Ernst & Young Still Not Losing Sleep Over the Schein Lawsuit

Ernst & Young has the unenviable distinction being the large firm that has a major trial ongoing. We mentioned it awhile back, noting that while E&Y has got plenty of lawsuits to worry about, this one didn't seem like anything to sweat over.

Well, an E&Y witness has given our theory a little boost, stating that a type of the loan created by the Plaintiff, Alan Schein, and marketed by the failed bank, was "deceptive and predatory". Not exactly a flattering description.

Regardless of what E&Y did or did not do (and they've already paid fines to settle claims by regulators so they've got, at the very least, a smidge of guilt) the jury hearing "deceptive and predatory" in the same sentence as the plaintiff will go much farther than any Zapruder Film-type evidence that Schein might dig up.

Superior Bank Peddled Risky Loans, Ernst & Young Witness Says [Bloomberg] Sphere: Related Content

At the Very Least, a Few People at PwC are Bigots

P. Dubya has had a couple of weeks. The Satyam story is not going away, interns in New York are rumored to be getting whip, and the firm has been pegged by the Somalian "Government" to take on a super-fun new project that will probably result in at least one bean counter death.

So now, because bad times aren't really bad times unless you're accused of bigotry, a former employee has filed a GBP 40 million lawsuit against the firm:

Mihaela Popa alleges she was the victim of racist bullying and was repeatedly ignored for promotion throughout the time she was employed by PricewaterhouseCoopers (PwC) in London.

The 31-year-old says she was asked to do menial tasks such as filing while her less-qualified British colleagues were given more challenging jobs.

Can't say that this comes as a surprise re: the menial tasks for a "transfer" from another country. The typical modus operandi in the Big 4 seems to be that if you come from another office, as in the case, you're automatically branded as an idiot who is completely incapable of any task that doesn't involve using a copy machine. But this particular case gets a little more interesting:

Miss Popa claims she was made to feel like a prostitute because she came from Eastern Europe and that colleagues, including senior managers, responded to her questions by making sexual innuendoes.

Miss Popa also claims that during an office discussion about an outbreak of bird flu in Romania, one male member of staff pointed at her and said "this Romanian bird will have a slow death"

P. Dubya sure picks some charming fellows over there to work in the UK. Truth be told, the treatment in the States would probably be similar since the majority of Big 4 management teams (i.e. manager and above) in are filled with man-babies.

It's also worth mentioning that all the firms make a big push to celebrate their "diversity". This is pretty hard to take seriously when shit like this happens.

Oh, and just in case you think it's isolated, it's most certainly not. You rarely hear anything regarding harassment in these firms but everyone knows that it is ubiquitous. Work there for 6 months and you're likely to hear a story or witness at the very least borderline behavior.

We'll continue to follow this story as it moves along.

PricewaterhouseCoopers hit by racism claim [The Telegraph via Accountancy Age]

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More Bad News for AIG

We haven't reported on the whole Hank Greenberg/AIG trial but we thought we'd at least let you know that AIG lost. This after AIG claimed that Greenberg was a liar, liar pants on fire. Jury musta figured no sympathy was due to a company that nearly destroyed life as we know it.

Carry on...

Jury Finds Against A.I.G. in Greenberg Case [New York Times]

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Ernst & Young Might be Going Down but It's Not Because of This

So you merge your company with a bank and it turns out that the bank has about half a billion less in assets than they reported. Regulators come in, take over the bank and your life is ruined. RUINED! The next, most logical step (and most American, for that matter) is to sue anyone and everyone that remotely has got their stank on this thing because, dammit, businesses don't fail in America!

Alan Schein sold his mortgage marketing company (sounds like a scam) to Superior Bank of Illinois and turns out, Superior was making up their numbers. E&Y missed the booboo and now Schein is blaming the them, natch, because what the hell does he know about auditing or doing due diligence?

Oh, and Schein is also claiming that E&Y covered up the mistake because they were trying to sell their consulting arm at the time for $10 Bil and Capgemini, the buyer, would have never bought E&Y's consulting business because of a mistake made by the audit practice. NEVER!

Schein, obviously being a student of classic egomaniacal logic because, duh, his business was so kick ass that a multi-billion dollar deal WOULD NEVER HAVE HAPPENED had this accounting error was known by all.

Our advice to Mr. Schein would be that if you're going to make wild-ass accusations, at the very least try taking a less narcissistic route. You're a small fish pal. E&Y saves their cover ups for failures of Lehman-sized proportions and having serious Madoff exposure and auditing UBS, not your shady "mortgage marketing company" (which we still don't know what that is). E&Y, don't worry, we've got your back on this one.

Ernst & Young Sued for Allegedly Covering Up Bad Audits [Law.com] Sphere: Related Content

BDO Int'l Skates, Leaves BDO Seidman to Deal with $520M Verdict

Believe it or not friends, the wedding planner defense worked for BDO International Global Coordination.

As Tramp speculated, the six-person South Florida jury seemed to relate more to "wedding planning" than "public duty" and found that BDO International Global Coordination was not liable for either the punitive damages of $350M or the compensatory damages of $170M.

BDO is certainly a benefactor of the "jury of your peers" in this case considering that the peers have no clue what the hell any of the evidence meant or why it pointed to BDO International Global Coordination's responsibility. Re: The Auditors has excellent coverage including video clips. Go here and here.

During the trial, defense counsel went so far to state that the the claim by the Plaintiff that the firm had a "public duty" was a SIDESHOW. Want to know what comes at the very top of a Google search when you type in "sideshow"? We were hoping for the human blockhead or the bearded woman, but instead it was this.

So now BDO Seidman is on the hook for the $520M. They've said that these damages will bring double entry apocalypse. But they're appealing the original verdict, and why the hell not? They seem to be pretty good at dodging bullets. Oh wait, they're not the same firm. Sorry, sorry, sorry.

PISS OFF.

Jury: BDO International not liable for millions in losses [Miami Herald] Sphere: Related Content

Follow-up on Big 4 Lawsuits Re: Overtime

Tramp has obtained an announcement made to KPMG employees regarding overtime lawsuits, originally mentioned here two weeks ago.

Quoting the announcement:

These lawsuits were filed by several of our former professional employees ("Plaintiffs") and allege that all of KPMG's associates and senior associates were improperly classified as salaried, or "exempt" employees (who do not receive overtime pay), and that they instead should have been classified as "non-exempt" employees and paid overtime. Among other things, the Plaintiffs are seeking back overtime pay and other monetary awards.

[We] want you to know that we work very hard to be an employer of choice and believe we have classified and paid our professional employees appropriately. Consequently, we have denied the claims asserted in the lawsuits, and we are actively engaged in defending against them.

The Plaintiffs are seeking to certify the cases as class actions, on behalf of all current and former associates and senior associates nationwide, as well as within certain specified states. If the courts grant the Plaintiffs' request that the cases be certified as class actions, then some of you may be potential class members, in which case you would have the right, at a future date, to determine whether you want to participate in the cases.

The "work very hard to be an employer of choice" part sounds sincere desperate because, oh, I don't know, there's lots of KPMG employees out there that were/are being treated like two-bit whores. Tramp predicts that this class action thing will get the go ahead and lots of people will be getting calls from big shot law firms.

So far, Tramp has not received any communicado on lawsuits affecting the other Big 4, so please pass along anything you may know.
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Breaking: Employees Suing Big 4 On Overtime

Tramp has learned from several sources that class action lawsuits are being filed on the behalf of current and former employees of all the Big 4 firms because of overtime hours worked by professionals without additional compensation.

Reportedly, no action will be taken against current employees that participate in the case.

Updates will be posted as details emerge. Sphere: Related Content