Ernst & Young settles SEC accusations for $4 million

@FortuneMagazine

July 14, 2014, 6:50 PM EDT

Ernst & Young has agreed to pay $4 million to settle charges by the Securities and Exchange Commission that its auditors illegally lobbied Congressional staff on behalf of clients.

The SEC found that Washington Council EY, an Ernst & Young subsidiary, lobbied for clients of the company’s auditing arm despite the Ernst & Young’s assurances in published financial statements that it was “independent.” The violations are said to have occurred in 2009, although the SEC didn’t name the companies involved or the specific legislation.

“Auditor independence is critical to the integrity of the financial reporting process,” Scott W. Friestad, associate director in the SEC’s Division of Enforcement, said in a statement. “When an auditor acts as an advocate for its audit client, that independence is compromised.”

“We regret these instances that arose many years ago and are pleased to put this matter behind us,” Ernst & Young said in a statement to the Associated Press.

In 2012, the firm said it voluntarily stopped lobbying for clients, which the SEC factored into deciding on the latest sanctions.

In the past few years, the SEC has brought cases against a number of accounting firms, including Arthur Anderson following the Enron scandal in 2002. The SEC also took action against Ernst & Young in 2007 when it ordered it to pay $1.6 million to settle charges related to its work with audit client PNC Financial Services Group.

Donald Sterling’s case to stop L.A. Clippers sale starts – slowly

by
Benjamin Snyder" itemprop="author" class="article-byline-author"> Benjamin Snyder

@FortuneMagazine

July 7, 2014, 8:37 PM EDT

Donald Sterling’s legal battle to stop his wife’s sale of the Clippers basketball team kicked off in a Los Angeles courtroom on Monday with little in the way of fireworks.

Most of the day was spent wrangling over jurisdictional issues. When the time came for testimony to start, Sterling wasn’t present, and the judge had to call for a recess so his legal team could find him. The hearing was ultimately recessed until Tuesday with Donald Sterling’s lawyers promising to have him in court, according to ESPN.

The day began slowly with a federal judge considering Donald Sterling’s attempt to have the dispute moved to a U.S. District Court. Sterling, who had been banned for life from the NBA for making racist comments, filed papers on Thursday asking for the change in venue while complaining that his privacy was violated through the public disclosure of his medical records.

District Court Judge George Wu rejected the request. Almost immediately, another judge, Michael Levanas, started hearing the case in probate court, according to USA Today. But because Sterling was not present, the judge quickly adjourned.

In the end, Sterling’s lawyer reportedly spoke on his behalf arguing that one of the doctors that helped disclose his alleged mental incapacitation should not be allowed to testify. The judge is said to have disagreed with the argument, according to ESPN.

Sterling is trying to stop the sale of the Clippers for $2 billion to former Microsoft MSFT CEO Steve Ballmer. He has argued that his wife does not have the authority to sell the team, which she has claimed to have based on medical tests that show he suffers from dementia.

“These were personal, medical tests,” Gary Ruttenberg, Sterling’s probate lawyer, told CBS Los Angeles. “They had nothing to do with removal (from controlling the team), therefore, those exams probably do not count.”

Earlier in June, Donald Sterling reversed his decision to accept the conditions of his wife’s sale. At the time, he also said he’d continue to push for a $1 billion federal lawsuit against the NBA for expelling him after his remarks.

There was a July 15 sale deadline between Shelly Sterling and Ballmer, although that may be moved to August 15, if necessary.

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