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Ernst & Young settles failed thrift case.

Ernst & Young agreed to pay $400 million to the Federal Deposit Insurance Corp. and the Resolution Trust Corp. (RTC) to settle four cases brought against it by these agencies.

The suits, involving four highly publicized failed institutions (Lincoln Savings and Loan, Silverado Banking Savings and Loan, Vernon Savings and Loan and Western Savings and Loan), alleged Ernst violated a variety of generally accepted auditing standards in performing audits of these institutions before their failures.

Under the settlement, the FDIC will receive $271.8 million and the RTC $128.2 million. Additionally, one current and two former Ernst partners are barred permanently from performing work for federally insured financial institutions. Of the $400 million settlement, $300 million will be paid by the firm's professional liability insurers. The remaining $100 million will be paid by Ernst partners over four years.
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Copyright 1993, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Journal of Accountancy
Article Type:Brief Article
Date:Mar 1, 1993
Words:138
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