also admitted that it made an incorrect submission to the Enforcement Division conveying that the firm had no current issues with cheating, and failed to correct it even after launching an internal investigation that confirmed the misconduct. In addition to a $100 million penalty, the SEC will require E&Y to retain “two separate independent consultants to help remediate its deficiencies.”
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Katherine M. Lenahan is a Partner in the New York office of Faruqi & Faruqi, LLP and focuses her practice on securities litigation.
