Ernst and Young's PeopleSoft case ditched by SEC

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PeopleSoft has escaped being dragged into a potential accounting firm scandal after a Securities and Exchange Commission judge dismissed a lawsuit accusing Ernst & Young LLP of violating auditor-independence rules through its relationship with the software firm.

In a lawsuit filed in May, the SEC accused E&Y of compromising the independence of its audits of PeopleSoft by entering a business venture with the company that sold tax-related software. PeopleSoft was not implicated in the suit.

The SEC has "not cited any public interest considerations that suggest it was urgent to initiate the proceeding," SEC Judge Brenda Murray said in the ruling. The case was dismissed without prejudice, meaning the SEC can re-file it later.

In the event, Commissioner Isaac Hunt was the only SEC. member who voted to charge Ernst & Young. Both Harvey L. Pitt, the commission's chairman, and Cynthia Glassman, who have declared past ties to Ernst & Young, recused themselves. Two other SEC. seats are currently vacant.

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