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August 31, 2010

E&Y US faces lawsuit over fail

A group of investors has filed a lawsuit
against Ernst & Young (E&Y) US relating to the collapse of
Parkcentral Global, a Texas based hedge fund.

The investors say they lost $17m invested in
two funds sold by Parkcentral and allege E&Y failed in its
watchdog role by not warning investors of the risk of fraud and
noncompliance by management, according to US media reports.

E&Y was the hedge fund’s auditor at the
time of its collapse.

The Parkcentral fund lost more than $2.6bn,
which according to the complaint was due to “catastrophic and
concentrated risk in a single investment strategy”.

The investors suing the company are Brown
Investment Management LP, MBB Ventures LLC, SBS Ventures LLC,
Thomas R. Brown Family Private Foundation and Gus Comiskey.

E&Y has declined to comment on the
lawsuit.

 

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