Did Ernst & Young Fail To Spot Madoff’s Ponzi Scheme?

Investment firm FutureSelect Portfolio Management Inc is seeking nearly $200 million in damages from Ernst & Young, alleging the accounting firm “signed its name to $4.2 billion of fake assets” and that led to millions of dollars in losses for FutureSelect. The case was filed in Washington state court, which according to an article on the Courtroom Connect site has stricter investor protection statutes than many other states or under federal law. Morrison & Foerster attorney James Bennett, representing Ernst & Young, told the court that his client “did its job, full stop,” and a spokesperson for the firm said the subject of the audit in question was not a Madoff entity, but rather a Madoff-advised fund, and that no audit of such a fund could have detected the Ponzi scheme. The case was originally filed in 2010 and dismissed by a trial court, but then was reinstated by an appeals court, whose ruling was upheld by the state supreme court.