Attorney General Cuomo is planning to sue Ernst & Young under New York's Martin Act for its accounting work for Lehman Brothers, Bloomberg News reports. By going after the whole firm rather than just the individuals involved, Mr. Cuomo risks doing to Ernst & Young what happened to Arthur Anderson after Enron. There used to be a "Big Eight" of accounting firms. Then there were a "Big Six" — Andersen, Ernst & Young, Deloitte & Touche, Coopers & Lybrand, KPMG Peat Marwick and Price Waterhouse. The end of Anderson and the merger of Coopers and Price Waterhouse into Price Waterhouse Coopers ("PWC") — brought it down to a "big four." If a government attack on Ernst & Young takes it down to a "big three," the reduction in competition just makes it easier for the survivors to raise prices, and harder for businesses looking for audit and tax firms to find one that doesn't have a conflict. I'm not saying Ernst & Young exactly covered itself with glory in the Lehman Brothers engagement, but there are lot of employees there who didn't do any work for Lehman Brothers. It's not exactly terrific for business in New York to have the governor-elect using his final days as attorney general running around launching an attack on a company that has 4,700 New York City-based employees.
Cuomo Versus Ernst and Young
https://www.futureofcapitalism.com/2010/12/cuomo-versus-ernst-and-young
by Ira Stoll | Related Topics: New York receive the latest by email: subscribe to the free futureofcapitalism.com mailing list