Ernst & Young will pay more than $9 million to settle an investors' suit that accused the firm of aiding American International Group and PNC Financial Services Group Inc. in a multimillion-dollar phony accounting scheme.
According to court documents, U.S. District Court Judge David Stewart Cercone, sitting in Pittsburgh, approved the $9.08 million settlement Thursday. The money will be paid into a fund for investors who filed suit against PNC over financial misstatements.
The accounting firm--accused of assisting AIG in the scheme--admitted no wrongdoing in the settlement.
In 2004 the Securities and Exchange Commission accused AIG of aiding PNC in taking $762 million in bad loans and venture capital investments off its financial statements by moving them to special entities it created back in 2001.
The move inflated PNC's earnings by $155 million that year, the SEC said.
In November of 2004 PNC paid $30 million to resolve the class action suit, while AIG paid an additional $4 million into the fund.
AIG paid a total of $120 million in 2004 to the U.S. Justice Department and the SEC for the questionable insurance transactions but never admitted any wrongdoing.
The New York-based insurer also agreed to the appointment of an independent monitor to review the placement of nontraditional insurance products between 2000 and 2004.
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