Ernst & Young LLP reached a $125 million settlement Friday with the Office of Thrift Supervision and the Federal Deposit Insurance Corp. stemming from the failure of Superior Bank FSB in 2001, regulators reported.
The accounting firm will pay the OTS $85 million as part of a consent agreement and the FDIC $40 million in restitution.
The failure of the Hinsdale, Ill., bank cost the Savings Association Insurance Fund about $428 million. Regulators said faulty accounting was a major reason for the failure, specifically saying that Superior and Ernst accountants improperly valued residuals in securitized subprime mortgages.
An Ernst & Young spokesman did not return a call for comment Monday. The agencies said in press releases that the auditor did not admit wrongdoing in the settlement.
Of the $125 million settlement, $31.25 million will go to the Pritzker family, which had been a co-owner of Superior's holding company.