E&Y Sued Over Hedge Fund Bailout
The Bermuda Sun newspaper reported last week that accounting firm, Ernst &
Young is being sued by several large international investors for its failure
to alert them to the unauthorized activities of Sloane Robinson Investment Ltd
some five years ago. According to the Bermuda Sun, in 1997, qualified investors from New York, Bermuda
and the Isle of Man sank more than $27 million into the S.R. Global International
Fund LP. In a suit filed in Delaware Chancery Court, and made public last week, Anglo
American Security Fund, Sterling Grace Capital Management, and the Lorraine
and Oliver Grace Trusts alleged that Ernst & Young failed to inform them
in good time that Sloane Robinson had secretly withdrawn nearly all of the funds
from its capital account, despite its obligation to keep a portion of investments
in the fund. The auditor's inaction deprived investors of the chance to decide 'whether
to withdraw some or all of the funds' in their accounts, the Bermuda Sun quoted
court papers as observing. A spokesman for Ernst & Young informed the newspaper that the company is
not yet aware of all of the details of the $9.5 million lawsuit, but that: 'We
believe the case has no merit and we will defend ourselves accordingly.' http://bermudasun.bm/archives/2002-12-11/03Business03/
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