BREAKING NEWS: Equitable to drop £700m E&Y claim this morning
Insurer and former auditor agree case will be dropped, parties to pick up own costs
Insurer Equitable Life is expected to walk away from its £700m lawsuit
against its former auditor Ernst & Young this morning.
The sensational development, leaked to Reuters and The Daily
Telegraph, will be a massive embarrassment for the insurer, which has
sought to cast the Big Four as culpable for its financial problems. An
announcement is expected about 10:30am.
The two sides are expected to each meet their own legal costs, which are
likely to be more than £30m for Equitable Life and about £20m for E&Y.
Equitable had originally sued for more than £2bn, but cut this to £700m in July
in the first sign that their case was crumbling.
In another sign of the society’s case losing momentum, Equitable is also
expected to make a small contribution to E&Y’s costs, possibly around £1m.
Lawyers are understood to have been working ‘night and day’ on the
settlement, agreeing terms at about 6pm last night.
Equitable Life’s claim was based on the contention that the former board
would have tried to sell the society had Ernst & Young warned it of its dire
financial position, and that a sale would have realised more than £1bn.
Updates to follow throughout the morning
