The SEC unloaded on Ernst & Young Friday, blasting the accounting firm for denying wrongdoing in a conflict-of-interest case.
First, some backround: Last month, the agency accused Ernst of violating auditor-independence rules by entering into a business relationship in the 1990s with PeopleSoft
In court briefs filed three weeks ago, Ernst's lawyers denied it violated any independence rules, called the proposed penalty "outrageous," and accused the SEC of leaking misleading information to the media.
The SEC fired back late Friday:
While the fun of Harry Potter is its other-world view, its power has been said to lie in the real-world truths it reveals," it said in a brief. "By contrast, while the interest of E&Y's brief is its apparent real-world view, its power lies in the truths it conceals.
Like a lot of stuff from the regulatory board, the language is hard to understand, but the meaning is clear. The SEC is miffed at Ernst, and is pushing hard for the six-month penalty to set an example for the industry. Consider that get-tough attitude as a positive by-product of the Enron/Arthur Andersen debacle.
For another, consider the California Public Employees' Retirement System's vote against eBay's
eBay still easily won PwC's ratification, but -- as the SEC's actions against Ernst & Young show -- the tide is turning for the better.