| June 27
June 27 A U.S. Securities and Exchange
Commission judge has issued suspensions for two KPMG
auditors, temporarily barring them from practicing or appearing
before the regulator after finding they did not properly vet the
books of a Nebraska bank before it failed.
Carol Fox Foelak, an SEC administrative law judge, ruled on
Friday that KPMG auditors John Aesoph and Darren Bennett
overlooked "numerous red flags" when auditing TierOne Bank's
2008 financial statements.
TierOne collapsed under the weight of loan losses during the
financial crisis and the SEC in 2012 charged TierOne Bank
executives with understating losses.
In January 2013, the SEC sued Aesoph and Bennett, saying
they did not properly review TierOne's allowance for loan and
lease losses, and also did not get enough evidence to support
estimates by management of fair value for the collateral tied to
their risky loans.
Aesoph and Bennett have denied wrongdoing.
But on Friday, Foelak said Aesoph and Bennet "failed to
sufficiently address... that (TierOne) management was inept and
had an incentive to understate losses." Despite that, Foelak
said KPMG issued a clean audit opinion of TierOne.
Foelak barred Aesoph from practicing or appearing before the
SEC for one year, and Bennett for six months, according to the
Gary Bendinger, a partner at Sidley Austin who represents
Bennett, said "we're reviewing the decision with Mr. Bennett and
we're considering all options, including an appeal."
Lawyers for Aesoph did not immediately respond to a request
for comment and neither did an SEC representative.
(Reporting By Casey Sullivan; Additional Reporting by Nate
Raymond; Editing by Ken Wills)