Ernst & Young partner jailed in US
A FORMER partner at the accountants Ernst & Young partner has been sentenced to a year in jail following his conviction for tampering with financial documents.
Thomas Trauger, 42, was sentenced to 12 months in a federal prison in the US and ordered to pay a $5,000 (£2,200) fine after he admitted that he had changed and destroyed documents to impede a federal investigation into the collapse of NextCard, a credit card issuer that offered cards exclusively on the internet.
Trauger originally faced up to five years in prison and has been told he must also undergo two years of supervised release, the judge ruled. The accountant admitted in October that he had altered auditing records after an investigation into accounting practices prompted regulators to look into NextCard.
NextCard went out of business after the investigation. It was accused of issuing too many cards to customers who could not keep up with repayments and its banking offshoot was forcibly closed down three years ago. When NextCard collapsed, it left behind losses of about £200m.
The prosecution against Trauger was brought under expanded governance powers granted to financial markets regulators under the Sarbanes-Oxley Act of 2002. The new rules mark a significant crackdown on the manipulation of corporate financial records and Trauger's case is one of the first cases of document destruction under the act to make it to court.
With the exception of Trauger, the Sarbanes-Oxley regulations have otherwise spelled a bonanza for top accounting firms. KPMG revealed earlier this week that advice fees on post-Enron corporate regulation and new international financial reporting rules have gone 'stratospheric'.
UK partners at KPMG reported a 9% leap in earnings and pushed KPMG profits to a record £247m for the year to the end of September. Chief executive John Griffith-Jones described risk advisory services - advising on new accounting rules, Sarbanes-Oxley legislation in the US and corporate governance principles in the UK ? as a business with 'real legs on it'.
After a 23% rise in fees last year, the business has gone stratospheric with turnover in the first quarter up over 50%, he revealed.
