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E&Y Paying $4M to Settle Lobbying Charges

Ernst & Young has agreed to pay more than $4 million to settle charges from the Securities and Exchange Commission that its lobbying efforts violated auditor independence rules. An SEC administrative proceeding found that a subsidiary of the accounting firm lobbied congressional staff on behalf of two audit clients.

 The charges involve E&Y's subsidiary, Washington Council EY, which sent letters signed by a senior executive of a firm audit client to congressional staff, advocating passage of some legislation. The unit also asked for the insertion of language into a bill that was favorable to the business interests of an audit client. WCEY also met with congressional staff to defeat legislation the client opposed and asked third parties to approach a U.S. Senator to seek support of a legislative amendment sought by one of the firm's audit clients and marked up a bill by sending an E&Y client's language and sending it to congressional staff.

The SEC also censured Ernst & Young. The monetary sanctions include disgorgement of $1.24 million, prejudgment interest of $351,925.98, and a penalty of $2.48 million. The SEC said it took into consideration remedial acts take by the firm, included new guidance about legislative advisory services issued in June 2012 and May 2103, and its cooperation with investigators.

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