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Ernst & Young Settles With SEC for $8.5M

WASHINGTON (CN) - Ernst & Young will pay $8.5 million to settle SEC charges that six of its partners provided Bally Total Fitness with "false and misleading" audit reports. The SEC says that Ernst & Young "knew or should have known about Bally's fraudulent financial accounting and disclosures," and that all six men also agreed to settle.

The three current Ernst & Young partners charged in the complaint are Randy G. Fletchal, who is in charge of E&Y's national office; Mark V. Sever, its national director of area professional practice; and Kenneth W. Peterson, professional practice director of the Lake Michigan area.

The three former partners are Thomas D. Vogelsinger, Lake Michigan area managing partner until October 2003; William J. Carpenter, the engagement partner for the 2003 audit; and John M. Kiss, engagement partner for the 2001 and 2002 audits.

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