The Securities and Exchange Commission is questioning Ernst & Young (E&Y) about the audit firm’s involment in designing and auditing financial products for PNC Financial Services Group that the bank allegedly used to inflate profits, noted a Bloomberg report.
Officials at the Big Four accounting firm stated that they were co-operating fully with the SEC, but declined to comment further, according to the Financial Times. The SEC also declined to comment, which is standard procedure for the agency in cases that are still open.
The PNC transactions were the subject of an SEC action against PNC in 2002 and were ended early in 2003. A 2002 probe by the SEC found that insurance giant AIG helped PNC create three special-purpose entities to remove $762 million of under-performing loans and volatile venture-capital investments off PNC’s balance sheet, according to the SEC.
Without admitting or denying wrongdoing, Pittsburgh-based PNC agreed to a formal settlement with the SEC, the Federal Reserve, and the Office of the Comptroller of the Currency, according to press reports.
Last year PNC paid $115 million to settle Justice Department criminal charges, according to Bloomberg.
Last month, AIG settled with the SEC and paid a total of $126 million, which included a penalty of $80 million and disgorgement and prejudgement interest of $46 million, said SEC officials.