E&Y to Close Advisory Services Division
February 28, 2005
Due to what sources say are conflict of interest issues, Ernst & Young is said to be closing its financial advisory services unit, a move that would eliminate several hundred positions and leave clients scrambling.
Full details of the alleged conflict and the scope of the potential change could not be determined, as calls to several E&Y executives, including Steven Buller, director of investments, Andrew Kyriacou and Charles "Chuck" Kowal, managing partners, were not returned. An E&Y spokeswoman declined comment.
News of the reported closure is the latest conflict of interest debacle facing the firm. In December, the Securities and Exchange Commission launched an investigation into the firm's part in the design of a financial tool used by PNC Financial Services Group to exaggerate profits. American International Group hired E&Y to build and market the tool, which PNC used to inappropriately move $762 million into investments in 2001. Also, in April 2004 the SEC barred the firm from accepting new audit clients for six months, but E&Y formed a relationship with PeopleSoft, and the firm was ordered to pay $1.7 million.