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Komfie Manalo, Opalesque Asia: The Washington Superior Court jury last week ordered auditing firm Ernst & Young to pay nearly $25m for its flawed auditing of one of Bernard Madoff’s feeder funds, Tremont Group Holdings, that resulted to losses to its investors, reported Nixon Peabody.
Court records showed that FutureSelect Portfolio Management Inc. lost an estimated $120m from its investments in the Rye Funds, which were managed by Tremont Group, the second largest feeder fund invested with Bernard L. Madoff Investment Securities.
Ernst & Young was the auditor of Rye Funds from 2000–2003, and occasionally up until 2008. Madoff liquidator Irving Picard sued Tremont for $2.1bn to recover ill-gains from the various Madoff fund but the feeder fund opted to settle the claims for $1bn. However, FutureSelect did not participated in the settlement and pursued its own case in Washington State, where the securities laws are more favorable to investors than their federal counterparts.
FutureSelect told the court that EY "failed to adhere to generally accepted accounting standards in its audits of Tremont and the Rye Funds, claiming that EY took the audits allegedly performed by the auditor of BLMIS at face value, when even a basic inquiry would have revealed that the BLMIS auditor wasn’t properly qualified. FutureSelect claimed that EY made material misstatements to FutureSel...................... To view our full article Click here
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