Associated Press reports that the US government has filed a $548m lawsuit against Ernst & Young (E&Y) in connection with the failure of a Chicago-based bank in 2001.
The US Federal Deposit Insurance Corp. (FDIC) has accused E&Y 'of misstating Superior Bank's assets and deliberately delaying reporting of the error for fear it would hurt an $11bn sale of the accounting firm's consulting arm'.
Superior is the biggest insured savings and loan failure in the US and is believed to have cost the FDIC $750m. E&Y stands accused of overvaluing the thrift's assets by as much as $420m.
In a related story, The New York Times reports that US securities regulators are currently considering bringing civil charges against three E&Y auditors in connection with audit irregularities which are believed to have cost Cendant Corporation $3.2bn.