NEW YORK— Reuters reports that stock market regulators are considering filing civil charges against three accountants at Ernst & Young who audited CUC International, the firm that preceded real estate and hotel company Cendant Corp., a source familiar with the matter said. The U.S. Securities and Exchange Commission has sent three Ernst & Young auditors— Marc Rabinowitz, Ken Wilchfort and Simon Wood— so-called “Wells notices,” which give them the chance to respond on why they should not be charged by the agency, the source said. CUC International merged with HFS in 1997 to form Cendant Corp. The next year, an investigation was opened into charges that CUC artificially inflated earnings before the deal, triggering a tumble in its share price. A spokesman for Ernst & Young declined to comment on Wells notices, but said the firm has been assured in writing that no criminal charges will be brought against the auditors. Federal prosecutors have also been investigating individual accountants at Ernst & Young who worked on the CUC account, a source closed to the case said in June, according to the report. — SOURCE: Reuters
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